Answer:
Instructions are below.
Explanation:
Giving the following information:
Standard:
Direct materials 7.30 pounds $ 2.25 per pound $16.43
Actual:
16,600 pounds of material was purchased for $2.05 per pound. All of the material purchased was used to produce 2,000 units of Zoom.
To calculate the direct material price and quantity variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (2.25 - 2.05)*16,600
Direct material price variance= $3,320 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Standard quantity= 2,000*7.3= 14,600
Direct material quantity variance= (14,600 - 16,600)*2.25
Direct material quantity variance= $4,500 unfavorable
In the development of a SFAS matrix, the first step is to:____________.
A) enter the ratings of how the company's management is responding to each of the strategic factors.
B) calculate the weighted scores.
C) list the most important EFAS and IFAS items.
D) indicate short-term goals for the duration.
E) enter the weights for all of the internal factors.
Answer:
its A
Explanation:
I promise trust me
Prepare journal entries to record each of the following four separate issuances of stock.
a. A corporation issued 4,000 shares of $10 par value common stock for $48,000 cash.
b. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $57,000.
c. The stock has a $3 per share stated value.A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $57,000.
d. The stock has no stated value.A corporation issued 1,000 shares of $50 par value preferred stock for $107,000 cash.
Answer:
a.
DR Cash $48,000
CR Common Stock (4,000*10) $40,000
CR Paid in Excess of Par- Common Stock $8,000
(To record common stock issued for cash)
Working
Paid in Excess of Par- Common Stock = 48,000- 40,000
= $8,000
b.No stated value
DR Organization expenses $57,000
CR Common Stock $57,000
(To record common stock issued to promoters)
c.
DR Organization expenses $57,000
CR Common Stock (2,000 * $3) $6,000
CR Paid in Excess of Par- Common Stock $51,000
(To record common stock issued to promoters)
Working
Paid in Excess of Par- Common Stock = 57,000 - 6,000
= $51,000
d.
DR Cash $107,000
CR Preferred Stock (1,000*50) $50,000
CR Paid in Excess of Par- Preferred Stock $57,000
(To record preferred stock issued for cash)
Working
Paid in Excess of Par- Preferred Stock
= 107,000 - 50,000
= $57,000
According to the expenditure approach, if Y is GDP, C is consumption, I is investment, G is government purchases, and NX is net exports, the national income identity can be written as:
Answer:
The answer is Y = C + I + G + NX
Explanation:
National income can be represented as: Y = C + I + G + NX
where Y is the national income
C is the consumers' consumption or households' expenses on goods and services
I is the firms' investment. Investment done by businesses on procuring non-current assets used in production
G is the government expenditure.
NX is the net export. Net export is the difference between the total value of export and total value of import in a year.
What is the price of a perpetual bond that pays a $45 per year into perpetuity, and has a 3.5% yield to maturity (YTM)
Answer:
Price =$1,285.71
Explanation:
A perpetual bond is that which pays a fixed amount of interest income for the foreseeable future. It issuer does not always have an obligation for redemption under the terms of loan contract.
The price of perpetual bond can be determined as the present value of a perpetuity. An perpetuity is an annuity that pays a fixed amount of cash flow for a certain number of years
PV = A/r
PV- price of bond- ?
A- annual interest - 45
r- Yield to maturity- 3.5%
Price = 45/0.035=1,285.714
Price =$1,285.71
The specifications for a plastic liner for a concrete highway project calls for thickness of 5.0 mmplus or minus±0.10 mm. The standard deviation of the process is estimated to be 0.02 mm.
A) The upper specification limit for this product = ? mm (round your response to three decimalplaces).
B) The lower specification limit for this product = ? mm (round to three decimal palces)
C) The process capability index (CPk) = ? (round to three decimal places)
D) The upper specification lies about ? standard deviations from the centerline (mean thickness)
Answer:
a) 5.10 mm
b) 4.90 mm
c) 1.67
d) upper specification lies at 5 standard deviations from mean.
Explanation:
Given:
Mean = 5.0mm
Standard deviation = 0.02 mm
a) The upper specification limit:
5.0 + 0.10
= 5.10 mm
b) The lower specification limit:
5.0 - 0.10
= 4.90 mm
c) The process capability index (CPk):
Use the formula below to find the process capability index
[tex] C_p_k = min (\frac{USL - mean}{3\sigma}, \frac{mean - LSL}{3\sigma}) [/tex]
Substitute figures:
[tex] C_p_k = min (\frac{5.1 - 5.0}{3*0.02}, \frac{5.0 - 4.9}{3*0.02}) [/tex]
[tex] C_p_k = min (\frac{0.1}{0.06}, \frac{0.1}{0.06}) [/tex]
[tex] C_p_k = min( 1.67, 1.67) [/tex]
[tex] C_p_k = 1.67 [/tex]
d) The upper specification lies at a distance of (5.1-5) = 0.1 mm
Standard deviation = 0.02 mm
upper specification lies at:
[tex] \frac{0.1}{0.02} = 5 [/tex]
Therefore, upper specification lies at 5 standard deviations from mean.
Suppose that JB Cos. has a capital structure of 75 percent equity, 25 percent debt, and that its before-tax cost of debt is 14 percent while its cost of equity is 18 percent. Assume the appropriate weighted-average tax rate is 25 percent.
What will be JBâs WACC? (Round your answer to 2 decimal places.)
WACC ______ %
Answer:
16.13%
Explanation:
The computation of the weighted cost of capital (WACC) is shown below:
As we know that
WACC is
= weight of equity × cost of equity + weight of debt × before cost of debt × (1 - tax rate)
= 0.75 × 18% + 0.25 × 14% × (1 - 0.25)
= 13.5% + 2.625%
= 16.13%
We simply applied the above formula so that the WACC could be arrive
Floral Beauty, Inc., is a large floral arrangements store located in Asheville Mall. Bridal Lilies, which are a specially created bunch of lilies for bridal bouquets, cost Floral Beauty $19 each. There is an annual demand for 22,000 Bridal Lilies. The manager of Floral Beauty has determined that the ordering cost is $85 per order, and the carrying cost, as a percentage of the unit cost, is 14%. Floral Beauty is now considering a new supplier of Bridal Lilies. Each lily would cost only $17.50, but to get this discount, Floral Beauty would have to buy shipments of 2,000 Bridal Lilies at a time. Should Floral Beauty use the new supplier and take this discount for quantity buying?
a. What is the total annual inventory cost (including purchase cost) for the current supplier?
b. What is the annual holding cost for the new supplier (when purchasing 3,000 each order)?
c. What is the total annual inventory cost (including purchase cost) for the new supplier (when purchasing 3,000 each order)?
d. What should Floral Beauty do?
Answer:
a) Total annual inventory cost (including purchase cost) for the current supplier = $421,154
b) Annual holding cost for the new supplier (when purchasing 3,000 each order) = $3,675
c) Total annual inventory cost = $389,298
d) Since the total cost has reduced, Flora Beauty should choose the new supplier option.
Explanation:
Annual demand, D = 22,000
Unit cost, C = $19
Ordering cost, K = $85
Unit carrying cost, h = 14% of C
h = 0.14*19 = $2.66
(a) Total annual inventory cost for the current supplier, [tex]T_c[/tex]
[tex]T_c = (D*C) + (\frac{Q'h}{2} ) + \frac{DK}{Q'}[/tex]...........(1)
Economic order quantity,Q'
[tex]Q' = \sqrt{2DK/2.66} \\Q' = \sqrt{2*22000*85/2.66}\\Q' = 1186 units[/tex]
Su bstitute Q' and other parameters into Tc
[tex]T_c = (D*C) + (\frac{Q'h}{2} ) + \frac{DK}{Q'}[/tex]
[tex]T_c = (22000*19) + \frac{1186*2.66}{2} + \frac{2000*85}{1186} \\T_c = \$421,154[/tex]
(b)
Q = 3000
C = $17.50
h = 0.14*17.50 = 2.45
Annual holding cost for the new supplier = (Q/2)*h = (3000/2)*2.45 = $3,675
(c)
Total annual inventory cost = (D*C) + (Q/2)*h + (D/Q)*K
Total annual inventory cost = (22000*17.5) + (3000/2)*2.45 + (22000/3000)*85
Total annual inventory cost for the new supplier = $389,298
d)
Since the total cost has reduced, Flora Beauty should choose the new supplier option.
You have just sold your house for $ 1 comma 000 comma 000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of $ 800 comma 000. The mortgage is currently exactly 18½ years old, and you have just made a payment. If the interest rate on the mortgage is 5.25 % (APR), how much cash will you have from the sale once you pay off the mortgage? g
Answer:
cash received = $510194.55
Explanation:
given data
sold your house = $1000000
time t = 30 year = 360 month
initial balance P = $800,000
mortgage currently exactly = 18½ years = 138 months
interest rate r = 5.25 % = 0.525% per month
solution
first, we will get monthly loan payment is express as
C = P ÷ [tex]\frac{1}{r} \times (1-\frac{1}{(1+r)^n})[/tex] ...............1
Put here values
C = 800,000 ÷ [tex]\frac{1}{.00525} \times (1-\frac{1}{(1+0.00525)^{360}})[/tex]
C = $ 4951.78
so that monthly payment is $ 4951.78
and
Balance after the 18.5 years will be
Balance = $ 4951.78 × [tex]\frac{1}{0.00525}[/tex] × [tex](1-\frac{1}{1.00525^{138}})[/tex]
Balance after 18.5 year = $ 485287.64
Balance after 18.5 year = $489805.45
but here we received here $1000,000 excess cash received is
so
cash received = 1000,000 - 489805.45
cash received = $510194.55
A corporation has 44,904 shares of $26 par value stock outstanding that has a current market value of $238 per share. If the corporation issues a 5-for-1 stock split, determine the number of shares outstanding. Select the correct answer. 583,752 8,981 224,520 44,904
Answer: 224,520
Explanation:
From the question, we are told that a corporation has 44,904 shares of $26 par value stock outstanding that has a current market value of $238 per share and that the corporation issues a 5-for-1 stock split. The number of shares outstanding goes thus:
Shares outstanding = 44,904 shares
We are also told that the corporation issues a 5-for-1 stock split. Therefore, the new shares will be:
= 44,904 × 5
= 224,520 shares
If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be 224,520.
J.C Coats Inc. carefully develops standards for its coat making operation. Its specifications call for 2 square yards of wool per coat. The budgeted price of wool is $50 per square yard. The actual price for the wool was $38 and the usage was only 1.6 yards of wool per coat. What would be the standard cost per output for the wool?
Answer:
$100 per coat
Explanation:
Standard ;
Wool required = 2 yard square per coat
Budgeted price = $50 per square yard
Therefore,
We will need to multiply the total direct material quantity per unit for its unitary cost in order to arrive at the standard cost per unit.
Total standard cost per coat = Wool per coat × Cost per square yard,
= 2 × $50
= $100 per coat
Bonner Corp.'s sales last year were $345,000, and its year-end total assets were $355,000. The average firm in the industry has a total assets turnover ratio (TATO) of 2.4. Bonner's new CFO believes the firm has excess assets that can be sold so as to bring the TATO down to the industry average without affecting sales. By how much must the assets be reduced to bring the TATO to the industry average, holding sales constant? Use the year-end balance in your calculations. Select the correct answer. a. $211,325 b. $211,175 c. $211,101 d. $211,250 e. $211,026
Answer:
d. $211,250
Explanation:
The TATO is the ratio of sales to assets:
TATO = sales/assets
Filling in the desired numbers, we can find the desired level of assets:
2.4 = 345,000/assets
assets = 345,000/2.4 = 143,750
Starting with assets of 355,000 the reduction necessary to bring assets down to 143,750 is ...
$355,000 -143,750 = $211,250 . . . . matches choice D
Yuhu manufactures cell phones and is developing a new model with a feature (aptly named Don't Drink and Dial) that prevents the phone from dialing an owner-defined list of phone numbers between the hours of midnight and 6:00 A.M. The new phone model has a target price of $380. Management requires a 25% profit on new product revenues.
Required:
a. Calculate the amount of desired profit.
b. Calculate the target cost.
Answer:
1. $95
2. $285
Explanation:
1) Calculate the desire profit of the company
25% profit on Product revenue
Desired Profit=Target price*25%
=380 * 0.25
= $95
The desire profit of the company is $95
2) Calculate the target cost
Total Sales Price $380
Less: Desired profit ($95)
Target cost $285
The project manager should schedule the post-project evaluation meeting with the customer or sponsor for a time when the customer is in a position to
Answer:
b. really determine whether the project met expectations and achieved the anticipated results.
Explanation:
A post-project evaluation meeting is usually held after a project must have been executed, and its purpose is to get feedback from the customer regarding the project. A time period is usually left for the customer to observe the project so as to determine if it met his expectations. The time period could be short or long, depending on the magnitude of the project in question.
During the post-project evaluation meeting, the customer is interviewed by the contractor so as to determine his level of satisfaction or reservations with respect to the project. If he is unsatisfied with the project, the contractor should listen patiently to know areas of improvement. However, if he is satisfied, the contractor could request future jobs from him or even use him as a reference for prospective customers.
The core CPI looks at the price changes of a market basket without Select one: a. luxury goods b. taxes c. food and energy d. imported goods
Answer:
The correct answer is the option C: food and energy.
Explanation:
On the one hand, the concept known as "Consumer Price Index" or CPI is refered to the measure that is basically used in economics in order to obtain the variation of prices in general that happens in a certain period of time, so that means that it focus in calculating the inflation of an economy by examinating the weighted average of prices of a basket of predetermined goods.
On the other hand, the "Core CPI" calculates the inflation in the costs of goods and services of a predetermined basket by does not include the ones from the food an energy sectors.
Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares
Answer: B. more shares will dilute the existing value of the stock, causing its market price to fall
Explanation:
The company is already Publicly traded. If it were to issue more stock it would increased the amount of stock it has in the market which will lead to the prices reducing from a high amount of supply.
Companies generally do not want their stock prices to decrease as it sends negative signals to investors as well as the fact that management's role is to try to increase Shareholder wealth.
They will therefore rather issue bonds than risk their stock prices reducing in price.
A divorced woman with 2 young children has just re-entered the workforce part time and earns $3,000 from this work. She collects another $2,400 per year in alimony payments. The woman wishes to make a contribution to an Individual Retirement Account this year. Which statement is TRUE
Which statement is TRUE
A. No contribution can be made because the woman received alimony payments
B. A contribution can be made based only on the income earned from part-time work
C. A contribution can be made based only on the alimony payments received
D. A contribution can be made based on both the earned income from part-time work and the alimony payments received
Answer:
B. A contribution can be made based only on the income earned from part-time work
Explanation:
According to Individual Retirement Account regulations, contribution can only be made base on earned income and not a court-mandated allowance made to a former spouse by a divorced or legally separated person otherwise known as "Alimony". Alimony is just a means to support life and not a earned income. So, contribution can be made based only on the income earned from part-time work.
Kyle accepted a job at Brenton Manufacturing. During his training, he was told that defective and poor-quality products were unacceptable, and the goal is to manufacture goods that met 100 percent of standards. What methodology does this company use
Answer:
TQM (Total quality management)
Explanation:
Total Quality Management is process by which all members of an organisation take part in improving products, services, processes, and the culture of the workplace.
The aim of TQM is to achieve long term success of the business through customer satisfaction.
Kyle was made to understand that defective and poor-quality products were unacceptable, and the goal is to manufacture goods that met 100 percent of standards.
This is a TQM strategy that ensures customer is always satisfied with the company's product.
A small independent television station will need to replace one of its cameras. They deposit $9,400 in an account that earns 3.7% per year compounded semiannually. How much will they have toward the purchase of the camera in 3 years?
Answer:
$10,492.86
Explanation:
we are to determine the future value of the lump sum in 3 years
The formula for calculating future value:
FV = P (1 + r/m)^nm
FV = Future value
P = Present value
R = interest rate
N = number of years
m = number of compounding per year
$9,400 (1 + 0.037 / 2)^6 = $10,492.86
Diane Manufacturing Company is considering investing $500,000 in new equipment with an estimated useful life of 10 years and no salvage value. The equipment is expected to produce $320,000 in cash inflows and $200,000 in cash outflows annually. The company uses straight-line depreciation, and has a 30% tax rate. Diane Manufacturing desired rate of return on this project is 10%. Net cash flows for years 1 through 10 (99,000 X present value of $1 annuity factor) round to nearest dollar A. 120000 Recovery of investment in working capital (500,000 x (present value of $1 factor) B. Present Value of net cash flows C. Initial cash outlay500,000 Net Present Value
Answer:
net income per year = $49,000
annual cash flows = $99,000
NPV = $108,315.40
payback period = 5.05 years
accounting rate of return = 19.6%
Explanation:
annual cash flow = [($320,000 - $200,000 - $50,000) x 0.7] + $50,000 = $99,000
NPV = -$500,000 + [$99,000 x 6.1446 (PV annuity, 10%, 10 periods)] = -$500,000 + $608,315.40 = $108,315.40
payback period = $500,000 / $99,000 = 5.05 years
accounting rate of return = net income per year / average investment = $49,000 / [($500,000 + $0)/2] = $49,000 / $250,000 = 19.6%
The Internal Rate of Return (IRR) represents which of the following: Multiple Choice The discount rate that must be lower than the required rate of return. The discount rate that makes the net present value equal to zero. The discount rate that makes the net present value positive. The discount rate that makes the net present value negative. The discount rate that is affected by the cash flows external to the project.
Answer:
The discount rate that makes the net present value equal to zero.
Explanation:
The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
It is the discount rate that makes the net present value equal to zero.
I hope my answer helps you
A bank has excess reserves of $1 million and makes a new loan for $500,000. If the bank faces a 10% required reserve ratio, by how much could the money supply increase when the loan is made
Answer:
With a 10% required reserve ratio, the money supply could increase by $500,000/r when the loan is made.
This equals $5,000,000 ($500,000/0.1) where r = 10%
Explanation:
a) The money multiplier is the amount of money that banks generate with each dollar of reserves. Reserves is the amount of deposits that the Federal Reserve requires banks to hold and not lend.
b) The formula for the money multiplier is simply 1/r, where r = the reserve ratio.
c) The reserve ratio, also known as Cash Reserve Ratio, is the percentage of deposits which commercial banks are required to keep as cash according to the directions of the central bank. It is used by the central bank to control the supply of money in the economy. When the central bank wants to increase the money supply, it lowers the reserve ratio and vice versa.
d) According to wikipedia.com, "the money supply is the total value of money available in an economy at a point of time." It is usually defined as currency in circulation plus demand deposits. It is the demand deposits that give commercial banks the ability to create money using the reserve ratio.
Myers Corporation's stock currently trades at $40 a share. Investors estimate that the year-end dividend will be $2.00 a share and that its dividend will grow at 5% a year (i.e., D1= $2.00 and g = 5%). The company needs to issue new stock in order to fund its upcoming projects, and investment bankers estimate that the floatation cost will be 4%. What is Myers' cost of new external equity?
a) 10.2%
b) 12.0%
c) 9.6%
d) 11.3%
e) 8.5%
Answer: 10.2%
Explanation:
The formula to solve this question will be: Re =D1/P0(1 - float) + g
where,
D1 = $2.00
P0 = $40
Float = 4% = 4/100 = 0.04
g = 5% = 5/100 = 0.05
We will then solve Myers' cost of new external equity by slotting the values into the formula written. This will now be:
Re =D1/P0(1 - float) + g
= 2/40(1 - 0.04) + 0.05
= 2/(40 × 0.96) + 0.05
= 2/38.4 + 0.05
= 0.052 + 0.05
= 0.1020
= 10.2%
Myers' cost of new external equity will be 10.2%
Determine the uniform annual value for the cash flow below at an interest rate of 11% per year.
Year 0 1 2 3 4 5 6 7 8 9
Cash Flow, 0 $ 30,000 30,000 30,000 30,000 45,000 45,000 45,000 45,000 45,000
a. $38,474
b. $37,744
c. $36,595
d. $39,595
Answer:
$36,595
Explanation:
The computation of the uniform annual value is shown below:;
Before that we need to find out the present worth which is
= $30,000 × (P/A , 11%, 4) + $45,000 × (P/A , 11%, 4) × (P/F , 11%, 4)
= $30,000 × (3.1025) + $45,000 × (3.69590) (0.65873)
= $202,630.51
Now the annual worth is
= Present value × (A/P, 11%,9)
= $202,630.51 × 0.18060
= $36,595
a. Compute the future value of $2,500 continuously compounded for 5 years at an APR of 9 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Compute the future value of $2,500 continuously compounded for 6 years at an APR of 7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. Compute the future value of $2,500 continuously compounded for 9 years at an APR of 4 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. Compute the future value of $2,500 continuously compounded for 6 years at an APR of 10 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
a) $3920.78
b) $3804.90
c) $3583.32
d) $4555.30
Explanation:
To find future value, use the formula below:
[tex] A=P(e)^r^n [/tex]
where
A=future value
P=present value
r=rate of interest
n=time period.
e=2.71828
a)
[tex] A=2500*(2.71828)^(^0^.^0^9^*^5^)[/tex]
=$2500*1.568312185
Future value =$3920.78
b)
[tex] A=2500*(2.71828)^(^0^.^0^7^*^6^)[/tex]
=$2500 * 1.521961556
Future value =$3804.90
c)
[tex] A=2500*(2.71828)^(^0^.^0^4^*^9^)[/tex]
=$2500 * 1.433329415
Future value =$3583.32
d)
[tex] A=2500*(2.71828)^(^0^.^1^0^*^6^)[/tex]
=$2500 * 1.8221188
Future value =$4555.30
Answer:
u9g
Explanation:
Joseph contributed $25,750 in cash and equipment with a tax basis of $14,800 and a fair market value of $19,500 to Berry Hill Partnership in exchange for a partnership interest.a. What is Joseph’s tax basis in his partnership interest?b. What is Berry Hill’s basis in the equipment?
Answer:
a. Joseph’s tax basis in his partnership interest=$40,550
b. Joseph contributed equipment with a tax basis of $14,800, therefore, Berry Hill’s basis in the equipment is $14,800
Explanation:
a. In order to calculate Joseph’s tax basis in his partnership interest we would have to make the following calculation:
Joseph’s tax basis in his partnership interest=amount contributed in cash+tax basis equipment
According to given data:
amount contributed in cash=$25,750
equipment tax basis =$14,800
Therefore, Joseph’s tax basis in his partnership interest=$25,750+$14,800
Joseph’s tax basis in his partnership interest=$40,550
Joseph's tax basis in his partnership interest is $40,550
b. According to the given data Joseph contributed equipment with a tax basis of $14,800, therefore, Berry Hill’s basis in the equipment is $14,800
Swisher, Incorporated reports the following annual cost data for its single product: Normal production level 30,000units Direct materials$6.40per unit Direct labor$3.93per unit Variable overhead$5.80per unit Fixed overhead$150,000in total This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's income increase or decrease under variable costing
Answer:
The company's income would decrease by $422,600.
Explanation:
The Variable Costing includes only variable manufacturing costs in product costs.Fixed and non-manufacturing costs are treated as period costs.
Prepare a Differential Analysis for an additional 20,000 units
Differential Analysis for an additional 20,000 units
Additional Costs :
Direct materials ($6.40 × 20,000) $128,000
Direct labor ($3.93× 20,000) $78,600
Variable overhead ($5.80× 20,000) $116,000
Fixed Overheads ($5 × 20,000) $100,000
Incremental Cost $422,600
Conclusion:
The company's income would decrease by $422,600.
Currently, a U.S. trader notes that in the 6-month forward market, the Japanese yen is selling at a premium (that is, you receive more dollars per yen in the forward market than you do in the spot market), while the British pound is selling at a discount. Which of the following statements is correct?
a) If interest rate parity holds among the three countries, the United States should have the highest 6-month interest rates and Britain should have the lowest rates.
b) If interest rate parity holds among the three countries, the United States should have the highest 6-month interest rates and Japan should have the lowest rates.
c) If interest rate parity holds among the three countries, Japan should have the highest 6-month interest rates and Britain should have the lowest rates.
d) If interest rate parity holds, 6-month interest rates should be the same in the U.S., Britain, and Japan.
e) If interest rate parity holds among the three countries, Britain should have the highest 6-month interest rates and Japan should have the lowest rates.
Answer:
Hence correct answer is option e) If interest rate parity holds among the three countries, Britain should have the highest 6-month interest rates and Japan should have the lowest rates.
Explanation:
Tru-U stock is selling for $41 a share. A 6-month call on Tru-U stock with a strike price of $45 is priced at $1.60. Risk-free assets are currently returning .29 percent per month. What is the price of a 6-month put on Tru-U stock with a strike price of $45?
Answer:
$4.82
Explanation:
Calculation for the price of the 6-month put on Tru-U stock
To find the price of a 6-month put on Tru-U stock with a strike price of $45 we are going to use Put-call parity formula to calculate it
Using this formula
Put-call parity: S + P = C + PV(E) P
Let plug in the formula
Put-call parity= $1.60 + ($45 / 1.0029^⁶) - $41 = Put-call parity=$1.60+($45/1.01752)-$41
Put-call parity=$1.60+(44.22517)-$41
Put-call parity=$45.82517-$41
Put-call parity=$4.82
Therefore the price of a 6-month put on Tru-U stock with a strike price of $45 will be $4.82
The following summarized data (amounts in millions) are taken from the September 27, 2014, and September 28, 2013, comparative financial statements of Apple Inc., a manufacturer of mobile communication and media devices, personal computers, portable digital music players, and seller of a variety of related software, services, accessories, networking solutions, and third-party digital content and applications:(Amounts Expressed in Millions) For the Fiscal Years Ended September 27 and September 28, respectively: 2014 2013Net sales $108,400 $65,370 Costs of sales 64,580 39,690 Operating income 33,950 18,530 Net income $26,050 $14,160 At Year End: Assets Current assets: Cash and cash equivalents $9,580 $10,630 Short-term marketable securities 16,280 14,510 Accounts receivable, less allowancesof $84 and $99, respectively 5,520 5,670 Inventories 930 1,200 Deferred tax assets 2,170 1,780 Vendor nontrade receivables 6,500 4,560 Other current assets 4,680 3,590 Total current assets 45,660 41,940 Long-term marketable securities 85,770 25,540 Property, plant, and equipment, net 7,930 22,670 Goodwill 1,060 890 Acquired intangible assets, net 3,690 490 Other assets 3,710 2,410 Total assets $147,820 $93,940 Liabilities and Shareholdersâ Equity Current liabilities: Accounts payable $14,780 $12,160 Accrued expenses 9,400 5,870 Deferred revenue 4,250 3,130 Commercial paper 6,548 0 Total current liabilities 34,978 21,160 Deferred revenueânoncurrent 1,840 1,290 Long-term debt 23,452 17,760 Other noncurrent liabilities 10,260 5,680 Total liabilities 70,530 45,890 Shareholdersâ Equity: Common stock and additional paid-in capital, $0.00001 par value, 1,900,000 shares authorized; 929,430 and 916,130 shares issued and outstanding, respectively 13,490 10,810 Retained earnings 63,200 37,320 Accumulated other comprehensive income (loss) 600 (-80 )Total shareholdersâ equity 77,290 48,050 Total liabilities and shareholdersâ equity $147,820 $ 93,940 At September 29, 2012, total assets were $47,820 and total shareholdersâ equity was $31,800.a. Calculate Apple Inc.âs working capital, current ratio, and acid-test ratio at September 27, 2014, and September 28, 2013. (Round your ratio answers to 1 decimal place. Enter "Working capital" in million of dollars.)b. Calculate Appleâs ROE for the years ended September 27, 2014, and September 28, 2013. (Round your answers to 1 decimal place.)2014 2015roi=c. Calculate Appleâs ROI, showing margin and turnover, for the years ended September 27, 2014, and September 28, 2013. (Round "Turnover" answers to 2 decimal places. Round your percentage answers to 1 decimal place.)2014 2015roi=margin=turnover=
Answer:
Apple Inc.
a. Calculate Apple Inc.'s working capital, current ratio, and acid-test ratio at September 27, 2014, and September 28, 2013. (Round your ratio answers to 1 decimal place. Enter "Working capital" in million of dollars.)
September 2014:
a) Working Capital = Current Assets - Current Liabilities
= $45,660,000 - $34,978,000 = $10,682,000
b) Current Ratio = Current Assets / Current Liabilities
= $45,660 / $34,978 = 1.3 : 1
c) Acid-Test Ratio = Current Assets - Inventory / Current Liabilities
= $45,660 - 930 / $34,978 = 1.3 : 1
September 2013:
a) Working Capital = Current Assets - Current Liabilities
= $41,940,000 - $21,160,000 = $20,780,000
b) Current Ratio = Current Assets / Current Liabilities
= $41,940 / $21,160 = 2 : 1
c) Acid-Test Ratio Current Assets - Inventory / Current Liabilities
= $41,940 -1,200 / $21,160 = 1.9 : 1
b. Calculate Apple's ROE for the years ended September 27, 2014, and September 28, 2013. (Round your answers to 1 decimal place.)
September 2014
ROE = Net Income/Equity x 100 = $26,050/$77,290 x 100 = 33.7%
September 2013
ROE = Net Income/Equity x 100 = $14,160/$48,050 x 100 = 29.5%
c. Calculate Apple's ROI, showing margin and turnover, for the years ended September 27, 2014, and September 28, 2013. (Round "Turnover" answers to 2 decimal places. Round your percentage answers to 1 decimal place.)
September 2014
ROI = Margin x Turnover = Net Operating Income/Sales x Sales/Average Assets
= ($33,950/$108,400) x ($108,400/$120,880)
= 0.31 x 0.90
= 0.279 = 27.9%
Average Assets = $120,880 ($147,820 + 93,940) /2
September 2013
ROI = margin = turnover = Net Operating Income/Sales x Sales/Average Assets
= ($18,530/$65,370) x ($65,370/$70,880)
= 0.28 x 0.92
= 0.258 = 25.8%
Average Assets = $70,880 ($93,940 + 47,820) /2
Explanation:
Apple Inc. Income StatementFor the Fiscal Years Ended September 27 and September 28, respectively:
2014 2013
Net sales $108,400 $65,370
Costs of sales 64,580 39,690
Operating income 33,950 18,530
Net income $26,050 $14,160
Balance Sheet:
Assets
Current assets:
Cash and cash equivalents $9,580 $10,630
Short-term marketable securities 16,280 14,510
Accounts receivable, less allowances of $84 & $99 5,520 5,670
Inventories 930 1,200
Deferred tax assets 2,170 1,780
Vendor non-trade receivables 6,500 4,560
Other current assets 4,680 3,590
Total current assets 45,660 41,940
Long-term marketable securities 85,770 25,540
Property, plant, and equipment, net 7,930 22,670
Goodwill 1,060 890
Acquired intangible assets, net 3,690 490
Other assets 3,710 2,410
Total assets $147,820 $93,940
Liabilities and Shareholders Equity
Current liabilities:
Accounts payable $14,780 $12,160
Accrued expenses 9,400 5,870
Deferred revenue 4,250 3,130
Commercial paper 6,548 0
Total current liabilities 34,978 21,160
Deferred revenue: noncurrent 1,840 1,290
Long-term debt 23,452 17,760
Other noncurrent liabilities 10,260 5,680
Total liabilities 70,530 45,890
Shareholders' Equity:
Common stock and additional paid-in capital,$0.00001
par value, 1,900,000 shares authorized; 929,430 & 916,130
shares issued & outstanding, respectively 13,490 10,810
Retained earnings 63,200 37,320
Accumulated other comprehensive income (loss) 600 (-80)
Total shareholders' equity 77,290 48,050
Total liabilities & shareholders' equity $147,820 $ 93,940
At September 29, 2012, total assets were $47,820 and total shareholders' equity was $31,800.
b) Working Capital is the excess of current assets over current liabilities. It shows the amount of finance needed for meeting day-to-day operations of an entity. Working capital measures a company's liquidity, operational efficiency, and its short-term financial health. A healthy entity has some excess of current assets over current liabilities in order to continue to run the business operations in the short-run. Working capital can also be measured in relative terms with the use of ratios, especially the current ratio and the acid-test ratio.
c) ROE means Return on equity. It is a financial performance measure calculated by dividing net income by shareholders' equity. Since shareholders' equity is equal to a company's assets minus its debt, ROE is considered as the return on net assets. As with return on capital, a ROE measures management's ability to generate income from the equity available to it.
d) Return on Investment (ROI) is a financial performance measure which evaluates the efficiency of an investment or compares the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment's cost. As a financial metric, it measures the probability of gaining a return from an investment.
Clemens Inc. is considering a $100 million investment in a new line of soft drinks. However, $100 million is a huge investment for Clemens; if things turn bad, it could wipe out the company. A few senior managers have suggested
Answer: expand
Explanation:
Here's the complete question:
Clemens Inc. is considering a $100 million investment in a new line of soft drinks. However, $100 million is a huge investment for Clemens; if things turn bad, it could wipe out the company. A few senior managers have suggested a smaller investment of $20 million to see if the market is as strong as they hope it is. If demand is strong and the opportunity is still available, Clemens will increase its investment at a later date. This example describes a real option to:
a. abandon
b. expand
An expansion option is an option that gives the company that bought a real option, the right to take part in certain actions, and to also expand its operations in the future even with little or no cost. In real estate, this option gives opportunities to the tenants to increase the space of the premises where they live.
This is the idea portrayed in the question when few senior managers suggested a smaller investment of $20 million should be made at first and when the demand is strong and the opportunity is still available, Clemens will increase its investment at a later date.