Answer:
D. If Hazel sells the chocolate fountain for $3,300, she will have a $1,500 capital gain.
Explanation:
I´m assuming that Hazel is a person that owns this event planning company.
The current book value of the chocolate fountain = purchase cost - accumulated depreciation = $3,000 - $1,200 = $1,800
If the chocolate fountain (or any asset) is sold at a higher price than book value, then a capital gain must be recognized. If the chocolate fountain is sold at a lower price than book value, then a capital loss should be recognized.
$3,300 (selling price) - $1,800 (book value) = $1,500 capital gain
A post-closing trial balance will reflect balances, after closing entires have been posted to reset the temporary accounts as follows:
A) zero balances for balance sheet accounts.
B) Balances only showing in income statement accounts
C) Balances only showing for balance sheet accounts.
D) zero balances for all accounts.
Answer: C) Balances only showing for balance sheet accounts.
Explanation:
A Post-Closing Trial Balance is used to match debits with credits to ensure that they are equal. It will however contain no items from the Income statement because those were considered to be temporary accounts that are part of the calculation of Retained Earnings and have thus have been dissolved during the Closing process.
This Trial Balance will therefore only have Balance Sheet items listed in it.
The following events took place for Digital Vibe Manufacturing Company during January, the first month of its operations as a producer of a digital video monitor.
a. Purchased $168,500 of materials.
b. Used $149,250 of direct materials in production.
c. Incurred $360,000 of direct labor wages.
d. Incurred $120,000 of factory overhead.
e. Transferred $600,000 of work in process to finished goods.
f. Sold goods for $875,000.
g. Sold goods with a cost of $525,000.
h. Incurred $125,000 of selling expenses.
i. Incurred $80,000 of administrative expenses.
Using the information given, complete the following:
a. Prepare the January income statement for the Digital Vibe Manufacturing Company.
b. Determine the Materials Inventory, Work in Process Inventory, and Finished Goods Inventory balances at the end of the first month of operations.
Answer:
1. Income Statement for Digital Vibe Manufacturing company
For the Month ended January 31
Sales 875,000
Cost of goods sold 525,000
Gross Profit 350,000
Operating Expenses:
Selling expenses 125,000
Administrative expenses 80,000
Total Operating expenses 205,000
Net Income $145,000
B.
1. Ending material inventory = Material purchased - Used material in production
= 168,500 - 149,250
= $19,250
2. Ending work in Process inventory = Material used in production + Direct labor + Factory overhead - Transferred of work in process to finished goods
= 149,250 + 360,000 + 120,000 - 600,000
=$29,250
3. Ending finished goods inventory = Transfer from work in progress - Cost of goods sold
= 600,000 - 525,000
= $75,000
The absorption-cost approach is used by most companies for all of the following reasons except that:______a) absorption cost information is readily provided by a company’s cost accounting system.b) basing prices on only variable costs could encourage managers to set too low a price to boost sales.c) this approach is more consistent with cost-volume-profit analysis.d) absorption cost provides the most defensible bases for justifying prices to interested parties
Answer:
c) this approach is more consistent with cost-volume-profit analysis.
Explanation:
The absorption costs does not separate the fixed costs and variable cost for profit determination.
This hence, is not adequate for internal purposes of as it does not provide management accountants of the changes in fixed and variable costs that arise as a result of changes in levels of sales demand.
Thus this method is not consistent with cost-volume-profit analysis.
A hospital purchased new MRI equipment and intended to be used for 4 years. The information is given below. As part of the warranty agreement, the maintenance costs will be waived for the first 4 years. At MARR of 29% per year, determine the minimum revenue per year to realize the expected recovery and return.
Answer:
the information is missing but I looked for a similar question that can help as an example (hopefully it will be the same):
purchase cost $750,000
useful life 4 years, salvage value $150,000
discount rate 29%
in order to answer this question, we would need to calculate a cash flow that results in NPV = 0
0 = -$750,000 + CF/1.29 + CF/1.29² + CF/1.29³ + (CF + $150,000)/1.29⁴
$750,000 = CF/1.29 + CF/1.29² + CF/1.29³ + (CF + $150,000)/1.29⁴
$750,000 = 0.7752CF + 0.6009CF + 0.4658CF + 0.3611CF + $54,166.70
$695,833.30 = 2.203CF
CF = $695,833.30 / 2.203 = $315,857.15
Acme Inc. has the following information available:
Actual price paid for material $1.00
Standard price for material $0.90
Actual quantity purchased and used in production 100
Standard quantity for units produced 110
Actual labor rate per hour $ 15
Standard labor rate per hour $ 16
Actual hours 200
Standard hours for units produced 220
1. Compute the material price and quantity, and the labor rate and efficiency variances.
2. Describe the possible causes for this combination of favorable and unfavorable variances.
Answer:
1. Computation of variances
a. Material Price Variance = (Actual Price - Standard Price) x Actual Quantity
= ($1 - $0.9) x 100
= $10 U
b. Material Quantity Variance = (Actual Quantity - Standard Quantity) x Standard Price
= (100 - 110) x $0.9
= $9 F
c. Labor Rate Variance = (Actual Rate - Standard Rate) x Actual hours
= ($15 - $16) x 200
= $200 F
d. Labor Efficiency Variance = (Actual hours - Standard hours) x Standard Rate
= (200 - 220) x $16
= $320 F
2. Description of the possible causes for this combination of these variances
a. This could be due to scarcity of resources or major demand for this material, thus prices increasing in the market. Or could be purchase of high quality material than budgeted.
b. This could be because of purchase of higher quality material thus lower damages and could also be due to the efficiency of manufacturing plants.
c.This could be because of the use of less qualified cheap labor.
d.This could be due to good management of labors and strict overseeing, co-ordination of their work activities.
The additional paid-in capital account represents profit to the corporation and, as such, it is credited to Retained Earnings.
A. True
B. False
Answer:
B. False
Explanation:
The retained earnings show distributions available out of profit to the company shareholders after all other obligations to third parties are satisfied.
Hence, additional paid-in capital account would not necessarily form part of Retained Earnings but is included as an increase in the equity account.
You are given the following information for Bowie Pizza Co.: Sales = $64,000; Costs = $30,700; Addition to retained earnings = $5,700; Dividends paid = $1,980; Interest expense = $4,400; Tax rate = 22 percent. Calculate the depreciation expense. (Do not round intermediate calculations and round your answer to the nearest dollar.)
Answer:
$18554
Explanation:
The formula for addition to retained earnings can be used to determine the amount of depreciation expense as shown below:
addition to retained earnings=sales-costs-depreciation expense-interest expense-tax paid-dividends
addition to retained earnings=net income-dividends
5700=net income-1980
net income=5700+1980=7680
if tax 22%,net income is 1-22%=0.78
profit before tax=7680 /0.78= 9,846.15
tax = 9,846.15*22%= 2,166.15
using the long formula,we have depreciation expense
5700=64000-30700-depreciation expense-4400-2666.15-1980
depreciation expense=64000-30700-4400-2666.15-1980-5700
depreciatio expense=$18553.85
1. A stock has an expected return of 10.2 percent, the risk-free rate is 4.1 percent, and the market risk premium is 7.2 percent. What must the beta of this stock be?
Answer:
Beta is 0.85
Explanation:
The value of Beta can de derived from the CAPM formula of expected return
expected return=risk-free rate+Beta*market risk premium
expected return is 10.2%
risk-free rate is 4.10%
market risk premium is 7.2%
Beta is unknown
10.20%=4.10%+Beta*7.20%
10.20%-4.10%=Beta*7.20%
6.10% ==Beta*7.20%
Beta=6.10% /7.20%
Beta= 0.85
Question 3
You are the Chief Operations Officer responsible for overall company operations in ATCHULO Company Ltd, a large courier company in Ghana. Your company has 16 regional offices (terminals) scattered around the country in each of the regional capitals and a main office (hub) located in the capital city of the country. Your operations are strictly domestic. You do not accept international shipments.
The day at each terminal begins with the arrival of packages from the hub. The packages are loaded onto trucks for delivery to customers during morning hours. In the afternoon, the same trucks pick up packages that are returned to the terminal in late afternoon and then shipped to the hub where shipments arrive from the terminals into the late evening and are sorted for delivery early the next day for the terminals.
Examiner: Dr. Abubakari Atchulo Page 1 of 2
Each terminal in your company is treated as an investment centre and prepares individual income statements each month. Each terminal receives 30% of the revenue from packages that it picks up and 30% of the revenue from the packages it delivers. The remaining 40% of the revenue from each transaction goes to the hub. Each terminal accumulates its own costs. All costs relating to travel to and from the hub are charged to the hub. The revenue per package is based on size and service type and not the distance the package travels. (There are two services: overnight and ground delivery, which takes between 1 and 7 days, depending on the distance traveled).
All customer service is done through a central service group located in the hub. Customers access this service centre through a toll-free telephone number. The most common calls to customer service include requests for package pickup, requests to trace an overdue package, and requests for billing information. The company has invested in complex and expensive package tracking equipment that monitors the package’s trip through the system by scanning the bar code placed on every package. The bar code is scanned when the package is picked up, enters the originating terminal, leaves the originating terminal, arrives at the hub, leaves the hub, arrives at the destination terminal, and is delivered to the customers. All scanning is done with hand held wands that transmit the information to the regional and then central computer.
The major staff functions in each terminal are administrative (accounting, clerical, and executive), marketing (the sales staff), courier (the people who pick up and deliver the shipments and the equipment they use), and operations (the people and equipment who sort packages in the terminal).
This organisation takes customer service very seriously. The revenue for any package that fails to meet the organisation’s service commitment to the customer is not assigned to the originating and destination terminals.
All company employees receive a wage and a bonus based on the terminal’s economic value added. This system has promoted many debates about the sharing rules for revenues, the inherent inequity of the existing system, and the appropriateness of the revenue share for the hub. Service problems have arisen primarily relating to overdue packages. The terminals believe that most of the service problems relate to wrong sorting in the hub, resulting in packages being sent to the wrong terminals.
Required:
A) Explain why an investment centre is or not an appropriate organisational design in ATCHULO Company Ltd. (15 marks)
B) Assuming that ATCHULO Company Ltd is committed to the current design, how would you improve it? (15 marks)
C) Assuming that ATCHULO Company Ltd has decided that the investment centre model is
unacceptable, what model to performance evaluation would you recommend and why? (15 marks)
Answer:
ATCHULO Company Ltd
A) ATCHULO Company Ltd, as it is currently being operated should not be using an investment center as the appropriate organizational design when a profit center structure could have been applied. However, if it wants to continue the use of the investment center model as a preferred organizational structure, then it should implement the structure fully. For one, an investment center is a division in ATCHULO company that is supposed to be in control of all its investment activities (assets), and is responsible for generating profits (revenue and costs) for its sustenance. Its performance will then be evaluated based on the revenue it generates less the expenses, including the capital costs incurred for generating the revenue.
B) For a better operation of the investment center, revenues generated by the investment centers should be assigned to the investment centers and all their costs will be assigned as well. The investment centers should have their operational assets and make the necessary decisions regarding their use.
The hub should not be sorting packages for the investment centers as each investment center could handle the sorting at their various centers and route packages to appropriate destinations, accordingly. The investment centers should operate their own trucks or outsource such services at some costs. Since packages are sent from one center to the other and vice versa, they can charge for the services they provide for one another. In this way, each investment center's performance will be more accurately evaluated.
C) The investment center approach would have been the best for ATCHULO Company Ltd if it were being properly implemented, both in terms of operational activities and performance evaluation.
However, since ATCHULO Company has decided to change the model, I recommend the centers to be operated as profit centers, because this is the next best thing in terms of performance evaluation. However, each center must be able to make its own revenue and cost decisions, so that it can be assessed based on profit performance.
Explanation:
An investment center in ATCHULO Company should be a unit of the firm that is responsible for its revenue, cost, and investment decisions, with its performance judged based on the overall outcome achieved or the value added to the company.
A profit center in ATCHULO Company is a unit that is only responsible for its revenue and cost decisions, while investment activities are handled from the headquarters. Its performance is evaluated on profits without consideration of the capital costs incurred in generating the profits.
Suppose on January 1 Andrew's Tavern prepaid rent of $ 16 comma 800 for the full year. At November 30, how much rent expense should be recorded for the period January 1 through November 30?
Answer:
The rent expense to be recorded on November 30 will be $15400.
Explanation:
The accrual principle in the accounting states that the revenues and expenses for a period should be matched and recorded in their respective periods. Following the principle, we should record the expenses in the period to which they belong. Thus, the rent that is paid in advance is an asset and it will be expensed out as it is consumed.
The rent of $16800 is paid for the period from January to December.
The rent to be recorded as rent expense on 30 November will be for 11 months from January to November.
Rent expense = 16800 * 11/12 = $15400
Bailliere Company recorded cash sales of $300,000 and cost of goods sold relating to those sales of $120,000 on its Excel spreadsheet during the month of June. At the end of June, the company closed its underapplied overhead in the amount of $5,000 to cost of goods sold and reflected that transaction on its spreadsheet. What is the amount of cost of goods sold that will be reported on the company's income statement for the month of June?
a) $120,000
b) $125,000
c) $115,000
d) $175,000
Answer:
Option B
Cost of goods reported =$ 125,000
Explanation:
Overheads are charged to units produced by the means of using an estimated overhead absorption rate. This rate is computed using budgeted overhead and budgeted activity level.
As a result of this, overhead charged to total units product might be over or under absorbed compared to the actual amount incurred.
The under applied overhead implies that the applied overhead is less than the actual overhead.
This implies that the cost of the goods are under valued. Hence, to accurately valued them, the under applied overhead would be added to the cost of the goods.
Cost of goods reported = cost of goods + under applied overhead
= 120,000 + 5,000 = 125,000
Cost of goods reported =$ 125,000
In the long run, when price is less than average total cost for all possible levels of production, a firm in a competitive market will choose to exit (or not enter) the market.
a. True
b. False
Answer:
a. True
Explanation:
A competitive market is a market in which there are many buyers and sellers. Also, sellers have similar goods and and they don't have the power to influence the market. This means that in a competitive market companies have to accept the price define by the market and if the price is less than average total cost for all possible levels of production, a firm in a competitive market will choose to exit (or not enter) the market as it doesn't have the possibility to do something to influence the price and it won't be able to make a profit. According to that, the statement is true.
HUD, Co. had a beginning retained earnings of $30,995. For the year, the company had net income of $7,590 and paid dividends of $3,120. The company also issued $5,320 in new stock during the year. What is the ending retained earnings balance?
Answer:
$35,465
Explanation:
Calculation for Ending Retained Earnings
Using this formula
Retained earnings = Beginning retained earnings +(Net income- Dividend)
Let plug in the formula
Retained earnings = $30,995 + ($7,590 − $3,120)
Retained earnings =$30,995 +$4,470
Retained earnings =$35,465
Therefore the the ending retained earnings balance will be $35,465
Assume that the risk-free rate is 4.5% and the required return on the market is 13%. What is the required rate of return on a stock with a beta of 2
Answer:
Required rate of return= 21.5 %
Explanation:
The capital asset pricing model is a risk-based model. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta.
Under CAPM, Ke= Rf + β(Rm-Rf)
Rf-risk-free rate, β= Beta, Rm= Return on market.
Using this model,
Ke= 4.5% + 2(13-4.5%)
= 21.5 %
Required rate of return= 21.5 %
An investment project provides cash inflows of $615 per year for eight years. a. What is the project payback period if the initial cost is $1,750
Answer:
It will take 3 years and 66 days to pay for the initial investment.
Explanation:
Giving the following information:
Cash flows= $615 for 8 years
Initial investment= $1,750
The payback period is the time required to cover for the initial investment.
Year 1= 615 - 1,750= -1,135
Year 2= 615 - 1,135= -520
Year 3= 615 - 520= 95
Exactly:
(95/520)= 0.18*365= 66
It will take 3 years and 66 days to pay for the initial investment.
Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2011. The note, along with interest at 6%, is due on June 30, 2012. On September 30, 2011, Ireland discounted the note at Cloverdale bank. The bank's discount rate is 10%. What amount of cash did Ireland receive from Cloverdale Bank
Answer:
$39,220
Explanation:
The maturity value of the note receivable on June 30, 2012
= Principal + Interest
= $40,000 + $40,000 x 6%
= $40,000 + $2,400
= $ 42,400
The note is discounted on September 30, 2011. Time period remaining to go till maturity as on September 30, 2011
= 12 - 3 months ( July, Aug and Sep)
= 9 months.
Amount of deduction
= $ 42,400 x 10% x 9/12
= $ 3,180
Finally, the Cash received by Ireland will be
= Maturity value - Discount
= $42,400 - $ 3,180
= $39,220
three examples of foreign companies operating in Fiji and a type of service they provide
Answer:
Three foreign companies operating in Fiji:
Bank of Baroda: a multinational, financial services companies from India. It offers banking services in Fiji, and is one of the five international banks that operate in that country.Coca Cola: this American multinational beverages corporation from Atlanta, Georgia, also operates in Fiji. It sells consumer goods, specially beverages.Marriott: the American multinational hotel corporation has one hotel in Fiji: the Fiji Marriott Resort Momi Bay.
Consider a market for a specific kind of used cars, say 2009 Honda Civic. Suppose that in use these cars have proved to be either trouble free and reliable (peach) or have many things go wrong (lemon). The buyers are willing to pay $8,000 for a peach and $4,000 for a lemon. Each seller, on the other hand, values his/her car at $6,000 if it is a peach, and $2,000 if it is a lemon. The information about quality of any given car is not symmetric between its owner and potential buyers. The owner of the car knows perfectly well whether it is a peach or a lemon, whereas potential buyers don’t. The buyers only know that 60% of the Civics are peaches and the remaining 40% are lemons.
Required:
a. What will be the market price for a Civic? Which cars will be traded? (For definiteness, suppose that there is a limited stock of used Civics and a larger number of potential buyers.) Assume that the example above takes place in month 0. Every month that passes, all sellers of Civics – regardless of type – are willing to accept $100 less than they were the month before. Also, with every passing month buyers are willing to pay $400 less for a peach than they were the previous month and $200 less for a lemon.
b. What will be the market price for a Civic in month 1? Which cars will be traded?
c. What will be the market price for a Civic in month 2? Which cars will be traded?
Answer:
a. What will be the market price for a Civic? Which cars will be traded?
market price = $6,400all cars would be traded since the market price exceeds the selling price of peaches (and lemons).b. What will be the market price for a Civic in month 1? Which cars will be traded?
market price = $6,080all cars would be traded since the market price exceeds the selling price of peaches (and lemons).c. What will be the market price for a Civic in month 2? Which cars will be traded?
market price = $5,760only lemons would be traded since the market price exceeds the selling price of lemons but not peaches.Explanation:
month 0
buyers expected cost:
peaches $8,000 x 60% = $4,800
lemons $4,000 x 40% = $1,600
total expected cost = $6,400
sellers expected price:
peaches $6,000
lemons $4,000
month 1
buyers expected cost:
peaches $7,600 x 60% = $4,560
lemons $3,800 x 40% = $1,520
total expected cost = $6,080
sellers expected price:
peaches $5,900
lemons $3,900
month 2
buyers expected cost:
peaches $7,200 x 60% = $4,320
lemons $3,600 x 40% = $1,440
total expected cost = $5,760
sellers expected price:
peaches $5,800
lemons $3,800
Local Co. has sales of $ 10.8 million and cost of sales of $ 5.7 million. Its selling, general and administrative expenses are $ 550,000 and its research and development is $ 1.2 million. It has annual depreciation charges of $ 1.2 million and a tax rate of 35 %.
a. What is Local's gross margin? (answer in %, Round to one decimal place.)b. What is Local's operating margin? (answer in %, Round to one decimal place.)c. What is Local's net profit margin? (answer in %, Round to two decimal places.)
Answer:
Gross profit Margin = 47.2%
Operating profit margin = 19.9%
Net Profit Margin = 12.93%
Explanation:
Requirement A: Gross profit margin
Gross Profit = Sales - Cost of sales
Gross Profit = 5.1m
Gross profit Margin = Gross profit/Sales x 100
Gross profit Margin = 5.1/10.8 x 100
Gross profit Margin = 47.2%
Requirement B: Operating profit margin
Operating profit margin = Operating Profit/ Sales x 100
Operating Profit = Gross Profit - selling,general and administrative expense -research and development - depriciation
Operating Profit = 5.1m - 0.55m - 1.2m - 1.2m
Operating Profit = 2.15m
Operating profit margin = 2.15m/10.8m x 100
Operating profit margin = 19.9%
Requirement C: Net profit Margin
Net Profit margin = Net profit / Sales x100
Net Profit = Operating profit - tax
Net Profit = 2.15m - (2.15m x 35%)
Net Profit = 2.15m - 0.7525m
Net Profit = 1.3975m
Net Profit Margin = 1.3975m/10.8m x 100
Net Profit Margin = 12.93%
Trak Corporation incurred the following costs while manufacturing its bicycles.
Bicycle components $100,000 Advertising expense $45,000
Depreciation on plant 60,000 Property taxes on plant 14,000
Property taxes on store 7,500 Delivery expense 21,000
Labor costs of assembly-
line workers 110,000 Sales commissions 35,000
Factory supplies used 13,000 Salaries paid to sales clerks 50,000
Identify each of the above costs as direct materials, direct labor, manufacturing overhead, or period costs.
Bicycle components
Depreciation on plant
Property taxes on store
Labor costs of assembly-line workers
Factory supplies used
Advertising expense
Property taxes on plant
Delivery expense
Sales commissions
Salaries paid to sales clerks
Answer:
Required: Identify the costs as direct materials, direct labor, manufacturing overhead, or period costs.
They are classified below:
Bicycle components: DIRECT MATERIALS
Depreciation on plant: MANUFACTURING OVERHEAD
Property taxes on store: PERIOD COST
Labor costs of assembly-line workers: DIRECT LABOUR
Factory supplies used: MANUFACTURING OVERHEAD
Advertising expense: PERIOD COST
Property taxes on plant: MANUFACTURING OVERHEAD
Delivery expense: PERIOD COST
Sales commissions: PERIOD COST
Salaries paid to sales clerks: MANUFACTURING OVERHEAD
Definition of terms used:
Period cost is any cost incurred which was not directly involved during production.
Manufacturing overhead can be said to be indirect costs incurred during production.
Direct labour costs involves payment made to workers involved in production.
Direct materials cost are costs of raw materials used in production.
Therefore,
Bicycle components are classified as direct materials.
Depreciation on plant are classified as manufacturing overhead.
Property taxes on store are classified as period cost.
Labor costs of assembly-line workers are classified as direct labour.
Factory supplies used are classified as manufacturing overhead.
Advertising expense is classified as period cost
Property taxes on plant are classified as manufacturing overhead.
Delivery expenseis classified as period cost.
Sales commissions is classified as period cost.
Feather Tissues Inc. decided to change the color of its tissue box from red to blue because blue was thought to be visually pleasing to consumers at the time of purchase. The change in color represents the ________ aspect of packaging.
Answer:
aesthetic
Explanation:
Based on the information provided within the question it can be said that the change in color represents the aesthetic aspect of packaging. An aesthetic aspect refers to making sure that the packaging has an overall pleasant, positive, beautiful, or artful appearance in order to evoke positive emotions on the viewer. Which in this scenario is exactly what Feather Tissues Inc. is trying to accomplish by changing the color from red to blue, in order to please/attract their customers and in term increase sales.
Tate Company purchased equipment on November 1, 2015 and gave a 3-month, 9% note with a face value of $20,000. The December 31, 2015 adjusting entry is
Answer:
Dr Interest expense 300
Cr Interest payable 300
Explanation:
Preparation of December 31, 2015 adjusting entry for Tate Company
Since Tate Company had purchased the equipment on November 1, 2015 in which the company gave a 3-month with 9% note and a face value of $20,000, this means we have to record the transaction by Debiting Interest expense with 300 and Crediting Interest payable with the same amount . The amount of 300 is calculated as 2/12×9%×20,000
Therefore Tmthe December 31, 2015 adjusting entry will be :
Dr Interest expense 300
Cr Interest payable 300
Graphical Designs is offering 10-10 preferred stock. The stock will pay an annual dividend of $10 with the first dividend payment occurring 10 years from today. The required return on this stock is 5.20 percent. What is the price of the stock today
Answer:
PV of the stock today = $115.83
Explanation:
We will use the discounted cash flows approach to calculate the price of the stock today. This approach values the stock by accumulating the present value of all the expected future cash flows from the stock/asset.
As the preferred stock pays a constant dividend after equal intervals of time and for an indefinite period, it can also be treated as a perpetuity. Thus, the formula for the present value of perpetuity will be used to calculate the price of the stock at year 10 that we will discount back to today.
Present value of perpetuity = Cash flow / expected rate of return
PV of stock at Year 10 = 10 / 0.052
PV of stock at Year 10 = 192.3076923
The value of the today will be,
PV of the stock today = 192.3076923 / (1+0.052)^10
PV of the stock today = $115.83
A broker is a person or organization that uses its website to market a different company’s products, usually via online ads, and is paid a commission for each product sold.
a. True
b. False
Answer:
a. True
Explanation:
The broker is a person or a company that works is to sell the company products and charged a commission for each product sold. It worked like an intermediator between the company and the client
Therefore in the given case since the broker or firm used its website so that they offer different products of the company or different company products in orders to increased the sale of the company
Hence, the given statement is true
When stocks are held in street name, Group of answer choices the investor receives a stock certificate without the owner's street address. the investor does not receive a stock certificate. the broker holds the stock in the brokerage firm's name on behalf of the client. the investor does not receive a stock certificate, and the broker holds the stock in the brokerage firm's name on behalf of the client. the investor receives a stock certificate with the owner's street address.
Answer:
the broker holds the stock in the brokerage firm's name on behalf of the client.
Explanation:
In simple words, A security would be carried in "street name," when that is retained by a fund manager or a brokerage on a client 's behest. The title appearing on such stock or bond certification is the buyer 's definition however the person paying for the shares maintains property rights.
If brokers held the physical access credentials, the danger of psychical damage , loss as well as robbery would boost. Brokerage firms are able to maintain the shares electronically by retaining them in street names.
Do you think the Business practices in an Islamic country are likely differ from Business practices in the United States? If so, how?
Explanation:
Yes, the business practices of an Islamic country certainly differ from the business practices of the United States, starting with the significant cultural differences between those countries, including differences in the rules of etiquette, employee benefits, communication, the presence of women in the workplace, etc.
There is also strict government control in companies in Islamic countries, which obliges them to follow certain religious laws and regulations, which prevents them from managing an organization more aggressively with regard to paying interest and establishing a culture geared towards receiving "fair" profits, while business in the United States survives without obligation to comply with religious laws or impede profit.
Identify the best definition of money. whatever serves society in three functions: medium of exchange, store of value, and unit of account paper bills and coins metal or paper currency produced by governments to enable the exchange of goods and services the exchange of goods and services enabled via the double coincidence of wants
Answer:
Unit account of paper bills
Explanation:
I took test during school
As settlement of a 100,000 death benefit, a beneficiary elected to take an annuity-immediate payable monthly for 25 years. The monthly payment was calculated using an effective annual interest rate of 3 percent. After making payments for 10 years, the insurance company decided to increase the monthly payments for the remaining 15 years by changing the effective annual interest rate to 5 percent. Calculate the increase in the monthly payment.
Answer:
Increase in monthly payment = 66
Explanation:
Given:
Amount = 100,000
Time, n = 25 years
Rate of 3% was used for the first 10 years.
Rate of 5% was used for the remaining 15 years.
Required:
Calculate the increase in the monthly payment.
To find the increase we are to subtract the original monthly payment from the new monthly payment.
First find the original monthly payment:
Original monthly payment [tex]= 100000* \frac{(1+0.03)^(^1^/^1^2^)-1)}{(1-1/(1+((1+0.03)^(^1^/^1^2^)-1))^(^1^2^*^2^5^))} = 472.108741438514[/tex]
Therefore, original monthly payment % 472.109
Now calculate the new monthly payment:
New monthly payment [tex]= 472.108741438514 / [((1+0.03)^(^1^/^1^2^)-1)* (1-1/(1+((1+0.03)^(^1^/^1^2^)-1)^(^1^2^*^1^5^))*((1+0.05)^(^1^/^1^2^)-1)/(1-1/(1+((1+0.05)^(^1^/^1^2^)-1))^(^1^2^*^1^5^))] = 538.1868715[/tex]
New monthly payment = 538.187
Increase in monthly payment = 538.187 - 472.109 = 66.078
Increase in monthly payment ≈ 66
If a customer does not give a broker his or her instructions, cost basis reporting on Form 1099-B for a stock holding where there have been multiple purchases at different times is done on a:
Answer:
FIFO basis.
Explanation:
If a customer does not give a broker his or her instructions, cost basis reporting on Form 1099-B for a stock holding where there have been multiple purchases at different times is done on a first in, first out (FIFO) basis.
According to the internal revenue service (IRS), a Form 1099-B is a tax form which is received by individuals from their brokers or barter exchange enumerating their proceeds (gains) and losses from transactions made for a given tax year. The transactions include sales of stocks, forward contracts, derivatives, bonds, commodities, options, debt instruments for cash through a broker or barter exchange. It is necessary to also state on the Form 1099-B whether the holding period is short-term or long-term.
If the customer didn't give a broker his or her instructions and there have been multiple purchases of the stock at different times, it is reported or done on a first in, first out (FIFO) basis because the earliest or oldest unit of stock purchased are also the first unit that are sold.
29) If the rate of interest (r) is 9%, then you should be indifferent about receiving $750 in one year or $________ today A) $688.07 today B) $750 today C) $825.68 today D) None of the above
Answer:
$688.07
Explanation:
To find the answer, we can use the Future Value of an Investment formula:
FV = PV(1 + i)^n
Where:
FV = Future value
PV = Present value
i = interest rate
n = number of compounding periods.
Now, we replace the amounts into the formula to find the value of that the $750 had a year ago.
$750 = PV(1 + 0.09)^1
$750 = PV(1.09)
$750 / 1.09 = PV
$750 / 1.09 = $688.07
We can see that $750 is the value that $688.07 will have in one year, under a 9% interest rate. For that reason, the correct answer is A).