Jason just joined a new gym and signed up for a one-year membership. Membership fees can be paid in 12 monthly payments of $50, due at the beginning of each month or in one payment today. If the appropriate interest rate is 11%,.How much should he pay today for the annual membership?
Answers
Answer:
$570.91
Explanation:
For computing, the amount pay today for the annual membership we just need to apply the present value formula i.e to be shown in the attachment
Provided that
Future value = $0
Rate of interest = 11% ÷ 12 months = 0.916666%
NPER = 12 months
PMT = $50
The formula is shown below:
= PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the amount paid today for the membership is $570.91
Related Questions
NU YU announced today that it will begin paying annual dividends. The first dividend will be paid next year in the amount of $.27 a share. The following dividends will be $.32, $.47, and $.77 a share annually for the following three years, respectively. After that, dividends are projected to increase by 2.3 percent per year. How much are you willing to pay today to buy one share of this stock if your desired rate of return is 12 percent
Answers
Answer:
The maximum hat should be paid for the stock today is $6.48
Explanation:
The price of the stock today can be calculated using the dividend discount model. It bases the price or value of a stock on the present value of the expected future dividends from the stock.
The price of the stock today is,
P0 = 0.27/(1+0.12) + 0.32/(1+0.12)^2 + 0.47/(1+0.12)^3 + 0.77/(1+0.12)^4
[ (0.77 * (1+0.023)) / (0.12 - 0.023) ] / (1+0.12)^4
P0 = $6.48092 rounded off to $6.48
Oscar owns a building that is destroyed in a hurricane. His adjusted basis in the building before the hurricane is $130,000. His insurance company pays him $140,000 and he immediately invests in a new building at a cost of $142,000. What is Oscar's basis on his new building?
Answers
Answer: $132,000
Explanation:
Oscar's new basis on the building will be the basis of the old building plus any additional investment he added.
This is the because there is no gain on the $140,000 he received because it was an Involuntary Conversion amount and he reinvested it into another building within a period of 2 years.
As there is no gain, the building will retain it's original basis but will add any amount outside the involuntary replacement cost of the building.
The Additional basis will be,
= Cost of building - Insurance
= 142,000 - 140,000
= $2,000
The Basis for the new building is,
= 130,000 + 2,000
= $132,000
The following monthly data are available for Sheridan Company which produces only one product: Selling price per unit, $38; Unit variable expenses, $14; Total fixed expenses, $42000; Actual sales for the month of June, 7000 units. How much is the margin of safety for the company for June
Answers
Answer:
$199,500
Explanation:
The computation of the margin of safety is shown below:
As we know that
margin of safety = Actual sales - break even sales
where,
Actual sales is
= Actual sales units × Selling price per unit
= 7,000 units × $38
= $266,000
And, the break even sales is
= Fixed cost ÷ contribution margin per unit
= $42,000 ÷ ($38 - $14)
= $42,000 ÷ $24
= 1,750 units
Now the break even sales is
= Break even units × selling price per unit
= 1,750 units × $38
= $66,500
So, the margin of safety is
= $266,000 - $66,500
= $199,500
art E14 is used by M Corporation to make one of its products. A total of 20,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials $ 4.30 Direct labor $ 8.90 Variable manufacturing overhead $ 9.40 Supervisor's salary $ 4.80 Depreciation of special equipment $ 3.20 Allocated general overhead $ 8.40 An outside supplier has offered to make the part and sell it to the company for $30.30 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part E14 could be used to make more of one of the company's other products, generating an additional segment margin of $32,000 per year for that product. The annual financial advantage (disadvantage) for the company as a result of buying part E14 from the outside supplier should be:
Answers
Answer:
It is more profitable to continue making the product. On this level of production, the company saves $26,000 if it makes the product in-house.
Explanation:
Giving the following information:
Units= 20,000
Per Unit Cost:
Direct materials $4.30
Direct labor $8.90
Variable manufacturing overhead $9.40
Supervisor's salary $4.80
An outside supplier has offered to make the part and sell it to the company for $30.30 each.
Rent space= $32,000 per year
We will take into account only the differential costs.
Make in-house:
Total cost= 20,000* (4.3 + 8.9 + 9.4 + 4.8)= $548,000
Buy:
Total cost= 20,000*30.3 - 32,000= $574,000
It is more profitable to continue making the product. On this level of production, the company saves $26,000 if it makes the product in-house.
5. Sarasota Bicycles has been manufacturing its own wheels for its bikes. The company is currently operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $3.00 and $3.60 respectively. Normal production is 200,000 wheels per year. A supplier offers to make the wheels at a price of $8 each. If the bicycle company accepts this offer, all variable manufacturing costs will be eliminated, but the $84,000 of fixed manufacturing overhead currently being charged to the wheels will have to be absorbed by other products. Required: a. Prepare an incremental analysis for the decision to make or buy the wheels. b. Should Sarasota Bicycles buy the wheels from the outside supplier
Answers
Answer:
It is better to make the wheels
Explanation:
Sarasota Bicycles
Incremental Analysis
Make Buy
Direct materials $3.00
Direct labor $3.60
Variable OH (3.06*30%) 1.08
Total 7.68 8
Normal production 200,000 200,000
Total Costs 1536000 1600,000
Fixed Overheads 84,000 84,000
Total Costs 1620,000 1684,000
As fixed costs are irrelevant costs that would not change whether the company makes or buys wheels and the cost to make the wheels $7.08 is less than the cost to buy $ 8.0. It is better to make the wheels . Buying the wheels from the outside supplier is costly.
a. Incremental Analysis for making the wheels at Sarasota Bicycles is as follows:
Make Buy Differential
Alternative 1 Alternative 2 Cost
Relevant cost per unit $7.68 $8.00 $0.32 ($8.00 - $7.68)
Total cost $1,536,000 $1,600,000 $64,000 (200,000 x $0.32)
b. Sarasota should not buy the wheels from the outside supplier. It should continue to make them as it saves $64,000 per year from making the wheels.
Data and Calculations:
Direct materials cost per unit = $3.00
Direct labor cost per unit = $3.60
Variable manufacturing overhead = $1.08 ($3.60 x 30%)
Total variable cost per unit = $7.68
Number of wheels per year = 200,000
Outside Supplier's Price = $8 per unit
Thus, Sarasota Bicycles gains $64,000 by making the wheels instead of buying from the outside supplier.
Learn more: https://brainly.com/question/15313511
Outstanding stock of the Blue Corporation included 50000 shares of $5 par common stock and 18000 shares of 5%, $10 par non-cumulative preferred stock. In 2019, Blue declared and paid dividends of $7500. In 2020, Blue declared and paid dividends of $25000. How much of the 2020 dividend was distributed to preferred shareholders
Answers
Answer:
The dividends to be distributed among preferred stockholders in 2020 is $9000
Explanation:
The preferred stock holders are always paid dividends before the common stock holders. The amount left after paying preferred stockholders is paid to common stockholders as dividends.
Non cumulative preferred stock does not accrue or accumulates dividends. Thus, if dividends are not paid in a particular year, the company has no obligation to pay these dividends ever in the future.
Preferred stock dividend per year = 18000 * 10 * 0.05
Preferred stock dividend per year = $9000
As the preferred stock is non cumulative, then the remaining dividends for 2019 (which are 9000 - 7500 = $1500) will not be paid in 2020.
So, the preferred stock dividends to be paid in 2020 will be $9000 as the declared dividends are more than that required to pay the preferred stockholders.
Due to population shifts, Select one: a. businesses that cater to older consumers will see slower growth. b. health care will emerge as the only business sector that will grow. c. businesses that sell electronic devices will see a significant decline. d. businesses that cater to older consumers will see higher growth.
Answers
Answer: d. businesses that cater to older consumers will see higher growth
Explanation:
The trend in the Developed World is that of lower birth rates and higher life expectancies. This has and will keep leading to more of the population being from the Older generation. This is a population shift towards the older generation.
Should this happen, Businesses and products that were made for the older generation will see their business grow as they will have more customers which equates to more demand which equates to higher profitability.
Jack's Construction Co. has 80,000 bonds outstanding that are selling at par value. Bonds with similar characteristics are yielding 8.5%. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is yielding 4% and the market risk premium is 8%. Jack's tax rate is 35%. What is Jack's weighted average cost of capital
Answers
Answer:
The answer is =10.36%
Explanation:
The weighted average cost of capital (WACC) is a way that a company calculates its cost of financing and acquiring assets by comparing the debt and equity structure of the business.
WACC = WeRe + WdRd
We is weight of equity
Re is cost of equity
Wd is weight of debt
Rd is cost of debt
For its cost of equity:
Ke = Rf + beta(market risk premium)
Where Ke is cost of equity
Rf is risk free rate of return( treasury bill return)
4% + 1.1 x 8%
= 12.8%
Total debt 80,000 x $1,000 = $80million
Common: 4million x $40 = $160million
Total = $80milllion + $160million
=$240million.
Therefore, WACC is
WdRd= 80/240 x [8.5% x(1-35%)]
80/240 x 5.5%
=1.83%
WeRe = 160/240 x 12.8%
= 8.53%
=1.83% + 8.53%
=10.36%
The next dividend payment by Savitz, Inc., will be $1.68 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. If the stock currently sells for $32 per share, what is the required return
Answers
Answer:
The answer is 11.25%
Explanation:
Solution
Given that:
The next step to take is to calculate the required rate of return which is shown below:
The required rate = D₁/P₀₀ + g
Thus,
$1.68/$32 + 0.06%
=0.0525 + 0.06
=0.1125 or 11.25%
Therefore, the required rate of return is 11.25%
On November 7, 2017, Mura Company borrows $360,000 cash by signing a 90-day, 9% note payable with a face value of $360,000. (Use 360 days a year. Do not round your intermediate calculations.) 1. Compute the accrued interest payable on December 31, 2017.
Answers
Answer:
The accrued interetst is $4860 and $3240
Explanation:
Solution
Recall that:
Mura Company borrows= $360,000
Time =90/360
rate = 9%
Face value =$360,000
The next step is to compute the accrued interest payable on December 31, 2017.
Now,
Interest = 360000*9%*90/360=8100$
year end interest accrual:
Principal =$360000
time 54/360
Interest =360000*9%*54/360 = $4860
Interest recognized on February 5
Principal =$360000
Rate= 9%
Time= 36/360
Interest 360000*9%*36/360 = $3240
Periodic Inc. provides formal training to newly recruited Business Developers to guide them in designing new business initiatives. The new recruits are in the _____ stage of the creative process.
Answers
Answer:
Preparation stage.
Explanation:
Since Periodic Inc. provides formal training to newly recruited Business Developers to guide them in designing new business initiatives. The new recruits are in the preparation stage of the creative process.
A creative process is a mental approach to innovation, it involves all the process of conceiving an idea and using this ideas to create a new and original product.
Generally, the creative process can be classified into five (5) stages, these are;
1. Preparation: this is typically the first stage of the creative process and it involves the process of gathering information by doing a whole lot of background research that would inspire you to do it.
2. Incubation: at this second stage of the creative process, you will let your mind wander away in imagination, in order to construct your thoughts.
3. Insight: this is the third stage of the creative process and it involves connecting the dots in your thoughts. It is simply the "eureka" moment where a perfect idea fits into your head.
4. Evaluation: this is the fourth stage of the creative process and it involves verifying and sifting your ideas to ensure they are in tandem with your aim, objectives and goals.
5. Implementation: this is the final stage of the creative process and it is the stage where the beautiful and insightful ideas are put into actions to develop a product.
Hence, the new recruits are in the preparation stage of the creative process.
The City of Southern Pines maintains its books so as to prepare fund accounting statements and records worksheet adjustments in order to prepare government-wide statements. As such, the City’s internal service fund, a motor pool fund, is included in the proprietary funds statements. Balance sheet asset accounts include: Cash, $102,000; Investments, $150,400; Due from the General Fund, $18,300; Inventories, $396,000; and Capital Assets (net), $1,169,700. Liability accounts include: Accounts Payable, $61,500; Long-Term Advance from Enterprise Fund, $738,000. The only transaction in the internal service fund that is external to the government is interest revenue in the amount of $4,400. Exclusive of the interest revenue, the internal service fund reported net income in the amount of $84,000. An examination of the records indicates that services were provided as follows: one-third to general government, one-third to public safety, and one-third to public works. Prepare necessary adjustments in order to incorporate the internal service fund in the government-wide statements as a part of governmental activities. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answers
Answer: The answer has been attached
Explanation:
The journal is a book in accounting that is used to record the transactions that affect a business. It should be noted that the double entry method of bookkeeping is utilised while recording in a journal.
The journal has been attached in the following way:
1. The journal was used to record the balance sheet particulars.
2. To record the transaction in the internal service fund that is external to the government.
3. To record the internal service fund in the government-wide statements as a part of governmental activities.
It should also be noted that the net income of $84,000 was to be shared as one-third to general government, one-third to public safety, and one-third to public works. This means they'll all receive ($84,000/3) = $28,000 each.
Further explanation can be found in the attached file.
Accounting practice in the United States follows the generally accepted accounting principles (GAAP) developed by the Financial Accounting Standards Board (FASB), which is a nongovernmental, professional standards body that monitors accounting practices and evaluates controversial issues. The Securities and Exchange Commission (SEC) requires all publicly traded companies to periodically report their financial information.
A publicly held corporation must publish an annual report that contains the balance sheet, income statement, statement of cash flows, statement of retained earnings, and other financial information for analysis.
The following descriptions of the major financial statements and reports that a firm publishes. Identify the correct statement or report for each description.
Description :
a. Is required by the SEC and includes the audited document that shows the company's financial results for the past year and management's discussion about the future outlook and plans
b. Gives details about the firm's sales, costs, and profits for the past accounting period
c. Details changes in the capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earings.
d. Provides details about the flow of funds from operating, investing, and financing activities.
e. Summarizes a company's assets, liabilities, and stockholders' equity at a specific point in time.
Answers
Answer: a. Annual Report
b. Income statement
c. Statement of Shareholder Equity.
d. Cashflow Statement
e. Balance Sheet.
Explanation:
The Annual Report is a comprehensive report that aims to show stakeholders including the SEC what the company has been up to in the previous year. It analyzes the business's financial report and also the strategic goals of the business as well.
The Income Statement lets stakeholders know how the company's business transactions went for the previous period. It shows how much goods and services were sold as well as the expenses involved.
The Statement of Shareholder Equity aims to show how the business's dealings during the year have impacted the ownership of the company. It shows the Capital and the Retained Earnings.
The Cashflow Statement aims to show just how much actual cash that the business has. To do so it usually divides the cash transactions into Operating, Investing, and Financing activities.
The Balance Sheet summarizes the components of the Accounting Equation which includes Assets, Liabilities and Equity. This way a person can see at a glance how the business operates.
The Securities and Exchange Commission and the Federal Aviation Administration are examples of agencies engaged in A. the regulation of nonmonopolistic industries. B. health and safety regulation. C. social regulation. D. the regulation of natural monopolies.
Answers
Answer:
A. the regulation of nonmonopolistic industries.
Explanation:
The Securities and Exchange Commission and the Federal Aviation Administration are examples of agencies engaged in the regulation of nonmonopolistic industries.
A nonmonopolistic industry is one that is characterized by competition among various service providers in a country and generally there's a government agency that regulates their actions and activities in the public.
The Securities and Exchange Commission (SEC) is a governmental agency saddled with the sole responsibility of regulating the securities or capital markets, as well as protecting investors in a country.
In the U.S, the Securities and Exchange Commission (SEC) as an independent government agency was established under the Securities Act of 1933 and the Securities and Exchange Act of 1934 of the United States of America.
Hence, SEC has the power to propose securities rules and regulations, and enforce federal securities law in the securities market.
The Federal Aviation Administration (FAA) was founded on the 23rd of August, 1958 under the Federal Aviation Act of 1958 of the United States of America. It is an independent government agency with the responsibility of regulating civil aviation, commercial space transportation, construction and maintenance of airports, air traffic management and operations of navigation systems for both civil and military aircrafts, and issuance of licenses to airline operators with their personnel.
Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 29 percent for the next three years, with the growth rate falling off to a constant 6.8 percent thereafter. If the required return is 15 percent and the company just paid a dividend of $3.15, what is the current share price
Answers
Answer:
The current price of the share is $69.85
Explanation:
To calculate the current share price, we will use the dividend discount model approach.
The dividend discount model (DDM) estimates the value of a share/stock based on the present value of the expected future dividends from the stock. We will use the two stage growth model of DDM here as the growth in dividends of the stock is divided into two stages.
The formula for current price under two stage growth model is,
P0 = D0 * (1+g1) / (1+r) + D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n +
[( D0 * (1+g1)^n * (1+g2)) / (r - g2)] / (1+r)^n
Where,
g1 is initial growth rateg2 is the constant growth rater is the required rate of returnSo, the price of the stock today will be,
P0 = 3.15 * (1+0.29) / (1+0.15) + 3.15 * (1+0.29)^2 / (1+0.15)^2 +
3.15 * (1+0.29)^3 / (1+0.15)^3 +
[( 3.15 * (1+0.29)^3 * (1+0.068)) / (0.15 - 0.068)] / (1+0.15)^3
P0 = $69.85196 rounded off to $69.85
Consider an assembly line with 20 stations. Each station has a 0.5% probability of making a defect. At the end of the line, an inspection step singles out the defective units. The inspection step catches 80% of all defects. From inspection, units that are deemed to be non-defective
are moved to the shipping department.
If a defect is found at inspection, it is sent to the rework department.
Rework fixes about 95% of the defective units. Units are directly shipped from the rework department with no further inspection taking place.
1- What is the probability that a unit ends up in rework (in decimal form)?
2- What is the probability that a defective unit is shipped (in decimal form)?
Answers
Answer:
Assembly Line1. Probability that a unit ends up in rework = Probability of defect in 20 stations multiplied by the probability of catching defects = 0.8%(1% x 80%) = 0.008
2. Probability that a defective unit is shipped = Probability of defective units during inspection plus Probability of defective units during rework = 25% (20% + (100-95%)) = 0.25
Explanation:
a) Probability of defect in 20 stations = 0.5% x 20 = 1%. Each station has a 0.05%
b) Probability of defective units during inspection = 20% (100% - 80)
c) Probability of defective units during rework = 5% (100% -95)
c) Probability is the likelihood or chance of an event occurring. Divide the number of events by the number of possible outcomes. This will give us the probability of a single event occurring.
If a business using the specific identification method of inventory has two items on hand at $300 each and purchases four items at $400 each, what is the value of inventory if two of the $300 items are sold
Answers
Answer:
The value of inventory is $1600.
Explanation:
The business has two inventory on hand that cost $300 each so total value of inventory = 2 × 300 = $600
The value of four items at $400 each = 4 × 400 = $1600
Total number of items = 2 + 4 = 6
Total value of 6 items = 600 + 1600 = $2200
The value of sold inventory = 2 × 300 = $600
The value of inventory = total value of inventory - The value of sold inventory
The value of inventory = $2200 - $600
The value of inventory = $1600
Oscar Clemente is the manager of Forbes Division of Pitt, Inc., a manufacturer of biotech products. Forbes Division, which has $4 million in assets, manufactures a special testing device. At the beginning of the current year, Forbes invested $5 million in automated equipment for test machine assembly. The division's expected income statement at the beginning of the year was as follows:Sales revenue $ 16,000,000 Operating costs Variable 2,000,000 Fixed (all cash) 7,500,000 Depreciation New equipment 1,500,000 Other 1,250,000 Division operating profit $ 3,750,000A sales representative from LSI Machine Company approached Oscar in October. LSI has for $6.5 million a new assembly machine that offers significant improvements over the equipment Oscar bought at the beginning of the year. The new equipment would expand division output by 10 percent while reducing cash fixed costs by 5 percent. It would be depreciated for accounting purposes over a three-year life. Depreciation would be net of the $500,000 salvage value of the new machine. The new equipment meets Pitt's 20 percent cost of capital criterion. If Oscar purchases the new machine, it must be installed prior to the end of the year. For practical purposes, though, Oscar can ignore depreciation on the new machine because it will not go into operation until the start of the next year. The old machine, which has no salvage value, must be disposed of to make room for the new machine. Pitt has a performance evaluation and bonus plan based on ROI. The return includes any losses on disposal of equipment. Investment is computed based on the end-of-year balance of assets, net book value. Ignore taxes. Oscar Clemente is still assessing the problem of whether to acquire LSI’s assembly machine. He learns that the new machine could be acquired next year, but if he waits until then, it will cost 15 percent more. The salvage value would still be $500,000. Other costs or revenue estimates would be apportioned on a month-by-month basis for the time each machine (either the current machine or the machine Oscar is considering) is in use. Fractions of months may be ignored. Ignore taxes.Required: Calculate ROI for the coming year assuming that the new equipment is bought at the beginning of the year. (Do not round intermediate calculations. Round your final answer to nearest whole percentage.)
Answers
Answer:
Forbes Division of Pitt, Inc.Performance Reportby Oscar Clemente
ROI = $1,900,000/$4,500,000 x 100 = 42.222%
(Return on Investment = Operating Income/net book value of new investment x 100)
Explanation:
a) Forbes Division's Expected Income Statement at the beginning of the year: Year 1 Year 2
Sales revenue $ 16,000,000 $ 17,600,000
Operating costs:
Variable 2,000,000 2,200,000
Fixed (all cash) 7,500,000 6,750,000
Depreciation: New equipment 1,500,000 2,000,000
Other 1,250,000 1,250,000
Disposal of old equipment (loss) 3,500,000
Division operating profit $ 3,750,000 $ 1,900,000
b) Return on Investment (ROI) is a financial performance measure which evaluates the efficiency of an investment, by trying to directly measure the amount of return on a particular investment, relative to the investment's cost.
c) The Formula for ROI calculation is to subtract the initial value of the investment from the final value of the investment (which equals the net return), then dividing this new number (the net return) by the cost of the investment, and, finally, multiplying it by 100. In this Forbes Division, the operating income is taken as the difference between the initial value of the investment and the final value of the investment.
Many consumers buy soft drinks and potato chips together when they shop at a grocery, convenience, or mass merchandiser store. But when querying its marketing information system (MIS), one convenience store discovered that when consumers bought a sandwich, many also purchased toothpaste. This information was obtained from checkout scanner data from its stores nationwide. This convenience store used________ to extract this hidden information from its MIS to find the statistical link between the two product categories.
Answers
Answer:
Data mining
Explanation:
Data mining is the process in which we can extract the raw data into useful data that would become beneficial for the company.
Large data is available and if we take the data i.e important or useful so this process we called data mining
In the given situation, it is discovered that when the consumers purchased a sandwich so many customers purchased toothpaste along with it. And for extracting the hiding information from its MIS the store used the data mining technique.
An asset has an average return of 10.19 percent and a standard deviation of 22.41 percent. What is the most you should expect to lose in any given year with a probability of 16 percent
Answers
Answer:
The answer is 32.6%
Explanation:
Solution
Given that
An assets has a return average of =10.19%
Standard deviation =22.41%
Probability in any given year =16%
Now
The most you should expect to earn in any given year with a probability of 16 percent is = 10.19 + 22.41
= 32.6
Therefore,what you should expect in given year to lose is 32.6%
Testbank Multiple Choice Question 96 On June 30, 2021, when Bonita Industries's stock was selling at $66 per share, its capital accounts were as follows: Capital stock (par value $50; 58000 shares issued) $2900000 Premium on capital stock 580000 Retained earnings 4150000 If a 100% stock dividend were declared and distributed, capital stock would be $3480000. $5800000. $7656000. $2900000.
Answers
Answer:
$5800000
Explanation:
Stock dividend refers to a form of dividend payment whereby additional stock shares of the company are distributed to shareholders instead of paying the shareholders in cash.
Stock dividends are also known as stock spills and it increases the common stock par value by its declared percentage.
Since the a 100% stock dividend were declared and distributed, this would increase the common stock as follows:
Increase in common stock = $2,900,000 * 100% = $2,900,000.
Therefore, the new common stock would be:
New common stock = Existing common stock + Increase in common stock = $2,900,000 + $2,900,000 = $5,800,000.
Therefore, If a 100% stock dividend were declared and distributed, capital stock would be $5,800,000.
Dynamo Corporation manufactures toasters. Each toaster comes with a 5-year assurance-type warranty. The toasters sell for $60 each. During Year 1, Dynamo sells 600 toasters, for cash. Past experience shows that the average warranty costs are $4 each or $2,400 for these toasters. In Year 1, Dynamo pays $500 cash for warranty costs on the toasters sold that year. Required: Prepare Dynamo’s journal entries related to the sales and warranty in Year 1.
Answers
Answer:
Journal entry to record sale of toasters and warranty
Dr Cash 36,000
Cr Sales revenue 36,000
Dr Warranty expense 2,400
Cr Warranty liability 2,400
Adjusting entry for actual warranty expense
Dr Warranty liability 500
Cr Cash 500
Since the warranty covers a 5 year period, the remaining warranty expense cannot be recognized as warranty revenue yet. Only after the warranty period is over, will any money left over will be recognized as revenue.
g in computing the present value of lease payments, the lessee shoulduse the lessee's incremental borrowing rate unless the lessor's implicit interest rate is known to the lessee. expected rate of return. settlement rate. none of these answer are correct
Answers
Answer:
b on edg
Explanation:
Mars Corp. is choosing between two different capital investment proposals. Machine A has a useful life of four years, and machine B has a useful life of six years. Each proposal requires an initial investment of $200,000, and the company desires a rate of return of 10 percent. Although machine B has a useful life of six years, it could be sold at the end of four years for $35,000.
Year Present Value of $1 at 10 Percent
1 0.909
2 0.826
3 0.751
4 0.683
5 0.621
6 0.513
Machine A will generate net cash flow of $70,000 in each of the four years. Machine B will generate $80,000 in year 1, $70,000 in year 2, $60,000 in year 3, and $40,000 per year for the remaining three years of its useful life. Which of the following statements portrays the most accurate analysis between the two proposals?
a. Mars should invest in Machine A becuase the net present value of Machine A after 4 years is higher than the net present value of Machine B after 4 years.
b. Mars should invest in Machine B becuase the net present value of Machine A after 4 years is lower than the net present value of Machine B after 6 years.
c. Mars should invest in Machine B becuase the net present value of Machine A after 4 years is lower than the net present value of Machine B after 4 years.
d. Mars should invest in Machine A becuase the net present value of Machine A after 4 years is higher than the net present value of Machine B after 6 years.
Answers
Answer:
c. Mars should invest in Machine B becuase the net present value of Machine A after 4 years is lower than the net present value of Machine B after 4 years.
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
Considering that machine b can be sold on 4 years, The NPV of machine b should be calculated based on the cash flow in for 4 years
NPV can be calculated using a financial calculator.
Machine A :
Cash flow in year 0 = $-200,000
Cash flow each year from year 1 to 4 = $70,000
I = 10%
NPV = 21,890.58
Machine B :
Cash flow in year 0 = $-200,000
Cash flow each year from year 1 = $80,000
Cash flow each year from year 2 = $70,000
Cash flow each year from year 3 = $60,000
Cash flow each year from year 4 = $40000 + $35,000 = $75,000
I = 10%
NPV = $26,883.41
Machine b should be accepted because its NPV is greater than that of machine A
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
Using $3,000,000 as the total manufacturing costs, compute the cost of goods manufactured using the following information.
Raw materials inventory, January 1 $ 20,000
Raw materials inventory, December 31 40,000
Work in process, January 1 18,000
Work in process, December 31 12,000
Finished goods, January 1 40,000
Finished goods, December 31 32,000
Raw materials purchases 1,700,000
Direct labor 760,000
Factory utilities 150,000
Indirect labor 50,000
Factory depreciation 400,000
Operating expenses 420,000
a. $3,014,000
b. $3,006,000
c. $3,008,000
d. $2,994,000
Answers
Answer:
$3,006,000
Explanation:
The computation of cost of goods manufactured is shown below:-
Cost of Goods Manufactured = Gross Manufacturing Cost + Opening Work in progress - Closing work in progress
= $3,000,000 + $18,000 - $12,000
= $3,006,000
Therefore for computing the cost of goods manufactured we have applied the above formulas and ignore all other values as they are not relevant.
Value of a retirement annuity Personal Finance Problem An insurance agent is trying to sell you an annuity, that will provide you with $6 comma 200 at the end of each year for the next 20 years. If you don't purchase this annuity, you can invest your money and earn a return of 4%. What is the most you would pay for this annuity right now? Ignoring taxes, the most you would pay for this annuity is
Answers
Answer:
The maximum to be paid= $84,260.023
Explanation:
The maximum amount to be paid is the present value of the series of annual cash inflow discounted at the opportunity cost rate of 4% per annum.
This is given in the relationship below:
PV = A ×( 1- (1+r)^(-n))/r )
A- annual amount receivable- 6,200. r-rate of return - 4%, n-number of years- 20
PV = 6,200 × ( 1 - (1+0.04)^(-20)/0.04)
= 6,200 × 13.5903
= $84,260.023
The maximum to be paid= $84,260.023
An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it is badly needed. Because the firm has received a permit, the plant would be legal; but it would cause some air pollution. The company could spend an additional $40 million at Year 0 to mitigate the environmental Problem, but it would not be required to do so. The plant without mitigation would cost $209.71 million, and the expected cash inflows would be $70 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $75.84 million. Unemployment in the area where the plant would be built is high, and the plant would provide about 350 good jobs. The risk adjusted WACC is 17%.a) Calculate the NPV and IRR with and without mitigation.
b) How should the environment effects be dealt with when evaluating this project?
c) Should this project be undertaken? If so, should the firm do the mitigation?
Answers
Answer:
Without Mitigation:
Net Present Value $14,244,200
IRR 19.92%
With mitigation
Net Present Value: $ -7,071,600
IRR = 15.76%
The project should be started without hte mitigation effort as would decrease the return below the cost of capital of the company.
Explanation:
Present value without mitigation
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 70.00
time 5
rate 0.17
[tex]70 \times \frac{1-(1+0.17)^{-5} }{0.17} = PV\\[/tex]
PV $223.9542
Less
cost $209.71
Net Present Value 14,2442
IRR (using excel)
we input the -209.71 in one cell
then, we enter the 70 millon five times below the cost
and use the IRR formula to get the answer:
0.1992 = 19.92%
With mitigation:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 75.84
time 5
rate 0.17
[tex]75.84 \times \frac{1-(1+0.17)^{-5} }{0.17} = PV\\[/tex]
PV $242.6384
Less
249.71 cost
Net present value -7,0716
IRR:
A
1 -249.71
2 +75.84
3 +75.84
4 +75.84
5 +75.84
6 +75.84
=IRR(A1:A6)
= 0.1576
Question 2 (10 Marks)
In Andalusia Ltd, wages are paid on a weekly basis (40 hours per week) at a guaranteed hourly rate
of RM2.80. It is estimated that the time required to manufacture a particular product was 12 minutes.
However, the time allowed of 25% is to be added (for normal idle time, setting up time, etc.). During
the first week of June 2020, Roslan produced 250 units of the product.
Required:
Compute Roslan's wages for the particular week using the following methods of wage payment:
a. time rate.
[2 marks]
b. piece rate with a guaranteed weekly wage.
[3 marks]
c. Halsey's premium bonus scheme.
[5 marks]
Answers
Answer:
Andalusia LtdWages based on:a. Time rate = RM 2.80 x 40 hours = RM 112
b. Piece Rate = RM 0.70 x 250 units = RM 175
c. Halsey premium bonus scheme:
Pay per hour = RM 2.80,
Therefore Wages = Normal Wages + Bonus
= (RM 2.80 x 40) + 50% (RM 2.80 x 22.5)
= RM 112 + 31.5 = RM 143.50
Explanation:
a) Time for each product unit = 12
Piece rate = RM 2.80/60 x 15 = RM 0.70 per unit
b) Under Halsey Premium Bonus Scheme:
Hours used in production = 40 hours
Hours for producing 250 units = 62.5 hours
Gain in hours = 22.5 hours (62.5 - 40)
c) Time rates are wages based on the amount of time spent at work. The usual form of time rate is the weekly wage or monthly salary. Usually the time rate is fixed in relation to a standard working week (e.g. 40 hours per week).
d) Wages based on piece rate (also known as piecework) is a pay based on number of units or pieces created rather than the number of hours worked. In other words, the more “pieces” an employee produces, the more the employee is paid.
e) Under Halsey Plan, the standard time for the completion of a job is fixed and the rate per hour is then determined. The usual bonus share paid to the worker is 50% of the time saved multiplied by the rate per hour (time-rate).
Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 24 percent for the next three years, with the growth rate falling off to a constant 7 percent thereafter. If the required return is 11 percent, and the company just paid a dividend of $2.05, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answers
Answer:
The current price per share is $84.16
Explanation:
The dividend discount model (DDM) estimates the value of a share/stock based on the present value of the expected future dividends from the stock. We will use the two stage growth model of DDM here as the growth in dividends of the stock is divided into two stages.
The formula for current price under two stage growth model is,
P0 = D0 * (1+g1) / (1+r) + D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n +
[( D0 * (1+g1)^n * (1+g2)) / (r - g2)] / (1+r)^n
Where,
g1 is initial growth rate
g2 is the constant growth rate
r is the required rate of return
So, the price of the stock today will be,
P0 = 2.05 * (1+0.24) / (1+0.11) + 2.05 * (1+0.24)^2 / (1+0.11)^2 +
2.05 * (1+0.24)^3 / (1+0.11)^3 + [( 2.05 * (1+0.24)^3 * (1+0.07)) / (0.11 - 0.07)] / (1+0.11)^3
P0 = $84.1556 rounded off to $84.16
A firm considers to buy a machine in 2020. The cost of that machine is $ 5 000 000. The firm uses 5 year straight line depreciation which allows it to write off $ 1 000 000 depreciation expense each year. The firm is subject to 20% corporate tax rate. The firm's revenue in 2021 is expected to be $ 6 000 000 if the investment is not done. The revenue will be $ 9 000 000 if the investment is done. The firm's total costs (including both COGS and General&Administrative Costs) will be $ 4 000 000 if the investment is not done. The total costs will be $ 5 500 000 if the investment is done. Also the following information is given for the year 2021
Without Investment With Investment
Inventories $ 300 000 $ 500 000
Acc. Receivables $ 200 000 $ 300 000
Acc. Payables $ 100 000 $ 150 000
Given the above information, calculate the free cash flow of that investment for the years 2020 and 2021.
Answers
Answer and Explanation:
The computation of the free cash flow of the investment for the year 2020 and 2021 is shown below:
Particulars Case 1 Case 2
Without Investment With Investment
Add: Earnings Before
Interest and
Tax × (1 - Tax Rate) $2,000,000 $2,500,000
Add: Non Cash Expenses $0 $1,000,000
less: Change in
(Current Assets
- Current Liabilities) ($400,000) ($650,000)
Less: Capital Expenditure $0 ($5,000,000)
Free Cash Flows $1,600,000 ($2,150,000)
Working notes:
1.
Particulars Without Investment With Investment
Revenue for the Year 2021 $6,000,000 $9,000,000
Less: Cost of Goods Sold $4,000,000 $5,500,000
(-) Depreciation $0 $1,000,000
Earnings Before
Interest and Tax $2,000,000 $2,500,000
Tax Savings on Depreciation
(Depreciation × 20%) $0 $200,000
2.
Current Assets Without Investment With Investment
Inventories $300,000 $500,000
Accounts Receivable $200,000 $300,000
Total $500,000 $800,000
(Less: Current Liabilities)
Accounts Payable $100,000 $150,000
Less: Change in
(Current Assets
- Current Liabilities) $400,000 $650,000