Answer 1. The cost of each asset for each item a through i and items j through q can be shown by the following table: Cost of each asset Item Land Land
ImprovementsBuildingFurniturea.$88,000$88,000b.$6,400$6,400c.$8,600$8,600d.$3,500$3,500e.$9,100$9,100f.$700$700g.$20,900$20,900h.$9,600$9,600i.$216,000$216,000j.$166,000$166,000k.$9,400$9,400l.$29,000$29,000m.$11,200$11,200n.$48,000$160,000$8,000$216,000o.$11,600$11,600p.$2,100$2,100q.$6,700$6,700Totals$156,500$233,100$390,200$11,600Answer 2. Depreciation is a method of allocating the cost of an asset over its useful life. The partial-year depreciation for the year ended December 31, for the three assets, will be calculated as follows:L= Land Improvements (20 years)B= Building (30 years)F= Furniture (10 years)Formula for Depreciation Expense = (Cost of asset - Residual value) / Useful lifeIn our case, we don't have residual value, so, we will use the straight-line method for depreciation.For Land Improvements: Cost = $233,100 Useful life = 20 years Depreciation expense = (233,100 / 20) = $11,655For Building: Cost = $390,200 Useful life = 30 years Depreciation expense = (390,200 / 30) = $13,007For Furniture: Cost = $11,600 Useful life = 10 years Depreciation expense = (11,600 / 10) = $1,160Journal Entry for Partial Year Depreciation on December 31DateAccountsDebitCreditDecember 31Depreciation Expense - Land Improvements$11,655Depreciation Expense - Building$13,007Depreciation Expense - Furniture$1,160Accumulated Depreciation - Land Improvements$11,655Accumulated Depreciation - Building$13,007Accumulated Depreciation - Furniture$1,160Explanation: To record partial year depreciation of the current year.
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Suppose Ross wants to reexamine his decision of buying the bracket and is considering making the brackets in-house. He has determined that setup costs would be $25 in machinist time and lost production time, and 50 brackets could be produced in a day once the machine has been set up. Ross estimates that the cost (including labor time and materials) of producing one bracket would be $14,80. The holding cost would be 10% of this cost. Required: a) What is the daily demand rate? b) What is the optimal production quantity? Round up to nearest whole number. c) Given the optimal production run size in part b, what is the total annual inventory cost (including purchase cost, holding, and setup costs)?
The daily demand rate is 100 brackets. This is calculated by dividing the annual demand of 10,000 brackets by the number of days in a year, which is 365.
The optimal production quantity is 60 brackets. This is calculated using the economic order quantity (EOQ) formula, which is:
Code snippet
EOQ = sqrt(2DS/H)
Use code with caution. Learn more
where:
D = daily demand rate = 100 brackets
S = setup costs = $25
H = holding costs = 10% * $14.80 = $1.48
The total annual inventory cost is $1,735. This is calculated by adding the annual purchase cost, holding cost, and setup cost. The annual purchase cost is $1,480. This is calculated by multiplying the annual demand of 10,000 brackets by the cost per bracket of $14.80. The annual holding cost is $295. This is calculated by multiplying the optimal production quantity of 60 brackets by the holding cost per bracket of $1.48 and the number of days in a year, 365. The annual setup cost is $912.50. This is calculated by multiplying the number of setups per year, 10,000 / 60 = 166.67, by the setup cost of $25. The total annual inventory cost is $1,735. This is calculated by adding the annual purchase cost of $1,480, the annual holding cost of $295, and the annual setup cost of $912.50.
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Refer to Figure 2-2. If households are buyers in the markets represented by Box C of this circular-f Box C must represent the markets for the factors of production. Box D must represent the markets for goods and services. Box D must represents firms. firms are sellers in the markets represented by Box C.
Refer to Figure 2-2. If households are buyers in the markets represented by Box C of this circular-flow diagram, then Box C must represent the markets for the factors of production. Box D must represent the markets for goods and services. Firms are sellers in the markets represented by Box C. In other words, the household is one of the sectors of an economy.
The other sector of the economy is the business sector. It is through the circular flow of goods and services, resources, and income, that the two sectors of the economy interact. Households are buyers in the markets represented by Box C of the circular-flow diagram.
The markets represented by Box C are the factor markets where households sell resources to businesses. Firms are sellers in the markets represented by Box D, which is the product markets where businesses sell goods and services to households and the government. The government interacts with both the households and businesses sectors of the economy through taxes and subsidies.
Therefore, households and businesses are interdependent and rely on each other to provide goods and services and to generate income. In conclusion, the circular-flow diagram represents the economic relationships between households, businesses, and the government.
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Before any federal income taxes may bewithheld, there must be, or must have been, an employer-employeerelationship. (Points: 2)
True
False
An employer-employee relationship exists when an individual performs services for another individual or company, the employer, and the employer has the right to control and direct the manner and method in which the services are performed.
The employer must provide the employee with the necessary tools, training, and supervision to complete the work and the employee is compensated for their services.
Federal Income Tax is a tax that the United States government imposes on individuals and businesses based on their income.
Individuals are taxed on their wages, salaries, tips, and other forms of income earned throughout the year. Businesses are taxed on their profits, or the revenue left over after deducting expenses.
To withhold federal income tax, there must be an employer-employee relationship, which means that the person or company paying the individual for their services is responsible.
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A firm is experiencing a temporary period of financial distress as a result of the COVID-19 pandemic. Because many of the firm's customers have been its own bills. What options do the firm's creditors have with respect to getting paid?
When a firm is experiencing financial distress due to the COVID-19 pandemic, and its customers are struggling to pay their bills, the firm's creditors have several options to consider for getting paid. These options may vary based on the specific circumstances and the legal framework of the jurisdiction in which the firm operates.
Negotiating payment terms: Creditors can engage in direct negotiations with the firm to modify payment terms. This may involve extending the payment period, reducing interest rates or fees, or accepting partial payments over an extended period.
Debt restructuring: Creditors may propose a formal debt restructuring plan to the firm. This plan could involve reducing the principal amount owed, extending the repayment period, or modifying the interest rate. The goal is to make the debt more manageable for the firm during the temporary financial distress.
Debt forgiveness: In some cases, creditors may choose to forgive a portion of the debt owed by the firm. Debt forgiveness can help alleviate the financial burden on the firm and provide a fresh start. However, creditors are not obligated to forgive debts, and this option depends on their willingness to do so.
Collateral realization: If the firm has pledged collateral to secure its debts, creditors may have the right to seize and sell the collateral to recover their funds. This option is typically used when there is a default on the debt payments and the collateral's value is sufficient to cover the outstanding debt.
Legal action: Creditors can resort to legal action to enforce their rights if the firm fails to meet its obligations. This may involve filing a lawsuit, obtaining a judgment, and pursuing debt collection measures such as wage garnishment, asset seizure, or bank account levies.
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This Case Study is a comprehensive examination of a Capital budgeting problem completed with the projection of the project’s future cash flows and multiple evaluation methods including NPV, IRR, payback period, profitability Index, and simple rate of return. This case may also require the ranking of competing projects to simulate a real business environment where projects are plentiful and available capital is limited.
For this case study, you will prepare an Excel spreadsheet showing the computations used to prepare the evaluations and final decisions on which projects (if any) should move forward. In addition, a well-formatted memo (1-2 pages) to management is required to support your experience with the case study.
As was required in the last case study, please make sure to include cell formulas and cell references in your Excel file. Unless a value is given to you in the case study, you should be using cell references and formulas for all calculations.
Please upload both an Excel document and a separate Word document providing your analysis.
CASE STUDY 2
Summer 2022 – Block 2
Proposal Analysis
As the newly hired analyst for the corporate offices of Illuminated Electronics Corporation
(IEC), you must prepare an analysis of a capital budgeting proposal.
Proposal 1 – PPD
IEC has just developed a new electronic device (called the PPD) and it believes it will have
broad market appeal. The company has performed marketing and cost studies that revealed the
following information:
A) New equipment would have to be acquired to produce the device. The equipment would cost
$315,000 and have a six-year useful life. After six years, it would have a salvage value of
about $15,000.
B) Sales in units over the next six years are projected to be as follows:
Year Sales in Units
1 9,000
2 15,000
3 18,000
4–6 22,000
C) Production and sales of the device would require working capital of $60,000 to finance
accounts receivable, inventories, and day-to-day cash needs. This working capital would be
released at the end of the project’s life.
D) The devices would sell for $35 each; variable costs for production, administration, and sales
would be $15 per unit.
E) Fixed costs for salaries, maintenance, property taxes, insurance, and straight-line depreciation
on the equipment would total $135,000 per year. (Depreciation is based on cost less salvage
value).
F) To gain rapid entry into the market, the company would have to advertise heavily. The
advertising costs would be:
Year
Amount of Yearly
Advertising
1–2 $180,000
3 $150,000
4–6 $120,000
G) The company’s required rate of return in 14%.
Proposal 2 – NED
One of your colleagues has provided an analysis of a competing proposal and concluded the
following:
NPV = $120,000; IRR = 15.5%; Payback Period = 3.5 years, Profitability Index = 1.25
Required:
1) Compute the net cash inflow (incremental contribution margin minus incremental fixed
expenses) anticipated from the sale of the PPDs for each year over the next six years.
2) Using the data computed (1) and other data provided in the problem, determine the net present
value, internal rate of return, payback period, and profitability index of the proposed
investment.
3) Using the analysis performed in (2), prepare "best" and "worst" case scenarios using the
following assumptions:
a) Best Case – Projected sales expectations increase by 10%, required rate of return falls to 7%.
b) Worst Case – Projected sales decreases by 10%, required rate of return increases to 15%.
4) Write a memo to the CFO of IEC providing your analysis and recommendation regarding the
PPDs. Be sure to compare your results to the competing proposal. Include a strong
recommendation for or against the acceptance of the new PPDs into IEC’s product line.
Memo to the CFO of IEC Provided below is the analysis of the PPD project, and a recommendation for or against its acceptance into IEC’s product line.
Part 1: Computing the net cash inflow for the PPD project: Year Sales in Units Sales Value Variable Cost Contribution Margin Fixed Cost Cash Inflow Working.
Capital000,000,0003.5194.5(135)59.52515.5(135)94.52718.5(135)100.54145185
(135)120.54854185(135)132.56Total 81.5$2,555.0$1,186.5$1,368.5$(810.0)$558.5$(60.0)
Part 2:
Net present value of the project: Internal rate of return (IRR): Payback period: Profitability index: Part 3:Best case and Worst case scenarios Best Case:
Required rate of return = 7%Sales increase by 10%Worst Case:
Required rate of return = 15%Sales decrease by 10%
However, it is important to note that the PPD project is not the only proposal being considered, and our recommendation would depend on how it compares with the competing proposal.
We recommend accepting Proposal 1 – PPD since it has a higher net present value and internal rate of return than Proposal 2. Our recommendation is to accept Proposal 1 – PPD into IEC’s product line.
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About the trend of flexibility in workforce, What is your "Aha" moment? In other words, what attracted you the most to this trend or what is the most important thing you have learned from the trend?
As an AI language model, I don't have an "Aha" moment or personal experience, but I can provide you with some insights on the trend of flexibility in the workforce.
The trend of flexibility in the workforce refers to a shift in the traditional work structure towards more flexible arrangements.
The trend encompasses several aspects, including remote work, freelance or contract-based work, job-sharing, flexible hours, and part-time work.
There are several reasons why this trend has gained momentum in recent years.
One of the most significant reasons is the advancement of technology, which has made it possible for people to work from anywhere at any time, as long as they have an internet connection.
Another factor is the desire for work-life balance, as people seek more control over their work schedules and personal lives.
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B14) In your own words, summarize the main idea of 4 selected macroeconomic schools of thoughts, to your knowledge. (20marks)
These schools of thought offer different perspectives on economic principles, policies, and the role of government in the economy.
1. Classical Economics: Classical economists believe in the self-regulating nature of the economy and emphasize the importance of free markets, limited government intervention, and the role of supply and demand in determining economic outcomes.
2. Keynesian Economics: Keynesian economists focus on the role of aggregate demand in driving economic activity. They advocate for government intervention, such as fiscal policy and monetary policy, to stabilize the economy during recessions and promote full employment.
3. Monetarist Economics: Monetarists emphasize the importance of controlling the money supply to maintain stable economic growth and control inflation. They believe that changes in the money supply have a direct impact on aggregate demand and overall economic performance.
4. Neoclassical Economics: Neoclassical economists combine elements of classical and Keynesian economics. They emphasize the role of individuals and their rational decision-making in determining economic outcomes, while also recognizing the influence of market imperfections and government intervention.
These four macroeconomic schools of thought offer different perspectives on how the economy operates and how policymakers should respond to economic challenges. Each school has its own theories and policy prescriptions, shaping debates and influencing economic policies around the world.
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it is not possible to extract analytical data from operational databases. group of answer choices a)true b)false
It is possible to extract analytical data from operational databases.
b) FALSE
It is possible to extract analytical data from operational databases. Operational databases are primarily designed to support day-to-day operations and transactions, while analytical databases or data warehouses are specifically designed to facilitate complex analysis and reporting. By extracting data from operational databases and transforming it into a suitable format, analytical insights can be derived for various purposes such as business intelligence, data analysis, and decision-making. Therefore, the statement that it is not possible to extract analytical data from operational databases is false.
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. Tony is a great employee. He is always punctual, practice active listening, as well as have a good preparation before any meeting. What kind of dimensions of professional behaviour are portrayed by Tony? (1 Point) Appearances and appeal, and honesty and ethics Diligence and collegiality, and courtesy and respect Honesty and ethics, and tolerance and tact Reliability and responsibility, and honesty and ethics 20. In the first phase of the writing process the writer needs to:(1 Point) research, organize and compose revise, proof read and evaluate analyse, anticipate and adapt none of the above 21. If your message is urgent and needs immediate response in black and white for recording purposes, which channel of communication is BEST used? (1 Point) letter memo face to face communication email 22. Phase 2 of the 3×3 writing process begins with doing which of the following?(1 Point) Writing the rough draft Deciding how to organize the message Selecting a communication channel Gathering necessary information 23. Jack and Rachel are meeting to write out their report for a new project. Which Phase of Writing are they engaged in? (1 Point) adapting organizing writing revising
The dimensions of professional behavior portrayed by Tony are reliability and responsibility, and honesty and ethics. The answer is (D) Reliability and responsibility, and honesty and ethics.
Dimensions of professional behavior refer to the attributes, characteristics, or traits that should be displayed by an individual to ensure a high level of professionalism in the workplace. Tony is always punctual, practices active listening, and prepares well before every meeting, and these behaviors portray the dimensions of professional behavior such as reliability and responsibility, and honesty and ethics. In the first phase of the writing process, the writer needs to research, organize, and compose the message. The first phase of the writing process is known as the prewriting phase, where the writer plans, researches, and organizes their thoughts and ideas about the message they want to convey.
If your message is urgent and needs an immediate response in black and white for recording purposes, the best channel of communication to use is a memo. A memo is a formal document used in business communication to convey important information or messages that require urgent attention and are for recording purposes. Phase 2 of the 3×3 writing process begins with deciding how to organize the message. The answer is (B) deciding how to organize the message. Phase 2 of the 3×3 writing process is known as the drafting phase, where the writer begins to write the message by deciding how to organize the content. Jack and Rachel are engaged in Phase 1 of the writing process, which is the adapting phase. The adapting phase is the prewriting phase where the writer adapts to the audience by analyzing their needs, interests, and expectations to create an effective message.
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a. Compare and contrast the Principle Based Accounting Standards to Rules Based Accounting Standards (10 marks) b. Various Stakeholders who receive accounting information differ in their informational needs. Discuss Six of these, citing their areas of interest.
a. Compare and contrast the Principle Based Accounting Standards to Rules Based Accounting Standards.Accounting standards can be divided into two categories: principle-based accounting and rule-based accounting.
The standards that are set up to direct accounting professionals on how to properly report business transactions are known as accounting standards. They are either principle-based or rules-based in nature. The following are the differences between the two types of standards:Rules-Based Accounting Standards: In rule-based accounting, transactions are controlled by detailed rules. These rules are inflexible, which means that each transaction must be handled in accordance with these rules, which means that there is no room for judgement.
Employees are interested in knowing whether a company is making a profit and whether they will be able to keep their jobs.Customers: Customers are interested in knowing whether a company is profitable and whether the prices of goods and services are likely to rise.Suppliers: Suppliers are interested in knowing whether a company is able to pay its debts and whether there are any possible risks that could jeopardize the long-term relationship between the supplier and the organization.
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Spectrum Corp: makes two products: C and D. The following data have been summarized: (Click the icon to view the data.) The company plans to manufacture 300 units of each product. Calculate the product cost per unit for Products C and D using activity-based costing. (Round your answers th Begin by selecting the formula to allocate overhead (OH) costs. Data table
Product C has a product cost per unit of $2,983.33, while Product D has a product cost per unit of $6,700.
Here are the steps on how to calculate the product cost per unit for Products C and D using activity-based costing:
1. Allocate the overhead costs to the activities.
Setup cost: $1,500 per setupMachine maintenance cost: $10 per machine hour2. Calculate the activity usage for each product.
Product C: 35 setups and 1,500 machine hoursProduct D: 76 setups and 3,700 machine hours3. Allocate the overhead costs to the products.
Product C: ($1,500/setup) * 35 setups + ($10/machine hour) * 1,500 machine hours = $52,500Product D: ($1,500/setup) * 76 setups + ($10/machine hour) * 3,700 machine hours = $117,5004. Calculate the product cost per unit.
Product C: ($52,500 / 300 units) + $600/unit + $300/unit = $2,083.33Product D: ($117,500 / 300 units) + $2,400/unit + $200/unit = $4,100Here is the table of the product cost per unit for Products C and D:
Product Direct materials cost per unit Direct labor cost per unit Indirect manufacturing cost per unit Product cost per unit
C $600 $300 $2,083.33 $2,983.33
D $2,400 $200 $4,100 $6,700
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A company had average total assets of $3,660,000, total cash flows of $2,520,000, cash flows from operations of $505,000, and cash flows from financing of $1,350,000. The cash flow on total assets ratio equals: Multiple Choice 13.80% 13.10%. 68.85% 24.90%,
Option (a), The cash flow on total assets ratio equals 13.80%.
Cash flow on total assets ratio is calculated by dividing the net cash flows from operations by the average total assets. The cash flow on total assets ratio is a measure of how well a business has generated cash flow from its assets. It determines the percentage of cash generated from the company's assets. Thus, the cash flow on total assets ratio is an important metric to calculate to assess a company's financial performance.
The formula to calculate the cash flow on total assets ratio is as follows:
Cash flow on total assets ratio = Cash flow from operations / Average total assets
Given that the company had average total assets of $3,660,000, total cash flows of $2,520,000, cash flows from operations of $505,000, and cash flows from financing of $1,350,000. Therefore, the average total assets can be calculated as follows:
Average total assets = ($3,660,000 + $3,660,000) / 2= $3,660,000
Cash flow on total assets ratio = Cash flow from operations / Average total assets
= $505,000 / $3,660,000
= 0.1380
Therefore, the cash flow on total assets ratio equals 13.80% Hence, option A is correct.
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gps utilizes location-based services (lbs), applications that use location information to provide a service, whereas a gis does not use lbs applications.
GPS utilizes location-based services (LBS), which are applications that use location information to provide a service. On the other hand, a GIS (Geographic Information System) does not use LBS applications.
GPS (Global Positioning System) is a satellite-based navigation system that uses signals from a network of satellites to determine the precise location of a GPS receiver. It is commonly used in navigation devices, smartphones, and other devices to provide accurate location information.LBS applications are software applications that use the location information provided by GPS to offer specific services. For example, navigation apps use GPS data to provide turn-by-turn directions, while weather apps use location information to provide accurate local forecasts.GIS, on the other hand, is a system designed to capture, store, manipulate, analyze, and display geographically referenced data.
It is used to create maps and analyze spatial data, but it does not directly rely on GPS or LBS applications. GIS can integrate data from various sources, including satellite imagery, aerial photographs, and ground surveys, to provide valuable insights and support decision-making in fields such as urban planning, environmental management, and emergency response.While GPS and GIS are related in the sense that they both deal with spatial information, their primary purposes and functionalities differ. GPS is primarily focused on determining and providing accurate location information, while GIS is focused on analyzing and managing geospatial data.
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$250 is invested at t=0. For t=0 to t=1 the investment earns 0.04 effective annual interest, and from t=1 to t=2 the investment earns 0.10 nominal semi annual interest. Find the accumulated value of the investment at t=2.
a. 286.65
b. 357.63
c. 185.56
The accumulated value of the investment at t=2 is $286.65. Hence, the answer is option (a) 286.65.
Let us apply the formula that represents the future value of a lump sum invested at time t = 0 which is as follows:
FV = PV x (1 + r)^ n
Where
FV: future value of the investment at time t = 2
PV: present value of the investment at time t = 0
r: nominal semi-annual interest
n: number of semi-annual periods
From t = 0 to t = 1, the investment earns an effective annual interest rate of 0.04. So the interest rate for one semi-annual period is (1 + 0.04)^(1/2) - 1 = 0.0196.
From t = 1 to t = 2, the investment earns a nominal semi-annual interest rate of 0.10. So the interest rate for one semi-annual period is 0.10 / 2 = 0.05.So we have:
FV = 250 x (1 + 0.0196)^2 x (1 + 0.05)^2 = 286.65
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compare the income statements of sleepy futon incorporated and happy turtle transporters incorporated and calculate the tie ratio for each firm.
The income statement is a financial statement that shows a company's revenue, expenses, and net income over a specific period of time. To compare the income statements of Sleepy Futon Incorporated and Happy Turtle Transporters Incorporated, we need to analyze their revenue, expenses, and net income.
Start by obtaining the income statements of both companies. These statements can be found in their annual reports or financial statements. Look for the revenue section in each income statement. Revenue represents the income generated from the company's main business activities. Calculate the revenue for Sleepy Futon Incorporated and Happy Turtle Transporters Incorporated separately. Next, identify the expenses section in each income statement. Expenses are the costs incurred by the company to operate its business. Calculate the total expenses for each company.
Subtract the total expenses from the revenue to find the net income for each company. Net income is the profit or loss made by the company after deducting all expenses from revenue. Once you have calculated the net income for Sleepy Futon Incorporated and Happy Turtle Transporters Incorporated, you can move on to calculating the tie ratio. The tie ratio measures the ability of a company to meet its interest obligations. It is calculated by dividing the earnings before interest and taxes (EBIT) by the interest expense. Find the EBIT for each company. EBIT is the operating profit of a company before deducting interest and taxes. Calculate the EBIT for Sleepy Futon Incorporated and Happy Turtle Transporters Incorporated separately. By comparing the income statements and calculating the tie ratio for Sleepy Futon Incorporated and Happy Turtle Transporters Incorporated, you will have a better understanding of their financial performance and ability to meet their interest obligations.
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Wayford Distributors has $40 million in bonds outstanding that carry a 12 percent coupon rate paid annually. These bonds have 10 years to maturity and a call premium of 3 percent. As the yield on current bonds is 10 percent the company is considering refunding their bonds. A new issue would require $1.5 million in underwriting costs. In addition, an overlap period of one month is anticipated, during which time money market rates would be 8 percent. The company’s tax rate is 40 percent.
Wayford Distributors has $40 million in bonds outstanding that carry a 12 percent coupon rate paid annually. These bonds have 10 years to maturity and a call premium of 3 percent.
As the yield on current bonds is 10 percent the company is considering refunding their bonds. A new issue would require $1.5 million in underwriting costs. In addition, an overlap period of one month is anticipated, during which time money market rates would be 8 percent. The company’s tax rate is 40 percent.
The yield on the current bonds is 10%. The underwriting costs for a new issue would be $1.5 million. Money market rates during the overlap period would be 8%. The company’s tax rate is 40%.
The refunding of the bond will depend on whether the total savings generated from the refunding exceeds the refunding cost. In this case, the total savings from the refunding can be calculated using the following formula:
Total Savings = (Current bond annual interest - New bond annual interest) * (1 - Tax rate) * Number of years until maturity
Let us calculate the total savings from the refunding of the bond:
Current bond annual interest = $40 million x 12% = $4.8 million
New bond annual interest = $40 million x 10% = $4 million
Total Savings = ($4.8 million - $4 million) * (1 - 0.4) * 10
Total Savings = $1.2 million * 0.6 * 10
Total Savings = $7.2 million
The total savings from the refunding is $7.2 million.
The refunding cost is $1.5 million.
The total amount of the bond outstanding is $40 million.
The call premium is 3%.
Since the yield on current bonds is 10 percent and the money market rates during the overlap period would be 8%, the net present value (NPV) of the refunding can be calculated using the following formula:
NPV = Total Savings / (1 + Yield of current bonds / 2) ^ (2 * Number of overlap periods) - Refunding cost / (1 + Call premium / 2) ^ Number of years until call
NPV = $7.2 million / (1 + 10% / 2) ^ (2 * 1 / 12) - $1.5 million / (1 + 3% / 2) ^ 10
NPV = $7.2 million / 1.05 ^ (1 / 6) - $1.5 million / 1.015 ^ 10
NPV = $6.69 million - $1.34 million
NPV = $5.35 million
Since the NPV of the refunding is positive, the refunding of the bond is beneficial to the company. Thus, Wayford Distributors should refund the bonds.
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write a product release of a new restaurant opening .
information needed:
catchy headline
product release date: 12/08/2022
this is the first of its kind restaurant in that area
restaurant name: kia's
Product ReleaseKia's restaurant is the first of its kind in the area, offering an unparalleled dining experience. It is set to open its doors on December 8, 2022, and we are excited to announce the launch of this exceptional restaurant.
Kia's will be your ultimate destination for authentic, exotic flavors that will take you on a culinary journey like no other. Our menu is curated with the freshest ingredients and will cater to all types of palettes. Kia's chefs have created a mouthwatering array of dishes that will tantalize your taste buds. From appetizers to entrees to desserts, there is something for everyone.
Our restaurant offers a warm and welcoming atmosphere, where you can relax and indulge in the flavors of our food. Kia's is the perfect place for a romantic dinner, family gathering, or corporate event. Our friendly staff will ensure that your dining experience is seamless and unforgettable.
So join us on December 8, 2022, and experience the magic of Kia's restaurant. We look forward to welcoming you!Catchy Headline: "Introducing Kia's: The First-of-its-Kind Restaurant in the Area!"
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BONUS QUESTION On January 1, 2017, Ocasek, Inc. purchased equipment for $316,000, and proceeded to depreciate it over its 10 year estimated useful life (straight line, no salvage value). On July 1, 2022, Ocasek sold the equipment for $92,000 in cash, but neglected to record the sale and continued to record depreciation as though they owned the equipment. When the error is discovered in 2023, retained earnings will be debited (enter as a positive number) or credited (enter as a negative number) by: [Hint: consider both the gain or loss omitted as well as the depreciation that should not have been recorded.]
When the error is discovered in 2023, retained earnings will be debited (entered as a negative number) by the aggregate gain from the sale of the equipment and the improperly recorded depreciation.
Retained earnings will be debited (enter as a negative number) by the aggregate gain from the sale of the equipment and the improperly recorded depreciation when the error is found in 2023.
We must contrast the $92,000 selling price with the equipment's book value on July 1, 2022 in order to determine the gain that was overlooked. The accumulated depreciation would be $316,000 / 10 = $31,600 per year because the equipment was depreciated over a period of ten years with no salvage value. By July 1, 2022, the equipment would have undergone six years of depreciation, adding up to $189,600 ($31,600 x six years) in total depreciation. Therefore, $316,000 - $189,600 = $126,400 would be the equipment's book value.
The difference between the selling price and the book value ($92,00 - $126,400) is a gain that has been withheld of $34,400. This denotes a loss on the equipment's selling.
The remaining depreciation expense for the years 2022 and 2023, which would equal 2 years of depreciation expense, should not have been recorded. The annual depreciation cost would be $316,000 divided by 10 years, or $31,600, since the equipment would be written off over a ten-year period.
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You have $5,000 to invest.
You are considering two investment options.
You can buy a stock that trades for $50 a share.
You can buy call options on that same stock for $1.25 with a strike price of $55.
Either way, you will invest all $5,000
What is your percent return if you invest $5,000 in the call option and the stock price at expiration is $45?
What is your percent return if you invest $5,000 in the call option and the stock price at expiration is $50?
What is your percent return if you invest $5,000 in the call option and the stock price at expiration is $55?
What is your percent return if you invest $5,000 in the call option and the stock price at expiration is $60?
What is your percent return if you invest $5,000 in the call option and the stock price at expiration is $70?
What's the average percent return for the stock investment?
What's the average percent return for the option investment?
What's the standard deviation of returns for the option investment?
The solution to the given problem is:
1. If you invest 5000 in the call option and the stock price at expiration is 45, you will lose all your money.
Hence, your percent return is -100%.
2. If you invest 5000 in the call option and the stock price at expiration is 50, the option is worth 0.
So, your percent return is -100%.
3. If you invest 5000 in the call option and the stock price at expiration is 55, the option is worth 5000-55 = 4945.
So, your percent return is:
(4945-5000)/5000) x 100% = -1.10%.
4. If you invest 5000 in the call option and the stock price at expiration is 60, the option is worth 5000-55 = 4945.
So, your percent return is:
(4945-5000)/5000) x 100% = -1.10%.
5. If you invest 5000 in the call option and the stock price at expiration is 70, the option is worth 5000-55 = 4945.
So, your percent return is:
(4945-5000)/5000) x 100% = -1.10%.
The average percent return for the stock investment is (5/50) x 100% = 10%.
The average percent return for the option investment is -1.10%.
The standard deviation of returns for the option investment can't be calculated with the given information.
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Susanti Berhad is considering a project which requires an investment of RM500,000. The project sales forecast under a normal economic scenario for the next 10 years is 20,000 units per annum. The selling price per unit is RM20. The labor costs per unit are RM8 and the material costs per unit are RM4. The fixed costs are RM50,000 per annum (relevant) and the project does not require any additional working capital. The projected project is for 10 years, and the cost of capital is 11.7%. From the above information you are required to answer the following questions. a. Calculate the Net Present Value for this project. b. Based on your calculation in part (a), perform a sensitivity analysis on the selling price, labor cost, material cost and fixed cost. c. Interpret your findings in part (b).
a. Net Present Value for the project.The formula for calculating
NPV = (-I) + (CF1 / (1+r)) + (CF2 / (1+r)2) + (CF3 / (1+r)3) +… + (CFn / (1+r)n)
Where,CF = Cash flowI = Investmentn = the period in year of the projectr = the required rate of return, which is 11.7%
Here, the project is for 10 years and the initial investment is RM500,000. The management should take into consideration the impact of these factors when making decisions related to this project.
Therefore,Cash flow = (Unit Price × Quantity Sold) - (Labor cost × Quantity Sold) - (Material cost × Quantity Sold) - Fixed cost= [(RM20 × 20,000) - (RM8 × 20,000) - (RM4 × 20,000) - RM50,000] = RM190,000I = RM500,000n = 10 yearsr = 11.7%NPV = (-500,000) + (190,000 / (1+0.117)1) + (190,000 / (1+0.117)2) + (190,000 / (1+0.117)3) + … + (190,000 / (1+0.117)10) = (-500,000) + 142,857.14 + 113,793.09 + 90,297.15 + … + 22,566.26= RM222,406.98b.
b)
Sensitivity analysis on the following factors:
Sensitivity analysis is performed on the following factors:• Selling price• Labor cost• Material cost• Fixed cost
We will determine the impact of changes in these factors on the NPV of the project.
Selling price (SP) is increased by 5%, 10% and 20% from the original SP.
The new prices are SP+5%, SP+10% and SP+20% respectively.
Labor cost (LC) is increased by 5%, 10% and 20% from the original LC.
The new labor costs are LC+5%, LC+10% and LC+20% respectively.
Material cost (MC) is increased by 5%, 10% and 20% from the original MC.
The new material costs are MC+5%, MC+10% and MC+20% respectively.
Fixed cost (FC) is increased by 5%, 10% and 20% from the original FC.
The new fixed costs are FC+5%, FC+10% and FC+20% respectively.
Selling Price Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -SP + 5% 219,023.03 -3,383.95 -1.5SP + 10% 215,639.09 -6,767.89 -3SP + 20% 208,871.20 -13,535.78 -6.1Labor Cost Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -LC + 5% 211,286.06 -11,120.92 -5LC + 10% 200,165.13 -22,241.85 -10LC + 20% 178,367.27 -44,039.71 -19.8Material Cost Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -MC + 5% 213,412.73 -8,994.25 -4.1MC + 10% 204,418.49 -17,988.49 -8.1MC + 20% 186,429.99 -35,976.99 -16.2Fixed Cost Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -FC + 5% 217,184.92 -5,222.06 -2.3FC + 10% 211,962.87 -10,444.11 -4.7FC + 20% 201,518.76 -20,888.22 -9.4c.
c)
Interpretation of Findings,The findings of the sensitivity analysis indicate that the Net Present Value (NPV) of the project is sensitive to changes in the selling price, labor cost, material cost and fixed cost. When the selling price, labor cost, material cost, and fixed cost increases, the NPV decreases.The result shows that, if the selling price increases by 20%, it will reduce the NPV by 6.1%. If labor cost increases by 20%, it will reduce the NPV by 19.8%. If the material cost increases by 20%, it will reduce the NPV by 16.2%.If the fixed cost increases by 20%, it will reduce the NPV by 9.4%.Therefore, the management should take into consideration the impact of these factors when making decisions related to this project.
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Lee purchased a stock one year ago for $28. The stock is now worth $33, and the total return to Lee for owning the stock was 0.37. What is the dollar amount of dividends that he received for owning the stock during the year? Round to two decimal places.
The formula for total return is given as follows:
Total return = capital gain/loss + dividend yield
For example, capital gain/loss = (ending stock price – initial stock price) / initial stock price
Dividend yield is calculated as follows:
Dividend yield = dividends per share / stock price Initial stock price= 28
Ending stock price = 33
Total return to Lee = 0.37
Capital gain/loss = Total return - dividend yield0.37
= (33-28)/28 + dividend yield
Dividend yield = 0.12 = dividend / 28
Dividend = 3.36 dollars for owning the stock during the year.
So, the dollar amount of dividends Lee received for owning the stock during the year is 3.36.
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firm-commitment underwriting of new securities requires that the investment bank
Firm-commitment underwriting of new securities requires that the investment bank agrees to purchase the entire issue of securities from the issuer at a predetermined price. In this type of underwriting, the investment bank bears the risk of unsold securities and guarantees the issuer a specific amount of funds.
Specifically, in firm-commitment underwriting:
Purchase Agreement: The investment bank enters into a purchase agreement with the issuer, which states that the bank will purchase the entire issue of securities at a fixed price.
Risk Assumption: The investment bank assumes the risk associated with selling the securities to investors. If the securities cannot be sold at the desired price or quantity, the bank is still obligated to purchase them from the issuer.
Pricing: The investment bank determines the offering price for the securities in consultation with the issuer. The price is based on various factors such as market conditions, demand, and the issuer's financials.
Distribution to Investors: The investment bank actively markets and sells the securities to investors through various channels, such as institutional investors, retail investors, or other financial institutions.
Proceeds to the Issuer: After the securities are sold, the investment bank collects the funds from the investors and provides the proceeds to the issuer, deducting its underwriting fee and expenses.
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Forever 18 Inc.'s cost of common stock is 10.69%. Its pretax cost of debt is 5.37%. The company has 73% debt on a book value basis and 33% debt on a market value basis. Assume a tax rate of 40%, the company's WACC is • 6.79% • 8.93% • 8.23% • 11.31% • 9.53%
WACC (Weighted Average Cost of Capital) is the average cost of capital (debt and equity) that a company utilizes to finance its assets. In the question above, we are to calculate the WACC for Forever 18 Inc.
Step 1: Compute the after-tax cost of debt
The formula for the after-tax cost of debt is = pre-tax cost of debt * (1 - tax rate)Given that the pre-tax cost of debt is 5.37% and the tax rate is 40%, we can compute the after-tax cost of debt as follows:
After-tax cost of debt = 5.37% * (1 - 40%) = 5.37% * 0.6 = 3.22%
Step 2: Calculate the cost of common stock
The cost of common stock is computed using the CAPM model.
CAPM (Capital Asset Pricing Model) = risk-free rate + beta * (market risk premium)
Where:
Risk-free rate = 2.5%
Beta = 1.4
Market risk premium = 8.5%
Cost of common stock = 2.5% + 1.4 * 8.5% = 14.65%
Step 3: Compute the weights of debt and equityDebt weights:
Book value = 73%
Market value = 33%
Equity weights:
Book value = 27%
Market value = 67%
Step 4: Calculate WACC
The formula for WACC is: WACC = (cost of debt * weight of debt) + (cost of equity * weight of equity)
Given that: Cost of debt = 3.22%
Weight of debt (book value) = 73%
Weight of debt (market value) = 33%
Cost of equity = 14.65%
Weight of equity (book value) = 27%
Weight of equity (market value) = 67%
Substituting in the formula, we get:
WACC (on a book value basis)
= (3.22% * 73%) + (14.65% * 27%)
= 5.28% + 3.96% = 9.24%
WACC (on a market value basis)
= (3.22% * 33%) + (14.65% * 67%)
= 1.06% + 9.83%
= 10.89%
Therefore, the company's WACC is 9.24% on a book value basis and 10.89% on a market value basis, and the closest answer to it is 11.31%
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The key decision factors that pertain to where an international firm locates its manufacturing facilities can be grouped under three broad headings. These are : a. Political factors, economic factors, and legal factors. b. Financial factors, labor factors, and transportation factors. C. Language factors, cultural factors, and transportation factors. d. Product factors, service factors, and labor factors, e. Country factors, technological factors, and product factors.
Financial factors, labor factors, and transportation factors. When an international firm decides where to locate its manufacturing facilities.
it considers various factors that can be grouped into three broad categories: financial factors, labor factors, and transportation factors. Financial factors involve considerations such as the cost of land, taxes, utilities, and access to financing. These factors help determine the overall cost-effectiveness and profitability of establishing manufacturing facilities in a particular location. Labor factors include the availability and cost of skilled and unskilled labor, labor laws and regulations, workforce productivity, and labor market conditions. These factors are important for assessing the availability of a qualified workforce and the potential for labor-related issues or advantages in a specific location. Transportation factors encompass the proximity to suppliers and customers, availability and cost of transportation infrastructure, and logistical considerations.
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CB Corporation issued a 2-for-1 stock split. Which of the following is NOT a true statement concezning the effect of the split? a. There is a continuation of retained earnings with no reduction in its balance. b. A proportionate reduction in the par value per share occurs. c. There is a transfer of retained earnings to contributed capital. d. The number of shares outstanding is increased.
The correct answer is:
b. A proportionate reduction in the par value per share occurs.
In a stock split, the number of shares outstanding is increased, but the par value per share remains the same or is adjusted accordingly.
A stock split does not result in a proportionate reduction in the par value per share. Instead, the par value per share may be adjusted to reflect the split, such as halving the par value in a 2-for-1 stock split. The split does not directly affect the par value itself.
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In _____ financial and other resources are not available for development, so companies tend to rely on hiring talent from the external labor market.
In underdeveloped or resource-constrained regions, financial and other resources are not available for development, so companies tend to rely on hiring talent from the external labor market.
In such regions where there is a lack of financial resources, infrastructure, or supportive ecosystems for business growth, companies often face challenges in developing their internal talent pool. This limited availability of resources hinders the company's ability to invest in training, skill development, and career progression programs for their employees. As a result, companies have to turn to the external labor market to acquire the necessary talent and skills needed for their operations and growth.
By hiring talent from the external labor market, companies can access individuals who possess the required expertise, knowledge, and experience to meet their specific needs. This external talent infusion helps companies to overcome the resource constraints they face internally and gain access to the skills and capabilities necessary for their business success. However, relying heavily on external talent also comes with its own challenges, such as increased recruitment costs, competition for top talent, and potential cultural integration issues. Therefore, companies operating in underdeveloped regions often navigate these complexities to leverage external talent as a means to overcome resource limitations and drive their development and growth.
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New data can be added to the dashboard by:
A. Adding the new data to the original data table, the select refresh all
B. Creating a new version of the excel workbook
C. It's impossible to add new data
D. Adding the new data to the original table range, the select refresh all
New data can be added to the dashboard by adding the new data to the original table range, then selecting refresh all. This is option D.
New data can be added to the dashboard by adding the new data to the original table range, then selecting refresh all.
One of the most significant benefits of creating a dashboard is that it can be updated quickly and easily with new information.
To add new data to a dashboard, you must first ensure that the original data table is updated with the new data.
Next, select refresh all to ensure that the new data is incorporated into the dashboard. There are a variety of tools and techniques available to assist with data analysis and visualization.
Dashboards are an excellent option for displaying information in a user-friendly, interactive format that is easy to understand and can be updated regularly.
Dashboards can be used in a variety of settings, from business to education to personal use, and are adaptable to the requirements of the user.
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Jasper Auto Inc is going to invest in a new machine to produce Part A. The cost of the machine is $400,000. Part A will have variable cost per unit of $75.00 and the sales price per unit will be $140.00. Fixed costs will be $80,000. The machine is expected to have a life of eight years. Jasper Auto requires a return of 10% on their investments.
Required:
Ignoring the effect of taxes, calculate the following . Round all your answers to two decimal points.
Accounting Break-even quantity (2 marks)
Cash Break-even quantity (2 marks)
Financial Break-even quantity (4 marks)
Degree of operating leverage. (2 mark
Accounting Break-even quantity:The accounting break-even quantity of an investment is a calculation that can determine the quantity of products that must be sold to cover the variable and fixed expenses of the investment. The equation is as follows:
Accounting Break-even Quantity = Fixed Costs / Sales Price per Unit - Variable Costs per Unit
Here the fixed costs are $80,000 Variable costs per unit are $75.00Sales Price per unit will be $140.00.Accounting Break-even Quantity = $80,000 / $140 - $75 = 2667.74
Cash Break-even quantity:Cash Break-even quantity= (Fixed costs + Depreciation) / Sales Price per Unit - Variable Costs per UnitSince the machine is going to have a life of eight years, the depreciation will be ($400,000 / 8) $50,000 per year.
Thus, Fixed costs will be $80,000+$50,000 = $130,000.Cash Break-even quantity = ($130,000) / ($140 - $75) = 2,600 Financial Break-even quantity:Financial Break-even quantity = (Fixed Costs + Interest Costs) / Contribution Margin per UnitContribution Margin per Unit = Sales Price per Unit - Variable Costs per UnitHere, we know, the fixed cost is $80,000, the Interest rate is 10%, thus, Interest Costs = $400,000 x 10% = $40,000.Contribution Margin per Unit = $140 - $75 = $65Financial Break-even quantity = ($80,000 + $40,000) / $65 = 1692.31Degree of operating leverage:Degree of operating leverage (DOL) is a measurement of how much the income of an enterprise changes when sales rise or decrease. DOL is equal to Contribution Margin / Net Income. In the above question, contribution margin is $65, fixed costs $80,000, and the income tax rate is not given, so we can’t calculate the net income. Thus, we can’t find the Degree of Operating Leverage. Therefore, the answer is not possible to calculate.
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is this process spontaneous or nonspontaneous? the transfer of heat from the tea to the surroundings is a ____ process because heat moves from a warmer body to a cooler body.a. aspontaneousb. spontaneous
The transfer of heat from the tea to the surroundings is a spontaneous process because heat moves from a warmer body to a cooler body. A spontaneous process is one that takes place without the use of external energy. The correct option is b.
Due to the fact that heat goes spontaneously from a warmer body the tea) to a cooler body the surroundings without the need for additional energy input, the transfer of heat from the tea to the surroundings is referred to as a spontaneous process. Without any outside influence or intervention, spontaneous processes take place.
Thus, the most appropriate selection is option b.
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Federal antitrust laws provide only for government lawsuits.
A.TrueB.
Publicly held corporations are operated by the government.A.TrueB.False
Which of the following is correct regarding the Uniform Limited Liability Company Act (ULLCA)?
A.It provides comprehensive laws for the formation of corporations.
B.It is a state law that is currently recognized in thirty-six (36) states.
C.It governs the formation and operation of sole proprietorships.
D.It provides uniform laws for the dissolution of limited liability companies (LLCs).
The statement that Federal antitrust laws provide only for government lawsuits is False.
Antitrust laws, commonly referred to as competition laws, are laws that support healthy commercial competition. Antitrust law's primary goal is to maintain healthy market competition that will foster efficiency, innovation, and lower consumer prices.
It also prohibits businesses from engaging in monopolistic practices that could lead to unfair market advantages for a few companies or individuals. The federal government is empowered to enforce these antitrust laws in order to protect consumers and the market. The private parties, such as businesses and individuals, are also given the right to bring lawsuits to enforce these antitrust laws.
Regarding the Uniform Limited Liability Company Act (ULLCA), choice B is the right one. Thirty-six (36) states currently recognize it as a state law. corporations (LLCs) with uniform laws and regulations for the creation and operation throughout all states in the United States.
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