Answer:
The horizon value is calculated by discounting the free cash flows beyond the horizon date and any tax savings at the WACC
Explanation:
Horizon value
This is simply known as the value of a security. It is regarded as present value usually at future point in time of all cash flows when we stable growth rate is anticipated forever. Its simply known also as present value of all free cash flows beyond the horizon date discounted back to the horizon date. It is also called the terminal value due to it being regarded as end of the explicit forecast period or the continuing value due to the fact that it is the value if operations continue to be used rather than be liquidated.
The growth in free cash flows is usually not constant so modification has to be made to the constant growth formula to find the value of free cash flows beyond the horizon date discounted back to the horizon Formula to calculate horizon value.
Mathematically;
HV = V option at time t =FCFt(1+g)
(WACC-g)
The formula for Terminal Value using the Gordon Growth method includes: Terminal Value = Final Year Free Cash Flow * (1 + Growth Rate) / (Discount Rate - Growth Rate)
A company with a higher contribution margin ratio is either more or less sensitive to changes in sales revenue, depending on other factors. likely to have a lower breakeven point. less sensitive to changes in sales revenue. more sensitive to changes in sales revenue.
Answer:
more sensitive to changes in sales revenue.
Explanation:
Contribution margin can be defined as the subtraction of variable cost from the sales price.
Mathematically, it given by the formula;
[tex] Contribution \; margin = sales \; price - variable \;cost[/tex]
Variable cost refers to cost which are the same per unit of production but vary directly with level of output.
Generally, a company that has a higher contribution margin ratio is more sensitive to changes in sales revenue because it affects it in the long-run.
Suppose eggs are only sold by the dozen and priced in whole dollar amounts. No eggs are demanded at a price above $7 per dozen. At a price equal to $7 per dozen, 10 dozen eggs are demanded. If the price falls to $6 per dozen, then 11 dozen are demanded. At a price of $5 per dozen, 12 dozen are demanded. When the price falls to $4 then 13 dozen are demanded. Suppose also that this market is operating in the short run and the quantity of eggs supplied is fixed at 12 dozen eggs. What are the equilibrium price and quantity in this market?
Answer:
$5
12
Explanation:
Equilibrium price is the price at which quantity demand equal quantity supplied. Above equilibrium price there is a surplus - quantity supplied exceeds quantity demanded.
Below equilibrium price there is a shortage - quantity demanded exceeds quantity supplied
from the question, the following table can be determined
P Qd Qs
$7 10
$6 11
$5 12 12
$4 13
At equilibrium price, quantity demanded equal quantity supplied. this price is $5 and quantity is 12
Suzette has received an order for 1,500 boxes of nuts per week for the next 3 months. If she expects the trend in the marginal product of labor will continue in the same direction, what do you think she should do
Answer:
18,000 boxes
Explanation:
1500×3×4 or
1500×12
On January 1, Pharoah Company had 87000 shares of $10 par value common stock outstanding. On May 7, the company declared a 5% stock dividend to stockholders of record on May 21. Market value of the stock was $16 on May 7. The stock was distributed on May 24. The entry to record the transaction of May 24 would include a
Answer: credit to Common Stock Dividends Distributable for $43500
Explanation:
Based on the information given in the question, the entry to record the transaction of May 24 goes thus:
Debit Stock Dividend = 87000 × 5% × $16 = $69600
Credit To Common Stock Dividend Distributable = 87000 × 5% × $10 = $43500
Credit To Paid in capital in excess of Par - Common Stock = $69600 - $43500 = $26100
Law Office employ 12 full-time attorneys and 5 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $30,000 per paraprofessional. For 20x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
How much should the client be billed in a normal costing system which uses budgeted rate and cost allocations are based on actual data, when 1,000 professional labor-hours were used?a. $27,000b. $32,000c. $34,800d. $37,400
Answer:
See below
Explanation:
Given the above information,
= ($110,000 × 12 + $30,000 × 5) / 60,000 × 1,000
= ($1,320,000 + $150,000) / 60,000,000
= $1,470,000 / 60,000,000 + $300,000/60,000) × 1,000
= $0.0245 + $5,000
= $5,000
What would be the annual cost saved by shifting from the -bag lot size to the EOQ? The annual holding cost with the EOQ is $ nothing. (Enter your response rounded to two decimal places.)
Answer:
Without Calculating The... Problem 13 Current on-hand inventory is 310 bags, with no open orders or. Problem 13 ... What would be the annual cost saved by shifting from the 505-bag lot size to the EOQ? The annual holding cost with the EOQ is $ 690.15.
Explanation:
does it help??
Legacy issues $630,000 of 9.0%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $571,310 when the market rate is 12%.
Required:
a. Prepare the January 1, 2018, journal entry to record the bonds' issuance.
b. Prepare the journal entries to record the first two interest payments.
Solution :
a). Prepare the journal entry to record the bonds' issuance as shown below:
Interest paid = [tex]$\$630,000 \times 9\%\times \frac{1}{2}$[/tex]
= $ 28,350
Date Accounts titles and explanation Debit ($) Credit($)
1 Jan 2018 Cash 571,310
Discount on bonds payable 58,690
($ 630,000 - $ 571,130)
Bonds payable 630,000
b). Preparing the journal entries to record the first two interest payments :
Date Accounts Titles and explanation Debit($) Credit($)
30/6/2018 Interest expense 35,686.25
Discount on bonds payable 7,336.25
Cash 28,350
31/12/2018 Interest expense 35,686.25
Discount on bonds payable 7,336.25
Cash 28,350
Income from operations for Division L is $250,000, total service department charges are $400,000 and operating expenses are $2,750,000. What are the revenues for Division L
Answer:
the sales revenue is $3,400,000
Explanation:
The computation of the revenue is shown below;
Income from operations = Sales revenue - operating expense - total service department charges
$250,000 = Sales revenue - $2,750,000 - $400,000
So, the sales revenue is
= $3,150,000 + $250,000
= $3,400,000
Hence, the sales revenue is $3,400,000
Josiah's team missed a crucial deadline and lost a major client due to poor communication. As a result, his team is experiencing trust issues. Josiah is looking for ways to improve trust across the team as a whole and has generated a few ideas. All of the following are likely to increase trust except:________.
a. Josiah creates a poster board with team goals, indicating the roles of each team member.
b. Josiah plans to provide his team with more project training sessions to help improve their efficiency both as dividuals and as a group.
c. Josiah conducts individual performance reviews in front of the whole group so no one feels singled out
d. Josiah has individual check-ins with his team members to provide feedback
10. What is an advantage of using a credit card?
1 point
It will not affect your credit score or credit history
Since it is tied directly to your checking account, it prevents you from spending money
you do not have
If you need to carry a balance, the interest rates are generally quite low (less than 5%)
If you pay off your balances every month in full, it's like getting a short-term interest-
free lom
11. Each of the following financial products will help you build a credit
history EXCEPT
10. The correct advantage of using a credit card is: if you pay off your balances every month in full, it's like getting a short-term interest-free loan.
11. All the mentioned financial products can help build credit history when used responsibly, so none of them should be excluded from the list.
10. Using a credit card responsibly and paying off the balance in full each month offers the advantage of essentially accessing interest-free credit for a short period.
When you make purchases with a credit card and pay the full amount by the due date, you avoid paying any interest charges on those purchases. This can be particularly beneficial if you have a large purchase or unexpected expense that you need to make and would prefer to pay off gradually over a few weeks or months without incurring interest.
11. As for the financial products that help build credit history, all of the following options can contribute to establishing a credit history:
Credit cards: Responsible use, such as making timely payments and keeping credit utilization low, can help build a positive credit history.
Loans (e.g., student loans, auto loans, mortgages): Consistently making payments on time and in full can demonstrate your ability to manage debt responsibly.
Lines of credit: Similar to credit cards, properly managing lines of credit and making timely payments can contribute to a positive credit history.
Secured credit cards: These cards require a security deposit but can still help build credit history if used responsibly.
Therefore, all the mentioned financial products can help build credit history when used responsibly, so none of them should be excluded from the list.
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The following items are reported on a company's balance sheet: Cash $160,000 Marketable securities 75,000 Accounts receivable (net) 65,000 Inventory 140,000 Accounts payable 200,000 Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place. a. Current ratio fill in the blank 1 b. Quick ratio fill in the blank 2
Answer and Explanation:
a. The current ratio is
We know that
Current ratio = Current Assets ÷ Current Liabilities
= $440,000 ÷ $200,000
= 2.2
Cash $160,000
Marketable Securities $75,000
Account receivable $65,000
Inventory $140,000
Current Assets $440,000
Account Payable $200,000
current liabilities $200,000
b
Quick ratio =( Current assets - inventory ) ÷ Current Liabilities
= ($440,000 - $140,000 ) ÷ $200,000
= 1.5
Suppose you ran a business, your tax rate was 21%, the CAPM model said that the required return on equity capital was 17% and you are issuing a bonds with a 4% coupon. 60% of your capital to be used for investments is equity and the remaining 40% is debt arising from the bond issue. What is your WACC?
Answer:
11.46
Explanation:
WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate)
(17% x 0.6) + (0.4 x 4 x (1 - 0.21) = 11.46%
Why does insurance matter? What have you heard about insurance from your parents or the news?
You are considering an investment that promises to pay $1,000 per year for the next 10 years. The interest rate associated with investments having similar risk is 6.0%. How much would you be willing to pay for this investment
Answer:
$7360.09
Explanation:
the amount i would be willing to pay can be determined by calculating the present value of the cash flows
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow each year from year 1 to 10 = 1000
I = 6%
PV = $7360.09
To determine PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
Brown Cow Dairy uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $14,000; (2) up to 120 days past due, $4,500; and (3) more than 120 days past due, $2,500. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2 percent, (2) 12 percent, and (3) 30 percent, respectively. At December 31 (end of the current year), the Allowance for Doubtful Accounts balance is $800 (credit) before the end-of-period adjusting entry is made. Data during the current year follow:
a. During December, an Account Receivable (Patty's Bake Shop) of $750 from a prior sale was determined to be uncollectible; therefore, it was written off immediately as a bad debt.
b. On December 31, the appropriate adjusting entry for the year was recorded.
Required:
1. Give the required journal entries for the two items listed above.
2. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the income statement and balance sheet for the current year. Disregard income tax considerations.
Answer:
Brown Cow Dairy
1. Journal Entries:
a. Debit Allowance for Uncollectibles $750
Credit Accounts Receivable $750
To write-off an uncollectible account.
b. Debit Bad Debts Expense $1,520
Credit Allowance for Doubtful Accounts $1,520
To record bad debts expense for the year.
2. Amounts that would be reported:
Income Statement:
Bad debts expense $1,520
Balance Sheet:
Accounts Receivable $21,000
less Allowance for Doubtful accounts $1,570
Explanation:
a) Data and Calculations:
(1) not yet due, $14,000 * 2% = $280
(2) up to 120 days past due, $4,500 * 12% = 540
(3) more than 120 days past due, $2,500 * 30% = 750
Total $21,000 $1,570
Balance of Allowance for Doubtful Accounts = $800
a. Debit Allowance for Uncollectibles $750
Credit Accounts Receivable $750
To write-off an uncollectible account.
b. Debit Bad Debts Expense $1,520
Credit Allowance for Doubtful Accounts $1,520
To record bad debts expense for the year.
A common size analysis requires the representation of financial statement data in terms of a single financial statement item (or base account or value). What is the most commonly used base item for a common size income statement
Answer:
Net sales
Explanation:
A common size income statement represent the income statement in which each item line wise should be expressed as the sales or revenue percenatge. The motive of preparing this statement is to have the analyse and compare the performance of the company with their various years
So the base item that should be common used for this type of income statement is net sales
The primary purpose for using the the mean absolute error (MAE) in forecasting is to: A. remove forecast error B. estimate the trend line C. estimate forecast error D. seasonally adjust the forecast
Answer:
measure forecast accuracy
Explanation:
The main purpose for using the mean absolute error is to do the forecast in an accurate manner. Also, it provides the measure for total forecast error for the given model
Therefore as per the given situation, the above represent the answer as neither it remove the error, nor estimated the trend line, etc
So, the same should be considered
What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 12% of par, and a current market price of (a) $56.00, (b) $76.00, (c) $116.00, and (d) $133.00? Round your answers to two decimal places. %
[tex] \text{Preferred share par value = $30} [/tex]
[tex] \text{Dividend per share (Dp) = $10 ($100×10%)} [/tex]
Required :[tex] \text{Normal rate of return (rp)} [/tex]
Formula :[tex] \text{rp =} \frac{Dp}{Vp} [/tex]
Where,
[tex] \text{Vp = price of preferred share} [/tex]
[tex] \text{Dp = dividend per share} [/tex]
[tex] \text{Rp = normal rate of return of preferred share} [/tex]
Solve for nomial rate of return (rp) :Refer The AttachmentIf the best operating level of a process X is 1026 bottles per day and the actual output during a day is 786 bottles, then what is the capacity utilization rate for process X
Answer:
greater than 70% but less than or equal to 90%
Explanation:
The computation of the capacity utilization rate for process X is shown below:
As we know that
Capacity Utilization = (Actual Output ÷ Design Capacity) × 100
= (786 ÷ 1026) × 100
= 76.61%
So, it is greater than 70% but less than or equal to 90%
Ford Motor Company agreed to pay its workers $37 an hour in 1999 and $37 an hour in 2001. The CPI in 1999 was 166 and in 2001 was 180. Calculate the real wage rate in each year (to the nearest cent). Did these workers really get a pay raise between 1999 and 2001?
Answer:
No, the wage rate did not raise.
Explanation:
Given the nominal wage rate for the year 1999 = $37
CPI for 1999 = 166
The real wage for the year 1999 = [ Nominal wage / CPI ] x 100
The real wage for the year 1999 = [ 37/ 166] x 100 = $22.28
Given the nominal wage rate for the year 2001 = $37
CPI for 2001 = 180
The real wage for the year 2001 = [ Nominal wage / CPI ] x 100
The real wage for the year 2001 = [ 37/ 180] x 100 = $20.55
No the wage rate did not raise.
Assume the prices of product X and Y are $2.00 and $1.00, respectively, and that Mr. Mo has $100 to spend. Assume a normal indifference curve.
a. What is the slope of Mr. Mo budget constraint.
b. Write out Mr.Mo equation to his budget constraint.
c. Assume that Mr. Mo needs 10 units of product X to maximize utility. What combination of X and Y Will Mr. Chen purchase?
d. Now assume that the price of Y changed from $1.00 to $2.00, redo part a, b and c,
e. Draw the budget constraint graph and indifference curve before the change and after the change in the price of Y.
Answer:
Explanation:
The equation of a line is given by:
y = mx + b; where m is the slope of the line, b is the y intercept.
Given that the price of product X is $2 while the price of Y is $1 and Mr. Mo has $100 to spend. Therefore:
a) 2x + y = 100
y = -2x + 100
The slope of Mr. Mo budget constraint is -2
b) 2x + y = 100
c) If x = 10, to find the combination, substitute x = 10 and find y:
2x + y = 100
2(10) + y = 100
y + 20 = 100
y = 80
That is 10 units of x and 80 units of Y
d) 2x + 2y = 100
2y = -2x + 100
y = -x + 50
The slope of Mr. Mo budget constraint is -1
The budget constraint is 2x + 2y = 100
If x = 10, to find the combination, substitute x = 10 and find y:
2x + 2y = 100
2(10) + 2y = 100
2y + 20 = 100
2y = 80
y = 40
That is 10 units of x and 40 units of Y
e) The graph was drawn using geogebra online graphing calculator and it is attached
Camelot Company has estimated the following costs for this year for 50,000 units: Manufacturing Selling and Administrative Variable $100,000 $ 25,000 Fixed 150,000 75,000 Total $250,000 $100,000 What is the initial selling price needed to obtain a target profit of $50,000 using the manufacturing cost markup method
Answer:
the initial selling price is $8 per unit
Explanation:
The computation of the initial selling price is shown below;
Total manufacturing costs = $250,000
Now
Markup required is
= $100,000 + $50,000
= $150,000
So, the Initial selling price is
= ($250,000 + $150,000) ÷ 50,000
= $8.00
hence, the initial selling price is $8 per unit
Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. If the measure of risk aversion in is A = 4: a. What would be a reasonable guess for the expected market risk premium? b. What value of A is consistent with a risk premium of 9%? (Round your answer to 2 decimal places.) c. What will happen to the risk premium if investors become more risk tolerant?
Answer:
a) 16%
b) 2.25
c) Increase in expected market risk premium
Explanation:
Expected standard deviation of market return = 20%
measure of risk aversion ( A ) = 4
a) Determine a reasonable expected market risk premium
= A * ( std ) ^2
= 4 * ( 20%)^2
= 16%
b) determine Value of A
market risk premium = A * ( std )^2
∴ A = 9% / ( 20% ) ^2
= 0.09 / 0.04
= 2.25
c) If investors become more risk tolerant the expected market risk premium will increase
You are given the following information on Kaleb's Heavy Equipment: Profit margin 6.5 % Capital intensity ratio .74 Debt-equity ratio .8 Net income $ 78,000 Dividends $ 16,000 Calculate the sustainable growth rate.
Answer: 14.36%
Explanation:
The sustainable growth rate will be calculated thus:
Firstly, we will calculate the return on equity(ROE) which will be:
= Profit margin × (1/Capital intensity ratio) × (1 + Debt equity ratio)
= 6.5% (1/0.74) × (1 + 0.8)
= 0.065 × 1.35 × 1.8
= 0.158
Then, we'll calculate the plowback ratio which will be:
= 1 - (16000/78000)
= 1 - 0.2051
= 0.7949
Therefore, the growth rate will be:
= (ROE × Plowback ratio) / [1 - (ROE × Plowback ratio)]
= (0.158 × 0.7949) / [1 - (0.158 × 0.7949)]
= 0.1256 / 0.8744
= 0.1436
= 14.36%
The sustainable growth rate is 14.36%
A small business sold an equipment for $30,000 after depreciating the equipment using the MACRS depreciation method. The applicable federal tax rate for the company is 39%. The federal tax liability on this depreciation recapture is $10,200 if the company also had other taxable income of $200,000 in that year.
a. True
b. False
Cyberphone, a manufacturer of cell phone accessories, ended the current year with annual sales (at cost) of $ million. During the year, the inventory of accessories turned over times. For the next year, Cyberphone plans to increase annual sales (at cost) by percent. a. What is the increase in the average aggregate inventory value required if Cyberphone maintains the same inventory turnover during the next year? $ nothing. (Enter your response as an integer.)
Answer:
sorry po
Explanation:
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Kanesha is an entrepreneur and has recently opened her first coffee shop, The Coffee Cat. Kanesha pays $5,000 rent each month, $3,200 for monthly employee payroll, and $2,100 for supplies each month. She was planning on selling several of her own tables and chairs on Craigslist for $900, but instead she brought them to The Coffee Cat. Additionally, Kanesha quit working as an accountant where she was earning $54,000 per year to open up the shop. If the shop earns $150,000 in revenue this year, calculate annual: Instructions: Enter your responses as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Hint: be sure to calculate explicit costs as annual costs. a. Accounting profits. $ b. Economic profits. $
Answer:
$26400
$-28500
Explanation:
Accounting profit= total revenue - explicit cost
Total revenue =price x quantity sold
Explicit cost includes the amount expended in running the business.
They include rent , salary and cost of raw materials
Explicit costs = (5000 x 12) + (3200 x 12) + (2100 x 12)
= 60,000 + 38400 + 25200 = 123600
Accounting profit = 150,000 - 123600 = 26400
Economic profit = accounting profit - implicit cost
Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives
Implicit costs = 54,000 + 900 = 54900
Economic profit = 26400 - 54900 = $-28500
QUESTION 31 Denzil was one of 50,000 people defrauded of $40 in an advertising scam. His best course of action to recover his money is to a. bring an individual lawsuit in a U.S. District Court. b. bring an individual lawsuit against the advertiser in a state appellate court. c. mediate the claim with the advertiser. d. become part of a class action lawsuit, which might include plaintiffs who are unaware of the lawsuit or are even unaware they were harmed.
Answer: d. become part of a class action lawsuit, which might include plaintiffs who are unaware of the lawsuit or are even unaware they were harmed.
Explanation:
When multiple people are affected by unethical and illegal behavior by a company, they can come together and form a class action lawsuit.
In a class action lawsuit, a group of people are named as the plaintiffs and will be represented by some members of the group. The group can include people who did not even know they were unjustly treated or that they are in a lawsuit but in the interest of justice, their names will be included so as to right the wrong they are facing.
Class action lawsuits are beneficial because they save the individual plaintiffs money and put pressure on the courts to find a favorable outcome.
Frank's sporting goods projects sales for the second quarter of 2021 to be as follows: April $250,000 May $300,000 June $380,000 All of Frank's sales are on credit, 45% of credit sales are collected one month following the sale and the rest are collected two months following the sale. January sales were $150,000, February sales were $180,000, and March sales were $280,000. What are the total cash receipts in the month of May
Answer:i would tell you to look on a the brainly app lol
Explanation:
The demand for
goods increases with a decrease in income, whereas
are goods that cannot be bought or sold.
Answer:
A normal good is a good that experiences an increase in its demand due to a rise in consumers' income. Normal goods include food ...
