Masterson, Inc., has 3.6 million shares of common stock outstanding. The current share price is $85.50, and the book value per share is $9.25. The company also has two bond issues outstanding. The first bond issue has a face value of $73 million, a coupon rate of 5.3 percent, and sells for 95.7 percent of par. The second issue has a face value of $45 million, a coupon rate of 5.9 percent, and sells for 104.9 percent of par. The first issue matures in 23 years, the second in 11 years. The most recent dividend was $4.04 and the dividend growth rate is 4.3 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 23 percent.
1. What is the company's cost of equity?
2. What is the company's aftertax cost of debt?
3. What is the company's weight of equity?
4. What is the company's weight of debt?
5. What is the company's WACC?

Answers

Answer 1

Answer:

1. 9.03 %

2. 7.56 %

3. 72.45 %

4. 27.55 %

5. 8.63 %

Explanation:

Cost of equity is the return that is required by holders of Common Stocks

Cost of equity = Recent year`s dividend / Current Market Price + Expected Growth Rate

                       = $4.04 / $85.50 + 0.043

                       = 0.0903 or 9.03 %

1st bond issue

PV = $69,861,000

Pmt = ($73,000,000 × 5.30%) ÷ 2 = - $1,934,500

p/y = 2

n  = 23 × 2 = 46

Fv = 0

i = ?

Cost of the 1st Bond Issue, i is : 2.1571 %

After tax cost = 2.1571 % × 77 %

                      = 1.66%

2nd Bond Issue

PV = $47,205,000

Pmt = ($45,000,000 × 5.90%) ÷ 2 = - $1,327,500

p/y = 2

n  = 11 × 2 = 22

Fv = 0

i = ?

Cost of the 2nd Bond Issue, i is : 7,6681 %

After tax cost = 7,6681 % × 77 %

                      = 5.90%

Total Cost of Debt = 1.66% + 5.90%

                               = 7.56 %

Market Values :

Market Value of Equity = 3,600,000 shares × $85.50

                                      = $307,800,000

Market Value of Bonds

1st Issues  =  $69,861,000

2nd Issue  = $47,205,000

Total          = $117,066,000

Weight of equity = Market Value of Equity ÷ Total Market Value

                            = $307,800,000 ÷ ($307,800,000 + $117,066,000)

                            = 72.45 %

Weight of debt    = Market Value of Bonds ÷ Total Market Value

                            = $117,066,000 ÷ ($307,800,000 + $117,066,000)

                            = 27.55 %

WACC = Weighted Cost of Debt + Weighted Cost of Equity

           = 27.55 % × 7.56 % + 72.45 % ×  9.03 %

           = 8.63 %


Related Questions

A mail-order house uses 18,000 boxes a year. Carrying costs are 60 cents per box a year, and ordering costs are $96. The following price schedule applies.
Determine:
A. The optimal order quantity.
B. The number of orders per year.
of boxes: 1,000-1,999 Price per box: $1.25
of boxes: 2,000- 4,999 Price per box: $1.20
of boxes: 5,000- 9,999 Price per box : $1.15
of boxes: 10,000 or more Price per box : $1.10

Answers

Answer:

Explanation:

Given that:

A mail-order house uses 18,000 boxes a year.

Carrying costs are 60 cents per box a year =$0.60

and ordering costs are $96.

Determine:

A. The optimal order quantity.

The optimal order quantity can be calculated by using the formula:

[tex]Q_o = \sqrt{\dfrac{2DS}{H}}[/tex]

[tex]Q_o = \sqrt{\dfrac{2*18000*96}{0.60}}[/tex]

[tex]Q_o = \sqrt{\dfrac{3456000}{0.60}}[/tex]

[tex]Q_o = \sqrt{5760000}[/tex]

[tex]Q_o = 2400 \ boxes[/tex]

B. The number of orders per year.

of boxes: 1,000-1,999 Price per box: $1.25

of boxes: 2,000- 4,999 Price per box: $1.20

of boxes: 5,000- 9,999 Price per box : $1.15

of boxes: 10,000 or more Price per box : $1.10

SInce 2400 boxes lies within ''of boxes: 2,000- 4,999 Price per box: $1.20 ''

Total cost = Carrying cost + ordering cost + Purchasing cost

[tex]Total \ cost =(\dfrac{Q}{2} )H +(\dfrac{D}{Q}) S+PD[/tex]

[tex]Total \ cost =(\dfrac{2400}{2} )0.60 +(\dfrac{18000}{2400}) 96+1.20*18000[/tex]

Total cost  = ( 1200) 0.60 + 7.5(96) + 1.20(18000)

Total cost  = 720 + 720 + 21600

Total cost  =  $ 23040

If the order size is 5000, the price per box will be 1.15

[tex]Total \ cost =(\dfrac{Q}{2} )H +(\dfrac{D}{Q}) S+PD[/tex]

[tex]Total \ cost =(\dfrac{5000}{2} )0.60 +(\dfrac{18000}{5000}) 96+1.15*18000[/tex]

Total cost = 2500 (0.60) + 3.6 (96) + 20700

Total cost = 1500 + 345.6 + 20700

Total cost = $22545.6

If the order size is 10000 , the price per box will be 1.10

[tex]Total \ cost =(\dfrac{Q}{2} )H +(\dfrac{D}{Q}) S+PD[/tex]

[tex]Total \ cost =(\dfrac{10000}{2} )0.60 +(\dfrac{18000}{10000}) 96+1.10*18000[/tex]

Total cost = 5000 (0.60) + 1.8(96)  + 19800

Total cost =  3000 + 172.8 + 19800

Total cost = $22972.8

From the three total cost, the least minimum cost of ordering is: 5000

So; the number of orders per year = total number of boxes per year/ boxes per order

the number of orders per year = 18000/5000

the number of orders per year = 3.6 orders per year

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

Answers

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.

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

Answers

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

A PHLX Jan 80 Swiss Franc Call contract is quoted at 2 when the Swiss Franc closes at 77. The contract is:_______

Answers

Answer:

Out the money.

Explanation:

A PHLX Jan 80 Swiss Franc Call contract is quoted at 2 when the Swiss Franc closes at 77. The contract is out the money.

An out the money ultimately implies that an option only has an extrinsic value but no intrinsic value. The extrinsic value of an option refers to the difference between its intrinsic value and the market value (premium). An extrinsic value is affected by the volatility in the market and its time value. The intrinsic value of an asset refers to the calculated, true or real value of an asset and is solely affected by internal factors.

A call is out the money when the strike price is greater than or above the underlying price of an asset. This simply means that, it's market value (price) has fallen below its strike price.

In this scenario, the market price of the call is 77 while its strike price is 80; thus, the call option is out the money by 3.

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?

Answers

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%

Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the present and proposed production approaches. If required, round percentages to one decimal place. Present Approach Proposed Approach Value-added time 23 min 23 min Non-value-added time 1,582 min 105 min Total lead time 1,605 min 1,605 min Value-added ratio (as a percent) 14 % 21 %

Answers

Answer:

Hello some parts of your question is missing attached below is the missing part

Answer : value added times : 30 minutes , 30 minutes

               non-value added times: 1210 minutes, 130 minutes

               Total lead times : 1240 minutes,  160 minutes

               value added time as a ratio: 2.4%, 18.8%

Explanation:

Given data:

production batch sizes = 40 units

process step 1 = 6 minutes

process step 2 = 10 minutes

process step 3 = 6 minutes

process step 4 = 8 minutes

Determining : The value added, non-value added , total lead times and value added ratio under the present and proposed production approaches

UNDER PRESENT PRODUCTION APPROACH

Th value added time:

= summation of all process times = (6+10+6+8) = 30 minutes

Non-value added time:

=  Value added time *(Batch size -1) + move time between each step

= 30*39+8*5

= 1170 +40 = 1210 minutes

total lead time :

= value added time + non-value added time

= 30 + 1210 = 1240 minutes

value added time as a percentage/ratio

(value added time / total lead time) * 100

= 30 / 1240 * 100 = 2.4%

UNDER PROPOSED PRODUCTION APPROACH

value added time :

= summation of all process times = (6+10+6+8) = 30 minutes

Non-value added time :

=  Value added time *(Batch size -1) +  time between each step

= 30*4+2*5 = 120 + 10 = 130 mins

total lead time :

= value added time + non-value added time  = 30 +130 = 160 mins

value added time as a percentage/ratio:

(value added time / total lead time ) * 100

= (30 / 160) * 100 = 18.8%

Explain how to use the decision trees and Monte Carlo analysis for quantifying risk. Give an example of how you would use each technique on an IT project.

Answers

Answer:

The answer is below

Explanation:

Decision Tree Analysis is a form or type of quantitative risk assessment tool and techniques that involves a diagram that indicates the significances of choosing one or other alternatives.

In other words, the purpose of the tool is to assist you to select between several courses of action.

For example, lines are drawn towards the right for each possible solution, and then the solution is written along the line. Then evaluation of each alternative can be easily considered.

On the other hand, Monte Carlo Analysis is also a form or type of quantitative risk assessment tools and techniques that utilizes optimistic, most probable, and cynical estimates to infer the total project cost and project completion dates.

For example, an estimate of the probability of completing a project at a cost of $100M can be carried out using Monte Carlo Analysis

x

Midyear on July 31st, the Digby Corporation's balance sheet reported: Total Assets of $205.498 million Total Common Stock of $6.350 million Cash of $10.050 million Retained Earnings of $44.117 million. What were the Digby Corporation's total liabilities?
a) $165.081 million.
b) $144.981 million.
c) $155.031 million.
d) $161.381 million.

Answers

Answer:

The value of total liabilities is $155.031 million and option c is the correct answer.

Explanation:

The basic accounting equation states that the total value of assets is always equal to the sum of the total value of liabilities and the total value of equity.

Thus, we can say that,

Total Assets = Total Liabilities + Total Equity

The equity part can contain various components. In the given question it has two components namely Common Stock and retained earnings.

205.498 = Total Liabilities + (6.350 + 44.117)

205.498 = Total Liabilities + 50.467

205.498 -  50.467 = Total Liabilities

Total Liabilities = $155.031

Location Score

Factor
(100 points each) Weight A B C
Convenience .15 89 78 84
Parking facilities .20 75 93 98
Display area .18 92 90 87
Shopper traffic .27 92 93 82
Operating costs .10 93 97 84
Neighborhood .10 90 96 95
1.00


a.
Using the above factor ratings, calculate the composite score for each location. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)



Location Composite Score
A
B
C


b.
Determine which location alternative (A, B, or C) should be chosen on the basis of maximum composite score.

B
C
A

Answers

Answer and Explanation:

The computation of composite score for each location is shown below:-

Composite score for A is

= 0.15 × 89 + .20 × 75 + 0.18 × 92 + 0.27 × 92 + 0.10 × 93 + 0.10 × 90

= 88.05

 Composite score for B is

= 0.15 × 78 + .20 × 93 + 0.18 × 90 + 0.27 × 93 + 0.10 × 97 + 0.10 × 96

= 90.91

Composite score for C is

= 0.15 × 84 + .20 × 98 + 0.18 × 87 + 0.27 × 82 + 0.10 × 84 + 0.10 × 95

= 87.90

Therefore for computing the composite score for each location we simply multiply weight with A location and in the same manner of A, B and C

b. The maximum composite score from A, B and C is B

A company has reported operating income of $25,000,000. The bond interest expense for the year is $4,000,000 and principal payments on bonds totaled $1,000,000. The company's debt service coverage ratio is:

Answers

Answer:

The company's debt service coverage ratio is 5.

Explanation:

The debt service coverage ratio refers to the financial ratio that give a measure of the ability of a company to meet its current debts obligation.

The debt service coverage ratio therefore compares the operating income of the company with the company's total debt service obligations.

The total service obligation includes the current interest, principal repayment, and any other debt obligations.

The formula for calculating the debt service coverage ratio is given as follows:

Debt service coverage ratio = Operating income / Total debt service costs

Form the question, we have:

Operating income = $25,000,000

Total debt service costs = Interest expense + Principal payments on bonds = $4,000,000 + $1,000,000 = $5,000,000

Substituting the values into the formula, we have:

Debt service coverage ratio = $25,000,000 / $5,000,000 = 5

Therefore, the company's debt service coverage ratio is 5.

Since this is greater than 1, this iimplies that operating profits made by the company is more than enough to pay its current debt service costs.

What was the ratio of per capita income in each of the following countries to that in the United States in the year 2010:

a. Ethiopia
b. Mexico
c. India
d. Japan

Answers

Answer:

For   Countries (per capita)          United States of America (per capita)

Ethiopia:        

$380                                               $48,468

Mexico:                                          

$9,271                                             $48,468

India:

$1,358                                             $48,468

Japan:

$44,508                                          $48,468

Explanation:

Ratio per Capita also known as Gross Domestic Product per Capita (GDP Capita) is the monetary measure of the market value of all the final goods and services produced in a specific time period within the country in view. It is useful for comparing national economies of different countries on the international market.

Badger Corporation declared a stock distribution to all shareholders of record on March 25 of this year. Shareholders will receive one share of Badger stock for each 10 shares of stock they already own. Madison Cheesehead owns 1,000 shares of Badger stock with a tax basis of $100 per share. The fair market value of the Badger stock was $110 per share on March 25 of this year.Required:a. What amount of taxable dividend income, if any, does Madison recognize in 2009? b. What is Madison's income tax basis in her new and existing stock in Badger Corporation, assuming the distribution is non-taxable? c. How would you answer questions a and b if Madison was offered the choice between 1 share of stock in Badger for each 10 shares she owned or $100 cash for each 10 shares she owned in Badger?

Answers

Answer:

a. What amount of taxable dividend income, if any, does Madison recognize in 2009?

Madison doesn't have to recognize any income because she is not getting any. Only after Madison decides to sell his stocks will he recognize any taxable income if she makes a gain.

b. What is Madison's income tax basis in her new and existing stock in Badger Corporation, assuming the distribution is non-taxable?

Madison current basis is $100 per stock, and after the stock dividend it will be $100 / 1.1 = $90.91 per stock

c. How would you answer questions a and b if Madison was offered the choice between 1 share of stock in Badger for each 10 shares she owned or $100 cash for each 10 shares she owned in Badger?

then the cash dividend would be $10 per stock, which results in $10 x 1,000 = $10,000 taxable income. Her basis in the stock will remain not change.

A gift-wrapping business is staffed by Kaitlyn, Rob, Sam, Susan and Sarah. The production by each of the staff members for an average eight-hour work day is as follows:

Assume that the standard or normal productivity in the organization is 10 minutes per package. What is Kaitlyn's efficiency?

Kaitlyn Rob Sam Susan Sarah
72 packages 55 packages 52 packages 52 packages 48 packages

a. 0.75 (75%)
b. 1.50(150%)
c. 9.0 packages per hour
d. 1.50 packages per hour
e. 9.0 minutes per package

Answers

Answer:

b. 1.50(150%)

Explanation:

Given that, the standard time per packages is 10 minutes

Then, the total time taken in eight hour shift is 8 * 60 = 480 minutes

The standard output = Total time taken / Standard time = 480/10 = 48 packages

Therefore, the efficiency of Kaitlyn = Kaitlyn's Output / Standard output

=72 / 48

= 1.5

Hence, the answer is 150% or 1.5

Founder of Vanguard, Jack Bogle, believes that all investors should buy stock indices. Group of answer choices He believes in strong form market efficiency. He believes in semi-strong form market efficiency. He believes in weak form market efficiency. He believes markets are not efficient.

Answers

Answer:

Correct Answer:

1. He believes in strong form market efficiency.

Explanation:

Jack Bogle believed that, in a situation where people simply buy an entire group of stocks as a result of investors investing money into the index fund, it will create a strong market. That is, if every investor in the world only purchased the same index fund, then the market of buyers and sellers would no longer set the fair market price of the stocks in the stock market.

air pollution causes capital to wear out more rapidly, doubling the rate of depreciation. How would this affect economic growth?

Answers

Answer:

The economic growth will be lower.

Explanation:

The rise in pollution and the doubling of the rate of depreciation will affect economic growth adversely. However, rapid wear and tear of capital will cost the person and it will reduce the purchasing power. Thus, lower purchasing power will result in lower economic growth. Moreover, pollution creates three main problems that are reduced labor productivity, rise in health problems, and loss of crop yield. So the reduction in all these factors will also slow down economic growth.

There is a 3 percent defect rate at a specific point in a production process. If an inspector is placed at this point, all the defects can be detected and eliminated. The inspector would cost $8 per hour and could inspect units in the process at the current production rate of 30 per hour. If no inspector is hired and defects are allowed to pass this point, there is a cost of $10 per defective unit to correct the defects later on. Assume that the line will operate at the same rate (i.e., the current production rate) regardless of whether the inspector is hired or not. a. If an inspector is hired, what will be the inspection cost per unit? (Round your answer to 3 decimal places.) Cost per unit $ b. If an inspector is not hired, what will be the defective cost per unit? (Round your answer to 3 decimal places.) Cost per unit $ c. Should an inspector be hired based on costs alone? Yes No

Answers

Answer:

1a. $2.67 cost per unit

1b. $0.3 cost per unit

1c. Yes

Explanation:

1a. Calculation for what will be the inspection cost per unit If an inspector is hired

The following details were given in the question.

Defective average =3/100= 0.03

inspection rate = 30 per hour

Cost of inspector = 8 per hour

Correction cost = $10 each

Using this formula

Hired inspector =Cost per hour/Current production rate per hour

Let plug in the formula

Hired inspector=8 per hour/30 rate per hour

Hired inspector =0.267×100

Hired inspector=$2.67 cost per unit

1b. Calculation for what will be the defective cost per unit If an inspector is not hired

Using this Formula

No inspector=Defect rate %/Cost per defective

Let plug in the formula

No inspector= 3/100×$10

No inspector= $0.3 cost per unit

1c. Based on the above calculation the inspector should be hired.

New Harvest Bakery acquired all the outstanding common stock of Red Rock Bakery for $69,300 in cash. The book values and fair values of Red Rock's assets and liabilities were as follows: Book Value Fair Value Current assets $ 28,700 $ 22,300 Property, plant, and equipment 47,800 52,600 Other assets 3,500 5,800 Current liabilities 15,100 14,900 Long-term liabilities 29,000 21,400 Calculate the amount paid for goodwil

Answers

Answer:

Amount paid for goodwill is $24,900

Explanation:

Note: The data in the question are merged and they first sorted before answering the question as follows:

                                                          Book Value            Fair Value

Current assets                                     $ 28,700               $ 22,300

Property, plant, and equipment             47,800                 52,600

Other assets                                             3,500                    5,800

Current liabilities                                      15,100                  14,900

Long-term liabilities                                 29,000                21,400

The explanation of the answer to the question are now provided as follows:

Generally, goodwill refers to an intangible asset of a company and it can be in different for such as intellectual property, brand, commercial secrets, and reputation.

Amount paid for goodwill of an acquired company can be estimated by deducting the fair value of  net identifiable assets acquired from the consideration paid.

For this question, fair value of net identifiable assets can be calculated as follows:

Particular                                                  Fair Value ($)  

Current assets                                               22,300

Property, plant, and equipment                   52,600

Other assets                                                    5,800

Current liabilities                                          (14,900)

Long-term liabilities                                      (21,400)  

Fair value of net asset                                44,400    

Therefore, we have:

Amount paid for goodwill = Cash consideration paid - Fair value of net asset =  $69,300 - $44,400 = $24,900

Given the following information. Which of the statements below can you support with this information?

Maximum capacity (labor hours): 480 hours per week
Effective capacity ratio: 85 %
Actual time worked: 380 hours per week over the last two weeks
On-time delivery %: 75 percent of the jobs are being completed on time

a. More capacity needs to be added in the short term to improve performance in the system.
b. We need to look at variability in the rate at which jobs enter the shop.
c. Our workforce is not working hard enough.
d. Our workforce may be waiting on delayed arrivals of inputs needed to do the work.
Describe the reasons why you selected the specific option(s) that you did.

Answers

Answer:

d. Our workforce may be waiting on delayed arrivals of inputs needed to do the work.

Explanation:

There are two possible sources for 25% of the jobs not being delivered on time:

we have a problem with inputs required (materials or labor)we have a problem with the capacity of our facility

If we followed Juran's Law, we can simply assume that the problem here has to do with our productive system (like 85% of production errors). Two clear problems are obvious:

only 380 hours worked out of total of 480 hours per week ⇒ why didn't anyone work during the remaining 100 hours? Is there a delay with the inputs or we don't have enough workers?only 85% of the facility's capacity is being used ⇒ why only 85% of the effective capacity ratio? If we are finishing jobs late, why do we have 15% of unused capacity?

Obviously we cannot answer these questions just be reading two paragraphs, but that is what should be answered in order to solve the issues.

If the region or country where a company is located is experiencing a labor shortage, what should the company's management do

Answers

Answer:

In a situation where the company established in a region or country is experiencing a labor shortage, the best action to be taken would be to employ labourers from other regions or countries and moved them towards their location. This approach is adopted mostly by construction and hospitality industries.

Explanation:

Bryce Co. sales are $801,000, variable costs are $465,100, and operating income is $287,000. What is the contribution margin ratio

Answers

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

You are an investor who wants to form a portfolio that lies to the right of the "optimal" minimum standard deviation portfolio on the efficient frontier. You must: 0 / 1 puntos Invest only in risky securities. Borrow money at the risk-free rate, invest in the minimum standard deviation portfolio and, in addition, only in risky securities. Borrow money at the risk-free rate and invest everything in the minimum standard deviation portfolio. Invest only in risk-free securities.

Answers

Answer:

Correct Answer:

invest in the minimum standard deviation portfolio and, in addition, only in risky securities.

Explanation:

For an investor aiming to invest in a portfolio so that, his minimum standard deviation would lie towards the optimal right, he or she would need to invest in extremely risky securities. And, also, there will be need to maintain minimum standard deviation portfolio.

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Budgeted unit
sales 12,200 13,200 15,200 14,200
The selling price of the company’s product is $21 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $72,600.
The company expects to start the first quarter with 2,440 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,640 units.
Required
1-A. Complete the company's sales budget.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Budgeted Units Sales
Selling Price Per Unit
Total Sales
1-B. Complete the schedule of expected cash collections.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Beginning Accts Receivable
1st Quarter Sales
2nd Quarter Sales
3rd Quarter Sales
4th Quarter Sales
Total Cash Collections
2. Prepare the company’s production budget for the upcoming fiscal year.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Budgeted Unit Sales
Total Needs
Required Production in Units

Answers

Answer:

1-A. Sales budget

                                   1st             2nd             3rd             4th

                             Quarter     Quarter       Quarter       Quarter        Year

Sales units              12,200      13,200        15,200         14,200    54,800

Price per unit           $21             $21             $21             $21           $21

Total sales          $256,200  $277,200   $319,200   $298,200   $1,150,800

1-B. Cash collections budget

                                   1st             2nd             3rd             4th

                             Quarter     Quarter       Quarter       Quarter        Year

Collections from  $72,600    $76,860     $83,160      $95,760   $72,600

previous quarter  

Collections from $166,530  $180,180  $207,480  $193,830  $1,003,900

current quarter  

Total                    $239,130  $257,040  $290,640 $289,690  $1,076,500

2. Productions budget

                                   1st             2nd             3rd             4th

                             Quarter     Quarter       Quarter       Quarter        Year

Sales units              12,200      13,200        15,200         14,200    54,800

Planned ending       2,640       3,040          2,840          2,640       2,640

inventory

Total production     14,840      16,240        18,040         16,840    65,960

required

- Beginning              2,440        2,640         3,040           2,840       2,440

inventory

Units to be              12,400      13,600        15,000         14,000     63,520

produced

Answer:

sells budget

Explanation:

Identify whether each of the following examples belongs in M1 or M2.

a. Van has $2,500 in a savings account.
b. Paolo has a $10 bill in his wallet.
c. Amy has $7,000 in a six-month certificate of deposit (CD).

Answers

Answer: The answer is given below

Explanation:

It should be noted that M1 will be derived as Currency plus the Travelers check while M2 will be M1 plus the certificate of deposit plus the money market account.

a. Van has $2,500 in a savings account.

It should be noted that money in a savings account will have to be included in M2.

b. Paolo has a $10 bill in his wallet.

This fits into the description of both M1 and M2 forms of money.

c. Amy has $7,000 in a six-month certificate of deposit (CD)

The certificate of deposit is included in the M2.

Answer:

Option A is M2

Option B is M1

Option C is M2

Explanation:

The above classifications speak to various categories of money supply.

M1 refers to the supply of money that is composed of physical currency such as notes, coins, demand deposits other checkable deposits, etc.

Simply put, M1 would include forms of money that are liquid or easy to convert into cash.

M2 and M3 which are also known as "near money" and "near, near money,"  are money types which cannot be converted to currency as quickly as M1.

Another example of M2 is Money Market Mutual Funds. M1 is often included when calculating for M2.

Cheers!

Pam Erickson Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2015. For tax purposes, the company employs the completed-contract method and will continue this approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows.

Pretax Income from:

Percentage-of-Completion Completed-Contract Difference

2014 $752,200 $586,700 $165,500
2015 683,500 444,700 238,800

(a) Assuming that the tax rate is 30%, what is the amount of net income that would be reported in 2015?

Net income $
(b) What entry(ies) are necessary to adjust the accounting records for the change in accounting principle?

Answers

Answer:

a. $478,450

b.Dr Construction in Process $165,500

Cr  Deferred tax liability  $49,650

Cr   Retained earnings  $115,850

Explanation:

A. Calculation for the amount of net income that would be reported in 2015 for Pam Erickson Construction Company

Using this formula

Net income =(Income before income tax ) Income before income tax-Tax rate

Let plug in the formula

Net income= $683,500 - (683,500 × 30%)

Net income= $683,500 - $205,050

Net income= $478,450

B. Preparation of the Journal entry(ies) that are necessary to adjust the accounting records

For Pam Erickson Construction Company

Dr Construction in Process $165,500

Cr  Deferred tax liability  $49,650

($165,500 × 30%)

Cr   Retained earnings  $115,850

($165,500 × (100%-30%)

The central problem in product-oriented layout planning is?

Answers

Answer: The minimizing the imbalance in the workloads among workstations.

Explanation:

Workspace can inspire informal and productive encounters if it balances what three physical and social aspects.

Suppose you are building a scatter plot in Excel for a large amount of data. After selecting the scatter plot option, how do you enter the data into your scatter plot?


a. By manually typing each data point into the scatter plot

b. By using the Quick Styles button under the Chart menu

c. By using the Select Data button and the Select Data Source option

Answers

Answer:

c. By using the Select Data button and the Select Data Source option

Explanation:

A scatter plot is a plot which is used to plot the points of the data on the horizontal and the vertical axis also it depicts how one variable is affected by the another.

After preparing the scatter plot to enter the data in the scatter plot we need to use the data button and then data source option so that the data could be entered in the scatter plot

hence, option c is correct

If a municipality is expecting to receive federal funding for mass-transit programs, it could borrow against the expected funds to be received by issuing:_____.
A. BANs.
B. TANs.
C. GANs.
D. CLNs.

Answers

Answer:

Option C (GANs) is the correct answer.

Explanation:

GAN refers to "Grant Anticipation Notice". This can indeed be distributed by a municipality or community to "move forward" as well as make the proper use of another government grant extra funds expected future economic in the years ahead. Those other state grant monies are being used for investments in mass transportation, energy efficiency, including environmental regulations.

The other three alternatives are not related to the given instance. So that the above would be the appropriate one.

Mountain Ski Corp. was set up to take large risks and is willing to take the greatest risk possible. Lakeway Train Co. is more typical of the average corporation and is risk-averse.
Projects Returns: Expected Value Standard Deviation
A $ 310,000 $ 173,000
B 676,000 413,000
C 163,000 120,000
D 134,000 101,000
a-1. Compute the coefficients of variation. (Round your answers to 3 decimal places.)
a-2. Which of the following four projects should Mountain Ski Corp.
A. Project B
B. Project A
C. Project C
D. Project D

Answers

Answer:

B. Project A

Explanation:

Coefficient of variation=standard deviation/expected return value

Project A:

Coefficient of variation=$173,000/$310,000= 0.558  

Project B:

Coefficient of variation=$413,000/$676,000=  0.611  

Project C:

Coefficient of variation=$120,000/$163,000=0.736

Project D:

Coefficient of variation=$101,000/$134,000=0.754

The Project A has the lowest rate of risk per unit of return, hence, it is the preferred choice of investment

Suppose that in 1969, the U.S. economy was operating close to potential. The budget deficit experienced by the United States in 1969 was:

Answers

Answer: primarily cyclical deficit

Explanation:

Budget deficit occurs when the government expenditure for a certain year is more than the revenue the government makes.

Since the the United States economy was operating close to potential. The budget deficit experienced by the United States in 1969 was primarily cyclical deficit.

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

Answers

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

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