Answers
Answer:
The demand curve for snowmobiles will increase and the price of snowmobiles will rise.
Explanation:
Demand is defined as the quantity of a good that is requested by a customer at a given price and time.
In the given instance there was heavy snowfall during the winter season that will result in more people wanting to go out on the snow.
When there is a change in demand as a result of a factor apart from price demand shifts.
In this case demand will shift to the right (increase).
Demand will increase at an increased price.
This is illustrated in the attached diagram.
Demand shifts from D1 to D2 and price increases from P1 to P2
Related Questions
________________ allow(s) for more wealth because a larger market allows producers and consumers to benefit from lower costs.
Answers
Answer:
Global competition
Explanation:
Global competition is the competition in which the products and the services are provided by the companies that are competed and serve their products and services to international customers. In this the companies should faced a lot of challenges like taste and preferences, a lifestyle that occurs due to the difference in cultures also it generated the benefit from lowering the cost
Therefore according to the given scenario, global competition is the answer
The comparative balance sheet of Nathan Company appears below: NATHAN COMPANY Comparative Balance Sheet December 31, Assets 2017 2016 Current assets $420 $333 Plant assets 780 567 Total assets $1,200 $900 Liabilities and stockholders' equity Current liabilities $168 $144 Long-term debt 300 162 Common stock 432 306 Retained earnings 300 288 Total liabilities and stockholders' equity $1,200 $900 Using horizontal analysis, show the percentage change for each balance sheet item using 2016 as a base year. NATHAN COMPANY Comparative Balance Sheet December 31, Assets 2017 2016 Percentage change Current assets $420 $333 % Plant assets 780 567 % Total assets $1,200 $900 % Liabilities and stockholders' equity Current liabilities $168 $144 % Long-term debt 300 162 % Common stock 432 306 % Retained earnings 300 288 % Total liabilities and stockholders' equity $1,200 $900 % Using vertical analysis, prepare a common size comparative balance sheet. (Round percentages to 0 decimal places, e.g. 12.) NATHAN COMPANY Comparative Balance Sheet December 31 2017 2016 Assets Amount Percentage Amount Percentage Current assets $420 % $333 % Plant assets 780 % 567 % Total assets $1,200 % $900 % Liabilities and stockholders' equity Current liabilities $168 % $144 % Long-term debt 300 % 162 % Common stock 432 % 306 % Retained earnings 300 % 288 % Total liabilities and stockholders' equity $1,200 % $900 %
Answers
Answer:
NATHAN COMPANY
Comparative Balance Sheet
For the years 2017 and 2016
2017 2018 Change Change
value in %
Assets:
Current assets $420 $333 $87 26.13%
Plant assets $780 $567 $213 37.57%
Total assets $1,200 $900 $300 33.33%
Liabilities and stockholders' equity
Current liabilities $168 $144 $24 16.67%
Long-term debt $300 $162 $138 85.19%
Common stock $432 $306 $126 41.18%
Retained earnings $300 $288 $12 4.17%
Total liabilities and equity $1,200 $900 $300 33.33%
pryor frosted flakes company offers its customers a pottery cereal bowl if they send in 4 boxtops from flakes boxes and $1.00. The company estimates that 60% of the boxtops will be redeemed. In 2007, the company sold 500,000 boxes and costumers redeemed 220,000 boxtops receiving 55,000 bowls. if the bowls cost 2.50 each, how much liabilitiy for outstanding premiums should be recorded at the end od 2007?
Answers
Answer: $30,000
Explanation:
Company estimates that 60% of boxtops will be redeemed.
They sold 500,000 boxes
= 500,000 * 60%
= 300,000 boxtops will be sent in.
So far, 220,000 have been sent in. How many left;
= 300,000 - 220,000
= 80,000 boxtops are still to be sent in
4 boxtops are needed to receive a pottery bowl so with 80,000;
= 80,000/4
= 20,000 pottery bowls are due to be issued.
Each bowl costs $2.50 to make. Customers will send in $1 however so effectively it will cost the company;
= 2.50 - 1
= $1.50
With 20,000 still left to be issued, each costing $1.50, the total liabilitiy for outstanding premiums to be recorded at the end of 2007 is;
= 20,000 * 1.5
= $30,000
A location decision for a traditional department store (e.g., Macy's) would tend to have what type of focus? revenue focus environmental focus labor focus education focus cost focus
Answers
Answer: revenue focus
Explanation:
A location decision for a traditional department store (e.g., Macy's) would tend to have revenue focus. For every organization or company, revenue plays a vital role in the organization.
A traditional department store will shift its focus to a location whereby it can meet the needs of the people daily and generate as much revenue as possible.
On March 15, a fire destroyed Sheridan Company's entire retail inventory. The inventory on hand as of January 1 totaled $5900000. From January 1 through the time of the fire, the company made purchases of $2032000, incurred freight-in of $242000, and had sales of $4140000. Assuming the rate of gross profit to selling price is 20%, what is the approximate value of the inventory that was destroyed
Answers
Answer:
the approximate value of the inventory that was destroyed is $4,862,000.
Explanation:
Use the Gross Profit percentage to find the value of the inventory that was destroyed.
Sales $4,140,000
Less Cost of Goods Sold
Opening Inventory $5,900,000
Add Purchases $2,032,000
Add Freight In $242,000
Available $8,174,000
Less Inventory Lost ($4,862,000)
Cost of Sales (3,312,000)
Gross Profit at 20% $828,000
Conclusion :
The Value of inventory that was destroyed is $4,862,000.
Penne Pharmaceuticals sold 2 million shares of its $5 par common stock to provide funds for research and development. If the issue price is $16 per share, what is the journal entry to record the sale of the shares
Answers
Answer:
Please see the journal entry below.
Explanation:
Cash account Dr
(2m shares × $16 per share) $32,000,000
Common stock account Cr
(2m shares × $5 per common stock) $10,000,000
APIC - Common stock account Cr
[($16 - $5) × 2m shares]
$22,000,000
What is the value of a perpetuity that pays $100 every 3 months forever? The interest rate quoted on an APR basis is 6%.
Answers
Answer:
$6,666.67
Explanation:
According to the given situation, the computation of the value of a perpetuity is shown below:-
Value of Perpetuity = Quarterly Payment ÷ Quarterly Interest Rate
Now, we will put the values into the above formula to reach the value of a perpetuity
= $100 ÷ (6% ÷ 4)
= $100 ÷ 0.0150
= $6,666.67
Therefore for computing the value of perpetuity we simply applied the above formula.
Jamal lost his job as a shipbuilder. His plant closed down "temporarily" but never reopened and will not. Jamal's skills are very specialized and no longer in demand. His unemployment is best classified as .
Answers
Answer:
Structural unemployment
Explanation:
Since Jamal's specialized skills are no longer in demand, this is a clear example of structural unemployment.
Structural unemployment is a situation that exists when the skills one can offer and the available jobs are not matched. It is caused by changes in technology thereby causing the skills that one possesses to be old fashioned. Jamal would have to learn new skills that are in demand to be employable.
A company's normal operating activity is to produce 500 units per month. During its first two months of operaetion, it produced 100 units per month. Following a great article about the product, product spiked to 1,000 units per month, but the spike only lasted for one month. Which of the following best approximates the company's relevant range?
a. 450-510 units.
b. 100-1,000 units.
c. 500-1,000 units.
d. 100, 500, or 1,000 units.
Answers
Answer:
a. 450-510
Explanation:
450-510 units which best approximates the company's relevant range. The correct option is A.
What is an operating activity?All of a company's continuing marketing efforts for its goods and services are referred to as operating activities. Non-operating activities are one-time occurrences that could have an impact on the company's regular, core business but also on sales, costs, or cash flow.
Given,
Normal Producing Units = 500 units per month
Last month produced = 1000 units
Production for first 2 months = 100 units per month
Calculate the range of company produce units =?
Total units produce = 2 x 100 + 9 x 500 + 1 x 1000/12
Total units produce = 5700/12 = 475 units
The relevant range for the company producing the units is 450-510 units because 475 units is lies between in such range.
Thus, the ideal selection is option A.
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A market economy is regulated by the interactions between which two things?
Answers
Answer:
b is the answer
Explanation:
producers and consumers
Legacy issues $640,000 of 8.5%, four-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. They are issued at $570,443 and their market rate is 12% at the issue date.
Required:
Record the issue of bonds with a par value of $640,000 cash on January 1, 2017 at an issue price of $570,443.
Answers
Answer:
Debit Credit
Jan 1 2017
Cash 570,443
Discount on bond 69,557
Bond payable account 640,000
For the issue of bonds on discount
Explanation:
Legacy sold the bonds at a discount .A bond is said to be sold at a discount if it is sold at a price less that its face value. The difference is called the discount.
To record the issuance of a bond at discount, the following accounts would be used :
Cash account- to record the amount received from the issuanceDiscount on bonds- this a contra-liability account to record the discount on the issueBond payable account : Another liability account to record the face value or principal amount of the bond.Discount on bond = 640,000 - 570,443 = 69,557
Accounting entries:
Debit Credit
Jan 1 2017
Cash 570,443
Discount on bond 69,557
Bond payable account 640,000
For the issue of bonds on discount
Note that the cash account was debited to increase the asset value and the the bond payable account credit to recognize an increase in liability.
True or False:
Transactions that result in significant investing and financing activities bu that do not involve cash are reported either directly after the statement of cash flows or in a note to the financial statements
Answers
Answer: True
Explanation:
Transactions that do not increase or decrease cash, but that result in significant investing and financing activities, are reported as noncash activities either directly after the cash flow statement or in a note to the financial statements.
It is true that In cash-flow statement, any transaction that do not involve cash are reported directly after the statement or in a note to the financial statements
Non-cash activities includes depreciation amortization, unrealized gain, unrealized loss etc
In accounting, non-cash investing or financing activities are required to be disclosed in the footnotes to the financial statements or within the cash flow statement.
Therefore, It is true that In cash-flow statement, any transaction that do not involve cash are reported directly after the statement or in a note to the financial statements.
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Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take three rights to buy a new share in the offering at a subscription price of $53. At the close of business the day before the ex-rights day, the company’s stock sells for $80 per share. The next morning, you notice that the stock sells for $65 per share and the rights sell for $2 each.
Required:
a. Are the stock and the rights correctly priced on the ex-rights day?
b. Describe a transaction in which you could use these prices to create an immediate profit.
Answers
Answer:
a. Are the stock and the rights correctly priced on the ex-rights day?
stock price at ex-right = [(3 x $80) + $53] / 4 = $73.25
cost of ex-right = $80 - $73.25 = $6.75
the rights are underpriced since they are sold at $2, and they should sell at $6.75
b. Describe a transaction in which you could use these prices to create an immediate profit.
You can purchase 3 rights at $6 and then pay subscription price ($53) and you would have an stock at $59. Your profit = $65 - $59 = $6 per stock.
Acme Company’s production budget for August is 17,700 units and includes the following component unit costs: direct materials, $6.0; direct labor, $10.2; variable overhead, $6.2. Budgeted fixed overhead is $34,000. Actual production in August was 18,630 units. Actual unit component costs incurred during August include direct materials, $8.40; direct labor, $9.60; variable overhead, $7.00. Actual fixed overhead was $35,700. The standard fixed overhead application rate per unit consists of $2 per machine hour and each unit is allowed a standard of 1 hour of machine time.Required:Calculate the fixed overhead budget variance and the fixed overhead volume variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Answers
Answer:
a. $1,700 U
b. $3,260 F
Explanation:
a. Fixed over head budget variance = Actual fixed overhead - Budgeted fixed overhead
Actual fixed overhead = $35,700
Budgeted fixed overhead = $34,000
Fixed overhead budget variance = $35,700 - $34,000
= $1,700 U
b. Fixed overhead volume variance = Budgeted fixed overhead - Standard fixed overhead
Standard fixed overhead application rate = $2 per machine hr × 1hr
= $2
Budgeted fixed overhead = $34,000
Standard fixed overhead = Standard hours for actual output × Budgeted rate
= (18,630 units × 1hr) × $2
= $37,260
Fixed overhead volume variance
= $34,000 - $37,260
= 3,260 F
"he company’s beginning cash balance was $90 and its ending balance was $85. Required: 1. Use the indirect method to determine the net cash provided by operating activities for the year. 2. Prepare a statement of cash flows for the year."
Answers
Answer:
1. Net cash provided by operating activities for the year = $130
2. Ending cash balance = $85
Explanation:
Note: This question is not complete. A complete question is therefore provided before answering the question. See the attached pdf file for the complete question.
The explanation to the answer is now provided as follows:
1. Use the indirect method to determine the net cash provided by operating activities for the year.
Note: See the part 1 of the attached excel file for the calculation of the net cash provided by operating activities for the year.
Note: See the part 1 of the attached excel file for the calculation of the net cash provided by operating activities for the year.
Cash flows from operating activities refers to the section of the cash flow statement that shows the cash generated and provided by the ongoing regular business activities of a company in a particular period. Cash flows from operating activities normally comprise of net income from the income statement, adjustments to net income as well as changes in working capital.
2. Prepare a statement of cash flows for the year.
Note: See the part 1 of the attached excel file for the statement of cash flows for the year.
Statement of cash flow refers to the financial statement that presents the effect of changes in balance sheet accounts and income on cash and cash equivalents by breaking it down to operating, investing, and financing activities.
It is not possible to create a per unit MCS if you are given total revenue and selling price. True False
Answers
Answer:
True
Explanation:
A per unit MCS cannot be created if you are given total revenue and selling price because per unit MCS is created by dividing the given total revenue by the total units of products ( for revenue per unit of product )
And also dividing the total cost by the total units of products ( for cost per unit of product ) hence the absence of the number of products will make it impossible to create a per unit MCS.
The whole cost of sales of welfare's and commodities is called total revenue while the trading price is the price the purchaser spends on acquiring the goods and commodities.
Yes, the given statement is true.
To generate per unit MCS total income and sale price cannot serve as determinants.MCS is estimated by dividing the total income by the generation of total assemblies.Also, MCS is determined by dividing total cost by the total assemblies of products so that the cost per unit can be determined.Therefore without the quantity of production MCS cannot be determined.
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A $5,000 bond with a coupon rate of 5.1% paid semiannually has eight years to maturity and a yield to maturity of 8.9%. If interest rates rise and the yield to maturity increases to 9.2%, what will happen to the price of the bond?
Answers
Answer:
The bond's market price will decrease by $72.08 (1.83%) from $3,928.89 to $3,856.81.
Explanation:
bond's current market price:
$5,000 / (1 + 4.45%)¹⁶ = $2,491.35
$127.50 x 11.27483 (PV annuity factor, 4.45%, 16 periods) = $1,437.54
current market price = $3,928.89
if interests rise and YTM increases to 9.2%, then new market price:
$5,000 / (1 + 4.6%)¹⁶ = $2,434.80
$127.50 x 11.15305 (PV annuity factor, 4.45%, 16 periods) = $1,422.01
current market price = $3,856.81
Granger Inc. Comparative Balance Sheets December 31
Assets 2017 2016
Cash $80,800 $48,400
Accounts receivable 87,800 38,000
Inventory 112,500 102,850
Prepaid expenses 28,400 26,000
Long-term investments 138,000 109,000
Plant assets 285,000 242,500
Accumulated depreciation (50,000) (52,000)
Total $682,500 $514,750
Liabilities and Stockholders' Equity
Accounts payable $102,000 $67,300
Accrued expenses payable 16,500 21,000
Bonds payable 110,000 146,000
Common stock 220,000 175,000
Retained earnings 234,000 105,450
Total $682,500 $514,750
Granger Inc. Income Statement Data For the Year Ended December 31, 2017
Sales revenue $388,460
Less:
Cost of goods sold $135,460
Operating expenses, excluding depreciation 12,410
Depreciation expense 46,500
Income tax expense 27,280
Interest expense 4,730
Loss on disposal of plant assets 7,500 233,880
Net income $154,580
Additional information:
1. New plant assets costing $90,000 were purchased for cash during the year.
2. Old plant assets having an original cost of $51,750 and accumulated depreciation of $43,650 were sold for $1,350 cash.
3. Bonds payable matured and were paid off at face value for cash.
4. A cash dividend of $23,427 was declared and paid during the year.
Required:
Prepare a statement of cash flows for Granger Inc. using the direct method.
Answers
Answer:
GRANGER INC.
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED DECEMBER 31, 2017
Particulars Amount$
Cash flow from operating activities
Net Income 154,580
Adjustments to reconcile net income to net cash
provided by operating activities
Adjustment for non cash effects
Depreciation expense 46,500
Loss on sale of plant assets 7,500
Change in operating assets & liabilities
Increase in Accounts receivable -49,800
Increase in inventory -9,650
Increase in prepaid expenses -2,400
Increase in accounts payable 34,700
Decrease in accrued expenses payable -4,500
Net cash flow from operating activities (a) 176,930
Cash Flow from Investing activities
Old Plant assets sold 1,350
New plant assets purchased -90,000
Long-term investments purchased -29,000
Net cash Flow from Investing activities (b) -117,650
Cash Flow from Financing activities
Cash dividends paid -23,427
Common stock issued 45,000
Bonds paid -36,000
Net cash Flow from Financing activities (c) -14,427
Net Change in cash c=a+b+c 44,853
Add: Beginning cash balance 48,400
Closing cash balance 93,253
On January 1, 2018, Frontier World issues $40.7 million of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new ride that combines a roller coaster, a water ride, a dark tunnel, and the great smell of outdoor barbeque, all in one ride. rev: 11_03_2016_QC_CS-68413 Required: 1-a. If the market rate is 8%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
Answers
Answer:
$44,728,243.62
Explanation:
face value $40,700,000
coupon rate 9%, semiannual 4.5%
maturity 20 years x 2 = 40 periods
market interest rate 8%
issue price?
present value of face value = $40,700,000 / (1 + 4%)⁴⁰ = $8,477,364.12
present value of coupon payments = $1,831,500 x 19.793 (PV annuity factor, 4%, 40 periods) = $36,250,879.50
market price = $8,477,364.12 + $36,250,879.50 = $44,728,243.62
Journal entry to record issuance of the bonds:
January 1, 2018, bonds are issued at a premium
Dr Cash 44,728,243.62
Cr Bonds payable 40,700,000
Cr Premium on bonds payable 4,028,243.62
Brennan's Boats is considering a project which will require additional inventory of $128,000, will decrease accounts payable by $7,000, and will increase accounts receivable by $56,000. What is the initial project cash flow needed for net working capital?
Answers
Answer:
$191,000
Explanation:
Brennan's Boats is considering a project in this, the initial project cash flow needed for net working capital is $ 191,000.
What do you mean by the net working capital?The difference between a company's short-term assets and its short-term debts and liabilities is known as net working capital (NWC). Positive net working capital is excellent since it shows that a company's financial obligations have been met and allows it to invest in other operational needs.
Current assets less Current Liabilities equals Working Capital. An entity has a working capital deficiency, also known as a working capital deficit and negative working capital, if current assets are fewer than current liabilities.
Here,
Calculation of net working capital (NWC):
Net working capital = $128,000 + 7,000 + 56,000
Net working capital = $191,000.
Therefore, Brennan's Boats is considering a project in this, the initial project cash flow needed for net working capital is $ 191,000.
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Jesse Livermore, Human Resources Director of GA Trading Company recently read a report on "The state of the Baby Boomer generation between the years 2011-2030," that he believes to be factually correct. To respond to this growing trend, he has created an employee program that hopes to attract and retain _____ workers through flexible schedules, training opportunities, and creative pay schedules.
Answers
Answer: younger
Explanation:
From the question, we are informed that Jesse Livermore, Human Resources Director of GA Trading Company recently read a report on "The state of the Baby Boomer generation between the years 2011-2030," that he believes to be factually correct.
To respond to this growing trend, Jesse has created an employee program that hopes to attract and retain younger workers through a flexible schedule, training opportunities, and creative pay schedules.
A firm hires labor in a perfectly competitive labor market. Its current profit-maximizing hourly output is 100 units, which the firm sells at a price of $5 per unit. The Marginal Physical product (MPP) of the last unit of labor employed is 5 units per hour. The firm pays each worker an hourly wage of $15. a)What Marginal Revenue (MR) does the firm earn from sale of the output produced by the last worker employed? b)Does this firm sell its output in a perfectly competitive market?
Answers
Answer:
A.Marginal Revenue $3
B. No
Explanation:
A.Calculation for the Marginal Revenue (MR) that the firm earn from sale of the output produced by the last worker employed
Based on the information given we were told that the Marginal Physical product of the last unit of labor was 5 units per hour in which the firm pays each worker an hourly wage of $15. Now let calculate the Marginal Revenue using this formula
Marginal Revenue = Employees hourly wages/Marginal Physical product unit of labor
Where,
Employees hourly wages=$15
Marginal Physical product unit of labor =5 units per hour
Let plug in the formula
Marginal Revenue =$15/5
Marginal Revenue =$3
B. No reason been that the current profit-maximizing hourly output was 100 units in which we were told that the firm sells at a price of $5 per unit. While the Marginal Revenue gotten in (A) above was $3 which is lesser or lower than $5 per unit which simply means that the firm does NOT sell its output in a well perfectly competitive market .
every organization has a set of unwritten norms that mambers of the organization accept and understand and which guide their actions. this system of shared meaning is
Answers
Answer:
Organization's culture.
Explanation:
Every organization has a set of unwritten norms that members of the organization accept and understand and which guide their actions. This system of shared meaning is organization's culture.
An organizational culture typically comprises of values, norms, beliefs and assumptions which defines the most appropriate ways of behaving in an organization (work environment).
Generally, an organizational culture is usually designed and established by the top executives or management of an organization and communicated to the various employees working there.
According to Robert Quinn and Kim Cameron, an organizational culture can be divided into four (4) main categories;
1. Adhocracy culture.
2. Clan culture.
3. Hierarchy culture.
4. Market culture.
Additionally, the significance of an organizational culture is simply that it creates a unique social, efficient and psychological environment of an organization.
The incredible shrinking $50 bill in 1957 was worth $50, but in 2007 it is worth only $. a. What was the compounded average annual inflation rate (loss of purchasing power) during this period of time? b. Fifty dollars invested in the stock market in 1957 was worth $ in 2007. In view of your answer to Part (a), what was the annual real interest rate earned on this investment?
Answers
Answer:
A. 4.02%
B. 3.49%
Explanation:
a. Computation of the compounded average annual inflation rate during this period of time
Using this formula
Annual inflation rate=FV/ P *(1+i)^t
Where,
t = 2007 - 1957 = 50 yrs
FV = 6.42
P = 50
Let plug in the formula
Annual inflation rate = (6.42 / 50)^(1/50) - 1
Annual inflation rate= 0.1284 ^ 0.02 - 1
Annual inflation rate= 0.959779 - 1
Annual inflation rate= -0.0402208 *100%
Annual inflation rate=4.02%
b. Computation of the annual real interest rate earned on this investment
First step is to find the Norminal ROR
Using this formula
Norminal ROR
= FV/ P *(1+i)^t
Where
FV = 1998
P = 50
let plug in the formula
Norminal ROR = (1998 / 50)^(1/50) -1
Norminal ROR= 39.96 ^ 0.02 - 1
Norminal ROR= 1.076545 - 1
Norminal ROR= 0.0765457 *100
Norminal ROR= 7.65%
Last step is to calculate for annual real interest rate earned using this formula
Annual real interest rate earned = (1+ Nominal ROR) / (1+ Inflation) -1
Let plug in the formula
Annual real interest rate earned=(1+0.0765457) / (1+0.0402208) - 1
Annual real interest rate earned= (1.0765457) / (1.0402208) - 1
Annual real interest rate earned= 1.034920 - 1
Annual real interest rate earned= 0.0349*100
Annual real interest rate earned=3.49%
Therefore the Annual inflation rate will be 4.02% while Annual real interest rate earned will be 3.49%
What is the value of a zero-coupon bond with a par value of $1,000 and a yield to maturity of 6.60%? The bond has 19 years to maturity.
Answers
Answer:
$296.90
Explanation:
For computing the value of the zero coupon bond we need to apply the present value formula i.e to be shown in the attachment below:
Given that,
Future value = $1,000
Rate of interest = 6.60%
NPER = 19 years
PMT = $0
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the value of zero coupon bond is would be $296.90
Explain some of the basic principles of cost management, such as profits, life cycle cost, tangible and intangible costs and benefits, direct and indirect costs, and Reserves.
Answers
Answer:
Profits - These refer to the revenues accrued from a project less the costs of the project.
Life Cycle Cost - Life Cycle Cost is a concept in Cost management where the cost of a project throughout it's entire life is assessed. Costs assessed therefore include; initial capital costs, maintenance costs and operating costs.
Tangible and Intangible Costs - When costs are tangible, quantifying them.is easy as the cost can be stated and directly attributable to a cost object eg, cost of a fixed asset. Intangible cost on the other hand is not easy to quantify and is not easily attributable. For instance, the experience that a Project Manager leaves with if they resign.
Tangible and Intangible Benefits - Like tangible costs, tangible benefits are easily quantifiable and noticeable such as trade discounts from buying in bulk. Intangible benefits on the other hand are not easily quantifiable. An example would be Employee motivation from a safer working Environment.
Direct and Indirect Costs - Direct costs are costs that can be easily traced to a cost object. In other words, the reason for the cost is known e.g labor cost for assembling a product. Indirect Costs are harder to trace to a cost object even though they are related to production. An example would be the Electricity used for production.
Reserves - Cost reserves are monies held for any emergency expenses that may come up. This way the company can deal with them speedily.
Due to numerous lawsuits, major chemical manufacturer has recently experienced a market reevaluation. The firm has 15-year, 8% coupon bond, paid semiannually and par value of $1,000. The required nominal rate (yield) on this debt has now risen to 10%. What is the current price of this bond?
Answers
Answer:
Bond Price = 846.2754897 rounded off to $846.28
Explanation:
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = 0.08 * 1/2 * 1000 = $40
Total periods (n)= 15 * 2 = 30
r or YTM = 10% * 1/2 = 5% or 0.05
The formula to calculate the price of the bonds today is attached.
Bond Price = 40 * [( 1 - (1+0.05)^-30) / 0.05] + 1000 / (1+0.05)^30
Bond Price = 846.2754897 rounded off to $846.28
Cadiz Co. uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $300,000 to $360,000. Variable costs and their percentage relationships to sales are: Sales commissions 5% Advertising 4% Traveling 7% Delivery 1% Fixed selling expenses consist of sales salaries $40,000 and depreciation on delivery equipment $10,000. The actual selling expenses incurred in February, 2019, by Cadiz are as follows: Sales commissions $17,200 Advertising 12,000 Traveling 23,700 Delivery 2,400 Fixed selling expenses consist of sales salaries $41,500 and depreciation on delivery equipment $10,000. Prepare a flexible budget performance report, assuming that February sales were $330,000.
Answers
Answer:
Cadiz Co.
Flexible Budget Performance Report:
Budget
Flexible Actual Variance
Sales $330,000 $330,000 $0
Variable costs:
Sales commissions 16,500 17,200 700 U
Advertising 13,200 12,000 1,200 F
Traveling 23,100 23,700 600 U
Delivery 3,300 2,400 900 F
Fixed selling expenses:
Sales Salaries 40,000 41,500 1,500 U
Depreciation: delivery 10,000 10,000 0 None
Total 700 U
Explanation:
a) Data:
Budget
Static Actual Variance
Sales $360,000 $330,000 $30,000 U
Variable costs:
Sales commissions 18,500 17,200 1,300 F
Advertising 14,400 12,000 2,400 F
Traveling 25,200 23,700 1,500 F
Delivery 3,600 2,400 1,200 F
Fixed selling expenses:
Sales Salaries 40,000 41,500 1,500 U
Depreciation: delivery 10,000 10,000 0 None
b) Flexible Variable Expenses:
Sales commission = 5% of $330,000 = $16,500
Advertising = 4% of $330,000 = $13,200
Traveling = 7% of $330,000 = $23,100
Delivery = 1% of $330,000 = $3,300
c) Cadiz Co.'s flexible budget changes with respect to the volume of sales. Since some percentages of the sales are given for Sales commission, advertising, traveling, and delivery, these change as the volume of sales changes. This flexible budget forms the basis for the management of Cadiz Co. to judge the actual performance with the budget, which enables control to be instituted.
What element of the tourism and recreation industry has increased tenfold over the last fifteen years, bringing increased revenue to cities in the Coastal South such as Miami, Fort Lauderdale, and Tampa
Answers
Answer: A. The Cruise Ship Industry
Explanation:
The Cruise Ship Industry has been until recently (due to the Pandemic) one of the fastest growing elements of Tourism and Recreation in the United States having increased tenfold over the last 15 years.
Indeed in 2018, it was estimated that the industry added over $52 billion to the US economy as well as employing over 400,000 people.
This massive growth has benefitted port cities from which these Cruises take off and return to such as Miami, Fort Lauderdale, and Tampa immensely.
"A mutual fund manager of a "high technology" fund feels that the market for this sector will remain flat in the next coming months and he wishes to generate some additional income against his portfolio. The best strategy is to sell:"
Answers
Answer: C. narrow-based calls
Explanation:
Narrow based calls would include calls from one industry. The mutual fund is an "High technology" firm which means that it is a narrow based fund for instance as it is interested only in one industry being the High Tech industry.
The manager should invest in Narrow based calls that focus on the sector if he anticipates that the market will remain flat for the sector. Narrow based Calls are more volatile because they are specific and with the volatility comes higher premiums to be charged.
Should he wish to make income against the portfolio, he should sell these knowing that the options will not be called as the market will remain flat.
