Answer:
Supplies expense to be recorded = $2,850
Explanation:
Beginning account balance = $1,200
debit during the year = $2,300. This means that a transaction of $2,300 was used for supply purchase during the year
balance on hand = $650
difference between beginning and ending inventory = 1200 - 650 = $550
This means that an expense of $550 was carried out during the year.
Therefore, total expense during year = 550 + purchase expense
= 550 + 2300 = $2,580
Alternatively, the supply expense reported can be calculated with the formula:
Supplies expense = beginning inventory + supplies purchased - ending inventory
Supplies expense = 1200 + 2300 - 650 = $2,850
Based on the supplies opening balance, the supplies purchased and other details, the supplies expense must be $2,850
The supplies expense can be calculated as:
= Beginning balance + Supplies purchased - Closing balance
Solving would give:
= 1,200 + 2,300 - 650
= $2,850
In conclusion, the supplies expense in the income statement will be $2,850
Find out more at https://brainly.com/question/14313516.
Duff Inc. paid a 2.69 dollar dividend today. If the dividend is expected to grow at a constant 3 percent rate and the required rate of return is 5 percent, what would you expect Duff's stock price to be 4 years from now?
Answer:
$155.92
Explanation:
Div₀ = $2.69
Div₁ = $2.7707
Div₂ = $2.8538
Div₃ = $2.9394
Div₄ = $3.0276
Div₅ = $3.1184
we need to calculate the stocks terminal value in year 4, and to do that we will use Div₅ and the growing perpetuity formula:
stock price = $3.1184 / (5% - 3%) = $155.92
if we wanted to calculate the current stock price we would use Div₁ in the same formula.
Cotton On Ltd. currently has the following capital structure: Debt: $3,500,000 par value of outstanding bond that pays annually 10% coupon rate with an annual before-tax yield to maturity of 12%. The bond issue has face value of $1,000 and will mature in 20 years.
Answer and Explanation:
This question is incomplete. Kindly find the incomplete question here
Ordinary shares: $5,500,000 book value of outstanding ordinary shares. Nominal value of each share is $100. The firm plan just paid a $8.50 dividend per share. The firm is maintaining 4% annual growth rate in dividends, which is expected to continue indefinitely.
Preferred shares: 45,000 outstanding preferred shares with face value of $100, paying fixed dividend rate of 12%
The firm's marginal tax rate is 30%.
Required:
a) Calculate the current price of the corporate bond?
b)Calculate the current price of the ordinary share if the average return of the shares in the same industry is 9%?
c) Calculate the current price of the preferred share if the average return of the shares in the same industry is 10%
The computation is shown below:
a. For the current price of the corporate bond
Before that first we have to determine the after tax yield to maturity i.e
After tax YTM = Before tax YTM × (1 - tax rate)
= 12% × ( 1 - 30%)
= 12% × (1 - 0.3)
= 12% × (0.7)
= 8.4%
Now
Price of bond = Interest × PVIFA(YTM%,n) + Redemption value × PVIF(YTM%,n)
Interest = 1000 × 10% = $100
YTM% = 8.4%
n = 20
PVIFA(YTM%,n) = [1 - (1 ÷ (1 + r)^n ÷ r ]
PVIFA(8.4%,20) = [1 - (1 ÷ (1 + 8.4%)^20 ÷ 8.4%]
= [1 - (1 ÷ (1 + 0.084)^20 ÷ 0.084]
= [1-(1 ÷ (1.084)^20 ÷ 0.084]
= [1 - 0.1993 ÷ 0.084]
= 0.8007 ÷ 0.084
= 9.5327
PVIF(8.4%,20) = 1 ÷ (1 + 8.4%)^20
= 1 ÷ (1.084)^20
= 0.19926
So, the price of bond is
= $100 × 9.5327 + $1000 × 0.19926
= $953.27 + $199.26
= $1,152.52
b)Price of stock = Dividend of next year ÷ (Required rate of return - growth rate )
where,
Growth rate = 4%
Required rate of return = 9%
The Dividend of next year = Dividend paid × (1 + growth rate)
= 8.50 × (1 + 4%)
= 8.50 × (1 + 0.04)
= 8.50 × (1.04)
= $8.84
Thus the price of the stock is
= $8.84 ÷ (9% - 4%)
= $8.84 ÷ 5%
= $176.80
c) Price of preference shares is
= Dividend ÷ Required rate of return
where,
Dividend = 100 × 12% = $12
And, the Required rate of return = 10%
So, the price of preference shares is
= 12 ÷ 10%
= $120
sadik inch's bonds currently sell for $1,300 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call
Answer:
5.31%
Explanation:
For computing the yield to call we need to use the RATE formula i.e shown in the attachment below:
Given that,
Present value = $1,300
Future value or Face value = $1,100
PMT = 105
NPER = 5 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the above formula, the yield to call is 5.31%
Which of the following is not descriptive of external environmental scanning? used as a tool for corporations to avoid strategic surprise used to monitor, evaluate, and disseminate information relevant to the organizational development of strategy used to identify major stockholders used to determine a firm's competitive advantage used as a tool to ensure a corporation's long-term health
Answer:
used to identify major stockholders
Explanation:
Environmental scanning is a management strategy that focuses on systematically acquiring informations about occasions, trends, events or patterns through surveys and analysis of these information in an organisation's external and internal environment. The informations acquired through environmental scanning is then used by the executive management in strategically planning the organisation's future and exploitation of available opportunities for the success of the organization.
The internal environmental scanning offers an organization strength and weakness while the external environmental scanning provides information about opportunities and threats.
Generally, the external environmental scanning gives an overview of the opportunities in the market as well as potential threats to an organization.
Hence, the following are descriptive of an external environmental scanning;
1. Used as a tool for corporations to avoid strategic surprise.
2. Used to monitor, evaluate, and disseminate information relevant to the organizational development of strategy.
3. Used to determine a firm's competitive advantage.
4. Used as a tool to ensure a corporation's long-term health.
Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is considering 7 equal-sized capital budgeting projects. Its CFO hired you to assist in deciding whether none, some, or all of the projects should be accepted. You have the following information: rRF= 4.50%; RPM = 5.50%; and b = 0.93. The company adds or subtracts a specified percentage to the corporate WACC when it evaluates projects that have above- or below-average risk. Data on the 7 projects are shown below. If these are the only projects under consideration, how large should the capital budget be?
Project Risk Risk Factor Expected Return Cost (Millions)
1 Very low -2.00% 7.60% $25.00
2 Low -1.00% 9.15% $25.00
3 Average 0.00% 10.10% $25.00
4 High 1.00% 10.40% $25.00
5 Very high 2.00% 10.80% $25.00
6 Very high 2.00% 10.90% $25.00
7 Very high 2.00% 13.00% $25.00
a. $ 125
b. $ 100
c. $ 25
d. $50
e. $75
Answer:
E $75
Explanation:
Using CAMP we solve for the Cost of equity on each and determinate which project are worht to invest on it
A
[tex]Ke= r_f + \beta (r_m-r_f)[/tex]
risk free = 0.045
rate premium market = (market rate - risk free) = 0.055
beta(non diversifiable risk) = 0.93
[tex]Ke= 0.045 + 0.93 (0.055)[/tex]
Ke 0.09615 = 9.615%
A 9.615% - 2.00% = 7.615% As the return is 7.60% we should reject
B 9.615% - 1% = 8.615% return of 9.15% we should Accept
C return of 10.10% while Ke 9.615% Accepted
D 9.615% + 1% = 10.615% return of 10.40% rejected
E 9.615% + 2% = 11.615% against 10.80% yield rejected
F cost of 11.615% ith return of 10.90% rejected
G cost of 11.615% with return of 13.00% Accepted
We accept three projectthus, we require $75
Indicate whether each of the statements below about a perfectly competitive market is true or false. a. In general, the market demand curve in a perfectly competitive market is perfectly elastic. False True b. In general, an individual firm in a perfectly competitive market faces a perfectly elastic demand curve. True False c. An individual firm in a perfectly competitive market can obtain a higher price for its product by reducing output. True False d. An individual firm in a perfectly competitive market must lower its price to sell more of its product. True False f. In a perfectly competitive market, average revenue is equal to the market price. False True e. In a perfectly competitive market, marginal revenue is equal to the market price. False True
Answer:
A. False
B. True
C. False
D. False
E. True
F. True
Explanation:
A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
If a seller increases her price, her demand would fall to zero because customers woild patronize other suppliers. Also, there is no incentive to reduce price because the firm would be making a loss. This is the reason why the firm's demand curve is perfectly elastic, the firm can only sell at one price. This price is set by the market forces.
The market's demand curve is downward sloping
Price = average revenue = Marginal revenue
I hope my answer helps you
In general, the market demand curve in a perfectly competitive market is perfectly elastic.
A. FalseIn general, an individual firm in a perfectly competitive market faces a perfectly elastic demand curve.
B. TrueAn individual firm in a perfectly competitive market can obtain a higher price for its product by reducing output.
C. FalseAn individual firm in a perfectly competitive market must lower its price to sell more of its product
D. FalseIn a perfectly competitive market, marginal revenue is equal to the market price.
E. Tr ueIn a perfectly competitive market, average revenue is equal to the market price
F. TrueAccording to the principles of economics, we can see that in a perfectly competitive market, the marginal revenue is equal to the market price and the average revenue is equal to the market price.
A perfectly competitive market is a market where there is equal chances for competitors in an ideal scenario
Read more here:
https://brainly.com/question/20379276
Hall Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory 1,000
Materials costs $7,100
Conversion costs $6,400
Percent complete with respect to materials 65%
Percent complete with respect to conversion 30%
Units started into production during the month 13,600
Units transferred to the next department during the month 12,300
Materials costs added during the month $137,224
Conversion costs added during the month $215,050
Ending work in process inventory:
Units in ending work in process inventory 2,300
Percent complete with respect to materials 60%
Percent complete with respect to conversion 25%
The total cost transferred from the first processing department to the next processing department during the month is closest to:______
a. $356,256
b. $380,435
c. $341,325
d. $349,856
Answer:
c. $341,325
Explanation:
First determine the Equivalent Units of Production
Materials
Units completed and transferred (12,300 × 100%) = 12,300
Units in Ending Work In Process Inventory ( 2,300 ×60%) = 1,380
Equivalent Units of Production = 13,680
Conversion
Units completed and transferred (12,300 × 100%) = 12,300
Units in Ending Work In Process Inventory ( 2,300 ×25%) = 575
Equivalent Units of Production = 12,875
Next Determine the Total Cost Incurred during the period
Materials
Cost in Units of Opening Work In Process = $7,100
Incurred during the period = $137,224
Total Cost = $144,324
Conversion
Cost in Units of Opening Work In Process = $6,400
Incurred during the period = $215,050
Total Cost = $221,450
Then Determine the Total Cost per Equivalent unit of Production
Cost per Equivalent unit = Total Cost / Total Equivalent Units
Materials = $144,324 / 13,680
= $10.54
Conversion = $221,450 / 12,875
= $17.20
Total = $10.54 + $17.20 = $27.74
Finally calculate total cost transferred from the first processing department to the next processing department
total cost transferred = Units transferred × Total cost per equivalent unit of production.
= 12,300 × $27.74
= $341,202
Conclusion :
The total cost transferred from the first processing department to the next processing department during the month is closest to $341,325
The adjusted trial balance of Ryan Financial Planners appears below.
RYAN FINANCIAL PLANNERS
Adjusted Trial Balance
December 31, 2014
Debit Credit
Cash $2,660
Accounts Receivable 2,140
Supplies 1,850
Equipment 15,900
Accumulated Depreciation-Equipment $3,975
Accounts Payable 3,310
Unearned Service Revenue 3,205
Common Stock 10,000
Retained Earnings 4,510
Dividends 1,000
Service Revenue 4,300
Supplies Expense 410
Depreciation Expense 2,420
Rent Expense 2,920
$29,300 $29,300
Using the information from the adjusted trial balance, you are to prepare for the month ending December 31:
1. An income statement. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Dividends Expenses Net Income / (Loss) Retained earnings, December 1 Retained earnings, December 31 Revenues Total Expenses Total Revenues
RYAN FINANCIAL PLANNERS
Income Statement
For the Month Ended December 31, 2014
Dividends Expenses Net Income / (Loss) Retained earnings, December 1 Retained earnings, December 31 Revenues Total Expenses Total Revenues
2. A retained earnings statement.
RYAN FINANCIAL PLANNERS
Retained Earnings Statement
For the Month Ended December 31, 2014
3. A balance sheet. (List Assets in order of liquidity.)
RYAN FINANCIAL PLANNERS
Balance Sheet
December 31, 2014
Dividends Expenses Net Income / (Loss) Retained earnings, December 1 Retained earnings, December 31 Revenues Total Expenses Total Revenues
less
Assets
Liabilities and Stockholders' Equity
Current AssetsLiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesShort-term InvestmentsTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Liabilities and Stockholders
Answer and Explanation:
The preparation is presented below:
1. For income statement
Particulars (in dollars)
Service Revenue 4,300
Less: Supplies Expense 410
Gross Income 3,890
Less: Depreciation Expense 2,420
Less: Rent Expense 2,920
Income Statement ($1,450) i.e net loss
It records expenses incurred and revenues earned
3. For retained earnings statement
Retained Earnings Statement $
Beginning Retained Earnings 4,510
Less: Dividend Paid (1,000)
Less: Net Loss for the year (1,450)
Ending Retained earning 2,060
It records the dividend paid and the net loss for the year
2. For Balance Sheet
Assets $
Non-Current Asset
Equipment (15,900 - 3,975) 11,925
Current Asset
Cash 2,660
Accounts Receivable 2,140
Supplies 1,850
Total current assets 6,650
Total Asset 18,575 (11,925 + 6,650)
Common Stock 10,000
Add: Retained Earnings 2,060
Liabilities
Current Liabilities
Unearned Service Revenue 3,205
Accounts Payable 3,310
Total current liabilities 6,515
Total Equity and Liability 18,575 ($10,000 + $2,060 + $6,515)
It shows the financial position, performance of the company
The fair values of all of Sirius's assets and liabilities were equal to their book values except for inventory that had a fair value of $85,000, land that had a fair value of $60,000, and buildings and equipment that had a fair value of $250,000. Buildings and equipment have a remaining useful life of 10 years with zero salvage value. Paradox Company decided to employ push-down accounting for the acquisition. Subsequent to the combination, Sirius continued to operate as a separate company. Based on the preceding information, what amount will be present in the revaluation capital account, when consolidating entries are prepared?
Answer:
$0
Explanation:
The fair value is the value above the book value. The financial statements are prepared at historic cost and when the value of assets rises a revaluation account is created to present financial statements accurate. The fair values of Sirius's assets are equal to book value and all assets are presented at cost or book value. There will be no revaluation charged to the consolidated statement.
Suppose that Boeing and Rolls-Royce Holdings are the sole producers of a particular turbo engine. The two firms currently charge the same price for their products. If neither firm reduces the price of its turbo engine, each firm earns $50 million in profit. If both firms reduce their prices, then each firm will earn $10 million in profit. If one firm reduces its price and the other does not, then the firm that reduces price will earn a profit of $70 million while the other firm will earn a profit of $5 million. If the firms can operate as a cartel, what will they do
Answer:
The two firms will manipulate the market in unison, to maintain the same price, which guarantees the optimum benefit for both firms, as opposed to if one or both of them reduces its price.
Explanation:
A cartel is a group of independent market participants that collude with each other in order to improve their profits and dominate the market. Cartels are usually in the same line of business, and they form a type of alliance as competitors. Cartel use price fixing, bid rigging, and reductions in output, to dominate the market and to maximize their profit. They are usually frowned upon in a free market system.
In this case, if the the two firms Boeing and Rolls-Royce operates as a cartel, they will bend the market rules by fixing their prices, instead of letting market drivers like demand and supply to determine their selling price, they might also reduce their output so that they both have the same level of output, or do any other form of manipulation in unison to maintain the same price. This is because both companies will benefit equally if they maintain the same price, as opposed to if one or both of them reduces price.
You come across different kinds businesses every day. The following sentences describes some businesses. Using the description of each business, classify it as a sole proprietorship, a partnership, a corporation, or a Limited liability company/limited liability partnership.
a. Anthony started a tutoring website. After a few months, a publishing company filed a lawsuit against his company for copyright infringement. Anthony had to shut down his business and lost all his personal assets in the process.
b. Willie started a business, based in a different state, with his unde. Due to the business's underperformance, they had to dose the business. Willie, however, ended up losing his house due to a litigation claim.
c. James, the CEO of a beverage company, is required to certify the accuracy of information provided in the company's quarterly reports.
Answer:
The correct answers are:
A - Sole propietorship
B - Partnership
C - Corporation
Explanation:
A) The name of "Sole Propietorship" is refered to a type of enterprise whose main characteristics reside in the fact that the ownership belongs to one person only and that person receives all the profits and is also fully unlimited liable for the debts of the business. Therefore that in that case Anthony started a sole propietorship
B) The name of "Partnership" is refered to a type of enterprise that is characterized for the fact of being a business that is operated and managed by two or more parties that have made a formal arregenment in order to work together and both obtain profits equally and also share the responsibility of the debts and its liability together equally. Therefore that in that case Willie has started a partnership.
C) The name of "Corporation" is refered to a type of enterprise that basically is characterized by the fact of being a different legal person that itw owners and therefore that the ones that own the business do not take unlimited responsibility for the actions of the company and its debts. The most common in this type of companies is that the owners hire many employees, among them, CEOs.
Heinz Ketchup holds 54% of the U.S. ketchup market, and nine of every 10 restaurants feature Heinz ketchup. However, Heinz has learned that many restaurant owners simply refill Heinz bottles with cheaper ketchup, thereby capitalizing on the Heinz name without the cost. One restaurant owner explains, "It’s just ketchup. The customers don’t notice." There are no specific health regulations that apply, and owners are not breaking the law by refilling the bottles. Do you think this practice is ethical?
Answer:
No, not at all. The practice is NOT ethical.
Explanation:
So, from the question above let us take each statement one after the other.
(1). "Heinz Ketchup holds 54% of the U.S. ketchup market, and nine of every 10 restaurants feature Heinz ketchup"
DEDUCTION FROM (1): this shows that Heinz Ketchup is a popular brand in the United States of America.
(2). " Heinz has learned that many restaurant owners simply refill Heinz bottles with cheaper ketchup, thereby capitalizing on the Heinz name without the cost. One restaurant owner explains, "It’s just ketchup. The customers don’t notice." There are no specific health regulations that apply, and owners are not breaking the law by refilling the bottles"
DEDUCTION FROM (2): What these other restaurants owners are doing is purely CHEAT that is "refill Heinz bottles with cheaper ketchup". CHEATING IS UNETHICAL!
A type of entity that must have one general partner and at least one limited partner. b. A type of entity in which owners are "members". c. A type of entity in which all owners are jointly and severally liable for the entity's debts. d. A type of entity in which there can be only one owner.
Answer: a) Limited Liability Partnership (LLP)
b) Limited Liability Company (LLC)
c) General Partnership
d) Sole Proprietorship
Explanation: Limited Liability Partnership (LLP) - A type of entity that must have one general partner and at least one limited partner.
Limited Liability Company (LLC)- A type of entity in which owners are "members".
General Partnership - A type of entity in which all owners are jointly and severally liable for the entity's debts.
Sole Proprietorship - A type of entity in which there can be only one owner.
ABC Appliance offers a warranty requiring an annual fee. The warranty may be purchased at the time of sale or at any time within the first year after the appliance was purchased. The warranty fee after the date of purchase is twice the time-of-purchase fee. When asked why the fee was higher after the date of purchase, ABC's president said, "Buying a warranty is voluntary. We've noted that those who buy the warranty after the purchase date have a greater need for service." Charging the same rate or a lower rate after the date of purchase would expose ABC to what problem that also impacts private insurers?
Answer: adverse selection
Explanation:
Adverse selection is a situation whereby the sellers possesses information that the buyers do not have. It may also be the other way round whereby the buyers have information which the sellers don't have regarding the quality of a product.
There is information failure between both parties; typically, it's usually the sellers who has more information. Therefore, base on the scenario above, charging same rate or lower rate after the date of the purchase would expose ABC to adverse selection problems.
Which of the following is a major difference between Internet banks and traditional banks? The government does not regulate Internet banks. Traditional banks are prohibited from having ATMs. Internet banks have lower overhead costs. Traditional banks offer less personal care and attention to customers.
Answer:
Internet Banks have lower overhead costs.
Explanation:
Online Banks and traditional banks are basically the same with the main difference being that Internet Banks have lower overhead costs. These are costs on the income statement usually including accounting fees, advertising, insurance, interest, legal fees, labor burden, rent, repairs, supplies, taxes, telephone bills, travel expenditures, and utilities. Since Internet Banks do not need many physical locations they save on many of these overhead fees.
Which of the following statements is most correct? a. All else equal, if a bond’s yield to maturity increases, its price will fall. b. All else equal, if a bond is down graded by the rating agencies its yield to maturity will increase. c. If a firm has two bond issues that are identical except one is subordinate to the other, the subordinate issue will have a higher yield to maturity than the other issue. d. A B and C are correct. e. None of the above are correct
Answer: d. A B and C are correct.
Explanation:
A bond's price and it's Yield to Maturity (YTM) are inversely related such that when Yield to Maturity rises, the price of the bond falls. This is a because a higher YTM signifies that the bond is riskier so it will compensate by being cheaper.
If a bond is downgraded by Ratings agencies then it means that the bond is now riskier. As it is riskier investors will charge more interest for taking on the risk. The interest is the YTM and so it rises.
A Subordinate bond means that if the company were to go into bankruptcy for instance, the Subordinate bond would only be paid for after the bond that is not Subordinated. This means that there is a chance that Subordinate bond holders will not get anything from the liquidation of the company. Investors will therefore charge a higher YTM to cater for the risk that this happens.
Consider a firm with an annual net income of $30 million, revenue of $70 million and cost of goods sold of $35 million. If the balance sheet amounts show $3.5 million of inventory and $800,000 of property, plant & equipment, what is the inventory turnover?
a. 12.50
b. 4.44
c. 17.50
d. 5.00
e. 10.00
Answer:
The answer is 5.2 million
Explanation:
Solution
Given that:
The cost of good sold is =$35 million
Inventory = $3.5 million
Thus we compute for the Inventory turnover which is given below:
Inventory turn over ratio (ITR)
=Cost of goods sold/Inventory
=35$million/$3.5 million
=$10 million
So,
The weekly supply = The number of week in a year /ITR
= 52 Weeks/$10 million
=5.2
Therefore the turnover of inventory is 5.2 million which is close to option (d) 5.00
Bolton Tire Manufacturing and the union came to an impasse during negotiation of the collective bargaining agreement. Specifically, they could not agree on the wage increase for the employees. The union representative reported this information to the employees, and they staged a strike without the union's authorization.
A. The employees have engaged in an unfair labor practice strike.
B. The employees have engaged in an economic strike.
C. The employees have engaged in a sitdown strike.
D. None of the choices are correct.
Answer:
The correct answer is the option A: the employees have engaged in an unfair labor practice strike.
Explanation:
To begin with, due to the fact that the union was already establishing the area for the negotiation and they might have planeed obviously to keep trying to increase the situation in their favour then the action taken by the employees was a bit hurry and was obvious that was not thought very well with calm minds and therefore that they engaged in an unfair labor practice strike because they had to be patience and wait for the union to improve the situation for them, because their are the representatives and if the company sees that the workers do not obey to the representatives then the union will lose negotiation power and the situation will get worse for them.
Zoe, who is risk averse, purchased flight cancellation insurance which will cover the cost of her non-refundable $500 airline ticket if she is unable to travel due to illness. Zoe faces a 10 percent probability of becoming ill and then using the insurance.a) The fair insurance premium (i.e., selling price) for this insurance is $450.b) Zoe’s maximum willingness to pay for the insurance is $50.c) Zoe’s personal risk premium must exceed the actuarially fair price.d) None of the above.
Answer: Zoe’s maximum willingness to pay for the insurance is $50
Explanation:
From the question, we are informed that Zoe, who is risk averse, bought flight cancellation insurance which will cover the cost of her non-refundable $500 airline ticket if she is unable to travel due to illness wnd also that Zoe faces a 10 percent probability of becoming ill and then using the insurance.
The expected value of the insurance will be the cost of the airline ticket multiplied by the probability of her becoming ill. This will be:
= $500 × 10%
= $500 × 0.1
= $50
Based on the calculation, it can be concluded that Zoe’s maximum willingness to pay for the insurance is $50.
Star Corp. has a rate of return on assets of 10% and a debt/equity ratio of 2 to 1 before entering into an operating lease. Not including any indirect effects on earnings, when Star Corp. records the operating lease, the immediate impact on these ratios is a(an):
Answer:
The return on assets and debt/equity ratio does not change
Explanation:
An operating lease does not affect assets and liabilities. From the formula:
Equity = Assets - Liabilities, since both assets and liabilities are not affected (they remain unchanged) therefore the equity is also the same.
The debt/ equity ratio = total liabilities/total equity. Since liabilities and equity remain unchanged, therefore The debt/ equity ratio is the same.
Also the return of assets (earnings/assets) remain the same
Platen purchased inventory on August 17 and received an invoice with a list price amount of $5,900 and payment terms of 4/10, n/30. Platen uses the net method to record purchases. For what amount should Platen record the purchase
Answer:
$5,664
Explanation:
Calculation of the amount that Platen should record the purchase.
Using this formula
List price -(Percentage of payment term × list price)
Let plug in the formula
$5,900 -(4%×5,900 )
=$5,900-$236
=$5,664
Therefore Platen should record the purchase on August 17 as a:
Debit to Purchases (periodic system) and a Credit to Accounts Payable for $5,664
Therefore the amount that Platen should record the purchase will be $5,664
Kansas Company acquired a building valued at $151,000 for property tax purposes in exchange for 12,000 shares of its $3 par common stock. The stock is widely traded and selling for $18 per share. At what amount should the building be recorded by Kansas Company
Answer:
The building would be recorded by Kansas Company for an amount of $216,000
Explanation:
In order to calculate the amount should the building be recorded by Kansas Company we would have to calculate the value of the building with the following formula:
value of the building= shares exchanged*Market value per share
shares exchanged=12,000 shares
Market value per share=$18
Therefore, value of the building=12,000*$18
value of the building=$216,000
The building would be recorded by Kansas Company for an amount of $216,000
Suppose that in the rice market demand shifts greatly due to a new rice diet that is being marketed heavily in the U.S. as a cure for cancer. Simultaneously the supply curve shifts slightly due to a healthy rainy season that positively affects the rice crop in California. What is the most likely outcome in this situation?
Answer:
the equilibrium price increases, albeit by a negligible amount
Explanation:
Here are the options to this question :
the supply curve will shift again after demand meets supply
the equilibrium price increases
the equilibrium price increases, albeit by a negligible amount
the demand curve will shift back to its original level
The new rice diet that is being marketed heavily in the U.S. as a cure for cancer would increase the demand for rice. This would shift the demand curve rightward. This shift of the demand curve would increase demand and price
The hw healthy rainy season that positively affects the rice crop in California woild increase the supply of rice and as a result the supply curve would shift to the right. The rightward shift of the supply curve would cause quantity to rise and price to fall.
This combined effect would lead to a rise in quantity and a rise in price by only a negligible amount.
I hope my answer helps you
A sales associate moves from Jacksonville, Florida, to Atlanta, Georgia. The associate continues to be employed by the same broker, who has an office in Atlanta. Which statement is TRUE
Answer: The sales associate must notify the DBPR in writing within 60 days regarding her change in residency
Explanation:
The options are:
a. The states associate broker is required to file the change of address on her behalf.
b. The sales associate broker is not required to notify DBPR because she did not change employers.
c. The sales associate must notify the DBPR in writing within 60 days regarding her change in residency.
d. The sales associate must file an application for Georgia real estate license.
From the question, we are informed that a sales associate moves from Jacksonville, Florida, to Atlanta, Georgia. The associate continues to be employed by the same broker, who has an office in Atlanta.
Based on the scenario, the sales associate should let the DBPR be aware that he or she has moved from
Jacksonville, Florida, to Atlanta, Georgia by writing to them within 60 days regarding her change in residency.
When we express the value of a cash flow or series of cash flows in terms of dollars today, we call it the ________ of the investment. If we express it in terms of dollars in the future, we call it the
Answer:
Present value
Future value
Explanation:
Present value is the value of cashflows discounted at interest rate at arrive at its value today.
Future value is the value of cashflows discounted at interest rate at arrive at its value at some given time in the future.
I hope my answer helps you
Answer:
Present value, future value
Explanation:
Cash flows can be expressed in present value or as future value. The present value of cash flows is the current value of cash.
Future value is the projected value of money at some point in the future. The future value of money is usually higher than the present value.
For example $1 in the present will appreciate in value over the next 5 years to a higher value of let's say $1.50. The $1 is the present value while $1.50 is the future value
Last winter, your service fraternity volunteered at an elementary school in a lower income neighborhood in your city. You noticed many of the children did not have hats or mittens to wear in the cold weather. You decided to start a business that will provide hats and mittens to children in need. You quickly realize you will need help in this venture and set out to find a cofounder. Which of the following characteristics and traits would you like to see in a cofounder?
A) Persistent.
B) Economically motivated.
C) Hard working.
D) Creative.
Answer:
A) Persistent.
C) Hard-working.
D) Creative.
Explanation:
In the given situation, it is mentioned that an individual wants to start a business that deals in hats and mittens so the needs of the children could be fulfilled. But for that, we need to find out a cofounder that should be have following traits and characteristics
a. Persistent: The person should be trying his best o achieve it rather than escape from it
b. he should be hardworking so that every child's need could be fulfillled
c. He should be creative or we can say who bring innovative ideas to the firm so that the people get attracted to the company products so that the sale of the firm could rise up
The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: Jan. 1 Inventory $ 360,000 Jan. 1 to Dec. 31 Purchases (net) 2,870,000 Sales 4,470,000 Estimated gross profit rate 30% A. Estimate the cost of the inventory destroyed. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. B. In which situations would the gross profit method be useful
Answer:
A. Estimate the cost of the inventory destroyed is $101,000
B. Gross profit method would be useful in estimating the cost of merchandise destroyed by the fire.
Explanation:
Particulars Debit ($) Credit ($)
Beginning merchandise inventory 360,000
Add: Net purchase 2,870,000
Merchandise available for sale 3,230,000
Less: Net sales 4,470,000
Estimated gross profit (30%) (1,341,000)
Estimated cost of merchandise sold 3,129,000
Estimate the cost of the inventory destroyed 101,000
Your company rents computers to local businesses and schools. You have 1,600 computers with a book value of $163,000. As a result of changing technology, your computers are more difficult to rent so you must drastically reduce your rental price, which causes a decrease in estimated future cash flows. The fair value of the computers is estimated to be $123,500 because of their outdated technology. Your company should report an asset impairment loss of:
Answer:
Your company should report an asset impairment loss of : $39,500
Explanation:
Impairment loss is recognized when the Carrying Amount of an Asset exceed its Recoverable Amount.
Carrying Amount
Carrying Amount is the Cost of Asset less its Accumulated Depreciation
Carrying Asset of Computers = $163,000
Recoverable Amount
Recoverable Amount is the Higher of :
Value in Use of Asset orFair Value less Cost to Sale the AssetIn this case the Recoverable amount is $123,500
Analysis for impairment loss
Carrying Amount : $163,000 > Recoverable Amount : $123,500,
Thus we have an impairment situation.
Impairment loss is $39,500 ($163,000 - $123,500)
If the government began providing free textbooks to college students who would otherwise have bought their books from the private sector, the government's action would result in:_______
A) a Ricardian dilemma.
B) a direct expenditure offset.
C) an increase in real Gross Domestic Product (GDP).
D) a reduction of the government deficit.
Answer:
Option (B) is the correct answer to this question.
Explanation:
As the government spends more money, businesses within the private sector typically spend less.
Specific budget offsets refer to the private-sector expenditures through which compensation was generated as a result of expansionary budgetary policy decisions becoming implemented. The private sector activities in investment profits that counter government spending behavior by the state. Some income from federal spending in an environment competing with corporate companies must be offset by any government expenditure.
Other options are incorrect because they are not related to the given scenario.
Conroy Copper Mines has $940 million in total liabilities and $620 million in shareholder's equity. It discloses operating lease commitments over the next five years with a present value of $120 million. If the lease commitments are treated as debt, the debt-to-total-capital ratio is closest to:
Answer:
0.63
Explanation:
Total debt = 940 + 120 =1060
Total sharesholder's equity = $620 million
We can find the debt to total capital ratio by dividing debt by total capital
Debt-to-total-capital ratio = Debt / Total capital = 1060 / (1060+620)
Debt-to-total-capital ratio = 0.63