Answer:
d
Explanation:
wild guess
Scranton, Inc. reports net income of $232,000 for the year ended December 31. It also reports $88,600 depreciation expense and a $5,100 gain on the sale of equipment. Its comparative balance sheet reveals a $35,900 decrease in accounts receivable, a $15,950 increase in accounts payable, and a $12,650 decrease in wages payable. Calculate the cash provided (used) in operating activities using the indirect method.
Answer:
Cash flow form operating activities $359,800
Explanation:
$
Net income 232,000
Add depreciation expense 88,600
Add Decrease in receivable 35,900
Increase in account payable 15,950
Decrease in wages ( 12,650)
Cash flow form operating activities 359,800
Increase in payable and decrease in receivable represent cash inflow while decrease in payable and increase in receivables represent cash outflow
. Spot rates and forward rates:Assume that the current yield curve for zero-coupon bonds (spot rates) is as follows:y1 = 0.5%, y2 = 0.75%, y3 = 1.0%, y4 = 1.25%, y5 = 1.5%a. Plot the spot rates against maturity (yield curve). Is the yield curve upward or downward sloping? Do market participants expect interest rates to increase or decrease in the future? b. What are the implied 1-year forward rates f2, f3, f4, and f5? Are interest rates expected to increase or decrease?Assume that there is no uncertainty about future short rates. This means that future 1 year interest rates will be equal to current forward rates (which you calculated in b.).c. In that situation what will be the spot curve (that is, the yields to maturity on 1, 2, 3, and 4-year zero coupon bonds) in 1 year? d. What is the price of a 5-year coupon bond making annual coupon payments of 2% and a par value of 1000 today? Is the bond trading above or below par? Why?e. What is the price of this bond next year (remember, it is then a 4-year coupon bond)? What is the rate of return on this bond over the next year?
Answer:
Check the explanation
Explanation:
As is observable in the first attached image below, the yield curve is upward sloping. According to the pure expectations hypothesis which states that current short-term interest rates are a reflection of long-term term interest rates, market participants should expect long-term interest rates to rise going forward.
(b) Implied one-year forward rate calculation:
[tex]1+f2 = [(1+y2)^(2)] / (1+y1)[/tex]
f2 = 1.0006%
[tex]f3 = [{(1+y3)^(3)} / {(1+y2)^(2)}] - 1[/tex]
f3 = 1.502% approximately
[tex]f4 = [{(1+y4)^(4)} / {(1+y3)^(3)}] - 1[/tex]
f4 = 2.004% approximately
[tex]f5 =[{(1+y5)^(5)} / {(1+y4)^(4)}] - 1[/tex]
f5 = 2.506% approximately.
As implied one-year forward rates are observed to be rising and there is no uncertainty about future spot rates, future interest rates are expected to rise.
(C) Kindly check the second attached image below for the solution to question c
(d) The bond's price would be calculated by summing the Present Values(PVs) of the bond's future cash flows (in the form of annual coupon payments and face value redemption). The discount rate, however, should be the spot rates from the yield curve instead of a single promised yield to maturity.
Let bond price be Pm
Therefore, Pm = 20 / 1.005 + 20 / (1.0075)^(2) + 20 / (1.01)^(3) + 20 / (1.0125)^(4) + 1020 / (1.015)^(5) = $ 1024.872 approximately.
The bond's market value is above its par value, thereby implying that the bond is selling at a premium. This happens whenever the bond's discount rate (or spot interest rates in this case) is below the bond's annual coupon rate.
Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $69, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate of 6 percent, and sells for 94 percent of par. The second issue has a face value of $55 million, a coupon rate of 5 percent, and sells for 106 percent of par. The first issue matures in 24 years, the second in 9 years.Suppose the most recent dividend was $4.25 and the dividend growth rate is 4.4 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 25 percent. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
10.83%
Explanation:
The simplest way to determine the if we use the Gordon growth model for determining the company's stock price:
stock price = [dividend x (1 + growth rate)] / (WACC - growth rate)
dividend = $4.25g = 4.4%stock price = $69WACC - g = [dividend x (1 + g] / price
WACC = {[dividend x (1 + g] / price} + g
WACC = {[$4.25 x (1 + 4.4%] / $69} + 4.4% = 0.1083 or 10.83%
g On July 1, 2019, Sheffield Corp. issued 9% bonds in the face amount of $12400000, which mature on July 1, 2025. The bonds were issued for $11859948 to yield 10%, resulting in a bond discount of $540052. Sheffield uses the effective-interest method of amortizing bond discount. Interest is payable annually on June 30. At June 30, 2021, Sheffield's unamortized bond discount should be
Answer:
$393,063
Explanation:
The bond is issued on discount when the issuance price is less than the face value of the bond. The discount is expensed over the bond period until maturity. It is added to the interest expense value to expense it.
Unamortized Discount is the discount balance which has not been expensed or discount balance for outstanding period of the bond to maturity.
Discount Balance = $540,052
Date Interest Paid Interest Expense Amortization Book Value
7/1/19 11,859,948
6/30/20 1,116,000 1,185,995 69,995 11,929,943
6/30/21 1,116,000 1,192,994 76,994 12,006,937
Unamortized Discount = Total Discount - Discount amortized
Unamortized Discount = $540,052 - ($69,995 + $76,994)
Unamortized Discount = $393,063
Assume that Parker Company will receive SF200,000 in 360 days. Assume the following interest rates: the 360-day borrowing rate in U.S. is 7% while the 360-day borrowing rate in Switzerland is 5%. The 360-day deposit rate in U.S. is 5% while the 360-day deposit rate in Switzerland is 4%. Assume the forward rate of the Swiss franc is $0.50 and the spot rate of the Swiss franc is $0.48. If Parker Company uses a money market hedge, it will receive ____ in 360 days.
Answer:
Company will receive = $96,000
Explanation:
As per the data given in the question,
Corresponding SF liability equals to pay SF200,000 including interest
= 200,000÷1.05 = SF190476.19
Now Convert the SF into $US at the current spot rate = $0.48×190476.19
= $91428.57
Now deposit the $ US at 5% and withdraw after 360 days =
= $91428.57 + $91428.57×5%
= $95999.99
This way the liability of SF 190476.19 + 190476.19×5% interest will be paid off when Parker company receives $200,000, Parker company will receive = $96,000 in 360 days.
Use the following information for Problems 35 through 40 A potential investor is seeking to invest $1,000,000 in a venture, which currently has 2 million shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce 1 million dollars in income per year at year 5. It is known that a similar venture recently produced $2,000,000 in income and sold shares to the public for $20,000,000. What is the percent ownership of our venture that must be sold in order to provide the venture investor’s target return?
Answer:
0.3797 or 37.97%
Explanation:
According to the scenario, computation of the given data are as follow:-
Wants Rate on return on investment = 50%
Expected value of return on investment = invested amount × (1+g)^t
= $1,000,000 × (1+50%)^5
= $1,000,000 × 7.59375
= $7,593,750
Similar venture would achieve valuation of $20,000,000 for $2,000,000. We can expect that company would achieve similar valuation of $20,000,000 in 5 years from now.
Investor’s share value at 5 years = $7,593,750 ÷ $20,000,000
= 0.3797 or 37.97%
Pronghorn Appliances provides a 3-year warranty with one of its products which was first sold in 2017. Pronghorn sold $1,840,000 of products subject to the warranty. Pronghorn expects $202,000 of warranty costs over the next 3 years. In 2017, Pronghorn spent $106,000 servicing warranty claims. Prepare Pronghorn’s journal entries to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs; Pronghorn now expects future warranty costs of $115,000
Answer:
See the explanation below.
Explanation:
Balance in the warranty liability account after claim = $202,000 - $106,000 = $96,000
Amount needed to reduce expected warranty to $115,000 = $155,00 - $96,000 = $19,000
The journal entries will be as follows:
Details Dr ($) Cr ($) .
Cash 1,840,000
Sales revenue 1,840,000
To record the sales of products .
Warranty expenses 202,000
Estimated warranty liability 202,000
To record the expected warranty expenses .
Warranty liability account 106,000
Inventory 106,000
To record the warranty claim .
Warranty expenses 19,000
Estimated warranty liability 19,000
To record the reduction of expected warranty expenses to $115,000.
71. When making decisions that are ethical under either profit maximization or corporate citizenship theories, a business should include all of the following steps except a. recognize that there is an ethical issue in the decision. b. apply ethical theories to reasonable alternatives. c. publicize the options you rejected with your reasons. d. reflect on the outcome of the decision once it is made
Answer:
The Correct Option of the given scenario is "C - Publicize the options you rejected with your reasons".
Explanation:
While creating business selection it is ought to seek for the philosophies and integrities. However, don't create it public the explanations of captivating some choices as they are having dissimilarities in philosophies which might drawback your businesses.
Answer: c. publicize the options you rejected with your reasons.
Explanation:
Under the Profit Maximisation theory where ethical behaviour does not necessarily benefit the company and the corporate citizenship theory that describes just how a company contributes to society, all the above are methods applied execpt the publication of the options rejected with reasons.
This is because certain things need to remain confidential for the protection of individuals and reputations as well as to avoid scrutiny because a Company's methodology might not be the methodology that a number of people would subscribe to.
If the marginal propensity to consume decreases, then the marginal propensity to save will decrease by the same percentage. the spending multiplier will decrease. the money multiplier will decrease. the rate of savings will decrease. the spending multiplier will increase.
Answer:
1.If the marginal propensity to consume decreases, then
a)the marginal propensity to save will decrease by the same percentage.
b)the spending multiplier will decrease.
c)the money multiplier will decrease.
d)the rate of savings will decrease.
e)the spending multiplier will increase.
2.Which of the following might cause stagflation in an open-market economy operating at equilibrium in the intermediate range of the aggregate supply curve?
a)Over the course of time, companies begin to provide educational opportunities for their employees.
b)The price of oil decreases as new reserves are found in the Alaskan wilderness.
c)The government sets a price ceiling for gasoline below market equilibrium.
d)An earthquake causes a serious rupture in the Alaskan oil pipeline that will take 6 months to repair.
e)Consumers fear a recession so they cut back on spending causing massive layoffs in major cities across the United States.
3.According to Classical economists,
a)the economy is stable in the long run causing unemployment to increase during time of recession.
b)the economy is stable in the long run and macroeconomic equilibrium can occur at less than full employment.
c)the economy is stable in the long run and self correcting to full employment.
d)the economy is unstable in the long run causing unemployment to increase during time of recession.
e)the economy is unstable in the long run and self correcting to full employment.
4.Which of the following will cause a decrease in SRAS?
a)An increase in labor productivity
b)An decrease in employee wages
c)An increase in government regulations on businesses
d)An increase in consumer spending
e)A decrease in investment spending
5.When inflation has reached a peak, economists would say that the economy has reached the
a)trough of the business cycle.
b)expansion of the business cycle.
c)peak of the business cycle.
d)contraction of the business cycle.
e)bottom of the business cycle.
6.In the circular flow diagram, tourists spend money in
a)the product market that provides goods and services to firms.
b)the product market that provides profit for firms.
c)the product market that provides revenue for firms.
d)the factor market that provides profit for firms.
e)financial markets that provides profit for firms.
7.Which of the following statements about the official rate of unemployment in the United States is most accurate?
a)The official unemployment rate includes only structurally and frictionally unemployed persons.
b)The official unemployment rate is greater than the natural rate of unemployment.
c)The official unemployment rate does not include discouraged workers.
d)The official unemployment rate includes all unemployed persons except teenagers who would be counted as seasonally unemployed.
e)The official unemployment rate includes all people in the labor force who do not have jobs.
8.If the Federal Reserve purchases securities, then
a)consumer spending will increase and AD will shift right.
b)consumer spending will decrease and AD will shift left.
c)government spending will increase and AD will shift right.
d)investment spending will increase and AD will shift right.
e)investment spending will decrease and AD will shift left.
9.If, while maintaining a balanced budget, Congress decreases spending and taxes by $100 each, then
a)aggregate demand will shift right.
b)aggregate demand will shift left.
c)aggregate demand will remain the same.
d)aggregate supply will shift right.
e)aggregate supply will shift left
10)If Congress wanted to lower inflation and unemployment at the same time, it would most likely
a)increase the international value of the dollar.
b)increase spending on public works projects across the United States.
c)decrease personal income taxes.
d)pay subsidies to businesses that increase economic investment and provide increased training and education to their workers.
e)decrease welfare payments to the working poor.
Explanation:
Crowl Corporation is investigating automating a process by purchasing a machine for $793,800 that would have a 9-year useful life and no salvage value. By automating the process, the company would save $133,000 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $21,200. The annual depreciation on the new machine would be $88,200. The simple rate of return on the investment is closest to
a. 5.80%
b. 11.12%
c. 16.72%
d. 5.12%
Answer:
Simple rate of return is 5.8%
Therefore option (a) is correct option.
Explanation:
It is given that purchase cost = $793800
Company saving per year = $133000
Yielding = $21200
Annual depreciation = $88200
Annual profit = $133000 - $88200 = $44800
Net investment is equal to = $793800 - $21200 = $772600
Simple rate of return [tex]=\frac{44800}{772600}=0.0579[/tex]
= 5.8%
Therefore simple rate of return is 5.8 %
So option (a) is correct.
Crane Corporation had the following 2020 income statement. Sales revenue $197,000 Cost of goods sold 124,000 Gross profit 73,000 Operating expenses (includes depreciation of $19,000) 48,000 Net income $25,000 The following accounts increased during 2020: Accounts Receivable $10,000, Inventory $10,000, and Accounts Payable $11,000. Prepare the cash flows from operating activities section of Crane’s 2020 statement of cash flows using the direct method.
Answer:
$35,000
Explanation:
Crane Corporation
CASH FLOW STATEMENT
FOR THE YEAR ENDING 2020
Cash Flows from Operating Activities:
Net Income $25,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation on Fixed Assets $19,000
(Increase) Decrease in Current Assets:
Accounts Receivable ($10,000)
Inventory ($10,000)
Increase (Decrease) in Current Liabilities:
Accounts Payable $11,000
Net Cash Provided by operating activities $35,000
Cash Flow from Investing Activities: -
Cash Flow from Financing Activities: -
Net Increase (Decrease) in Cash $35,000
Farrugia Corporation produces two intermediate products, A and B, from a common input. Intermediate product A can be further processed into Product X. Intermediate product B can be further processed into Product Y. The common input is purchased in batches that cost $89 each and the cost of processing a batch to produce intermediate products A and B is $36. Intermediate product A can be sold as is for $53 or processed further for $33 to make Product X that is sold for $79. Intermediate product B can be sold as is for $113 or processed further for $66 to make Product Y that is sold for $158.
Required:
A. Assuming that no other costs are involved in processing potatoes or in selling products, how much money does the company make from processing one batch of the common input into the end products X and Y?
B. Should each of the intermediate products, A and B, be sold as is or processed further into an end product?
Answer:
Explanation:
Product A Product B Total
Incremental rev. 79 158 237
Incremental cost 33 66 99
Contribution 46 92 138
common cost (89)
Cost of Processing (36)
Net income 13
B
Financial advantage - Incremental revenue- Incremental cost -Initial revenue
Product A
79-33-53 = - 7
Product B
158-66-113 = -21.
The two products are better sold at it is without further processing.
As no other cost is involved in the processing or selling and the initial selling price is greater than the incremental contribution , it is advisable that they are sold as they are
Freeman, Inc., reported net income of $40,000 for 20A. The income tax return excluded a revenue item of $3,000 (reported on the income statement) because under the tax laws the $3,000 would not be reported for tax purposes until 20B. Assuming a 30% income tax rate, this situation would cause a 20A deferred tax amount of A) $3,000 (debit). B) $3,000 (credit). C) $ 900 (debit). D) $ 900 (credit).
Answer:
The correct option is D,$900(credit)
Explanation:
The revenue omitted would be increase revenue in the year 20B ,as result net income would also be increased,hence the tax impact of it in the future that should be taken record of now is a deferred tax liability,a tax payable in the year 20B.
The amount of tax deferred is the omitted revenue multiplied by the tax rate of 30% i.e
deferred tax =$3000*30%=$900
This would be credited to deferred tax liability and debited income tax expense.
A marketing manager wants to build a strong relationship with the customers and to customize messages without high costs. He understands that relationship building and message customization would require constant updating of the database due to the reliance on CRM and he plans to hire staff to make sure the database stays up to date. Based on the manager's consideration, ________ will be the most appropriate promotion mix element.
Answer:
Direct marketing and interactive marketing.
Explanation:
In a case of direct marketing here, they do research, identify customers, select media (TV, direct mail, internet), and create a campaign. But rather than guess whether the message worked, they track the consumer's response. How many people (and of what age, ethnic group, income level) called the number in the catalog, clicked the button on the website, or went to the store for their gift with purchase. This is because direct marketers can measure the results, they can make the next campaign even better.
While in the other hand, interactive marketing explained to be the fastest growing form of marketing where sellers do chats and explanations that comes off as convincing approach of their products to their buyers, this could be physically or online.
In 2020, Sheffield Corp., issued for $102 per share, 97000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Sheffield's $20 par value common stock at the option of the preferred stockholder. In August 2021, all of the preferred stock was converted into common stock. The market value of the common stock at the date of the conversion was $25 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock
Answer:
Additional paid-in capital is $4,074,000.
Explanation:
In 2020, Sheffield issued $102 per share and there were 97,000 shares of convertible preferred stock.
Preferred stock = 97,000 shares × $102 = $9,894,000
Also we were told that one preferred stock can be converted to 3 common stock i.e. 3 × Preferred stock = Common stock
Therefore, Common stock = [(97000 shares × 3 shares) × $20] = $5,820,000
Additional paid-in capital = $9,894,000 - $5,820,000 = $4,074,000.
Fresher Foods, Inc., orally agreed to purchase one thousand bushels of corn for $1.25 per bushel from Dale Vernon, a farmer. Fresher Foods paid $125 down and agreed to pay the remainder of the purchase price on delivery, which was scheduled for one week later. When Fresher Foods tendered the balance of $1,125 on the scheduled day of delivery and requested the corn, Vernon refused to deliver it. Fresher Foods sued Vernon for damages, claiming that Vernon had breached their oral contract.
Can Fresher Foods recover? If so, to what extent?
Answer:
In the case of Fresher Goods, Inc.v. Vernon, the trial court will possibly conclude that Vernon must complete the portion of the payment which has already been compensated for as a result of partial results.
Explanation:
Vernon accepted partial payment for the sold goods. While the Law of Frauds demanded that any contract for the selling of goods at a price of $500 or more be enforceable in writing, the oral arrangement was partially compensated and agreed by all parties. That part of the deal was binding, so Vernon would supply 100 corn bushels to Fresher for $1.25 per bushel.
Imagine that your goal is to retire 34 years from today with \$1,000,000$1,000,000 in savings. Assuming that you currently (i.e., today) have \$5,000$5,000 in savings, what rate of return must you earn on that savings to hit your goal? (Hint: Solve your future value formula for the discount rate, RR) *Make sure to input all percentage answers as numeric values without symbols, and use four decimal places of precision. For example, if the answer is 6%, then enter 0.0600.
Answer:
Present value after 34years = 1000000
Cash flow at present= 5000
Using
PV= CF(1+R)^t
1000000=5000(1+R)^34
R=1.169-1
R=0.168(16.8%)
Rate of return must you earn on that savings to hit your goal is 0.168, at the present value of $1000000, this can be calculated as follows
formula for calculating rate of return =
PV= CF(1+R) ^t
Wherein,
PV is Present value after 34years = 1000000
CF is Cash flow at present= 5000
R (rate of return) =?
T, that is time is 34 years
Therefore, with the help of given numbers the rate of return can be calculated as follows:
1000000=5000(1+R) ^34
R=1.169-1
R=0.168(16.8%)
Therefore, an individual with the present value of $1000000 and present cash flow of $5000 can earn a rate of return at 0.168 after 34 years
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Which of the following is a manufacturing cost?
A. Indirect materials
B. Advertising expense
C. Depreciation of the office equipment used by the sales staff
D. Salary of clerical workers
Answer:
A and C
Explanation:
A manufacturing cost is the depreciation of the office supplies utilized by the sales team and indirect materials. As a result, choices (A) and (C) are the correct stuff.
What is manufacturing cost?The cost of all the resources used to produce a product, collectively referred to as the manufacturing cost, is what is considered. Direct labor, direct material costs, and manufacturing overhead make up the three areas that make up the cost of production. The whole cost of delivery is affected by it.
The raw materials known as "direct materials" are those that are included into the finished good. Applying a chain of processes to maintain a deliverable product provides value to raw materials in manufacturing. For example, welding, cutting, and painting are just a few of the many processes that can be used on raw materials. The difference between direct and indirect materials must be understood.
Hence, option (C) is accurate.
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Consider a market where the demand and supply for the good are described by the following equations: begin mathsize 14px style straight Q subscript straight D space equals space 225 space minus space 3 straight P end style and begin mathsize 14px style straight Q subscript straight S space equals space minus space 22.5 space plus space 1.5 straight P end style.
If the government implements a price ceiling of $45, this will result in a
A. surplus of 22.5 units.
B. a surplus of 45 units.
C. a shortage of 45 units.
D. a shortage of 22.5 units.
Answer:
The correct option is (c)a shortage of 45 units.
Explanation:
Solution
Given that:
Qd=225-3P
Qs=-22.5+1.5P
Then,
Set Qd=Qs for equilibrium
225-3P=-22.5+1.5P
4.5P=247.50
P=$55
Now
The government forces a ceiling of $45, it is binding as it is lesser than the equilibrium price.
Thus,
Let calculate the demanded quantity and supplied quantity at a price of $45
Now,
Qd=225-3*45=90
Qs=-22.5+1.5*45=45
Shortage=Qd-Qs=90-45=45 units .
Therefore, there is a shortage of 45 units.
Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp rise in the stock market, an increase in government purchases, an increase in the money supply and a decline in the value of the dollar. In the short run a. the price level and real GDP will both rise. b. the price level and real GDP will both fall. c. neither the price leave nor real GDP will change. d. All of the above are possible.
Answer:
All of the above are possible.
Explanation:
Discussions here center on equilibrium of an economy in a long run, and here after the government activities, their is a decline in dollar value; therefore in the short run, the price level and real GDP will both rise in as much as the price level and real GDP will also both fall. It is also gathered that neither the price leave nor real GDP will change.
The transition from the short run to the long run may be done by considering some short run equilibrium that is also a long run equilibrium as to supply and demand, then comparing that state against a new short run and long run equilibrium state from a change that disturbs equilibrium, say in the sales tax rate, tracing out the short run adjustment first, then the long run adjustment.
Pharmaceutical Company (PC) has made record profits in the last 10 years. For each of the first 9 years, PC has declared dividends. In the 10th year, however, PC decides not to decare dividends and to reinvest that money into new drugs. Harry, a shareholder who relies on the dividends for income, sues the Board of Directors and the Officers for failing to issue a divident in the 10th year. Who wins and why?
Answer:
As in my consideration the pharmaceutical organization might won the case , as for all the dividend bonds concerned decision are taken by the organizational financial advisor, and it's the responsibility of financial advisor to choose whether to issue the revenue as dividend bonds or to hold them for more investment to generate large revenue. Thus it's the choice of the corporate that whether to issue dividend or not.
The dividend is the portion of profit that is paid to the shareholders in respect to the funds invested by them for the long-term. It is paid to the preference shareholders at a fixed rate at the end of each period while it is paid to the equity shareholders based upon the amount of profit.
The case for the dividend is won by the pharmaceutical organization.
The reason is the payment or non-payment of dividend to the shareholders' is a concerned decision that is taken by the board of directors and financial advisors of the organization.
It becomes responsibility of the financial advisor to take advantageous decision for the organization and shareholders, that is the payment of dividend is the current period is feasible or holding them for reinvestment and earning more revenue is feasible.
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Recent financial statement data for Harmony Health Foods (HHF) Inc. is shown below.
Current liabilities $ 197
Income before interest and taxes $ 116
10% Bonds, long-term 370
Interest expense 37
Total liabilities 567
Income before tax 79
Shareholders' equity
Income tax 22
Capital stock 210
Net income $ 57
Retained earnings 291
Total shareholders' equity 501
Total liabilities and equity $1,068
HHF's times interest earned ratio is (Round your answer to two decimal places.):
a. 10.00.
b. 3.14.
c. 1.54.
d. 2.14.
Current liabilities $ 180
Income before interest and taxes $ 118
10% Bonds, long-term 360
Interest expense 36
Total liabilities 540
Income before tax 82
Shareholders' equity
Income tax 20
Capital stock 201
Net income $ 62
Retained earnings 283
Total shareholders' equity 484
Total liabilities and equity $1,024
HHF's debt to equity ratio is:_____________. (Round your answer to two decimal places.):
a. 0.74.
b. 0.56.
c. 1.12.
d. 1.90.
Answer:
1. B. 3.14
2. C. 1.12
Explanation:
1. Times Interest Earned ratio
Measures how well a company is able to cover it's debt obligations using it's earnings.
The formula is simply,
= Earning before Interest and Tax / Interest Expense
Therefore,
Times Interest Earned ratio = 116/37
= 3.14
HHF's times interest earned ratio is Option B, 3.14.
2. Debt to Equity Ratio
This ratio compares the debt used to fund a company vs it's equity. It measures how much of either way used to fund the company.
The formula is,
= Total Debt / Total Equity
= 540/484
= 1.12
HHF's Debt to Equity ratio is 1.12, Option C.
Net income was $469,000. Issued common stock for $76,000 cash. Paid cash dividend of $14,000. Paid $115,000 cash to settle a note payable at its $115,000 maturity value. Paid $124,000 cash to acquire its treasury stock. Purchased equipment for $90,000 cash. Use the above information to determine this company's cash flows from financing activities. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
The company's cash flows from financing activities is ($177,000).
Explanation:
The company
Statement of cash flows (extract)
Proceed from issue of common stock $76,000
Dividends paid ($14,000)
Repayment of note payable ($115,000)
Purchase of treasury stock ($124,000)
Net cash flows from financing activities ($177,000)
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. The system has an installation cost of $150,000 and an additional cost of $50,000 at year 10. The annual software maintenance cost is $5,000 for the first 4 years and $8,000 thereafter. If the new system will be used for the indefinite future, find the equivalent present value at a discount rate of 5%.
Answer:
Equivalent annual cost = $16,502.89
Explanation:
Equivalent annual cost = Present Value of cost / Annuity factor
Present value of cost:
PV of additional cost =50,000 ×1.05^(-10)=30,695.66
PV of maintenance cost
First four years= 5,000× (1-1.05^(-4))/0.05=17,729.75
From year 5 to infinity = (8,000/0.05)× 1.05^(-4)=131,632.39
PV of maintenance cost = 17,729.75 + 131,632.396= 149,362.14
PV of costs = 150,000 + 30,695.66 + 149,362.14= 330,057.8112
Annuity factor = 1/r = 1/0.05= 20
Equivalent annual cost = 330,057.8112 /20=$16,502.89
Equivalent annual cost = $16,502.89
Suppose that initially, the economy is in long-run macroeconomic equilibrium at point A. If there is increased pessimism about the future of the economy, the AD curve will shift from ▼ . The new short-run macroeconomic equilibrium occurs at ▼ point A point B point C . Long-run adjustment will shift the SRAS curve from ▼ SRAS 0 to SRAS 1 SRAS 1 to SRAS 0 as workers adjust to lower-than-expected prices. The new long-run macroeconomic equilibrium occurs at ▼ point A point B point C .
Answer:
a) In simple words, higher level of pessimism would result in lesser aggregate demand. Thus, AD will shift from point AD0 to the point AD1. The fresh short time equilibrium is placed at point B (wherein AD1 is conneting to SRAS0). Longer run accostoming will move SRAS curve from point SRAS0 to the pint SRAS1. Hence, the New longer run equilibrium has been placed at point C.
January 1, 2021, Woody Forrest Corporation granted executive stock options to purchase 41,000 of its common shares at $9 each. The market price of common stock was $24 per share on December 31, 2021, and averaged $12 per share during the year then ended. There was no change in the 164,000 shares of outstanding common stock during the year. Net income for the year was $39,000. The number of shares to be used in computing diluted earnings per share for the quarter is:
Answer:
174,250 shares
Explanation:
The computation of the number of shares to be used in computing diluted earnings per share is shown below:
Proceeds from exercise of options (a) $369,000 (41,000 shares × $9)
Used to repurchased for common stock (b) 30,750 shares (41,000 shares × $9 ÷ $12)
Number of shares for exercised (c) 41,000 shares
Less: repurchased shares (d) -30,750 shares
Diluted common shares {e = c - d} 10,250 shares
Add: Common shares (f) 164,000 shares
Total number of shares for diluted earning per share 174,250 shares
We ignored the market price of common stock as it is not relevant.
Beamish Inc., which produces a single product, has provided the following data for its most recent month of operations: Number of units produced 4,600 Variable costs per unit: Direct materials $ 91 Direct labor $ 85 Variable manufacturing overhead $ 7 Variable selling and administrative expense $ 10 Fixed costs: Fixed manufacturing overhead $ 161,000 Fixed selling and administrative expense $ 326,600 There were no beginning or ending inventories. The absorption costing unit product cost was:
Answer:
The answer is $ 218
Explanation:
Solution
Given that:
Description Amount
Direct materials $91
Direct labor $85
Variable manufacturing overhead $7
Fixed manufacturing overhead
( $ 161,000/ 4,600 units) $35
The unit product under absorption costing = $218
Therefore, the absorption costing unit product cost is $218
You can repair your furnace for $500 and it will last 5 more years, but your heating bills will cost you about $1500 per year. Alternatively, a new furnace can be installed for $3000 that will reduce your annual heating bill to $1200. Suppose you sell the house in 5 years and receive an additional $1000 in the sales price of your home (salvage value) because of having a fairly new furnace. Should you replace it? Use a 5-year analysis period and a MARR of 5%
Answer:
By present value old furnace should not be replaced, since the new furnace costs more.
Explanation:
Solution
For the old furnace
Present value = - 500 - 1500 = (1 +i)^n-1/i (1+i)n
= - 500-1500 * 1.05^⁵/0.05 * 1.05^⁵
= -$6994.215
Now,
For the new furnace
The present value = - 3000 - 1200 * 1.05^⁵ - 1/0.05 * 1.05^⁵ + 1000/ (1.05)⁵
= -$7411.845
Therefore, As the new furnace costs more by present value old furnace should not be replaced
The CFO’s objective is to make certain that the capital consumed in farming is renewed and that the farm remains efficient, utilizing the best technology and equipment appropriate for its competitive situation. How would you expect the CFO to calculate depreciation expense?
Explanation:
Since the CFO wants the company to be competitive in the Industry he has to upgrade the machines and equipment in time when a new technology hits the market. which makes the company to increase the depreciation expense and write of the asset as early as possible.
The members of the farm is sharing the profits and assumes no other way of remuneration or incentive, Hence there will not be any opposition in charging higher depreciation.
So it is suitable for the company to claim depreciation on Straight Line method or Double Decline method which will amortize the capital expense early.
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $74,000. The machine would replace an old piece of equipment that costs $19,000 per year to operate. The new machine would cost $9,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $31,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine
Answer:
$7,400 per year
Explanation:
Data provided for computing the annual depreciation expense is here below:-
Automated bottling machine = $74,000
Useful life = 10 years
The calculation of annual depreciation expense is given below:-
Annual depreciation expense = Automated bottling machine ÷ Useful life
= $74,000 ÷ 10
= $7,400 per year
Therefore for computing the annual depreciation expense we simply divide the automated bottling machine by useful life.
