Answer:
PV= $61,759.80
Explanation:
Giving the following information:
Future value (FV)= $83,000
Number of years (n)= 10 years
Interest rate (i)= 3% compounded annually
To calculate the initial deposit, we need to use the following formula:
PV= FV/(1+i)^n
PV= 83,000 / (1.03^10)
PV= $61,759.80
A bond par value is $1,000 and the coupon rate is 5.1 percent. The bond price was $946.02 at the beginning of the year and $979.58 at the end of the year. The inflation rate for the year was 2.6 percent. What was the bond's real return for the year
Answer:
the bond's real return for the year is 6.18 %.
Explanation:
First find the nominal return of the bond then the real return as follows :
PV = - $946.02
Pmt = $1,000 × 5.10% = $51
P/yr = 1
FV = $979.58
n = 1
r = ?
Using a Financial Calculator, the nominal return of the bond, r is 8.9385 %.
Real Return = ( 1 + nominal return) / (1 + inflation rate) -1
= (1 + 0.089395) / (1 + 0.026) - 1
= 0.0618 or 6.18 %
Hotel Cortez is an all-equity firm that has 10,900 shares of stock outstanding at a market price of $37 per share. The firm's management has decided to issue $66,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 8 percent. What is the break-even EBIT
Answer:
$32,264.07
Explanation:
The computation of the Break-even EBIT is shown below:
(EBIT ÷ Number of shares) = (EBIT - Interest) ÷ Number of shares
(EBIT ÷ 10,900) = (EBIT - $66,000 × 0.08) ÷ (10,900 - (66,000 ÷ $37))
(EBIT ÷ 10,900) = (EBIT - $5,280) ÷ (10,900 - 1,783.78)
(EBIT ÷ 10,900) = (EBIT - $5,280) ÷ (9116.22)
After solving this, the value of break-even EBIT is $32,264.07
A customer buys 1,000 shares of XYZ at $60 in a margin account, regular way settlement. Two days after the trade, XYZ has dropped to $40. The minimum maintenance margin requirement is:
Answer:
$10,000
Explanation:
A customer buys 1,000 shares of XYZ
The shares are bought at $60 in a margin account
Two days after the price of XYZ drops to $40
The first step is to calculate the current market value
= 1,000 shares×$40
= $40,000
Therefore, the minimum maintenance margin requirement can be calculated as follows
= 25/100 × current market value
= 25/100 × 40,000
= 0.25×40,000
= $10,000
Hence the minimum maintenance margin requirement is $10,000
The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with a. 9 units of output. b. 15 units of output. c. 21 units of output. d. 30 units of output.
Answer:
b. 15 units of output.
Explanation:
information regarding sales price and quantity demanded is missing, so I looked it up (see attached file):
units sales revenue total costs profits
9 $216 $36 $180
15 $270 $54 $216
21 $252 $72 $180
30 $90 $99 ($9)
When the actual cost of direct materials used exceeds the standard cost, the company must have experienced an unfavorable direct materials price variance.
a. True
b. False
Answer:
True
Explanation:
The cost was bigger than they had budgeted for, so it was an unfavorable variance.
A company with a WACC of 8.5% is considering two possible investments. Project A will return 10% and be financed using equity costing 9.5%. Project B will return 8% and be financed using debt costing 6%. Which project should the company undertake
Answer:
The Company should undertake project A.
Explanation:
The finance of projects is usually done through pooling of funds, that is using various sources of finance. The WACC represents the return required by providers of this finance and also shows the risk of the company.
A company will always accept projects that provide a return higher that their weighted average cost of capital (risk) and reject any project offering a return below the WACC.
Conclusion :
The Company should undertake project A as this gives a return higher than the WACC of 8.5%.
After reading it write about whether or not you agree with the academic economic consensus that independent officials running the Federal Reserve are able to properly balance their dual mandate in a fair and balanced fashion with the needs of workers in one hand and the financial industry on the other. If you agree with the consensus view explain your reasons; or if you disagree and think that the officials are biased in favor of the financial industry explain your reasoning with some possible solutions to the problem. Write at least two paragraphs articulating your views.
Answer:
The Federal Reserve has been at times biased in favor of the financial industry, because they have often put inflation targeting above the need to reduce unemployment when executing monetary policy. Besides, the financial industry has often been rescued by massive loans from the Fed.
However, the Federal Reserve has also acted in favor of reducing unemployment, specially during recessions, by expanding the money supply through a policy known as quantitative easing.
In conclusion, we can say that the Fed tends to be biased in favor of the financial industry, but not at all times.
hich of the following is NOT one of the ways companies are using mobile apps? Group of answer choices track behavior across tablets and mobile devices utilize cookies to track mobile activity utilize GPS data to provide location-based offers track loyalty program participation add social value and entertainment to consumers' lives
Answer: Add social value and entertainment to consumers' lives
Explanation:
In this age of technology, companies have found that being able to offer their customers relevant products can be greatly helped by gathering information about them and offering it to them directly on their phones. A great way to do so is through the use of mobile apps.
With mobile apps a company can track behavior on the device as well as track mobile activity. They could even use the GPS capabilities of the phone through the app to offer relevant location based content.
However, as much as companies would like their customers to have enjoyable lives, this is not an aim with mobile apps. The apps are there to boost the companies sales not to add social value and entertainment to consumers' lives unless of course, that is the company's main business.
Answer:
Which features are created by wave erosion?
Your answer is:
- arches
- cliffs
- stacks
Explanation:
Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a % weight in equity, % in preferred stock, and % in debt. The cost of equity capital is %, the cost of preferred stock is %, and the pretax cost of debt is %. What is the weighted average cost of capital for Ford if its marginal tax rate is %?
Complete Question:
Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 10% weight in equity, 25% in preferred stock, and 65% in debt. The cost of equity capital is 17%, the cost of preferred stock is 11%, and the pretax cost of debt is 9%. What is the weighted average cost of capital for Ford if its marginal tax rate is 40%?
Answer:
7.96%
Explanation:
We can calculate WACC using the formula:
WACC = Cost of equity * Equity %age / 100% +
After Tax Cost of Debt * Debt %age / 100% +
Cost of Preferred Stock * Preferred Stock %age / 100%
Here,
Cost of equity is 17%
Cost of preferred stock is 11%
Post tax cost of debt = Pre-Tax cost * (1 - Tax rate)
This implies,
Post tax cost of debt = 9% * (1 - 40%) = 5.4%
Equity weight is 10% weight in equity
Preferred stock weight is 25%
Debt Weight is 65%
By putting value in the formula given in the attachment, we have:
WACC = 17% * (10% / 100%) + 11% * (25% / 100%) + 5.4% * (65% / 100%)
WACC = 1.7% + 2.75% + 3.51%
WACC = 7.96%
On January 1, the listed spot and futures prices of a Treasury bond were 95.4 and 95.6. You sold $100,000 par value Treasury bonds and purchased one Treasury bond futures contract. One month later, the listed spot price and futures prices were 95 and 94.4, respectively. If you were to liquidate your position, your profits would be a Group of answer choices $125 profit. $1,060.50 loss. None of the options are correct. $125 loss. $1,062.50 profit.
Answer:
None of the options are correct.
Explanation:
We start by calculating the net change of the treasury bond position.
= $95,125 - $95,000
= $125
The long treasury bond position gains $125 after a month.
We will also calculate the net change of the treasury bond futures contract.
= $94,125 - $95,187.50
= -$1,062.50
Therefore, Net profits is;
= $125 - $1,062.50
= -$937.50
Following is information on two alternative investments being considered by Jolee Company. The company requires a 6% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1). (Use appropriate factor(s) from the tables provided.) Project A Project B Initial investment $ (174,325 ) $ (152,960 ) Expected net cash flows in year: 1 41,000 44,000 2 60,000 53,000 3 72,295 68,000 4 87,400 81,000 5 59,000 30,000For each alternative project compute the net present value.
Answer and Explanation:
The computation of the net present value is presented in the attachment below:
For project A, the net present value is $91,771.53 and for project B, the net present value is $79,390.69
It is computed after considering the discounting factor that comes from
= 1 ÷ (1 + discount rate)^number of years
for year 1, it is
= 1 ÷ (1 + 0.06)^1
The same applied for the remaining years
balance sheet reports assets of $6900000 and liabilities of $2700000. All of Ivanhoe’s assets’ book values approximate their fair value, except for land, which has a fair value that is $410000 greater than its book value. On 12/31/21, Oriole Corporation paid $7030000 to acquire Ivanhoe. What amount of goodwill should Oriole record as a result of this purchase?
Answer: $2,420,000
Explanation:
Goodwill is the amount over the fair value of a company that it is purchased for.
Goodwill = Acquisition price - Net Assets
Net Assets = Assets - Liabilities
= (6,900,000 + 410,000) - 2,700,000
= $4,610,000
Goodwill = 7,030,000 - 4,610,000
= $2,420,000
Prior to setting pricing options for its products to maximize profit, a company must: a. determine whether it should use horizontal or vertical integration. b. select appropriate corporate-level strategies. c. perform value-chain functional activities.
Answer: b. select appropriate corporate-level strategies
Explanation:
Prior to setting pricing options for its products to maximize profit, a company must select appropriate corporate-level strategies.
This is necessary in order to ensure that the strategies aligns with what the organization is willing to do in order to achieve its profit maximization goal.
The following data were taken from the financial statements of Gates Inc. for the current fiscal year. Property, plant, and equipment (net) $971,600 Liabilities: Current liabilities $140,000 Note payable, 6%, due in 15 years 694,000 Total liabilities $834,000 Stockholders' equity: Preferred $4 stock, $100 par (no change during year) $834,000 Common stock, $10 par (no change during year) 834,000 Retained earnings: Balance, beginning of year $890,000 Net income 386,000 $1,276,000 Preferred dividends $33,360 Common dividends 130,640 164,000 Balance, end of year 1,112,000 Total stockholders' equity $2,780,000 Sales $21,141,000 Interest expense $41,640 Assuming that total assets were $3,433,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place.
Answer:
Ratio of fixed assets to long-term liabilities = fixed assets / long term liabilities = $971,600 / $694,000 = 1.4
Ratio of liabilities to stockholders' equity = total liabilities / stockholders' equity = $834,000 / $2,780,000 = 0.3
Asset turnover = net sales / average total assets = $21,141,000 / [($3,614,000 + $3,433,000)/2] = 6
Return on total assets = (net income + interest expense) / average total assets = ($386,000 + $41,640) / [($3,614,000 + $3,433,000)/2] = 12.14%
Return on stockholders’ equity = net income / average stockholders' equity = $386,000 / [($2,780,000 + $2,558,000) = 14.46%
Return on common stockholders' equity = net income / average common stockholders' equity = $386,000 / [($1,946,000 + $1,724,000) = 21.04%
22. On January 1, 2021, Princess Corporation leased equipment to King Company. The lease term is eight years. The first payment of $675,000 was made on January 1, 2021. The equipment cost Princess Corporation $3,600,000. The present value of the lease payments is $3,961,183. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 10%, how much interest revenue will Princess record in 2022 on this lease
Answer:
$293,980.13
Explanation:
Calculation of how much of the interest revenue Princess will record in 2022 on the lease
First Step is to find the interest for year 2021
Present Value January 1, 2021 $3,961,183
Less Payment January 1, 2021 (675,000)
=$3,286,183
Hence,
2021 Interest =$3,286,183× 10%
2021 Interest = $328,618.3
Second Step
Second Payment $675,000
Less Interest (328,618.3)
Reduced balance $346,381.7
Third Step is to find the how much interest revenue will Princess record in 2022 on the lease
2021 $3,286,183
Less Reduced balance (346,381.7)
January 1 2022 Liability = $2,939,801.3× 10%
2022 Interest Revenue =$293,980.13
Therefore the amount of interest revenue that Princess will record in 2022 on the lease will be $293,980.13
. A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price
Answer:
The answer is $18.29
Explanation:
We have many formulas to arriving at the stock price but here we use Gordon growth model.
Formula for getting stock price is:
D1/r - g
Where:
D1 - is the next year dividend or expected dividend to be paid next.
r is the rate of return
g is the growth rate
$0.75/0.105 - 0.064
$0.75/0.041
$18.29.
Therefore, the stock's current price is $18.29
Someone offers to buy your car for four, equal annual payments, with the first payment coming 2 years from today. If you think that you could sell your car to another purchaser for an immediate payment of $9,000 and the interest rate is 10%, what is the minimum annual payment that you would accept from this buyer?
Answer:
4i8484884858585848484i
5. Kroger can use __________ gathered from ClickList orders to determine which products they should keep more or less of in stock.
Answer: Data analytics
Explanation:
Data analytics simply has to do withcanalyzing raw data to make conclusions about a particular information. Data analytics is used by organizations in order to optimize their business performance.
Kroger can use data analytics gathered from ClickList orders to determine which products they should keep more or less of in stock.
The difference between total sales revenue and total cost of goods sold is the: A. Trade margin B. Gross marketing contribution C. Net marketing contribution D. All of the above
Answer:
A. Trade margin
Explanation:
The profit obtained from trading operations is known as gross profit or trade margin.This is calculated as sales less costs of goods sold.
The difference between total sales revenue and total cost of goods sold is the gross marketing contribution.
The following information is considered:
When the cost of goods sold is deducted from the sales revenue so the gross marketing contribution should come. Neither it is trade margin, nor net marketing contribution.In other words, the difference is called as gross margin.Therefore we can conclude that the correct option is B.
Learn more: brainly.com/question/16115373
Suppose the country of Stan has fixed its exchange rate to the dollar. The official exchange rate is 0.50 U.S. dollars per rupee. Suppose market conditions are such that the actual equilibrium exchange rate is 0.25 U.S dollars per rupee.
1. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price at official exchange rates? ___________ Are products bought from Stan a good deal?
2. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price if you could buy at the equilibrium exchange rate?
3. Will foreigners want to demand Stan’s rupees to buy goods at the official rate? Explain.
4. Will people in Stan want to buy U.S. goods at the official exchange rates? Will they being supplying or demanding their rupees?
5. Will the monetary authorities in Stan have to buy up a surplus of their currency or sell their currency to meet a shortage of their currency to keep the exchange rate at 0.50 dollars per rupee?
Answer and Explanation:
1. At 0fficial exchange rate:
100 * 0.5 = $50
what I want to buy would be purchased at $50
at market exchange rate:
0.25 x 100 = $25
products bought from this place are not a good deal as I am paying more than the market exchange rate.
2. at equilibrium exchange rate:
100 x 0.25% = $25
the price is $25
3. from answers 1 and 2, I will not want demand Stan's rupees. the products are costly to get.
4. Stan's currency is obviously overvalued. the people from this country now has increased purchasing power so they can purchase goods in dollars, therefore they would be supplying their currency.
5. They will have to buy up the surplus of rupees so that they can easily keep up with maintaining the rupee at half a dollar.
Midhun uses internet to deposit 1 poin
and withdraw money from his
bank. Name this type of
banking.
e-commerce
O e-banking
O e-payment
O e-lending
Answer:
e banking
Explanation:
it is called e banking ( electronic), because Midhun is using both deposit and withdraw money through internet
Akram owns a small farm. He employs 80 workers in the field and has recently hired a manager to help him manage the farm. The income of the business varies greatly during the year. The farm makes a small profit but Akram is ambitious. He wants to take over a neighbour’s farm and increase the range of crops he sells. He thinks that he needs long-term finance and plans to take out bank loan to pay for the takeover. He has already borrowed money to buy a new tractor. A friend has advised him to form a company and sell shares
Question Completion:
Requirement. Identity two types of short-term finance Akram could use when the farm income is low
Answer:
Akram's Farm
Akram's farm can make good use of the following short-term financing sources:
1. Akram's farm can use Accounts Payable to provide short-term trade finance when the farm buys farm inputs, equipment, and other supplies on credit. The farm's Accounts Payable can provide interest-free trade loans by allowing the farm to take longer time to settle the suppliers. But, the farm should not miss out on cash discounts - an important source of trade finance.
2. Akram's farm can generate finances by ensuring early collections of the Accounts Receivable. Akram's farm can also go ahead and borrow on the accounts receivable through short-term bank loans guaranteed on the accounts. The farm can also factor the accounts receivable by selling them to factoring and finance houses for less.
Explanation:
Akram's farm is still a small farm that is not yet formed as a company. The immediate concentration is growing the entity and starting the processes for changing its corporate status so that it can take advantage of the sources of finance available to companies.
Disclosure of interest and income tax paid if the indirect method is used. Primary objectives of a statement of cash flows. Disclosure of noncash investing and financing activities.
Answer with Explanation:
The disclosure of interest and income tax paid if the indirect method is used is cited at FASB ACS 230-10-50-2 under the title "Statement of Cashflows-Overall Disclosure-Interest and Income Taxes Paid".The primary objectives of a statement of cash flows is cited at FASB ACS 230-10-10-1 under the title "Statement of Cashflows-Overall Objective".The disclosure of noncash investing and financing activities is cited at FASB ACS 230-10-50-3 under the title "Statement of Cashflows-Overall Disclosure-Noncash Investing and Financing Activities".A corporate bond currently yields 8.5%. Municipal bonds with the same risk, maturity, and liquidity currently yield 5.5%. At what tax rate would investors be indifferent between the two bonds?
Answer: 35.29%
Explanation:
Municipal Bonds are attractive in that they give the tax benefit of being tax exempt whereas a corporate bond is liable for taxation. The tax rate that will therefore make an investor indifferent between the two bonds is the one that will equate the Corporate bond's yield net of tax to the yield on the Municipal bond.
5.5% = 8.5% * ( 1 - x)
5.5% = 8.5% - 0.085x
0.085x = 8.5% - 5.5%
0.085x = 3%
x = 35.29%
Prepare journal entries to record the following four separate issuances of stock. A corporation issued 7,000 shares of $20 par value common stock for $168,000 cash. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $34,000. The stock has a $1 per share stated value. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $34,000. The stock has no stated value. A corporation issued 1,750 shares of $25 par value preferred stock for $77,750 cash.
Answer: Please see explanation column for answer
Explanation:
1. For shares issued in excess of par value common stock
Amount Debit Credit
Cash $168,000
Common stock at $20 ( 7000 x 20) $140,000
Paid in excess of par value common stock
(168,000 - 140,000) $28,000
2. For shares issued to Promoters at stated value
Amount Debit Credit
Organisational expenses $34,000
Common stock at $1 ( 3,500x 1) $3,500
Paid in capital in excess of stated value
common stock(34,000 - 3,500) $30, 500
3. For shares issued to Promoters at no stated value
Amount Debit Credit
Organisational expenses $34,000
Common stock at $1 no par value $34,000
4.For shares issued in excess of par value preferred stock
Amount Debit Credit
Cash $77,750
preferred stock at $25(1,750 x 25) $43,750
Paid in capital in excess of par value
Preferred stock(77,750 -43,750) $34,000
One year ago, you purchased a stock at a price of $55.20 per share. Today, you sold your stock at a loss of 18.63 percent. Your capital loss was $12.62 per share. What was the total dividends per share paid on this stock over the year
Answer:
Dividend = $2.34
Explanation:
Purchase Price = $55.20
Loss on stock = 18.63% of $55.20 = $10.28
Capital Loss = $12.62
Dividend = Capital Loss - Total Loss
Dividend = $12.62 - $10.28
Dividend = $2.34
Which of the following items would be a way to manipulate the cash flow from operating activities amount on the statement of cash flows?
a.
Adding depreciation back to net income to determine cash flow from operating activities.
b.
Including interest expense and tax expense in the calculation of cash flow from operating activities.
c.
Recording an item that should be recorded as an operating activity as an investing activity.
d.
The cash flow statement cannot be manipulated.
Answer:
C. Recording an item that should be recorded as an operating activity as an investing activity.
Explanation:
Hope it helped
Which of the following statements would best characterize someone who is not culturally competent in working with others from different cultures?a. The person varies the rate of their speaking.b. The person uses facial expressions when communicating.c. The person pays attention to verbal and non-verbal behavior.d. The person fills "silence" during conversations.
Answer: The person fills "silence" during conversations
Explanation:
Culture is simply regarded as people's way of life. The way if life include their food, the kind of music they listen to, their religion, language, their beliefs, values etc.
Someone who is not culturally competent in working with others from different cultures would usually be silent during conversations. This is because the person doesn't know much about the culture and can't really be involved in the conversation.
The risk-free rate is 6% and the expected rate of return on the market portfolio is 13%. a. Calculate the required rate of return on a security with a beta of 1.25.
Answer:
The required rate of return is r = 0.1475 or 14.75%
Explanation:
The required rate of return is the minimum return that investors demand/expect on a stock based on the systematic risk of the stock as given by the beta. The expected or required rate of return on a stock can be calculated using the CAPM equation.
The equation is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free raterM is the return on marketr = 0.06 + 1.25 * (0.13 - 0.06)
r = 0.1475 or 14.75%
The Sisyphean Company has a bond outstanding with a face value of $1,000 that reaches maturity in 8 years. The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 9.6%, then this bond will trade at
Answer:
this bond will trade at $912.05.
Explanation:
There is an Inverse relationship between the yield and the price of bond.
As the yield goes up, the price of bond goes down, that is trade at discount.Whereas, as the yield goes down, the price of bond goes up, that is trade at a premium.The Bond investment in Sisyphean Company is trading at a discount.
The Price of the Bond, PV can be determined as follows..
PV = ?
FV = $1,000
PMT = ($1,000 × 8%) ÷ 2 = $40
P/yr = 2
YTM = 9.6%
n = 8 × 2 = 16
Using a Financial Calculator, the Price of the Bond, PV is $912.05.
