Kermit plans to open a boutique. The initial investment is $10,000. He has to spend $1,500 in annual operations and maintenance. The boutique generates $3,000 in revenues every year. Kermit uses a 10 year planning horizon and a MARR of 12%. The correctly calculated Rate of Return for this project is ________________%.
Answers
Answer:
8.14
Explanation:
The Rate of Return is 8.14 from my calculations which you can find in the attached file.
Now since the Rate of return is 8.14. Which is less than MARR of 12%, it shows that investment is not good.
Year Initial Annual Maintenance Annual Revenue Total Cash Flow
0 -$10,000 -$10,000
1 -$1,500 $3,000 $1,500
2 -$1,500 $3,000 $1,500
3 -$1,500 $3,000 $1,500
4 -$1,500 $3,000 $1,500
5 -$1,500 $3,000 $1,500
6 -$1,500 $3,000 $1,500
7 -$1,500 $3,000 $1,500
8 -$1,500 $3,000 $1,500
9 -$1,500 $3,000 $1,500
10 -$1,500 $3,000 $1,500
Internal Rate of Return 8.1442% [IRR() in excel]
The rate of return is 8.1442 which is less than MARR of 12% investment is not worth it
Related Questions
Which of the following considerations is related to sociocultural environment
Answers
Answer:
You didn't provide anything for me to choose from, so I can't give you an answer.
Why would a firm that incurs losses choose to produce rather than shut down? In a perfectly competitive industry, if a firm is incurring losses, then it might choose to produce in the short run because A. is greater than , resulting in profit in the long run. B. is greater than , resulting in smaller losses than would result from shutting down. C. variable costs are greater than fixed costs, resulting in smaller losses than would result from shutting down. D. zero in the long run, resulting in profit in the long run. E. is greater than , resulting in smaller losses than would result from shutting down.
Answers
Answer:
E. price is greater than , resulting in smaller losses than would result from shutting down
Explanation:
The firm incurred losses and select to generate instead of shutting down as in the perfect competifive market if a firm has the loss so it produce in the short run because here the price should be more than due to which it result in less losses as compared to the losses at the time of shutting down
So as per the given situation, the option e is correct
Carmichael Inc. has a beginning balance in Accounts Receivable of $100,000 at June 1. On June 24, Carmichael sells $20,000 of merchandise to K. Low, terms 2/10, n/30. Assuming just this one transaction occurred, what is the ending balance in Accounts Receivable at June 30 under the gross method
Answers
Answer:
$120,000
Explanation:
Particulars Amount
Beginning balance in accounts receivables A/C $100,000
Add: Credit sales $20,000
Ending balance in accounts receivables A/C $120,000
A refiner produces heating fuel and gasoline from crude oil in virtually fixed proportions. What can you say about economies of scope for such a firm? What is the sign of its measure of economies of scope, SC?
Answers
Answer:
The cost benefits of simultaneous manufacturing do not exist and there are thus no economies as well as range disadvantages. A further explanation is provided below.
Explanation:
Scope savings are environmental impacts if a variety of commodities are produced collectively when producing these commodities collaboratively is far less costly than individually.Throughout this case, the manufacturer can create two items from the main resource although manufacturing takes place in some kind of a set proportion. Therefore includes the amount of production is identical to the expenditure of combined production of the products.Thus the above is the appropriate solution.
When purchases of merchandise are made on account with a perpetual inventory system, the transaction is recorded with which entry
Answers
Answer:
debit Merchandise Inventory, credit Accounts Payable.
Explanation:
In the case when the merchandise is purchased on account, so the following journal entry is recorded
Merchandise inventory Dr XXXXX
To account payable XXXXX
(Being merchandise inventory purchased on account)
Here merchandise inventory is debited as it increased the assets and credited the account payable as it also increased the liabilities
MC Qu. 99 The Work in Process Inventory account... The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $5,220 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,200 and direct labor cost of $1,000. Therefore, the company's overhead application rate is:
Answers
Answer:
202%
Explanation:
Calculation to determine what the company's overhead application rate is
First step is to calculate the Total manufacturing overhead using this formula
Total manufacturing overhead = Overhead rate - Direct material cost - Direct labor cost
Let plug in the formula
Total manufacturing overhead =5220 - 2,200 - 1000
Total manufacturing overhead =2020
Now let determine the overhead application rate using this formula
Overhead application rate=Total manufacturing overhead/Direct labor cost
Let plug in the formula
Overhead application rate=2020/1000*100
Overhead application rate=202%
Therefore, the company's overhead application rate is:202%
Loger's, a high-end apparel company in Bruslon, an Asian country, cuts back on production as consumers start turning to basic products such as food because of the economic downturn in the country. The company also lays off many of its employees to further cut down expenses. In the context of the business cycle, Bruslon is most likely going through a period of _____.
a. economic expansionb. economic integration
c. economic recovery
d. economic contraction
Answers
Answer:
d. economic contraction
Explanation:
Contraction is in economics means it is business cycle phase where the overall economu should be fall. Also the contraction should arise when the cycle of the business is in peak but it should be prior to became as a trough
So at the time of economic contraction, the company normally took the measures of the cost cutting
So as per the given situation, the option d is correct
XYZ Co. expects to sell 26,000 pools for $15 each. Direct materials cost is $3 per pool, direct labor cost is $5 per pool, and manufacturing overhead cost is $1.62 per pool. The following inventory levels apply to 2019: Beginning inventory Ending inventory Direct materials 20,000 units 22,000 units Work-in-process inventory 0 units 100 units Finished goods inventory 1,800 units 2,600 units How many pools need to be produced in 2019
Answers
Answer:
250120
Explanation:
Total pools is equal to 26,000
Directable cost is equal to $5 per pool
Manufacturing overhead equals 1.62 dollars per pool
Direct costes equals $3 per pool
We add up this costs
5+1.62+3 = 9.62 dollars in total
In 2019 the total amount of pools that needs to be produced can be gotten by multiply 26000 with 9.62
26000x9.62
= 250,120
Define Total Quality Management (TQM) and Lean Production.
Answers
Total Quality Management (TQM) is an on-going improvement management plan. Furthermore, TQM ensures that equipment is properly maintained and a recent type, and workers are well-trained. However, most companies who use Total Quality management also utilize other lean processes, not just TQM.
Kathy Elliot has decided that she will start an internet company to sell reliable used cars to customers Nationwide she has decided to use the sole proprietorship business format. Elliot's next step is to write a formal _____ before she applies for a business loan
Answers
Answer:
business plan
Explanation:
L. Bowers and V. Lipscomb are partners in Elegant Event Consultants. Bowers and Lipscomb share income equally. M. Ortiz will be admitted to the partnership. Prior to the admission, equipment was revalued downward by $8,000. The capital balances of each partner are $96,000 and $40,000, respectively, prior to the revaluation.
a. Provide the journal entry for the asset revaluation.
b. Provide the journal entry for Ortiz’s admission under the following independent situations:
1. Ortiz purchased a 20% interest for $20,000.
2. Ortiz purchased a 30% interest for $60,000.
Answers
Answer: See attachment and explanation
Explanation:
1. Ortiz purchased a 20% interest for $20,000.
Total capital after the admission of the partner will be:
= ($96000 - $4000) + ($40000 - $4000) + $20000
= $92000 + $36000 + $20000
= $148000
The share of new partner in the capital structure will be:
= Total capital × Interest of new partner
= $148000 × 20%
= $29600
There'll be a deficiency in the profit which the existing partner contributes to and this will be:
= $29600 - $20000
= $9600
Then each partner shares =$9600/2 = $4800
2. Ortiz purchased a 30% interest for $60,000.
Total capital after the admission of the partner will be:
= ($96000 - $4000) + ($40000 - $4000) + $60000
= $92000 + $36000 + $60000
= $188000
The share of new partner in the capital structure will be:
= Total capital × Interest of new partner
= $188000 × 30%
= $56400
Since the share is less than the amount of $60000 bought in, the existing partner will be compensated in the amount of ($60000 - $56400) = $3600. Therefore each partner gets $3600/2 = $1800
Check attachment for the journal entries.
Carnelian Company sells bicycles at $200 each. Variable cost per unit is $160, and total fixed cost is $120,600. Calculate the sales that Carnelian must make to earn an operating income of $21,500. a. $238,833.
b. $716,500.
c. $243,800.
d. $626,000.
Answers
Answer:
Carnelian Company
The sales that Carnelian must make to earn an operating income of $21,500 is:
= $710,500.
Explanation:
a) Data and Calculations:
Selling price per bicycle = $200
Variable cost per unit = $160
Contribution margin per unit = $40 ($200 - $160)
Contribution margin percentage = $40/$200 * 100 = 20%
Fixed cost = $120,600
Target operating income = $21,500
Sales in dollars to earn target operating income = (Fixed cost + Target Income)/Contribution margin ratio
= $120,600 + $21,500/20%
= $142,100/0.2
= $710,500
A minimum acceptable rate of return for an investment decision is called the: Multiple Choice Internal rate of return. Average rate of return. Hurdle rate of return. Maximum rate of return. Payback rate of return.
Answers
Answer:
Hurdle rate of return.
Explanation:
A hurdle rate can be regarded as minimum rate of return that is been required by an investor or manager
on a particular project or investment.
The hurdle rate gives the description of the appropriate compensation as regards level of risk present. There are
higher hurdle rates associated with riskier projects.
It should be noted that A minimum acceptable rate of return for an investment decision is called the Hurdle rate of return.
Tomlinson Packaging Corporation began business in 2018 by issuing 30,000 shares of $5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2019 balance sheet, Tomlinson Packaging would report:___________
a. Common Stock of $100,000
b. Paid-In Capital of $150,000
c. Common Stock of $200,000
d. Common Stock of $160,000
Answers
Answer:
d. common stock of $150,000.
Explanation:
First and foremost, upon issuance of stocks, the common stock account would be credited with the total par value of the shares issued as shown below:
total par value=par value per share*shares issued
total par value=$5*30,000
total par value=$150,000
The paid-in capital would be credited with the total amount the cash proceeds from the share issue exceeds the total par value
total cash proceeds=$8*30,000
total cash proceeds=$240,000
paid-in capital=$240,000-$150,000
paid-in capital=$90,000
The correct option is the common stock of $150,00, except that the number of shares issued is 20,000,hence, the common stock of $100,000 would be correct
Check a similar question below to drive home my point:
Kerwin Packaging Corporation began business in 2010 by issuing 30,000 shares of $5 par common stock for $8 per share and 10,000 shares of 6%, $10 par preferred stock for par. At year-end, the common stock had a market value of $10. On its December 31, 2011 balance sheet, Kerwin Packaging would report:
a. common stock of $300,000.
b. paid-in capital of $150,000.
c. common stock of $240,000.
d. common stock of $150,000.
You wish to sell short 100 shares of XYZ corporation stock. If the last two transactions were at $34.10 followed by $34.15, you only can sell short on teh next transaction at a price of
Answers
Answer: b. 34.15 or higher
Explanation:
Short sales refer to the sale of borrowed stocks in anticipation that the stock price of the underlying stock will fall. This will then enable you to make a profit by buying the cheaper shares and giving it back to the entity you borrowed from thereby making a profit.
With short sales, the price is usually upward trending so will normally increase from the last price. As the last price here was $34.15, that would be the likely minimum for the next sale.
This means that the next sale will either be at a price of $34.15 or a price higher than that.
Suppose Torche Corporation has the following results related to cash flows for 2020: Net Income of $10,000,000 Increase in Accounts Payable of $800,000 Increase in Accounts Receivable of $600,000 Decrease in Inventory of $100,000 Assuming no other cash flow adjustments than those listed above, create a statement of cash flows with amounts in thousands. What is the Net Cash Flow from Operating Activities?
Answers
Answer:
9,700,000
Explanation:
Essentially... a lot. I would recommend learning about debits and credits. Short explanation is credits are negative and debits are positive. So an increase to a debit is adding to the net value, just as a decrease to a credit adds net value.
We start with 10,000,000.
We subtract 800,000 from this as we are increasing AP, a credit.
We are now at 9,200,000
We then add 600,000 from AR, a debit that is increasing.
We are at 9,800,000.
Finally, we subtract 100,000 because we are decreasing Inventory, a debit.
Our final value is 9,700,000
g A monopoly is a market that has Group of answer choices Only one buyer. Only one seller. Many sellers who sell differentiated products. Many sellers who sell identical products.
Answers
Answer:
Only one seller.
Explanation:
A monopoly is a market structure which is typically characterized by a single-seller (one seller) who sells a unique product in the market by dominance. This ultimately implies that, it is a market structure wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes.
Also, a monopolist refers to any individual that deals with the sales of unique products in a monopolistic market.
For example, a public power supply company is an example of a monopoly because it serve as the only source of power supply to the general public in a society.
A public power company refers to a company that provides power (electricity) utility to the general public of a society.
In conclusion, a monopoly is a market that has only one seller.
83) Suppose in the United States, the opportunity cost of producing a motor engine is 4 auto bodies. In Canada, the opportunity cost of producing a motor engine is 2 auto bodies. a. What is the opportunity cost of producing an auto body for the United States
Answers
Answer:
Opportunity cost = 0.25 motor engine
Explanation:
Below is the given value:
In the U.S. ,Opportunity cost of 1 motor engine = 4 auto bodies
In the Canada, Opportunity cost 1 motor engine = 2 auto bodies
Below is the calculation for opportunity cost pf 1 auto body in the U.S.
Opportunity cost = Motor engine / Auto body
Opportunity cost = 1 / 4
Opportunity cost = 0.25 motor engine
The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 2,400 machine-hours rather than 2,500 machine-hours? Assume that the activity levels of 2,500 machine-hours and 2,400 machine-hours are within the same relevant range. Group of answer choices
Answers
Answer:
$60,380
Explanation:
Missing word "Kerekes Manufacturing Corporation has prepared the following overhead budget for next month. Activity Level - 2500 Machine Hours - Variable Overhead Cost: Supplies 12,250 Indirect Labor ---22,000 Fixed Overhead: Supervisor 15,500 Utilities -- 5500 Depreciation --- 6500 Total Cost --- 61,750"
So, at activity level of 2500
Total variable overhead cost = Supplies + Indirect labor
Total variable overhead cost = $12,250 + $22,000
Total variable overhead cost = $34,250
So, at activity level of 2400
Total variable overhead cost = $34,250 * 2,400/2,500
Total variable overhead cost = $34,250 * 0.96
Total variable overhead cost = $32,880
So, at 2,400 hours
Total overhead cost = Variable overhead cost + Fixed overhead cost
Total overhead cost = $32,880 + Supervisor salary + Utilities + Depreciation
Total overhead cost = $32,880 + $15,500 + $5,500 + $6,500
Total overhead cost = $60,380
Cheese Mart LLC sells cheese to Pizza Palace for $1,500. Pizza Palace uses the cheese to make pizzas, selling them to consumers for a total of $9,000. These transactions contribute ________ to the gross domestic product (GDP).
Answers
Answer: $9000
Explanation:
The gross domestic product (GDP) is the final value of the goods that are produced in an economy. In this case, we are only interested in the final value which is the $9000.
It should be noted that when Cheese Mart LLC sells cheese to Pizza Palace for $1,500, this is an intermediate good and should not be counted when calculating the GDP.
Hailey Corporation pays a constant $9.45 dividend on its stock. The company will maintain this dividend for the next 13 years and will then cease paying dividends forever. If the required return on this stock is 10.7 percent, what is the current share price?
Answers
Answer:
$64.76
Explanation:
The current share price can be determined by calculating the present value of the dividend
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow from year 1 to 13 = 9.45
I = 10.7
PV = 64.76
To find the 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.
3. Press compute
roject A costs $6,000 and will generate annual after-tax net cash inflows of $2,150 for five years. What is the payback period for this investment under the assumption that the cash inflows occur evenly throughout the year
Answers
Answer:
It will take 2.79 years to cover the initial investment.
Explanation:
Giving the following information:
Project A costs $6,000 and will generate annual after-tax net cash inflows of $2,150 for five years.
The payback period is the time required to cover the initial investment:
Year 1= 2,150 - 6,000= -3,850
Year 2= 2,150 - 3,850= -1,700
Year 3= 2,150 - 1,700= 450
To be more accurate:
(1700/2150)= 0.79
It will take 2.79 years to cover the initial investment.
The cost to produce was $20 per unit in 2019. During 2020, it has increased to $23 per unit. In 2020, Supplier Company has offered to supply for $18 per unit. For the make-or-buy decision:_____.a. incremental costs are $2 per unit.
b. differential costs are $7 per unit.
c. net relevant costs are $2 per unit.
d. incremental revenues are $7 per unit.
Answers
Answer: Differential cost is $5 per unit
Explanation:
Differential cost is the extra cost that the company would incur if they made the product themselves versus if they bought it from an outside supplier.
Differential cost is therefore:
= Cost to produce internally - Cost from supplier
= 23 - 18
= $5
likely
Specter Co. combines cash and cash equivalents on the balance sheet. Using the following information, determine the amount reported on the year-end balance sheet for cash and cash equivalents.$7,000 cash deposit in checking account.$28,000 bond investment due in 20 years.$7,000 U.S. Treasury bill due in 1 month.$400, 3-year loan to an employee.$1,800 of currency and coins.$700 of accounts receivable.
Answers
Answer:
the cash and cash equivalents is $15,800
Explanation:
The computation of the cash and cash equivalents is given below:
= Cash deposit + U.S. Treasury bill due in 1 month + currency and coins
= $7,000 + $7,000 + $1,800
= $15,800
hence, the cash and cash equivalents is $15,800
The same is to be considered and relevant
3. If nominal GDP and real GDP both drop by 10 percent, then the GDP deflator Question 3 options: also rises by 10 percent rises by about 20 percent falls by 10 percent is unchanged
Answers
Answer: unchanged
Explanation:
The formula for calculating the GDP price deflator is:
= (Nominal GDP / Real GDP) × 100
Let's assume that the nominal GDP and the real GDP is $100 million. Then if they drop by 10%, they will both be $90 million, then the deflator will be:
= (90m / 90m) × 100
= 100
Therefore, the GDP deflator will be unchanged.
Escareno Corporation has provided its contribution format income statement for June. The company produces and sells a single product.
Sales (8,400 units) $ 764,400
Variable expenses 445,200
Contribution margin 319,200
Fixed expenses 250,900
Net operating income $68,300
If the company sells 8,200 units, its total contribution margin should be closest to:________.
a. $301,000
b. $311,600
c. $319,200
d. $66,674
Answers
Answer:
b. $311,600
Explanation:
Calculation to determine what total contribution margin should be closest to:
Using this formula
Contribution margin per unit=Current contribution margin ÷ Current sales in units
Where,
Contribution margin per unit
=$319,200 ÷ 8,400
Contribution margin per unit= $38
Now let determine the total contribution margin
Total contribution margin= 8,200 × $38
Total contribution margin=$311,600
Therefore total contribution margin should be closest to:$311,600
Paul’s Pizza Parlor bakes pizza pies according to Q = 3 L – 0.3 L 2. If labor costs $6 and pizza sells for $10, the optimal amount of labor is:
Answers
Answer: 4 units of labor
Explanation:
Optimum amount of labor occurs where marginal revenue equals marginal cost which means:
Marginal revenue product = Cost of labor
Marginal revenue product = Marginal product of labor * Prize of pizza
Marginal product of labor = differentiation of Q
= dQ/dL
= d(3L - 0.3L²)
= 3 - 0.6L
Marginal revenue product = (3 - 0.6L) * 10
= 30 - 6L
Marginal revenue product = Cost of labor
30 - 6L = 6
30 - 6 = 6L
L = 24/6
= 4 units of labor
You are considering two mutually exclusive projects. Project A costs $3.6 million, has a required return of 14.5 percent, and an IRR of 14.3 percent. Project B costs $4.1 million, has a required return of 16 percent, and an IRR of 15.6 percent. Which project(s) should be accepted
Answers
Answer:
Neither
Explanation:
The internal rate of return is a capital budgeting method that is used to determine the profitability of a project.
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
The decision rule when using the internal rate of return is to undertake the project if the internal rate of return is greater than the required return of the project. If this is not met, the project should be rejected.
If choosing between multiple projects, the decision rule is to choose the projects with the highest internal rate of return. This is because that project would be the most profitable.
Neither of the project should be selected because the IRR of both projects is less than their required returns
40. Giả sử tỷ giá giao ngay của EUR là 0.9 USD/EUR . Tỷ giá giao ngay dự kiến một năm sau là 0.85 USD/EUR, % thay đổi của tỷ giá giao ngay là :
Answers
Answer:
Sorry I can't understand
Assume banks are required to hold reserves equal to 20 percent of deposits. Instructions: Enter your responses as a whole number. a. How much excess reserves does the bank hold
Answers
Answer: $100
Explanation:
If the reserve requirement is 20% then the required reserves being held by the company is:
= Total deposits * reserve requirement
= 8,000 * 20%
= $1,600
The reserves held by the company of $1,700 comprise of both the required reserves and the excess reserves. The excess reserves will therefore be calculated as:
Excess reserves = Reserves - Required reserves
= 1,700 - 1,600
= $100
