Answer:
The number of sheets you should order is 219 sheets.
Explanation:
Before we can determine the number sheets to order, we need to first calculate the targeted number of sheet as follows:
TN = DD * (LT + RT) + z + SDD * [tex]\sqrt{LT + RT}[/tex] .......................... (1)
Where;
TN = Targeted number of sheets = ?
DD = Daily demand = 5,000 / 365 = 13.70
LT = Lead time = 10
RT = Review time or stock taking time = 14
SDD = Standard Deviation of Daily Demand = 5
z = 1.64
Note: Since Dunstreet’s Department Store would like to develop an inventory ordering policy of a 95 percent probability of not stocking out, the z is determined by just typing the function =NORM.S.INV(0.95) in the Microsoft Excel to obtain the 1.64.
Substituting the values into equation (1), we have:
TN = 13.70 * (10 + 14) + 1.64 * 5 * [tex]\sqrt{10+14}[/tex]
TN = 369 approximately
Since there are currently 150 sheets on hand, the number of sheets you should order can be determined as follows:
Number of sheet to order = TS - Number of sheets on hand = 369 - 150 = 219 sheets
Therefore, the number of sheets you should order is 219 sheets.
Answer:
219 sheets
Explanation:
The computation of the number of sheets ordered is computed by applying the following formula
Number of sheets ordered is
= Average daily demand × (Lead time + time taken) + Service probability × standard deviation in lead time - present inventory level
where,
Standard deviation in lead time is
= [tex]\sqrt{10+14(5)}[/tex]
= 24.49
And, the service probability level could be find out by applying the =NORMSINV(0.95) in excel so the value of z is 1.64
And, all other things would remain the same
= 5,000 ÷ 365 days × (10 + 14) + (1.64) (24.49) - 150
= 219 sheets
Mars Inc. has a defined benefit pension plan. On December 31 (the end of the fiscal year), the company received the PB0 report from the actuary. The following information was included in the report: ending PBO, $110,000 benefits paid to retirees. $10,000, interest cost, $7,200. The discount rate applied by the actuary was 8%. What was the beginning PBO?
A) $100,000
B) $112,000.
C) $90,000.
D) $107,200.
Answer:
C) $90,000
Explanation:
Beginning PBO = Interest cost/Discount rate =
Beginning PBO = $7,200/8%
Beginning PBO = $90,000
Discuss three major factors that contribute to an employee's decision to join a union. Discuss the five reasons that have contributed to the trend of decline in unionization g
Answer:
The answer is below
Explanation:
Three major factors that contribute to an employee's decision to join a union.
1. Greater Bargaining Power
As an individual employee, it can be difficult to negotiate for wage increase or better working condition generally. However, being a member Union, together the group can negotiate and demand for what they feel is right for their members. In a rare occasion, the threat of a strike by a Union is a great tool to bargain well with the employer.
2. Minimize Discrimination
As a Union, it is easier to demand for equality in terms of wage, working condition, promotion, leave etc. Unlike individual employee, who may be facing discrimination from his or her supervisor as to employee related issue. Union can ensure the management used the right policies that seek for equality among all its employees without favoritism or discrimination.
3. Sense of Security
An employee may join the Union on the basis that, Union can save them against abrupt dismissal or other types of work insecurities including accident, injury, illness etc.
Also, Union can help secure retirement benefits and ensure the management improve on the employees' welfare generally.
Five reasons that have contributed to the trend of decline in unionization
1. Irrelevance appearance of the Union:
Many workers believe that Union is not necessary because in the time of economic boom, getting wage increase and other working benefits can be gotten be individual employee and not necessarily through a Union, and at the same time, during economic downturn, unions often times don't have the capacity to protect their members from layoffs, wage and benefit reductions and tougher working conditions.
2. Poor Image of the Union:
Many employers and employees tend to view union with negativity, in the sense that, often times, their demands can be unreasonable, and are characterized by issue of labor racketeering, mob influence and embezzlement.
3. Unions are Seen as Political:
For some employees, they believe that Union tend to use their money or Union dues to support a political candidate. This in turn has made some employees who are neutral, not wanting to join the Union.
4. Reliance on goverment:
Many employees now believe that, government, not Union gives better form of security and voice to air their opinions. These includes pensions, healthcare, protection.
5. Global competition and deregulation in Unionized industries:
Since most of the companies or industries that have union has been deregulated, this has increased its competition, there by, making the need for union not really necessary, because with or without Union, one may still faces sack.
You short-sell 200 shares of Rock Creek Fly Fishing Co., now selling for $50 per share. If you want to limit your loss to $2,500, you should place a stop-buy order at ____. A. $37.50 B. $62.50 C. $56.25 D. $59.75
Answer:
The answer is B. $62.5
Explanation:
A stop order is an order to either buy or sell a stock immediately the stock price reaches a certain price. This particular price is called stop price.
A buy stop order is an order to buy a stock immediately the its price reaches a certain stop price. When stop price is above the current market price, a buy stop order is made.
Let's now go back to the question;
Stop buy order will be placed at:
($2,500 / 200 shares) + $50
= $12.5 + $50
= $62.5
Japanese tourists come to experience the magic of Disney World and other attractions around Orlando, Florida. These tourists are:___________
[A] contributing to the United States’ deficit balance of payments.
[B] helping increase the balance of payments for Japan.
[C] exporting products and services back to Japan.
[D] further decreasing the United States’ balance of payments.
[E] helping the United States’ balance of payments.
Answer:
Option E, helping the United States’ balance of payments, is the right answer.
Explanation:
Option “E” is the correct answer because the balance of payment records all the transactions that occurred between the home country and the rest of the word. Therefore, if the foreign tourist spends in the country that means they are helping the balance of payment. This will increase the country’s surplus and the ability to pay the expenses because tourism is helping to generate revenue.
Pattison Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. Fixed Element per Month Variable Element per Customer Served Revenue $5,500 Employee salaries and wages $46,300 $1,000 Travel expenses $ 500 Other expenses $32,500 When the company prepared its planning budget at the beginning of May, it assumed that 20 customers would have been served. However, 17 customers were actually served during May. The activity variance for "Travel expenses" for May would have been closest to:
Answer:
Pattison Corporation
Activity Variance for "Travel expenses" for May would have been closest to:
$1,500 Favorable
Explanation:
Data and Calculations:
Fixed Element Variable Element per
per Month Customer Served
Revenue $5,500
Employee salaries
and wages $46,300 $1,000
Travel expenses $ 500
Other expenses $32,500
The Travel Expenses Activity Variance = Actual cost minus budgeted cost
= $8,500 - $10,000
= $1,500 Favorable
Actual travel expenses = ($500 x 17)
= $8,500
Budgeted travel expenses = ($500 x 20)
= $10,000
Pattison Corporation's activity variance for Travel Expenses for the month of May is the difference between the actual travel expenses and the budgeted travel expenses. The budgeted expenses are based on budgeted number of customers served in May while the actual expenses are based on actual number of customers served in May.
When convertible preferred stock is converted into common stock:______.
a. cash is debited.
b. a gain or loss can be recognized.
Answer:
b. a gain or loss can be recognized.
Explanation:
Convertible preferred stock is an option for shareholders with preferred shares where they have the choice of converting their preferred shares to common shares. The conversion is best done at a time when the common stock is above the conversion price. At this time, the stockholder can make a profit or gain. But if the common share is below the conversion price, the shareholder would most likely record a loss if he converts.
One disadvantage of this conversion process is that, once the preferred stock is converted to the common stock, the preferred shareholder gives up his rights as a preferred shareholder which includes no fixed dividends and higher claims on assets.
Each year, public schools are rewarded with bigger budgets for achieving a rating of "excellent" or "recommended" and are punished for rating "needs improvement." These ratings are based on meeting thresholds on a broad set of measures such as attendance rates, graduation rates, standardized test scores, SAT scores, and so on. True or False: This funding structure incentivizes schools to seek out and serve lower-performing students. True False
Answer:
Each year, public schools are rewarded with bigger budgets for achieving a rating of "excellent" or "recommended" and are punished for rating "needs improvement." These ratings are based on meeting thresholds on a broad set of measures such as attendance rates, graduation rates, standardized test scores, SAT scores, and so on. True or False
This funding structure incentivizes schools to seek out and serve lower-performing students. True False
Explanation:
The funding structure is meant to encourage public schools for improved performance in all the performance measures. These performance measures are the means to judge whether proper application is being achieved with the funds provided by the government to such schools. They also encourage healthy competition among public schools when followed judiciously. Since they have some internal and external benchmarks, the performance measures are like a balanced scorecard for performance evaluation.
Ohno Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Ohno’s monthly manufacturing cost and other expense data are as follows.
Rent on factory equipment $11,600
Insurance on factory building 2,500
Raw materials (plastics, polystyrene, etc.) 79,700
Utility costs for factory 900
Supplies for general office 300
Wages for assembly line workers 63,700
Depreciation on office equipment 800
Miscellaneous materials (glue, thread, etc.) 1,200
Factory manager’s salary 6,400
Property taxes on factory building 500
Advertising for helmets 14,500
Sales commissions 10,600
Depreciation on factory building 1,600
Required:
Prepare an answer sheet with the following column headings:
Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs
Answer:
Cost Item Direct Direct Manufacturing Period
materials labor overhead costs
Rent on factory $11,600
equipment
Insurance on $2,500
factory building
Raw materials $79,700
Utility costs $900
for factory
Supplies for $300
general office
Wages assembly $63,700
line workers
Depreciation on $800
office equipment
Miscellaneous $1,200
materials
Factory manager’s $6,400
salary
Property taxes on $500
factory building
Advertising for $14,500
helmets
Sales commissions $10,600
Depreciation on $1,600
factory building
TOTALS $79,700 $63,700 $24,700 $26,200
Bryce Co. sales are $801,000, variable costs are $465,100, and operating income is $287,000. What is the contribution margin ratio
Answer:
Contribution margin ratio= 0.42
Explanation:
Giving the following information:
Bryce Co. sales are $801,000
Variable costs are $465,100
Operating income is $287,000.
To calculate the contribution margin ratio, we need to use the following formula:
contribution margin ratio= (sales - variable cost) / sales
contribution margin ratio= (801,000 - 465,100) / 801,000
contribution margin ratio= 0.42
Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic.Activity Expected Costs Expected Activity Handling materials $625,000 100,000 parts Inspecting product 900,000 1,500 batches Processing purchase orders 105,000 700 orders Paying suppliers 175,000 500 invoices Insuring the factory 300,000 40,000 square feet Designing packaging 75,000 2 modelsAssume that the following information is available for the company’s two products for the first quarter of 2017.Production volume 10,000 units 30,000 unitsParts required 20,000 parts 30,000 partsBatches made 250 batches 100 batchesPurchase orders 50 orders 20 ordersInvoices 50 invoices 10 invoicesSpace occupied 10,000 sq. ft. 7,000 sq. ftModels 1 model 1 modelRequired:Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model?
Answer:
I can't understand this type of questions
The firm has a target debt-equity (D/E) ratio of 0.76. Its cost of equity is 15.3 percent, and its pretax cost of debt is 9 percent. What is the WACC given a tax rate of 21 percent
Answer:
11.76%
Explanation:
The computation of the Weighted average cost of capital (WACC) is shown below:
= Weightage of debt × cost of debt × ( 1 - tax rate)+ (Weightage of common stock) × (cost of common stock)
= (0.76 ÷ 1.76 × 9%) × ( 1 - 21%) + (1 ÷ 1.76 × 15.3%)
= 3.07% + 8.69%
= 11.76%
Hence, the WACC is 11.76%
We simply multiplied the weight of capital stucture with its cost
If you could purchase IBM stock and simultaneously sell the stock for $5 more, you would be involved in one type of economic activity?a. indifference principleb. arbitragec. carry traded. marked to markete. none of the above
Answer:
arbitrage
Explanation:
Arbitrage can be defined as an act or process of buying buying and selling an asset simultaneously. Purchasing IBM stock and selling it for 5 dollar more simultaneously is an example of arbitrage. Such a seller is going to cash in on the price difference in buying and selling this stock. It is simply taking advantage of the difference in price that is gotten from buying and reselling this stock at 5dollars.
A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,200 and other assets of $7,800. Equity is worth $9,000. The firm has 600 shares of stock outstanding and net income of $760. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?
Answer: $1.46
Explanation:
Earnings per share = Net Income/Number of shares
Value of shares at current = 9,000/600
= $15 a share
Excess cash is $1,200.
Using that, the following number shares can be purchases;
= 1,200/15
= 80 shares
New number of shares = 600 - 80
= 520 shares
New EPS
= 760/520
= $1.46
Under Armour uses its website to sell its products, but Nathan Shriver, art director of Interactive, believes that what the website does, and what advertising does not do, is make the brand
Answer:
This question is incomplete, the options are missing. The options are the following:
a) Friendlier to the customer
b) Recognizable in retail stores
c) Seem special compare to off-label gear
d) Part of the consumer's daily life
e) Seem of higher quality than Nike
And the correct answer is the option D: Part of the consumer's daily life.
Explanation:
To begin with, when Nathan Shriver says that he believes that the website and advertising of the company does is to make the brand more part of the consumer's daily life refers that in the end it is that action what truly makes the company to increase its sales due to the fact that thanks to the marketing campaigns now the brand is more important in the life of the consumers and more due to the fact that those advertising make them understand that the use of Under Armour's products is essential to every day training and movement that the clients might face.
Consider a basket of consumer goods that costs $90 in the United States. The same basket of goods costs CNY 105 in China.
Holding constant the cost of the basket in each country, compute the real exchange rates that would result from the two nominal exchange rates in the following table.
Cost of Basket in U.S (Dollars) Cost of Basket in China (Yuan) Nominal Exchange Rate (Yuan per dollar) Real Exchange Rate (Baskets of Chinese goods per basket of U.S goods)
90 105 7.00
90 105 10.50
Answer:
The real exchange rates that would result from the two nominal exchange rates are:
For the first row in the table RER is 6.
For the second row in the table RER is 9.
Note: See the attached excel file for the table.
Explanation:
Note: The table in the question is merged together. It is therefore sorted before answering the question. See the attached excel file for the sorted table.
The answer to the explanation to the answer is now provided as follows:
The real exchange rate (RER) between the the currencies of two counties can be described as the multiplication of the nominal exchange and the ratio of baskets of goods between these two countries.
RER can can therefore be calculated using the following formula:
RER = (e * P*) / P ................................. (1)
Where, from the question;
e = Nominal exchange rate or Yuan per dollar
P* = Cost of Basket in U.S (Dollars)
P = Cost of Basket in China (Yuan)
For the first row in the table:
e = Nominal exchange rate or Yuan per dollar = 7
P* = Cost of Basket in U.S (Dollars) = $90
P = Cost of Basket in China (Yuan) = 105
Substituting the values into equation (1), we have:
RER = (7 * 90) / 105
RER = 630 / 105
RER = 6
For the second row in the table:
e = Nominal exchange rate or Yuan per dollar = 10.50
P* = Cost of Basket in U.S (Dollars) = $90
P = Cost of Basket in China (Yuan) = 105
Substituting the values into equation (1), we have:
RER = (10.50 * 90) / 105
RER = 945 / 105
RER = 9
The real exchange rates that should lead from the two nominal exchange rates should be 6 and 9.
Calculation of the real exchange rate:RER = (e * P*) / P ................................. (1)
Here,
e = Nominal exchange rate or Yuan per dollar
P* = Cost of Basket in U.S (Dollars)
P = Cost of Basket in China (Yuan)
So,
e = Nominal exchange rate or Yuan per dollar = 7
P* = Cost of Basket in U.S (Dollars) = $90
P = Cost of Basket in China (Yuan) = 105
Now
RER = (7 * 90) / 105
RER = 630 / 105
RER = 6
Now
e = Nominal exchange rate or Yuan per dollar = 10.50
P* = Cost of Basket in U.S (Dollars) = $90
P = Cost of Basket in China (Yuan) = 105
So,
RER = (10.50 * 90) / 105
RER = 945 / 105
RER = 9
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Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 9 percent, has a YTM of 7 percent, and has 15 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 7 percent, has a YTM of 9 percent, and also has 15 years to maturity. The bonds have a $1,000 par value. What is the price of each bond today
Answer:
Bond Price today
Bond X = $1183.920454 rounded off to $1183.92
Bond Y = $837.1111146 rounded off to $837.11
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,
For Bond X
Coupon Payment (C) = 0.09 * 1/2 * 1000 = $45
Total periods (n)= 15 * 2 = 30
r or YTM = 7% * 1/2 = 3.5% or 0.035
The formula to calculate the price of the bonds today is attached.
Bond Price = 45 * [( 1 - (1+0.035)^-30) / 0.035] + 1000 / (1+0.035)^30
Bond Price = $1183.920454 rounded off to $1183.92
For Bond Y
Coupon Payment (C) = 0.07 * 1/2 * 1000 = $35
Total periods (n)= 15 * 2 = 30
r or YTM = 9% * 1/2 = 4.5% or 0.045
Bond Price = 35 * [( 1 - (1+0.045)^-30) / 0.045] + 1000 / (1+0.045)^30
Bond Price = $837.1111146 rounded off to $837.11
If a company has the following data, is the budget variance favorable or unfavorable? Budgeted Sales $10,000 Actual Sales. $8,000
Answer:
$2,000 unfavorable
Explanation:
The computation of the budget variance is shown below:
Budget variance is
= Budgeted sales - actual sales
where,
Budgeted sales is $10,000
And the actual sales is $8,000
Now placing these values to the above formula
So, the budget variance is
= $10,000 - $8,000
= $2,000 unfavorable
Since the actual sales is less than the budgeted sales so the same is to be unfavorable else it is favorable
What must be the price of a $5,000 bond with a 6.6% coupon rate, semiannual coupons, and two years to maturity if it has a yield to maturity of 10% APR?
Answer:
Bond Price = $4698.59
Explanation:
The price of a bond is equal to the present value of the interest payments, which are in form of an annuity, made by the bond plus the present value of the face value of the bond.
The formula to calculate the price of the bond is attached.
The semi annual coupon rate = 6.6% / 2 = 3.3%
Total period = 2 * 2 = 4
Semi annual YTM = 10% / 2 = 5%
Semi annual coupon payment = 5000 * 0.033 = 165
Bond Price = 165 * [( 1 - (1 + 0.05)^-4) / 0.05] + 5000 / (1+0.05)^4
Bond Price = $4698.59
Suppose that hypothetically there are only two countries in the world: Japan and South Korea Now suppose that at the end of year 2, Japan has positive net exports of $20 billion against South Korea. In addition, Japan has earned $1 billion in interest from its South Korean assets over the course of year 2. Question: What are the respective balances for the current account, and the financial and capital account for Japan at the end of year 2
Answer:
i) $21 billion
ii) $0
iii) $0
Explanation:
GIVEN DATA : ( two countries )
At the end of year 2
net exports = $20 billion for Japan
Interest earned from assets = $1 billion for Japan
i) The balances for the current account for Japan
export value + interest earned from assets
= $20 billion + $1 billion = $21 billion
ii) Financial account for Japan
Financial account for Japan will be zero because there is no increase or decrease in number of its assets within the given period
iii) capital account for Japan
Capital account of Japan will will have a zero balance. this is because Capital account is used to record foreign investments, local investment and the reserve account as well. and there was no investment captured within the given time that was made by Japan
The Busby Corporation had a share price at the start of the year of $26.20, paid a dividend of $0.56 at the end of the year, and had a share price of $29.00 at the end of the year. Which of the following is closest to the rate of return of investments in companies with equal risk to The Busby Corporation for this period?
A) 5%
B) 7%
C) 9%
D) 13%
Answer:
D) 13%
Explanation:
Calculation for the percentage that is closest to the rate of return of investments
First step is to find the balance amount of the share price using this formula
Share price =(End of the year Share price + End of the year dividend)-Start of the year Share price
Let plug in the formula
Share price =($29.00+$0.56)-$26.20
Share price =$29.56-$26.20
Share price =$3.36
Second step is to find the rate of return of investments
Using this formula
Rate of return of investments= Share price/Start of the year Share price
Rate of return of investments
Let plug in the formula
Rate of return of investments=$3.36/$26.20
Rate of return of investments=0.13*100
Rate of return of investments=13%
Therefore the percentage that is closest to the rate of return of investments in companies with equal risk to The Busby Corporation for this perio will be 13%
True or false: At 2019 year-end, a government has $25,000 of outstanding encumbrances. The 2019 Budgetary Comparison Scheduled will include the $25,000 whether or not the encumbrances lapse at year-end.
Answer:
True.
Explanation:
The 2019 Budgetary Comparison Schedule will include the $25,000 whether or not the encumbrances lapse at the year-end, either as outstanding encumbrances or settled encumbrances. These $25,000 encumbrances are budget reservations of appropriations so that they can be used to settle specified expenditures in the future. The purpose of making these reservations is to signal that the expenditures have been earmarked so that their cash allocations are not used for other purposes.
Pauley Company needs to determine a markup for a new product. Pauley expects to sell 15,000 units and wants a target profit of $22 per unit. Additional information is as follows:
Variable product cost per unit $19
Variable administrative cost per unit 11
Total fixed overhead 13,500
Total fixed administrative 21,000
Using the variable cost method, what markup percentage to variable cost should be used?
Answer:
81%
Explanation:
Calculation for the markup percentage to variable cost that should be used
Using this formula
Markup percentage=[(Target profit + Fixed overhead costs + Fixed administrative costs) / Total variable costs
Let plug in the formula
Markup percentage=[($22*15,000 units)+$13,500+$21,000]/$30×15,000)
Markup percentage=($330,000+$13,500+$21,000)/$450,000
Markup percentage=$364,500/$450,000
Markup percentage=0.81*100
Markup percentage=81%
Calculation for Total variable costs
Variable product cost per unit $19
Variable administrative cost per unit $11
Total variable costs =$30
Therefore the markup percentage to variable cost that should be used will be 81%
Consider the following scenario analysis:
Rate of Return
Scenario Probability Stocks Bonds
Recession 0.20 -5 % 14 %
Normal economy 0.60 15 8
Boom 0.20 25 4
Assume a portfolio with weights of .60 in stocks and .40 in bonds.
a. What is the rate of return on the portfolio in each scenario? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Answer:
a. Rate of Return on the portfolio in each scenario:
Scenario Analysis:
Rate of Return
Scenario Probability Stocks Bonds Return of Return
Recession 0.20 -5 % 14 %
= 0.20((-5% x 60%) + (14% x 40%)) = 0.0052 = 0.5%
Normal economy 0.60 15 8
= 0.60((15% x 60%) + (8% x 40%)) = 0.0732 = 7.3%
Boom 0.20 25 4
= 0.20((25% x 60%) + (4% x 40%) = 0.0332 = 3.3%
Weights 1.00 0.60 0.40
b. Expected rate of return =
Recession = 0.0052
Normal economy = 0.0732
Boom = 0.0332
Total expected returns = 0.1116 = 11.2%
Mean = 3.72% (11.2%/3)
Variance = 0.001168
Standard Deviation = 0.034 = 0.03
Explanation:
a) Data:
Scenario Analysis:
Rate of Return
Scenario Probability Stocks Bonds
Recession 0.20 -5 % 14 %
Normal economy 0.60 15 8
Boom 0.20 25 4
Weights 1.00 0.60 0.40
b) The rate of return for each portfolio is derived by weighing the securities, adding the resultant figures and applying the scenario probability. The expected rate of return is the addition of the returns of all the portfolio under the three scenarios. The step for obtaining the standard deviation is to calculate the mean, the variance, and getting the square root of the variance.
A manufacturing company is thinking about building a new factory. The new factory, if built, will give a return of $200 million in 4 years, and it would cost $125 million today to build. The company will decide to build the factory if the interest rate is
Answer:
The company will decide to build the factory if the interest rate is 12.47 %.
Explanation:
The required interest rate r, can be determined as follows ;
PV = - $125 million
n = 4
Pmt = $0
P/yr = 1
FV = $200 million
r = ?
Using a Financial Calculator, the required interest rate r, is 12.4683 or 12.47 % (2 decimal places)
Which of the following promises is subject to the "strict performance" standard? Assume that performance of the promise is not an express condition of the promisee's duty to perform. cousrse hero
Answer:
A promise to deliver a deed
Explanation:
The term, 'strict performance' is used to describe a contract between two parties. A contract is an agreement between two parties, and it is legally binding. When discharging contracts involving services, 'substantial performance' is required. For example, if I tell a painter to paint my house blue except for the kitchen and storeroom which should be painted white, and he does accordingly but failed in painting the kitchen white, he has performed substantially even though there was a minor breach. The consequences of which would be borne by him.
'Strict performance' is required in contracts where the terms are stated in express terms and the standards are very high. A 'deed' is such a contract because it is a document specifying the legal rights of a person or the ownership of a property. It requires the signatures of the two parties. Therefore, strict performance and adherence to the contractual deed are required.
IP Company has a preliminary cash balance of $25,000 and an agreement with the bank that it will keep a minimum balance of $20,000. IP Company has a beginning loan balance of $12,000.
The ending loan balance is:________.
Answer: $7,000
Explanation:
From the question, we are informed that IP Company has a preliminary cash balance of $25,000 and an agreement with the bank that it will keep a minimum balance of $20,000 and that IP Company has a beginning loan balance of $12,000.
The ending loan balance will be:
= $20,000 + $12,000 - $25,000
= $32,000 - $25,000
= $7,000
Deployment Specialists pays a current (annual) dividend of $1.00 and is expected to grow at 20% for 2 years and then at 4% thereafter. If the required return for Deployment Specialists is 8.5%, what is the intrinsic value of its stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
$30.80
Explanation:
Intrinsic value
V0=D1/1+k +D2/(1+k)^2 +DH+PH/(1 +k)^H
Let plug in the formula
First step
V0=$1 × 1.2/(1+0.085) +($1 × 1.2)^2/(1+0.085)^2 +($1 × 1.2)^2*1.04/(0.085-0.04)*(1+0.085)^2
Second step
V0=1.2/1.085+1.44/1.007225+1.44*1.04/0.045*1.177225
Third step
V0=1.2/1.085+1.44/1.007225+1.4976/0.052975
Fourth step
V0=1.10599+1.42967+28.26993
V0=$30.80
Therefore the intrinsic value of its stock will be $30.80
Brian Hickey uses his credit card in August to purchase the following college supplies: books for $425, your long bus pass for $175, food service meal ticket for $450, and season tickets to the basketball games for $125,. On September 1, he uses 650 of his financial aid check to reduce the balance. The issuing bank charges 1.2% interest per month and requires full payment within 36 months. Brian had a previous balance is zero and he makes no other purchases with his card. What is the minimum payment due September 1, and what is the balance due on October 1?
Answer:
Brian Hickey
a. Minimum due on September 1 is:
$510.90
b. Balance due on October 1 is:
$516.13
Explanation:
a) Data and Calculations:
Purchases in August:
Books = $425
Long bus pass = 175
Meal ticket = 450
Basketball games = 125
Total purchases = $1,175
Interest rate = 1.2% per month
Interest accrued 14.10
Total in debt $1,160.90
September 1:
b) Debt reduction 650.00
Balance = $510.90
Interest accrued 6.13
Ending Balance $516.13
c) The credit card interest is calculated on the remaining debt after each transaction. This interest is then added back to the debt to obtain the balance due. If Brian Hickey does not carry out any other transaction with his credit card, the debt will continue to increase by 1.2% compounded monthly until the expiration of the 36-months period.
Harvey’s Hardware is thinking about starting a line of lawnmowers to serve its customer base in the summer. The lawnmowers would be priced at $100 and Harvey the manager believes that they would sell 3 units. They have the following estimated costs.
Units Produced Labor Cost Total cost
0 0 100
1 50 150
2 100 200
3 200 300
4 350 450
What is the marginal cost of producing the third unit?
a. $400
b. $300
c. $200
d. $100
Answer:
Harvey's Hardware
Marginal cost of producing the third lawnmowers:
d. $100
Explanation:
Harvey's marginal cost for producing the third unit of lawnmowers is the additional cost that resulted when the total cost increased from $200 to $300. However, it can be deciphered from the case that the marginal cost for Harvey, which it is supposed to be a variable cost, is traceable to the direct labor costs. This implies that the fixed cost element for Harvey in the production of the lawnmowers has been relatively fixed at $100. It does not vary with the volume of production, while the direct labor costs vary with the volume of lawnmowers produced by Harvey.
A 25-year old single client has just started his own small business and is not covered by a retirement plan. He has $5,000 to invest and currently has a low level of income. He wishes to start saving for retirement. The BEST recommendation is a:
Answer:
Roth IRA
Explanation:
Based on this scenario, it can be said that the best recommendation would be a Roth IRA. This is an individual retirement account that non-deductible tax-free growth for retirement at age 59 1/2. As of 2018, the yearly limit for a Roth IRA account is $5,500 meaning that the client in this scenario would not have any problem investing the entire $5000 as soon as they open the account. And since he is in a low tax bracket he should not have any problem opening an Account.
