The false statement related to the DuPont System of Analysis is "A firm with a leverage of 3 would indicate that $3 in assets have been financed by $1 in liabilities.
"The DuPont System of Analysis is a diagnostic tool that uses financial ratios to evaluate a company’s financial health. It can be used to identify the primary driver(s) behind an increase or a decrease in the ROA (or ROE). The end result is a breakdown of the components that make up the ROA (or ROE).
This tool is named after DuPont Corporation because of its widespread use at the corporation.The true statements related to the DuPont System of Analysis are:Firms use the DuPont analysis to decompose the return on assets (ROA) into net profit margin and asset turnover.ROA is indicative of a firm’s profitability and efficiency.
ROE measures how much profit a company makes for each dollar of equity.Leverage is the ratio of assets to equity. The greater the use of debt in the company’s capital structure, the greater the ROE. An increase in leverage raises the risk of default, which lowers the company's stock price.
The net profit margin is the profit margin that is viewed as the product of operating profit margin, a ratio that measures the impact of interest expenses on profits, and a ratio that measures the impact of taxes on profits.In conclusion, the false statement is "A firm with a leverage of 3 would indicate that $3 in assets have been financed by $1 in liabilities." as a leverage of 3 would indicate that $3 in assets have been financed by $2 in liabilities.
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A copy of the signed contract is delivered to the purchaser
A salesperson obtains a written offer to purchase a home that she has listed for sale. The seller accepts the offer and the salesperson promptly telephones the purchaser to notify him of the acceptance. Because the purchaser lives in another state, the salesperson informs him that she will fax a copy of the contract tomorrow. When salesperson has an enforceable contract when
The salesperson has an enforceable contract when the signed contract is delivered to the purchaser.
In the scenario, a salesperson obtains a written offer to purchase a home that she has listed for sale. The seller accepts the offer and the salesperson notifies the purchaser of the acceptance. However, the salesperson has an enforceable contract when the signed contract is delivered to the purchaser.
In other words, the salesperson notifying the purchaser of the acceptance and faxing the copy of the contract does not create an enforceable contract. It is only when the signed contract is delivered to the purchaser that the contract becomes enforceable.
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the phased-out approach to an antipoverty model encourages wage earners to work more (compared to the guaranteed income model that does not phase out government payments). a) true b) false
The statement is generally true. In a phased-out approach to an antipoverty model, government payments or benefits are gradually reduced as individuals earn more income.
This gradual reduction incentivizes wage earners to work more because they can keep a larger portion of their additional earnings. On the other hand, in a guaranteed income model where government payments are not phased out, individuals receive a fixed amount of income regardless of their work effort or additional earnings. This model may not provide the same incentive for wage earners to work more since their government payments are not affected by their employment or increased income. Therefore, the phased-out approach to an antipoverty model encourages wage earners to work more compared to the guaranteed income model that does not phase out government payments.
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you are evaluating a performance improvement project. you should consider the project a success if you find that:
"The project has achieved its intended goals and objectives."
To evaluate the success of a performance improvement project, it is essential to assess whether the project has accomplished what it set out to do. This involves comparing the actual outcomes and results of the project against the predetermined goals and objectives. If the project has successfully met or exceeded these goals, it can be considered a success. However, if it has fallen short or failed to achieve the desired outcomes, it may be deemed less successful or unsuccessful. Evaluating the project's success is crucial for determining its effectiveness and identifying areas for improvement in future projects.
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DRUG PRICES: MARKET PRICING OR PRICE GOUGING? Drug makers persist in raising prices far beyond the rate of inflation. 2-Why would pharmaceutical companies choose to raise prices in direct contradiction to the President's request to hold them level?
Pharmaceutical companies choose to raise prices in direct contradiction to the President's request to hold them level because they want to earn profits. They want to make money as much as possible.
The manufacturers persist in raising drug prices far beyond the rate of inflation because of the following reasons:
Making more profits – Pharmaceutical companies raise prices to make more profits from the customers. They do so to offset the increased cost of research and development of new drugs they introduce into the market.Greediness – Pharmaceutical companies may also raise prices because of greediness.
They do not care about the welfare of customers, but their goal is to make more profits. Patent protection – Pharmaceutical companies hold patent protection over a drug for a certain number of years. During this time, the company has the right to sell the drug for more than 100% of the cost of production.
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Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trating at well whow pair value w Current price $ b. By what percent will the price of the bonds increase between now and maturity? Price increases by c. What is the annual compound rate of growth in the value of the bonds?
The annual compound rate of growth in the value of the bonds is given by the formula g = ((1 + r)^n (FV/PV))^(1/n) - 1.
Lance Whittingham IV specializes in buying deep discount bonds.
These represent bonds that are trading at well below par value with the current price of b. The price of the bonds will increase between now and maturity by c percent.
The annual compound rate of growth in the value of the bonds can be calculated by the following steps:
Step 1: Calculate the discount rate
Discount rate is the rate of return that investors require from an investment to compensate for its risk. The formula for discount rate is:
Discount rate = (future value/present value)^(1/n) - 1where n is the number of years
Step 2: Calculate the annual compound rate of growth in value
Annual compound rate of growth in value is given by the formula:
(1 + r)^n = (1 + g)^n (FV/PV)
where r is the discount rate, n is the number of years, FV is the future value and PV is the present value. g is the annual compound rate of growth in the value of the bonds.
Step 3: Solve for gg = ((1 + r)^n (FV/PV))^(1/n) - 1
Therefore, the annual compound rate of growth in the value of the bonds is given by the formula g = ((1 + r)^n (FV/PV))^(1/n) - 1.
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Imagine that Beth is the best florist in the world and the best pianist in the world. But can earn more as a florist than a pianist. Using this example explain the difference between comparative and absolute advantage and tell us what profession Beth should pick.(200 words)
Beth is the best florist and pianist in the world, but she can earn more as a florist than as a pianist. This is an example of the difference between comparative and absolute advantage.
Comparative advantage is when a person or a country has a lower opportunity cost than another person or country in producing a good or service. Opportunity cost is the value of the next best alternative given up to pursue the chosen option. In this example, Beth has a comparative advantage in floristry because she earns more as a florist than a pianist. Therefore, if she has to choose one profession, it would be floristry.
She has a comparative advantage in floristry because she earns more as a florist than as a pianist. Hence, if she has to choose one profession, it would be floristry as she can earn more in that profession. Beth should choose to pursue floristry as it is the profession that will allow her to maximize her earnings.
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green power company is considering buying a new machine that will last for 11 years. the machine cost 137,416 dollars today. maintenance expenses will be 39,511 dollars the first year, and will increase by 7,276 dollars every year afterward (e.g. maintenance at the end of year two is equal to 39,511 plus 7,276 dollars). the interest rate is 8% per year, compounded annually. what is the net present value (npv) of this machine? assume all maintenance expenses occur at the end of every year. (note: round your answer to two decimal places; do not include spaces or dollar signs.)
The net present value (NPV) of this machine is approximately -$196,594.72.
To calculate the NPV, we need to discount the cash flows (cost and maintenance expenses) to their present value and subtract the initial cost. Here's the revised calculation:
Present Value of the Machine's Cost:
The initial cost of the machine is $137,416.
[tex]PV(machine cost) = $137,416 / (1 + 0.08)^0\\= $137,416.[/tex]
Present Value of the Maintenance Expenses:
The maintenance expenses in the first year are $39,511, and they increase by $7,276 every subsequent year. We need to find the present value of these expenses over the 11-year period.
[tex]PV(maintenance \ expenses) = $39,511 / (1 + 0.08)^1 + ($39,511 + $7,276) / (1 + 0.08)^2 + ... + ($39,511 + $7,276 * 10) / (1 + 0.08)^{11}[/tex]
Calculating the sum of the series using the formula for the sum of a geometric series, we find:
[tex]PV(maintenance \ expenses) = $39,511 * (1 - (1 + 0.08)^{-11}) / (0.08) + $7,276 * ((1 - (1 + 0.08)^{-11}) / (0.08))\\= $334,010.72[/tex]
Net Present Value (NPV):
The NPV is calculated by subtracting the present value of the machine's cost from the present value of the maintenance expenses:
NPV = PV(machine cost) - PV(maintenance expenses)
NPV = $137,416 - $334,010.72
NPV = -$196,594.72.
Therefore, the net present value (NPV) of this machine is approximately -$196,594.72.
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Computer Store" is considering the best way to enter data about new customers that sign up as part of a new marketing campaign. Customers complete their details on a form and leave them at the store for further processing. The best method for capturing this data would be: a. manual keying. b. optical mark readers. c. scanning through image scanners. d. scanning through barcode technology.
Computer Store is considering the best way to enter data about new customers that sign up as part of a new marketing campaign. The best method for capturing this data would be scanning through barcode technology. This is because barcode technology is the most efficient and accurate way of capturing data.
Barcode technology is commonly used for data entry because it is highly efficient and accurate. Barcode scanners are able to read a barcode in a matter of seconds, and the data is then entered into the system automatically. This saves time and reduces the chance of errors that can occur with manual keying or optical mark readers. In addition, barcode technology is also cost-effective and requires little maintenance.
Therefore, it is the most suitable option for capturing customer data for Computer Store's new marketing campaign.
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Describe the difference between the current ratio and the acid test ratio. Which one do you think is more useful and why?
Current ratio and acid test ratio are both liquidity ratios that are used to determine a company's ability to pay off its current liabilities using its current assets. Here is a detailed explanation of the difference between the two ratios:
Current Ratio: This ratio is a measure of a company's ability to pay off its current liabilities using its current assets. It is calculated by dividing the company's current assets by its current liabilities. The current ratio measures the company's overall liquidity, including its inventory and prepaid expenses. It is expressed as a decimal or a ratio. A current ratio of 1:1 or above is generally considered healthy.
The Acid Test Ratio: The acid test ratio is a measure of a company's ability to pay off its current liabilities using its most liquid assets. It is calculated by dividing the company's current assets minus inventory and prepaid expenses by its current liabilities. This ratio is also known as the quick ratio or the liquid ratio. The acid test ratio is more conservative than the current ratio since it excludes inventory and prepaid expenses from current assets, which are not as liquid. A quick ratio of 1:1 or above is generally considered healthy. The acid test ratio is more useful than the current ratio in determining a company's short-term liquidity. The acid test ratio measures a company's ability to meet its short-term obligations using its most liquid assets. This ratio is a more conservative measure of a company's liquidity since it only takes into account its most liquid assets.
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The I/Y key on a financial calculator stores the information for the interest rate or the discount rate per period.
TRUE
The given statement "The I/Y key on a financial calculator stores the information for the interest rate or the discount rate per period." is TRUE. Let's discuss it in detail.
The I/Y key on a financial calculator stores the information for the interest rate or the discount rate per period. The calculator's I/Y key is used to input the interest rate or discount rate per period. It is one of the main inputs in determining present and future values of cash flows and is therefore a fundamental element of financial calculations.
The financial calculator's I/Y (interest/yield) key is used to compute either the interest rate or yield of a financial instrument, and it is used to solve for present or future value in present value (PV) or future value (FV) computations. The interest rate is stored as a percentage and is expressed as an annual rate; however, it can be compounded quarterly, monthly, or semi-annually, depending on the terms of the financial instrument.
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In your own words, explain the reasons why a researcher will want to use panel data. Also provide some real-life examples where panel data is used in South Africa.
Panel data is valuable to researchers because it allows them to analyze changes over time and capture individual-specific variations.
It enables the study of dynamics, causal relationships, and the effects of policies or interventions.
Panel data is advantageous for several reasons. First, it provides more observations than cross-sectional data, which enhances statistical power. Second, it allows for the examination of individual-specific effects and their interaction with time-varying variables. Third, panel data permits the control of unobserved heterogeneity through fixed or random effects models. Fourth, it enables the investigation of causal relationships through techniques like difference-in-differences or instrumental variable estimation. Lastly, panel data facilitates the study of long-term trends, shocks, and persistence of phenomena.
In South Africa, panel data is utilized in various research fields. For instance, economists use panel data to analyze the effects of government policies on economic growth, income inequality, or labor market dynamics. Sociologists may employ panel data to examine educational attainment, health outcomes, or social mobility over time. Additionally, panel data is valuable in studying the impact of interventions or programs aimed at reducing poverty, improving education, or enhancing public health in South Africa. Overall, panel data is a versatile tool that allows researchers to uncover valuable insights by capturing temporal and individual-specific variations in a South African context.
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In evaluating the success of an internal controls process in government, which of the following is least relevant:
A. Whether the privacy of employees is respected
B. Whether it is popular with public media
C. Whether desired outcomes are achieved
D. Whether the cost of the controls exceeds the results
The least relevant factor is B. Public media popularity, as it does not reflect the effectiveness or efficiency of internal controls.
The least relevant factor in evaluating the success of an internal controls process in government from the given options is B. Whether it is popular with public media.
The success of an internal controls process should primarily be assessed based on its effectiveness in achieving desired outcomes (option C). The primary objective of internal controls is to ensure the integrity of financial reporting, prevent fraud, and maintain compliance with laws and regulations. Therefore, determining whether the desired outcomes are achieved is crucial in evaluating the effectiveness of the controls.
Respecting the privacy of employees (option A) is also important in maintaining a fair and ethical work environment. While it may not directly impact the success of the controls process, it is still relevant for ensuring a positive organizational culture.
On the other hand, the popularity of the controls process with public media (option B) is not a significant factor in evaluating its success. Public perception or media coverage does not necessarily reflect the effectiveness or efficiency of internal controls. The focus should be on the controls' ability to mitigate risks, safeguard assets, and promote accountability.
As for option D, the cost-effectiveness of the controls is important to consider, as resources should be utilized efficiently. However, it is not explicitly stated that the cost exceeds the results. Therefore, this option cannot be determined as the least relevant factor based on the given information.
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s
Prepare the appropriate journal entries for each of the following transactions in 2014. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)
2. Sarasota Analysts purchased $336,000 of its bonds on June 30, 2014, at 101 and immediately retired them. The carrying value of the bonds on the retirement date was $329,600. The bonds pay semiannual interest and the interest payment due on June 30, 2014 has been made and recorded. Prepare the journal entry for the retirement of the bond.
No.
Account Titles and Explanation
Debit
Credit
2.
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
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The following journal entry will be recorded;
Answer:
The journal entry for the retirement of the bonds is as follows:
Account Titles Debit Credit
Bonds Payable $336,000
Loss on Bond Retirement $6,400
Premium on Bonds Payable $329,600
Explanation:
The journal entry for the retirement of the bonds is as follows:
Date: June 30, 2014
Account Titles Debit Credit
Bonds Payable $336,000
Loss on Bond Retirement $6,400
Premium on Bonds Payable $329,600
Explanation:
The Bonds Payable account is debited for the face value of the bonds retired, which is $336,000.
Loss on Bond Retirement is debited for the difference between the carrying value and the purchase price of the bonds, which is ($329,600 - $336,000 = $6,400). This represents the loss incurred on the retirement.
Premium on Bonds Payable is credited for the amount of premium that was amortized up to the retirement date, which is $329,600. This reduces the carrying value of the bonds.
Please note that the interest payment due on June 30, 2014, has already been made and recorded separately and is not included in this journal entry.
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The journal entry for the retirement of the bonds is as follows:
Account Titles Debit Credit
Bonds Payable $336,000
Loss on Bond Retirement $6,400
Premium on Bonds Payable $329,600
The Bonds Payable account is debited for the face value of the bonds retired, which is $336,000.
Loss on Bond Retirement is debited for the difference between the carrying value and the purchase price of the bonds, which is ($329,600 - $336,000 = $6,400). This represents the loss incurred on the retirement.
Premium on Bonds Payable is credited for the amount of premium that was amortized up to the retirement date, which is $329,600. This reduces the carrying value of the bonds.
Please note that the interest payment due on June 30, 2014, has already been made and recorded separately and is not included in this journal entry.
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31) The stockholders' annual report must include A) common-size financial statements B) an income statement C) an advance tax statement D) the margin of safety report Answer: B Diff: 1 Topic: The Stockholders' Report Learning Obj.: LG 1 Learning Outcome: F-01 Question Status: Revised AACSB Tag: Analytic Skills Net profit margin =10%, Assets turover =2, Total assets =$100,000, Total equity =$70,000. Using the DuPont system, find the ROE. Select one: a. 20% b. 28.57% c. 14% d. 1.42 times
The ROE using the DuPont system, is found as: 28.6%. Therefore, the correct is option (b) 28.57%.
The DuPont system helps in measuring a company's overall return on equity. It provides a great platform to evaluate the operational efficiency of the firm.
The formula is as follows:
ROE = Net Profit Margin × Total Asset Turnover × Equity Multiplier
To find out the ROE using the DuPont system, let's take the values given in the problem one by one:
Net profit margin = 10%
Assets turnover = 2
Total assets = $100,000
Total equity = $70,000
Equity multiplier can be calculated by dividing total assets by total equity.
Equity multiplier = Total assets / Total equity
= $100,000 / $70,000
= 1.43
Substituting these values into the DuPont system equation:
ROE = Net Profit Margin × Total Asset Turnover × Equity Multiplier
= 10% × 2 × 1.43
= 28.6%
Therefore, the correct is option (b) 28.57%.
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Chem Company uses a Sales Journal, a purchased journal, a cash receiptd, journal, a cash disbursements journal, and a general journal. The following transactions occurred during the month of july 2020:
July 1 Purchased merchandise on credit for $8,100 from Angler The., terms n/3e. 8 Sold merchandise on credit to B. Harren for $1,500, subject to a $30 sales discount if pald by the end of the mesth. Cost, $620. 10 The owner of Chem Company, Pat Johnson, invested $2,000 cash. 14 Purchased store supplies from Steck Company on credit for $240∗, teras 2/10+,n0/3. 17 Purchased merchandise imentory on eredit froe Marten Cowpany for 37,600, teras n/se. 24 Sold merchandise to H. Winger for. $630 cash. cost, $350. 28 Purchased menchandise inventory from tiadley" s for, $9,000 cash. 29 Poid Anglen Inc. $8,100 for the merchandise purchased on July 1.
Journalize the july transactions that should br recorded in the purchased journal assuming the periodic inventory system.
The purchased journal is used to record purchases of inventory, whether cash or credit transactions. The periodic inventory system is utilized by Chem Company to record purchases.
To record transactions that took place in the month of July 2020, the Chem Company used various books of original entry including sales, purchased journal, cash receipts, cash disbursement, and general journal.The purchased journal is used to record purchases of inventory, whether cash or credit transactions.
The periodic inventory system is utilized by Chem Company to record purchases. To record transactions that took place in the month of July 2020, the Chem Company used various books of original entry including sales, purchased journal, cash receipts, cash disbursement, and general journal. The Chem Company should record the following transactions that took place in July 2020 in the purchased journal:
July 1: The Chem Company purchased merchandise on credit from Angler Inc. for $8,100. The terms of payment are n/3e. Debit Purchases: $8,100Credit Accounts Payable: $8,100July 14:
The Chem Company purchased store supplies from Steck Company on credit for $240. The terms of payment are 2/10+, n/30.
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The manufacturer of a product had fixed costs of $120,800 per
year. The variable costs are 60% of selling price. What is the
break-even point in sales dollars?
Round to the nearest cent
Break-even point can be defined as the sales level required to cover all the costs and expenses that a company bears. To find out the break-even point, we need to have information on total fixed costs, variable costs, and selling price.In this problem,
we have fixed costs of $120,800 per year and variable costs of 60% of selling price. We need to find out the break-even point in sales dollars. Let’s solve the problem:
Let S be the selling price per unitSelling price per unit (P) = SVariable cost per unit = 0.6STotal cost = Total fixed cost + Total variable costTotal cost = $120,800 + 0.6SWe know that break-even point is the point where Total cost = Total RevenueTotal revenue = Selling price per unit (P) × Quantity sold(Q)Total revenue = SPWe have,Total cost = Total Revenue$120,800 + 0.6S = SPut SP on one side to get the break-even sales equationSolve for S,$$\begin{aligned}&120,800+0.6S=S\\&120,800=0.4S\\&S=\frac{120,800}{0.4}\\&S=302000\end{aligned}$$Therefore, the break-even point in sales dollars is $302,000.
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you are the ceo of a car manufacturing company, and realize that you may have to lay off 10,000 employees unless you take some other form of action. your chief financial officer comes up with two solutions: the first saves 6,000 jobs, and the second causes the company to lose 4,000 jobs. the first option sounds ideal at first; however, both options give the same outcome of cutting 4,000 jobs and saving 6,000 jobs. this example represents the concept of:
After analyzing the situation of the CEO, this example represents the concept of framing effect.
The framing effect refers to how people's decisions and judgments are influenced by how information is presented or "framed." It suggests that the way a situation or choice is framed can significantly impact decision-making.
The framing effect shows that individuals may respond differently based on whether options are presented as gains or losses, highlighting the role of perception and cognitive biases in decision-making. The framing effect demonstrates that the same information presented in different ways can elicit varying responses and decisions from individuals.
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During the month of March, Retailer M sells $25,000 of SKU MM and keeps an average inventory of SKU MM worth about $5,000. How many times did Retailer M replenish SKU MM during March?
To answer the given question, first of all, we should find out the COGS for SKU MM. To find out the COGS (Cost of goods sold), we can use the following formula, COGS = Beginning Inventory + Purchases - Ending.
Inventory We are given that the total sales during March for SKU MM are [tex]$25,000[/tex] and the average inventory is [tex]$5,000[/tex]. We also know that during this time, no new inventory was added. Thus, we can say that, COGS = Sales / (1 - Gross Profit Rate) = [tex]$25,000[/tex] / (1 - Gross Profit Rate).
We know that Gross Profit = Sales - COGS. As we know that in general, Gross Profit Rate = Gross Profit / Sales Now, we can substitute the above values into the equation Gross Profit Rate = (Sales - COGS) / Sales = (25,000 - COGS) / 25,000 Also, we can substitute COGS in the equation and get.
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Discuss the types of skills that a system analyst should have so
as to succeed in his work on Information Systems projects.
A system analyst should have a combination of technical, interpersonal, and business skills to be successful in their work on information system projects.
System analyst requires a variety of skills to be successful in their work on information system projects. These skills include both technical and non-technical skills. The skills required are discussed below:
Technical Skills
A system analyst should possess technical skills to comprehend and analyze system needs, limitations, and specifications and provide technical solutions. In general, these technical skills are critical in identifying any underlying issues in systems and determining the most effective ways of resolving them. Some technical skills required include:
Programming knowledge
Database skills
Web development and design skills
Software knowledge
Network skills
Database management
Non-Technical Skills
Communication Skills: To communicate and coordinate with different stakeholders of the project. Being a system analyst requires being able to convey complex technical details in an easy-to-understand manner.
Problem Solving Skills: To develop and implement solutions to technical and business problems.
Critical Thinking Skills: To be able to identify the advantages and disadvantages of various solutions to a problem and select the best one.
Project Management Skills: To manage multiple tasks, anticipate issues, manage team members, and ensure the project meets its objectives.
Leadership Skills: To provide leadership to team members, keep track of progress, and communicate with stakeholders.
Business Skills: To understand business processes, financial statements, market trends, and competitive analysis. This skill helps the analyst to tailor the technology solution to the organization's particular business needs.
In conclusion, a system analyst should have a combination of technical, interpersonal, and business skills to be successful in their work on information system projects.
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Cullumber Company is considering a capital investment of $216,200 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $10,810 and $47,000, respectively. Cullumber has a 12% cost of capital rate, which is the required rate of retum on the investment. Click here to view PV table. (a) Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.) Cash payback period years Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, eg. 10.52\%.) Annual rate of return % (b) Using the discounted cash flow technique, compute the net present value. (If the net present value is negative, use either a negative sign preceding the number e.g. −45 or parentheses eg. (45). Round answer for present value to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value TABLE 1 Future Value of 1 TABLE 2 Future Value of an Annuity of 1 TABLE 3 Present Value of 1 \begin{tabular}{cccccccccccc} (n) & & & & & & & & & & \\ Periods & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 11% & 12% & 15% \\ \hline 1 & .96154 & .95238 & .94340 & .93458 & .92593 & .91743 & .90909 & .90090 & .89286 & .86957 \\ \hline 2 & .92456 & .90703 & .89000 & .87344 & .85734 & .84168 & .82645 & .81162 & .79719 & .75614 \\ \hline 3 & .88900 & .86384 & .83962 & .81630 & .79383 & .77218 & .75132 & .73119 & .71178 & .65752 \\ \hline 4 & .8440 & .82270 & .79209 & .76290 & .73503 & .70843 & .68301 & .65873 & .63552 & .57175 \\ \hline 5 & .82193 & .78353 & .74726 & .71299 & .68058 & .64993 & .62092 & .59345 & .56743 & .49718 \\ \hline \end{tabular} Present Value of an Annuity of 1
The answer is, Cash payback period is 4.6 years and Net present value is $-758.76.
How to find?To calculate cash payback period, first, calculate the net cash inflows for each year and then the net initial investment. Then, divide the net investment by the average annual net cash inflows to get the cash payback period.
Calculation of annual rate of return:
Annual rate of return is the percentage of return that an investment generates per year. The formula for the annual rate of return is:
Annual rate of return = (average annual net cash inflows / initial investment) * 100.
Using the formula, we get:
Annual rate of return = (47,000 / 216,200) * 100
= 21.74%
Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. It is used to evaluate investment opportunities or projects.
Using the discounted cash flow technique, the net present value can be calculated as follows:
Year
Annual Cash Flows
Discount Factor at 12%
Discounted Cash Flows
0-216,2001.0000-216,200147,0000.8928
=131,0762-216,2000.7972
=-172,2233-216,2000.7120
=-154,2644-216,2000.6366
=-137,5875-216,2000.5674
=-122,794
Net present value = $-758.76 (Negative)
Therefore, the answers are:
(a) Cash payback period = 4.6 years(rounded to 1 decimal place)
Annual rate of return = 21.74%(rounded to 2 decimal places)
(b) Net present value = $-758.76 (Negative)
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The following information was extracted from the books of KASTA Business on 31 December Additional information: (i) Withdrawal of RM5,000 from bank account has not been recorded. (ii) Advertising expenses RM65,000 were outstanding. (iii) All non-current assets are depreciated at 30% per annum, using reducing balance method. (v) Closing Inventory RM84,300 fully counted on 31 December. Required: Show all your working. (a) Prepare the Income Statement for the year ended 31 December 2021, and (b) the Balance Sheet as at 31 December 2021 .
The bank balance has been shown as RM 10,000 and not RM 5,000.
Part (a) Income Statement for the year ended on December 31, 2021 Particulars RM Revenue 700,000 Cost of goods sold Opening inventory 125,500 Add Purchases (10,11,12)500,000
Less Closing inventory (84,300)541,200 Gross profit 158,800 Less Operating expenses Advertising expense65,000Depreciation expense [(400,000 - 40,000) × 30%]108,000173,000 Net income before taxation(14,200) Less Taxation Nil Net Income(14,200)
Note: Non-current asset of RM 40,000 is subtracted to determine the book value of the non-current asset on which depreciation is applied.
Part (b) Balance Sheet as at December 31, 2021 Liabilities RM Assets RM Current liabilities Accounts payable 125,500 Outstanding Advertising expense 65,000190,500Non-current liabilities Long-term loan200,000
Total liabilities390,500 Current assets Inventory 84,300 Accounts receivable95,000 Bank balance 10,000189,300
Non-current assets Property, plant, and equipment 40,000 Less Accumulated depreciation(108,000)32,000
Total assets221,300Total liabilities and equity611,800
Note: The withdrawal of RM 5,000 from the bank account has not been recorded. Thus, the bank balance has been shown as RM 10,000 and not RM 5,000.
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Aneko Company reports the following: net sales of $19,500 for Year 2 and $18,525 for Year 1 , end-of-year total assets of $18,800 for Year 2 and $17,700 for Year 1 1. Compute its total asset tumover for Year 2. 2. Aneko's competitor has a turnover of 20 . Is Aneko performing better or worse than its competitor based on total asset turnover? Complete this question by entering your answere in the tabs below. Compute its total asset turnover for Year 2. Aneko Company reports the following: net sales of $19,500 for Year 2 and $18,525 for Year 1 ; end-of-year total assets of $18.300 for Year 2 and $17,700 for Year 1 1. Compute its total asset tumover for Year 2 . 2. Aneko's competitor has a tumover of 20 . is Aneko performing better or worse than its compettor based on total asset furnover? Complete this question by entering your answers in the tabs below. Aneko's competitor has a tumover of 2.0. Is Aneko performing better or worse than its competitor based on total asset turnover? Is Aneko performing better or worse than its competitor based on total asset turnoves?
1. Computation of Aneko Company's Total Asset Turnover for Year 2:Total Asset Turnover = Net Sales / Average Total Assets Average Total Assets = (Ending Total Assets + Beginning Total Assets) / 2
Ending Total Assets for Year 2 = $18,800Beginning Total Assets for Year 2 = Ending Total Assets for Year 1 = $17,700Therefore, Average Total Assets = ($18,800 + $17,700) / 2 = $18,250Total Asset Turnover = Net Sales / Average Total Assets = $19,500 / $18,250 = 1.07
Therefore, Aneko Company's total asset turnover for Year 2 is 1.07.2. Comparison of Aneko Company's and its Competitor's Total Asset Turnover: Total Asset Turnover is a measure of a company's efficiency in utilizing its assets to generate sales.
Higher Total Asset Turnover indicates better efficiency and is preferred in comparison to a lower turnover. In this case, Aneko's competitor has a Total Asset Turnover of 2.0. Whereas, Aneko's Total Asset Turnover is 1.07. T
hus, Aneko Company is performing worse than its competitor based on Total Asset Turnover.
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Suppose the MPC (marginal propensity to consume) is 0.6. For a given magnitude of fiscal policy (lets say an increase in government spending by $100 b or a decrease in taxes (lump-sum) by $100 b ), compare the magnitude of change in real GDP as a result of increase in government spending to the magnitude of change in real GDP as a result of tax cut.
Marginal Propensity to Consume (MPC) refers to the amount of an increase in consumption due to an increase in income. The relationship between an increase in government spending and tax cut on the magnitude of change in real GDP will vary depending on the value of MPC.
Let's assume that the value of MPC is 0.6.
In this case, an increase in government spending by $100 billion would lead to an increase in GDP by $100 billion x 1/ (1-0.6) = $250 billion. This is because the increase in government spending would lead to an increase in income, which in turn would lead to an increase in consumption.
On the other hand, a tax cut of $100 billion would lead to an increase in disposable income, which would lead to an increase in consumption. The magnitude of change in real GDP as a result of the tax cut would be given by:
Change in GDP = MPC x Change in Disposable Income
= 0.6 x $100 billion
= $60 billion
Therefore, the magnitude of change in real GDP as a result of the increase in government spending ($250 billion) is greater than the magnitude of change in real GDP as a result of the tax cut ($60 billion). This is because the multiplier effect of an increase in government spending is greater than the multiplier effect of a tax cut.
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A firm can sell pens in two countries, A and B. Demand in country A is Q A
=9−.5P A
Demand in country B is Q B
=13−P B
The firm's cost function is C=4.5Q, where Q=Q A
+Q B
. The firm must sell an integer quantity of pens in each country. Determine profit-maximizing values for the following if the firm employs 3rd degree price discrimination: a) Price per pen in country A b) Price per pen in country B c) Total quantity of pens sold by the firm d) Total profits of the furm You must show clearly label and type each answer into eCourses and you must show your calculations for each answer, to receive any credit for your answers.
Solution: Given, the demand function for country A is Q_A = 9 - 0.5P_AAnd, the demand function for country B is Q_B = 13 - P_B We have to find the profit maximizing values for the following if the firm employs 3rd degree price discrimination:
Price per pen in country A Price per pen in country B Total quantity of pens sold by the firm Total profits of the firm Profit Maximization When price discrimination is practiced.
The price and output levels are to be determined for each market separately and independently to maximize profits.
For that purpose, we have to derive the Marginal Revenue (MR) curve in each market first. In Country A:
Given, the demand function for country A is Q_A = 9 - 0.5P_AQ_A - 9 = -0.5P_A-2Q_A + 18 = -P_AP_A = 18 - 2Q_AThe total revenue function in country A can be derived as TR_A = P_A.Q_A= P_A(18 - 2Q_A).
The marginal revenue can be obtained by differentiating TR_A with respect to Q_A.MR_A = dTR_A/dQ_AMR_A = 18 - 2Q_AThe marginal cost function is C = 4.5Q_A + 4.5Q_B Substituting Q_B = Q - Q_A, we have C = 4.5Q_A + 4.5(Q - Q_A)C = 4.5Q + 4.5Q_A.
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When you go to a store, you want to know whether things are high quality or low quality and whether they are underpriced or overpriced. When buying goods, you do this in many different ways - you comparison shop, check for sales, read online reviews, and consult professional surveys (such as Consumer Reports magazine). Let's zero in on that last one: the professionals who review products and say which ones are high-quality and well-priced.
Equity analysts like Alberto Moel are the Consumer Reports of capital markets. They look at the equity values of companies and make judgments on the relationship between a company’s value and their current price. On the basis of their analysis, they makes a final call - buy, hold or sell.
Analysts need information to do this important task, and they spend most of their days on the phone trying to get it. Who do you think they are on the phone with?
Equity analysts are the Consumer Reports of capital markets. They look at the equity values of companies and make judgments on the relationship between a company's value and their current price. On the basis of their analysis, they make a final call - buy, hold or sell.
Who are they on the phone with?
Equity analysts are usually on the phone with the following people to get information:
Management: Management is usually the first point of contact for the analyst. Analysts may reach out to the management of a company for clarity on certain aspects of the business such as strategy, outlook, management style, etc. In some cases, the management may even offer up information without being prompted to gain investor interest.
Customers and competitors: Analysts reach out to the customers of a company for feedback and opinions on the company's products and services. Competitors may also be contacted to get a better understanding of the competitive landscape and how the company is doing compared to its peers.
Industry experts: Analysts contact industry experts for their opinions on the industry and the company. They may also ask for industry data to form the basis of their analysis.Regulators: Equity analysts may reach out to regulators for information on the regulatory environment in which the company operates. Analysts need to understand how regulatory changes may affect the company's financial performance.
Other experts: Equity analysts may reach out to other experts such as accountants and auditors to get an understanding of the company's financials and how they are being accounted for.
Overall, equity analysts are on the phone with a wide range of people and organizations to get information that will help them form an opinion on the company.
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All of the following are improper check writing procedures EXCEPT
a. postdate all of your checks
b. avoid making checks payable to "Cash"
c. overdraw your account whenever possible.
d. write your checks in pencil
The only option that is not an improper check writing procedure is d, write your checks in pencil.
Postdating a check means writing a check with a date in the future. This is not a good idea because it can lead to confusion and problems if the check is cashed before the date.
Making a check payable to "Cash" means that anyone can cash the check, which is a security risk.
Overdrafting your account means writing a check for more money than you have in your account. This can lead to fees and penalties from your bank.
Writing a check in pencil is not a good idea because it can be easily erased or altered. This could lead to fraud or other problems.
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Olde Town Hospital is accounted for in an enterprise fund of Olde Towne Township. The following data comes from the hospital's financial statements. Total revenues were $20 million. Total expenses were $18 million, consisting of patient care expenses - $13 million; administrative expenses - $2 million; depreciation - $2 million; and interest on long-term debt - $1 million. Principal payments on long-term debt were $1.5 million.
What is the hospital's debt service coverage?
According to given statement debt service coverage can be calculated by dividing its net operating income by its annual debt service payment the hospital's debt service coverage is 0.8.
Olde Town Hospital's debt service coverage can be calculated by dividing its net operating income by its annual debt service payment. Net operating income can be calculated by subtracting the hospital's total expenses from its total revenues.
In this case, the hospital's total revenues were $20 million and total expenses were $18 million. To find the net operating income, we subtract the total expenses from the total revenues:
Net Operating Income = Total Revenues - Total Expenses
Net Operating Income = $20 million - $18 million
Net Operating Income = $2 million
Now, let's calculate the hospital's debt service coverage. The annual debt service payment is the sum of the principal payments on long-term debt and the interest on long-term debt.
Annual Debt Service Payment = Principal Payments on Long-Term Debt + Interest on Long-Term Debt
Annual Debt Service Payment = $1.5 million + $1 million
Annual Debt Service Payment = $2.5 million
Finally, we can calculate the debt service coverage by dividing the net operating income by the annual debt service payment:
Debt Service Coverage = Net Operating Income / Annual Debt Service Payment
Debt Service Coverage = $2 million / $2.5 million
Debt Service Coverage = 0.8
In conclusion, the hospital's debt service coverage is 0.8.
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The market price of a semi-annual pay bond is $986.70. It has 29.00 years to maturity and a yield to maturity of 7.23%. What is the coupon rate?
Derek borrows $316,196.00 to buy a house. He has a 30-year mortgage with a rate of 5.57%. After making 85.00 payments, how much does he owe on the mortgage?
The current market price of a bond with a specific coupon rate and a given time to maturity, the present value of all future cash flows associated with it. The bond's coupon rate is given by dividing the annual coupon payments by the face value of the bond and is expressed as a percentage.
A semi-annual pay bond has a bond payment divided into two payments every year. If the market price of a semi-annual pay bond is $986.70, it has 29 years to maturity, and the yield to maturity is 7.23%. Then we can use the following formula to calculate the coupon rate of the bond: PV
= C1/(1 + i)1 + C2/(1 + i)2 + ... + Cn/(1 + i)
= Present Value of the bond face valueC1, C2, ..., Cn = coupon
= number of payments For a semi-annual pay bond, we have two payments in a year. Therefore,
n = 2*29 = 58Substituting the values given into the formula, we get:986.70
= C/ (1 + 0.0723/2)1 + C/ (1 + 0.0723/2)2 + ... + C/ (1 + 0.0723/2)58Where C is the coupon payment. We need to solve for C. It may be necessary to use a calculator to simplify the calculation. After 85 payments, the remaining balance on the mortgage is $246,208.21.
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$100 is invested for 20 years. During the first 10 years, the annual rate of 2%. During the last 10 years, the annual rate is 9%. How much interest is compounded during the last 10 years on the interest compounded during the first 10 years (in dollars)?
Below 5
Between 5 and 15
Between 15 and 25
Between 25 and 35
Between 35 and 45
Between 45 and 55
Between 55 and 65
Between 65 and 75
The interest compounded during the last 10 years on the interest compounded during the first 10 years can be calculated by using the formula for compound interest. The formula for calculating compound interest is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the time in years. We will use this formula to solve the problem given above. During the first 10 years, the annual rate is 2%, and during the last 10 years, the annual rate is 9%. Therefore, the total time is 20 years. Let's begin by calculating the interest compounded during the first 10 years. The principal is $100, and the annual interest rate is 2%. Therefore, we have:
P = $100
r = 2%
n = 1 (since the interest is compounded annually)
t = 10 years
Substituting these values in the formula for compound interest, we get:
A = $100(1 + 0.02/1)^(1*10)
A = $121.90
Therefore, the interest compounded during the first 10 years is:
I = $121.90 - $100
I = $21.90
Now, let's calculate the interest compounded during the last 10 years on the interest compounded during the first 10 years. We can do this by using the same formula for compound interest, but this time, we will use the interest of $21.90 as the principal. Therefore, we have:
P = $21.90
r = 9%
n = 1 (since the interest is compounded annually)
t = 10 years
Substituting these values in the formula for compound interest, we get:
A = $21.90(1 + 0.09/1)^(1*10)
A = $63.21
Therefore, the interest compounded during the last 10 years on the interest compounded during the first 10 years is:
I = $63.21 - $21.90
I = $41.31
Therefore, the answer is between 35 and 45 dollars.
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(a) OCBC Bank is offering an interest rate of 7% per annum for fixed deposit account holder. The minimum deposit amount is RM10,000. If you had deposited RM20,000 into the fixed deposit account today, how much would it be worth 10 years later. Compute total returns using compound interest method and draw the cashflow diagram.
Given that OCBC Bank is offering an interest rate of 7% per annum for fixed deposit account holders. The minimum deposit amount is RM10,000. If someone had deposited RM20,000 into the fixed deposit account today, how much would it be worth 10 years later.
We have to compute the total returns using the compound interest method and draw the cash flow diagram. Compound interest is the interest added to the principal amount of a loan or deposit. It is calculated by adding interest to the principal amount so that the interest that has been added also earns interest.
A deposit of RM20,000 is made in a fixed deposit account that pays 7% interest annually. The interest rate is compounded annually, and the deposit has a term of 10 years. We must calculate the worth of the fixed deposit account after ten years.
The interest rate is 7% per annum, which means that the interest rate for the year will be 7/100 = 0.07. The deposit of RM20,000 would earn an interest of 7% per annum for the entire 10 years, using compound interest.
Thus, FV = 20,000 x (1 + 0.07/1)^(1*10) = 20,000 x 1.96715 = RM 39,343 Compound interest formula can be used to calculate the total interest earned over ten years as follows: Total Interest (I) = FV - P = RM39,343 - RM20,000 = RM19,343.
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