Answer:
Total relevant cost of 21,962 * $0.39 = $8,565.18
making internally
Less: Total relevant 21,962 * 0.22 = $4,831.64
cost of purchasing
Savings in cost $3,733.54
Conclusion: Manufacturing the hard cardboard box internally will save cost of $3,733.54 as compared to cost of purchasing the same quantity of box needed from supplier.
Note: Fixed costs is not relevant cost as it is unavoidable.
Debra and Merina sell electronic equipment and supplies through their partnership. They wish to expand their computer lines and decide to admit Wayne to the partnership. Debra's capital is $200,000, Merina's capital is $160,000, and they share income in a ratio of 3:2, respectively.Required:Record Wayne's admission for each of the following independent situations:a. Wayne directly purchases half of Merina's investment in the partnership for $97,000.b. Wayne invests the amount needed to give him a one-third interest in the partnership's capital if no goodwill or bonus is recorded.
Answer:
a. Merina's captal is $160,000. Half would be $80,000.
Entry;
DR Merina, Capital ..................................................................$80,000
CR Wayne, Capital ....................................................................................$80,000
(To record purchase of half of Merina Capital)
b.
DR Cash......................................................................$180,000
CR Wayne, Capital.........................................................................$180,000
(To record Wayne investment)
Working
The current Capital amount is;
= 200,000 +160,000
= $360,000
If Wayne joins and adds to this such that he owns 1/3 then;
2/3x = 360,000
x = 360,000/2/3
x = $540,000
Wayne's share would be;
= 1/3 * 540,000
= $180,000
The journal entries that would take place will take effect as A- A debit in Merina's capital amount and Cash account as $17000 and a credit effect in Wayne's capital account. The amount of debit and credit will be $97000.
And for B- There will be Debit in Cash account effecting a credit in The Wayne's capital account. The amount effecting the debit and credit side will be $180,000.
The journal entries are added in the images attached to the answer. The entries would take place in the journal entries on the respective date of their occurrence.( Image attached below).When Wayne is introduced as partner for one third share the calculation of the amount of his capital would be shown as considering the capital as x. The capital by existing partners is $360000. (Image below).,[tex]\dfrac{2}{3}x\ = 360000[/tex]
[tex]x= \dfrac {360000}{\dfrac{2}{3}}[/tex]
Now the value of x will be calculated as
[tex]x= \dfrac{540000}{3}[/tex]
[tex]x=180000[/tex]
Therefore Wayne's capital will be calculated as $180,000, so he will be required to bring in additional $180,000 capital in the firm for getting one third share in the profits and losses of the company.Hence, the correct statements for A will be that Wayne pays $97000 which will be divided in Merina's capital and cash accounts in the proportion of $80000 and $17000 respectively.
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A company is considering a project with a beta of 0.5 while the company’s beta is 2.0. How should the company adjust its WACC to reflect the riskiness of the project? g
Answer: decrease
Explanation:
The weighted average cost of capital is a vital calculation that is used in finance to know whether the return on an investment will meet or exceed exceed a project or an asset.
If a company is considering a project with a beta of 0.5 while the company’s beta is 2.0, to reflect the riskiness of the project, the WACC will be reduced.
Bank's Balance Sheet Assets Liabilities and Owners' Equity $1,600 $250 Securities $1,000 Capital (owners' equity) $150 Reserves$200 Deposits Loans $800 Debt Suppose the owners of the bank borrow $100 to supplement their existing reserves.
This would increase the reserves account and ______ the ______ account.
This would also bring the leverage ratio from its initial value of __________ to a new value of_______
Which of the following is true of the capital requirement?
a. The higher the percentage of assets a bank holds as loans, the higher the capital requirement.
b. A minimum leverage ratio for all banks.
c. Its intended goal is to protect the interests of those who hold equity in the bank.
Answer:
1. This would increase the reserves account and increase the debt account.
Borrowing refers to debt and so it will increase the debt account.
2. This would also bring the leverage ratio from its initial value of 13.33 to a new value of 14.
The bank leverage ratio refers to its Assets divided by Capital (Owners equity).
Before the $100 was borrowed, the leverage ratio was;
= (Reserves + loans + securities)/Capital
= ( 200 + 800 + 1,000) / 150
= 13.33
After the $100 was borrowed
= ( 200 + 800 + 1,000 + 100) /150
= 14.
3. a. The higher the percentage of assets a bank holds as loans, the higher the capital requirement.
The capital requirement is meant to protect depositors in case the loans are defaulted on as the loans are created from the funds depositors bring in. Should the loans be defaulted on, they will be paid from the capital therefore if the bank holds more loans, it will have to hold more capital to ensure it can cover those loans.
An all-equity firm is considering the following projects:
Project Beta IRR
W .85 8.9%
X .92 10.8
Y 1.09 12.8
Z 1.35 13.3
The T-bill rate is 4 percent, and the expected return on the market is 11 percent.
a. Which projects have a higher expected return than the firm's 11 percent cost of capital?
b. Which projects should be accepted?
c. Which projects would be incorrectly accepted or rejected if the firm's overall cost of capital were used as a hurdle rate?
Answer:
Projects Y and Z
b. Projects W and Z
c. Projects W and Y
Explanation:
CAPM equation : Expected return = Risk free rate + Beta x (Expected market return - Risk free rate)
W = 4% + [0.85 x (11% - 4%)] = 9.95%
X = 4% + (0.92 x 7%) = 10.44%
Y = 4% + (1.09 x 7%) = 11.63%
Z = 4% + (1.35 x 7%) = 13.45%
Projects Y and Z have an expected return greater than 11%
b. Projects W and Z should be accepted because its expected return is higher than the IRR
c. Project W would be incorrectly rejected because the expected rate of return is less than the overall cost of capital (i.e. 9.95 is less than 11). But its expected rate of return is greater than the IRR
Y would be incorrectly accepted because its expected rate of return is greater than the overall cost of capital but its expected rate of return is less than the IRR
A project will reduce costs by $38,500 but increase depreciation by $18,300. What is the operating cash flow if the tax rate is 35 percent?
Answer:
$31,430
Explanation:
A project will reduce costs by $38,500
The project will have an increased depreciation of $18,300
The tax rate is 35%
= 35/100
= 0.35
Therefore, the operating cash flow can be calculated as follows
Operating cash flow= reduction in project cost×(1-tax rate)+(increase in the depreciation amount ×tax rate)
= $38,500×(1-0.35)+($18,300×0.35)
= $38,500×0.65+6,405
= $25,025+$6,405
= $31,430
Hence the operating cash flow is $31,430
Consider the following information and then calculate the required rate of return for the Global Investment Fund, which holds 4 stocks. The market’s required rate of return is 13.25%, the risk-free rate is 7.00%, and the Fund’s assets are as follows:(hint: market beta =1.0) Stock Investment Beta A $ 200,000 1.50 B 300,000 −0.50 C 500,000 1.25 D $1,000,000 0.75
Answer:
11.77%
Explanation:
total investment = $200,000 + $300,000 + $500,000 + $1,000,000 = $2,000,000
stock weight beta total
A $200,000 / $2,000,000 1.5 0.15
B $300,000 / $2,000,000 -0.5 -0.075
C $500,000 / $2,000,000 1.25 0.3125
D $1,000,000 / $2,000,000 0.75 0.375
Portfolio 0.7625
required rate of return = Rf + beta(Rm - Rf) = 7% + 0.7625(13.25% - 7%) = 11.7656% = 11.77%
All About Animals has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow:
Total Cat Food Dog Food
Sales revenue $435,000 $350,000 $85,000
Variable expenses $61,000 $21,000 $40,000
Contribution margin $374,000 $329,000 $45,000
Fixed expenses $101.000 $49,000 $52,000
Operating income (loss) $273,000 $280,000 $(7,000)
Assuming the Dog food is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $26,000 per year, how will operating income be affected?
A. Increase $254,000
B. Decrease $19,000
C. Increase $527,000
D. Increase $19,000
Answer:
B. Decrease $19,000
Explanation:
The computation of the amount affect the operating income is shown below
But before that first we need to find the new operating income
Total operating income for Cat Food $280,000
Less: Fixed costs for Dog Food ($52000)
Add: rented per year $26000
New net operating income $254000
Now decrease in net operating income is
= operating income - new operating income
= $273,000 - $254,000
= $19,000
The following data relate to direct materials costs for February: Materials cost per yard: standard, $1.93; actual, $2.03 Standard yards per unit: standard, 4.68 yards; actual, 4.96 yards Units of production: 9,400 Calculate the direct materials price variance. a.$4,399.20 favorable b.$940.00 unfavorable c.$4,662.40 favorable d.$4,662.40 unfavorable
Answer:
d.$4,662.40 unfavorable
Explanation:
Calculation for direct materials price variance
The first step is to find the Actual quantity variance using the formula
Actual quantity variance =Actual units produced* Actual yard used
Let plug in the formula
Actual quantity variance=9,400*4.96 yards
Actual quantity variance=$46,624
Second step is to calculate for the Direct material price variance using this formula
Direct material price variance= ( Standard price -Actual price)* Actual quantity used
Let plug in the formula
Direct material price variance=($1.93-$2.03)*$46,624
Direct material price variance=(-0.1*46,624)
Direct material price variance=-$4,662.40 Unfavorable
Therefore the Direct material price variance will be $4,662.40 Unfavorable
A company sold equipment that originally cost $290,000 for $145,000 cash. The accumulated depreciation on the equipment was $145,000. The company should recognize a:
Answer:
$0 gain/loss
Explanation:
A company sold an equipment that originally cost $290,000 for $145,000
The accumulated depreciation on the equipment was $145,000
The first step is to calculate the book value of the equipment
Book value of the equipment= Cost of equipment-accumulated depreciation
= $290,000-$145,000
= $145,000
Therefore, the gain/loss on the equipment can be calculated as follows
= Selling price-book value
= $145,000-$145,000
= 0
Hence there is no recognized gain or loss on the equipment
Answer:
Company would recognize a no loss or gain on the disposal i.e Nil
Explanation:
The gain or loss on disposal is the difference between the carrying value of an assets at the point of disposal and the the disposal value.
Gains/(Loss)= Disposal value - carrying value
The carrying value is the difference between the historical cost and the accumulated depreciation till date.
Carrying value = Historical cost - Accumulated depreciation till date
Carrying value = 290,000 - 145,000 = 145 ,000
Gains/Loss= 145,000 - 145,000 = 0.
Company would recognize a no loss or gain on the disposal i.e Nil
Which of the following stocks is less risky? Stock Average Return Standard Deviation Coefficient of Variation X 10% 40% 4 Y 20% 40% 2
Answer:
Stock X has a CV of 4 while Stock Y has a CV of 2. As stock Y has a lower CV than Stock X, it is less riskier.
Explanation:
The coefficient of variation is a statistical model which is also used to determine the volatility per unit of a factor. In terms of a stock, the coefficient of variation calculates the volatility of its return. It is calculated by dividing the stock's standard deviation, which is a measure of risk, by the stock's mean return or expected return.
CV = SD / r
Where,
CV is coefficient of variationSD is standard deviationr is expected returnThe CV of a stock tells us the risk per unit of return. The higher the CV, the riskier the stock and vice versa.
Stock X has a CV of 4 while Stock Y has a CV of 2. As stock Y has a lower CV than Stock X, it is less riskier.
On February 20, services valued at $60,000 relating to the organization of a corporation were performed in exchange for 1,000 shares of its $25 par value common stock.
Make the necessary journal entry.
Answer: The solution has been attached
Explanation:
From the question, we are informed that on February 20, services valued at $60,000 relating to the organization of a corporation were performed in exchange for 1,000 shares of its $25 par value common stock.
The common stock was calculated as:
= 1000 × $25
= $25,000
The paid on capital in excess of the par common stock was calculated as:
= $60,000 - $25,000
= $35,000
The journal has been solved and attached.
Amos Manufacturing has two major departments. Management wants to compare their relative performance. Information related to the two departments is as follows:Division 1:Sales: $200,000Expenses: $150,000Asset investment: $950,000Division 2:Sales: $45,000Expenses: $35,000Asset investment: $200,000Based on ROI, which division is more profitable?a. Division 1b. Both divisions have the same ROI ratioc. Division 2
Answer:
Division A is doing better and his more profitable because it has a higher ROI than Division B
Explanation:
Return on Investment is the proportion of operating assets that an investment center earned as as net operating income.
ROI is measure of the returned earned by a division relative to the amount invested in the assets used to generate the return.
It is calculated as follows
ROI = operating income/operating assets
Division A
Net operating income = Sales - expenses
Net operating income = 200,000 - 150,000 = 50,000
Operating assets = 950,000
ROI = 50,000/950,000× 100 = 5.26 %
Division B
Net operating income = 45,000 - 35,000 = 10,000
Operating assets = 200,000
ROI = 10,000/ 200,000 × 100 = 5 %
Division A is doing better and his more profitable because it has a higher ROI than Division B
g A decrease in the basis will __________ a long hedge and __________ a short hedger. Group of answer choices hurt; hurt hurt; benefit benefit; have no effect upon benefit; benefit benefit; hurt
Answer:
1. hurt
2. benefit
Explanation:
Given that a contract and an asset are to be converted in cash early, this implies that, basis risk exists and futures price and spot price should not move in lockstep before delivery date. However, a reduction in the basis will then hurt the long hedger and benefit the short hedger.
Hence, considering the nature of the hypothetical situation, a decrease in the basis will HURT a long hedge and BENEFIT a short hedge.
Abica Roast Coffee Company produces Columbian coffee in batches of 6,000 pounds. The
standard quantity of materials required in the process is 6,000 pounds, which cost $5.00per pound. Columbian coffee can be sold without further processing for $8.40 per pound.
Columbian coffee can also be processed further to yield Decaf Columbian, which can
be sold for $10.00 per pound. The processing into Decaf Columbian requires additional
processing costs of $9,450 per batch. The additional processing will also cause a 5% loss
of product due to evaporation.
Columbian coffee can be sold without further processing for $8.40 per pound.
Columbian coffee can also be processed further to yield Decaf Columbian, which can
be sold for $10.00 per pound. The processing into Decaf Columbian requires additional
processing costs of $9,450 per batch. The additional processing will also cause a 5% loss
of product due to evaporation.
a. Prepare a differential analysis dated August 28, 2012, on whether to sell regular
Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2).
b. Should Abica Roast sell Columbian coffee or process further and sell Decaf
Columbian?
c. Determine the price of Decaf Columbian that would cause neither an advantage or
disadvantage for processing further and selling Decaf Columbian.
Answer:
A)
no further further differential
processing processing amount
price per pound $8.40 $10.00 $1.60
materials $5 $5.25 ($0.25)
processing costs $0 = $9,450 / ($1.66)
5,700 = $1.66
operating profit per $3.40 $3.09 ($0.31)
pound
B)
The company should sell coffee without any further processing, just sell it as normal Colombian coffee.
C)
In order to eliminate the financial disadvantage of processing further the decaf coffee, the the price should be $10 + $0.31 = $10.31 per pound.
Brodrick Company expects to produce 21,200 units for the year ending December 31. A flexible budget for 21,200 units of production reflects sales of $508,800; variable costs of $63,600; and fixed costs of $142,000. Assume that actual sales for the year are $587,200 (26,300 units), actual variable costs for the year are $113,900, and actual fixed costs for the year are $137,000. Prepare a flexible budget performance report for the year.
Answer:
Flexible budget performance report for the year
Flexible budget Actual Variance Fav/Unf
Sales 631,200 587,200 44,000 UNF
Variable cost (78,900) (113,900) 35,000 F
Contribution 416,000 368,000 48,000 UNF
margin
Fixed cost (142,000) (137,000) 5000 UNF
Net operating 274,000 231,000 43,000 UNF
income
Working:
a. At flexible budget, selling price per unit = $508,800 / 21,200 = $24 per unit . Total sales =26,300 *24 = $631,200
b. Variable cost per unit = $63,600 / 21,200 = $3 per unit . Total cost = 3 * 26,300 = 78,900
The following data relate to the direct materials cost for the production of 50,000 automobile tires: Actual: 725,000 lbs. at $3.00 per lb. Standard: 730,000 lbs. at $2.95 per lb. a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Answer and Explanation:
a. The computation of the material price variance is shown below:
= Actual Quantity × (Standard Price - Actual Price)
= 725,000 × ($2.95- $3)
= 725,000 × $0.5
= $36,250 unfavorable
b. The computation of the material quantity variance is shown below:
= Standard Price × (Standard Quantity - Actual Quantity)
= $2.95 × (730,000 - 725,000)
= $2.95 × 5,000
= $14,750 favorable
And, the total direct material cost variance is
= Material price variance + material cost variance
= $36,250 unfavorable + 14,750 favorable
= $21,500 unfavorable
Find the operating cash flow for the year for Harper Brothers, Inc. if it had sales revenue of , cost of goods sold of , sales and administrative costs of , depreciation expense of , and a tax rate of .
Answer:
$101,960,000
Explanation:
For the computation of operating cash flow first we need to follow some steps which are shown below:-
Step 1
EBIT = Sales - Cost of goods sold - Sales and administrative costs - Depreciation
= $302,100,000 - $135,900,000 - $39,600,000 - $65,000,000
= $61,600,000
Step 2
Net income = EBIT - Tax
= $61,600,000 - ($61,600,000 × 40%)
= $61,600,000 - $24,640,000
= $36,960,000
and finally
Operating cash flow = EBIT - Taxes + Depreciation
= $61,600,000 - $24,640,000 + $65,000,000
= $101,960,000
The Federal Reserve has been aggressively expanding the money supply by using repurchase agreements in its open market operations. Ignoring other factors, this is likely to result in:
Answer: decrease in interest rates and an increase in inflation
Explanation:
From the question, we are informed that The Federal Reserve has been aggressively expanding the money supply by using repurchase agreements in its open market operations.
This will result in a reduction in the interest rate and since there's more money in circulation, it will bring about an increase in the prices of goods.
The statement "Automobiles manufactured by this brand are the safest" is an example of the _____ component of attitude.
Answer:
cognitions
Explanation:
The cognitions component of attitude refers to the opinion a person has about an object. According to this, the answer is that the statement "Automobiles manufactured by this brand are the safest" is an example of the cognitions component of attitude as the sentence shows the belief the person has about that brand.
A negative supply shock, such as the OPEC oil price increases of the early 1970s, can be illustrated by a shift to the ______________ of the short-run aggregate supply curve and a shift _________________ of the short-run Phillips curve.
Answer: Leftward; upwards.
Explanation: A Supply shock is a term used to describe the sudden and unexpected change in the supply of a given product or commodity usually indicated by the leftward shift if the shock is negative in the aggregate supply curve and an upward change in direction in the Phillips curve both on the short run. Both curves are used to demonstrate graphically the impacts of shifts in supply for a given product or commodity.
Q3) Creative Sports Design (CSD) manufactures a standard-size racket and an oversize racket. The firm’s rackets are extremely light due to the use of a magnesium-graphite alloy that was invented by the firm’s founder. Each standard-size racket uses 0.125 kilograms of the alloy and each oversize racket uses 0.4 kilograms; over the next two-week production period only 80 kilograms of the alloy are available. Each standard-size racket uses 10 minutes of manufacturing time and each oversize racket uses 12 minutes. The profit contributions are $10 for each standard-size racket and $15 for each oversize racket, and 40 hours of manufacturing time are available each week. Management specified that at least 20% of the total production must be the standard-size racket. How many rackets of each type should CSD manufacture over the next two weeks to maximize the total profit contribution? Assume that because of the unique nature of their products, CSD can sell as many rackets as they can produce.
Answer:
165 oversize rackets = 32 machine hours (79.71% of total production)
42 standard size rackets = 7 machine hours (20.29% of total production)
total profit contribution = (165 x $15) + (42 x $10) = $2,895
Explanation:
materials machine hours profit
standard size 0.125 kg 1/6 $10
oversize 0.4 kg 1/5 $15
constraints 80 kilograms of materials
40 hours of manufacturing
profit per machine hour:
standard size $10 x 6 = $60 x 40 hours = $2,400 (total possible production = 240 rackets)
oversize $15 x 5 = $75 x 40 hours = $3,000 (total possible production = 200 rackets)
profit per kilogram of alloy:
standard size $10 / 0.125 = $80 x 80 kgs = $6,400 (total possible production = 480 rackets)
oversize $15 / .4 = $37.50 x 80 hours = $3,000 (total possible production = 200 rackets)
since the most important constraint is the manufacturing hours available, the company should try to produce the products that yield the highest contribution margin per machine hour. In this case, at least 20% of total production must be standard size rackets, so the remaining 80% should be oversize rackets that yield a higher profit.
165 oversize rackets = 32 machine hours (79.71% of total production)
42 standard size rackets = 7 machine hours (20.29% of total production)
total manufacturing time = 40 hours
if we produce 166 oversize rackets and 41 standard size rackets, total manufacturing time will exceed 40 hours (40.03 hours exactly).
The credit terms 2/10, n/30 are interpreted as: Multiple Choice 2% cash discount if the amount is paid within 10 days, or the balance due in 30 days. 30% discount if paid within 2 days. 2% discount if paid within 30 days. 30% discount if paid within 10 days. 10% cash discount if the amount is paid within 2 days, or the balance due in 30 days.
Answer:
The credit terms 2/10, n/30 are interpreted as:
2% cash discount if the amount is paid within 10 days, or the balance due in 30 days.Explanation:
I will explain using an example:
On January 2, the company sells $1,000 worth of goods with credit terms 2/10, n/30.
January 2
Dr Accounts receivable 1,000
Cr Sales revenue
If the client pays within the discount period:
January 11
Dr Cash 980
Dr Sales discounts 20
Cr Accounts receivable 1,000
If the client pays after the discount period but before 30 days:
January 31
Dr Cash 1,000
Cr Accounts receivable 1,000
The credit terms 2/10, and n/30 are interpreted as a 2% cash discount if the amount is paid within 10 days, or the balance is due in 30 days. Thus, option A is the correct option.
Trade credits like 2/10 net 30 are frequently provided by suppliers to purchasers. It stands for an agreement that if payment is made within 10 days, the buyer would get a 2% reduction on the net invoice amount. Otherwise, you have 30 days to pay the entire invoice amount.
It's a common way to express an early payment discount. In accounting, the discount amount and the window of availability are typically represented using a formula like 2/10, n/30. This implies that if the invoice is paid in full within ten days, a 2% reduction is applied; otherwise, the full amount is owed.
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Desktop Computer Company would like to calculate their cash conversion cycle. What factors are included in computing this metric?
Answer:
The answer is:
1. Days inventory outstanding i.e the number of days it takes to sell its inventories
2. Days sales outstanding i.e the number of days it takes to collect it receivables
3. Days payables outstanding i.e the number of days it takes to pay its payables.
Explanation:
Cash conversion cycle is the time(number of days) it takes a business to convert its money tied in inventory to cash through sales from customers.
In computing cash conversion cycle, the following are included:
1. Days inventory outstanding i.e the number of days it takes to sell its inventories
2. Days sales outstanding i.e the number of days it takes to collect it receivables
3. Days payables outstanding i.e the number of days it takes to pay its payables.
The formula for cash conversion cycle is Days inventory outstanding + Days sales outstanding - Days payables outstanding
Gen-Fast Shoes wants to expand internationally and is deciding if its line of tennis shoes can be sold at a high price in Europe. One way for Gen-Fast Shoes to assess this is to determine whether these types of shoes in the foreign market offer customers greater.
a. cost.
b. exports.
c. value.
d. competition.
e. production.
Answer: value
Explanation:
From the question, we are informed that Gen-Fast Shoes wants to expand internationally and is deciding if its line of tennis shoes can be sold at a high price in Europe.
One way for Gen-Fast Shoes to assess this is to determine whether these types of shoes in the foreign market offer customers greater value.
Value simply means the worth of something. When people realize that the tennis shoes are worth it, it'll command a high value.
dazzle, inc. produces beads for jewelry making use the journal entry to record production activities for direct labor usage is
Answer:
Debit Work in Process Inventory $180,000; credit Factory Wages Payable $180,000.
Explanation:
The journal entry to record the direct labor usage is shown belwo:
Work in process inventory Dr
To factory wages payable
(Being the direct labor usage is recorded)
For recording this we debited the work in process as it increased the assets and credited the factory wages payable as it also increased the liabilities
Moreover, when the wages is applied in the production level so the respective account is debited and credited
What is the annual real estate tax on a property valued at $135,000 and assessed for tax purposes at $47,250, with an equalization factor of 125%, when the tax rate is 25 mills
Answer:
$1,477
Explanation:
The annual real estate tax = assessed tax × equalization factor × tax rate
= $47,250 × 125% × 25 mills
= $47,250 × 125% × 2.5%(25 mills)
= $47,250 × 1.25 × 0.025
= $1,477
Blossom, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $4,700 from sales $201,000, variable costs $175,000, and fixed costs $30,700. If the Big Bart line is eliminated, $19,800 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) g
Answer:
Analysis of the Big Bart line discontinuity
Opportunity Costs :
Sales ($201,000)
Savings :
Variable Costs $175,000
Fixed Costs ($30,700 - $19,800) $10,900
Financial Advantage / (Disadvantage) ($15,100)
Conclusion :
Do not eliminate / discontinue Big Bart line.
Explanation:
The results show that closing Big Bart line results in a contribution towards fixed cost being lost to the amount of $15,100. Therefore leaving the entire company in a worse off position.
Caribou Gold Mining Corporation is expected to pay a dividend of $6 in the upcoming year. Dividends are expected to decline at the rate of 3% per year. The risk-free rate of return is 5%, and the expected return on the market portfolio is 13%. The stock of Caribou Gold Mining Corporation has a beta of .5. Using the constant-growth DDM, the value of the stock is _________. A. $150 B. $50 C. $100 D. $200
The question is incomplete. Here is the complete question.
Caribou Gold Mining Corporation is expected to pay a dividend of $6 in the upcoming year. Dividends are expected to decline at the rate of 3% per year. The risk-free rate of return is 5%, and the expected return on the market portfolio is 13%. The stock of Caribou Gold Mining Corporation has a beta of .5. Using the constant-growth DDM, the intrinsic value of the stock is _________. A. $150 B. $50 C. $100 D. $200
Answer:
$50
Explanation:
Caribou Gold mining corporation is expected to make a dividend payment of $6 next year
Dividend are expected to decline at a rate of 3%
= 3/100
= 0.03
The risk free rate of return is 5%
= 5/100
= 0.05
The expected return on the market portfolio is 13%
= 13/100
= 0.13
The beta is 0.5
The first step is to calculate the expected rate of return
= 0.05+0.5(0.13-0.05)
= 0.05+0.5(0.08)
= 0.05+0.04
= 0.09
Therefore, the intrinsic value of the stock using the constant growth DDM model can be calculated as follows
Vo= 6/(0.09+0.03)
Vo= 6/0.12
Vo= $50
Hence the intrinsic value of the stock is $50
A customer who has routinely traded securities through your firm has placed an order to buy a security that is only listed on the Malaysian Stock Exchange. To effect the transaction, your firm must use a correspondent broker-dealer located in Malaysia that charges large special handling fees to cover Malaysian securities transfer taxes. Which statement is TRUE
Answer:
the broker-dealer must notify the customer of the additional charges prior to executing the transaction
Explanation:
In such a scenario, the statement that would be completely true is that the broker-dealer must notify the customer of the additional charges prior to executing the transaction. Since the broker is acting on behalf of the customer, then the customer needs to be notified beforehand in order for him/her to be able to analyze and decide whether or not they still want to go ahead with the transaction.
Fremont Enterprises has an expected return of and Laurelhurst News has an expected return of . If you put of your portfolio in Laurelhurst and in Fremont, what is the expected return of your portfolio?
The question is incomplete as it is missing the figures. The complete question is,
Fremont Enterprises has an expected return of 15% and Laurelhurst News has an expected return of 20%. If you put 70% of your portfolio in Laurelhurst and 30% in Fremont, what is the expected return of your portfolio?
Answer:
Portfolio return = 0.185 or 18.5%
Explanation:
The expected return of a portfolio is a function of the weighted average of the individual stocks returns' that form up the portfolio. The expected return of a portfolio can be calculated using the following formula,
Portfolio return = wA * rA + wB * rB + ... + wN * rN
Where,
w represents weight of each stock in the portfolior represents the return of each stock in the portfolioPortfolio return = 0.3 * 0.15 + 0.7 * 0.2
Portfolio return = 0.185 or 18.5%
