Answer:
The answer is explained below
Explanation:
When a firm increases the average wage rate, the firm would employ fewer workers causing a movement up along the demand curve and a shift to the left of the labor demand curve. As wage increase, the firm production will reduce because of a decrease in number of staffs, the causes the number of machines needed for production to reduce causing the marginal product of labor to shift to the left. The labor demand is further reduced, the firm then employ less labor at a higher wage.
A corporation can earn 7.5% if it invests in municipal bonds. The corporation can also earn 8.30% (before-tax) by investing in preferred stock. Assume that the two investments have equal risk. What is the break-even corporate tax rate that makes the corporation indifferent between the two investments? Assume a 70% dividend exclusion for tax on dividends. (Do not round your intermediate answer and round your final answer to two decimal places.)
Answer:
32.13%
Explanation:
The computation of the break-even corporate tax is shown below:
As we know that
Municipal bond return = preferred stock return before tax × [1 - (1 - dividend exclusion) × Break even corporate tax]
7.5 = 8.30 × [1 - ( 1 - 0.70) × Break even corporate tax ]
7.5 ÷ 8.30 = 1 - 0.30 × Break even corporate tax
0.9036 = 1 - 0.30 × Break even corporate tax
0.30 × Break even corporate tax = 1 - 0.9036
So, Break even corporate tax is
= 0.0964 ÷ 0.30
= 32.13%
Basically we applied the above formula
Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2018. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of $4,600 on each September 30, beginning on September 30, 2021. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required: Calculate the amount at which Lincoln should record the note payable and corresponding purchases on September 30, 2018, assuming that an interest rate of 11% properly reflects the time value of money in this situation. Amount recorded
Answer:
Dr purchases $ 15,794.56
Cr notes payable $ 15,794.56
Explanation:
The present value of the annual payments of $4,600, starting in three years' time is computed as shown below:
PV of annual payments=$4600/(1+11%)^3+$4600/(1+11%)^4+$4600/(1+11%)^5+$4600/(1+11%)^6+$4600/(1+11%)^7+$4600/(1+11%)^8=$ 15,794.56
The amount of purchases and notes payable is $ 15,794.56
Jolene hired Lacy to find a buyer for her house. Adam was interested in buying the house. If both Jolene and Adam agree, Lacy, a real estate agent, may represent both parties.
A. True
B. False
Answer:
True
Explanation:
Lacy can represent both parties. If Lacy represents both parties this is known as dual agency.
As the “dual” agent Lacy handles all of the communications, paperwork, and negotiations between both parties, that is the buyer and seller who happens to be Jolene and Adam. She is supposed to remain neutral as the facilitator of the deal with no fiduciary duty to either side. Fiduciary duty is to uphold a client's interest in good faith an trust.
Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 39,000 for January, 59,000 for February, and 49,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows. Commissions 11 % of sales dollars Rent $ 20,000 per month Advertising 12 % of sales dollars Office salaries $ 74,000 per month Depreciation $ 49,000 per month Interest 11 % annually on a $270,000 note payable Tax rate 40 % Prepare a budgeted income statement for this first quarter. (Round your final answers to the nearest whole dollar.)
Answer:
Budgeted Income Statement For Quarter Ended March 31
Sales $3,675,000
Cost of goods sold $1,764,000
Gross profit $1,911,000
Operating expenses
Commissions expense $404,250
Rent expense $60,000
Advertising expense $441,000
Office salaries expense $222,000
Depreciation expense $147,000
Interest expense $ 7,425
Total operating expenses $1,281,675
Income before taxes $629,325
Income tax expense $251,730
Net income $ 377,595
Explanation:
Commissions 11 % of sales dollars
Rent $ 20,000 per month
Advertising 12 % of sales dollars
Office salaries $ 74,000 per month
Depreciation $ 49,000 per month
Interest 11 % annually on a $270,000 note payable
Tax rate 40%
Sales = Number of units for first quarter × price per unit
= (39,000 + 59,000 + 49,000) × $25
= $3,675,000
Cost of goods = (39,000 + 59,000 + 49,000) × $12
= $1,764,000
Commissions expense = 11 % of sales = 11% × $3,675,000 = $404,250
Advertising expense = 12 % of sales = 12% × $3,675,000 = $441,000
Interest expense = 11 % annually on a $270,000
= 11% × 270,000 × 3/12
= $ 7,425
Income = Gross profit - total operating expenses
= $1,911,000 - $1,281,675
= $629,325
Income tax expenses = 40% × $629,325 = $251,730
The Hudson Corporation makes an investment of $24,000 that provides the following cash flow: Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.Year Cash Flow
1 $ 13,000
2 13,000
3 4,000a. What is the net present value at an 8 percent discount rate? (Do not round intermediate calculations and round your answer to 2 decimal places.)b. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Answer:
NPV = $2,357.77
IRR = 14.31%
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
NPV and IRR can be calculated using a financial calculator.
Cash flow in year 0 = $-24,000
Cash flow each year in year 1 and 2 = $13,000
Cash flow in year 3 = 4,000
I = 8%
NPV = $2,357.77
IRR = 14.31%
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
To find the IRR using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
I hope my answer helps you
Hulston Appliances Co. wants to introduce a new digital display, laser driven iron to the market. The estimated unit sales price is $44.00. The required investment is $88,000. Unit sales are expected to be 8,800 and the minimum required rate of return on all investments is 10.00%. Compute the target cost per iron.
Answer:
Target cost per unit = $43 per unit
Explanation:
Target cost is the cost at which a product must be produced and sold to achieve a desired profit margin
Target cost =(Sales revenue - (ROI × capital) )/ No of units
Target cost =( (44 × 8,800) - (10%× $88,000 ) )/ 8,800 guns
Target cost per unit = (387200 - 8800 ) / 8,800 units= $43 per unit
Target cost per unit = $43 per unit
Spencer Company purchased a tractor at a cost of $360,000 on January 1, 2019. The tractor has an estimated salvage value of $60,000 and an estimated life of 8 years. If Spencer uses the straight-line method, what is the book value at January 1, 2023
Answer:
$210,000
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
( $360,000 - $60,000) / 8 = $37,500
Depreciation expense each year of the useful life would be $37,500.
Book value in 2023 = Cost of asset - accumulated deprecation
There are 4 years between January 1, 2019 and January 1, 2023.
Accumulated depreciation = $37,500 x 4 = $150,000
Book value = $360,000 - $150,000 = $210,000
I hope my answer helps you
A company wants to determine its reorder point (R). Demand is variable and they want to build a safety stock into R. The company wants to have a service level of 95 percent. If average daily demand is 8, lead time is 3 days and the standard deviation of demand during lead time is 2, what is the desired value of R
Answer: 27.28 units
Explanation:
From the question, we are told that a company wants to determine its reorder point (R) and that demand is variable and they want to build a safety stock into R. We have also been given the information that the company wants to have a service level of 95 percent and that average daily demand is 8, lead time is 3 days and the standard deviation of demand during lead time is 2.
It should be noted that a service level of 95% will have a desired z score of 1.64. To get the desired value of R, we multiply the average daily demand by the number of the days in lead time and then add to the multiplication between the standard deviation during the lead time and the desired z score. Mathematically, this will be expressed as:
= (8 × 3) + (2 × 1.64)
= 24 + 3.28
= 27.28
Therefore, the desired value of R = 27.28 units
Suppose we hold a forward contract on a stock with expiration 66 months from now. We entered into this contract 66 months ago so that when we entered into the contract, the expiration was T = 1T=1 year. The stock price$ 66 months ago was S_0 = 100S 0 =100, the current stock price is 125125 and the current interest rate is r = 10\%r=10% compounded semi-annually. (This is the same rate that prevailed 66 months ago.) What is the current value of our forward contract? Please submit your answer in dollars rounded to one decimal place so if your answer is 42.67842.678 then you should submit an answer of 42.742.7.
Answer:
The current value of our forward contract is $105.1
Explanation:
According to the given data we have the following:
Spot - 6 months ago=$ 100
Spot - Current=125
Interest rate= 10%
Time=12 months
Therefore, to calculate the current value of our forward contract we would have to make the following calculation:
Forward Price=Spot price*e^(rt)
=$100*e^(0.1*0.5)
Forward Price=$105.1
The current value of our forward contract is $105.1
When a bank has excess reserves, it can choose to turn its reserves into loans for consumers and businesses. Generally speaking, when banks increase the number of loans available, interest rates will
Answer:
reduce
Explanation:
Note that the bank has excess funds and thus wants to increase the number of available loans which in turn increases investment in the economy. For this strategy to work, the bank will reduce the interest rate it places on loans in order to entice its customers to procure the loans it offers.
For example, a bank that usually gives out 150 loans at 15% Interest rate may because of new banking policy and excess reserve decide to increase its loan capacity to around 300 loans per annum at an interest rate of 10%.
Bill Phillips is developing a Monte Carlo simulation to value a complex and thinly traded security. Phillips wants to model one input variable to have negative skewness and a second input variable to have positive excess kurtosis. In a Monte Carlo simulation, Phillips can appropriately use:_________
Answer: Both of them
Explanation:
The Monte Carlo Simulation is a forecasting technique that allows one to find out the probability of occurence of different outcomes which may be difficult to come up with because there are multiple random variables involved.
Monte Carlo simulations are used in many diverse fields such as Finance, Engineering and Science.
As earlier mentioned, this simulation allows for multiple random variables so Phillips can use it to model both the variables to have different characteristics.
Peanuts are an input in the production of peanut butter. If a decrease in the supply of peanuts increases the price of peanuts, what will happen to the equilibrium price and quantity in the peanut butter market?
Answer:
Equilibrium price would rise
Equilibrium quantity would fall
Explanation:
If the supply of peanuts falls, it would lead to a rise in the price of peanuts because the demand for peanuts woild exceed its supply.
The rise in price would increase the cost of production of peanut butter because peanut is an input in the production of peanut butter. This rise in cost would discourage suppliers and supply of peanut butter would fall. As a result equilibrium quantity would fall. As a result of a fall in supply of peanut butter, demand would exceed supply and equilibrium price would rise.
I hope my answer helps you
Answer:
^
Explanation:
Ms. Parker would like to have $99.000 buy a new car in 8 yearsTo accumulate $99,000 in years, how much should she invest monthly in a sinking tund with 3% Interest compounded monthly?
Answer:
$1,161.23
Explanation:
For computing the monthly payment we need to apply the PMT formula i.e to be shown in the attachment below:
Given that,
Present value = $99,000
Future value or Face value = $0
RATE = 3% ÷ 12 months = 0.25
NPER = 8 years × 12 months = 96 months
The formula is shown below:
= PMT(RATE;NPER;-PV;FV;type)
The present value come in negative
So, after applying the above formula, the monthly payment is $1,161.23
At an open house the listing agent begins giving advice to a prospective buyer regarding how much to offer for the house, without explaining that she is a representative of the sellers. Which of the following statements is NOT true?
a. the agent is not acting in accordance with her agency status
b. the agent is acting as an undisclosed dual agent
c. the agent has breached fiduciary duties to both parties
d. the agent has not violated any duties, because she is not performing real estate services for the buyers
Answer:
d. The agent has not violated any duties, because she is not performing real estate services for the buyers
Explanation:
Here, at the open house, the agent, without proper introduction and without explaining that she represents the seller, started giving advice to a prospective buyer regarding the amount to offer for the house. By offering advice to the buyer and not disclosing who she represents, the agent is now acting as an undisclosed dual agent, also she has breached the loyalty duties to both parties. The agent is also not acting in accordance with her agency status.
Therefore the incorrect option is option D.) The agent has not violated any duties, because she is not performing real estate services for the buyers
To calculate the market demand curve from individual demand curves, we: Group of answer choices vertically sum the individual demand curves. horizontally sum the individual demand curves. exponentiate the individual demand curves. add up the prices of the individual demand curves, holding the quantities constant.
Answer:
horizontally sum the individual demand curves.
Explanation:
You own a portfolio equally invested in a risk-free asset and two stocks (If one of the stocks has a beta of 0.66 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio? (Hint: Remember that the market has a Beta=1; also remember that equally invested means that each asset has the same weight- since there are 3 assets, each asset's weight is 1/3 or 0.3333). Enter the answer with 4 decimals (e.g. 1.1234)
Answer:
The beta of the other stock or stock B is 2.34
Explanation:
The beta of the portfolio is the weighted average of the individual stock betas that form up the portfolio. To calculate the beta for the portfolio, we use the following formula,
Portfolio beta = wA * Beta of A + wB * Beta of B + ... + wN * Beta of N
Where,
w represents the weight of each stock in the portfolioAs the portfolio is equally as risky as the market, the portfolio beta is assumed to be the same as that of the market and the beta is 1.
The beta is the measure of systematic risk and a risk free asset does not have risk and has a beta of 0.
To calculate the Beta of stock B in the portfolio, we simply put the available values in the formula for the portfolio beta,
1 = 1/3 * 0 + 1/3 * 0.66 + 1/3 * Beta of B
1 = 0 + 0.22 + 1/3 * Beta of B
1 - 0.22 = 1/3 * Beta of B
0.78 * 3 = 1 * Beta of B
2.34 = Beta of B
Thus, the beta of the other stock or stock B is 2.34
As the Toronto-based Four Seasons hotel chain remodels an existing hotel in Mumbai to bring it to the five-star hotels exacting standards, it is building a magnificent revolving restaurant overlooking the Arabian Sea at World. The restaurant structure is an example of a(n):
Answer:
Horizontal expansion model
Explanation:
Renovation in Horizontal expansion model is one in which current business is upgraded with some new features to add value and another branch is opened to serve its customers. The customers needs are kept in mind before going for a renovation process.
Change all of the numbers in the data area of your worksheet so that it looks like this:
Data
4 Unit sales 10,000 units
5 Selling price per unit $20 per unit
6 Variable expenses per unit $8 per unit
7 Fixed expenses $90,000
A) What is the break-even in dollar sales?
B) What is the margin of safety percentage?
C) What is the degree of operating leverage?
1. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.
2. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this:
Data
4 Unit sales 12,000 units
5 Selling price per unit $20 per unit
6 Variable expenses per unit $8 per unit
7 Fixed expenses $90,000
1. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.
2. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this:
A. What is net operating income?
B. By what percentage did the net operating income increase?
Answer:
A) What is the break-even in dollar sales?
$150,000B) What is the margin of safety percentage?
25%C) What is the degree of operating leverage?
41. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.
if unit sales increase by 20%, then profits should increase by 80%2. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20%
A. What is net operating income?
(10,000 x 1.2 x $20) - (10,000 x 1.2 x $8) - $90,000 = $240,000 - $96,000 - $90,000 = $54,000B. By what percentage did the net operating income increase?
net operating income increased from $30,000 to $54,000 (an 80% increase)Explanation:
selling price $20
variable costs $8
contribution margin $12
break even point = $90,000 / $12 = 7,500 x $20 = $150,000
margin of safety = (current sales - break even) / current sales = $50,000 / $200,000 = 25%
degree of operating leverage = (quantity x contribution margin) / [(quantity x contribution margin) - fixed costs] = (10,000 x $12) / ($120,000 - $90,000) = $120,000 / $30,000 = 4
or contribution margin / net profits = $120,000 / $30,00 = 4
A company is considering constructing a plant to manufacture a proposed new product. The land costs $300,000, the building costs $600,000, the equipment costs $250,000, and $100,000 additional working capital is required. It is expected that the product will result in sales of $750,000 per year for 10 years, at which time the land can be sold for $400,000, the building for $350,000, and the equipment for $50,000. All of the working capital would be recovered at the EOY 10. The annual expenses for labor, materials, and all other items are estimated to total $475,000. If the company requires a MARR of 15% per year on projects of comparable risk, determine if it should invest in the new product line. Use the AW method. (Sullivan, 20180327, p. 234) Sullivan, W. G., Wicks, E. M., Koelling, C. P. (20180327). Engineering Economy, 17th Edition. [[VitalSource Bookshelf version]]. Retrieved from vbk://9780134838229 Always check citation for accuracy before use.
Answer:
$327,909.14
Explanation:
Calculation to determine if it should invest in the new product line.
First step
The Investment cost will be:
Land costs $300,000
Building costs $600,000
Equipment costs $250,000
Additional working capital $100,000
=$1,250,000
Annual revenue $750,000
Annual expenses$475,000
Market value:
$400,000 +$350,000 + $50,000 = $80,0000
N: 10 year
MARR: 15% per year
Using PW method
-$1250000 + ($750,000 – $475,000) (P/A, 15%, 10) +$ 80000(P/F, 15%, 10)
-$1250000-$275,000((1+15)^¹⁰−1/15(1+15)^¹⁰+$3000
Hence,
=-$1,250,000 – $275,000(5.0188) + $3000(0.2472)
= $327,909.14
The accounting department prepares a bank reconciliation at the end of each month. The following Table Dashboard is provided to assist in our reconciliation for the month of November.
Bank Balance is $15000 at 31th Oct.. Bank Balance is $9700 at 15th November. Bank Balance is $16028 at 30th November.
Book Balance is $15000 at 31th Oct. Book Balance is $9100 at 15th November. Book Balance is $16127 at 30th November.
Cash interest received on Bank Balance: Augugst $31, September $24, October $22 November $37.
Total Deposits in Transit November 30: $250
Outstanding Checks at Nov.30: Check#1203 : $100 Check#1278 : $78.
November Bank Fees: Check Printing Fees: $35, Service Fees: $15, Wire Transfer Fees: $14.
1. Determine the company's (a) bank balance and (b) book balance on November 30 before the bank reconciliation.
2. What is the amount of cash interest received in the month of November?
3. Which of the bank fees is the largest of those charged to the company in November?
Answer: Please see explanation for answer
Explanation:
Bank Reconciliation statement for the month of November
Balance from bank statement $16,028
Deposit in transit +250
Outstanding checks
check1203 -100
check 1278 -78
Total outstanding checks - 178
Adjusted cash balance $16,100
Balance from Company account $16,127
Interest earned $37
Bank fees
Check Printing Fees $35,
Service Fees: $15,
Wire Transfer Fees $14
Total Bank fees -64
Adjusted cash balance $16,100
1.The company's
(a) bank balance on November 30 before the bank reconciliation= $16,028
(b) book balance on November 30 before the bank reconciliation =$16,127
2. Amount of cash interest received in the month of November = $37.
3. Bank fees charged in November is given as
Check Printing Fees: $35, Service Fees: $15, Wire Transfer Fees: $14.
The largest here is the Check Printing Fees at $35
On February 22, Brett Corporation acquired 250 shares of its $3 par value common stock for $26 each. On March 15, the company resold 66 shares for $29 each. What is true of the entry for reselling the shares
Answer: Credit Additional Paid in Capital $198
Explanation:
Brett Corporation reissued the Treasury Stock at $29 which was $3 higher than the amount they had repurchased it for.
When stock is sold for a price higher or lower than they are worth, the balance goes to the Additional Paid-in Capital account. If it is sold higher, the balance is Credited to the Additional Paid-in Capital account and if it is sold for lower than it is worth, it is debited.
The Balance here is,
= $3 * 66 resold shares
= $198
This $198 will therefore be credited to the Additional Paid-in Capital account.
The government establishes an effective price ceiling for a gallon of milk. What will be the result of this ceiling? a) It will create a surplus b) It will create a shortage c) It will have no effect d) It will cause an increase in demand e) it will cause an increase in supply
Answer:
D
Explanation:
Because price ceiling is put by the government so that certain commodities could still be available at a reasonable price for many
Answer: D
Explanation:
Selected accounts with some amounts omitted are as follows Work in Process Oct. 1 Balance 23,900 Oct. 31 Finished goods X 31 Direct materials 91,000 31 Direct labor 151,900 31 Factory overhead X Finished Goods Oct. 1 Balance 14,700 31 Goods finished 340,600 If the balance of Work in Process on October 31 is $215,100, what was the amount of factory overhead applied in October
Answer:
the amount of factory overhead applied in October is $274,200
Explanation:
First calculate the amount transferred to Finished Goods Account from the Work in Process Account.
Finished Goods T - Account
Debit
Opening Balance $14,700
Transferred from Work In Process Account $325,900
Totals $340,600
Credit
Closing Balance $340,600
Totals $340,600
Prepare the Work in Process T - Account to determine the balance that is Overhead Applied.
Work in Process T - Account
Debits
Opening Balance $23,900
Direct materials $91,000
Direct labor $151,900
Overheads (balancing figure) $274,200
Totals $541,000
Credits
Closing Balance $215,100
Transfer to Finished Goods $325,900
Totals $541,000
Conclusion :
the amount of factory overhead applied in October is $274,200
Inventory Write-Down The following information is taken from Aden Company's records: Product Group Units Cost/Unit Market/Unit A 1 600 $1.00 $0.80 B 1 250 1.50 1.55 C 2 150 5.00 5.25 D 2 100 6.50 6.40 E 3 80 25.00 24.60 Required: What is the correct inventory value if the company applies the LCNRV rule to each of the following? If required, round your answers to the nearest cent.
Answer:
$4,213
Explanation:
Product Group Units Cost/Unit Market/Unit Total Value
A 1 600 $1.00 $0.80 $480
B 1 250 $1.50 $1.55 $375
C 2 150 $5.00 $5.25 $750
D 2 100 $6.50 $6.40 $640
E 3 80 $25.00 $24.60 $1,968
total $4,213
when you are using the lower of cost or net realizable value to determine the value of your inventory, you should calculate the inventory's value using the lowest cost between purchase cost and market value.
In each of the following examples, identify whether the individual is experiencing cyclical unemployment, frictional unemployment, structural unemployment, or no unemployment.
a. Eduardo has recently moved to a new city with his wife who was offered a great job there. He is trying to find a position in the same industry he worked in before relocating.
b. Derek worked for a large telecommunications firm that went bankrupt last year due to a recent recession. He has since tried to find work with one of the firm's competitors, but good jobs are currently hard to come by.
c. Drew lost his job at a car manufacturer last year. He spent 6 months applying for every job possible before giving up 2 months ago. He now spends his day playing Xbox.
d. Paula has 20 years of experience in manufacturing. Her employer, and many other manufacturing firms, recently closed their U.S. plants. She would like to find a similar job but is unable to find anything that utilizes her skills.
e. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is currently unable to extend her hours.
f. Tyrell just graduated from college with a business degree. He is currently looking for a job in banking in the major city he just moved to.
g. Mike is a contractor who has been unable to find work, since most businesses are delaying or canceling their construction plans due to economic uncertainty in the coming year.
h. Meg used to own and run her own bookstore. Her sales declined due to competition from online retailers. She has not been able to find any work related to her skills in the diminishing retail industry for books.
Answer:
a. Eduardo has recently moved to a new city with his wife who was offered a great job there. He is trying to find a position in the same industry he worked in before relocating. Voluntary Unemployment
b. Derek worked for a large telecommunications firm that went bankrupt last year due to a recent recession. He has since tried to find work with one of the firm's competitors, but good jobs are currently hard to come by.
Cyclical Unemployment.
c. Drew lost his job at a car manufacturer last year. He spent 6 months applying for every job possible before giving up 2 months ago. He now spends his day playing Xbox.
Voluntary Unemployment
d. Paula has 20 years of experience in manufacturing. Her employer, and many other manufacturing firms, recently closed their U.S. plants. She would like to find a similar job but is unable to find anything that utilizes her skills.
Structural Unemployment
e.Katherine works part-time at a small retail store. She would like to work full-time, but her employer is currently unable to extend her hours.
No Unemployment.
f. Tyrell just graduated from college with a business degree. He is currently looking for a job in banking in the major city he just moved to.
No Unemployment
g. Mike is a contractor who has been unable to find work, since most businesses are delaying or canceling their construction plans due to economic uncertainty in the coming year.
Structural Unemployment
h. Meg used to own and run her own bookstore. Her sales declined due to competition from online retailers. She has not been able to find any work related to her skills in the diminishing retail industry for books.
Structural Unemployment
Cheers!
Consider the following case of Free Spirit Industries Inc :
Suppose Free Spirit Industries Inc. is considering a project that will require $400,000 in assets:
• The company is small, so it is exempt from the interest deduction limitation under the new tax law.
• The project is expected to produce earnings before interest and taxes (EBIT) of $45,000.
• Common equity outstanding will be 10,000 shares.
• The company incurs a tax rate of 25%."
If the project is financed using 100% equity capital, then Free Spirit Industries Inc.'s return on equity (ROE) on the project will be____________. In addition, Free Spirit's earnings per share (EPs) will be____________
Alternatively, Free Spirit Industries Inc.'s CFO is also considering financing the project with 50% debt and 50% equity capital. The interest rate on the company's debt will be 12%. Because the company will finance only 50% of the project with equity, it will have only 12, 500 shares outstanding. Free Spirit Industries Inc.'s ROE and the company's EPS will be_____________ if management decides to finance the project with 50% debt and 50% equity.
Typically, the use of financial average will make the probability distribution of ROIC:__________
Answer:
Return on equity (ROE) on the project will be 8.43%. In addition, Free Spirit's earnings per share (EPs) will be $3.375 per share
ROE and the company's EPS will be 7.875% if management decides to finance the project with 50% debt and 50% equity.
The use of financial average will make the probability distribution of ROIC $4.5
Explanation:
Calculation of When the company financed with 100% equity
Using this formula
ROE = (EBIT – Interest)(1-Tax Rate)/Equity
Let plug in the formula
When financed with 100% equity,
ROE = 45,000(1-25%)/400,000
ROE=45,000(0.75)/400,000
ROE=33,750/400,000
ROE=8.43
Calculation for the Free Spirit's earnings per share (EPs)
EPS = (45,000)(1-25%)/10,000
EPS=45,000*0.75/10,000
EPS=33,750/10,000
= $3.375 per share
Calculation of When the company financed with 50% Debt
50%×400,000=200,00
ROE = (45,000 – 200,000*12%)(1-25%)/200,000
ROE=21,000×0.75/200,000
ROE=15,750/200,000
ROE=
= 7.875%
EPS = Net Income/Outstanding shares
EPS=45,000/10,000
EPS.=4.5 per share
Hence,7.875 % and $4.5 respectively
Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 26, it paid the full amount due. The amount of the cash paid on August 26 equals:
Answer:
The journal entries to record the purchase and payment of the merchandise should be:
August 7, merchandise purchased, terms 1/10, n/30
Dr Merchandise inventory 9,750
Cr Accounts payable 9,750
August 11, $1,500 worth of merchandise is returned
Dr Accounts payable 1,500
Cr Merchandise inventory 1,500
August 26, invoice is paid at full amount since discount period expired
Dr Accounts payable 8,250
Cr Cash 8,250
If a company fails to adjust for accrued revenues:______. a. assets will be understated and revenues will be understated. b. liabilities will be understated and revenues will be understated. c. liabilities will be overstated and revenues will be understated. d. assets will be overstated and revenues will be understated.
Answer:
a. assets will be understated and revenues will be understated
Explanation:
Revenue accrued is recorded as follows :
Account Receivable (debit)
Sales Revenue (credit)
Thus omission of this adjustment would result in Assets (Accounts Receivables) being understated and Revenues being understated as well.
Your company is upgrading the breakroom and kitchen. It is going to include an expresso machine, a fridge with compartments for each employee, a sink, microwave, toaster oven, tables chairs, a rock wall, snacks for everyone, and maybe some other bells and whistles. Your managers think that by updating this area employees will not take as long of lunches. They understand this purchase will be at a cost. You are tasked with considering two different options and presenting them to management. Use a 5% interest rate. Walmart Kit Target First Cost $40,000 $65,000Annual Maintenance Cost $10,000 $12,000Salvage Value $12,000 $25,000Life Years 3 6 a. Using NPW (Net Present Worth Analysis) analysis determine which kitchen kit you should chooseb. Using EUAW (Equivalent Uniform Annual Worth) analysis determine which kitchen kit you should choose. C. You really want the Target kit because it looks nicer and has more bells and whistles. You are willing to keep these products around for longer and therefore extend the lives of these products. Perform the analysis to show that the Target option is the better choice. d. Now from your analysis in part b think about how ethical presenting this information to management would be. Write 2-3 sentences about how you would present this information in a way that showed your bias. You will be graded on your ability to consider two options in an ethical comparison and how you perceive your bias.
Answer:
1. In a Year 20,367 20,017
2. In a Year 21,333 21,917
3. In the case of NPW analysis Selected Target is best option because it is the better and cheaper investment while EUAM analysis states Walmart kit is better option,
4.Target is the best option because the cost difference is only around $600 which will last for 6 Years while in walmart case we will need to replace all the furniture in 3 Years .
Explanation:
1. Using NPW Analysis
Walmart Kit Target
Intial Cost 40000 65000
AMC 10000 12000
Salvage Value 12000 25000
Life Years 3 6
Total Cost
Intial Cost 40000 65000
Less Salvage 12000 25000
Balance 28000 40000
5% Interest 6000 19500
AMC PV 2.71 5.05
Amc 27100 60600
Total Cost 61100 120100
In a Year 20,367 20,017
2. Using EUAW Analysis
Walmart Kit
Target
Intial Cost 40000 65000
AMC 10000 12000
Salvage Value 12000 25000
Life Years 3 6
Total Cost
Intial Cost 40000 65000
Less Salvage 12000 25000
Balance 28000 40000
5% Interest 6000 19500
AMC 30000 72000
Total 64000 131500
In a Year 21,333 21,917
In the case of NPW analysis Selected Target is best option because it is the better and cheaper investment while EUAM analysis states Walmart kit is better option,
Target is the best option because the cost difference is only around $600 which will last for 6 Years while in walmart case we will need to replace all the furniture in 3 Years .
Hence Target product will be the best option we would advice the management to go for.
The following refers to units processed by a breakfast cereal maker in August. Compute the total equivalent units of production with respect to conversion for August using the weighted-average inventory method. Units of Product Percent of Conversion Added Beginning Work in Process 230,000 60 % Units started 570,000 100 % Units completed 620,000 100 % Ending Work in Process 180,000 70 %
Answer:
Total Equivalent Units Conversion 746,000
Explanation:
Breakfast Cereal Maker
Weighted-Average Inventory Method
Total Equivalent Units
Units Conversion Equivalent Units
Particulars %
Units completed 620,000 100 % 620,000
Add Ending WIP 180,000 70 % 126,000
Total Equivalent Units 746,000
The total Equivalent units are obtained by adding the percent of the units in the ending work in process inventory to the units completed and transferred out. This is the average weighted method of finding the equivalent units.
As only conversion is required we found out the conversion units only.