Answer:
a) $130,000
b)Equity = $110,500
Value of debt = $30,000
c) $10,500
d) 35%
Explanation:
Given:
Tax rate = 35%
Earnings before tax & interests = $10,000
Risk free interest rate = 5.0%
a) Suppose the firm has no debt and pays out its net income as a dividend each year. What is the value of the firm’s equity?
First find net income.
Net income = $10,000(1 - 0.35)
= $(10,000 - 0.65)
= $6,500
Since net income is $6,500 it means equity shareholders receive dividends of $6,500 annually without risk.
Therefore,
equity = Net income / risk free rate
= 6500/0.05
= $130,000
Equity = $130,000
b) First find net income:
($10,000 - $1,500)(1 - 0.35)
($8,500)(0.65) = $5,525
Net income = $5,525
Find equity:
Equity = Net income / risk free rate
= $5,525 / 0.05
= $110,500
Equity = $110,500
Value of debt:
Use the formula below to find value of debt:
Debt = Interest / risk free rate
= $1,500 / 0.05
= $30,000
Value of debt = $30,000
c) Find the total value of the firm with leverage:
$110,500 + $30,000
= $140,500
The total value of the firm without leverage: $130,000
Now, the difference between the total value of the firm with leverage and without leverage:
$140,500 - $130,000
= $10,500
Difference = $10,500
d) Find the percentage difference:
% difference = difference/debt * 100
[tex] = \frac{10500}{30000} * 100 [/tex]
[tex] 0.35 * 100 = 35 percent [/tex]
On June 30, 2020, Mischa Auer Company issued $4,000,000 face value of 13%, 20-year bonds at $4,300,918, a yield of 12%. Auer uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)(1) The issuance of the bonds on June 30, 2020.(2) The payment of interest and the amortization of the premium on December 31, 2020.(3) The payment of interest and the amortization of the premium on June 30, 2021.(4) The payment of interest and the amortization of the premium on December 31, 2021
Answer:
(1) The issuance of the bonds on June 30, 2020.
Dr Cash 4,300,918
Cr Bonds payable 4,000,000
Cr Premium on bonds payable 300,918
(2) The payment of interest and the amortization of the premium on December 31, 2020.
Dr Interest expense 258,055.08
Dr Premium on bonds payable 1,944.92
Cr Cash 260,000
(3) The payment of interest and the amortization of the premium on June 30, 2021.
Dr Interest expense 257,938.38
Dr Premium on bonds payable 2,061.62
Cr Cash 260,000
(4) The payment of interest and the amortization of the premium on December 31, 2021
Dr Interest expense 257,814.69
Dr Premium on bonds payable 2,185.31
Cr Cash 260,000
Explanation:
amortization of bond premium for first coupon payment:
($4,300,918 x 6%) - ($4,000,000 x 6.5%) = $258,055.08 - $260,000 = -$1,944.92
amortization of bond premium for second coupon payment:
($4,298,973.08 x 6%) - ($4,000,000 x 6.5%) = $257,938.38 - $260,000 = -$2,061.62
amortization of bond premium for third coupon payment:
($4,296,911.46 x 6%) - ($4,000,000 x 6.5%) = $257,814.69 - $260,000 = -$2,185.31
Assume that demand increases from D1to D2; in the new long run equilibrium, price settles at a level between P1and P2This means that the industry in question is a(n) __________-cost industry.a. decreasingb. increasingc. constantd. marginale. low
Answer:
The answer is B. Increasing
Explanation:
An increasing-cost industry is an industry whose costs for production increase as more companies compete.
Why is this so? - This is because each new company in the industry increases its demand for supplies and factors needed for production.
A decreasing‐cost industry is one where costs of production reduces as the industry expands.
According to Debra, the vice president of Theo Chocolate, the most important marketing vehicle the company has is: a.the fair trade certification. b.free product giveaways. c.tours of its factories. d.the unique varieties of chocolates it offers.
Answer:
The correct answer is the option C: Tours of its factories.
Explanation:
To begin with, the most important marketing vehicle the company has is the tours of its factories due to the fact that it is quite known that the showdown of the product and its current production to the customers increase the amount of desire that they have for them. Moreover, the fact of showing to the clients how well the products are made, with the greatest quality and all the correct process, the clients only feel more amaze for the products of the company and that is why that its demand increase as well as its sales, due to the tours.
Answer:
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Imagine that you are the supply chain manager for the Magic Widget company and you need to measure your supply chain performance. The chart shows the financial variables that you will need to perform your task.
Financial Variables
Total Assets (in $ billions) 15.3
Cost of Goods Sold (in $ billions) 19.8
Inventory:
Raw Material Inventory (in $ billions) 1.10
Work-in-progress Inventory (in $ billions) 2.20
Finished Goods Inventory (in $ billions) 0.82
Required:
Compute the percentage of assets committed to inventory and inventory turnover. Round your answers to the first decimal place.
Answer:
The percentage of assets committed to inventory is 26.9%.
Inventory turnover is 4.8 times.
Explanation:
Inventory as a percentage of assets = total inventory / total assets × 100
= (1.10 + 2.20 + 0.82) / 15.3 × 100
= 26.9% (rounded)
Inventory turnover = cost of sales / inventory
= 19.8 / (1.10 + 2.20 + 0.82)
= 4.8 times (rounded)
Compute the amount of raw materials used during November if $33,500 of raw materials were purchased during the month and if the inventories were as follows: Inventories Balance November 1 Balance November 30 Raw materials $ 8,400 $ 4,700 Work in process $ 6,700 $ 8,200 Finished goods $ 10,700 $ 12,700
Answer:
Raw material used = $37,200
Explanation:
Raw material used = Beginning raw material inventory + raw material purchase - ending raw material inventory
= ($8,400 + $33,500 - $4,700)
Raw material used = $37,200
Your uncle is considering investing in a new company that will produce high quality stereo speakers. The sales price would be set at 1.70 times the variable cost per unit; the variable cost per unit is estimated to be $75.00; and fixed costs are estimated at $1,170,000. What sales volume would be required to break even, i.e., to have EBIT
Answer:
The sales volume would be required to break even is $22,285
Explanation:
In order to calculate the sales volume would be required to break even we would have to calculate the following:
Breakeven sales = Fixed cost/contribution per unit
fixed costs are estimated at $1,170,000
contribution per unit=selling price per unit - variable cost per unit
selling price per unit=1.70*$75
selling price per unit=$127.50
Hence, contribution per unit=$127.50-$75
contribution per unit=$52.50
Therefore, Breakeven sales =$1,170,000/$52.50
Breakeven sales =$22,285
The sales volume that would be required to break even is $22,285.71.
Sales price per unit=Variable costs per unit× Price multiple over variable costs
Sales price per unit=$75.00×1.70
Sales price per unit= $127.50
Sales volume=$1,170,000 / ($127.50 - $75.00)
Sales volume=$1,170,000 /$52.5
Sales volume=$22,285.71
Inconclusion the sales volume that would be required to break even is $22,285.71.
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Assume N securities. The expected returns on all the securities are equal to 0.01 and the variances of their returns are all equal to 0.01. The covariances of the returns between two securities are all equal to 0.005.
Answer:
Number of securities in a portfolio = N
Expected returns on all the securities E_i = 0.01
Variances of their returns =0.01
i. Covariances of the returns between two securities = 0.005
Expected return of the portfolio is E(R) = w1R1 + w2Rq + ...+ wn Rn
E(R) =[tex]( \frac{1}{N}*0.01 + \frac{1}{N}*0.01 + .... + \frac{1}{N}*0.01 ) * N[/tex]
E(R) = 0.01
Expected return of N asset portfolio E(R) = 0.01
Variance of N asset portfolio [tex]\sigma ^2 = \frac{ \sum_{k=1}^{n}(r_k- E(r))^2}{n-1}[/tex]
where,
k is the specific return of the asset,
E(r) is the expected return.
ii. As N gets large, the portfolio's diversified risk rapidly decreases.
iii. The portfolio is well-diversified if the assets in a well-diversified portfolio exhibit a negative correlation or less correlation to each other.
The firm uses the periodic system, and there are 25 units of the commodity on hand at the end of the year. What is the amount of the inventory at the end of the year using the LIFO method? a. $1,805 b. $1,575 c. $3,815 d. $1,685
Answer: $1,575
Explanation:
When using Last In First Out (LIFO) method of inventory valuation, it is assumed that the most current goods purchased are the ones to be sold first. This means that the remaining inventory are the earlier ones purchased.
25 units remain at the end of the year. These will therefore come from;
The 10 units of beginning Inventory at $60 each
The remaining 15 units will come from the first purchase at $65 each.
Amount of Inventory = (10 * 60) + (15 * 65)
= 600 + 975
= $1,575
I have attached the complete question.
The following transactions are for Kingbird Company.1. On December 3, Kingbird Company sold $450,000 of merchandise to Blossom Co., on account, terms 1/10, n/30. The cost of the merchandise sold was $310,000.2. On December 8, Blossom Co. was granted an allowance of $22,000 for merchandise purchased on December 3.3. On December 13, Kingbird Company received the balance due from Blossom Co.Instruction:Prepare the journal entries to record these transactions on the books of Mack Company. Mack uses a perpetual inventory system.
Answer:
Kingbird Company or Mack Company
Journal Entries:
Dec. 3:
Debit Accounts Receivable (Blossom Co.) $450,000
Credit Sales Revenue $450,000
To record the sale of goods on account, terms 1/10, n/30.
Debit Cost of Goods Sold $310,000
Credit Inventory Account $310,000
To record the cost of goods sold.
Dec. 8:
Debit Sales Allowance $22,000
Credit Accounts Receivable (Blossom Co.) $22,000
To record the allowance granted.
Dec. 13:
Debit Cash Account $423,720
Debit Cash Discount $4,280
Credit Accounts Receivable (Blossom Co.) $428,000
To record the settlement of account.
Explanation:
Journal entries are used to record transactions that occur on a daily basis. They are usually the first set of records made in the accounting books. They show the accounts to be debited and the accounts to be credited. Each transaction is usually debited in one account and credited in another to reflect the double entry system of accounting and to keep the accounting equation in balance.
Denny Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to Unearned Service Revenues. This account had a balance of $900,000 at December 31, 2011 before year-end adjustment. Service contracts still outstanding at December 31, 2011 expire as follows:
Service contracts still outstanding at December 31, 2011 expire as follows:
During 2012 $190,000
During 2013 $285,000
During 2014 $125,000
What amount should be reported as Unearned Service Revenues in Denny's December 31, 2011 balance sheet?
a. $900,000
b. $600,000
c. $1,500,000
d. $300,000
Answer:
b. $600,000
Explanation:
Amount to be reported = Outstanding service contracts for 2012, 2013 and 2014
=$190,000 + $285,000 + $125,000
=$600,000
$600,000 should be reported as unearned service revenues in Denny's Co. December 31, 2015 balance sheet.
Magic Realm, Inc., has developed a new fantasy board game. The company sold 48,500 games last year at a selling price of $61 per game. Fixed expenses associated with the game total $873,000 per year, and variable expenses are $41 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contribution format income statement for the game last year. 1-b. Compute the degree of operating leverage. 2. Management is confident that the company can sell 60,625 games next year (an increase of 12,125 games, or 25%, over last year). Given this assumption: a. What is the expected percentage increase in net operating income for next year? b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.)
Answer:
1a.
Contribution format income statement for the game last year
Sales ( 48,500 games × $61) $2,958,500
Less Variable Expenses ( 48,500 games × $41) ($1,988,500)
Contribution $970,000
Less Fixed Costs ($873,000)
Net Income / (loss) $97,000
1b. 10.00
2a. 250%
2b. $339,500
Explanation:
Contribution Income Statement : Shows Separately the Variable Costs and Fixed Cost
Degree of operating leverage = Contribution / EBIT
= $970,000 / $97,000
= 10.00
Increase in net operating income = Degree of operating leverage × Percentage Increase in Sales
= 10.00 × 25%
= 250%
Expected amount of net operating income = Last Year`s net operating income × 3.5
= $97,000 × 3.5
= $339,500
Knowledge Check 01 On March 15, Viking Office Supply agrees to accept $1,200 in cash along with a $2,800, 60-day, 15 percent note from one of its customers to settle his $4,000 past-due account. Prepare the March 15 entry for Viking Office Supply by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
Viking Office Supply
Debit Accounts Receivable $4,000
Credit Allowance for Uncollectible Accounts $4,000
To revise the write-off of past-due account.
Debit Cash Account $1,200
Debit 15% Notes Receivable $2,800
Credit Accounts Receivable $4,000
To record the cash receipt and notes settlement.
Explanation:
Since the account is past-due, it must have been written off as uncollectible expense. To revise this entry, a credit is made to the Allowance for Uncollectible Accounts and a debit to the Accounts Receivable.
Then a debit to the Cash Account in the sum of $1,200 and a debit to the Notes Receivable account for $2,800 and a credit to the Accounts Receivable.
1. Calculate the straight-line and sum-of-years-digits depreciation schedules for a $450 video camera that will have a salvage value of $50 after five years of use.
Answer:
Explanation:
Hey
iable costs are paid immediately. The company has budgeted the following data for March: Sales 22160 units Cash, beginning balance $34000 Selling and administrative (of which depreciation, $5,000) $53000 Required minimum cash balance $66480 If necessary, the company will borrow cash from a bank on the first day of March. Assume that the borrowing can be made in any (exact) amount, but bears interest at 3% per month. The March interest will be paid during subsequent months. Q: What is the closest amount of cash that must be borrowed on March 1 to cover all cash disbursements and to obtain the desired March 31 cash balance
Answer:
$36,160
Explanation:
Sales price $8 and variable costs $6 per unit. All sales are done on cash and all variable costs are paid immediately.
expected cash flow for March
Beginning cash balance $34,000
Sales $177,280
Variable costs -$132,960
S&A costs -$48,000
without depreciation
ending cash balance $30,320
desired ending cash -$66,480
cash deficit to be $36,160
covered by bank loan
Suppose the borrowing rate rB=10% compounded annually. However, the lending rate (or equivalently, the interest rate on deposits) is only 8% compounded annually. Compute the difference between the upper and lower bounds on the price of an perpetuity that pays A=10,000\$ per year.
Answer: $25,000
Explanation:
From the question, we are told that the borrowing rate rB=10% compounded annually and the lending rate (or equivalently, the interest rate on deposits) is only 8% compounded annually.
The upper bounds on the price of an perpetuity that pays $10,000 per year will be:
= $10,000/10%
= $10,000/0.1
= $100,000
The lower bounds on the price of an perpetuity that pays $10,000 per year will be:
= $10,000/8%
= $10,000/0.08
= $125,000
The difference between the upper and lower bounds will now be:
= $125,000 - $100,000
= $25,000
The specifications for a plastic liner for a concrete highway project calls for thickness of 4.0 mmplus or minus0.08 mm. The standard deviation of the process is estimated to be 0.02 mm.
a) The standard deviation of the process is estimated to be 0.02 mm.
b) The upper specification limit for this product = ? mm (round your response to three decimal places).
c) The lower specification limit for this product = ? mm (round to three decimal places)
d) The process capability index (CPk) = ? (round to three decimal places)
e) The upper specification lies about ? standard deviations from the centerline (mean thickness)
Answer and Explanation:
The computation is shown below:
b. The upper specification limit is
= 4 + 0.08
= 4.080 mm
c. The Lower specification limit is
= 4 - 0.08
= 3.920 mm
d. The process capability index is
= min ((Upper specification limit - Mean) ÷ (3 × Standard deviation)), ((Mean - Lower specification limit)÷ (3 × Standard deviation))
= min (0.08 ÷ (3 × 0.02)), (0.08 ÷ (3 × 0.02))
= min (1.333, 1.333)
So it would be 1.333
e. Upper specification = 4.08 mm
Mean line = 4.0 mm
Now,
The upper specification lies at a distance = Upper specification - Mean line
= 4.08 mm - 4.0 mm
= 0.08 mm
upper specification =Upper specification lies ÷ One standard deviation
= 0.08 mm ÷ 0.02 mm
= 4 mm which is standard deviations from the mean
X sells a house to Y for $300,000. Before selling the house, X forgets to tell Y about a leakyfaucet in a little-used sink in the basement (which would cost about $10 to fix). Y inspected the house, but just didn't notice the faucet. Later, Y wants to rescind the deal on the basis of fraud or misrepresentation because of the leaky faucet. Which of the following is the best reason why Y cannot rescind? a. Because Y didn't make an express misstatement regarding the faucet, but merely said nothing.b. Because Y's failure to notice the leaky faucet means that he did not justifiably rely on X's "misstatement."c. Because X's failure to disclose the condition of the faucet is not material.d. Because X didn't do anything to actively hide the leaky faucet.21
Answer:
c. Because X's failure to disclose the condition of the faucet is not material.
Explanation:
In order to consider X's failure as material and therefore allowing Y to rescind the contract, the failure to disclose must involve an element of the contract that is in such a bad condition that it would make the contract as "irreparably broken".
In this case, contract law provides other remedies that Y can use to try to make X pay for the repairs, but Y cannot unilaterally rescind the contract.
A stock just paid a dividend of $3. The stock is expected to increase its dividend payment by 30% per year for the next 3 years. After that, dividends will grow at a rate of 8% forever. If the required rate of return is 10%, what is the price of the stock today?
Answer:
Price of stock today = $334.56
Explanation:
The Dividend Valuation Model(DVM) is a technique used to value the worth of an asset. According to this model, the value of an asset is the sum of the present values of the future cash flows would that arise from the asset discounted at the required rate of return.
This model would be applied as follows:
Year Present Value ( PV)
1 3 × 1.3 × 1.1^(-1) = 3.5454
2 3 × 1.3^2 × 1.1^(-2) = 4.1900
3 3 × 1.3^3 × 1.1^(-3) = 4.9519
Total 12.6874
Year 4 and beyond
This will be done in two steps
Step 1
D× (1+g)/k-g
3 × 1.3^4/(0.1-0.08)
=428.415
Step 2
Present Value in year 0
=428.415 × 1.1^(-3) = 321.87
Total present value = 12.6874 + 321.87 = 334.56
Price of stock today = $334.56
Management innovations such as total quality, benchmarking, and business process reengineering always lead to sustainable competitive advantage because everyone else is doing them.
a. True
b. False
Cox Media Corporation pays a coupon rate of 10 percent on debentures that are due in 15 years. The current yield to maturity on bonds of similar risk is 8 percent. The bonds are currently callable at $1,100. The theoretical value of the bonds will be equal to the present value of the expected cash flow from the bonds. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.a. Find the market value of the bonds using semiannual analysis. (Ignore the call price in your answer. Do not round intermediate calculations and round your answer to 2 decimal places.)b. Do you think the bonds will sell for the price you arrived at in part a?
Answer:
a. Find the market value of the bonds using semiannual analysis.
bond's price = PV of maturity value + PV of coupon payments
PV of maturity value = $1,000 / (1 + 4%)³⁰ = $308.32PV of coupon payments = $50 x 17.292 (annuity factor 4%, n = 30) = $864.60bond's price = $1,172.92
b. Do you think the bonds will sell for the price you arrived at in part a?
No, since they are currently callable at $1,100, their market price will be the call price. No investor will risk to pay more for a bond that can be called at a much lower price.
Sarasota Corporation had the following activities in 2017
1. Payment of accounts payable $817,000
2. Issuance of common stock $230,000
3. Payment of dividends $377,000
4. Collection of note receivable $97,000
5. Issuance of bonds payable $545,000
6. Purchase of treasury stock $42,000
Compute the amount Sarasota should report as net cash provided (used) by financing activities in its 2017 statement of cash flows. (Show amounts that decrease cash flow with either a -sign e.g.-15,000 or in parenthesis e.g. (15,000).,)
Net cash __________ by financing activitiess _________.
Answer:
Net Cash provided in financing activities is $356,000
Explanation:
The cash flow from financing activities are the funds that the business took in or paid to finance its activities. These involve long term liability, issuance of stock, short term borrowing etc.
The financing activities in Sarasota Corporation report include; Issuance of common stock, Issuance of bonds payable, Payment of dividends, Purchase of treasury stock.
Cash provided by financing activities for the year 2017
Issuance of common stock = $230,000
Issuance of bonds payable. = $545,000
Payment of dividends = - $377,000
Purchase of treasury stock = -$42,000
Net Cash provided in financing activities = $356000
At the beginning of the year, Ann and Becky own equally all of the stock of Whitman, Inc., an S corporation. Whitman generates a $120,000 loss for the year. On the 189th day of the year, Ann sells her half of the Whitman stock to her son, Scott. Becky's stock basis is $41,300. How much of the Whitman loss belongs to Ann and Becky
Answer:
Becky's loss = $60,000
Ann's loss = $31,068
Explanation:
Assuming a 365 day year, the loss allocation should be as follows:
Ann (then Scott) 50% x $120,000 = $60,000Becky 50% x $120,000 = $60,000From the 50% that corresponds to Ann:
Ann = 189/365 x $60,000 = $31,068.49 = $31,068Scott = $60,000 - $31,068 = $28,9321. What is global business?
2. Describe the impact of global business as it relates to direct foreign investment.
3. List and define the barriers governments erect to control trade.
4. What are the trade-offs between global consistency and local adaptation?
Your case is Monday July 27 by 11:59 in the Week 8 Folder
When finished, make sure to click Submit.
Optionally, click Save as Draft to save changes and continue working later, or click Cancel to quit without saving c
+
8
Answer:
Explanation:
1. Global business refers to business and economic activities of companies which cut across different countries. Any company engaging in global business would have access to a market around the world that is bigger than the local business.
Global business create competition on a high level basis among businesses like a company entering foreign market ; would have to compete with local business hence giving consumers benefit of choosing and buying high quality products at lower cost from wherever they want. Example include Starbucks, which have branches all over the world.
2. When people and businesses engage in global business, it will enable a country to have foreign direct investment in which companies are able to compete better in foreign markets and can better reach new customers abroad. Direct foreign investment increases as global business increases because such economic activities will attract foreign investment from multinational companies.
3.
• Tariffs
• Subsidies
• Quotas
• Voluntary export constraint
• Customs classification
° Tariffs are taxes imposed directly on goods imported into the country hence create trade barriers through making imported goods expensive compared to local goods.
° Subsidies refers to government loans, tax and grants giving to local companies as a way of protecting them from foregoing competition.
° Quotas refers to limit placed on the number of goods to be imported into the country.
° Voluntary export constraint like quotas is a limit imposed on the number or volume of products exported to particular country.
° Customs classification refers to classifications assigned to imported products by officials of government officials that affect the size of the tariff and imposition of import quotas.
4. Trade offs between global consistency and local adaptation refers to strategies that companies use when they engage in worldwide operations. Global consistency implies that company would run its plants, offices around the world based on same universal policies and procedures while local adaptation involve companies modifying their standard operating procedures to adapt to differences in governments, foreign customers and regulatory agencies.
Direct materials $ 7.20 Direct labor $ 4.50 Variable manufacturing overhead $ 1.25 Fixed manufacturing overhead $ 23,800 Sales commissions $ 1.30 Variable administrative expense $ 0.55 Fixed selling and administrative expense $ 8,200 If the selling price is $27.50 per unit, the contribution margin per unit sold is closest to:
Answer:
Unitary contribution margin= $12.7
Explanation:
Giving the following information:
Direct materials $ 7.20
Direct labor $ 4.50
Variable manufacturing overhead $ 1.25
Sales commissions $ 1.30
Variable administrative expense $ 0.55
Selling price is $27.50 per unit
The contribution margin per unit is the deduction of all the unitary variable costs from the selling price.
Total unitary variable cost= 7.2 + 4.5 + 1.25 + 1.3 + 0.55= $14.8
Unitary contribution margin= 27.5 - 14.8
Unitary contribution margin= $12.7
Health Foods bonds have 10 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 9%. They pay interest annually and have a 10% coupon rate. What is their current yield
Answer:
The current yield of the bond is 9.73%
Explanation:
We can calculate the Current Yield of the Bond by using the following formula:
Current Yield = Coupon Interest / Current Market Price in step 1 * 100
Current Yield = ($1,000 * 10%) / ($1,064 from step 1) * 100
Current Yield = 9.37%
Step 1. Calculate the current price of the bond:
All of the following statements regarding leases are true except : A. For a capital lease the lessee records the leased item as its own asset. B. Capital leases do not transfer ownership of the asset under the lease, but operating leases often do. C. Capital leases create a long-term liability on the balance sheet, but operating leases do not. D. For a capital lease the lessee depreciates the asset acquired under the lease, but for an operating lease the lessee does not. E. For an operating lease the lessee reports the lease payments as rental expense.
Answer: B. Capital leases do not transfer ownership of the asset under the lease, but operating leases often do.
Explanation:
When using Capital Leases, the lessee will record the lease as if it were their own asset and as a result will also depreciate it. The lessee will also create a long term liability on their balance sheet for the asset.
Capital leases usually also involve a transfer of ownership to the lessee at the end of the lease term. Operating Leases on the other hand do not have these features. They are more like a rental of an asset and as such are recorded as a rental expense in the books of the lessee. The ownership remains with the lessor in an Operating Lease and the asset will be returned once the lease period is over.
Alexis is single and in the 22% tax bracket. For the current year, assume she claims a standard deduction of $12,000. In addition, she is able to take a $1,000 education tax credit. What is the total tax benefit derived by Alexis as a result of claiming these items on her tax return
Answer:
$3,640
Explanation:
The computation of the total tax benefit derived is shown below:
But before that we have to find out the claimed tax benefit
= Standard Deduction × Tax Rate
= $12,000 × 22%
= $2,640
And, the education tax credit is $1,000
So, the total tax benefit derived is
= $2,640 + $1,000
= $3,640
Therefore the tax benefit derived is $3,640
When comparing the weighted-average and FIFO methods of process costing, which items are the same in both methods? (
Answer:
Objectives, Concepts and Journal Entry Accounts
Explanation:
The reason is that the objective of the FIFO and Weighted average methods is the same which is to assign the costs that were incurred to convert the raw inventory into finished goods.
The underlying concept in both of the method is cost flow assumption which is the transfer of the cost that was assigned to finished goods, to cost of goods sold.
The journal entry accounts are the same accounts used for weighted average method, LIFO and FIFO methods.
So these are the similarities which are found while comparing FIFO, LIFO and weighted average methods of process costing.
If a U.S. company operates within a competitive environment and chooses to offshore part of its production process, the resulting change in the firm’s costs should shift the ______________ curve for its product ___________________, thus _____________ the price of the product being produced.
Answer:
Supply, rightward and lowering, are the right answers.
Explanation:
The offshore production process will affect the supply side, not the demand side so the supply curve will change and it will shift rightwards. The rightwards shift in the supply curve shows that quantity supplied has increased and thus, an increase in quantity will result in the decrease of prices for the commodity.
You are hoping to have $10,000 in your account 7 years from today in order to go on a reindeer expedition in Lapland. If your current balance is $6,000, what APR (compounded monthly) would be required if you are to have $10,000 in your account in 7 years?
Answer:
APR= 7.32%
Explanation:
The APR is computed as shown below:
Future value = Present value (1 + r/ m)^nm
Future value = 10,000
Present value= 6,000
n=7
m=12
$ 10,000 = $ 6,000 (1 + r / 12 )^12 x 7
$ 10,000 = $ 6,000 (1 + r / 12 )^84
($ 10,000 / $ 6,000)^ 1 / 84 - 1 = r / 12
1.006099786 - 1 = r / 12
0.006099786 x 12 = r
r=0.006099786 x 12
r = 7.32%
APR= 7.32%