Answer:
New Zealand should specialize in apples.
Spain should specialize in plums.
Explanation:
As per the given production possibility tables, New Zealand must produce maximum apples in the available resources while Spain is able to produce maximum plums with the given resources. To produce 1 plum, New Zealand requires resources equivalent to 4 apples. This shows that New Zealand needs to specialize in apples for efficient utilization of resources. Although the cost of producing plum and apple is almost equivalent for Spain since, New Zealand is already involved in producing apples, It must go for Plums.
Activity Expected Costs Expected Activity Handling materials $ 625,000 100,000 parts Inspecting product 900,000 1,500 batches Processing purchase orders 105,000 700 orders Paying suppliers 175,000 500 invoices Insuring the factory 300,000 40,000 square feet Designing packaging 75,000 2 models Required: 1. Compute a single plantwide overhead rate, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours. 2. In January 2017, the Deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate.
Answer and Explanation:
The computation is shown below:
1. Plant wide overhead rate = Budgeted Overheads ÷ Budgeted Activity.
where,
Budgeted Overheads :
Handling materials 625,000
Inspecting product 900,000
Processing purchase orders 105,000
Paying suppliers 175,000
Insuring the factory 300,000
Designing packaging 75,000
Total Cost 2,180,000
And, the budgeted activity is 125,000
So, Plant wide overhead rate is
= Budgeted Overheads ÷ Budgeted Activity.
= $2,180,000/125,000
= $17.44 per direct labor hour
Now Assignment of Overheads
As Deluxe model required 2,500 direct labor hours
So, Deluxe model = 2,500 × $17.44
= $43,600
As Basic model required 6,000 direct labor hours
So, Basic model = 6,000 × $17.44
= $104,640
Sheffield Corp. assigned $1601000 of accounts receivable to Pharoah Company as security for a loan of $1344000. Pharoah charged a 2% commission on the amount of the loan; the interest rate on the note was 9%. During the first month, Sheffield collected $404000 on assigned accounts after deducting $1480 of discounts. Sheffield accepted returns worth $5400 and wrote off assigned accounts totaling $11910. The amount of cash Sheffield received from Pharoah at the time of the assignment was
Answer:
$1,317,120
Explanation:
Cash received by Sheffield Corporation at the time of assignment = Amount borrowed - Commission paid
= $1,344,000 - ($1,344,000 * 2%)
= $1,344,000 - $26,880
= $1,317,120
So, the amount of cash Sheffield received from Pharoah at the time of the assignment was $1,317,120
During May, Salinger Company accumulated 740 hours of direct labor costs on Job 200 and 900 hours on Job 305. The total direct labor was incurred at a rate of $20 per direct labor hour for Job 200 and $23 per direct labor hour for Job 305.Journalize the entry to record the flow of labor costs into production during May. If an amount box does not require an entry, leave it blank.
Answer:
May
Dr Work in Process $35,500
Cr Wages Payable $35,500
Explanation:
Preparation of the Journal entry to record the flow of labor costs into production during May
Based on the information given the Journal entry to record the flow of labor costs into production during May will be :
May
Dr Work in Process $35,500
Cr Wages Payable $35,500
Calculated as:
Labor costs = (740*20)+(900*23)
Labor costs=14,800+20,700
Labor costs=$35,500
Rusty has been experiencing serious financial problems. His annual salary was $100,000, but a creditor garnished his salary for $20,000; so the employer paid the creditor (rather than Rusty) the $20,000. To prevent creditors from attaching his investments, Rusty gave his investments to his 21-year-old daughter, Rebecca. Rebecca received $5,000 in dividends and interest from the investments during the year. Rusty transferred some cash to a Swiss bank account that paid him $6,000 interest during the year. Rusty did not withdraw the interest from the Swiss bank account. Rusty also hid some of his assets in his wholly owned corporation that received $150,000 rent income but had $160,000 in related expenses, including a $20,000 salary paid to Rusty. Rusty reasons that his gross income should be computed as follows:
Salary received $80,000
Loss from rental property ($150,000-$160,000) (10,000)
Gross income $70,000
Compute rustys correct gross income for the year, and explain any differences between your calculation and rusty
Answer:
Rusty annual salary was $100,000.
Rusty will not be taxed on the interest and dividend amount of $5,000 as Rebecca is the owner of the assets that is producing this income.
Secondly, Rusty will also need to report the $6,000 interest income. This has to be reported even though it has not been withdrawn.
Thirdly, he received $20,000 as salary from his wholly owned corporation.
Salary from employer $100,000
Salary from wholly owned corporation $20,000
Dividends and interest from the investments $0
Interest from Swiss bank account $6,000
Rental loss incurred $0
Gross income $126,000
Crowding-out is the notion that:_________
a. Since tax revenues vary directly with GDP, a rise in the level of GDP will increase the budget surplus and limit expansion
b. Deficit financing will increase the demand for money, increase the interest rate, and reduce the level of investment spending in the economy
c. The standardized budget is the best indicator of whether a budget deficit crowds out investment
d. The actual budget is the best indicator of whether a budget deficit crowds out saving
Answer:
B
Explanation:
The theory of crowding out is that as government spending and borrowing increases, the demand for money would increase. This would lead to an increase in interest rate. As a result, the level of investment spending would decline. The theory submits that increased government spending would drive down private spending
Adams Company manufactures two products. The budgeted per-unit contribution margin for each product follows: Super Supreme Sales price $ 95 $ 124 Variable cost per unit (58 ) (74 ) Contribution margin per unit $ 37 $ 50 Adams expects to incur annual fixed costs of $227,880. The relative sales mix of the products is 60 percent for Super and 40 percent for Supreme. Required Determine the total number of products (units of Super and Supreme combined) Adams must sell to break even. How many units each of Super and Supreme must Adams sell to break even
Answer:
Expected contribution as per sales mix = $37*0.60 + $50*0.40
= $22.20 + $20
= $42.20 per unit
Total number of products in total at break even point = Total fixed cost / Contribution per unit
= $227,880 / $42.20 per unit
= 5,400 units
How many units each of Super and Supreme must Adams sell to break even?
According to sales mix:
Super = 5,400 * 60% = 3,240 units
Supreme = 5,400 * 40% = 2,160 units.
Assume that a company cannot determine the market value of equipment acquired by reference to a similar purchase for cash. Explain how the company determines the cost of equipment purchased by exchanging it for each of the following 3 items: Bonds having an established market price. Bonds that do not have an established market price. Common stock not having an established market price. Similar equipment having a determinable market value.
Solution :
Let us suppose that a company cannot predict the market value of an equipment that acquired by the reference to the similar purchase for the cash. Thus the company finds cost of purchased of the equipment by exchanging :
-- the market price of the bonds when they have an established price in the market.
-- the market price of the bonds when the common stocks does not have a established market price.
-- market price of the equipment when the similar kind of an equipment have a determinable value in the market.
On March 10, 2017, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2017, Barr returned 6 tool sets and received a credit to its account.
Prepare journal entries for Steele to record (1) the sale on March 10, 2017, (2) the return on March 25, 2017, and (3) any adjusting entries required on March 31, 2017 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Answer:
Date Account Titles Debit Credit
March, 10 Accounts Receivables $10,000
Sales Revenue $10,000
Cost of Good sold $6,000
Inventory $6,000
Working
Receivables = 200 tool sets * 50 = $10,000
COGS = 200 * 30 = $6,000
Date Account Titles Debit Credit
March, 25 Sales Returns and Allowances $300
Accounts Receivable $300
Returned Inventory $180
Cost of Goods sold $180
Working:
Sales returns = 6 * 50 = $300
Cost of goods = 6 * 30 = $180
Estimated that 10 sets would be returned but only 6 were.
Date Account Titles Debit Credit
March, 25 Sales Returns and Allowances $200
Allowance for Sales Returns $200
and Allowances
Returned Inventory $120
Cost of goods sold $120
Working:
Sales returns = 4 * 50 = $200
COGS = 4 * 30 = $120
A company received 500 applications for a specific position.30 were given an assignment test. Only 15 were invited to an interview. The yield ratio of passing the interview is
a.
75%
b.
20%
c.
50%
d.
25%
makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.20 hours $ 26.00 per hour $ 5.20 Variable overhead 0.20 hours $ 6.20 per hour $ 1.24 In November the company's budgeted production was 6500 units, but the actual production was 6300 units. The company used 1550 direct labor-hours to produce this output. The actual variable overhead cost was $8990. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for November is:
Answer:
See
Explanation:
Given that;
Direct labor hours used to produce this output = 1,550
Actual variable overhead cost = $8,990
Variable overhead per hour = $6.2
The variable overhead rate variance for July is;
= Direct labor hours used to produce this out put × (Actual variable overhead rate per hour - Variable overhead per hour)
= 1,550 × ($8,990/1,550 - $6.2)
= 1,550 × ($5.8 - $6.2)
= 1,550 × (-$0.4)
= $620 favorable
Selected information from Peridot Corporation's accounting records and financial statements for 2021 is as follows ($ in millions): Cash paid to acquire machinery $ 35 Reacquired Peridot common stock 56 Proceeds from sale of land 97 Gain from the sale of land 55 Investment revenue received 72 Cash paid to acquire office equipment 84 In its statement of cash flows, Peridot should report net cash outflows from investing activities of:
Answer:
Peridot should report net cash outflows from investing activities of $22 million.
Explanation:
Peridot corporation
Statement of cash flows
$ in millions
Purchase of machinery
($35)
Proceeds from sale of land
$97
Cash paid to acquire office
($84)
Net cash outflows from investing activities
($22)
• We ignored required common stock because it belongs to financing activities section of cash outflows. Gain from sale of land and investment revenue is for operating activities section of the cash flow
these are the choices fill in the blanks.
asset backed security.
bank run
credit default swap.
capital
bond.
credit
common stock.
credit crunch
mortgage-backed securities.
debt
mutual fund.
default
option.
equity
futures contract.
foreclosure
subprime mortgage.
leverage
central bank.
liquidity
commercial bank.
liquidity risk
hedge fund.
moral hazard
investment bank.
mortgage
fannie mae/ freddie mac.
nationalization
federal deposit insurance corporation.
regulation
federal reserve system.
return
private equity fund
risk
securitization
elisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $528,000 $142,000 $386,000 Variable expenses 319,460 72,420 247,040 Contribution margin 208,540 69,580 138,960 Traceable fixed expenses 109,920 29,400 80,520 Segment margin 98,620 $ 40,180 $ 58,440 Common fixed expenses 55,370 Net operating income $ 43,250 The break-even in sales dollars for Division Q is closest to:
Answer:
the break even point in sales dollars is $223,667
Explanation:
The computation of the break even point in sales dollars is shown below:
= Fixed cost ÷ contribution margin ratio
= $80,520 ÷ ($138,960 ÷ $386,000)
= $80,520 ÷ 36%
= $223,667
Hence, the break even point in sales dollars is $223,667
Mark Brandt, an employee of Mueller Corp., earned 3 weeks of compensated vacation time during the current year, but only took 2 weeks of vacation. His employer permits that 1 week of vacation can be carried forward to the following year. Mark fully intends to remain at his current employer and plans to take his vacation during the following year. His current weekly salary is $2,000. Mueller Corp. expects to grant a general salary increase of 5% effective at the beginning of the next year. What amount should Mueller accrue during the current year relating to Mark Brandt's carried-forward vacation
Answer:
Mark Brandt of Mueller Corporation
The amount that Mueller should accrue during the current year relating to Mark Brandt's carried-forward vacation is:
= $2,100
Explanation:
a) Data and Calculations:
Current weekly salary = $2,000
Expected general salary increase = 5%
The amount that Mueller should accrue during the current year relating to Mark Brandt's carried-forward vacation is:
= $2,000 * 1.05
= $2,100
b) $2,100 is the amount that will be paid in cash for cash settlement of Mark Brandt's carried-forward vacation, assuming he does not take it the following year.
A company is forecasted to generate free cash flows of $25 million next year and $29 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 12.0%. The company has $34 million in debt, $19 million of cash, and 23 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 17, what's your estimate of the company's stock price
Answer:
$18.41
Explanation:
Equity value = FCF next year / (1 + cost of capital) + FCF in year 2 / (1 + cost of capital)^2 + 1 / (1 + cost of capital)^2 * [ (FCF in year 2 * exit multiple)]
= $25 million/1.12 + $29 million/1.12^2 + 1 / 1.12^2*[($29 million*17)]
= $25 million/1.12 + $29 million/1.12^2 + $493 million/1.12^2
= $25 million / 1.12 + $522 million / 1.12^2
= $438.4566327 million
The stock price = ($438.4566327 million - Debt + Cash) / Number of shares outstanding
= ($438.4566327 million - $34 million + $19 million) / 23 million shares
= $423.4566327 million / 23 million shares
= 18.4111579435
= $18.41
Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 20,500 units of one of its most popular products. Grant currently manufactures 41,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $13 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price.
Units 41,000 61,500
Manufacturing costs:
Direct materials $123,000 $184,500
Direct labor 164,000 246,000
Factory overhead 328,000 430,500
Total manufacturing costs$615,000 $861,000
Unit cost $15 $14
Required:
1. What is the relevant cost per unit and the bid price?
2. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,500 units to its regular customers?
Answer:
Missing word "What would the total opportunity cost be if by accepting the special order the company lost sales of 6,500 units to its regular customers? Assume the above facts plus a normal selling price of $24 per unit."
Variable factory overhead per unit = (430,500 - 328,000) / 20,500 = $5
Direct materials per unit = $123,000 / 41,000 = $3
Direct labor per unit = 164,000 / 41,000 = $4
1. Relevant cost per unit = Direct materials per unit + Direct labor per unit + Variable factory overhead
Relevant cost per unit = $5 + $4 + $3
Relevant cost per unit = $12
So, the bid price should be above $10 per unit
2. Total opportunity cost would be the total contribution margin lost for the lost sales to the regular customer
Total opportunity cost = Loss of regular sales revenue - Total relevant cost for lost sales
Total opportunity cost = (6,500*$24) - (6,500*$12)
Total opportunity cost = $156,000 - $78,000
Total opportunity cost = $78,000
1. The relevant cost per unit for Grant Industries is $7.00 ($123,000 + $164,000)/41,000 or ($184,500 + $246,000)/61,500.
2. The total opportunity cost of accepting the special order when the company lost sales of 6,500 units from its regular customers is $12,500.
What are the relevant costs and opportunity costs?The relevant costs describe the avoidable costs that could be stopped if a decision is taken.
For example, if Grant Industries decides to take the special order, the relevant decision-making cost is $7 per unit and not $14 per unit.
The opportunity costs are costs that are not incurred based on taking an alternative decision. It also describes the lost revenue when some sales are lost for the special order.
For example, the total opportunity costs incurred by Grant Industries for taking the special order instead of attending to the regular customers with 6,500 units demand is $12,500.
Data and Calculations:Special order = 20,500 units
Current production = 41,000 units
Current operational capacity = 50%
Total capacity = 82,000 (41,000/50%)
Bid price = $13 per unit
New production based on special order = 61,500 (41,000 + 20,500)
Production Data Per Unit Per Bid
Units 41,000 61,500
Manufacturing costs:
Direct materials $123,000 $184,500
Direct labor 164,000 246,000
Factory overhead 328,000 430,500
Total manufacturing costs $615,000 $861,000
Unit cost $15 $14
Question 2 Completion:Assume the above facts plus a normal selling price of $24 per unit."
The opportunity cost of lost sales:Lost sales units = 6,500
Contribution per unit = $17 ($24 - $7)
Total contribution margin = $110,500 ($6,500 x $17)
Contribution margin from special order = $123,000 ($13 - $7 x 20,500)
Thus, the opportunity cost of lost sales is $12,500 ($123,000 - $110,500).
Learn more about relevant and opportunity costs at https://brainly.com/question/14184614 and https://brainly.com/question/8846809
Two important group outcomes or consequences of the interactive
process that unfolds between a leader, follower, and the situation
include:
Answer:
task performance and group maintenance.
Explanation:
Leadership can be defined as a process which typically involves motivating, encouraging and inspiring employees working under an individual to be innovative and create positive changes that will foster growth and enhance the success of a business firm or company in the future.
This ultimately implies that, beyond an individual possessing the traits or qualities of a leader, leadership in itself is a process that revolves around the activities or happenings between the leader and those who he or she is leading, which are the followers. Thus, leadership is simply a continuous process and it's transactional in nature because it occurs between a leader and the followers.
A leader can be defined as an individual who is saddled with the responsibility of controlling, managing and maintaining a group of people under him or her.
Some types of power expressed by leaders are referent power, coercive power, etc.
Hence, two important group outcomes or consequences of the interactive process that unfolds between a leader, follower, and the situation include task performance and group maintenance.
Leaders are saddled with the responsibility of ensuring that the follower performs his or her duties or tasks as stated in the contract and to foster cohesion among the various team members.
Hughes Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 12 percent and the company just paid a $2.35 dividend, what is the current share price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Answer: $53.94
Explanation:
Current share price is the present value of the dividends for the next 3 years and the terminal value in year 3.
Terminal value = D₄ / ( required return - growth rate)
= (2.35 * 1.22³ * 1.05) / (12 % - 5%)
= $64
D₁ = 2.35 * 1.22 = $2.867
D₂ = 2.867 * 1.22 = $3.49774
D₃ = 3.49774 * 1.22 = $4.2672428
Share price = (2.867 / (1 + 12%)) + (3.49774 / 1.12²) + (4.2672428 / 1.12³) + (64/1.12³)
= $53.94
Hull Company reported the following income statement information for the current year: Sales $ 423,000 Cost of goods sold: Beginning inventory $ 151,500 Cost of goods purchased 286,000 Cost of goods available for sale 437,500 Ending inventory 157,000 Cost of goods sold 280,500 Gross profit $ 142,500 The beginning inventory balance is correct. However, the ending inventory figure was overstated by $33,000. Given this information, the correct gross profit would be:
Answer:
$109,500
Explanation:
Calculation to determine the correct gross profit would be:
Sales $ 423,000
Less: Corrected Cost of goods sold:($313,500)
(280,500 + $33,000)
Gross Profit $109,500
Therefore the correct gross profit would be:$109,500
Why does operations managers need to get involved into planning?
Answer:
See below
Explanation:
The reason is that he oversees the entire operations of an organization, hence must know what the planning entails at the beginning.
Again, if the operating manager is involved in planning at the early stage, he would be able to contribute meaningfully towards the success of the plan
Jenny, who is married and the mother of three, is 25 years old and expects to work until 70. She earns $45,000 per year. Jenny expects inflation to be 3% over her working life, and the appropriate risk-free discount rate is 5%. Her personal consumption is equal to 25% of her after-tax earnings, and her combined federal and state marginal tax bracket is 15%. What is the amount of life insurance necessary for Jenny using the Human Life Value method
Answer:
$855,903.20
Explanation:
Real discounting rate=> i= [i'-f]/[1+f]. Where i is the real interest rate. i' is the nominal interest rate which is given as 5% and f is the rate of inflation
i = (5%-3%)/1+3%)
i = 2/1.3
i = 1.94%
Her after tax earnings = 45,000*(1-0.15) = $38,250
Personal consumption = 25% of this, 38,250*0.75 = $28,688.
We are discounting her earnings back 45 years at 1.94%. The equation will be: 28,688 * {1-(1+0.01940)^-45} / {0.01940}
= 28,688 * {1 - 0.42120322099] / 0.01940
= 28,688 * 29.83488551597938
= 855903.1956824165
= $855,903.20
So, the amount of life insurance necessary for Jenny using the Human Life Value method is $855,903.20
On September 12, Vander Company sold merchandise in the amount of $3,950 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $2,725. Vander uses the periodic inventory system and the gross method of accounting for sales. On September 14, Jepson returns some of the merchandise. The selling price of the merchandise is $340 and the cost of the merchandise returned is $240. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Vander makes on September 18 is:
Answer:
Date Account Debit Credit
September 18 Cash $3,537.80
Sales discount $ 72.20
Accounts Receivable $3,610
Explanation:
Net merchandise sold = 3,950 - 340
= $3,610
Sales discount is 2% if paid in 10 days which Jepson did.
= 2% * 3,610
= $72.20
Cash = Net sales - discount
= 3,610 - 72.20
= $3,537.80
On August 5, 2021, Carla Vista Furniture shipped 30 dining sets on consignment to Furniture Outlet, Inc. The cost of each dining set was $420 each. The cost of shipping the dining sets amounted to $4300 and was paid for by Carla Vista Furniture. On December 30, 2021, the consignee reported the sale of 20 dining sets at $920 each. The consignee remitted payment for the amount due after deducting a 7% commission, advertising expense of $670, and installation and setup costs of $850. The amount cash received by Carla Vista furniture is
Answer:
$15,592
Explanation:
Calculation to determine what The amount of cash received by Carla Vista furniture is
Cash received =[(20 × $920)*(100%-7%)] - $670 - $850
Cash received=($18,400*93%)-$670-$850
Cash received=17,112-$670-$850
Cash received=$15,592
Therefore The amount of cash received by Carla Vista furniture is $15,592
A-Rod Manufacturing Company is trying to calculate its cost of capital for use in making a capital budgeting decision. Mr. Jeter, the vice-president of finance, has given you the following information and has asked you to compute the weighted average cost of capital.
The company currently has outstanding a bond with a 10.6 percent coupon rate and another bond with an 8.2 percent rate. The firm has been informed by its investment banker that bonds of equal risk and credit rating are now selling to yield 11.5 percent. The common stock has a price of $60 and an expected dividend (D1) of $1.80 per share. The historical growth pattern (g) for dividends is as follows:
1.35
1.49
1.64
1.80
The preferred stock is selling at $80 per share and pays a dividend of $7.60 per share. The corporate tax rate is 30 percent. The flotation cost is 2.5 percent of the selling price for preferred stock. The optimum capital structure for the firm is 25 percent debt, 10 percent preferred stock, and 65 percent common equity in the form of retained earnings.
(a) Compute the historical growth rate. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole percent. Omit the "%" sign in your response.)
Growth rate %
(b) Compute the cost of capital for the individual components in the capital structure. (Round growth rate to nearest whole percent. Round your answers to 2 decimal places. Omit the "%" sign in your response.)
Cost of capital
Debt (Kd) %
Preferred stock (Kp)
Common equity (Ke)
(c) Calculate the weighted cost of each source of capital and the weighted average cost of capital. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)
Weighted cost
Debt (Kd) %
Preferred stock (Kp)
Common equity (Ke)
Weighted average cost of capital (Ka) %
Answer:
PV = 1.35
FV = 1.8
n = 3
a. Growth rate = Rate(N, -PV, FV)
Growth rate = Rate(3, -1.35, 1.8)
Growth rate = 0.10
Growth rate = 10%
B. Cost of debt Kd (After tax) = 11.5%*(1-0.30) = 8.05%
Cost of preference share Kp = Dividend/Price = 7.6 /[80*(1 - 0.025)] = 9.74%
Cost of equity Ke = D1/P0+g = 1.8/60 + 0.1 = 0.03+0.1 = 0.13 = 13%
c. Source Weight A COC(%)(B) Weight cost of capital(A*B)
Debt 25% 8.05% 2.01%
Preferred stock 10% 9.74% 0.97%
Common stock 65% 13.00% 8.45%
Weighted average cost of capital 11.44%
Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 130 shares of its common stock on May 1 for $6,500. On July 1, it reissued 65 of these shares at $53 per share. On August 1, it reissued the remaining treasury shares at $48 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2
Answer:
Fortune Company
There is a balance of ($65) in the Paid-in Capital, Treasury Stock account on August 2.
However, this balance will be transferred to the Additional Paid-in Capital account at year-end, since there are no outstanding shares for the Treasury Stock account.
Explanation:
a) Data and Calculations:
May 1 Repurchase of 130 shares (Treasury Stock) = $6,500
July 1 Reissue of 65 shares at $53 per share = (3,445)
August 1 Reissue of 65 shares at $48 per share = (3,120)
August 2, Balance in the Paid-in Capital = ($65)
b) The Treasury Stock account is a contra Paid-in Capital account which records transactions involving the repurchase and reissue of treasury shares. Treasury shares represent the company's own shares which are repurchased from its investors.
Ann lives in Princeton, New Jersey, and commutes by train each day to her job in New York City (20 round trips per month). When the price of a round trip goes up from $10 to $20, she responds by consuming exactly the same number of trips as before, while spending $200 per month less on restaurant meals. Does the fact that her quantity of train travel is completely unresponsive to the price increase imply that Ann is not a rational consumer
Answer:
Yes
Explanation:
Since EBIT is not necessarily indicative of cash flow, many financial analysts adjust the formulation by: a. adding unpaid taxes to EBIT in the TIE formula b. adding unpaid taxes and interest to EBIT in the formula c. adding depreciation to EBIT in the TIE formula d. adding unpaid taxes, interest and depreciation to EBIT in the TIE formula
Answer: c. adding depreciation to EBIT in the TIE formula
Explanation:
The Times Interest Earned Ratio is used to measure the ease by which a company can pay its interest charges using its earnings before tax.
As depreciation is a non-cash expense, the amount apportioned to depreciation can be used when paying for interest so adding it back to the EBIT ensures that the cash resources of the company are included in the analysis of whether a company can pay back debt.
Capital using technological process results in ____?
Capital-driven technological processes lead to creating new and innovative capital goods.
What are capital goods?Capital goods are the assets utilized by a production company while engaging in the manufacturing of goods.
When the technological process is driven by capital funds, then the company starts manufacturing innovative capital products which further increase its worth. This leads to a decline in the worth of capital goods that are already been present in the consumer market.
Therefore, the emergence of new capital products is being produced due to technological processes.
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Seth Erkenbeck, a recent college graduate, has just completed the basic format to be used in preparing the statement of cash flows (indirect method) for ATM Software Developers. All amounts are in thousands (000s).
ATM SOFTWARE DEVELOPERS Statement of Cash Flows For the year ended December 31, 2021
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash flows from operating activities:
Net cash flows from operating activities
Cash Flows from Investing Activities
Net cash flows from investing activities
Cash Flows from Financing Activities
Net cash flows from financing activities
Net increase (decrease) in cash $1,725
Cash at the beginning of the period 8,215
Cash at the end of the period $9,940
Listed below in random order are line items to be included in the statement of cash flows.
Cash received from the sale of land $8,590
Issuance of common stock 12,925
Depreciation expense 5,435
Increase in account receivable 4,030
Decrease in account payable 1,730
Issuance of long-term notes payable 16,345
Purchase of equipment 39,715
Decrease in inventory 1,445
Decrease in prepaid rent 875
Payment of divivdends 6,310
Net income 11,800
Purchase of treasury stock 2,585
Required:
Prepare the statement of cash flows for ATM software developers using the indirect method. List cash outflows and any decrease in cash as negative amounts. Enter the answer in thousands.
Answer:
See below
Explanation:
Statement of cash flow for ATM SOFTWARE
• The figures seems to be in thousands already.
Cash flow from operating activities
Net income
$11,800
Increase in Account receivable
($4,030)
Decrease in Account payable
($1,730)
Depreciation expense
$5,435
Decrease in inventory
$1,445
Decrease in prepaid rent
$875
Net cash flow from operating activities
$13,795
Cash flow from investing activities
Sale of land
$8,590
Purchase of equipment
($39,715 )
Net cash flow from financing activities
($31,125)
Cash flow from financing activities
Issuance of stock
$12,925
Long term note payable
$16,345
Purchase of treasury stock
($2,585 )
Payments of dividends
($6,310)
Net cash flow from financing activities
$20,375
Net increase in cash
$1,725
Cash at the beginning
$8,215
Cash at the end
$9,940
Three accuracy problems with the consumer price index (CPI) are Group of answer choices price confusion, substitution, and quality changes. substitution, quality changes, and the money illusion. substitution, quality changes, and the availability of new goods and services. the availability of new goods and services, substitution, and traditional bundle bias. the income effect, substitution effect, and money illusion.
Answer:
Option b (Substitution.....services) is the appropriate choice.
Explanation:
The above leads to calculating difficulties as well as the failure throughout the Index to identify better products and services contributing to less precise inflation outcomes.It does not take account of the replacement facilities, which arise when an increase throughout the price of one promising recommendation to a replacement including its good by another, which often increases the costs of one quality.The other options are not related to the given scenario. So the above is the correct choice.