Answer:
WACC is 11.4%
Explanation:
The weighted average cost of capital (WACC) is the average cost of all the various sources of long-term finance used by a business weighted according to the proportion which each source of finance bears to the the entire pool of fund.
To calculate the weighted average cost of capital, follow the steps below:
Step 1: Calculate cost of individual source of finance(this is already given)
Cost of Equity= 15%
After-tax cost of debt:
= (1- T) × before-tax cost of debt
= 11%× (1-0.4)= 6.6%
Cost of preferred stock costs= 14%
Step 2 : calculate the proportion or weight of the individual source of finance . (This already given)
Equity = 40%
Debt= 40%
Preferred stock : 20%
Step 3; Work out weighted average cost of capital (WACC)
WACC = ( 15%× 40%) + ( 6.6%× 40%) + (14%× 20%)= 11.4%
WACC is 11.4%
"On January 1, MM Co. borrows $360,000 cash from a bank and in return signs an 8% installment note for five annual payments of $90,164 each. 1. Prepare the journal entry to record issuance of the note. 2. For the first $90,164 annual payment at December 31, what amount goes toward interest expense
Answer:
1.Jan 01 Dr Cash 360,000
Cr Notes payable 340,000
2.Interest expense 28,800
Principal Reduction 61,364
Explanation:
MM Co.
1 . Journal entry
Since MM Co. borrows $360,000 cash on January 1 from a bank this means we have to
Debit Cash with the amounts of money he borrowed which is $360,000 and Credit Notes Payable with the same amount.
Jan 01 Dr Cash 360,000
Cr Notes payable 340,000
2. Calculation of the amount goes toward interest expense and Principal reduction
Interest expense 28,800
(360,000*8%)
Principal Reduction 61,364
(90,164-28,800)
The management of Woznick Corporation has been concerned for some time with the financial performance of its product V86O and has considered discontinuing it on several occasions. Data from the company's accounting system appear below: Sales ................................................................ Variable expenses............................................ Fixed manufacturing expenses ........................ Fixed selling and administrative expenses ...... $150,000 $72,000 $50,000 $33,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $30,000 of the fixed manufacturing expenses and $13,000 of the fixed selling and administrative expenses are avoidable if product V86O is discontinued. A. According to the company's accounting system, what is the net operating income earned by product V86O? B. What would be the effect on the company's overall net operating income if product V86O were dropped?
Answer:
A. According to the company's accounting system, what is the net operating income earned by product V86O?
net loss ($5,000)B. What would be the effect on the company's overall net operating income if product V86O were dropped?
the company's net operating income would decrease by $40,000Explanation:
net operating income from product V860:
total sales $150,000
- variable expenses $72,000
- fixed manufacturing expenses $50,000
- fixed selling and administrative expenses $33,000
net loss ($5,000)
if product is dropped:
unavoidable fixed costs = ($50,000 + $33,000) - ($30,000 + $13,000) = $40,000
With reference to the Strategy Highlight 8.2, the Tata Group's corporate strategy is attempting to:______
a. pursue a focused differentiation strategy over a focused cost-leadership strategy.
b. integrate different strategic positions, pursued by different strategic business units.
c. depend on a single product market to generate most of its revenues.
d. move from unrelated diversification to related-constrained diversification.
Answer: integrate different strategic positions, pursued by different strategic business units
Explanation:
Tata group is a global enterprise that is made up of about 30 companies and operates in more than hundred countries. There are several companies under Tata such as Tata motors, Tata steels, Tata Communications, Tata consumer products, Tata chemicals etc.
Tata Group's corporate strategy is attempting to integrate different strategic positions, pursued by different strategic business units. Even though the companies are all under the general body of Tata Group, each business unit bears the profit and loss it makes.
If the government removes a binding price floor from a market, then the price received by sellers will Group of answer choices decrease, and the quantity sold in the market will decrease decrease, and the quantity sold in the market will increase increase, and the quantity sold in the market will decrease. increase, and the quantity sold in the market will increase.
Answer:
decrease, and the quantity sold in the market will decrease decrease,
Explanation:
Price floor is set by the government or an agency of the government and it is the minimum price that a good or service must be sold.
A price floor is binding if it is set above equilibrium price.
If a binding price floor is removed, price would fall back towards equilibrium and the quantity sold would decrease.
The fall in quantity supplied is in line with the law of supply which says the higher the price, the higher the quantity supplied and the lower the price , the lower the quantity supplied.
I hope my answer helps you
Paul Inc. forecasts a capital budget of $725,000. The CFO wants to maintain a target capital structure of 45% debt and 55% equity, and it also wants to pay dividends of $500,000. If the company follows the residual dividend policy, how much income must it earn, and what will its dividend payout ratio be?
Answer:
If the company follows the residual dividend policy, the income he must earn is $898,750
The dividend payout ratio will be 55.63%
Explanation:
In order to calculate the income must it earn we would have to make the following calculation:
income must it earn=55% equity+dividends
55% equity=$725,000*0.55
55% equity=$398,750
Therefore, income must it earn=$398,750+$500,000
income must it earn=$898,750
If the company follows the residual dividend policy, the income he must earn is $898,750.
To calculate the dividend payout ratio we would have to calculate the following formula:
dividend payout ratio=dividends paid/income must it earn
dividend payout ratio=$500,000/ $898,750
dividend payout ratio=55.63%
The dividend payout ratio will be 55.63%
A 1000 is deposited into Fund X, which earns an annual effective rate of 6%. At the end of each year, the interest earned plus an additional 100 is withdrawn from the fund. At the end of 10th year, the fund is depleted. The annual withdrawals of interest and principal are deposited in Fund Y, which earns an annual effective rate of 9%. Determine the accumulated value of Fund Y at the end of Year 10.
Answer:
The accumulated value of Fund Y at the end of Year 10 is $2,084.67.
Explanation:
Note: Find attached the excel file for the calculation of the accumulated value of Fund Y at the end of Year 10.
The accumulated value of Fund Y at the end of Year 10 is ending balance in year 10 which is in red color.
Also note the following from the attached excel file:
a) The ending balance of Fund X is 0.00 because Fund Y is depleted after Year 10.
b) The beginning balance of Fund Y and its earned interest are equal to 0.00, because no amount of money is deposite in Fund Y until after Year 1 which is the withdrawal from Fund X.
Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of
Answer:
both taxes would fall more heavily on the buyers than on the sellers
Explanation:
Here are the options:
a. both taxes would fall more heavily on the buyers than on the sellers. b. the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers c. the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers O d. both taxes would fall more heavily on the sellers than on the buyers.
Tax is a compulsory sum levied on goods and services. Taxes increases the price of goods and services
Supply is elastic if a small change in price leads to a greater change in the quantity supplied.
Demand is inelastic if there's little or no change in demand when price is increased.
More burden of tax should fall on the consumers because their demand is inelastic. So, if prices rise as a result of the tax, there would be little or no change in quantity demanded.
But in the case of suppliers, they are sensitive to price and a rise in price would cause quantity supplied to fall and revenue would fall.
I hope my answer helps you
Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $28,000 at the beginning of 2021. No previously written-off accounts receivable were reinstated during 2021. At 12/31/2021, gross accounts receivable totaled $466,700, and prior to recording the adjusting entry to recognize bad debts expense for 2021, the allowance for uncollectible accounts had a debit balance of 51,300. Required: 1. What was the balance in gross accounts receivable as of 12/31/2020? 2. What journal entry should Johnson record to recognize bad debt expense for 2021? 3. Assume Johnson made no other adjustment of the allowance for uncollectible accounts during 2021. Determine the amount of accounts receivable written off during 2021. 4. If Johnson instead used the direct write-off method, what wou
Answer:
1. What was the balance in gross accounts receivable as of 12/31/2020?
= allowance for doubtful accounts 2020 / 10% = $28,000 / 10% = $280,000
2. What journal entry should Johnson record to recognize bad debt expense for 2021?
Dr Bad debt expense (= 46,670 + 51,300) 97,970
Cr Allowance for doubtful accounts 97,970
3. Assume Johnson made no other adjustment of the allowance for uncollectible accounts during 2021. Determine the amount of accounts receivable written off during 2021.
= credit balance allowance for doubtful accounts January 1 + debit balance allowance for doubtful accounts December 31 = $28,000 + $51,300 = $79,300
4. If Johnson instead used the direct write-off method, what would the bad debt expense be
The bad debt expense would equal $79,300. The allowance for doubtful accounts is used as an estimate of future bad debt expense, while the direct write off method directly writes off bad debt as they occur.
Explanation:
beginning balance of allowance for doubtful accounts $28,000
gross accounts receivable $466,700 x 10% = $46,670 bad debt
before adjustments, the allowance for doubtful accounts had a debit balance of $51,300
Vest Industries manufactures 40,000 components per year. The manufacturing cost of the components was determined as follows: Direct materials $ 75,000 Direct labor 120,000 Variable overhead 45,000 Fixed overhead 60,000 Total $300,000 An outside supplier has offered to sell the component for $12.75. Fixed cost will remain the same if the component is purchased from an outside supplier. Vest Industries can rent its unused manufacturing facilities for $45,000 if it purchases the component from the outside supplier. What is the effect on income if Vest purchases the component from the outside supplier
Answer:
If the company buys the component, income will decrease by $225,000.
Explanation:
Giving the following information:
Units= 40,000
The manufacturing cost:
Direct materials $ 75,000
Direct labor 120,000
Variable overhead 45,000
An outside supplier has offered to sell the component for $12.75.
Vest Industries can rent its unused manufacturing facilities for $45,000.
We will take into account only the differential costs.
Make in -house:
Total cost= 75,000 + 120,000 + 45,000= $240,000
Buy:
Total cost= 40,000*12.75 - 45,000= $465,000
If the company buys the component, income will decrease by $225,000.
Wilson has a 40 percent interest in the assets and income of the CC&W Partnership, and the basis in his partnership interest is $45,000 at the beginning of 2014. During 2014, the partnership's net loss is $60,000 and Wilson's share of the loss is $24,000. Also, Wilson receives a cash distribution from the partnership of $12,000 on June 30, 2014.
a. Indicate the amount of income or loss from the partnership that should be reported by Wilson on his 2014 individual income tax return.
b. Calculate Wilson's basis in his partnership interest at the end of 2014.
Answer and Explanation:
a. A partner can report his share of the loss of partnership on his personal income tax return to the base limit during his or her partnership interest.
Its partnership interest is based on $45,000 and its share of loss of the partnership is $24,000
So W can report all of the $24,000 partnership loss on his personal income tax return.
b. W's partnership loss reported on his income tax return, and the cash distributed by the partnership to him will reduce his partnership interest base.
Now,
W's basis in his partnership interest at the end of 2014 is
= W's basis in his partnership interest - Partnership loss reported by W on his income tax return - Cash distributed to W by the partnership
= $45,000 - $24,000 - $12,000
= $9,000
Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway. Which of the following statements is correct?
A. Because human life is priceless, any measure to increase traffic safety would generate benefits that outweigh the costs.
B. Estimating the value of a human life is difficult but necessary in order to evaluate the proposal.
C. The benefits are usually easier to measure than the costs.
D. Both a and b are correct.
Answer:
B. Estimating the value of a human life is difficult but necessary in order to evaluate the proposal.
Explanation:
Cost benefit analysis is a method used to guage the cost involved in an undertaking or process compared to the benefit.
If the coat is higher than the benefit the activity is discarded.
However if the benefit is greater than the cost it is a good activity to adopt.
In this scenario there is a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway.
We will weigh the cost of setting up traffick barriers and the estimated value of human life.
If cost is more than the value of human life then the project is abandoned. But if value of human life is higher than the cost the project can proceed.
Although it is hard to estimate value of human life, we need to make an estimate in order to use the cost benefit analysis
Basic bond valuation Complex Systems has an outstanding issue of $1 comma 000-par-value bonds with a 16% coupon interest rate. The issue pays interest annually and has 11 years remaining to its maturity date. a. If bonds of similar risk are currently earning a rate of return of 9%, how much should the Complex Systems bond sell for today? b. Describe the two possible reasons why the rate on similar-risk bonds is below the coupon interest rate on the Complex Systems bond. c. If the required return were at 16% instead of 9%, what would the current value of Complex Systems' bond be? Contrast this finding with your findings in part a and discuss.
Answer:
a. Complex Systems' bond price today = $1,476.36
Explanation:
a. If bonds of similar risk are currently earning a rate of return of 9%, how much should the Complex Systems bond sell for today?
This can be calculated by adding the Present Value of Coupons and the Present Value of Par Value as follows:
Calculation of Present Value of Coupons
The present of coupons is calculated using the formula for calculating the present value of an ordinary annuity as follows:
Present value of coupons = C × [{1 - [1 ÷ (1 + r)]^n} ÷ r] …………………………………. (1)
Where;
C = Annual coupon amount = Par value * Coupon rate = $1,000 * 16% = $160
r = required rate of return or return of similar risk = 9%, or 0.09
n = number of years = 11
Substitute the values into equation (1) to have:
Present value of coupons = $160 × [{1 - [1 ÷ (1 + 0.09)]^11} ÷ 0.09] = $1,088.83
Calculation of Present Par of Value
To calculate this, we use the present value formula as follows:
Present Value of Par Value = Par value / (1 + r)^n
Since Par Value is $1000 and r and n are as already given above, we have:
Present value of Par Value = $1,000 / (1 + 0.09)^11 = $387.53
Therefore, we have:
Complex Systems' bond price today = Present value of coupons + Present value of Par Value = $1,088.83 + $387.53 = $1,476.36
b. Describe the two possible reasons why the rate on similar-risk bonds is below the coupon interest rate on the Complex Systems bond.
The following are the possible two reasons:
1. Interest may vary bust the coupon is fixed. What can cause the interest rate to vary is the bond rating by rating agency. But his will not affect the coupon rate which is fixed. When the rating is high, the interest will be low. But when the rating is low, the interest will be high. This indicates a negative relationship between the rating and the interest rate.
2. The level of demand may also influence the interest rate to change. When the demand is high, the interest will be low. But when the demand is low, the interest will be high. This also indicates a negative relationship between the demand and the interest rate.
c. If the required return were at 16% instead of 9%, what would the current value of Complex Systems' bond be? Contrast this finding with your findings in part a and discuss.
To do this, we simply change he required return to 16% (or 0.16) in part a and proceed as follows:
Present value of coupons at 16% = $160 × [{1 - [1 ÷ (1 + 0.16)]^11} ÷ 0.016] = $804.58
Present value of Par Value at 16% = $1,000 / (1 + 0.16)^11 = $195.42
Complex Systems' bond price today at 16% = $804.58 + $195.42 = $1,000.00
Comparing part c result with part a result shows that if the coupon rate is greater than the required rate of return, the bond is sold at a premium. That is, price of bond will be more than par. As it can be seen in part a, the price of bond is $1,476.36 when the coupon rate of 16% is greater than the required return of 9%.
Also, the bond will be sold at par when the coupon rate and require return are equal. This is shown in part c where the bond is sold at $1,000 when both coupon rate and required return rate are equal to 16%.
By implication, we can also infer without doing any calculation that the bond will be sold at a discount if the coupon rate is less than the required rate of return.
Purple Hedgehog Forestry Group has generated earnings of $140,000,000. Its target capital structure consists of 60% equity and 40% debt. It plans to spend $85,000,000 on capital projects over the next year and expects to finance this investment in the same proportion as its capital structure. The company makes distributions in the form of dividends.
What will Purple Hedgehog Forestry's dividend ratio be if it follows a residual distribution policy?
a. 63.40%
b. 47.55%
c. 79.25%
d. 71.33%
Purple Hedgehog Forestry is considering using more equity and less debt in its capital Structure. Which Of these statements best describes how this will affect the firm's annual dividend, assuming that all other factors are held
constant?
a. Purple Hedgehog Forestry will pay a smaller annual dividend if it goes forward with this decision.
b. Purple Hedgehog Forestry's annual dividend will be greater if it goes forward with this decision.
Answer:
1.63.57%
2.a. Purple Hedgehog Forestry will pay a smaller annual dividend if it goes forward with this decision.
Explanation:
1. Calculation of what will Purple Hedgehog Forestry's dividend ratio be if it follows a residual distribution policy
Total the amount of Dividend paid using the residual dividend policy will be:
Total Dividend = Net Income – [Total Capital Budget x Equity Ratio]
Let plug in the formula
= $140,000,000 – [$85,000,000 x 60%]
= $140,000,000 - $51,000,000
= $89,000,000
The Expected Dividend pay-out Ratio for this year will be:
Expected Dividend Pay-out Ratio = [Total Dividend Paid / Net Income] x 100
Let plug in the formula
= [$89,000,000 / $140,000,000] x 100
= 63.57%
Therefore Purple Hedgehog Forestry Group’s dividend payout ratio will be 63.57%”
2.The statements that best describes how this will affect the firm’s annual dividend, assuming that all other factors are held constant will be
Statement-A which state that "Purple Hedgehog Forestry Group will pay a smaller annual dividend if it goes forward with this decision."
Sally is employed as a computer programmer for the Ellis Corporation. She has a savings account of $15,000 and owns a few shares of Ellis stock. She thinks of herself as an investor rather than as a worker. Marx would maintain that Sally has __________. Group of answer choices
Answer:
She is experiencing false class consciousness
Explanation:
False class consciousness was introduced by Karl Marx.
False Class consciousness refers to an unawareness by a social or economic class like Sally of her position and interests within the structure of the economic order and social system in which she lives. By thinking herself to be an investor instead of worker, Sally has a misguided or false view of her own position in Ellis corporation.
Massage Envy offers massage services on a subscription basis, so it targets consumers that desire to get multiple treatments per month. Massage Envy likely segments its market by
Answer:
C. usage rate.
Explanation:
As in the question, it is mentioned that Massage Envy offers massage services based on a subscription basis with a view to targeting the consumers that they get more or multiple treatments per month
So Massage Envy target the market segment via usage rate as it depicts the average sales per day so that they get to know how much they earned the revenue by offering multiple treatments to clients
hence, the correct option is C. usage rate
As a financial advisor, what will you tell your client, Ryan, he should be willing to pay for an investment property that he plans to buy today and hold for 5 years and then sell, given the following cash flows and the fact that he expects 9% on any investment he makes?
Inflows Outflows Net
InitialOutlay $0
Year 1 $45,000 $55,000 10,000
Year 2 55,000 20,000 35,000
Year 3 55,000 20,000 35,000
Year 4 255,000 235,00 220,000
A. $189, 910.29.
B. $194, 589.33.
C. $178, 656, 73.
D. $191, 231, 57.
Answer:
The option (A) $189, 910.29 is correct
Explanation:
Solution
Given that
Years Net Cash flow Discount Factor at 11% Present Value
1 $ (10,000.00) 0.901 $(9,009.01)
2 $ 35,000.00 0.812 $ 28,406.79
3 $ 35,000.00 0.731 $ 25,591.70
4 $ 220,000.00 0.65 $ 144,920.81
Now,
The Net Present Value $189,910.29
Thus
After carrying out the financial analysis, it has been seen that if we go ahead to buy the Investment Property, then today we have Net present Value of $ 189,910.29.
So, i will inform my client to buy the Investment Property.
Klapper Company claimed a tax deduction which was uncertain when it was deducted in 2018 but is relatively certain of receiving the deduction over a five-year period. Which of the following is not correct in accounting for the uncertain tax item?
a. A contingency reserve will be set up at the same amount as the deferred tax asset if the firm is certain it may claim 100% of the deduction over time.
b. Income tax expense in the first year is the current portion of income tax expense minus the increase in the deferred tax asset.
c. The contingency reserve is reduced each year with the offset to the deferred tax account.
d. As the company will ultimately get 100% of the deduction, no contingency reserve is required.
Answer: d. As the company will ultimately get 100% of the deduction, no contingency reserve is required.
Explanation:
Just because the company will eventually get 100% of the deduction does not mean that no contingency reserve is required.
A contingency reserve needs to be created that is the same amount as the deferred tax asset which arises from the claimed deduction and deducted from every year to offset the deduction for that particular year until the 5 years have elapsed.
An investor wishes to buy a new issue of U.S. Government agency bonds. You recommend that the customer purchase Federal Home Loan Bank bonds with a 20 year maturity. The new issue of Federal Home Loan Bank Bonds will be sold:
Answer: a par
Explanation:
From the question, we are informed that an investor wishes to buy a new issue of U.S. Government agency bonds and was recommend that the customer purchase Federal Home Loan Bank bonds with a 20 year maturity.
It should be noted that new issues that relate to agency securities are typically sold by a selling group which will be appointed by the agency and such groups are usually made up of broker dealers and large banks.
The group will then sell the issue to the public at par and out of the revenue that is made, a selling concession will be paid by the agency to the selling group.
transtutors Cash received from customers includes all $139,000 of the accounts receivable that were outstanding at November 30, 2017. Accounts receivable at December 31, 2017 totaled $141,000. Accounts payable (to suppliers of inventory) decreased by $19,000 from November 30, 2017 to December 31, 2017. The balance in the inventory account decreased by $39,000 over the same period. Required: What is gross profit for the month of December under accrual accounting
Answer:
Gross profit from the month of December is $238000
Explanation:
Question is incomplete but the missing part is:
Cash received from customer during december 2017 - 387,000
Cash paid to supplier for inventory during december 2017 - 131,000
Accrual basis revenues
Particulars Amount $
Cash received from customer 387000
during December 2017
Cash received in December for -139000
November accounts receivable
December sales made on account 141000
collected in January
Accrual basis revenues 389000
Accrual basis expenses
Particulars Amount $
Cash paid to suppliers for inventory 131000
during December 2017
Payments for inventory purchased -19000
and used in November
Inventory purchased in November 39000
but not used in December
Accrual basis expenses 151000
Gross profit from the month of December= Accrual basis revenues - Accrual basis expenses
Gross profit = 389000 - 151000
Gross profit = $238000
When reading a research report on an automobile company, a registered representative's use of fundamental analysis determines that the stock is a good investment. When attempting to determine the best time to execute orders to buy the stock, the registered representative could refer to:
Answer:
Explanation:
In this situation, the registered representative could refer to a chart showing a recent history of the market price of the stock. The chart provides all the price movements of the stock during a certain period of time as well as different time intervals. This allows the individual to point out key levels of support and resistance as well as any trend that may be occurring. These indications allow the individual to make a more educated decision on the best time to execute orders to buy the stock.
Heidi Luking has discovered that several of the sites she has visited recently downloaded small filesto her computer's hard drive even though she did not request them. The files Heidi discovered areknown as crackers. True or False
Answer:
The correct answer is: False.
Explanation:
On the one hand, the "Crackers" is the name that the people with a huge knowledge in cyber security and therefore that they are the ones that mainly focus on explore methods to breach defenses from computers in order to explote the weakness of the computer system so they will be able to have control of the system.
On the other hand, what Heidi discovered is most likely to be a cybervirus that those web pages implanted in their sites in order to breach the system of the person automatically without her knowledge or autorization with the main purpose of just destroying the computer system.
When The files Heidi discovered are known as crackers the correct answer is: False. "Crackers" is the name for the people.
What is Cyber Security?
On the one hand, the "Crackers" is the name for the people with a piece of huge knowledge of cyber security, and thus that they are the ones that primarily focus on exploring methods to breach defenses from computers to explore the weakness of the computer system so they will be able to have control of the system.
In the different writing, what Heidi discovered is considered likely to be a cyber virus that those web pages entrenched in their sites to breach the system of the person automatically without her understanding or authorization with the main objective of exclusively destroying the computer system.
Find more information about Cyber Security here:
https://brainly.com/question/26520949
Crisp Cookware's common stock is expected t opay a dividend of $1.50 a share at the end of this year; its beta is 0.6. The risk free rate is 5.6% and the market risk premium is 4%. The dividend is expected to grow at some constant rate and the stock currently sells for $50 a share. Asuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years
Answer: $57
Explanation:
The following can be deduced from the question:
The risk free rate = 5.6%
The market risk premium = 4%
The stick beta = 0.6
The required return will be:
= Risk free rate + (Beta × Market risk premium)
= 5.6% + (0.6 × 4%)
= 5.6% + 2.4%
= 8% = 0.08
Crisp Cookware's common stock is expected to pay a dividend of $1.50 a share at the end of this year, Therefore,
D1 = $1.50
The current stock price will now be:
= D1/(Required return - Growth rate)
50= 1.5/(0.08 - growth rate)
(0.08 - growth rate) = 1.5/50
(0.08 - growth rate) = 0.03
Growth rate = 0.08 - 0.03
Growth rate = 0.05 = 5%
D4 = D1 × (1+Growth rate)³
D4 = 1.5 × (1 + 0.05)³
D4 = 1.5 × (1.05)³
D4 = 1.5 × 1.1576
D4 = $1.7364
The stock price at the end of the year 3
will be:
= D4/(Required return - Growth rate)
= 1.7364/(0.08 - 0.05)
= 1.7364/0.03
= $57
The market believe that the stock price at the end of 3 years will be $57
Gilbert Company generated sales revenues of $1,800,000 in 2017. Its cost of goods sold amounted to $990,000. Calculate Gilbert's gross profit percentage. Supporting Materials Cost of goods sold / Group of answer choices 55% 45% 222% 182%
Answer:
45%
Explanation:
The computation of the gross profit percentage is shown below:
As we know that
Gross profit percentage = Gross profit ÷ Sale revenue × 100
where,
Gross profit is
= Sales revenue - the cost of goods sold
= $1,800,000 - $990,000
= $810,000
And, the sales revenue is $1,800,000
So, the gross profit percentage is
= $810,000 ÷ $1,800,000
= 45%
Hence, the gross profit percentage is 45%
It is the employees duty to: obey his or her employer's lawful orders concerning the employment. create an environment free of competition. be careful and less competent than his or her colleagues. provide a safe and sanitary place to work.
Answer:
obey his or her employer's lawful orders concerning the employment.
Explanation:
As there are several duties owed by employers to their employees, so do we have duties that must be performed by employees to their employers. Example of such duty is employee must obey his or her employer's lawful orders concerning the employment terms.
Other duties or obligations included in the employment terms that must be carried out by an employee are; serve faithfully, account for all money or property received, cooperate with the employer, perform duties with proper care and diligence , otherwise may be sued the employer . There are also duties owed by an employee to an employer even though such are not mentioned in the contract terms, i.e duty to be honest, to do what is deemed reasonable by an employee in any situation, not to disclose employer's confidential information etc.
Lucy has just finished washing her car and is now checking its oil level. The oil dipstick shows her car’s oil is below the "Low" line. Lucy’s car must have more oil to operate well. What phase of the consumer decision-making process did Lucy just experience?
Answer:
recognition phase
Explanation:
There are 5 phases in the consumer decision-making process:
recognition: the customer realizes that he/she has an unsatisfied need or problem that must be satisfied or solved. In this case, Lucy realized that her car needs more oil and she has to purchase some. information search evaluations of alternatives purchase evaluation of decisionA company manufactures specialty pollution-sensing devices for the offshore oil industry. One particular device has reached maturity, and the company is considering whether to replace it with a newer model. Technologies have not changed dramatically, so the new device would have similar functionality to the existing one, but would be smaller and lighter in weight. The firm's three choices are: (1) keep the old model, (2) design a replacement device with internal resources, (3) and purchase a new design from a firm that is one of its suppliers. The market for these devices will be either "receptive" or "neutral" of the replacement model. The financial estimates are as follows: Keeping the old design will yield a profit of $6 million dollars. Designing the replacement internally will yield $10 million if the market is "receptive," but a $3 million loss if the market is "neutral." Acquiring the new design from the supplier will profit $4 million under "receptive," $1 million under "neutral." The company feels that the market has a 70 percent chance of being "receptive" and a 30 percent chance of being "neutral." Draw the appropriate decision tree. Calculate expected value for all courses of action. What action yields the highest expected value?
Answer:
designing a replacement with internal resources yields the highest expected value = $6,100,000
Explanation:
expected values:
keep the old model
expected profits = $6,000,000
design a replacement with internal resources
receptive market = $10,000,000 x 0.7 = $7,000,000
neutral market = -$3,000,000 x 0.3 = -$900,000
total expected value = $6,100,000
purchase new design
receptive market = $4,000,000 x 0.7 = $2,800,000
neutral market = $1,000,000 x 0.3 = $300,000
total expected value = $3,100,000
there is no room here to draw a proper decision tree, but it would be something like this:
⇒ keep old model ⇒ $6,000,000 in profits
sensing device ⇒ design a replacement ⇒ receptive market
$7,000,000
⇒ neutral market
-$900,000
continuing from above ⇒ expected value
$6,100,000
⇒ outside supplier ⇒ receptive market
$2,800,000
⇒ neutral market
$300,000
continuing from above ⇒ expected value
$3,100,000
your coin collection contains 56 1952 silver dollars. if your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2056, assuming they appreciate at an annual rate of 6.3 percent
Answer: $32184.54
Explanation:
For us to calculate this , we will use the formula for the future value which has been solved and attached. It should.be noted that:
Present value(PV) = $56
r = rate = 6.3% = 6.3/100 = 0.063
n = time = 2056 - 1952 = 104
The question has been solved and the answer is $32184.54
When they retire in 2056, the collection will be worth $32184.54
onceptual Connection: For each situation, identify the possible root cause(s) of the activity cost (such as plant layout, process design, and product design). a. A manual insertion process takes 30 minutes and 8 pounds of material to produce a product. Automating the insertion process requires 15 minutes of machine time and 7.5 pounds of material. The cost per labor hour is $12, the cost per machine hour is $8, and the cost per pound of materials is $10. b. With its original design, a gear requires 8 hours of setup time. By redesigning the gear so that the number of different grooves needed is reduced by 50%, the setup time is reduced by 75%. The cost per setup hour is $50. c. A product currently requires 6 moves. By redesigning the manufacturing layout, the number of moves can be reduced from 6 to 0. The cost per move is
Answer:
Explanation:
For each situation, identify the possible root cause or causes of activity cost, among these:
1. Plant Layout
2. Process design
3. Product design
(A) PROCESS DESIGN
The design of the process of production is the root cause of activity cost here. From the rates given, it's clear that the manual method of production costs more time and money than the mechanical production method.
A minor cause of activity cost here is the PRODUCT DESIGN; the cost of which varies with the use of labour and the use of machine.
(B) PRODUCT DESIGN
Change in design of the gear (removal of some component parts) reduces set up time and cost.
(C) PLANT LAYOUT
Redesign of manufacturing plant saves the time and cost of moves.
On January 1, Year 1, a company issues $320,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 7%, the bonds will issue at $349,428.
Required:
Record the bond issue on January 1, Year 1, and the first two semiannual interest payments on June 30, Year 1, and December 31, Year 1.
Answer with its Explanation:
At the issuance date, the bond the double entry would be as under:
Dr Cash $349,428
Cr Bonds payable $320,000
Cr Premium on Bonds payable $29,428
At June 30,2021, semi annual interest payment date, the double entry would be:
Dr Interest expense $12,230 ($349,428 * 7% * 6/12)
Dr Premium on Bonds payable $570
Cr Cash $12,800 (320,000 * 8% * 6/12)
Now at the end of the first six months, the carrying value of the bond would decrease by $570 ($349,428*8% * 6/12 - $320,000*7% * 6/12) to $348,858.
Now at December 31,2021, the next semi annual interest payment date, the double entry on this date would be:
Dr Interest expense $12,210 ($348,858 * 7% * 6/12)
Dr Premium on Bonds payable $590
Cr Cash $12,800 ($320,000 * 8% * 6/12)
Now at the end of the first six months, the carrying value of the bond would decrease by $590 ($348,858*8% * 6/12 - $320,000*7% * 6/12) to $348,268.
Comfy Fit Company manufactures two types of university sweatshirts, the Swoop and the Rufus, with unit contribution margins of $5 and $15, respectively. Regardless of type, each sweatshirt must be fed through a stitching machine to affix the appropriate university logo. The firm leases seven machines that each provides 1,000 hours of machine time per year. Each Swoop sweatshirt requires 6 minutes of machine time, and each Rufus sweatshirt requires 20 minutes of machine time. Assume that a maximum of 40,000 units of each sweatshirt can be sold. Required: 1. What is the contribution margin per hour of machine time for each type of sweatshirt
Answer:
Comfy Fit Company
Contribution margin per hour of machine time:
Contribution margin for 1 hour of machine time will be equal to:
Swoop = $5 x 60/6 = $50 per hour
Rufus = $15 x 60/6 = $150 per hour
Explanation:
If Contribution margin:
Swoop = $5 for 6 minutes' machine time
Rufus = $15 for 6 minutes' machine time
Therefore, contribution margin per hour will be
Contribution x 60/6.
Since 60 minutes make an hour, there will be ten times more contribution for each.
This gives an hourly contribution of $50 ($5 x 10) and $150 ($15 x 10).