Answer:
Because of the existence of certain types of market failure, employers can still engage in DISCRIMINATION and not necessarily lose profits.
Due to the existence of market failures like asymmetric information held by the employers, they can be able to discriminate in the wages they pay to employees such that they do not lose profit.
As an individual allocates their time, they face a trade-off between LEISURE and work.
An individual spends their time between leisure and work and they need to find a trade-off between the two that they are comfortable with because more hours allocated to one means less hours to the other.
Employers have some control over WAGES and adjust them in order to compensate for the danger or unpleasantness of a job and help contribute to certain types of market failure.
As a result of employers adjusting wages to suit the job characteristics or to entice employees, the job can contribute to market failure if the wages being paid are simply too high for that position.
Not all markets are perfectly competitive, due to the presence of UNIONS, which advocates for better salaries and working conditions on behalf of their members.
Unions campaign for their members to get better salaries and working conditions which might not be representative of the contribution of the job which leads to a situation where the market is no longer competitive because the tradeoff is not balanced.
On December 31, 2019, Burke Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Burke to make annual payments of $8,668 at the beginning of each year, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Burke uses the straight-line method of
Answer:
$39,405
Explanation:
Computation for the present value of the lease payments.
Using this formula
Present value of the lease payments=Beginning annual payments*Present value of an annuity due of 1 for 5 periods at 5%.
Let Plug in the formula
Present value of the lease payments=$8,668 × 4.54595
Present value of the lease payments=$39,405
Therefore the present value of the lease payments is $39,405
New Line Cinema is considering producing a new movie. To evaluate the proposal, the company needs to calculate its cost of capital. The firm has collected the following information:
a. The company wants to maintain is current capital structure, which is 20% equity, 20% preferred stock and 60% debt.
b. The firm has marginal tax rate of 34%.
c. The firm's preferred stock pays an annual dividend of $4.3 forever, and each share is currently worth $135.26.
d. The firm has one bond outstanding with a coupon rate of 6%, paid semiannually, 10 years to maturity, a face value of $1,000, and a current price of $1,163.51.
e. The company's beta is 0.8, the yield on Treasury bonds is is 0.6% and the expected return on the market portfolio is 6%.
f. The current stock price is $39.17. The firm has just paid an annual dividend of $1.13, which is expected to grow by 4% per year.
g. The firm uses a risk premium of 3% for the bond-yield-plus-risk-premium approach.
h. New preferred stock and bonds would be issued by private placement, largely eliminating flotation costs. New equity would come from retained earnings, thus eliminating flotation costs.
Required:
a. What is the cost of equity using the bond yield plus risk premium?
b. What is the midpoint of the range for the cost of equity?
c. What is the company's weighted average cost of capital?
Answer:
a.
7.00%
b.
5.96%
c.
1.20%
Explanation:
a.
First and foremost, we need to determine the yield to maturity on the bond, using a financial calculator as shown thus:
The financial calculator should be set to its default end mode before making the following inputs:
N=20(number of semiannual coupons in 10 years=10*2=20)
PMT=30(semiannual coupon=face value*coupon rate*/2=$1000*6%/2=$30)
PV=-1163.51(current price=$1,163.51)
FV=1000(face value of the bond=$1000)
CPT
I/Y=2.00%(semiannual yield=2%, annnual yield=2.00%*2=4.00%)
bond yield plus risk premium=bond yield(4.00%)+ risk premium(3%)
bond yield plus risk premium=7.00%
b.
In determining the midpoint range is the maximum plus minimum cost of equity divided by 2
Let us determine cost of equity using the Capital Asset Pricing Model and Constant Dividend Growth Model
cost of equity=risk-free rate+beta*(expected return on the market portfolio-risk-free rate)
risk-free rate=yield on Treasury bonds= 0.6%
beta=0.8
expected return on the market portfolio= 6%
cost of equity=0.6%+0.8*(6%-0.6%)
cost of equity=4.92%
cost of equity=expected dividend/share price+growth rate
expected dividend=last dividend*(1+growth rate)
expected dividend=$1.13*(1+4%)=$1.1752
share price= $39.17
growth rate=4%
cost of equity=($1.1752/$39.17)+4%
cost of equity=7.00%
midpoint range=(maximum cost of equity+minimum cost of equity)/2
midpoint rate=(7.00%+4.92%)/2
midpoint range=5.96%
c.
WACC=(weight of equity*cost of equity)+(weight of preferred stock*cost of preferred stock)+(weight of debt*after-tax cost of debt)
weight of equity= 20%
cost of equity=5.96%
weight of preferred stock=20%
cost of preferred stock=annual dividend/price
cost of preferred stock=$4.3/$135.26=3.18%
weight of debt=60%
aftertax cost of debt=4.00%*(1-34%)=2.64%
WACC=(20%*5.96%)+(20%*3.18%)*(60%*2.64%)
WACC=1.20%
The stockholders' equity section of Sheridan Company balance sheet at December 31, 2019, appears below:
Stockholders' equity
Paid-in capital
Common stock, $10 par value, 410,000 shares authorized;
330,000 issued and outstanding $3,300,000
Paid-in capital in excess of par 1,250,000
Total paid-in capital 4,550,000
Retained earnings 800,000
Total stockholders' equity $5,350,000
During 2020, the following stock transactions occurred:
Jan. 18 Issued 80,000 shares of common stock at $24 per share.
Aug. 20 Purchased 26,000 shares of Sheridan Company common stock at $26 per share to be held in the treasury.
Nov. 5 Issued 50,000 shares of common stock at $32 per share.
1. Prepare the journal entries to record the above stock transactions.
2. Prepare the stockholders' equity section of the balance sheet for Makoto Corporation at December 31, 2021. Assume that net income for the year was $100,000 and that no dividends were declared.
Answer:
Sheridan Company
1. Journal Entries:
Jan. 18 Debit Cash $1,920,000
Credit Common stock $800,000
Credit Paid-in capital in excess of par $1,120,000
To record the issuance of 80,000 shares of common stock at $24 per share.
Aug. 20 Debit Treasury stock $260,000
Debit Paid-in capital in excess of par $416,000
Credit Cash $676,000
To record the repurchase of 26,000 shares of Sheridan Company common stock at $26 per share to be held in the treasury.
Nov. 5 Debit Cash $1,600,000
Credit Common stock $500,000
Credit Paid-in capital in excess of par$1,100,000
To record the issuance of 50,000 shares of common stock at $32 per share.
2. Stockholders' Equity Section of Sheridan Company
Balance Sheet at December 31, 2019:
Paid-in capital
Common stock, $10 par value, 410,000 shares authorized;
330,000 issued and outstanding $4,600,000
Paid-in capital in excess of par 3,054,000
Treasury stock (260,000)
Total paid-in capital 7,394,000
Retained earnings 900,000
Total stockholders' equity $8,284,000
Explanation:
a) Data and Calculations:
Stockholders' Equity Section of Sheridan Company
Balance Sheet at December 31, 2019:
Paid-in capital
Common stock, $10 par value, 410,000 shares authorized;
330,000 issued and outstanding $3,300,000
Paid-in capital in excess of par 1,250,000
Total paid-in capital 4,550,000
Retained earnings 800,000
Total stockholders' equity $5,350,000
b) Transaction Analysis:
Jan. 18 Cash $1,920,000 Common stock $800,000 Paid-in capital in excess of par $1,120,000
Aug. 20 Treasury stock $260,000 Paid-in capital in excess of par $416,000 Cash $676,000
Nov. 5 Cash $1,600,000 Common stock $500,000 Paid-in capital in excess of par$1,100,000
Common stock:
Dec. 31, 2019: 330,000 issued and outstanding $3,300,000
Jan. 18, 2020: 80,000 issued of new shares 800,000
Nov. 5, 2020: 50,000 issued of additional shares 500,000
Dec. 31, 2020: 460,000 issued and outstanding $4,600,000
Paid-in capital in excess of par
December 31, 2019 $ 1,250,000
Jan. 18 issue 1,120,000
Aug. 20 treasury stock (416,000)
Nov. 5 issue of new shares 1,100,000
December 31, 2020 $3,054,000
Retained Earnings:
December 31, 2019 $800,000
Net income for 2020 100,000
December 31, 2020 $900,000
The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017.
Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $510,000 at face value.
Sep. 1 Acquired $1,230,000 of American Instruments' 10% bonds at face value.
Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds.
Oct. 2 Sold the Distribution Transformers bonds for $590,000.
Nov. 1 Purchased $1,950,000 of M&D Corporation 6% bonds at face value.
Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are:
American Instruments bonds$1,181,000
M&D Corporation bonds$2,021,000
(Hint: Interest must be accrued.)
Required:
Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end.
Answer:
1. Mar.31
Dr Investment in Distribution Transformers bonds $510,000
Cr Cash $510,000
2. September 01,
Dr Investment in American Instruments bonds
$1,230,000
Cr Cash $1,230,000
3 September 30
Dr Cash $20,400
Cr Interest revenue $20,400
4 October 02
Dr Fair value adjustment $80,000
Cr Unrealized holding gain—NI $80,000
5.October 02
Dr Cash $590,000
Cr Investment in Distribution Transformers bonds $510,000
Cr Fair value adjustment $8,000
6. November 01
Dr Investment in M&D Corporation bonds $1,950,000
Cr Cash $1,950,000
7 December 31
Dr Interest receivable $41,000
Cr Interest revenue $41,000
8 December 31
Dr Interest receivable $19,500
Cr Interest revenue $19,500
9. December 31
Dr Fair value adjustment $22,000
Cr Unrealized holding gain—NI $22,000
Explanation:
Preparation of the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end
1. Mar.31
Dr Investment in Distribution Transformers bonds $510,000
Cr Cash $510,000
2. September 01,
Dr Investment in American Instruments bonds
$1,230,000
Cr Cash $1,230,000
3 September 30
Dr Cash $20,400
Cr Interest revenue $20,400
(8%/2*$510,000)
4 October 02
Dr Fair value adjustment $80,000
Cr Unrealized holding gain—NI $80,000
($590,000-$510,000)
5.October 02
Dr Cash $590,000
Cr Investment in Distribution Transformers bonds $510,000
Cr Fair value adjustment $8,000
6. November 01
Dr Investment in M&D Corporation bonds $1,950,000
Cr Cash $1,950,000
7 December 31
Dr Interest receivable $41,000
Cr Interest revenue $41,000
($1,230,000 x 10% x 4/12)
8 December 31
Dr Interest receivable $19,500
Cr Interest revenue $19,500
($1,950,000* 6% x 2/12)
9. December 31
Dr Fair value adjustment $22,000
Cr Unrealized holding gain—NI $22,000
Available for sale securities Cost Fair market Value Profit/Loss
M & D Corporation shares
$1,950,000 $2,021,000 $ -71,000
American Instruments bonds $1,230,000 $1,181,000 $49,000
Totals $3,180,000 $3,202,000 $22,000
Item 1 Lawrin is a real-estate salesperson whose compensation is commission-only. She earns a 3% commission on the sale price of each house that she sells and receives 1.5% commissions at the end of each month (the broker retains the rest per the employment agreement). During the month of July, Lawrin sold two houses totaling $445,260. What is her gross pay for the month of July
Answer:
Gross pay= $13,357.8
Explanation:
Giving the following information:
Gross commission= 3%
Sales= $445,260
The gross pay is the amount earned before tax and other deductions. We need to use the following formula:
Gross pay= commission rate*sales
Gross pay= 0.03*445,260
Gross pay= $13,357.8
Golden Arch Company uses the periodic inventory system. It has compiled the following information in order to prepare the financial statements at December 31, 2019: Gross sales during 2019 $2,000,000 Sales returns and allowances during 2019 50,000 Beginning inventory, January 1, 2019 100,000 Ending inventory, December 31, 2019 120,000 Purchases during 2019 750,000 Required: Calculate the Cost of goods sold and Gross profit for the company during 2019.
Answer:
See below
Explanation:
Given the information above, cost of goods sold and the gross profit is calculated as;
Cost of goods sold for the company during 2019
= Beginning inventory + Net purchases - Ending inventory
= Beginning inventory + (Purchases - Purchase return) - Ending inventory
= $100,000 + ($750,000 - $0) - $120,000
= $100,000 + $750,000 - $120,000
= $730,000
Gross profit for the company during 2019
= Net Sales - Cost of goods sold
= (Gross sales - Sales return and allowances) - Cost of goods sold
= ($2,000,000 - $50,000) - $730,000
= $1,950,000 - $730,000
= $1,220,000
Bond valuation [LO14-2] Your investment department has researched possible investments in corporate debt securities. Among the available investments are the following $100 million bond issues, each dated January 1, 2021. Prices were determined by underwriters at different times during the last few weeks. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Company Bond Price Stated Rate
1. BB Corp. $ 107 million 15 %
2. DD Corp. $ 100 million 14 %
3. GG Corp. $ 93 million 13 %
Each of the bond issues matures on December 31, 2040, and pays interest semiannually on June 30 and December 31. For bonds of similar risk and maturity, the market yield at January 1, 2021, is 14%.
Required: Other things being equal, which of the bond issues offers the most attractive investment opportunity if it can be purchased at the prices stated?
Answer:
Bond Valuation
Other things being equal, the bond issue that offers the most attractive investment opportunity if it can be purchased at the prices stated is:
= BB Corp. bonds.
Explanation:
a) Data and Calculations:
Maturity period = 20 years
Issue date = January 1, 2021
Maturity date = December 31, 2040
Company Bond Price Stated Rate Annual Interest FV
1. BB Corp. $ 107 million 15 % $15 million $3,518,371,301.23
2. DD Corp. $ 100 million 14 % $14 million 2,827,106,832.58
3. GG Corp. $ 93 million 13 % $13 million 2,260,756,079.53
From an online financial calculator, the future values of the bonds are:
N (# of periods) 20
I/Y (Interest per year) 15
PV (Present Value) 107000000
PMT (Periodic Payment) 15000000
Results
FV = $3,518,371,301.23
Sum of all periodic payments $300,000,000.00
Total Interest $3,111,371,301.2
N (# of periods) 20
I/Y (Interest per year) 14
PV (Present Value) 100000000
PMT (Periodic Payment) 14000000
Results
FV = $2,827,106,832.58
Sum of all periodic payments $280,000,000.00
Total Interest $2,447,106,832.58
N (# of periods) 20
I/Y (Interest per year) 13
PV (Present Value) 93000000
PMT (Periodic Payment) 13000000
Results
FV = $2,260,756,079.53
Sum of all periodic payments $260,000,000.00
Total Interest $1,907,756,079.53
Burns Industries currently manufactures and sells 11,000 power saws per month, although it has the capacity to produce 26,000 units per month. At the 11,000-unit-per-month level of production, the per-unit cost is $46, consisting of $30 in variable costs and $16 in fixed costs. Burns sells its saws to retail stores for $71 each. Allen Distributors has offered to purchase 4,100 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs. Using an incremental analysis approach, Burns should consider accepting this special order only if the price per unit offered by Allen is at least: Multiple Choice $16. $46. $71. $30. qizket
Answer:
Selling price= $30
Explanation:
Giving the following information:
Unitary cost:
Variable= $30
Fixed= $16
Number of units= 4,100
Normally, when there is unused capacity and a new customer asks for a reduced price, the fixed cost should not be taken into account when calculating the selling price. The company benefits from increasing its sales, acquiring a new customer, and perhaps getting some discounts from suppliers in the variable components.
The lower price that the company accepts is the one that equals the unitary variable cost. In this case:
Selling price= $30
A museum of natural history opened a gift shop that operates throughout the year. Top-selling product is a bird feeder. Annual demand for the bird feeder is 933 units. Cost per order is $55. Annual holding cost per unit is $19. Assuming that the shop uses the EOQ as the order size, what would be the total holding cost for the bird feeder
Answer:
$1396.5
Explanation:
EOQ or economic order quantity formula is given as:
[tex]EOQ = \sqrt{\frac{2DC_o}{H_c}}[/tex]
Where, D = demand per year
C_0 = ordering cost and H_c = holding cost per unit per year
[tex]EOQ = \sqrt{\frac{2\times933\times55}{19}}[/tex]
EOQ= 73.5 units
Since, the order size is EOQ then, total holding cost
= holding cost per unit per year × EOQ
=73.5×19
=$1396.5
Your firm is preparing to open a new retail strip mall and you have multiple businesses that would like lease space in it. Each business will pay a fixed amount of rent each month plus a percentage of the gross sales generated each month. The cash flows from each of the businesses has approximately the same amount of risk. The business names, square footage requirements, and monthly expected cash flows for each of the businesses that would like to lease space in your strip mall are provided below:
Square Feet Expected Monthly
Business Name Required Cash Flow
Videos Now 4,000 70,000
Gords Gym 3,500 52,500
Pizza Warehouse 2,500 52,500
Super Clips 1,500 25,500
30 1/2 Flavors 1,500 28,500
S-Mart 12,000 180,000
WalVerde Drugs 6,000 147,000
Multigular Wireless 1,000 22,250
If your new strip mall will have 15,000 square feet of retail space available to be leased, to which businesses should you lease and why?
Answer:
I would like to lease spaces to the following businesses:
Square Feet Expected Monthly
S-Mart 12,000 $180,000
WalVerde Drugs 6,000 147,000
Videos Now 4,000 70,000
They have the highest monthly expected cash flows to be able to pay the monthly rent. Another reason is that the variable part of the rent depends on each business's monthly gross sales. The higher the gross sales, the higher the rent. They also require the highest square space on which the fixed element of the rent depends.
Explanation:
a) Data and Calculations:
Square Feet Expected Monthly
Business Name Required Cash Flow
Videos Now 4,000 $70,000
Gords Gym 3,500 52,500
Pizza Warehouse 2,500 52,500
Super Clips 1,500 25,500
30 1/2 Flavors 1,500 28,500
S-Mart 12,000 180,000
WalVerde Drugs 6,000 147,000
Multigular Wireless 1,000 22,250
Space available for leasing = 15,000 square feet
S-Mart 12,000 $180,000
WalVerde Drugs 6,000 147,000
Videos Now 4,000 70,000
Olga's Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000. The cost of goods sold for next month is expected to be a.$60,000. b.$40,000. c.$89,000. d.$90,000.
Answer:
a. $60,000
Explanation:
Costs of goods sold = Budgeted sales for next month * 40%
Costs of goods sold = $150,000 * 40%
Costs of goods sold = $60,000
So therefore, the cost of goods sold for next month is expected to be $60,000.
Ficus, Inc. began business on March 1 of the current year, and elected to file its income tax return on a calendar-year basis. The corporation incurred $800 in organizational expenditures. Assuming the corporation does not elect to expense but chooses to amortize the costs over 180 months, the maximum allowable deduction for amortization of organizational expenditures in the current year is: a.$44.44 b.$800.00 c.$4.44 d.$53.28 e.None of these choices are correct.
Answer:
a. $44.44
Explanation:
The amortization will be allowed for 10 months in the year (March-December) as the return is filed on a calendar year basis. The deduction allowed per month $4.44 ($800 / 180).
The maximum allowable deduction for amortization of organizational expenditures in the current year is $44.44 ($4.44*10 months).
Janes, Inc., is considering the purchase of a machine that would cost $410,000 and would last for 5 years, at the end of which, the machine would have a salvage value of $41,000. The machine would reduce labor and other costs by $101,000 per year. Additional working capital of $3,000 would be needed immediately, all of which would be recovered at the end of 5 years. The company requires a minimum pretax return of 13% on all investment projects.
Required:
Determine the net present value of the project. (Negative amount should be indicated by a minus sign.)
Answer:
- $33,678.21
Explanation:
Cash flow Summary of the Project will be as follows
Year 0 = $410,000 + $3,000 = - $413,000
Year 1 = $101,000
Year 2 = $101,000
Year 3 = $101,000
Year 4 = $101,000
Year 5 = $101,000 + $41,000 + 3,000 = $145,000
So the Net Present Value can now be calculated using the CFj function of a Financial calculator as follows :
- $413,000 CF 0
$101,000 CF 1
$101,000 CF 2
$101,000 CF 3
$101,000 CF 4
$145,000 CF 5
i/yr = 13%
Shift NPV = - $33,678.21
If the demand for labor falls from D to D' and wages are sticky on the downward side, there will be unemployment of ________ million. a. 75 b. 100 c. 25 d. None of the above
Answer:
There will be unemployment of 100 million. The correct option is b. 100.
Explanation:
Note: This question is not complete because the graph is not attached. The graph is therefore provided before answering the question. See the attached photo for the graph.
From the attached graph, we have:
Equilibrium units of labor at D = 300 million
Equilibrium units of labor at D’ = 200 million
Employment If the demand for labor falls from D to D' = Equilibrium units of labor at D’ - Equilibrium units of labor at D = 300 million - 200 million = 100 million
Therefore, there will be unemployment of 100 million. The correct option is b. 100.
Abell and Creek, LLC has prepared the following flexible budget figures for the current period and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. Flexible Budget Price Variance Efficiency Variance Product A311 (total costs) $58,000 $1,500 F $3,000 U Product A325 (total costs) $42,000 $1,750 U $1,500 F Direct manufacturing labor only $71,000 $2,000 U $2,500 F Calculate the actual amount spent for Product A325 during the current period:
Answer:
Abell and Creek, LLC
The actual amount spent for Product A325 during the current period is:
= $42,250.
Explanation:
a) Data and Calculations:
Flexible Price Efficiency
Budget Variance Variance
Product A311 (total costs) $58,000 $1,500 F $3,000 U
Product A325 (total costs) $42,000 $1,750 U $1,500 F
Direct manufacturing labor only $71,000 $2,000 U $2,500 F
Actual amount spent for Product A325:
Flexible budget $42,000
Price variance 1,750 U
Efficiency variance 1,500 F
Actual = $42,250
Crane Company incurred the following costs for 50000 units: Variable costs $300000 Fixed costs 392000 Crane has received a special order from a foreign company for 2000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $4000 for shipping. If Crane wants to break even on the order, what should the unit sales price be?
Answer:
see explanation
Explanation:
Use the Fixed Costs, Variable costs and Sales arising from the special order only and follow the steps below :
Step 1 : Determine the Break even level in sales revenue
Break even (sales revenue) = Fixed Costs ÷ Contribution margin ratio
Step 2 : Determine the unit selling price
Unit selling price = Break even (sales revenue) ÷ total units sold
On December 1, a six-month liability insurance policy was purchased for $1,134. Analyze the required adjustment as of December 31 using T accounts, and then formally enter this adjustment in the general journal. (Trial balance is abbreviated as TB.)
Answer and Explanation:
As the insurance policy would be for 6 months
So per month it is
= $1,134 ÷ 6 months
= $189
Now the T account is
Prepaid insurance
Opening balance $1,134 Insurance expense $189
balance $945
Income statement
Adjustment $189
Journal entry
Insurance expense $189
To Prepaid insurance $189
(Being insurance expense is recorded)
Paige is a scratch golfer, former Division I college golf star and past member of the LPGA tour. She is well-known for her ability to teach golf techniques and is often hired to teach golf clinics. Beatriz was a less successful golf clinic consultant who was just starting out and was hired to run a clinic for Par Golf Promotions. Beatriz was nervous about the clinic because it was her first and she asked Paige if she could fill in for her and Paige agreed. What is this transfer called and will it be allowed under the law of contracts
Answer:
This contract transfer is called a delegation. It will be allowed under the law of contracts, provided there is no provision or contract term in the original contract forbidding such transfer.
Explanation:
A delegation involves the appointment of Paige to perform Beatriz's duties under the golf clinic contract. This transfer is distinguishable from a contract assignment, which involves the transfer of the contract rights and obligations by Beatriz (the assignor) to Paige (the assignee). A transfer by delegation does not allow the assignee to assume all the obligations and rights but to specifically perform a duty.
Southern Alliance Company needs to raise $120 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 55 percent common stock, 15 percent preferred stock, and 30 percent debt. Flotation costs for issuing new common stock are 8 percent, for new preferred stock, 5 percent, and for new debt, 3 percent.
What is the true initial cost figure the company should use when evaluating its project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.)
Answer:
$127,727,515
Explanation:
Calculation to determine the true initial cost figure Southern should use when evaluating its project
First step is to find the weighted average flotation cost.
Weighted average flotation cost= .55(.08) + .15(.05) + .30(.03)
Weighted average flotation cost= .044+.0075+.009
Weighted average flotation cost= .0605*100
Weighted average flotation cost=6.05%
Now let determine the true initial cost figure
True initial cost figure=(1 – .0605) = $120,000,000
True initial cost figure = $120,000,000 / (1 – .0605)
True initial cost figure = $120,000,000 / .9395
= $127,727,515
Therefore the true initial cost figure Southern should use when evaluating its project is $127,727,515
Your Competitive Intelligence team is predicting that the Chester Company will invest in adding capacity to their Cent product this year. Assume Chester's product Cent invests in increasing its capacity by 10% this year. Because of this new information, your company anticipates all other products in the Core segment will increase their capacity by the same amount. How much can the industry produce in the Core segment the next year
Question Completion:
Product Segment Capacity Next Round
Attic Core 1,130
Axe Core 1,200
City Core 1,300
Cent Core 1,550
Dome Core 1,145
Dug Core 1,023
Answer:
Competitive Intelligence Team
The industry can produce 8,083 units in the Core segment next year.
Explanation:
a)Data and Calculations:
Product Segment Capacity Increasing New Capacity
Next Round by 10% next year
Attic Core 1,130 113 1,243
Axe Core 1,200 120 1,320
City Core 1,300 130 1,430
Cent Core 1,550 155 1,705
Dome Core 1,145 115 1,260
Dug Core 1,023 102 1,125
Total industry capacity 7,348 735 8,083
b) A Competitive Intelligence is an analysis for decision-makers that uncovers competitive gaps, products, and services. It uses information about a firm's industry, business environment, and competitors' strategies to develop strategic initiatives and identify opportunities and threats facing the firm in the marketplace.
The unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense, reports the following selected amounts: Accounts receivable $ 431,000 Debit Allowance for Doubtful Accounts 1,390 Debit Net Sales 2,240,000 Credit All sales are made on credit. Based on past experience, the company estimates 2.5% of ending account receivable to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense
Answer:
Bad Debts Expense $9,385 & Allowance for Doubtful Accounts $9,385
Explanation:
Bad debt expense = ($431,000 *2.5%) - $1,390
Bad debt expense = $10,775 - $1,390
Bad debt expense = $9,385
Adjusted Entry
Debit - Bad Debts Expense $9,385
Credit - Allowance for Doubtful Accounts $9,385
State whether true or false and briefly explain why:
If a business owner is delighted to accept additional orders at the current price, he or she cannot have been a profit-maximizing, perfectly competitive producer. A profit-maximizing, perfectly competitive firm would have been producing such that the multiple choice P > MC, so producing more would mean that the marginal cost increases to match the market price; so this is false. P = AC, so producing more would mean that the average cost would exceed the price reducing profits; so this is true. P = MC, so producing more would mean that the marginal cost would exceed the price reducing profits; so this is true. MR < MC, so producing more would mean that the marginal cost increases to match the market price; so this is false.
Answer:
Stating True or False
P > MC, so producing more would mean that the marginal cost increases to match the market price. FALSE
P = AC, so producing more would mean that the average cost would exceed the price reducing profits. FALSE
P = MC, so producing more would mean that the marginal cost would exceed the price reducing profits. TRUE
MR < MC, so producing more would mean that the marginal cost increases to match the market price. FALSE
Explanation:
All profit-maximizing producers accept a market price (P) that is equal to the marginal cost (MC), i.e. (P = MC). At this point, the market price does not exceed the marginal costs (costs of factors of production). When = P > MC, it shows that the benefits of producing more goods exceed the production costs, to the benefit of the society. However, if P < MC, then the social costs of producing the goods exceed the social benefits, signalling that the economy should produce less.
A single lease expense is recognized on the income statement for an operating lease. a finance lease. both a finance lease and an operating lease. neither a finance lease or an operating lease.
Answer:
an operating lease.
Explanation:
A lease refers to a contract that rents a land or other properties to another person for a specified period of time and amount of money.
A lease right can be defined as an approval granted by a lessor (landlord) to a lessee for the use of a property such as land over a specific period of time.
A lease for a period of 24 months must be in writing between the lessor (landlord) and the lessee (tenant) to be enforceable by a competent court of law
Generally, a single lease expense is recognized on the income statement for an operating lease.
A financial statement is a written report that quantitatively describes a firm's financial health. Under the financial statements is a cash-flow statement, which is used to record the cash inflow and cash equivalents leaving a business firm.
Cash flow statement, also known as the statement of cash flows, contains financial information about operating, financial and investing activities.
Hence, activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as operating activities.
Imagine that in the current year the economy is in long-run equilibrium. Then the federal government reduces its purchases of goods by 50%. In the long run, what happens to the expected price level and what impact does this have on wage bargaining
Answer:
The expected price level falls., new wage contracts will be negotiated at a lower wage in the market.
Explanation:
In the case when the economy is in the long run equilibrium and the federal government decreased the goods purchase by 50%. So in the long run the expected price level would be decline and the effect on wage bargaining would be that the new wage control would be negotiated at a less wages in the market place
Therefore, the correct option is c
And, the same would be relevant
An analyst compiled the following information for U Inc. for the year ended December 31, 2018: Net income was $1,700,000. Depreciation expense was $400,000. Interest paid was $200,000. Income taxes paid were $100,000. Common stock was sold for $200,000. Preferred stock (8% annual dividend) was sold at par value of $250,000. Common stock dividends of $50,000 were paid. Preferred stock dividends of $20,000 were paid. Equipment with a book value of $100,000 was sold for $200,000. Using the indirect method, what was U Inc.'s net cash flow from operating activities for the year ended December 31, 2018?
Answer:
Net cash from operating activities=$2,100,000
Explanation:
The net cashflow from operating activities represent how much a business generates doing its ordinary course of business.
It is the net income adjusted for all non-cash items like depreciation e.t.c
Net cash from operating activities = 1,700,000 + 400,000= $2.100,000
Net cash from operating activities=$2,100,000
Riverbed Corp bought equipment on January 1, 2022. The equipment cost $460000 and had an expected salvage value of $65000. The life of the equipment was estimated to be 5 years. The company uses the straight-line method of depreciation. The book value of the equipment at the beginning of the third year would be $395000. $158000. $302000. $460000.
Answer:
Book value= $302,000
Explanation:
Giving the following information:
Purchase price= $460,000
Salvage value= $65,000
Useful life= 5 years
First, we need to calculate the annual depreciation.
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (460,000 - 65,000) / 5
Annual depreciation= $79,000
Now, the accumulated depreciation after 2 full years:
Accumulated depreciation= 79,000*2= $158,000
Finally, the book value:
Book value= purchase price - accumulated depreciation
Book value= 460,000 - 158,000
Book value= $302,000
What are some recommendations for ways that Redbox can maintain its high market
share?
Answer:
Do online streaming
Explanation:
1: create commercials to spread the business
2: emphasize the good points for example, a movie ticket cost about $15 to $20 while a Redbox movie only cost about $2 and multiple people can watch the movie they bought.
3: place Redbox stations in high populated building for example, a mall, Publix, Walmart, Wawa, and Target.
At the end of 2020, Pharoah Co. has accounts receivable of $762,200 and an allowance for doubtful accounts of $60,300. On January 24, 2021, the company learns that its receivable from Megan Gray is not collectible, and management authorizes a write-off of $5,800. On March 4, 2021, Pharoah Co. receives payment of $5,800 in full from Megan Gray. Prepare the journal entries to record this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
To reverse the transaction, the journal entry is:
Date Account title Debit Credit
March 4, 2021 Accounts receivable - Megan Gray $5,800
Allowance for doubtful accounts $5,800
To record the receipt of cash:
Date Account title Debit Credit
March 4, 2021 Cash $5,800
Accounts receivable - Megan Gray $5,800
Kari is a limited partner in Lizard Partnership. This year, Kari's share of partnership ordinary income is $20,000, and she received a cash distribution of $30,000. Kari's tax basis in her partnership interest at the beginning of the year was $50,000. Her marginal tax rate is 22 percent. Kari qualifies for the QBI deduction, without regard to the wage or taxable income limitations.
a. Calculate the tax cost of Kari's partnership earnings this year Tax cost
b. Compute Kari's after-tax cash flow from her partnership activity this year After-tax cash flow
c. Compute Kari's tax basis in her partnership interest at the ending of the year. Assume no change in her share of partnership during the year.
Answer: a. $3520
b. $26480
c. $40000
Explanation:
a. Calculate the tax cost of Kari's partnership earnings this year Tax cost
Ordinary Income = $20000
Less: 199A deduction = 20% × $20000 = $4000
Ordinary Income share = $16000
The tax cost of Kari's partnership earnings this year Tax cost will be:
= 22% × $16000
= 0.22 × $16000
= $3520
b. Compute Kari's after-tax cash flow from her partnership activity this year After-tax cash flow
This will be:
= Cash distribution - Tax cost
= $30000 - $3520
= $26480
c. Compute Kari's tax basis in her partnership interest at the ending of the year. Assume no change in her share of partnership during the year.
Basis at start of year = $50000
Add: Ordinary income = $20000
Adjusted basis = $50000 + $20000 = $70000
Less: Cash distribution = $30000
End of year basis = $40000
Which of the following adjustments to convert net income to net cash provided by operating activities is incorrect? Add to Net Income Deduct from Net Income A. Accounts Receivable decrease increase B. Prepaid Expenses increase decrease C. Inventory decrease increase D. Accounts Payable increase decrease
Answer:
B. Prepaid Expenses increase decrease
Explanation:
When the net income would be converted to net cash provided by operating activities so the above answer would be held incorrect
As the correct adjustment would be when there is decrease in the prepaid expense so the same would be added to the net income and when it increased so the same would be deducted from the net income
Therefore, the option b is correct
Hence, the other options would be incorrect
The daily operations of a corporation involved in producing and selling its product, generating revenues, as well as fundamental management and software maintenance, are referred to as operating activities. Fabrication, marketing, promotion, and branding are all important aspects of a company's operations.
The correct answer that is not in the context of the operating activities is B. Prepaid Expenses increase decrease
When net income is converted to net cash generated by operational operations, the answer given above is erroneous.
As the appropriate correction, when the prepaid expense lowers, it is credited to the net revenue, and when it grows, it is removed from the net earnings.
Therefore, option b is the correct answer.
To know more about the adjustments of the operating activities, refer to the link below:
https://brainly.com/question/25656124