Answer: See explanation
Explanation:
a. Terry was in the hardware store business and did not acquire the two hardware stores.
The amount that Terry will deduct in 2020 will be $52000 which is the deduction for all expenses.
b. Terry was in the hardware store business and acquired the two hardware stores and began operating them on October 1, 2020.
In this case, he'll also deduct $52000 which is the deduction for all expenses.
c. Terry did not acquire the two hardware stores and was not in the hardware store business.
None of his expenses will be deducted. The amount it be deducted is 0.
The stock of Business Adventures sells for $40 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Dividend Stock Price Boom $2.00 $50 Normal economy 1.00 43 Recession 0.50 34 a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 4%.
Answer:
a. Expected holding-period return = 8.75%; and Standard deviation = 17.88%.
b. Portfolio expected return = 6.38%; and Portfolio standard deviation = 8.94%.
Explanation:
Given:
Dividend Stock Price
Boom $2.00 $50
Normal economy 1.00 43
Recession 0.50 34
a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Note: See the attached excel file for the calculation of expected return on standard deviation
The following are used in the excel.
HPY = Holding period yield = (((P1 - P0) + D1)/ P0) * 100
P1 = Year ending price of stock
P0 = Beginning price of stock
D1 = Dividend in each of the scenarios.
Boom = (((50 - 40) + 2)/ 40) * 100 = 30%
Normal = (((43 - 40) + 1)/ 40) * 100 = 10%
Recession = (((34 - 40) + 0.50)/ 40) * 100 = -13.75
From the excel file, we have:
E(X) = Expected holding-period return = 8.75%
Variance = 319.79
SD = Standard deviation = √variance = 17.88%
b. Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 4%.
W1 = Weight of T - Bills = 0.50
W2 = Weight of stock = 0.50
Rf = Return on T - Bill = 4
Rs = Expected return on stock = 8.75
Portfolio expected return = (0.50 * 4) + (0.50 * 8.75) = 6.38%
Portfolio standard deviation = (0.50 * 0) + (0.50 * 17.88) = 8.94%
Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslie would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip. Assume an interest rate of 6%, compounded quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
How much will she accumulate in three years by depositing $580 at the end of each of the next 12 quarters, beginning three months from now?
Table or calculator function:
Payment:
n =
i =
Future Value:
Answer:
the future value is $ 7,563.90
Explanation:
The computation of the future value is shown below:
Given that
RATE = 0.06 ÷ 4 = 0.015
NPER = 12
PMT = $580
PV = $0
The formula is given below:
= -FV(RATE,NPER,PMT,PV)
After applying the above formula the future value is $ 7,563.90
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
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.
Classify each of the following based on the macroeconomic definitions of saving and investment.
a. Crystal purchases stock in Pherk, a pharmaceutical company.
b. Brian purchases a new condominium in Dallas.
c. Alyssa purchases new ovens for her cupcake-baking business.
d. Tim purchases a certificate of deposit at his bank.
Explanation:
a. Crystal purchases stock in Pherk, a pharmaceutical company - Savings
She brought the stock from the money in his savings
b.Brian purchases a new condominium in Dallas- Investment
A condominium is property with a house and some more space you can sell it as well. So an investment
c. Alyssa purchases new ovens for her cupcake-baking business-Investment.
New ovens are an investment as it will be used in sale of her cupcake-baking business
d. Tim purchases a certificate of deposit at his bank- Savings
Any amount in bank is a saving.
On August 5, 2021, Carla Vista Furniture shipped 30 dining sets on consignment to Furniture Outlet, Inc. The cost of each dining set was $420 each. The cost of shipping the dining sets amounted to $4300 and was paid for by Carla Vista Furniture. On December 30, 2021, the consignee reported the sale of 20 dining sets at $920 each. The consignee remitted payment for the amount due after deducting a 7% commission, advertising expense of $670, and installation and setup costs of $850. The amount cash received by Carla Vista furniture is
Answer:
$15,592
Explanation:
Calculation to determine what The amount of cash received by Carla Vista furniture is
Cash received =[(20 × $920)*(100%-7%)] - $670 - $850
Cash received=($18,400*93%)-$670-$850
Cash received=17,112-$670-$850
Cash received=$15,592
Therefore The amount of cash received by Carla Vista furniture is $15,592
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.
abuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 135 Units in beginning inventory 0 Units produced 2,700 Units sold 2,210 Units in ending inventory 490 Variable costs per unit: Direct materials $ 37 Direct labor $ 27 Variable manufacturing overhead $ 7 Variable selling and administrative expense $ 8 Fixed costs: Fixed manufacturing overhead $59,400 Fixed selling and administrative expense $6,630 The total gross margin for the month under the absorption costing approach is:
Answer:
$92,820
Explanation:
Calculation to determine what The total gross margin for the month under the absorption costing approach is:
First step is to calculate the Absorption costing unit product cost
Direct materials $ 37
Direct labor $ 27
Variable manufacturing overhead $ 7
Fixed manufacturing overhead cost $22 ($59,400/2,700)
Absorption costing unit product cost $93
Now let calculate the The total gross margin for
Sales $298,350
($ 135 per unit × 2,210 units)
Less Cost of goods sold $205,530
($93 per unit × 2,210 units)
Gross margin $92,820
($298,350-$205,530)
Therefore The total gross margin for the month under the absorption costing approach is:$92,820
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
Kingsford Furnishings Company manufactures designer furniture. Kingsford Furnishings uses a job order cost system. Balances on April 1 from the materials ledger are as follows:
Fabric $58,300
Polyester filling 30,000
Lumber 58,800
Glue 9,950
The materials purchased during April on account are summarized from the receiving reports as follows:
Fabric $820,000
Polyester filling 315,000
Lumber 555,000
Glue 80,000
Materials were requisitioned to individual jobs as follows:
Fabric Polyester Filling Lumber Glue Total
Job 601 $190,000 $66,200 $118,500 $374,700
Job 602 365,000 152,100 219,300 736,400
Job 603 255,000 101,700 196,200 552,900
Factory overhead-indirect materials $83,600 83,600
Total $810,000 $320,000 $534,000 $83,600 $1,747,600
The glue is not a significant cost, so it is treated as indirect materials (factory overhead).
a. Journalize the entry to record the purchase of materials in April. If an amount box does not require an entry, leave it blank. b. Journalize the entry to record the requisition of materials in April. If an amount box does not require an entry, leave it blank.
Answer:
a. Debit Materials for $1,770,000; and Credit Account payable for $1,770,000.
b. Debit Work in process for $1,664,000; Debit Factory overhead for $83,600; and Credit Materials for $1,747,600.
Explanation:
a. Journalize the entry to record the purchase of materials in April. If an amount box does not require an entry, leave it blank.
The journal entries will look as follows:
Accounts Name Debit ($) Credit ($)
Materials (w.1) 1,770,000
Account payable 1,770,000
(To record the purchase of materials in April.)
b. Journalize the entry to record the requisition of materials in April. If an amount box does not require an entry, leave it blank.
The journal entries will look as follows:
Accounts Name Debit ($) Credit ($)
Work in process (w.2) 1,664,000
Factory overhead 83,600
Materials 1,747,600
(To record to record the requisition of materials in April.)
Working:
w.1: Materials purchased = Fabric + Polyester filling + Lumber + Glue = $820,000 + $315,000 + $555,000 + $80,000 = $1,770,000
w.2: Work in process = Materials - Factory overhead = $1,747,600 - $83,600 = $1,664,000
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
ABC Industries manufactured 2400 units of its product Huge in the month of April. It incurred a total cost of $132,000 during the month. Out of this $132,000, $45,700 comprised of direct materials used in the product and the rest was incurred because of the conversion cost involved in the process. It had no opening or closing inventory. What will be the total cost per unit of the product, assuming conversion costs contained $10,000 of indirect labor
Answer:
Unitary cost= $55
Explanation:
Giving the following information:
Total number of units manufactured= 2,400
Total cost incurred in production= $132,000
Beginning inventory= 0
Ending inventory= 0
To calculate the unitary cost, we need to use the following formula:
Unitary cost= total cost / units manufactured
Unitary cost= 132,000 / 2,400
Unitary cost= $55
According to the text, comparison shopping
Robert became quite well-to-do as founder and president of Carlson Auto Paint and Supply, Inc. (CAPS). Now, he wants to start a permanent fund to support research directed toward improved sustainability of painted surfaces at his alma mater. He plans to contribute money now so that $200,000 per year can be withdrawn each year forever, beginning in year 7. If the fund earns interest at a rate of 8% per year, how much money must be donated now
Answer:
The answer is "1475,000".
Explanation:
Given:
[tex]n=6\ year \ \ \ \text{because it start with 7 beginning year} \\\\r=8\% = 0.08\\\\P= \$ 200,000[/tex]
calculating the 6-year future value:
[tex]= \frac{\$200,000}{0.08} \\\\= \$2,500,000[/tex]
Using formula:
[tex]\bold{PV=FV(1+r)^{-n}}[/tex]
[tex]=\$2,500,000(1+0.08)^{-7} \\\\ =\$2,500,000(0.59)\\\\=\$1475,000[/tex]
The borrower questions the amount of the Notary/ Signing fee appearing on the settlement statement, The Notary agent should
Answer: Recommend that such borrower should contact the representative of the lender before the signing of the documents.
Explanation:
In a scenario whereby a borrower is questioning the amount of the notary or the signing fee that appears on the settlement statement, the notary agent should simply tell the borrower that he or she should contact the representative of the lender before the signing of the documents.
If that is done, the borrower can then know the next thing to do after hearing from the lenders representative.
The borrower questions the amount of the Notary/ Signing fee appearing on the settlement statement, The Notary agent should Recommend that the borrower contact the lender's representative before signing the documents.
Recommend that the borrower contact the lender's representative before signing the documents. In the event that a borrower questions the amount of the notary and the signing fee that appears on the settlement declaration, the notary agent should simply inform the borrower that he or she should contact the lender's representative before signing the documents.
If this is done, the borrower will know what to do next after hearing from the lender's representative.
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We have the following information. We have two companies we are considering. They are Anthony and Ben and their betas are 1 and 1.4, respectively. The T bond rate is .02 and the rate of return in the market is .12. The debt rates of the two firms are .30 and .60 in order we have mentioned them. Finally, their tax rates are .25 and .40, respectively. Compute their cost of equity. If they each pay $4 and their growth rate is .01, what are their prices
Answer:
Goof
Explanation:
During May, Salinger Company accumulated 740 hours of direct labor costs on Job 200 and 900 hours on Job 305. The total direct labor was incurred at a rate of $20 per direct labor hour for Job 200 and $23 per direct labor hour for Job 305.Journalize the entry to record the flow of labor costs into production during May. If an amount box does not require an entry, leave it blank.
Answer:
May
Dr Work in Process $35,500
Cr Wages Payable $35,500
Explanation:
Preparation of the Journal entry to record the flow of labor costs into production during May
Based on the information given the Journal entry to record the flow of labor costs into production during May will be :
May
Dr Work in Process $35,500
Cr Wages Payable $35,500
Calculated as:
Labor costs = (740*20)+(900*23)
Labor costs=14,800+20,700
Labor costs=$35,500
You are given the following information about equipment that is required for your business. Assume that the equipment will be replaced as it wears out and that straight-line depreciation to zero is used for each. The required return is 15% and ignore taxes. Machine A has an initial cost of $200,000, an operating cost per year of $15,000, and an expected life of 8 years. Machine B has an initial cost of $300,000, an operating cost per year of $17,500, and an expected life of 10 years. How does the equivalent annual cost of Machine A compare to that of Machine B
Answer:
Machine B EAC is $17,705.78 more than Machine A EAC.
Explanation:
First find the present values of the cost of both machines.
Machine A:
= 200,000 + (15,000 * Present value of annuity interest factor, 15%, 8 years)
= 200,000 + ( 15,000 * 4.4873)
= $267,309.50
Machine B
= 300,000 + (17,500 * Present value of annuity interest factor, 15%, 10 years)
= 300,000 + 17,500 * 5.0188
= $387,829
Equivalent Annual cost Machine A:
= [(NPV * Required return) / 1 - (1 + Required return) ^–Number of Periods
=[(267,309.50 * 15%) / 1 - 1.15⁻⁸
= $59,569.95
Equivalent Annual cost Machine B:
= (387,829 * 15%) / (1 - 1.15⁻¹⁰)
= $77,275.73
Difference:
= 77,275.73 - 59,569.95
= $17,705.78
The Machine B EAC is $17,705.78 more than Machine A EAC.
Calculation of equivalent annual cost:Here we first determine the present values of the cost of both machines.
For Machine A:
= 200,000 + (15,000 * Present value of annuity interest factor, 15%, 8 years)
= 200,000 + ( 15,000 * 4.4873)
= $267,309.50
For Machine B
= 300,000 + (17,500 * Present value of annuity interest factor, 15%, 10 years)
= 300,000 + 17,500 * 5.0188
= $387,829
Now
Equivalent Annual cost Machine A:
= [(NPV * Required return) / 1 - (1 + Required return) ^–Number of Periods
=[(267,309.50 * 15%) / 1 - 1.15⁻⁸
= $59,569.95
Equivalent Annual cost Machine B:
= (387,829 * 15%) / (1 - 1.15⁻¹⁰)
= $77,275.73
Now the Difference is
= 77,275.73 - 59,569.95
= $17,705.78
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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
Holly Company has the following information for December 1 to December 31. All direct materials are 100% complete.Work-in-Process Beginning balance December 345 units, 20% complete for conversion $25,185Completed 900 units and transferred to finished goods inventory $245,700Direct materials 135,000Direct labor 49,500Factory overhead:Property taxes 6,750Depreciation 39,000Utilities 23,800Indirect labor 6,000Ending balance December 31, 445 units, 40% completeRequired: Calculate equivalent units using the weighted-average and FIFO methods.
Answer:
Equivalent units using the weighted-average : Materials = 1,345 units, Conversion Costs = 1,078 units and FIFO methods : Materials = 1,000 units, Conversion Costs = 1,009 units.
Explanation:
Weighted-average method
This method focuses on completed units and units in ending work in process
Materials = 900 x 100 % + 445 x 100 % = 1,345 units
Conversion Costs = 900 x 100 % + 445 x 40 % = 1,078 units
FIFO method
This method focuses on work done during the production period only
Materials = 345 x 0 % + 555 x 100% + 445 x 100 % = 1,000 units
Conversion Costs = 345 x 80 % + 555 x 100% + 445 x 40% = 1,009 units
Conclusion
Equivalent units using the weighted-average : Materials = 1,345 units, Conversion Costs = 1,078 units and FIFO methods : Materials = 1,000 units, Conversion Costs = 1,009 units.
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
The following information is available for the Lock-Tite Company, which produces special-order security products and uses a job-order costing system.April 30 May 31Inventories Raw materials $ 43,000 $ 43,000 Work in process 9,300 20,900 Finished goods 53,000 33,100Activities and information for May Raw materials purchases (paid with cash) 188,000 Factory payroll (paid with cash) 250,000 Factory overhead Indirect materials 12,000 Indirect labor 57,500 Other overhead costs 92,500 Sales (received in cash) 1,600,000 Predetermined overhead rate based on direct labor cost 55%Compute the following amounts for the month of May using T-accounts:1. Cost of direct materials used.2. Cost of direct labor used.3. Cost of goods manufactured4. Cost of goods sold*5. Gross profit.6. Overapplied or underapplied overhead.
Answer:
1. $176,000
2. $192,500
Explanation:
1. Cost of direct materials used = $ 43,000 + $ 188,000 - $ 43,000 = $ 188,000 - $ 12,000 = $176,000
2. Cost of direct labor used = $ 250,000 - $57,500 = $192,500
RideShare offers short-term rentals of vehicles that are kept in small lots in urban neighborhoods with plenty of potential customers. With one lot, it has six cars. The interarrival time of potential demand for this lot from its base of customers is 20 minutes. The average rental period is 4 hours. If a customer checks availability of vehicles in this lot online and finds that they are all rented for the desired time, the customer skips renting and finds alternative arrangements. However, because customers pay a monthly fee to subscribe to this service, RideShare does not want customers to be disappointed too often.
Required:
a. What is the offered load?
b. What is the implied utilization?
c. What is the capacity of the process (rentals per hour)?
d. What is the probability that all eight cars are rented at the same time?
Answer:
a. Offered load = 1 lot / 4 hours = 6 cars/4 hours = 1.5 cars/hours
b. Demand rate = Total cars per 4 hours/20 minutes time
Demand rate = 6*4 / 20
Demand rate = 24/20
Demand rate = 1.2 cars/hours
Implied utilization = Demand rate / Offered load
Implied utilization = 1.2/1.5
Implied utilization = 0.8
Implied utilization = 80%
c. Capacity of the process = 1 lot / 5 hours
Capacity of the process = 6 / 5
Capacity of the process = 1.2 rentals per hours
d. Probability that all eight cars are rented at the same time
=> (1 - 0.8) * (0.8)^8
=> 0.2 * 0.1678
=> 0.03356
=> 3.36
Penn Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Units Unit Cost Inventory, December 31, prior year 2,000 $ 5 For the current year: Purchase, March 21 5,000 6 Purchase, August 1 3,000 8 Inventory, December 31, current year 4,000 Required: Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods.
Answer:
Total unit sold = Opening balance + Purhase in march + Purchase in August - Closing balance
Total unit sold = 2000 + 5000 +3000 - 4000
Total unit sold = 6000 units
1. FIFO method:
So total cost of goods sold is (2000*$5) + (4000*$6)= $34,000
Ending inventory value is (1000*$6) + (3000*$8) = $30,000
2. LIFO method:
So total value of goods sold is (3000*$8) + (3000*$6) = $42,000
Ending inventory value is (2000*6) + (2000*$5) = $22,000
3. Average cost of inventory:
Opening inventory (2000* $5) + Purchase on Mar.21 (5000*$6) + Purchase on August 1 (3000*$8) = $64,000
Total units = 2000 + 5000 + 3000
Total units = 10,000
Average cost is $64,000/10,000 (units) = $6.40 per unit
So, Cost of goods sold is 6000*$6.40 = $38,400
Ending Inventory value is 4000*$6.40 = $25,600
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
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%.
Allison has a horse stall cleaning business that has been growing rapidly since she started it three years ago. She estimates the total number of horse stalls in her market to be 5000, owned by a total potential population of 1500. Currently, there are only two competitors in the market, Allison, who has 439 stalls that she cleans, and Sam's Hayfaring Maneger, that cleans 1,450 stalls. The remainder of the stalls are cleaned by their owners rather than by a service. Allison prices her cleaning services at $11 per stall per month and Sam charges $8 for the same service. Allison's sales are derived from 136 customers while Sam's are from 54 customers, meaning that Sam's customers have more stalls on a per capita basis.
1. What is the market penetration rate based on potential customers
2. What is Allison's unit market share (based on stalls cleaned)?
3. What are Allison's monthly revenues?
4. What is Allison's revenue market share?
5. What is Allison's relative market share based on units?
Answer and Explanation:
The computation is shown below:
1. Market penetration rates
For alison = 136 ÷1500 = 9.07%
For Sam = 54 ÷ 1500 = 3.6%
So, Total market penetration based on potential customers is
= 9.07% + 3.6%
= 12.67%
2. alison's unit market share is
= alison's business ÷ total business in market
= 439 ÷ (439 + 1450)
= 23.24%
3. alison's revenue is
= $11 × 439
= $4,829
4 alison's revenue market share is = alison's revenue ÷ total revenue
= $4,829 ÷ ($4,829 + 8 × 1450)
= 29.39%
5 relatve market share is
= alison's market in terms of units ÷ competitor's market share in term of units
= 0.2324 ÷ (1 - 0.2324)
= 30.32%
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
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.
Learn more about Public Relations here:
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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.