The correct answer to this open question is the following.
The management of Sports Shoes Corporation, a U.S. firm, wants to expand into foreign investment and employment markets. They are considering either opening their own production facility in a foreign country or entering into a licensing agreement with a foreign firm.
The advantage of considering opening their own production facility in a foreign country is that the firm will have total control of the business and the income and profit will go directly to Sports Shoes Corporation. The disadvantage would be that the company does not know the market if that foreign country, so it could face some obstacles and difficulties in the firsts years.
The other option is entering into a licensing agreement with a foreign firm, knowing that the firm knows the business because it has been established in that country for years so they know the country laws, fiscal regulations, the relationship with local workers, and most importantly, they know the market and their consumers. That would be the advantage.
The disadvantage would be that this learning curve in the new country has its cost, and the association with the firm means that Sports Shoes Corporation must split the revenue and corporate decisions.
The detailed day-to-day operational decisions essential to the overall success of marketing strategies are referred to as
Answer:
Marketing tactics.
Explanation:
The detailed day-to-day operational decisions essential to the overall success of marketing strategies are referred to as marketing tactics.
Marketing tactics can be defined as both a strategic short-term and long-term actions employed by an organization to promote its goods and services with the intention of increasing sales and achieving a competitive market advantage by satisfying customers wants or need.
Hence, the purpose of a marketing tactics is to achieve substantial level of customer satisfaction as well as using the organization's limited financial resources efficiently in order to boost the effective promotion and sales of its products.
Some examples of marketing tactics are;
1. An organization sending newsletters or emails to its new and existing customers.
2. Participating in the exhibition of products in a trade fair.
3. Promotion of products on social media platforms.
Many people would like to sell and buy on eBay, the most popular of the current Internet auction sites, but they have questions about the process and how to sell and price their merchandise. A company called Keen.com has set up a directory of specialists to whom you can address questions. When you choose a name and click on the "Call Now" button, the specialist is contacted and will personally call and answer your questions. Keen.com charges a per-minute fee to the person who contacts its specialist. Keen.com would be classified as a:
a. good
b. tangible resource
c. tangible product
d. service
e. nonprofit organization
Answer:
d. service
Explanation:
As it is given in the question that there is a Kee. com who works for questions answering and there is an option for call now for this they charge a per minute fee who wants to contact its specialist
So here keen would be providing a service to its cilents and charged according to that
Therefore the correct option is d.
Suppose a monopoly firm produces a medical device and can sell 15 items per month at a price of $2,000 each. In order to increase sales by one item per month, the monopolist must lower the price of its medical device by $100 to $1,900. The marginal revenue of the 16th item is: Group of answer choices
Answer: $400
Explanation:
Marginal Revenue is the revenue that is added by one additional unit.
When the product was selling at $2,000 it sold 15 units meaning the total revenue was;
= 2,000 * 15
= $30,000
When the product started selling for $1,900 it would be able to sell 16 units so the total Revenue is;
= 16 * 1,900
= $30,400
The difference in total Revenue is as a result of 1 extra unit, the 16th unit which contributed an amount of;
= 30,400 - 30,000
= $400
If a major misdeed is committed by a brokerage that results in a substantial drain on the real estate recovery trust account, what options are available to replenish the fund?
Answer:
Explanation:
Real Estate Recovery Trust Account are accounts that are funded by administrative penalties and dispersed to consumers that are owed damages due to a license holder's conduct and subsequent inability to pay. These licence holders may be charged an additional $10 fee on the renewal date in order to make up for the substantial drain, or receive a special assessment if the replenishment is urgent.
One of the fastest ways to acquire knowledge is to hire individuals or purchase entire companies that have valued knowledge.
a) true
b) false
Answer:
a) true
Explanation:
In the changing environment companies face, they require to get valuable knowledge to be able to remain competitive in the market. To get that knowledge, they have the option to do research or train their employees but these options usually take time. When they need to do it fast, businesses can find people that already have the knowledge and that can apply it immediately in the company or acquire another organization that have what they need.
According to this, the statement that says that one of the fastest ways to acquire knowledge is to hire individuals or purchase entire companies that have valued knowledge is true.
On August 1, 2017, Gonzaga Corporation issued $600, 000, 7%, 10-year bonds at face value. Interest is payable annually on August 1. Gonzaga's year-end is December 31.
1. Prepare journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
2. Prepare journal entry to record the accrual of interest on December 31, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
3. Prepare journal entry to record the payment of interest on August 1, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer: Please see answers in the explanation column
Explanation:
journal entry to record the issuance of the bonds.
Date Account Debit Credit
August 1st Cash $600, 000
2017 Bonds payable $600, 000
2, journal entry to record the accrual of interest on December 31, 2017.
Date Account Debit Credit
Dec 31st Interest Expense $17,500
2017 Interest payable $17,500
Calculation =
Interest = P X T X R
From August - December31st = 5 months
600,000 x 5/12 x 7%= 600,000 x 0.07 x5/12= $17,500
3. journal entry to record the payment of interest on August 1, 2018
Date Account Debit Credit
Aug 1st Interest Expense $24,500
2018 Interest payable $17,500
Cash $42,000
Calculation =
Interest = P X T X R
From January- August `1st= 7 months
600,000 x 7/12 x 7%= 600,000 x 0.07 x7/12= $24,500
An S corporation earns $ 9.00 per share before taxes. The corporate tax rate is 39%, the personal tax rate on dividends is 15%, and the personal tax rate on non-dividend income is 36%. What is the total amount of taxes paid if the company pays a $ 6.00 dividend?
Answer:
$4.41
Explanation:
S corporation earns $9.00 per share before tax is paid
Corporate tax rate is 39%
= 39/100
= 0.39
Personal tax rate on dividend is 15%
= 15/100
= 0.15
The rate on non-dividend income is 36%
The company pays $6.00 for dividend
Therefore, the total amount of taxes paid can be calculated as follows
Corporate tax= $9.00×0.39
= $3.51
Personal tax= $6.00×0.15
= $0.90
Total amount of tax paid= corporate tax+Personal tax
= $3.51+$0.90
= $4.41
Hence the total amount of taxes paid is $4.41
Swinnerton Clothing Company's balance sheet showed total current assets of $1,800, all of which were required in operations. Its current liabilities consisted of $575 of accounts payable, $300 of 6% short-term notes payable to the bank, and $145 of accrued wages and taxes. What was its net operating working capital that was financed by investors? Select the correct answer. a. $1,096 b. $1,088 c. $1,112 d. $1,080 e. $1,104
Answer:
d. $1,080
Explanation:
The computation of the net operating working capital that was financed by investors is shown below:
= Total current assets - account payable - accrued wages and taxes
= $1,800 - $575 - $145
= $1,080
By deducting the account payable and accrued wages from the total current assets we can calculate the net operating working capital and the same is to be considered
The percent yield of product is calculated by:________.
a. percent yield graphic
b. percent yield graphic
c. percent yield graphic
Answer:
percent yield graphic
Explanation:
Percent yield defines that it is the ratio of the percentage of actual yield to the yield of theoretical.
To compute the percent yield of the product we simply divided the actual yield by yield of theoretical and after the result we do the multiply with 100 to get the result in percentage form. In this case,, if we found that actual and theoretical yield is similar then the percentage of yield will be 100 percent.
Rent Versus Buy. Alex Guadet of Nashville, Tennessee, has been renting a two-bedroom house for several years. He pays $900 per month in rent for the home and $300 per year in property and liability insurance. The owner of the house wants to sell it, and Alex is considering making an offer. The owner wants $160,000 for the property, but Alex thinks he could get the house for $150,000. Alex has talked to his banker and could get a 5 percent mortgage loan for 25 years to finance the remainder of the purchase price. The banker advised Alex that he would reduce his principal by $1,700 during the first year of the loan. Property taxes on the house are $1,400 per year. Alex estimates that he would need to upgrade his property and liability insurance to $1,200 per year and would incur about $3,000 in costs the first year for maintenance and improvements. Property values are increasing at about 3 percent per year in the neighborhood. Alex will have to pay $50 a month for private mortgage insurance. He is in the 25 percent marginal tax bracket.
b. Considering his reduction in principal the first year, how much interest would Alex pay during the first year of the loan?
Answer:
Rent Versus Buy. Alex Guadet of Nashville, Tennessee
b. Computation of Interest payable by Alex during the first year of the loan:
Interest = Net Mortgage amount x rate of interest
= ($148,300 x 5%)
= $7,415
Explanation:
a) Data and Calculation:
Mortgage amount = $150,000
Principal Reduction 1,700
Net Mortgage $148,300
b) Mortgage Interest is calculated as the Mortgage amount minus any reduction in the principal amount, multiplied by the interest rate. The interest represents the cost of capital that Alex pays for taking a mortgage on the property. For the bank, the interest represents the benefit for lending the mortgage loan to Alex.
Tyler Hawes and Piper Albright formed a partnership, investing $112,000 and $168,000, respectively. Determine their participation in the year's net income of $280,000 under each of the following independent assumptions: No agreement concerning division of net income. Divided in the ratio of original capital investment. Interest at the rate of 6% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $36,000 and $48,000, respectively, and the balance divided equally. Allowance of interest at the rate of 6% on original investments, salary allowances of $36,000 and $48,000, respectively, and the remainder divided equally.
Answer:
Income Summary 280,000 debit
Piper Account 140,000 credit
Tyler Account 140,000 credit
--under no agreement--
Income Summary 280,000 debit
Piper Account 112,000 credit
Tyler Account 168,000 credit
--under capital share --
Income Summary 280,000 debit
Piper Account 112,000 credit
Tyler Account 168,000 credit
--under 2:3 ratio with 6% interest rate --
Income Summary 280,000 debit
Piper Account 134,000 credit
Tyler Account 146,000 credit
--under salaries and equal share of the remainder --
Income Summary 280,000 debit
Piper Account 132,320 credit
Tyler Account 147,680 credit
--under interest, salaries and equal share of the remainder --
Explanation:
If the partners made the proper accounting the income will be stored under income summary account then split accordingly
A) If there is no agreement then, they share equally
b) 112,000 + 168,000 = 280,000
participation
Tyler 112,000/280,000 = 40%
Piper 168,000/280,000 = 60%
application
Tyler 280,000 x 40% 112,000
Piper 280,000 x 60% = 168,000
c)
6% interest
112,000 x 6% = 6,720
168,000 x 6% = 10,080
Remainder: 280,000 - 6,720 - 10,080 = 263,200
ratio:
Tyler 40% (2 / (2+3)) = 105280
Piper 60% (3 / (2+3)) = 157920
Total
Tyler: 105,280 + 6,720 = 112,00
Piper 157,920 + 10,080 = 168,000
with salaries:
280,000 - 36,000 - 48,000 = 196,000
equally divided in 98,000
Tyler 98,000 + 36,000 = 134,000
Piper 98,000 + 48,000 = 146,000
with slaries and interest:
112,000 x 6% = 6,720
168,000 x 6% = 10,080
280,000 - 6,720 - 10,080 - 36,000 - 48,000 = 179,200
Divided equally in 89,600
Tyler 89,600 + 6,720 + 36,000 = 132,320
Piper 89,600 + 10,080 + 48,000 = 147,680
Unit cost
4. During 2015, M Co. sold 30000 units at $60 per unit. The beginning period showed 5000 units in
inventory and produced 25000 units during the year. The following production costs and selling
and administrative expenses were:
Number of
Total costs
Units
Beginning inventory:
Direct materials
$ 33,500
5,000
Direct labor
77,500
5,000
Variable factory overhead
9,000
5,000
Fixed factory overhead
10,000
5,000
$
6.70
15.50
1.80
2.00
$
Current period costs:
Direct materials
Direct labor
Variable factory overhead
Fixed factory overhead
$ 175,000
405,000
45,000
50,000
25,000
25,000
25,000
25,000
7.00
16.20
1.80
2.00
Selling and administrative expenses:
Variable
Fixed
$ 65,000
45,000
Instructions: NOTE: SHOW ALL WORK.
1. Prepare both an absorption and variable costing income statement.
2. Determine and give reason for difference in income from operations in part (1).
Answer:
M Co.
1. Absorption and Variable Costing Income Statements:
Absorption Costing Variable Costing
Sales Revenue $1,800,000 $1,800,000
Product Cost of goods sold:
Beginning Inventory 130,000 120,000
Period's Production cost 675,000 (805,000) 625,000
Variable Selling & Administration expenses 65,000 (810,000)
Contribution $990,000
Gross profit $995,000
Period Costs:
Beginning Inventory overhead 10,000
Fixed factory overhead 50,000
Selling & Admin expenses (110,000) 45,000 (105,000)
Net Income $885,000 $885,000
2a. Determination of difference in income from part 1:
Absorption costing has a gross profit of $995,000
While variable costing has a contribution of $990,000
Their net income is the same at $885,000
2b. Reason for difference in income from part 1:
The reason for the difference is that absorption costing calculates gross profit, which includes all the costs of production (variable and fixed) in the cost of goods sold, while variable costing system calculates contribution, which includes only the variable costs in the cost of goods sold with fixed costs treated as period costs for arriving at the net income.
We would have noticed some differences in the Net Income under absorption and variable costing systems if there had been some ending inventory.
Explanation:
Data and Calculations:
1. Sales = 30,000 units at $60 per unit = $1,800,000
Beginning inventory = 5,000 units
Production during the year = 25,000
2. Production costs and Expenses:
Number of Units Unit costs Total Costs
Beginning inventory: 5,000
Direct materials 5,000 $6.70 $ 33,500
Direct labor 5,000 15.50 77,500
Variable factory overhead 5,000 1.80 9,000
Fixed factory overhead 5,000 2.00 10,000
Variable unit cost = $24 ($6.70 + 15.50 + 1.80)
Variable cost = $120,000 (5,000 x $24)
Total cost = $130,000 ($120,000 + 10,000)
Current period costs:
Direct materials 25,000 7.00 $ 175,000
Direct labor 25,000 16.20 405,000
Variable factory overhead 25,000 1.80 45,000
Fixed factory overhead 25,000 2.00 50,000
Variable cost per unit = $25 ($7.00 + 16.20 + 1.80)
Total variable cost = $625,000 (25,000 x $25)
Total absorption cost = $675,000 ($625,000 + 50,000)
Selling and administrative expenses:
Variable $ 65,000
Fixed 45,000
Total selling and administrative expenses $110,000
Categorize each statements as a component of Gross Domestic Product (GDP): consumption, investment, government, or net exports. If it is not included in GDP, leave it.
i. Consumption
ii. Investment
iii. Goverment
iv. Net exports
Answer:
The Gross Domestic Product (GDP) is a measure of the value of all final Goods and Services in an Economy in a given period usually a year.
It can be calculated using the Expenditure method which is;
= Consumption + Investment + Government Spending + Net Exports
Consumption
Here, the final goods and services that all households in the Economy purchased and used for the year are included. It is usually the largest component of GDP.
The following will fall here.
- Ice cream
- A domestically manufactured personal computer
- Cab fare for personal use
- A ticket to a local sporting event
- 55 cent tacos
Investment
The Goods that will fall under here include Capital goods purchased or made in an Economy for the purpose of increasing production capacity.
Of the goods listed only one will fall here being;
- A Domestically Manufactured Personal Computer.
Government Spending
This includes all Public Spending in the Economy on goods and services for things such as Health and Defense but excluding transfer payments such as Social Security.
- Public School Teacher's Salary will fall under here.
Net Exports
These are the Exported goods from the country less the goods that it imported. From the above only one item falls under this category;
- Exported Doll House
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years, because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $14 per share 10 years from today and will increase the dividend by 5 percent per year thereafter.
Required:
If the required return on this stock is 14 percent, what is the current share price?
Answer:
we have to divide the money
Explanation:
as it is written its
Peete Company identifies the following items for possible inclusion in the physical inventory. Indicate whether each item should be included or excluded from the inventory taking.
a. 900 units of inventory shipped on consignment by Peete to another company.
b. 3,000 units of inventory in transit from a supplier shipped FOB destination.
c. 1,200 units of inventory sold but being held for customer pickup.
d. 500 units of inventory held on consignment from another company.
Answer:
a. 900 units of inventory shipped on consignment by Peete to another company.
INCLUDED IN THE INVENTORY SINCE THE MERCHANDISE BELONGS TO PEETE COMPANYb. 3,000 units of inventory in transit from a supplier shipped FOB destination.
NOT INCLUDED IN THE INVENTORY SINCE THE MERCHANDISE BELONGS TO THE SELLER (FOB DESTINATION)c. 1,200 units of inventory sold but being held for customer pickup.
NOT INCLUDED IN THE INVENTORY SINCE THE MERCHANDISE BELONGS TO THE CUSTOMERd. 500 units of inventory held on consignment from another company.
NOT INCLUDED IN THE INVENTORY SINCE THE MERCHANDISE BELONGS TO THE CONSIGNORWhich of the following choices are both the stock and options positions on different sides of the market
a- long call / short stock
b- short call / long stock
c- long put / short stock
d- short put / long stock
Answer:
a- long call / short stock.
b- short call / long stock.
Explanation:
In trading and investment, a stock option can be defined as a contract that states that the buyer as the right to buy (call) or sell (put) an asset at a particular price at any time but necessarily obligational. Thus, it is strictly at the discretion of the buyer (investor).
Generally, in a long (buy) position, a buyer hopes that the price of stocks will rise because he or she will typically profit from a rise in price.
However, a short (buy) position, a buyer hopes that the price of stocks will fall because he or she will typically profit from a fall in price.
Hence, a long and short position are both on different sides of the market.
Therefore, the following choices are both the stock and options positions on different sides of the market;
a. Long call/short stock.
b. Short call/long stock.
However, a stock and options positions both on the same side of the market are;
a. Long call/long stock.
b. Long put/short stock.
In a nutshell, in a rising market long stock positions are profitable while in a falling or perhaps stable market short calls are profitable to investors.
Company F purchased 40% of the outstanding stock of company K on June 30, 20XX. Both of the companies have a December 31st, year end. Company K is a publicly traded company and reports its net income to company F. Company K also pays a hefty dividend to the shareholders of company F. How should company F report the above facts on its December 31, 20XX balance sheet and income statement
Answer and Explanation:
Within the U.S. GAAP, Company F is an owner owning greater than 20 percent but smaller than or equivalent to 50 percent of Company K's stock and is thus considered to have the right to exercise considerable control on Company K's financial affairs.
According to the GAAP, there is nothing exist explicit information that there is no substantial impact.
Company F will use the EQUITY method to compensate for all assets in the 20 to 50 percent ownership range.
Within this approach,
Business F will pass the following journal entry on the purchase of shares in K:
Particulars Debit Credit
Investment In K Dr, XXXXXX
To Cash XXXXXX
(Being cash paid is recorded)
For recording this we debited the investment as it increased the assets and credited the cash as it decreased the assets
If Company K declares net income in Dec 20XX, Company F will instantly recognize its share of income for the proportionate period of keeping the 40 percent (that is 6 months net income) by way of a journal entry is shown below: (Total net income of K × 40 percent × 6 ÷ 12)
Particulars Debit Credit
Investment in K Dr, XXXXXX
To Investment Income -Co. K XXXXXX
(Being the investment is recorded)
For recording this we debited the investment as it increased the assets and credited the investment income as it also increased the income
If Company K pays dividends to company owners F
The investment account reduces by the amount of cash dividend earned, and the below entry must be passed on to F's books:
Particulars Debit Credit
Cash Dr, XXXXXX
To Investment in K XXXXXX
(Being the cash is recorded)
For recording this we debited the cash as it increased the assets and credited the investment as it decreased the assets
Once Company F sells shown above investment it makes a clear entry:
Particulars Debit Credit
Cash Dr, XXXXXX
To Investment in K XXXXXX
(Being the cash is recorded)
For recording this we debited the cash as it increased the assets and credited the investment as it decreased the assets
The investment carrying value come by
= Purchase price + Net income accrued - Dividends received
Any balance shall be debited in respect of losses on the selling of investment in K-equity securities or Credited to Investment in K -Equity Securities Gain on Sale
So this amount of investment in other companies' equity (40 percent), includes forwarding the above-mentioned journal entries, in the buying company's accounts.
On November 1, 2013, Wenger Co. paid its landlord $4,260 in cash as an advance rent payment on its store location. The six-month lease period ends on April 30, 2014, at which time the contract may be renewed. Required: a.1 Prepare the horizontal model to record the six-month advance rent payment on November 1, 2013. (+ for increase and – for decrease).
Answer:
The journal entry should be:
November 1, 2013, six months of rent paid in advance
Dr Prepaid rent 4,260
Cr Cash 4,260
Assets = liabilities + equity
cash prepaid rent
-$4,260 $4,260 $0 $0
Revenues - Expenses = Net income
$0 $0 $0
This operation represents an operating cash flow activity.
sales of $1.67 million, cost of goods sold of $810,800, depreciation expenses of $175,000, and interest expenses of $89,575. Assume that the firm has an average tax rate of 35 percent. What is the company’s net income? Set up an income statement to answer the question.
Answer:
Net income= 561,506.25
Explanation:
Giving the following information:
sales of $1.67 million, cost of goods sold of $810,800, depreciation expenses of $175,000, and interest expenses of $89,575.
Tax= 35 percent
We need to determine the net income.
Sales= 1,670,000
COGS= (810,800)
Gross profit= 859,200
Depresiation= (175,000)
Interest= (89,575)
EBT= 594,625
Tax= (594,625*0.35)= (208,118.75)
Depreciation= 175,000
Net income= 561,506.25
The equal total payments pattern for installment notes consists of changing amounts of interest but constant amounts of principal over the life of the note.
A. True
B. False
Answer:
B. False
Explanation:
The equal total payments pattern for installment notes is when the regular payments on an installment note are always for the same amount. However, the amounts of interest and principal change over the life of the note because at the begining, most of the payment amount goes toward the interest and as you make payments your principal starts to decrease making the amount that goes toward the interest to decrease and the money that goes towards the principal to increase. According to that, the statement is false.
Payback period The Ball Shoe Company is considering an investment project that requires an initial investment of $ 544,000 and returns after-tax cash inflows of $77,624 per year for 10 years. The firm has a maximum acceptable payback period of 8 years. a. Determine the payback period for this project. b. Should the company accept the project?
Answer:
Payback period is 7.01 years
The project should be accepted
Explanation:
The payback period is the time taken for the initial cash outlay of $544,000 to recoup itself, in other words,the length of time taken for the company to receive cash inflows equivalent to the amount invested initially.
payback period=initial capital outlay/annual after-tax cash inflows
payback period=$544,000/$77,624= 7.01 years.
It shows that the project's payback is lesser than the company's target,hence,the project should be accepted
Buckeye Incorporated has operating income of $ 434,000, a sales margin of 7%, and a capital turnover rate of 2. What amount would Buckeye report for sale
Answer:
The amount Buckeye would report for sale is $6,200,000.
Explanation:
Sale refers to income or revenue that a company got by selling its goods or providing its services.
In accounting ratio analysis, sales margin is obtained by dividing the operating profit by sale. Therefore, the formula for sales margin can be written as follows:
Sales margin = Operating income / Sale ................... (1)
To obtain Sale, we can substitute the figures for sales margin and operating profit from the question into equation (1) and then solve for sale as follows:
7% = $434,000 / Sale
Sale * 7% = $434,000
Sale = $434,000 / 7%
Sale = $6,200,000
Therefore, the amount Buckeye would report for sale is $6,200,000.
The ____ the existing spot price relative to the strike price, the ____ valuable the call options will be.
Answer:
The Higher the existing spot price relative to the strike price the more valuable the call options will be.
Explanation:
Spot price simply refers to how much a particular stock is trading in the market (that is, Market Price of the Stock).
Strike Price, also known as exercise price, is the price at which a person (corporate or individual) can purchase security.
Call options refers to the option to purchase an asset at an agreed price prior to/or at a particular day.
If for instance an employee is presented with Stock Options at a particular price, it will be more attractive for him or her if the price at which it is being offered is lower than it's actual market value. That way, he or she has already made a profit.
For example, if the spot price for the stock of Google is $2000/Unit and it is offered to an employee at $1450, if he elects to buy it at that time, he stands a chance to make $550 on each unit that if he sells whilst the spot price is still reasonable.
Cheers!
Answer:
The higher the existing spot price relative to the strike price, the less valuable the call options will be.
Explanation:
Call options refer to financial contracts in which the buyer of the option has the right, but not obligation, to buy asset or instrument at an already agreed price on or before a particular date. The particular date is also known as the expiration date.
The strike price is refers to the price at which a put or call option can be exercised on or before a particular date.
The spot price refers the current market price at which an instrument or asset is bought or sold now for immediate payment and delivery.
The relationship between the strike price and the spot price is that a call option is most valuable when the strike price is higher than the spot price. At this point, the call option is said to be in the money (ITM). On the other hand, a call option is least valuable when the strike price is lower than the spot price. At this point, the call option is said to be out of the money (OTM).
Based on the explantion above, therefore, the higher the existing spot price relative to the strike price, the less valuable the call options will be.
In a cost-volume-profit chart, the a.total costs line must begin at zero. b.total costs line must end at the total fixed costs value on the vertical axis. c.total fixed costs line must begin at zero. d.slope of the total costs line is dependent on the variable cost per unit.
Answer:
d.slope of the total costs line is dependent on the variable cost per unit.
Explanation:
The total cost line takes the shape of a slope and begins from the total of the fixed cost for the relevant range and not zero.
This is because the total cost include a fixed cost and a variable cost element.The steepness of the slope is then dependent on the variable cost per unit.
Aldo Redondo drives his own car on company business. His employer reimburses him for such travel at the rate of 36 cents per mile. Aldo estimates that his fixed costs per year such as taxes, insurance, and depreciation are $2,200. The direct or variable costs such as gas, oil, and maintenance average about 14.4 cents per mile.
How many miles must he drive to break even? (Do not round intermediate calculations. Roundup your answer to the next whole number.)
Answer:
10,185 miles
Explanation:
The computation of the break even miles is shown below:
As we know that
Break even units is
= (Fixed cost) ÷ (Selling price per unit - variable cost per unit)
= ($2,200) ÷ (36 cents per mile - 14.4 cents per mie)
= $2,200 ÷ 21.6 cents per mile
= $2,200 ÷ 0.216
= 10,185 miles
We simply applied the above formula so that the break even point in units could come and the same is to be considered
Two mutually exclusive projects have an initial cost of $60,000 each. Project A produces cash inflows of $30,000, $27,000, and $20,000 for Years 1 through 3, respectively. Project B produces cash inflows of $80,000 in Year 2 only. The required rate of return is 10 percent for Project A and 11 percent for Project B. Which project(s) should be accepted and why
Answer:
Project B
Explanation:
The computation of the net present value is shown below:
For project A
(in dollars) (in dollars)
Year Cash flows Discount factor at 10% Present value
0 -60000 1 -60000.00 (A)
1 30000 0.9090909091 27272.73
2 27000 0.826446281 22314.05
3 20000 0.7513148009 15026.30
Total present value 64613.07 (B)
Net present value 4613.07 (B - A)
For project B
(in dollars) (in dollars)
Year Cash flows Discount factor at 11% Present value
0 -60000 1 -60000.00 (A)
1 0 0.9009009009 0
2 80000 0.8116224332 64929.79
3 0 0.7311913813 0
Total present value 64929.79 (B)
Net present value 4929.79 (B - A)
As we can see that project B has high net present value as compared with project A so project B should be accepted
Chang Co. issued a $50,172, 120-day, discounted note to Guarantee Bank. The discount rate is 10%. Assuming a 360-day year, the cash proceeds to Chang Co. are:___________.
A. $55,189
B. $50,172
C. $50,590
D. $48,500
Assuming a 360-day year, the cash proceeds to Chang Co. are $50,172. Thus, option (B) is correct
What is the rate?A number, amount, or degree measured in relation to another object. She typed at a speed of 80 words per minute. a charge or payment based on another quantity. more specifically: the premium per insurance unit. A rate in mathematics is the comparison of two related values expressed in different units.
Discounted note to Guarantee Bank. The discount rate is 10%. Assuming a 360-day year, the cash proceeds to Chang Co. are $50,172Investors buy discount notes at a price less than the note's face value since they are issued at a discount to par.
60 miles per hour is a standard or measure for a specific number or amount of one item when compared to a unit of another thing. a set price per quantity unit: 10 cents per pound is the price. To lower costs and prices for all home furniture.
Therefore, Thus, option (B) is correct
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When talking about economic profits in a perfectly competitive market, the difference between the long run and the short run is that, in the short run, firms:
In the Schedule of Cost of Goods Manufactured and Cost of Goods Sold, the cost of goods manufactured is computed according to which of the following equations?
a) Cost of goods manufactured = Total manufacturing costs + Beginning finished goods inventory – Ending finished goods inventory
b) Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory – Ending work in process inventory
c) Cost of goods manufactured = Total manufacturing costs + Ending work in process inventory – Beginning work in process inventory
d) Cost of goods manufactured = Total manufacturing costs + Ending finished goods inventory – Beginning finished goods inventory
Answer:
Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory – Ending work in process inventory
Explanation:
Cost of goods sold is the total direct costs of producing the goods sold by a company.
Cost of goods sold = cost of direct materials + cost of direct labour + Manufacturing Overhead + Beginning work in process inventory – Ending work in process inventory
The price elasticity of supply for basmati rice (an aromatic strain of rice) is likely to be which of the following?
A. High in both the long run and the short run, because the inputs required to produce basmati rice can easily be duplicated.
B. Low in both the long and short runs, because rice farming requires only unskilled labor.
C. High, because consumers have a lot of other kinds of rice and other staple foods to choose from.
D. Higher in the long run than the short run, because farmers cannot easily change their decisions about how much basmati rice to plant once the current crop has been planted.
Answer: D. Higher in the long run than the short run, because farmers cannot easily change their decisions about how much basmati rice to plant once the current crop has been planted.
Explanation:
Price Elasticity of Supply refers to how Supply changes in response to a change in price. Essentially, if the price of a good increases, will Supplier supply more or less of that good as a result and by how much will they do so.
In the short run, the farmers would have already planted the crops and so would be unable start changing the quantity that they expect from the harvest. They will therefore supply the amount they harvested regardless of a price change.
In the long run however, they can change the amount of rice planted depending on the price of the rice in the market. Price Elasticity is therefore higher in the long run than in the short run.