Answer:
$19,350
Explanation:
The finance charge is 3%. If the 5% retention is a non-refundable security, then the total loss would be 8% (3%+5%).
The nature of the retention is not given, so it is considered that it is refundable, then the total loss would be $19,350 ($645,000*3%).
Thus, the total loss to be reported is $19,350
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:
Kyle, a single taxpayer, worked as a freelance software engineer for the first three months of 2020. During that time, he earned $76,000 of self-employment income. On April 1, 2020, Kyle took a job as a full-time software engineer with one of his former clients, Hoogle Inc. From April through the end of the year, Kyle earned $196,000 in salary. What amount of FICA taxes (self-employment and employment related) does Kyle owe for the year
Answer:
$18,943.40
Explanation:
FICA taxes when Kyle was self employed = $76,000 x 15.3% = $11,628
Social security taxes while employed = ($137,700 - $76,000) x 6.2% = $3,825.40
Medicare taxes while employed = [($200,000 - $76,000) x 1.45%] + [($196,000 + $76,000 - $200,000) x 2.35%] = $1,798 + $1,692 = $3,490
Total FICA taxes = $18,943.40
Firm C currently has 320,000 shares outstanding with current market value of $33 per share and generates an annual EBIT of $1,500,000. Firm C also has $1 million of debt outstanding. The current cost of equity is 9 percent and the current cost of debt is 6 percent. The firm is considering issuing another $3 million of debt and using the proceeds of the debt issue to repurchase shares (a pure capital structure change). It is estimated that the cost of the new debt will be 7 percent and that the cost of equity will rise to 10 percent with the additional debt. The marginal tax rate is 34 percent. a. What is the current market value of the firm
Answer: $11,560,000
Explanation:
Market value = Equity + Debt
Equity = 320,000 shares * 33
= $10,560,000
Debt = $1,000,000
Market value = 10,560,000 + 1,000,00
= $11,560,000
If a firm offers a service that is valuable, rare, and costly to imitate, but a substitute exists for the service, the firm will: a. achieve competitive parity. b. have a competitive disadvantage. c. have a temporary competitive advantage. d. gain a sustainable competitive advantage.
Answer:
c. have a temporary competitive advantage
Explanation:
In this case, it is correct to say that the company has a temporary competitive advantage, as there is a substitute for its valuable, rare and expensive service to imitate.
The company gained a competitive advantage in the market for being the only one to offer that service, which by the attributes confer barriers of entry for new competitors, but when there is a substitute for the service and that have the same characteristics, it is correct to say that the company it will lose its competitive advantage in a matter of time, because with more competitors in the market it is common for there to be some loss of market share, so in this case it is ideal for the company to adapt and seek new attributes to innovate, generate more value for consumers and so seek a differential that will guarantee you a higher position in the market.
National defense is a good that is non excludable and nonrival in consumption. Suppose that, instead of national defense being paid with tax dollars, national defense is paid by voluntary contributions from (potentially) all individuals within Latvia.
Alan, who is a Latvian citizen, must decide whether he wants to contribute to the national defense budget Further, suppose that there are a total of 10 citizens, including Alan. For the optimal amount of safety, each citizen should pay $10. Every $1 contributed (by anyone) to the national defense, leads to increased security, which each person values at $0.25. This means that every dollar spent on defense is worth $2.50 to Latvia as a whole.
Suppose that, instead of relying on voluntary contributions, the government simply levies a tax of $10 on each person to pay for national defense. How much better or worse off would Alan be if everyone (including himself) were taxed $10 instead of contributing voluntarily?
If Alan is worse off, be sure to put a negative sign in front of the number.
Answer:
Alan is better off by $15
Explanation:
the number of citizens in latvia = 10
if citizens were levied $10 each, total amount
= 10*10
=$100
each persons valuation = 100*0.25
= $25
$25 is also Alans valuation sice he is a part of this population.
since he contribited $10, his net gain would be
$25.00 - $10.00
= $15.00
Alan is better of by $15 in the tax system.
Mcewan Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 48,000 direct labor-hours, total fixed manufacturing overhead cost of $307,200, and a variable manufacturing overhead rate of $2.80 per direct labor-hour. Job X941, which was for 50 units of a custom product, was recently completed. The job cost sheet for the job contained the following data:
Total direct labor-hours 300
Direct materials $600
Direct labor cost $6,400
Required:
Calculate the selling price for Job X941 if the company marks up its unit product costs by 20%.
Answer:
$234.24 per unit
Explanation:
The computation of the selling price for Job X941 is shown below:
But before that following calculations need to be determined
The Predetermined overhead rate is
= Variable overhead per DLH + Fixed overhead per DLH
= $2.80 + ($307,200 ÷ 48,000)
= $9.2 per DLH
Now the Total cost of Job X941 is
= Direct materials + Direct labor + Overhead applied
= $600 + $6,400 + (300 × $10)
= $9,760
And, finally
The Selling price per unit of Job X941 is
= Unit product costs × 120%
= ($9,760 ÷ 50) × 120%
= $234.24 per unit
Hyu Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 52,400 labor-hours. The estimated variable manufacturing overhead was $2.82 per labor-hour and the estimated total fixed manufacturing overhead was $1,196,840. The actual labor-hours for the year turned out to be 53,000 labor-hours. The predetermined overhead rate for the recently completed year was closest to:
Answer:
The predetermined overhead rate for the recently completed year would be $25.66
Explanation:
The predetermined overhead rate is computed as;
= Total estimated manufacturing overhead / estimated direct labor
Where;
Total estimated manufacturing overhead = Estimated total fixed manufacturing overhead + estimated variable manufacturing overhead rate × estimated labor hours
= $1,196,840 + $2.82 × 52,400
= $1,196,840 + $147,768
= $1,344,608
Therefore,
Predetermined rate = $1,344,608 / 52,400 hours
Predetermined rate = $25.66
b. A Venezuelan-style economic collapse would be less likely in a mixed economy like the United States because
a. corruption is less likely when economic power is more diffused.
b. private industry has strong financial incentives to produce efficiently.
c. mixed economies like the United States usually have a more equal distribution of income.
d. inflation is always low in a mixed economy.
Answer:
a. corruption is less likely when economic power is more diffused. b. private industry has strong financial incentives to produce efficiently.Explanation:
Venezuela is a planned / command economy which means that the government directs production of goods and services in the country. This can lead to corruption as those in government would become quite powerful and engage in activities that would make them richer at the expense of the nation because they will have the required access to do so.
As the government directs most things, there is less private industry and competition. With a lack of competition, companies will not see the need to compete and would end up being inefficient.
These are what happened in Venezuela.
On January 1, 2018, Surreal Manufacturing issued 600 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 4 percent, so the total proceeds from the bond issue were $583,352. Surreal uses the effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule 2-5.
2. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement.
Answer:
Period Bonds Interest Cash Increase in Bonds payable
Payable Expenses Paid Bonds payable at the end
2018 583352 23334.08 18000 5334.08 588686.1
2019 588686.1 23547.44 18000 5547.44 594233.5
2020 594233.5 23766.48 18000 5766.48 600000
Journal entries
Jan 01 2018
Cash account Dr $583352
Discount on Bonds Payable Dr $16648
Bonds payable Cr $600000
Dec 31 2018
Interest expense Dr $23334.08
Cash account Cr $18000
Discount on bonds Payable Cr $5334.08
Dec 31 2019
Interest expense Dr $23547.44
Cash account Cr $18000
Discount on bonds Payable Cr $5547.44
Dec 31 2020
Interest expense Dr 23766.48
Cash account Cr $18000
Discount on bonds Payable Cr $5766.48
Dec 31 2020
Bonds Payable Dr $600000
Cash account Cr $600000
01.01.2020 (Redemption at 101)
Bonds Payable Dr $600000
Loss on redemption of bonds Dr $11766.48
Cash account (600000*101%) Cr $606000
Discount on bonds payable Cr $5766.48
1. Surrel Manufacturing's bond amortization schedule is as follows:
Bond Amortization Schedule
Date Cash Payment Interest Expense Amortization Carrying Value
Jan. 1, 2018 $583,352
Dec. 31, 2018 $18,000 $23,334 $5,334 $588,686
Dec. 31, 2019 $18,000 $23,547 $5,547 $594,233
Dec. 31, 2020 $18,000 $23,767 $5,767 $600,000
2. Journal Entries to record the bond issuance, interest payments are as follows:
January 1, 2018
Debit Cash $583,352
Debit Bonds Discounts $16,648
Credit Bonds Payable $600,000
To record the issuance of the bonds at a discount.December 31, 2018
Debit Interest Expense $23,334
Credit Bonds Discounts $5,334
Credit Cash $18,000
To record the payment of interest and discount amortization.December 31, 2019
Debit Interest Expense $23,547
Credit Bonds Discounts $5,547
Credit Cash $18,000
To record the payment of interest and discount amortization.December 31, 2020
Debit Interest Expense $23,767
Credit Bonds Discounts $5,767
Credit Cash $18,000
To record the payment of interest and discount amortization.December 31, 2020
Debit Bonds Payable $600,000
Credit Cash $600,000
To record the retirement of the bonds payable.Data and Calculations:
Face value of bonds issued = $600,000 (600 x $1,000)
Bonds proceeds = $583,352
Bonds discounts = $16,648
Coupon interest rate = 3%
Market interest rate = 4%
Maturity period = 3 years
Issuance date = January 1, 2018
Maturity date = December 31, 2020
December 31, 2018:
Cash payment = $18,000 ($600,000 x 3%)
Interest Expense = $23,334 ($583,352 x 4%)
Amortization of discounts = $5,334 ($23,334 - $18,000)
Carrying value of bond = $588,686 ($583,353 + $5,334)
December 31, 2019:
Cash payment = $18,000 ($600,000 x 3%)
Interest Expense = $23,547 ($588,686 x 4%)
Amortization of discounts = $5,547 ($23,547 - $18,000)
Carrying value of bond = $594,233 ($588,686 + $5,547)
December 31, 2020:
Cash payment = $18,000 ($600,000 x 3%)
Interest Expense = $23,767 ($594,233 x 4%)
Amortization of discounts = $5,767 ($23,767 - $18,000)
Carrying value of bond = $600,000 ($594,233 + $5,767)
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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
You are interested in valuing a 2-year semi-annual corporate coupon bond using spot rates but there are no liquid strips available. However, you do find the following 4 comparable semi-annual bonds (below) maturing over the next 2 years. Using the bootstrap approach, calculate the 12-month spot rate.
Time remaining to maturity Coupon Bond price
6 months 0.000% 99.000
1 year 1.250% 98.000
18 months 1.500% 97.000
2 years 1.250% 96.000
a. 1.668%
b. 3.335%
c. 4.167%
d. 4.189%
e. 4.204%
Answer:
Following are the solution to this question:
Explanation:
Assume that [tex]r_1[/tex] will be a 12-month for the spot rate:
[tex]\to 1.25 \% \times \frac{100}{2} \times 0.99 + \frac{(1.25\% \times \frac{100}{2}+100)}{(1+\frac{r_1}{2})^2}=98\\\\\to \frac{1.25}{100} \times \frac{100}{2} \times 0.99 + \frac{(\frac{1.25}{100} \times \frac{100}{2}+100)}{(1+\frac{r_1}{2})^2}=98\\\\\to \frac{1.25}{2} \times 0.99 + \frac{(\frac{1.25}{2} +100)}{(1+\frac{r_1}{2})^2}=98\\\\\to 0.61875 + \frac{( 0.625 +100)}{(\frac{2+r_1}{2})^2}=98\\\\\to 0.61875 + \frac{( 100.625)}{(\frac{2+r_1}{2})^2}=98\\\\\to 0.61875 + \frac{402.5}{(2+r_1)^2}=98\\\\[/tex]
[tex]\to 0.61875 + \frac{402.5}{(2+r_1)^2}=98\\\\\to 0.61875 -98 = \frac{402.5}{(2+r_1)^2}\\\\\to -97.38125= \frac{402.5}{(2+r_1)^2}\\\\\to (2+r_1)^2= \frac{402.5}{ -97.38125}\\\\\to (2+r_1)^2= -4.13\\\\ \to r_1=3.304\%[/tex]
Assume that [tex]r_2[/tex] will be a 18-month for the spot rate:
[tex]\to 1.5\% \times \frac{100}{2} \times 0.99+1.5\% \times \frac{100}{2} \times \frac{1}{(1+ \frac{3.300\%}{2})^2}+\frac{(1.5\% \times \frac{100}{2}+100)}{(1+\frac{r_2}{2})^3}=97\\\\\to \frac{1.5}{100} \times \frac{100}{2} \times 0.99+\frac{1.5}{100} \times \frac{100}{2} \times \frac{1}{(1+ \frac{\frac{3.300}{100}}{2})^2}+\frac{(\frac{1.5}{100} \times \frac{100}{2}+100)}{(1+\frac{r_2}{2})^3}=97\\\\[/tex]
[tex]\to \frac{1.5}{2} \times 0.99+\frac{1.5}{2}\times \frac{1}{(1+ \frac{\frac{3.300}{100}}{2})^2}+\frac{(\frac{1.5}{2} +100)}{(1+\frac{r_2}{2})^3}=97\\\\\to 0.7425+0.75 \times \frac{1}{(1+ \frac{\frac{3.300}{100}}{2})^2}+\frac{(0.75 +100)}{(1+\frac{r_2}{2})^3}=97\\\\\to 1.4925 \times \frac{1}{(1+0.0165)^2}+\frac{(100.75 )}{(1+\frac{r_2}{2})^3}=97\\\\\to 1.4925 \times \frac{1}{(1.033)}+\frac{(100.75 )}{(1+\frac{r_2}{2})^3}=97\\\\[/tex]
[tex]\to 1.4925 \times 0.96+\frac{(100.75 )}{(1+\frac{r_2}{2})^3}=97\\\\\to 1.4328+\frac{(100.75 )}{(1+\frac{r_2}{2})^3}=97\\\\\to 1.4328-97= \frac{(100.75 )}{(1+\frac{r_2}{2})^3}\\\\\to -95.5672= \frac{(100.75 )}{(1+\frac{r_2}{2})^3}\\\\\to (1+\frac{r_2}{2})^3= -1.054\\\\\to r_2=3.577\%[/tex]
Assume that [tex]r_3[/tex] will be a 18-month for the spot rate:
[tex]\to 1.25\% \times \frac{100}{2} \times 0.99+1.25\% \times \frac{100}{2} \times \frac{1}{(1+\frac{3.300\%}{2})^2}+1.25\%\times\frac{100}{2} \times \frac{1}{(1+\frac{3.577\%}{2})^3}+(1.25\% \times \frac{\frac{100}{2}+100}{(1+\frac{r_3}{2})^4})=96\\\\[/tex]
to solve this we get [tex]r_3=3.335\%[/tex]
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.
Given the following information, which of the following firms has the lowest required rate of return? Group of answer choices
a. Schuldig Co. has a current share price of $5.50, an expected dividend of $1.05 per share, and a negative growth rate of 10%.
b. Iccarus Inc. has a current share price of $275.80, an expected dividend of $3.10, and a growth rate of 14%
c. Simpson, LLC. has a current share price of 94.30, an expected dividend of $3.00, and a growth rate of 10%.
d. I don't know that!
Answer:
Shuldig Co. has the lowest required rate of return
Explanation:
Shuldig Co.
$5.50 = $1.05 / (Re + 10%)
Re = 19% - 10% = 9%
Iccarus Inc.
$275.80 = $3.10 / (Re - 14%)
Re = 1.1% + 14% = 15.1%
Simpson LLC.
$94.30 = $3.00 / (Re - 10%)
Re = 3.2% + 10% = 13.2%
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.
Page 577 17.2. How do banks create money? Consider this hypothetical balance sheet for YooHoo Bank, in the fictional country of Hellond. YooHoo Bank Assets (in thousands of U.S. dollars) Liabilities and owner's equity (in thousands of U.S. dollars) Government securities $1,700 Checking deposits $10,000 Required reserves $800 Owner's equity $1,500 Excess reserves $100 Loans $8,900 Total assets $11,500 Liabilities and net worth $11,500 Calculate YooHoo Bank’s required reserve ratio, as a percentage. Round to the nearest percent if necessary. Type an answer and press enter to submit%
Answer:
8%
Explanation:
Following is the require reserve ratio:
Required reserve ratio = Reserves/ Deposits
Required reserve ratio = $800/$10,000 * 100
Required reserve ratio = 0.08 * 100
Required reserve ratio = 8%
So, the required reserve ratio for YooHoo Bank’s is 8%.
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.
A company using public relations sends information to media outlets such as
newspapers and radio stations. Who decides what information about the
company the outlets will publish?
A. The media outlets
B. The audience for the media outlets
C. The marketer
D. The publicity agency
N it
Answer:
A. the media outlets
Explanation:
took the test
A company using public relations sends information to the media outlets such as newspapers and radio stations because it is the media outlets who decide what information the company will publish. Hence, option A is appropriate.
What are Public Relations?Public relations or the PR sectors are very important functions for the company as well as the institution of their own. The main method of understanding is that the nature of public relations is not very well known, but can be understood to have taken place for a very long period.
The Public Relations in an organization strategically manages the relationship of that organization with that of the individuals and the public residing in their place. The main thing regarding public Relations is that everyone can be upheld for whatever they have been doing for a long period.
Public Relations is given the task to increase the consumer or the public who are more friendly with that the Company to increase. Hence, option A is correct.
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1) In the TOPCASH model, Analytics considerations include:
a. Is the analytics installation reliable?
b. The potential value of including specific goal tracking
c. All of the above
Answer:
b. The potential value of including specific goal tracking.
Explanation:
Top cash model is the one which prioritizes the cash value as compared to the product features. The potential value of a product is identified and then the price for the product is set. This creates value for money for customers.
Dermody Snow Removal's cost formula for its vehicle operating cost is $3,030 per month plus $333 per snow-day. For the month of December, the company planned for activity of 15 snow-days, but the actual level of activity was 17 snow-days. The actual vehicle operating cost for the month was $8,300. The spending variance for vehicle operating cost in December would be closest to:
Answer:
391 F
Explanation:
Calculation to determine what The spending variance for vehicle operating cost in December would be closest to
Using this formula
Spending variance for vehicle operating cost = Flexible budget-Actual
Let plug in the formula
Spending variance for vehicle operating cost= (333*17+3,030)-8300
Spending variance for vehicle operating cost=(5,661+3,030)-8,300
Spending variance for vehicle operating cost=8,691-8,300
Spending variance for vehicle operating cost=391 F
Therefore The spending variance for vehicle operating cost in December would be closest to
391 F
The corporate charter of Alpaca Co. authorized the issuance of 10 million, $1 par common shares. During 2021, its first year of operations, Alpaca had the following transactions:
January 1 sold 8 million shares at $15 per share
June 3 retired 2 million shares at $18 per share
December 28 sold 2 million shares at $20 per share
What amount should Alpaca report as additional paid-in capital—excess of par, in its December 31, 2021, balance sheet?
A. $104 million
B. $6 million
C. $52 million
D. $208 million
Answer:
Alpaca Co.
The amount that Alpaca should report as additional paid-in capital, in excess of par, in its December 31, 2021 balance sheet is:
= $116 million
Explanation:
a) Data and Calculations:
Authorized share capital = 10 million, $1 par common shares
Transactions during the year:
Date Number of shares issued Price Common Stock Additional
January 1 sold 8 million shares at $15 $8 million $112 million
June 3 retired 2 million shares at $18 (2 million) (34 million)
December 28 sold 2 million shares $20 2 million 38 million
Total $10 million $116 million
b) Additional paid-in capital represents the excess capital that is received above the par value of the shares issued. When the retired shares (treasury stock) are accounted for using the cash method, the additional capital is stated less the treasury stock's excess issue value. When the par value method is used, a treasury stock account is created separately so that the two adjustments to the treasury stock account are reflected differently.
Fedoras (F)
Very Very Bad-inators (B)
Perry
6/hr
4/hr
Dr. Doofenshmirtz
2/hr
10/hr
Graph the production possibilities frontier per hour for both Perry’s and Dr. Doofenshmirtz’s. (4 points)
Perry’s PPF
Dr. Doofenshmirtz’s PPF
Based on production per hour calculated in b., determine per unit opportunity costs of producing Fedoras and Bad-inators. Show your calculations for both Perry’s and Dr. Doofenshmirtz’s.
Who has comparative advantage in F? (1 point)
Determine a price range that is suitable for trade for both Fedoras and Bad-inators. (4 points)
Price range for Fedoras: 1F = ( , )
Price range for Bad-inators: 1 B = ( , )
If the trade price is 1F = 1B do both Perry and Dr. Doofenshmirtz gain from trade? Why?
(4 points)
Determine the new consumption possibilities frontier (CPF) with trade at the trade price of 1F = 1S for both Perry’s and Dr. Doofenshmirtz’s. Show the area of gains from trade in your graphs if it exists. (6 points)
Some people know how it works but 1+1 is 5
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
True or False: The largest companies performed the best over the past 12 months. Give evidence to support your answer.
The largest companies performed the best over the past twelve months, this given statement is false because over the last twelve months companies have faced huge losses due to pandemic.
What losses did businesses face during the Pandemic?Businesses have reduced employment, supply chain have got affected, lack of storage, less demand for products and services, human resource loss, productivity loss, and increased expenditures of the firms, these are some of the major losses faced by the companies during the pandemic.
Thus, the given statement is false.
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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
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
Alice MeyerMeyer?,owner of Flower DirectFlower Direct?, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery? fee,
MeyerMeyer wants to set the delivery fee based on the distance driven to deliver the flowers. MeyerMeyer wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. She has the following data from the past 7? months:
February and May are always Flower DirectFlower Direct?'s biggest months because of? Valentine's Day and? Mother's Day, respectively. Use the? high-low method to determine
Flower DirectFlower Direct?'s cost equation for van operating costs. Use your results to predict van operating costs at a volume of 16 comma 00016,000 kilometres.
? / ? = variable cost (slope)
? - ? = fixed cost
Use the? high-low method to determine Flower DirectFlower Direct?'s operating cost equation. ?(Round the variable cost to the nearest cent and the fixed cost to the nearest whole? dollar.)
Y = $?x + $?
Use the operating cost equation you determined above to predict van operating costs at a volume of 16 comma 00016,000 kilometres
the operating costs at a volume of 16 comma 00016,000 kilometres is ?$ ?
Table :
Month Kilometres Driven Van Operating Costs
January 16,000 $5,490
February 17,500 5,700
March 14,900 4,910
April 16,200 5,340
May 16,900 5,820
June 15,100 5,410
July 14,500 4,920
Answer:
Flower Direct1. Operating cost equation = $0.26x + $1,150
2. Prediction of operating costs at a volume of 16,000 is:
= $5,310
Explanation:
a) Data and Calculations:
Month Kilometres Driven Van Operating Costs
January 16,000 $5,490
February 17,500 5,700
March 14,900 4,910
April 16,200 5,340
May 16,900 5,820
June 15,100 5,410
July 14,500 4,920
High-Low Method:
February 17,500 5,700
July 14,500 4,920
Difference 3,000 780
Variable cost per unit = $780/3,000 = $0.26
Total variable cost at February figures = $4,550 (17,500 * $0.26)
Total fixed costs at February figures = $1,150 ($5,700 - $4,550)
Operating cost equation = $0.26x + $1,150
Operating cost at a volume of 16,000 = $1,150 + $0.26 * 16,000
= $1,150 + 4,160
= $5,310
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
At December 31, 2020, the available-for-sale debt portfolio for Blossom, Inc. is as follows.
Security Cost Fair Value Unrealized Gain (Loss)
A $17,900 $15,200 $(2,700)
B 11,000 15,000 4,000
C 24,000 26,500 2,500
Total $52,900 $56,700 3,800
Previous fair value adjustment balance—Dr. 400
Fair value adjustment—Dr. $3,400
On January 20, 2021, Blossom, Inc. sold security A for $15,300. The sale proceeds are net of brokerage fees. Blossom, Inc. reports net income in 2020 of $123,000 and in 2021 of $142,000. Total holding gains (including any realized holding gain or loss) equal $41,000 in 2021.
Prepare a statement of comprehensive income for 2020, starting with net income.
Prepare a statement of comprehensive income for 2021, starting with net income.
Answer:
a. Blossom Inc
Statement of Comprehensive Income
For the Year Ended December 31, 2020
Particulars Amount
Net income $123,000
Other comprehensive income:
Add: Unrealized holding gain $3,400
Comprehensive income $126,400
b. Blossom Inc
Statement of Comprehensive Income
For the Year Ended December 31, 2021
Particulars Amount
Net income $142,000
Other comprehensive income:
Total holding gains in 2021 $41,000
Add: Reclassification adjustment- $2,700
for loss included in net income $38,300
Comprehensive income $180,300
Note:
Particulars Amount
Net amount received from the sale of Security A $17,900
Less: Cost of Security A $15,200
Loss on the sale of Security A ($2,700)
The PLM Partnership balance sheet includes the following assets on December 31 of the current year: Basis FMV Cash $ 230,000 $ 230,000 Accounts receivable 0 75,000 Land 70,000 100,000 Total $ 300,000 $ 405,000 Pamela, a 1/3 partner, has an adjusted basis of $100,000 for her partnership interest. If Pamela sells her entire partnership interest to Emma for $135,000 cash, how much capital gain and ordinary income must Pamela recognize from the sale?
Answer: Capital gain recognized = $10000
Ordinary Income recognized = $25000
Explanation:
Since Pamela is a 1/3 partner, we should note that her share of the unrealized receivables will be 1/3 of the unrealized receivables and this will be:
= 1/3 × $75000
= $25000
Therefore, $25,000 of ordinary income will be recognized by Pamela and the capital gain will be:
= $35000 - $25000
= $10,000
What stock should I buy