The question is incomplete:
Gaggle, Inc. and Microhard, Inc., both large publicly held corporations, form a joint venture to develop a new smartphone operating system. Large corporations like this usually form a joint venture for:
-A single transaction or project
-A stated duration of not more than one year
-An implied duration of not more than six months
-A perpetual existence
Answer:
-A single transaction or project
Explanation:
A joint venture is an agreement in which two or more companies share their resources to achieve a specific objective but each business stays as an independent entity. According to this, the answer is that large corporations like this usually form a joint venture for a single transaction or project as the companies maintain their independence and agree to work together for a specific goal or task.
The other options are not right because joint ventures don't have a specifc duration, it depends on the terms establish by the parties and the joint venture will exist for the period of time determined on the agreement.
Aloha Inc. has 8 percent coupon bonds on the market that have 11 years left to maturity. If the YTM on these bonds is 10.22 percent, what is the current bond price
Answer:
The answer is $85.73
Explanation:
N(Number of periods) = 11years
I/Y(Yield to maturity) = 10.22 percent
PV(present value or market price) = ?
PMT( coupon payment) = $8
FV( Future value or par value) = $10
We are using a Financial calculator for this.
N= 11; I/Y = 10.22 ; PMT = 8; FV= $100; CPT PV= -85.73
Therefore, the market price of the bond is $85.73
The effects of inflation
Suppose Specific Automakers is considering signing a long-term contract with the union representing its workers. Specific Automakers and the union both agree that real wages should increase by 3%. Inflation is expected to be 6%, so they agree on a 9% nominal wage increase.
Now, suppose inflation turns out to be lower than expected, coming in at 5%. This would the _______union and _______ Specific Automakers because the real wage increase would now be _______.
Because of uncertainty about future inflation, the union devotes a large quantity of resources to monitoring inflation indicators in order to maximize its financial position.
This illustrates the fact that:
A. Inflation harms lenders and helps borrowers
B. Inflation obscures relative price changes
C. Variable inflation is associated with high transaction costs
Answer:
Benefit
Harm
Higher
C. Variable inflation is associated with high transaction costs
Explanation:
Inflation is a persistent rise in general price levels.
The increase in income was 9% based on the assumption that inflation would be 6%.
It turns out that inflation was 5%. The increase in income should have been 8% instead of 9%.
The union members end up earning more than they ought to, so they benefit. The company pays more than they ought to to workers, so they are in a disadvantage.
The union members spend a lot to monitor inflation. This is a transaction cost .
I hope my answer helps you
An entrepreneur is looking to open a restaurant in a town with only one other restaurant. The incumbent restaurant is very successful with high profits. Which of the following business strategies are most likely to allow the entrepreneur to start a profitable restaurant? Select all that apply. Offer the most popular dish served by the incumbent restaurant. Open the restaurant location near the incumbent restaurant. Use new technology and business practices to cut variable costs lower than the incumbent restaurant. Specialize in a type of cuisine not served by other restaurants in the region.
Answer:
Options C and D would be the correct options.
Explanation:
The technological innovation will decrease costs and raise income, even though the other establishment launches a trade dispute, it seems to be profitable. Specializing in some other quality of diet creates significant consumers and that could stick to something like a restaurant that will boost the product revenue and profit.Fining the least expensive could begin price competition and that it's necessary to play on quality to make costing fewer costly. The upscale steakhouse may have cheaper price capacities than that of the new ones. Specializing in almost the same product will boost rivalry, although with the old store, that the very first leading benefit is.Many alternatives have no relation to the given instance. Therefore the answer to the above seems to be the right one.
Which one of the following statements is correct?
a. Book values should always be given precedence over market values.
b. Financial statements are frequently the basis used for performance evaluations.
c. Historical information has no value when predicting the future.
d. Potential lenders place little value on financial statement information.
e. Reviewing financial information over time has very limited value.
Answer:
b. Financial statements are frequently the basis used for performance evaluations.
Explanation:
The financial statements are the accounting reports of an organization, through these documents it is possible to analyze what is the financial situation of a company in the internal and external environment, what are its greatest strengths and weaknesses.
They are instruments for evaluating organizational performance because they provide essential information about the general accounting situation of a company, which ensures greater reliability for a manager to make a decision directed to correct a problem or strategic implementation to achieve a certain result. It also allows stakeholders to analyze essential data and information when deciding to invest or do business with a particular company.
ou wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $32,000 for 25 years after retirement. During the period before retirement you can earn 8 percent annually, while after retirement you can earn 10 percent on your money. What annual contributions to the retirement fund will allow you to receive the $32,000 annuity
Answer:
Annual contributions to the retirement fund will be $6,347.31
Explanation:
First find the Present Value of the Annuity giving payments of $32,000 annually for 25 years at the rate of 10%.
Using a Financial Calculator enter the following data
PMT = $32,000
P/y = 1
N = 25
R = 10%
FV = 0
Thus, the Present Value, PV is $290,465.28
At the time of retirement (in 20 years time) the Value of the annuity fund is $290,465.28.
Next we need to find the Payments PMT to reach this amount in 20 years time at the interest rate of 8%
Using a Financial Calculator enter the following data
FV = $290,465.28
N = 20
R = 8 %
PV = $0
Thus, the Payments, PMT required will be $6,347.3080
Conclusion :
Annual contributions to the retirement fund will be $6,347.31
During the coming year, Colgate expects an increase in variable manufacturing costs of $8 per unit and in fixed manufacturing costs of $35,000. (a) If sales for 2015 remain at 13,000 units, what price should Colgate charge to obtain the same profit as last year? Round to the nearest cent.
Answer: $130.69
Explanation:
Colgate made a Net Income of $167,000 in 2014 and sold 13,000 units.
Variable costs were $663,000 and fixed costs were $730,000.
Variable costs are to increase by $8 per unit and fixed costs by $35,000.
Price to sell at to maintain same profit as last year will be x
167,000 = 13,000x - (Old + New Variable cost) - ( Old + New Fixed Cost)
167,000 = 13,000x - (663,000 + (8* 13,000)) - ( 730,000 + 35,000)
167,000 = 13,000x - 767,000 - 765,000
167,000 = 13,000x - 1,532,000
13,000x = 1,699,000
x = 1,699,000/13,000
x = $130.69
On June 30, 2021, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $40,000 on March 31, 2022. The fair value of the merchandise exchanged is $37,600. Esquire views the financing component of this contract as significant. Required: 1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), any December 31, 2021 interest accrual, and the March 31, 2022 collection. 2. What is the effective interest rate on the note
Answer:
1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), any December 31, 2021 interest accrual, and the March 31, 2022 collection.
June 30, 2021, merchandise sold in exchange for note receivable
Dr Notes receivable 40,000
Cr Sales revenue 37,600
Cr Unearned interest revenue 2,400
December 31, 2021, accrued interests (= $2,400 x 6/9)
Dr Unearned interest revenue 1,600
Cr Interest revenue 1,600
March 31, 2022, note receivable is collected
Dr Cash 40,000
Cr Note receivable 40,000
Dr Unearned interest revenue 800
Cr Interest revenue 800
2. What is the effective interest rate on the note
effective period rate = $2,400 / $37,600 = 6.3829% (for 9 months)
annual rate = 6.3829% x 12/9 = 8.51%
You manage an equity fund with an expected risk premium of 9% and a standard deviation of 12%. The rate on Treasury bills is 4%. Your client chooses to invest $50,000 of her portfolio in your equity fund and $40,000 in a T-bill money market fund. What is the reward-to-volatility (Sharpe) ratio for the equity fund?
Answer:
0.75%
Explanation:
Computation for reward-to-volatility (Sharpe) ratio for the equity fund
Using this formula
Reward to volatility ratio =Portfolio risk premium÷Standard deviation of portfolio excess return
Where ,
Portfolio risk premium =9%
Standard deviation of portfolio excess return=12%
Let plug in the formula
Reward to volatility ratio =0.09/0.12
Reward to volatility ratio =0.75%
Therefore reward-to-volatility (Sharpe) ratio for the equity fund will be 0.75%
A portfolio consists of $15,200 in Stock M and $23,400 invested in Stock N. The expected return on these stocks is 8.90 percent and 12.50 percent, respectively. What is the expected return on the portfolio
Answer:
Portfolio return = 11.08%
Explanation:
The expected return on the portfolio is the weighted average return of all the different stocks making up the portfolio. The weight of the individual stock would be the relative amount invested in each stock as a proportion of the total fund invested.
The expected return can be determined as follows
Weighted of stock A= 15,200/(15200+23400)=0.39
Weight of stock B = 23.400/((15200+23400)= 0.61
Expected return on portfolio = (0.39 ×8.90% ) + (0.61*12.50%)= 11.08 %
Presented here are long-term liability items for Skysong, Inc. on December 31, 2017.
Bonds payable (due 2021) $920,000
Notes payable (due 2019) 84,000
Discount on bonds payable 23,000
Prepare the long-term liabilities section of the balance sheet for Skysong, Inc.
Answer:
Skysong, Inc.
Balance Sheet (Partial)
As on December 31, 2017.
Liabilities
Long Term Liabilities
Bonds payable (due 2021) $920,000
Notes payable (due 2019) $84,000
Discount on bonds payable ($23,000)
Total Long Term Liabilities $981,000
Explanation:
Long term liabilities are all those liabilities that will be paid after one year's time. As Bond Payable is due in 2021 and needs to be paid after 4 years it is classified as long term liabilities. Note Payable is also due in 2019 and needs to be paid after 2 years it is also classified as long term liabilities.
The rest of the world sees problems; Martin sees opportunity. He made money in real estate and lost it when the recession hit. But soon he found another way to earn a living and has become wealthy again. Martin is high in ________.
Answer:
Resilience
Explanation:
In psychology, the term resilience refers to the process of coping with trauma, tragedy or adversity and adapt to it. But it doesn't only refer to the process of adaptation but actually it involves personal growth. In other words, the person grows thanks to the adversity, the person also sees problems as an opportunity to learn and become a better person.
In this example, Martin sees opportunity where the rest of the world sees problems, he made money and lost it but he's wealthy again. We can see that Marty has coped with adversity (the recession) but he adapted to it and he found a way to go through that and earn a living and become wealthy again, thus, this is an example of high resilience.
The company that you manage has invested $5 million in developing a new product, but the development is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to $1.5 million. If it would cost $2 million to finish development and make the product, you go ahead and do so. The most you should pay to complete development is $_______million.
Answer:
You should pay "$3" million to complete the development.
Explanation:
The possibility you've already plunged $5 million is therefore no longer important to either calculation, although this money disappears. All counts now would be the small chance of gaining money. When you are investing around $1 million and are able to produce $3 million in funding, users earn $2 million in gross income, so clients will.You seem entitled to say that perhaps a gross of $3 million has indeed been wasted to the venture, and you really should not even have begun it. That would be real, however, if you ever don't invest about $1 million extra you apparently can't have any profits and total damages will have been $5 million.And therefore what counts has never been the overall income, but the incremental benefit that you will receive. In reality, you'd pay approximately $3 million to feel a sense of achievement, not much more, and towards the bottom, you won't increase income.
The demand in a market for smartphones has increased, causing prices to
rise. What effect will this likely have on the supply of smartphones?
A. The supply curve will shift up according to the increased demand.
B. Supply will decrease, as always happens when price increases.
C. The supply point will increase by moving along the existing supply
curve, and the entire curve will shift upwards as well.
D. The supply point will increase by moving along the existing supply
curve, the curve itself will not shift.
Answer: D. The supply point will increase by moving along the existing supply curve, the curve itself will not shift.
The demand in a market for smartphones has increased, causing prices to The supply point will increase by moving along the existing supply curve, the curve itself will not shift. Hence, the correct option is D.
What is Supply curve?Supply curve is the curve which is a graphic representation of the relationship among the quantity of product and the price of the products, which the seller is willing to supply.
Supply curve on the right means the increase in the supply of the product in market.
So, the shift to the supply curve to the right for the smartphones, will result from increase in consumer income, as the income of the customer rises, will result in outwards shift (right) and when goods are normal goods.
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1. Which of the following measures is an evaluation of a firm's ability to pay current liabilities?
A. Acid-test ratio.
C. Both (a) and (b).
B. Current ratio.
D. None of the above
Answer:
B. Current ratio
Current ratio is a comparison of current assets to current liabilities, calculated by dividing your current assets by your current liabilities.
Current ratio is an evaluation of a firm's ability to pay current liabilities. Thus, the correct answer is option B.
What is an current ratio?The current ratio is a liquidity ratio that measures a company's ability to pay short-term or one-year obligations. It explains to investors and analysts how a company can maximise its current assets on its balance sheet in order to pay off its current debt and other payables.
A current ratio that is comparable to or slightly higher than the industry average is generally regarded as acceptable. A lower current ratio than the industry average may indicate a greater risk of distress or default. Similarly, if a company's current ratio is very high in comparison to its peer group, it indicates that management may not be utilising its assets efficiently.
Therefore, current ratio is the correct answer.
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The Green Giant has a 7 percent profit margin and a 61 percent dividend payout ratio. The total asset turnover is 1.4 times and the equity multiplier is 1.6 times. What is the sustainable rate of growth
Answer:
5.17%
Explanation:
The green giant has a 7% profit margin
= 7/100
= 0.07
The dividend payout ratio is 67%
= 67/100
= 0.67
Total turnover is 1.4 times
Equity multiplier is 1.6 times
The first step is to calculate the return of equity
ROE= profit margin×total turnover×equity multiplier
= 0.07×1.4×1.6
= 0.1568
Therefore, the sustainable rate of growth can be calculated as follows
= return of equity×(1-dividend payout ratio)
= 0.1568×(1-0.67)
= 0.1568×0.33
= 0.0517×100
= 5.17%
Hence the sustainable rate of growth is 5.17%
Transactions for Jayne Company for the month of June are presented below.
June
1 Issues common stock to investors in exchange for $5,000 cash.
2 Buys equipment on account for $1,100.
3 Pays $740 to landlord for June rent.
12 Sends Wil Wheaton a bill for $700 after completing welding work.
Identify the accounts to be debited and credited for each transaction.
Account Debited Account Credited
june 1
june 2
june 3
june 12
Answer:
June 1 , common stocks are issued
Dr Cash 5,000
Cr Common stock 5,000
June 2 , equipment purchased on account
Dr Equipment 1,100
Cr Accounts payable 1,100
June 3 , monthly rent paid
Dr Rent expense 740
Cr Cash 740
June 12, service revenue
Dr Accounts receivable 700
Cr Service revenue 700
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages. Queno Company had FUTA taxable wages of $510,900 during the year. Determine its: (Round your answers to two decimal places.) a. gross FUTA tax $ . b. FUTA tax credits (assuming no penalties) $ . c. net FUTA tax
Answer:
a. $30,654
b. $27,588.60
c. $3,065.40
Explanation:
The Gross/ Standard Federal Unemployment Tax (FUTA) is 6.0% but employers tend to receive a 5.4% reduction/ credit upon filing form 940 leaving them with a net of 0.6%.
a. The Gross tax is;
= 510,900 * 6%
= $30,654
b. FUTA Tax Credits
= 510,900 * 5.4%
= $27,588.60
c. Net FUTA Tax
= 510,900 * 0.6%
= $3,065.40
Why does e-commerce save businesses money?
O
A. Because warehouses can stock much more inventory than stores.
B. Because they charge more for online purchases.
ОО
C. Because more people shop online than in stores.
D. Because they lower the quality of the product for online
purchases.
Answer:
A. Because warehouses can stock much more inventory than stores.
Explanation:
What are some of the issues to consider in determining whether the Internet would provide your business with a competitive advantage
Answer:
relevancy, cost, and information
Explanation:
When determining whether the Internet would provide your business with a competitive advantage you need to consider relevancy, cost, and information. First would be how much extra cost will you incur in order to place your business on the internet. Secondly, you need to consider the importance of the internet to you business, such as what percentage of your customer population will be on the internet. And lastly, you need to consider how much information you actually need to acquire in order to successfully implement this course of action.
Cash received from customers includes all $139,000 of the accounts receivable that were outstanding at November 30, 2017. Accounts receivable at December 31, 2017 totaled $141,000. Accounts payable (to suppliers of inventory) decreased by $19,000 from November 30, 2017 to December 31, 2017. The balance in the inventory account decreased by $39,000 over the same period. Required: What is gross profit for the month of December under accrual accounting
Answer:
Gross profit from the month of December is $238000
Explanation:
Question is incomplete but the missing part is:
Cash received from customer during december 2017 - 387,000
Cash paid to supplier for inventory during december 2017 - 131,000
Accrual basis revenues
Particulars Amount $
Cash received from customer 387000
during December 2017
Cash received in December for -139000
November accounts receivable
December sales made on account 141000
collected in January
Accrual basis revenues 389000
Accrual basis expenses
Particulars Amount $
Cash paid to suppliers for inventory 131000
during December 2017
Payments for inventory purchased -19000
and used in November
Inventory purchased in November 39000
but not used in December
Accrual basis expenses 151000
Gross profit from the month of December= Accrual basis revenues - Accrual basis expenses
Gross profit = 389000 - 151000
Gross profit = $238000
Colter Steel has $4,800,000 in assets. Temporary current assets $ 1,600,000 Permanent current assets 1,530,000 Fixed assets 1,670,000 Total assets $ 4,800,000 Short-term rates are 12 percent. Long-term rates are 17 percent. Earnings before interest and taxes are $1,020,000. The tax rate is 40 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be
Answer:
Colter SteelEarnings after taxes:Earnings before interest and taxes = $1,020,000
Interests = $659,500
Pre-tax Earnings = $360,500
Income Tax (40%) 144,200 ($360,500 x 40%)
Earnings after taxes = $216,300
Explanation:
a) Interests:
i) Long-term interests = 17% of Fixed Assets ($1,670,000) = $283,900
ii) Short-term interest = 12% of current assets ($4,800,000 - 1,670,000) = $375,600
Total interests = $659,500 ($283,900 + 375,600)
b) Short-term rates are the interest rates for current assets (or short-term borrowings).
c) Long-term rates are the interest rates for long-term assets or fixed assets (or long-term borrowings).
Accounts Payable The balance in Ashwood Company's Accounts Payable account at December 31, 2016, was $1,200,000 before any necessary year-end adjustment relating to the following: Goods were in transit from a vendor to Ashwood on December 31, 2016. The invoice cost was $85,000, and the goods were shipped FOB shipping point on December 29, 2016. The goods were received on January 2, 2017. Goods shipped FOB shipping point on December 20, 2016, from a vendor to Ashwood were lost in transit. The invoice cost was $40,000. On January 5, 2017, Ashwood filed a $40,000 claim against the common carrier. Goods shipped FOB destination on December 22, 2016, from a vendor to Ashwood were received on January 6, 2017. The invoice cost was $20,000. What amount should Ashwood report as accounts payable on its December 31, 2016, balance sheet? a. $1,325,000 b. $1,260,000 c. $1,285,000 d. $1,345,000
Answer:
Ashwood CompanyAccounts Payable account at December 31, 2016:Amount to report in the balance sheet =
a. $1,325,000
Explanation:
The balance in the account was $1,200,000
Adjustments:
In transit goods, shipped FOB shipping point = $85,000
Lost in transit goods, shipped FOB shipping point = $40,000
Total = $1,325,000
The shipping terms determine when liability for goods in transit pass to the buyer and if the buyer should include the goods in its own Ending Inventory and adjust its Accounts Payable respectively. The liability for goods in transit passes to the buyer if the FOB is shipping point. The liability does not pass to the buyer if the FOB is destination.
During the year, Belyk Paving Co. had sales of $2,485,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,349,000, $660,000, and $462,000, respectively. In addition, the company had an interest expense of $287,000 and a tax rate of 24 percent. The company paid out $412,000 in cash dividends. Assume that net capital spending was zero, no new investments were made in net working capital, and no new stock was issued during the year. (lgnore any tax loss or carryforward provision and assume interest expense is fully deductible.)
Calculate the firm's net new long-term debt added during the year. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Answer:
$888,000
Explanation:
In order to determine how much new debt was added, we must calculate cash flows:
first we need to determine net income:
sales ($2,485,000) - COGS ($1,349,000) - S&A expenses ($660,000) - depreciation expense ($462,000) = EBIT = $14,000
since EBIT is lower than interest expense ($14,000 ≤ $287,000), we can assume there was a loss. But the question tells us to ignore any tax losses. So net income = $14,000 - $287,000 = -$273,000
operating cash flow = net income + adjustments = -$273,000 + $462,000 = $189,000
there were not capital spending and no new investments made, so cash flow from investing activities = $0
so the net cash flow from assets = $189,000
net cash flow form assets = net cash flow from stockholders + net cash flow from liabilities
net cash flow from stockholders = common stock issued - dividends = $0 - $412,000 = -$412,000
$189,000 = -$412,000 + net cash flow from liabilities
$601,000 = net cash flow from liabilities
net cash flow from liabilities = net new long term debt - interest expense
$601,000 = net new long term debt - $287,000
net new long term debt = $601,000 + $287,000 = $888,000
ACME Inc. has decided on a 10for1 reverse stock split. If the firm currently has 40,000,000 shares outstanding, how many shares will be outstanding after the stock split?
Answer:
$4,000,000 Shares
Explanation:
Calculation for how many shares will be outstanding after the stock split
Using this formula
Outstanding Shares after stock split =Shares outstanding ÷Reverse stock split
Let plug in the formula
Outstanding Shares after stock split =$40,000,000÷10
Outstanding Shares after stock split =$4,000,000 Shares
Therefore the amount of shares that will be outstanding after the stock split will be $4,000,000
What is the current price for a bond worth $4,000 that has a price quote of 50?
Answer:
$ 2,500 as far as i know.
Explanation:
Haag Corp.'s 2021 income statement showed pretax accounting income of $2,500,000. To compute the federal income tax liability, the following 2021 data are provided:
Income from exempt municipal bonds $ 100,000
Depreciation deducted for tax purposes in excess of depreciation deducted for financial statement purposes 200,000
Enacted corporate income tax rate 20%
Required:
Compute the amount that Haag should record for income tax payable.
Answer:
$440,000
Explanation:
The first is to calculate the taxable profits and taxable profit can be calculated as under:
Taxable Profit = Pre-Tax Accounting Profit - Tax allowable expenses not deducted + Tax disallowed expenses deducted previously - Tax disallowed Income added previously - Tax allowed income not added in accounting profits
Here
Pre-Tax Accounting Income is $2,500,000
Municipal Bond Income is the Tax Disallowed Income added previously to accounting profits and must be eliminated from it at $100,000
Depreciation for tax purposes which is in excess of the book depreciation allowed is $200,000 and is Tax allowed Expenses not deducted.
By putting the values, we have:
Taxable Profit = $2,500,000 - $200,000 - $100,000
Taxable Profit = $2,200,000
Now we will compute the income tax payable at 20%
Tax Payable = 20% * $2,200,000 = $440,000
Income tax payable is the compulsory charge to be paid by the individual or company earning incomes over the exempt slab rates. Tax payable is computed on the taxable income, which is computed by deducting the deductible expenses and incomes from the net profit earned during a particular financial period.
The amount of income tax payable by Haag is $440,000
Computation:
The taxable income and the income tax payable are shown in the image attached below.
The procedure to compute the tax liability is:
1. Determine the pre-tax accounting income that is given $2,500,000.
2. Deductions like tax allowable expenses, tax allowed incomes, etc. In this case, the deductions are the exempt income from municipal bonds and the deduction of depreciation amount as it was recorded in the financial statement.
3. The amount determined is taxable income over which the 20% income tax rate will be charged.
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A foundation was endowed with $15,000,000 in July 2010. In July 2014, $5,000,000 was expended for facilities, and it was decided to provide $250,000 at the end of each year forever to cover operating expenses. The first operating expense is in July 2015, and the first replacement expense in July 2014. If all money earns interest at 5% after the time of endowment, what amount would be available for the capital replacements at the end of every fifth year forever
Answer:
$2,274,639.75
Explanation:
Endowment on July 2010 = $15,000,000
Endowment amount on July 2014 = $15,000,000 (1+0.05)^4 - Expenditure on facilities
= $15,000,000 (1.2155) - $5,000,000
= $18,232,500 - $5,000,000
= $13,232,500
Amount to be set aside for operation expenses = $250,000/0.05 = $5,000,000
Amount available for capital replacement = $13,232,500 - $5,000,000 = $8,232,500
5-years effective interest rate = (1+0.05)^5 - 1 = 0.2763
Annual available for capital replacements every fifth year forever = $8,232,500 (0.2763) = $2,274,639.75
The amount that would be available for the capital replacements at the end of every fifth year forever is $2,274,513.93.
Endowment amount:
Endowment amount=[$15,000,000 (1+0.05)^4]- $5,000,000
Endowment amount=[$15,000,000 (1.21550625)] - $5,000,000
Endowment amount= $18,232,594- $5,000,000
Endowment amount= $13,232,594
Capital replacement:
Capital replacement = $13,232,594- ($250,000/0.05)
Capital replacement = $13,232,594 - $5,000,000
Capital replacement = $8,232,594
Effective interest rate :
Effective interest rate = (1+0.05)^5 - 1
Effective interest rate = (1.05)^5 - 1
Effective interest rate = 0.2762815625
Every Fifth year Capital replacements:
Every Fifth year Capital replacements= $8,232,594 ( 0.2762815625)
Every Fifth year Capital replacements=$2,274,513.93
Inconclusion the amount that would be available for the capital replacements at the end of every fifth year forever is $2,274,513.93.
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What do you see as the major deficiencies current information systems budgeting and prioritization processes are run
Answer:
The major challenges with the current information systems budgeting and prioritisation process are:
The focus was overly on how the budgeted monies will be spent and how much return it will bring to the business. Not much thought was given to how the monies required for the expenses will be generated. Budgeting not only looks at the outflow, it examines existing and potential sources of income/revenue. When this is balanced, the company can integrate such into their marketing strategy armed with what information about the market that they possess.The prioritization is all wrong. Budgeting is because there is are organisational objectives to be met with limited resources.
Because those resources are limited, the said objectives have to be prioritized. Income-generating projects must hold more priority over non-revenue generating activities.
If there is a strategic link between the company's Information Systems upgrade and an increase in its bottom line, then it must be given priority.
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Prepare budgetary entries, using general ledger control accounts only, for each of the following unrelated situations: (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in whole dollars not in millions (i.e., 1,000,000 not 1.0).) Anticipated revenues are $11.8 million; anticipated expenditures and encumbrances are $8.0 million. Anticipated revenues are $8.0 million; anticipated expenditures and encumbrances are $9.4 million. Anticipated revenues are $9.4 million; anticipated transfers from other funds are $1.6 million; anticipated expenditures and encumbrances are $8.0 million; anticipated transfers to other funds are $0.7 million. Anticipated revenues are $8.6 million; anticipated transfers from other funds are $1.1 million; anticipated expenditures and encumbrances are $9.7 million; anticipated transfers to other funds are $1.0 million.
Answer:
Please see answer in explanatory column
Explanation:
Journal for Budgetary entries
a) Anticipated revenues are $11.8 million; anticipated expenditures and encumbrances are $8.0 million
Account Debit Credit
Estimated Revenue control $11,800,000
Appropriation control $8,000,000
Budgetary fund $3,800,000
Calculation
Budgetary fund = Estimated Revenue control $11,800,000-
Appropriation control $8,000,000 = $3,800,000
b)Anticipated revenues are $8.0 million; anticipated expenditures and encumbrances are $9.4 million.
Account Debit Credit
Estimated Revenue control $8,000,000
Budgetary fund $1,400,000
Appropriation control $9,400,000
Budgetary fund = Estimated Revenue control $8,000,000-
Appropriation control $9,400,000 = -$1,400,000 , therefore will be debited
c)Anticipated revenues are $9.4 million; anticipated transfers from other funds are $1.6 million; anticipated expenditures and encumbrances are $8.0 million; anticipated transfers to other funds are $0.7 million
Account Debit Credit
Estimated Revenue control $9,400,000
Estimated other finance source control$1,600,000
Appropraition control $8,000,000
Estimated other finance source control $700,000
Budgetary fund $2,300,000
Budgetary fund = Estimated Revenue control +Estimated other finance source control) -Appropriation control + Estimated other finance source control= $9,400,000 +$1,600,000)- $8,000,000 + 700,000 ) = 11,000,000 - $8,700,000 =$2,300,000
d)Anticipated revenues are $8.6 million; anticipated transfers from other funds are $1.1 million; anticipated expenditures and encumbrances are $9.7 million; anticipated transfers to other funds are $1.0 million.
Account Debit Credit
Estimated Revenue control $8,600,000
Estimated other finance source control$1,100,000
Budgetary fund $1,000,000
Appropraition control $9,700,000
Estimated other finance source control $1,000,000
Budgetary fund = Estimated Revenue control +Estimated other finance source control) -Appropriation control + Estimated other finance source control= $8,600,000 +$1,100,000)- $9,700,000 + 1,000,000 ) = 9,700,000 - $10,700,000 =-$1,000,000 so will be debited
Which of the following would most directly affect the purchasing power of benefits paid on a fixed annuity?
A) Guaranteed minimum payout.
B) Economic inflation.
C) Interest rates
D) Company investment performance
The purchasing power of benefits on a fixed annuity is directly affected by economic inflation, which reduces the value of money over time. Therefore, option B is correct.
In the context of fixed annuities, inflation refers to the general increase in prices of goods and services over time, leading to a decrease in the purchasing power of money.
Inflation erodes the value of annuity payments, as the fixed benefit amount remains constant while the cost of living rises.
This means that over time, the annuity payments may not be sufficient to meet the same level of expenses. Managing inflation risk becomes crucial in maintaining the long-term purchasing power of annuity benefits, ensuring that they can adequately cover future expenses despite the impact of rising prices.
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