Answer:
c) Maximum combinations of products available with fixed resources and technology.
Explanation:
The production possibilities curve (PPC) is also known as the production possibilities frontier (PPF) and its a curve which illustrates the maximum (best) combinations of two products that can be produce in an economy if they both depend on these factors;
1. Technology is fixed.
2. Resources are fixed.
Hence, the production possibilities curve represents maximum combinations of products available with fixed resources and technology. This ultimately implies that the manufacturing or production of one item (product) is likely to rise or increase provided the production of the other item (product) falls or decreases.
Additionally, the production possibilities curve influences the choice of production used by companies and as such it helps to make the best decision regarding the optimum product mix for a company. This simply means that, all points in a production possibilities curve is efficient and resources should be used efficiently or to the fullest.
Why should a manager in an international business care about the political economy of free trade or about the relative merits of arguments of free trade and protectionism
Answer:
The answer is explained below
Explanation:
To begin with, the policies that the goverments decide to implement in their countries tend to influece in a huge way the companies decisions and therefore its actions as well. Therefore that as a company manager of an international business he needs to stay very updated about the government policies over the countries where his company works. Moreover, the manager will understand that if there is free trade in a country then there will be no problems for his company to start selling there and obtaining the maximum profits as possible and if there is protectionism then the company will have to deal with the policies that the government implemented there. And that is why that as an international business manager he should really care about the policies of the country's government and if there is free trade of protectionism.
Operating Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $25 million Operating costs (not including depreciation) $7 million Depreciation $6 million Interest expense $5 million The company faces a 35% tax rate. What is the project's operating cash flow for the first year (t = 1)? Write out your answer completely. For example, 2 million should be entered as 2,000,000.
Answer: $13,800,000
Explanation:
Operating Cashflow for the year = EBIT * (1 - tax rate) + Depreciation.
Earnings before Interest and Tax (EBIT) = Revenue - Operating Costs - Depreciation
= 25 - 7 - 6
= $12 million
Operating Cashflow = 12 * ( 1 - 35%) + 6
= 12 * 65% + 6
= $13.8 million
= $13,800,000
A chart of accounts is a list of all ledger accounts and an identification number for each. Identify the following accounts as either an asset (A), liability (L), equity (EQ), revenue (R), or expense (E) account.a. Advertising Expense b. Rent Revenue c. Rent Receivable d. Machinery e. Accounts Payable f. Furniture g. Common Stock h. Utilities Expense
Answer is given below
Explanation:
Asset is The property means and controls the business owner and its use will generate future financial benefits. Liability is the current liability of an organization arising from past events, which is the flow of financial benefit from settlement. Equity is the remaining interest in a company because its liabilities are deducted from the assets.Revenue means income derived from the normal activities of the business.Expense arises at time in the morning activitiesS.no Particulars Answer
a Advertisement expense expense
b rent expense expense
c rent receivable Asset
d Machinery Asset
e Account payable Liability
f Furniture Asset
g common stock Equity
h Utility Expense expense
Read the case below and answer the questions which follow:
Part I: IBM has long been one of IT's leaders and has acquired more than 22.000 patents in the past decade. However, by the 1990s the company had lost its draw for customers and its innovative edge. In 2003 IBM decided to redefine its business model. The company phased out its presence in creating/selling hardware and sold its Personal Computing Division to Lenovo, a computer company in China. If a company wants to stay on top of its market, it must be constantly moving forward and adapting its focus. IBM restructured its business skills, assets, and delivery capabilities to meet the needs of their clients who wanted to blend information technology with business operations. The company set up all architecture and technologies for the On Demand operating environment.
Part ll: In 2005, IBM continued to make On Demand Business more tangible and even more focused on innovation. The company's goal has been execution. As part of IBM's On Demand focus, the company vowed to become more On Demand itself by creating a true global reach and utilizing the talent available worldwide and by giving authority and resources to those working in close contact with its clients. On Demand has allowed IBM to become focused and in sync across the board.
Part IlI: Critics argue that there is nothing new to IT in On Demand, and others clalm development has not gone far enough for On Demand to be truly functional. Regardless, IT companies such as Microsoft, Hewlett-Packard, and Oracle (to nam few) are pursuing technology along the same lines. This tells developers and executives at IBM that they are certainly on the right track -setting the pace and in the lead.
1. IBM's shift to a service business, changed the inputs in their transformation process. Which input would be the most important resource in the new model?
a. Materials
b. Energy
c. Labor
d. Ideas
2. Because service to meeting this requirement? organizations require high-touch relationships with customers; which of the following characteristics of the service organization is most important ?
a. Hiring and training
b. Flexible systems
c. Customized services
d. Adjustable capecity
3. Service organizations like IBM can standardize processes they are offering by:
a. Blending the use of technology
b. Designing Gantt Charts
c. Aligning inputs
d. Empowering employees
4. Unlike a service operation, the outputs for manufacturing operations are:
a. Tangible
b. Intangible
c. High-touch
d. Customer driven
5. The services that IBM is providing business clients to help with their technology will require a great deal of transformation process in the conversion step of the:_________
a. Facilties
b. Equipment
c. Knowledge
d. Technology
Answer:
1. c. Labor
2. a. Hiring and training
3. a. . Blending the use of technology
4. a. Tangible
5. d. Technology
Explanation:
1. IBM wants to create a global reach so that it may be able to take advantage of the talent that is available worldwide signifying that is is Labor that is integral to their new business model.
2. If the organisation requires high-touch relationships with customers then good representatives/employees are needed. Proper employees should be hired and trained to ensure that they relate well with customers.
3. By blending the technology they use around the world, they can standardise the way their employees do things using that technology.
4. Manufacturing firms produce actual goods. These goods can be seen, held, felt etc. They are tangible unlike services which do not have the aforementioned characteristics.
5. A great deal of knowledge will be required during the conversion stage of the Transformation process because the client's business will have to be blended with information technology. As every business is different, the customisation will take quite a bit of knowledge to accomplish.
Suppose the current term structure of interest rates, assuming annual compounding, is as follows: s_1s 1 s_2s 2 s_3s 3 s_4s 4 s_5s 5 s_6s 6 7.0% 7.3% 7.7% 8.1% 8.4% 8.8% What is the discount rate d(0,4)d(0,4)? (Recall that interest rates are always quoted on an annual basis unless stated otherwise.) Please submit your answer rounded to three decimal places. So for example, if your answer is 0.45670.4567 then you should submit an answer of 0.4570.457.
Answer:
7.32
Explanation:
Swap rate is fixed rate that swap receiver requires for the paying the uncertain rate. SWAP rate is fixed interest rate that is required by Swap receiver in exchange of floating rate of LIBOR. Swap rate can be calculated by multiple formula using the spreadsheet. The formula listed below is the simplest version;
r = [tex]\frac{1-d (0, 4)} {∑4 d(0, t)}[/tex]
= 1-d (0, 4) /4 T=1 d(0,t) = 0.0732
= 7.32
n the current year, the POD Partnership received revenues of $200,000 and paid the following amounts: $50,000 in rent and utilities, and $20,000 as a distribution to partner Olivia. In addition, the partnership earned $6,000 of long-term capital gains during the year. Partner Donald owns a 50% interest in the partnership. How much and what type(s) of income must Donald report for the tax year?
Answer: $75,000 ordinary income; $3,000 of long-term capital gains.
Explanation:
From the question, we are told that the POD Partnership received revenues of $200,000 and paid $50,000 in rent and utilities, and $20,000 as a distribution to partner Olivia. Also, the partnership earned $6,000 of long-term capital gains during the year and that Partner Donald owns a 50% interest in the partnership.
From the question, the ordinary income of the firm will be the difference between the revenue gotten and the $50,000 paid in rent and utilities which is an expense. This will be:
= $200000 - $50000
= $150000
The income from capital gain = $6000
Since, Donald will get 50% of what the partnership makes, thus will be:
50% of $150,000 ordinary income which is (50/100 × $150,000) = $75,000 and 50% of $6000 capital gain which will be $3,000.
= 50
Therefore, Donald will get $75000 of the ordinary income and $ 3000 of the capital gain.
The following three identical units of Item A are purchased during April:
Item A Units Cost
Apr. 2 Purchase 1 $68
14 Purchase 1 73
28 Purchase 1 75
Total 3 $216
Average cost per unit $72 ($216 ÷ 3 units)
Assume that one unit is sold on April 30 for $118.
Determine the gross profit for April and ending inventory on April 30 using the:
a. First-in, first-out (FIFO)
b. Last-in, first-out (LIFO)
c. Weighted average cost methods
Answer:
Determination of Gross Profit and Ending Inventory:
a. First-in, First-out (FIFO)
1. Determination of Gross Profit:
Sales $118
Cost of Sales 68
Gross profit $50
2. Determination of Ending Inventory:
Apr. 14 Purchase 1 $73
Apr. 28 Purchase 1 75
Total 2 $148
b. Last-in, First-out (LIFO):
1. Determination of Gross Profit:
Sales $118
Cost of Sales 75
Gross profit $43
2. Determination of Ending Inventory:
Apr. 2 Purchase 1 $68
Apr. 14 Purchase 1 $73
Total 2 $141
c. Weighted average cost methods:
1. Determination of Gross Profit:
Sales = $118
Cost of Sales = 72
Gross profit = $46
2. Determination of Ending Inventory:
Ending inventory = 2 x $72 = $144
Explanation:
FIFO, LIFO, and Weighted Average Cost Methods are different techniques for allocating costs of products to the cost of goods sold and the ending inventory. They produce different results. FIFO assumes that units sold are taken from the units purchased first. LIFO assumes that units sold are taken from the units purchased last. Weighted Average Method uses the average cost to determine the cost to allocate to cost of sales and ending inventory. The average cost is obtained by summing the total inventory costs and dividing it by the units available for sale. Then this average cost is applied to the quantity sold and the quantity remaining to obtain cost of goods sold and value of ending inventory.
When a process fails to satisfy a customer: Group of answer choices it is quite often the customer's fault. it is considered a defect it is usually half the customer's fault and half the company's fault. it is time to reengineer the process.
Answer:
It is considered a defect
Explanation:
A process defect is When a process doesn't perform within what is supposed to be its specifications. When a process doesn't satisfy a customer. To manage defects it is defined as a process of detecting bugs and fixing them. A defect is a malfunction which interrupts or changes the normal expected behaviour of an item or a product.
When a process fails to satisfy a customer it is considered a defect. Thus, option B is correct. Process flaws are when a process doesn't operate according to what is intended to be its specs.
When a consumer isn't satisfied with a procedure. It is described as a method of finding faults and repairing them to manage defects. A fault is a failure that prevents or modifies a product's normally anticipated behavior.
When the result of a procedure is not what was anticipated, a flaw is said to have happened. The phrase "expected outcome" in this context refers to the specifications we have made in advance. Defective components may be produced as a result of a process fault or discrepancy.
A flaw is an imperfection or inadequacy that might exist in a good, asset, method, or legal document. Defects in design, manufacture, or marketing are the three main forms of defects recognized under product liability law.
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Ginger, Inc., has declared a $6.40 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 10 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. The company's stock sells for $94.50 per share, and the stock is about to go ex dividend. What do you think the ex-dividend price will be?
Answer:
$88.74
Explanation:
Ginger incorporation has declared a dividend of $6.40 per share
The dividends are taxed at 10%
= 10/100
= 0.1
The company's stock is sold at $94.50 per share
Therefore, the ex-dividend price can be calculated as follows
Ex-dividend price= Current selling price-dividend(1- tax rate)
= $94.50-$6.40(1-0.10)
= $94.50-$6.40(0.9)
= $94.50-$5.76
= $88.74
Hence the ex-dividend price is $88.74
What will be the approximate population of the United States if the current population of 300 million grows at a compound rate of 2% annually for 25 years?
Answer:
492.18 million
Explanation:
The computation of the approximate population is shown below:
= Current population × (1 + growth compound rate)^number of years
where,
The Current population is 300 million
Growth compound rate is 2%
And, the number of years is 25
Now placing these values to the above formula
So, the estimated population is
= 300 million × (1 + 2%)^25
= 492.18 million
Hommie Delicacies produces two products (Orapine and Banango) from a joint process. The joint cost of production is GH¢80,000. Five thousand units of Orapine can be sold at split-off for GH¢20 per unit or processed further at an additional cost of GH¢20,000 and sold for GH¢25 per unit. Ten thousand units of Banango can be sold at split-off for GH¢15 per unit or processed further at an additional cost of GH¢20,000 and sold for GH¢16 per unit. Advise Hommie on further processing each of the products? (5 marks)
Answer:
Explanation:
Joint cost = 80,000
Orapine
cost of 5000 at 20 = 100,000
Incremental Cost of further processing =20,000
Incremental revenue = 5000* (25-20)= 25,000
Incremental income 5,000
Banango
cost of 10000 at 15 = 150,000
Incremental cost of further processing = 20,000
Incremental revenue = 10,000*(16-15) = 10,000
Incremental income = (10,000) loss
If Orapine is processed further , there will be an incremental income of 5,000 compared to Banango that will bring an incremental loss of 10,00 if processed further.
Based on this , it is advised that Orapine be processed further while Banango is not
The next dividend payment by Skippy, Inc., will be $2.12 per share. The dividends are anticipated to maintain a growth rate of 8 percent, forever. The stock currently sells for $43 per share. What is the required return
Answer:
The answer is 12.9 percent
Explanation:
This question will be solved using the Dividend Discount Model. It is one of the valuation methods used in valuing price of Equity/stock.
Po = D1/r - g
Po is the current worth of stocks
D1 is the next dividend paid
r is the rate of return
g is the growth rate
$43 = $2.12/ r - 0.08
43r - 3.44 = 2.12
43r = 5.56
r = 5.56/43
=0.129
Expressed as a percentage:
12.9 percent
Which alternative offers you the highest effective rate of return? A) Investment A B) Investment B C) Investment C D) Investment
Answer:
Investment D
Explanation:
Effective Rate of Return can be defined as the the rate of interest on an investment either daily, monthly,quarterly or annually when compounding of them occurs more than once which is why effective interest rate is important and vital in helping to figure out the best loan or helping in determining which investment offers the highest rate of return
Therefore based on the information given in the question, the best alternative that will offers me the highest effective rate of return will be INVESTMENT D because the investment has the HIGHEST RATE of interest which is 6.1204% Monthly more than the rest of the listed investment .
Meryl is an avid doll collector and has been searching for the Beach Doll to complete her 200-piece collection. There were only 5 Beach Dolls created in the world. Meryl is envious of her neighbor Nancy, who has the first Beach Doll ever created. Nancy refuses to sell the doll because she thinks it will be worth a million dollars someday. While Nancy is on vacation, Meryl hires Alex to steal the doll from Nancy's home. Has an agency relationship been formed?
Answer:
An agency relationship has not been formed
Explanation:
An agency relationship has not been formed because the agreement has an illegal purpose. An agency relationship is a situation where one party calling the principal allows another party called agent to act on his or her behalf.
An agency relationship is only formed if the purpose for it's creation is legal. Meryl hired Alex to steal from Nancy, which is an illegal arrangement. Therefore an agency relationship was not formed.
The president is assisted by an executive branch organization in the preparation of a budget proposal which he submits to Congress and with the formulation of fiscal policy. This organization is called
Answer: Office of Management and Budget (OMB)
Explanation
The Office of Management and Budget is the biggest office that is within the Executive Office of the United States President. The Office of Management and Budget is also a member of the President's Executive Office and the main function of the Office of Management and Budget is to help the United States president in budget preparation.
It should also be noted that the office helps in overseeing and monitoring federal agencies performance.
Continuing with the company selected in Unit 2, think about the types of financial data that would be included and excluded in differential analysis. Propose which specific revenues and costs should be considered in an evaluation to drop or keep a: Customer Product line In addition, explain sunk and opportunity costs as they relate to your selected company. Should these costs be considered in differential analysis? Why or why not?
Answer:
Sorts of monetary information that would be incorporated and avoided in differential analysis
Differential cost investigation is the expansion or decline in complete expense pf the adjustment in explicit components of cost that outcome from any variety in tasks. It speaks to an expansion or abatement in all out expense coming about out of -
1. Creating or disseminating a couple of more or barely any less of the items
2. Change in the strategy for creation or of conveyance
3. An Addition or cancellation of item
4. Choice of extra deals channel
In Differential examination increment in incomes, variable expenses and opportunity costs are thought of. Fixed expenses and fixed segment of semi-variable expenses are disregarded.
differential analysis is utilized:
1. Dropping or including a product offering
2. Settle on or purchase choices
3. Proceed or shutdown item or client and so on.
Explicit incomes and expenses ought to be considered in an assessment to drop or keep a:
1. Commitment structure unbeneficial item ought to be thought of
2. Explicit fixed expenses of the unfruitful item will be thought of
3. Commitment from other non beneficial items which is proposed to be delivered with the extra limit will be thought of.
Avoidable fixed expenses are thought of, as these can be stayed away from when item or client is closed down. Avoidable fixed costs partitioned by the pv proportion will give level of deals beneath which it is smarter to close down.
Unavoidable fixed expenses are overlooked in considering in an assessment to drop or keep. Since these costs will be acquired despite the fact that the item or client is ceased.
shut down point = avoidable fixed expenses/PV proportion
Sunk Costs: A sunk expense is a cost that an element has brought about, and which it can not recoup anymore. Sunk expenses ought not be viewed as when settling on the choice to keep putting resources into a progressing venture, since these expenses can't be recouped. As sunk expenses are authentic expenses these are brought about before and notrelavent for dynamic reason. for instance, R&D costs, Feasibility report costs and so on.
Opportunity Costs: Opportunity costs emerge from inability to unused assets effectively. These are considered in dynamic investigation. in straightforward terms opportunity cost implies the loss of different options when one option is picked.
Misfortune emerging from picking one option rather than other option will be considered in assessing the task.
It's important to note that sometimes private solutions to externalities do not work. For example, this occurs when an excessive amount of time or money must be spent for parties to reach an agreement. This describes the problem of .
In the case when an excessive amount should be spending so this represents the problem of the Transaction cost.
What does a transaction cost?
Transaction cost is the cost that is typically in money or time format. It is the cost involved in the context of time or money when a decision is made or an agreement has been reached.
So according to the given situation, there is an excessive amount of time or money spent on parties so that it could be reached to an agreement
Therefore it represents the transaction cost.
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Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data: Year 1 Year 2 Year 3 Inventories Beginning (units) 210 150 200 Ending (units) 150 200 240 Variable costing net operating income $290,000 $279,000 $260,000 The company’s fixed manufacturing overhead per unit was constant at $550 for all three years. rev: 03_09_2019_QC_CS-162392 Required: 1. Calculate each year’s absorption costing net operating income.
Answer and Explanation:
The computation of each year’s absorption costing net operating income is shown below:-
Particulars Year 1 Year 2 Year 3
Beginning inventories 210 150 200
Less: Ending inventories 150 200 240
Change in inventories 60 -50 -40
Fixed Manufacturing Overhead
Beginning Inventory $115,500 $82,500 $110,000
($550 × 210) ($550 × 150) ($550 × 200)
Less: Fixed Manufacturing
Overhead in ending
inventory $82,500 $110,000 $132,000
($550 × 150) ($550 × 200) ($550 × 240)
Fixed Manufacturing
Overhead deferred
in (released from)
inventory $33,000 -$27,500 -$22,000
Variable Costing
net Operating
income $290,000 $279,000 $260,000
Add (deduct) Fixed MOH cost
deferred in (released from)
inventory under absorption
costing -$33,000 +$27,500 +$22,000
Absorption costing net
operating income $257,000 $306,500 $282,000
Hart Enterprises recently paid a dividend of $1.25. It expects to have a dividend growth rate of 15% for 3 years followed by a constant rate of 6% thereafter. The firm’s required return is 10%. What is the firm’s stock value today?
Answer:
Value of stock = $41.95
Explanation:
The price of a stock using the dividend valuation model is the present value of the the future dividend expected from the stock discounted at the required rate of return.
Year Present Value
1 1.25× 1.15^1 × 1.1^(1-) =1.3068
2 1.25× 1.15^2 × 1.1^(-2) = 1.366
3. 1.25× 1.15^3 × 1.1^(-3)= 1.4283
Present value of Dividend in Year 4 and beyond
This will be done in two steps
Step 1
PV in year 3 terms
= Dividend in year 4× (1.06)/(0.1-0.06)
1.25× 1.15^3 × 1.06/(0.1-0.06)=50.37898438
PV in year 0 terms =
PV in year 3 × 1.1^(-3)
=50.3789 × 1.1^(-3)= 37.8504
Value of stock = 1.3068 + 1.366 + 1.4283 = 41.95
Value of stock = $41.95
On December 2, Coley Corp. acquired 1,000 shares of its $2 par value common stock for $27 each On December 20, Coley Corp. resold 400 shares for $30 each. Which of the following is correct regarding the effect of the reselling of shares on the accounting equation?
A. Assets decrease
B. Liabilities decrease
C. Expenses increase
D. Stockholders' Equity increases
Answer:
D. Stockholders' Equity increases
Explanation:
Cost of the share being resale = 400 shares x $27 = $10,800
Proceeds on the resale of shares = 400 shares x $30 = $12,000
Profit / Gain on resale = $12,000 - $10,800 = $1,200
As there is a profit of $1,200 the stockholders equity will be increased on the reselling of share.
As the assets section is increased because more cash is received against the cost of those shares.
Suppose there are three commercial concrete suppliers that account for 90% of sales (of nearly identical products) in northern New England. What is the most important thing they can do to earn profits in the commercial concrete industry
Answer: c. Collude
Explanation:
In order to make the maximum profit, the most important thing that these commercial concrete suppliers can do would be to Collude. While this is against fair market practices in a competitive market, it will ensure that they make enough profits in the industry.
With a 90% market share between them, they could collude to establish a price at which they will all sell at and because of their high market share, this is the price that the market will begin to sell at. That price will be a price that is high enough for them all to make sufficient profits therefore the goal of the collusion will be accomplished.
Ford Motor Company has issued 8% convertible debentures, convertible at a 10:1 ratio. Currently the debenture is trading at 94. The stock is trading at $80. What is the conversion price of the stock
Answer: $100
Explanation:
Sometimes Debt instruments like Debentures and Bonds are convertible to shares in the company.
To calculate the Conversion Price, the following formula is used;
= Par Value / Conversion Ratio
= 1,000/10
= $100
Par value is usually $1,000 for such instruments.
The law of demand states that:________ a. a higher price will lead to increased sales. b. consumers have unlimited demands for a good. c. the price can never be too high for some consumers. d. quantity demanded will vary inversely with the price of the good.
Answer:
d. quantity demanded will vary inversely with the price of the good.
Explanation:
The law of demand states that when the price of a product increases, the quantity demanded decreases when everything else remains constant as people are less willing to purchase a product when the price is higher. This means that the price and the quantity demanded are inversely related as when one variable increases the other one decreases. According to this, the answer is that the law of demand states that quantity demanded will vary inversely with the price of the good.
The other answers are not right because the law of demand states that the price and the quantity demanded of a good are inversely related, it doesn't refer to the price and sales, consumers don't have unlimited demands for a good as it is affected by the price and the price can be too high for some consumers as when the price increases, the quantity demanded decreases.
C&A's potato chip filling process has a lower specification limit of 9.5 oz. and an upper specification limit of 105 oz. The standard deviation is 03 oz. and the mean is 10 oz. What is the process capability index for the chip filling process?
Answer:
Process capability index (cp) for the chip filling process is 0.56
Explanation:
Process capability index (cp) = (Upper Specification Limit - Mean) / (3 * standard deviation) = (Mean - Lower Specification) / (3 * standard deviation)
Process capability index (cp) = (10.5 - 10) / (3*0.3)
Process capability index (cp) = 5/9
Process capability index (cp) = 0.56
Equipment was purchased for $300,000. Freight charges amounted to $14,000 and there was a cost of $40,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $60,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be:________. a. $70,800 b. $58,800 c. $49,200 d. $48,000
Answer:
b)
Annual Depreciation expense= $58,800
Explanation:
According to International Accounting standards(IAS) 16 property plan and equipment (PPE), the cost of an asset is the purchase cost plus other costs of bringing it to the intended working conditions.
So we will add the purchase cost to installation , freight charges.
Cost of assets = 300,000 + 14,000 + 40,000 =$354,000
Annual depreciation = (Cost - Scrap Value)/ Number of years
= (354,000 - 60,000)/5
=$58,800
Annual Depreciation expense= $58,800
Just Right Incorporated is considering the option of an extra dividend versus a share repurchase and the impact of both decisions on the firm. Just Right plans to spend $85,000 in respect of both scenarios. Just Right’s current earnings are $2.10 per share, and the stock currently sells for $45 per share. Just Right currently has 5,000 shares outstanding. You own one share of stock in this company. If the company issues the dividend, what will your total investment be worth?
Answer:
The total investment will be "28".
Explanation:
The given values are:
Total dividend amount
= $85,000
Current earnings per share
= $2.10
Total purchased amount
= $85,000
Currently sell stock
= $45 per share
Now,
⇒ [tex]Dividend \ per \ share=\frac{85000}{5000}[/tex]
[tex]=17[/tex]
⇒ [tex]Total \ investment=currently \ sell \ stock+dividend \ per \ share[/tex]
[tex]=45+17[/tex]
[tex]=62[/tex]
The number of repurchased shares will be:
= [tex]\frac{total \ repurchase}{currently \ sells}[/tex]
= [tex]\frac{85000}{45}[/tex]
= [tex]1889[/tex]
So, Percentage of repurchased will be:
= [tex]\frac{1889}{5000}[/tex]
= [tex]37.78 \ percent[/tex]
When the share becomes bought, the overall investment value will be as follows:
= [tex]45\times ( 1 -0.3778)[/tex]
= [tex]45\times 0.6222[/tex]
= [tex]27.999 \ or \ 28[/tex]
You are offered the right to receive $1000 per year forever, starting in one year. If your discount rate is 5%, what is this offer worth to you
Answer:
Worth of the offer =$20,000
Explanation:
The worth of this offer is the present value of the annual cash inflow receivable forever discounted at the given interest rate. The cash inflow receivable forever is known as a perpetuity
The present of a cash inflow receivable forever is given below:
PV = A× 1/r
A- annual cash inflow, r- discount rate, PV - Present value of a perpetuity
A- 1,000, r- 5%
PV = 1,000 × 1/0.05
PV = $20,000
Worth of the offer =$20,000
A bond is issued at par value when: Multiple Choice The bond is callable. Straight line amortization is used by the company. The market rate of interest is the same as the contract rate of interest. The bond pays no interest. The bond is not between interest payment dates.
Answer:
The market rate of interest is the same as the contract rate of interest.
Explanation:
A bond can be defined as a fixed income instrument that firms use as a source of longer-term funding or loans.
The par value of a bond is its face value and it comprises of its total dollar amount as well as its maturity value. Also, the par value of a bond gives the basis on which periodic interest is paid.
A bond is issued at par value when the market rate of interest is the same as the contract rate of interest. This simply means that, a bond would be issued at par (face) value when the bond's stated rated is significantly equal to the effective or market interest rate on the specific date it was issued.
In Economics, bonds could either be issued at discount or premium.
Hence, a bond that is being issued at a discount has its stated rate lower than the market interest rate, on the specific date of issuance. Also, a bond that is being issued at a premium, has its stated rate higher than the market interest rate on the specific date of issuance.
Generally, bond price is inversely proportional to its interest rate, thus, when interest rates are high, bond prices would be low and when interest rates are low, bond prices are high.
Feldpausch Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Total Cost Total Activity Assembly $ 1,398,250 65,800 machine-hours Processing orders $ 69,451 2,520 orders Inspection $ 184,800 2,400 inspection-hours The company makes 920 units of product W26B a year, requiring a total of 1,290 machine-hours, 61 orders, and 40 inspection-hours per year. The product's direct materials cost is $57.55 per unit and its direct labor cost is $13.56 per unit. The product sells for $123.50 per unit. According to the activity-based costing system, the product margin for product W26B is:
Answer:
$16,125.15
Explanation:
DATA:
Activity Cost Pool Total Cost Total Activity
Assembly $1,398,250 65,800 machine hours
Processing orders $ 69,451 2,520 orders
Inspection $ 184,800 2,400 inspection-hours
Units produced = 920
Machine hours required = 1290
Processing orders required= 61
Inspection hours required = 40
Direct material cost = 57.55
Direct labor cost = 13.56 per unit
Selling price = 123.50
Solution
Sales Revenue (920 ×$123.5) $113,620
LESS: Costs
Direct Materials (920 × $57.55) $52,946
Direct labor (920 ×$13.56) $12,375.2
Assembly (1,398,250/65,800) = 21.25 × 1290= $27412.5
Processing (69,451/2,520) = 27.55 × 61 = $1681.15
Inspection (184,800/2,400) = 77 x 40 = $3080
Total Cost ($97494.65)
Product margin $16,125.15
The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $14 per machine-hour. What amount wou
Question
The question is incomplete, hence the tutor added a piece of information
The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $14 per machine-hour. What amount would be
Assuming the actual machine hours worked is 3,500
Note the actual machine was added by the tutor
Answer:
Applied overhead =$49,000
Explanation:
Overheads are charged to units produced by the means of an estimated overhead absorption rate. This rate is computed using budgeted overhead and budgeted activity level.
Pre-determined overhead absorption rate (POAR) = Budgeted overhead/Budgeted machine hours
The POAR is given as $14 per machine hour
Applied (absorbed) overhead = POAR × Actual machine hours
Applied overhead = $14 × 3,500 =$49000
Applied overhead =$49,000