Answer:
a. $45.00 per direct labor hour
b. Machining Department = $ 49.00 per machine hour, Finishing Department = $ 25.00 per direct labor hour.
Explanation:
Plant-wide overhead rate = Budgeted Overheads / Budgeted Direct Labor Hours
= $ 1,170,000 / 26,000 direct labor hours
= $45.00 per direct labor hour.
Departmental overhead rate = Budgeted Overheads / Budgeted Activity
Machining Department = $ 735,000 / 15,000 MH Hours
= $ 49.00 per machine hour
Finishing Department = $435,000 / 17,400 DL Hours
= $ 25.00 per direct labor hour
On January 1, 2014, Brenner Company purchased at face value, a $1,000, 6% bond that pays interest on January 1 Brenner Company has a calendar year end. The entry for the receipt of interest on January 1, 2015 is
Answer:
Dr Cash 30
Cr Interest revenue 30
Explanation:
Preparation of te entry for the receipt of interest on January 1, 2015 for Brenner Company
Since we were told that On January 1, 2014, Brenner Company was said to have purchased at a face value, the amount of $1,000 with 6% bond that pays the interest in January 1 this means we have to record the transaction by Debiting Cash with $30 and Crediting Interest revenue with the same amount. The $30 is been calculated as:
1,000 *.06 *1/2 =$30
Therefore the entry for the receipt of interest on January 1, 2015 is:
Dr Cash 30
Cr Interest revenue 30
In a business cycle, the _____ is the transition period between contraction and expansion.
Answer:
Recovery
Explanation:
The Business cycle is also known as the economic cycle, and consists of the periods of growth (expansion), and decline (contraction) of the economy, over a long period of time.
According to the theory of the business cycle, it is normal and expected for economies and businesses to experience periods of rise and fall.
The period that marks the transition between contraction and expansion is the recovery, because is the period when the contraction comes to a halt, and the economy starts recovering in order to expand again.
According to ComScore's U.S. total video report, which of the following statements is TRUE? Group of answer choices Younger audiences are more likely to consume news content on smartphones than traditional news platforms. Millennials are less likely to watch TV from an internetconnected TV device (e.g. Roku, Apple TV, Google Chromecast) as well as via a gaming console (e.g. Xbox, PlayStation, etc.) or Blu-Ray Player. Millennials spend one-third of their original TV series consumption time watching on digital platforms, with computers driving the majority of that activity. Generally speaking, the younger the viewer the greater percentage of time spent watching on "traditional" TV sets.
Answer: Millennials spend one-third of their original TV series consumption time watching on digital platforms, with computers driving the majority of that activity.
Explanation:
The report showed that Millennials who are loosely defined as those who were born between the years 1981 and 1996, preferred to watch TV series on digital platforms and when they do watch TV, they do it time-shifted or with a computer connected to the Television and simply projecting what the computer is showing.
This trend by Millennials towards digital platforms was put down to the Millennials' need to watch videos on their own time and these digital platforms offer that by simply putting videos there and leaving you to click on them whenever you want.
Find the present worth in year 0 of $60,000 in year 3 and amounts increasing by 15% per year through year 10 at an interest rate of 11% per year. g
Answer:
Present worth is 398,577
Explanation:
First we need to grow the payment by 15% each year after year 4. Then we need to discount the amounts using the interest rate of 11% each year.
All the workings are done in the pdf file attached with this answer, please find it.
Exhibit 27-5 Units of Labor Quantity of Output Marginal Revenue 0 0 $6 1 100 6 2 180 6 3 250 6 4 310 6 5 330 6 Refer to Exhibit 27-5. The marginal revenue product of the second unit of labor is
Answer:
$480
Explanation:
marginal revenue is the increase in revenue as a result of selling one extra unit of output.
(180 - 100)x $6 = $480
please find attached a clear image of Exhibit 27-5
If Megan Roberts were given total marketing responsibility over Diet Cherry 7Up, she would hold the position of ____ manager.
Answer: Brand
Explanation:
Brand managers are the ones in charge of how a product is perceived by the public, especially their niche. They do this through Marketing which is publicizing the product.
They are therefore in charge of marketing the product to their niche so that the product can be bought and by being given total marketing responsibility over Diet Cherry 7Up, Ms Roberts is now most definitely, the Brand Manager.
O'Malley, Inc. issued 100 comma 000 shares of common stock in exchange for manufacturing equipment. The equipment has a fair value of $ 1 comma 430 comma 000. The stock has a par value of $ 0.02 per share. The journal entry to record this transaction includes a
Answer:
Dr Manufacturing equipment $1,430,0000
Cr Common stock $2,000
Cr Paid-in capital in excess of par value $1,428,000
Explanation:
The equipment account would be debited with $1,430,000 as an increase in assets.
The common stock account would be credited with the par value of 100,000 stocks which is $2,000($0.02*100,000) while balance of $1,428,000($1,430,000-$2000) is credited to paid-in capital in excess pf par value
ou expect General Motors (GM) to have a beta of 1.6 over the next year and the beta of Exxon Mobil (XOM) to be 0.7 over the next year. Also, you expect the volatility of General Motors to be 40% and that of Exxon Mobil to be 45% over the next year. Which stock has more systematic risk
Answer: General Motors (GM)
Explanation:
The beta is a measure of the Systematic risk that a security holds. The higher the beta, the more Systematic risk the security has. Market Beta is 1 so anything above 1 is considered to have more Systematic risk than the Market.
General Motors here has a higher beta than Exxon Mobil so has more Systematic risk than Exxon.
Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on the balance sheet if
Answer:
(A.) the future tax rates have been enacted into law.
Explanation:
In case when the rate of tax instead of the current tax rate used to compute the deferred amount related to income tax for the balance sheet if the rate of future tax is enacted in law i.e means when the future tax rate imposed under the taxation rules and regulations
Therefore option A is correct and the other options are incorrect
Cai Corporation uses a job-order costing system and has provided the following partially completed T-account summary for the past year. Raw Materials Debit Credit Balance 1/1 17,000 Credits ? Debits 97,000 Balance 12/31 30,000 Work In Process Debit Credit Balance 1/1 19,000 Credits 506,000 Direct materials 74,000 Direct labor 13,000 Overhead applied 257,000 Balance 12/31 ? The cost of indirect materials requisitioned for use in production during the year was:
Answer:
Indirect Materials Used 10,000
Explanation:
Cai Corporation
Raw Materials Opening balance 17,000
Purchases 97,000
Raw Materials Ending Balance 30,000
Raw Materials Used 84,000
Direct Materials Used 74,000
Indirect Materials Used 10,000
The indirect materials are requisitioned from the raw materials inventory but summed under the manufacturing/ factory overhead.
The Total Raw materials requisitioned was $ 84,000 out of which $ 74,000 was direct materials and only $ 10,000 was used as indirect materials.
Work In Process Opening 19,000
Add Direct materials 74,000
Add Direct labor 13,000
Add Overhead applied 257,000
Less Work In Process Credits 506,000
Ending Work In Process 143,000
The ending Work in Process balance is found out by subtracting the total credits from the total debits .
The company offered Gwendolyn a(n) _____ for living in an unfamiliar country isolated from her family, dealing with a new culture and language, and adapting to new work habits and practices. She received this as a percentage of her base salary.
Answer:
Hardship allowance.
Explanation:
The company offered Gwendolyn a hardship allowance for living in an unfamiliar country isolated from her family, dealing with a new culture and language, and adapting to new work habits and practices. She received this as a percentage of her base salary.
A hardship allowance can be defined as an extra amount of money being paid by an employer to an employee for working in difficult or tedious conditions. Also, when an employee works in an unfamiliar environment, potentially dangerous territory, and deal with risks in living in isolation from his or family members, they are entitled to a hardship allowance from their employer.
Hardship allowance is usually calculated as a percentage of an employee's monthly salary.
For instance, Gwendolyn works for an oil company and he's given an assignment to go work at a rig in a warzone, he is entitled to a hardship allowance from his employer.
Presented below are incomplete manufacturing cost data.
Determine the missing amounts for three different situations.
Direct Materials Used Direct Labor Used Factory Overhead Total Manufacturing Costs
(1) $41,900 $62,500 $52,900 $157300
(2) $80000 $76,000 $144,000 $300,000
(3) $57,400 $139600 $115,000 $312,000
Determine the missing amounts.
Total Manufacturing Costs Work in Process (January 1) Work in Process (December 31) Cost of Goods Manufactured
(1) $122,000 $84,300
(2) $300,000 $98,500 $324,500
(3) $312,000 $467,000 $719,000
Answer and Explanation:
The computation of missing amounts is shown below:-
1. Total Manufacturing Costs = Direct Materials Used + Direct Labor Used + Factory Overhead
= $41,900 + $62,500 + $52,900
= $157,300
2. Total Manufacturing Costs = Direct Materials Used + Direct Labor Used + Factory Overhead
$300,000 = Direct material used + $76,000 + $144,000
Direct material used = $300,000 - $220,000
= $80,000
3. Total Manufacturing Costs = Direct Materials Used + Direct Labor Used + Factory Overhead
$312,000 = $57,400 + Direct labor used + $115,000
Direct labor used = $172,400 - $312,000
= $139,600
B. 1. Cost of Goods Manufactured = Total Manufacturing Costs + Work in Process of January 1 - Work in Process of December 31
= $157,300 + $122,000 - $84,300
= $195,000
2. Cost of Goods Manufactured = Total Manufacturing Costs + Work in Process of January 1 - Work in Process of December 31
$324,500 = $300,000 + Work in Process (January 1) - $98,500
Work in Process (January 1) = $123,000
3. Cost of Goods Manufactured = Total Manufacturing Costs + Work in Process of January 1 - Work in Process of December 31
$719,000 = $312,000 + $467,000 - Work in Process of December 31
Work in Process of December 31 = $60,000
You decide to use your department store charge card .. a lot! After seven weeks you have racked up $1,400 of debt. Your minimum monthly payment is $45, and is paid at the end of each month. If the APR is 16.80%, how long will it take you to pay the loan off? (Assume that you make the minimum payment until the debt is entirely paid off.)
Answer:
41 months
Explanation:
For computing the time period we have to use the NPER formula i.e shown in the attachment
Given that,
Present value = $0
Future value = $1,400
Rate of interest = 16.80% ÷ 12 months = 1.4%
PMT = $45
The formula is shown below:
= NPER(Rate;PMT;PV;-FV;type)
The future value come in negative
So, after applying the above formula, the time period is 41 months
A plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period is called a:
Answer:
Merchandise purchases budget.
Explanation:
The Merchandise purchases budget is a plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period.
It is prepared by a retail company to make sure it has sufficient inventory on hand. It uses the budgeted sales figures from the Sales Budget to decide the quantity of inventory to be bought at each period
The correct statement is that a plan that reports the units or costs of merchandise to be purchased by merchandising company is called a
It denotes and helps in understanding the formulation of inventories and free cash flows in the hands of the company as on the date of preparation of budgets by a merchandising company.
The requirement of the merchandising company to purchases can be estimated by addition of cost of goods sold and the desired ending cost of inventory which is to be subtracted with opening stock.The formula to calculate the merchandise purchases budget by a merchandising company can be stated as below,[tex]\rm Merchandise\ Purchases\ Budget= \ Costs\ of\ Goods\ sold\ + Desired\ Inventory\ - Stock[/tex]The formula stated above is effective in analyzing how much units are to be produced and the costs that can be reduced or born, if any by such merchandising company.Hence, the correct statement is that a report which suggests merchandise to be purchased by a company for a given accounting period is known as merchandise purchase budgeting report.
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A paint manufacturing company produces three paint bases of differing quality. Due to throughput limitations (measured in gallons) at their facility, they are unable to meet total demand for their products. In determining which of their products they should produce, what should they consider?
a. The gross profit per unit for each product
b. The operating margin per unit for each product
c. The contribution margin per gallon of throughput for each product
d. None of the above
Answer:
c. The contribution margin per gallon of throughput for each product
Explanation:
contribution margin per gallon = Revenue per gallon - variable cost per gallon.
Contribution margin would enable the company to know the amount each product earns in excess after variable cost has been subtracted from revenue.
the product with the highest contribution margin should be considered.
On December 31, 2015, Wintergreen, Inc., issued $150,000 of 7 percent, 10-year bonds at a price of 93.25. Write down the necessary journal entries.
Answer:
December 31
DR Cash $139,875
DR Discount on Bonds Payable $10,125
CR Bonds Payable $ 150,000
Explanation:
Cash
Because Wintergreen is selling at $93.25 when Par Value is usually at $100, they are selling at a discount.
Cash Received = 150,000 * 93.25/100
= $139,875
Discount on Bonds
= 150,000 - 139,875
= $10,125
When any two firms have both a high degree of market commonality and highly similar resources, a ______________ threat is present.
Answer: stronger, competitive
Explanation:
When there is a high identical resources base and and a high degree of market commonality between two firms ,this show that there is a stronger and competitive threat. It should be noted that despite this threat, there may be no competitive action.
A rival in the market may not want to attack a company that shares identical resources base because it can result into an intense battle. Also, attacking them can lead to more motivation and thereby produce a better quality product.
Sparacino Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 6.90 Direct labor $ 3.90 Variable manufacturing overhead $ 1.70 Fixed manufacturing overhead $ 25,200 Sales commissions $ 1.50 Variable administrative expense $ 0.55 Fixed selling and administrative expense $ 8,100 If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:
Answer:
Total overhad= $33,700
Explanation:
Giving the following information:
Variable manufacturing overhead $ 1.70
Fixed manufacturing overhead $ 25,200
Number of units= 5,000
The total manufacturing overhead is the sum of the total variable overhead and total fixed overhead.
Total overhead= 1.7*5,000 + 25,200
Total overhad= $33,700
Price of Good X Quantity Demanded Quantity Supplied
$10 220 90
11 200 100
12 180 130
13 150 150
14 120 190
15 80 260
Suppose that the government imposes a price ceiling at a price of $11. How many fewer units would be exchanged at the price ceiling than would be exchanged at the equilibrium price?
a. 50
b. 30
c. 40
d. 70
Answer:
Option a is the correct answer.
So, at a price ceiling of $11, 50 fewer units will be exchanged in the market.
Explanation:
The equilibrium point is a point where the quantity demanded of a good at a certain price is equal to the quantity supplied of the good at that price. The equilibrium point of Good X is at $13 per unit as at this price the quantity demanded equals quantity supplied.
Equilibrium price = $13
Equilibrium Quantity = 150 units
A price ceiling is a governmental control on the maximum price that can be charged for a product. The government uses this tool to protect consumers from high prices.
If the government imposes a price ceiling at $11, this means that the maximum price that can be charged for the product is $11. In case the price ceiling is less than the equilibrium price, it creates a shortage in the market and vice versa.
Thus, at a price ceiling of $11, the quantity demanded for the product will be 200 units while only 100 units of the product will be supplied. SO, the market will only satisfy a demand of 100 units.
The difference between the exchange at the equilibrium price and at price ceiling is,
Difference = 150 units - 100 units
Difference = 50 units
So, at a price ceiling of $11, 50 fewer units will be exchanged in the market.
Knowledge Check 01 On September 1, Vicario, Inc., borrows $100,000 from First National Bank at 6 percent annual interest. This note is due in 90 days. Prepare the September 1 journal entry for Vicario by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
Debit cash for $100,000
Credit cash for $100,000
Explanation:
It should be noted that on September 1, the only transaction that occurred is the receipt of cash by Vicario, Inc. from First National Bank and no interest expenses has been accrued.
Based on this therefore, the journal entry for Vicario on September 1 will appear as follows:
Date Name of Accounts DR ($) CR ($)
Sept. 1 Cash 100,000
Notes payable 100,000
(To record borrowing from First National Bank.)
A company that has both debt and equity in its capital structure will use its weighted average cost of capital (WACC) as its discount rate. Based on your understanding of the weighted average cost of capital, complete the following statements: • In general, the the risk of a firm as perceived by its existing and potential investors, the greater is the firm’s weighted average cost of capital (WACC). • The calculation of a firm’s weighted average cost of capital should be based on the after-tax cost of the dollar of financial capital raised. • It is generally believed that the proportions, or weights, used in the calculation of a firm’s weighted average cost of capital should be based on the market values of the firm’s capital sources. This is because the market value weighting system is more consistent with maximizing the value of the firm’s . True or False: Although the use of market value weights is theoretically superior to the use of book value weights in the calculation of a firm’s weighted average cost of capital (WACC), firms often use book value weights due to their relative stability compared to the daily changes in market values. True False True or False: A firm’s new investments, existing assets, and capital structure affect its overall degree of risk and, in turn, its weighted average cost of capital (WACC). True False
Answer:
In general, the higher the risk of a firm as perceived by its existing and potential investors, the greater is the firm’s weighted average cost of capital (WACC).
If a firm is considered to be risky, they will get debt at a high rate to compensate for the risk making WACC greater.The calculation of a firm’s weighted average cost of capital should be based on the after-tax cost of the dollar of financial capital raised.
Interest is tax deductible so WACC is calculated net of taxes to cater for this.It is generally believed that the proportions, or weights, used in the calculation of a firm’s weighted average cost of capital should be based on the market values of the firm’s capital sources. This is because the market value weighting system is more consistent with maximizing the value of the firm’s Shareholder wealth.
Market Values are the true reflection of shareholder wealth and this is what the company should aim to maximise.Although the use of market value weights is theoretically superior to the use of book value weights in the calculation of a firm’s weighted average cost of capital (WACC), firms often use book value weights due to their relative stability compared to the daily changes in market values. True
Market values tend to fluctuate quite often so it is easier for companies to use book value amounts.A firm’s new investments, existing assets, and capital structure affect its overall degree of risk and, in turn, its weighted average cost of capital. True
The assets and potential assets that a company has as well as how it funded those assets determine just how risky the company is and as earlier mentioned, the riskier the firm, the higher the WACC so risk does have an effect on WACC.Suppose that XTel currently is selling at $40 per share. You buy 500 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%. a. What is the percentage increase in the net worth of your brokerage account if the price of XTel immediately changes to (a) $44; (b) $40; (c) $36? (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.)
Answer:
Explanation:
a. What is the percentage increase in the net worth of your brokerage account if the price of XTel immediately changes to $44?
Total investment will be:
= 500 shares x $40 = $20,000
The Initial Net Worth =$15,000
Borrowed Amount = $20,000 - $15,000 = $5,000
New Net worth will be:
= $44 x 500 shares - 5000
= $22,000 - $5000
= $17,000
Percentage increase will be:
= [($17,000 - $15,000)/$15,000] × 100
= $2000/$15000 × 100
= 13.33%
b. What is the percentage increase in the net worth of your brokerage account if the price of XTel immediately changes to $40?
Total investment will be:
= 500 shares x $40 = $20,000
The Initial Net Worth =$15,000
Borrowed Amount = $20,000 - $15,000 = $5,000
New Net worth will be:
= $40 x 500 shares - 5000
= $20,000 - $5000
= $15,000
Percentage increase will be:
= [($15,000 - $15,000)/$15,000] × 100
= 0/$15000 × 100
= 0
c. What is the percentage increase in the net worth of your brokerage account if the price of XTel immediately changes to $36?
Total investment will be:
= 500 shares x $40 = $20,000
The Initial Net Worth =$15,000
Borrowed Amount = $20,000 - $15,000 = $5,000
New Net worth will be:
= $36 x 500 shares - 5000
= $18,000 - $5000
= $13,000
Percentage increase will be:
= [($13,000 - $15,000)/$15,000] × 100
= -$2000/$15000 × 100
= -13.33%
Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted factory overhead cost is $2,948,125. Overhead is allocated to the three products on the basis of direct labor hours. The products have the following budgeted production volume and direct labor hours per unit: Budgeted Production Volume Direct Labor Hours Per Unit Flutes 2,000 units 2.0 Clarinets 1,500 3.0 Oboes 1,750 1.5 a. Determine the single plantwide overhead rate.
Answer:
Predetermined manufacturing overhead rate= $391.78 per direct labor hour
Explanation:
Giving the following information:
Budgeted factory overhead= $2,948,125.
Direct labor hours:
Flutes= 2,000*2= 4,000
Clarinets= 1,500*3= 4,500
Oboes= 1,750*1.5= 2,625
Total direct labor hours= 7,525
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 2,948,125/7,525
Predetermined manufacturing overhead rate= $391.78 per direct labor hour
Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be $125,000 in year 1 and increase by 4% each year through year 5. What is the equivalent uniform annual worth of the maintenance costs at an interest rate of 10% per year, compounded semiannually
Answer:
The equivalent uniform annual worth of the maintenance costs at an interest rate of 10% per year, compounded semiannually is $127,432
Explanation:
In order to calculate the equivalent uniform annual worth of the maintenance costs at an interest rate of 10% per year, compounded semiannually we would have to calculate the following formula:
equivalent uniform annual worth of the maintenance costs= P(i(1+i)∧n/(1+i)∧n-1
The rate of interest i would be as follows:
rate of interest i=(1+10%/2)-1
rate of interest i=0.1025*100
rate of interest i=10.25%
The present value P would be calculated as follows:
present value P=$125,000(1-(1+1/100)∧5 (1+10.25/100)∧-5/(10.25/100-1/100)
present value P=$125,000*3.84
present value P=$480,000
Therefore,
equivalent uniform annual worth of the maintenance costs=$480,000*(10.25/100 (1+10.25/100)∧5/(1+10.25/100)∧5-1)
equivalent uniform annual worth of the maintenance costs=$480,000*0.2654
equivalent uniform annual worth of the maintenance costs=$127,432
The equivalent uniform annual worth of the maintenance costs at an interest rate of 10% per year, compounded semiannually is $127,432
Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $14,500 and will produce cash flows as follows: End of Year Investment A B 1 $9,500 $0 2 9,500 0 3 9,500 28,500 The present value factors of $1 each year at 15% are: 1 0.8696 2 0.7561 3 0.6575 The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment A is: A. $18,739. B. $(14,500). C. $14,000. D. $(21,691). E. $7,190.
Answer:
E. $7,190
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
For project A,
Cash flow in year 0 = $-14,500
Cash flow in year 1 = $9,500
Cash flow in year 2 = $9,500
Cash flow in year 3 = $9,500
I = 15%
NPV = $7190.64
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
I hope my answer helps you
What is the annual percentage rate on a loan with a stated rate of 2.75 percent per quarter?A. 11.00 percentB. 11.09 percentC. 11.18 percentD. 11.27 percentE. 11.31 percent
Answer:
A. 11.00 percent
Explanation:
The computation of the annual percentage rate is shown below:-
Annual percentage rate = Percentage of stated rate × Number of quarters per year
= 2.75% × 4
= 11%
Therefore for computing the annual percentage rate we simply applied the above formula i.e multiplying the percentage of the stated rate with the number of quarters in a year
So, the correct option is A.
The annual percentage rate on a loan with a stated rate of 2.75 percent per quarter is 11.27 percent.
To calculate the annual percentage rate (APR) on a loan with a stated rate of 2.75 percent per quarter, we need to use the following formula: APR = (1 + periodic interest rate)^n - 1. Here, the periodic interest rate is 2.75 percent, and n is the number of compounding periods in a year, which is 4. Substituting these values into the formula, we get: APR = (1 + 0.0275)^4 - 1 = 0.1127 or 11.27%. Therefore, the annual percentage rate on the loan is 11.27 percent.
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ABC Company had addition to retained earnings for the current fiscal year just ended of $395,000. The firm paid out $195,000 in cash dividend, and it has ending total equity of $5.3 million. The company currently has 170,000 shares of common stock outstanding. Please answer the following questions:
1. What are earnings per share (E/PS)?
2. Dividends per share?
3. Book value of share?
4. If the stock currently sells for $64 per share, what is the market-to-book ratio?
5. The price to earnings ratio (P/E)?
6. The company had sales of $5.15 million, what is the price to sales ratio (P/S)?
7. Finally, explain the implication of P/E ratio for different types of investors.
Answer:
ABC Company
1. E/PS = $3.47
2. Dividends per share = $1.15
3. Book value of share = $31.18
4. Market-to-book ratio = 2.05 : 1
5. Price to earnings ratio (P/E) = 18.44 times
6. Price to Sales ratio (P/S) = 2.11 times or 2.11 : 1
7. A high P/E ratio shows that a company's share is overvalued and vice versa. This knowledge will equip the investor to take position. Some investors are interested in the long-term growth of their investments. Others are interested in the short-term. With P/E ratio, an investor who is interested in the long-term growth can determine the market value and the future earnings growth. For those interested in short-term, they can know when the price is rising to sell off their investment and maximize profit.
Explanation:
Addition to retained earnings = $395,000
Dividend paid out $195,000
Net income $590,000
Ending Equity = $5.3 million
Beginning Equity = $4,905,000 ($5,300,000 - 395,000)
Outstanding common stock shares = 170,000
2) Earnings per share (E/PS) = Earnings or Net Income/ No. of outstanding shares = $590,000/170,000 = $3.47
3) Dividends per share = Dividends paid/ No. of outstanding shares = $195,000/170,000 = $1.15
4) Book value of share = Ending Equity/No. of outstanding shares = $5,300,000/170,000 = $31.18
5) Market-to-book ratio = Market price/book value = $64/$31.18 = 2.05 : 1
6. Price to earnings ratio (P/E) = Market price/EPS = $64: $3.47 = 18.44 times
7. Price to Sales ratio (P/S) = Market Capitalization/Sales Revenue = ($64 x 170,000)/$5,150,000 = 2.11 : 1
8. Market capitalization = Market price of shares multiplied by number of outstanding shares.
Suppose you purchased 100 shares of stock in 2010 for $20 a share, and the price now is $30 a share. If you sell the stock, then your capital gain is:__________.A. $3,000.B. $1,500.C. $1,000.D. indeterminate without knowing the inflation rate.
Answer:
Option D is correct
Explanation:
The cost of purchasing the 100 shares was $20 per share, in other words, the total amount paid for the stock acquisition is $2,000($20*100).
However, the later shares were sold for $3,000($30*100), which means that capital gain is the difference between the sales value and the acquisition value.
Capital gain=$3,000-$2,000=$1000
The correct option is D
Below is a list of activities for Jayhawk Corporation. Required: Select from the activities of Jayhawk Corporation whether the transaction increases, decreases, or has no effect on assets, liabilities, and stockholders' equity. The first item is provided as an example.
Transaction Assets = Liabilities+ Stockholders' Equity
1. Issue common stock in exchange for cash. Increase= No effect+ Increase
2. Purchase business supplies on account. = +
3. Pay for legal services for the current month. = +
4. Provide services to customers on account. = +
5. Pay employee salaries for the current month. = +
6. Provide services to customers for cash. = +
7. Pay for advertising for the current month. = +
8. Repay loan from the bank. = +
9. Pay dividends to stockholders. = +
10. Receive cash from customers in (4) above. = +
11. Pay for supplies purchased in (2) above. = +
Answer:
Jayhawk Corporation
Transaction Assets = Liabilities Stockholders' Equity
1. Issue common stock in exchange for cash. Increase= No effect + Increase
2. Purchase business supplies on account. Increase = Increase + No effect
3. Pay for legal services for the current month. Decrease = No effect + Decrease
4. Provide services to customers on account. Increase = No effect + Increase
5. Pay employee salaries for the current month. Decrease = No effect + Decrease
6. Provide services to customers for cash. Increase = No effect + Increase
7. Pay for advertising for the current month. Decrease = No effect + Decrease
8. Repay loan from the bank. Decrease = Decrease + No effect
9. Pay dividends to stockholders. Decrease = No effect + Decrease
10. Receive cash from customers in (4) above. Increase + Decrease = No effect + No effect
11. Pay for supplies purchased in (2) above. Decrease = Decrease + No effect
Explanation:
The accounting equation states that Assets are equal to Liabilities Plus Equity. This equation remains true for every business transaction, which affects two accounts on either side of the equation. This keeps the equation in equilibrium or balance with each given transaction. It is from this equation that the double entry system of accounting was developed and is based.
The impact whether the transaction increases, decreases, or has no effect on assets, liabilities, and stockholders' equity is explained below:
1. Issue common stock in exchange for cash. Increase= No effect + Increase
2. Purchase business supplies on account. Increase = Increase + No effect
3. Pay for legal services for the current month. Decrease = No effect + Decrease
4. Provide services to customers on account. Increase = No effect + Increase
5. Pay employee salaries for the current month. Decrease = No effect + Decrease
6. Provide services to customers for cash. Increase = No effect + Increase
7. Pay for advertising for the current month. Decrease = No effect + Decrease
8. Repay loan from the bank. Decrease = Decrease + No effect
9. Pay dividends to stockholders. Decrease = No effect + Decrease
10. Receive cash from customers in (4) above. Increase + Decrease = No effect + No effect
11. Pay for supplies purchased in (2) above. Decrease = Decrease + No effect
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In the classical model of decision making, the most appropriate decision possible in light of what is believed to be the most desirable consequences for the organization is known as the _______ decision. intuitive creative heuristic subjective optimum
Answer:
Optimum
Explanation:
The Classical approach to decision making is specific on making decisions to achieve required outcome. Under this approach, decisions are rationl and geared towards one stable and sustainable goal. The most appropriate decision possible in light of what is believed to be the most desirable consequences for the organization is the Optimum. The decision maker always makes decisions based on what is the best interests of that organization.