McKerley Corp. has preferred stock outstanding that will pay an annual dividend of $3.70 per share with the first dividend exactly 14 years from today. If the required return is 3.6 percent, what is the current price of the stock?

Answers

Answer 1

Answer:

$64.89

Explanation:

Calculation for the current price of the stock

First step is to find the preference stock value at end of 13 years

Using this formula

P13= Annual dividend/Required return

Let plug in the formula

P13=$3.70/.036

P13= $102.78

The second step is to calculate for the current price of the stock

Using this formula

P0= P13/(1+Required return)^Dividend years

Let plug in the formula

P0= $102.78/(1 + .036)^13

P0=$102.78/(1.036)^13

P0=$102.78/1.5837

P0=$64.89

Therefore the current price of the stock will be $64.89


Related Questions

Cullumber Corporation had 312,000 shares of common stock outstanding on January 1, 2017. On May 1, Cullumber issued 29,700 shares.

(a) Compute the weighted-average number of shares outstanding if the 29,700 shares were issued for cash.

Weighted-average number of shares outstanding $



(b) Compute the weighted-average number of shares outstanding if the 29,700 shares were issued in a stock dividend.

Weighted-average number of shares outstanding $

Answers

Answer:

a. Issued for Cash = ($312,000 * 12/12) + ($29,700 * 8/12)

= $312,000 + $19,800

= $331,800

b. Issued in a stock dividend: Shares issued in the stock dividend are assumed outstanding from the beginning of  the year

= ($312,000 * 12/12) + ($29,700 * 12/12)

= $312,000 + $29,700

= $341,700

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 decide to invest in a portfolio consisting of 30 percent Stock A, 30 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio? State of Economy Probability of State Return if State Occurs of Economy Stock A Stock B Stock C Recession .17 - 18.8 % - 3.9 % - 22.8 % Normal .45 10.2 % 8.5 % 17.1 % Boom .38 28.6 % 15.8 % 31.7 %

Answers

Answer:

Portfolio return = 0.127744 or 12.7744% rounded off to 12.77%

Explanation:

The portfolio return is a function of the weighted average of the individual stocks returns' that form up the portfolio. The formula for portfolio return is,

Portfolio return = wA * rA  +  wB * rB  +  ...  +  wN * rN

Where,

w represents the weight of each stockr represents the return of each stock

To calculate the expected return of portfolio, we first need to calculate the individual stock returns.

The expected rate of return of individual stocks can be calculated as follows,

r = pA * rA  +  pB * rB + ... + pN * rN

Where,

pA, pB and so on represents the probability of an event or return to occur rA, rB and so on are the return in different events

For Stock A

rA = 0.17 * -0.188  +  0.45 * 0.102  +  0.38 * 0.286

rA  = 0.12262 or 12.262%

For Stock B

rB = 0.17 * -0.039  +  0.45 * 0.085  +  0.38 * 0.158

rB  = 0.09166 or 9.166%

For Stock C

rC = 0.17 * -0.228  +  0.45 * 0.171  +  0.38 * 0.317

rC  = 0.15865 or 15.865%

Portfolio return = 0.3 * 0.12262  +  0.3 * 0.09166  +  0.4 * 0.15865

Portfolio return = 0.127744 or 12.7744% rounded off to 12.77%

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of ? 1000, 25 years to maturity, and a coupon rate of 6.4 percent paid annually. If the yield to maturity is 7.5 percent, what is the current price of the bond?

Answers

Answer:

Bond Price = $877.3835955 rounded off to $877.380

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 an annual bond, the coupon payment, number of periods and r or YTM will be,

Coupon Payment (C) = 0.064 * 1000 = $64

Total periods (n)= 25

r or YTM = 7.5% or 0.075

The formula to calculate the price of the bonds today is attached.

Bond Price = 64 * [( 1 - (1+0.075)^-25) / 0.075]  +  1000 / (1+0.075)^25

Bond Price = $877.3835955 rounded off to $877.380

The current price of the bond is $877.38.

Given that,

The par value of $1,000.The NPER is 25 years.The coupon rate is 6.4%, PMT = 6.4% of $1,000 = $64.The RATE is 7.5%.

Based on the above information, the calculation is to be shown in the attachment.

Therefore we can conclude that The current price of the bond is $877.38.

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It is March 31, 2014. What is the latest reported number of E-Bay shares beneficially owned by the company’s CEO? Please provide your answer without comma separator or decimal (Ex: 23456326563)

Answers

Answer: 2663844

Explanation:

According to page 22 of eBay's March 2014 Definitive Proxy statement on the SEC's website, the President and CEO Mr John J. Donahoe, beneficially owned 2,663,844 shares in the company. This includes,  2,083,628 shares that he can acquire pursuant to some Options and 35,306 in Restricted stock units.

The Peabody Company has 7 year MACRS property with an original cost basis of $1,700,000. Calculate the ending book value at Year 4.

Answers

Answer: $531,080

Explanation

The Modified Accelerated Cost Recovery System (MACRS) is a depreciation schedule for assets and can be based on various year denominations. This one is of a 7 year type and the rates are specified below;

The ending book value at the end of year 4 would be;

= Original Cost - Accumulated Depreciation

= 1,700,000 - (1,700,000 * ( 14.29% + 24.49% + 17.49% + 12.49%))

= 1,700,000 - (1,700,000 * 68.76%)

= 1,700,000 - 1,168,920‬

= $531,080

Revenue of $1,000 was collected in advance from customers for goods and was recorded as sales revenue. At year end, $600 of the revenue collected in advance is earned. The adjusting entry includes a:

Answers

Answer:

Please see below

Explanation:

The adjusting entries include

Revenue A/c. Dr. $400

To Deferred revenue A/c. Cr $400

($1,000 - $600)

* When a company makes a journal entry to record revenue that it had previously collected in advance, which was recorded as sales revenue, then the adjusting entry to record portion of the earned revenue received in advance would include a debit to revenue a/c

When auto manufacturer BMW purchased the RollsRoyce brand​ name, BMW had to hire and train a new staff of assembly workers. The new workers were paid per​ hour, worked a total of ​hours, and produced cars. BMW budgeted for a standard labor rate of per hour and direct labor hours per car. What is the direct labor rate variance for the RollsRoyce ​division?

Answers

Complete Question:

When auto manufacturer BMW purchased the Rolls-Royce brand name, BMW had to hire and train a new staff of assembly workers. The new workers were paid $25 per hour, worked a total of 7,500 hours, and produced 2,000 cars. BMW budgeted for a standard labor rate of $27 per hour and 1.25 direct labor hours per car.

What is the direct labor rate variance for the Rolls-Royce division?

Answer:

$15,000 Favorable Variance

Explanation:

As we know that:

Labor Rate Variance = (Actual Rate per Hour − Standard Rate per Hour) * Actual Hours Worked

If we consider the parenthesis elements in the formula, we can decide whether the variance is favorable or adverse. If the actual cost is higher than the budget (standard) then the variance (difference) is adverse and vice versa.

Here

Actual rate per hour is $25 per Hour

Standard rate per hour is $27 per Hour

Actual Hours Worked are 7,500 Hour

By putting values, we have:

Labor Rate Variance = ($25 − $27) * 7,500 Hrs

Labor Rate Variance = ($2 per share) * 7,500 Hrs

Labor Rate Variance = $15,000 Favorable

As the actual labor rate is lower than the standard rate hence the variance is favorable.

The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11200 gallons of direct materials that actually cost $42400 were used to produce 6000 units of product. The direct materials quantity variance for last month was

Answers

Answer:

$3,200 Favorable

Explanation:

For the computation of direct materials quantity variance first we need to find out the standard quantity which is shown below:-

Standard quantity = Standard quantity per unit × Number of units produced

= 2 gallon × 6,000

= 12,000

Direct materials quantity variance = (Standard quantity - Actual quantity) × Standard Price

= (12,000 - 11,200) × $4

= 800 × $4

= $3,200 Favorable

Wood Co.'s dividends on noncumulative preferred stock have been declared but not paid. Wood has not declared or paid dividends on its cumulative preferred stock in the current or the prior year, and has reported a net loss in the current year. For the purpose of computing basic earnings per share, how should the income available to common stockholders be calculated

Answers

Answer:

Once the preferred dividends have been declared, they must be included in the calculation for the earnings per share (EPS) formula: EPS = (net income - preferred dividends) / average shares outstanding.

When the dividends are declared the following journal entry must be made:

Dr Retained earnings X

    Cr Preferred dividends payable X

Net income is reported using the retained earnings account, and once the retained earnings account decreases, the preferred dividends become a liability.

At the beginning of the school year, Priscilla Wescott decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:
Cash balance, September 1 (from a summer job) $8,220
Purchase season football tickets in September 110
Additional entertainment for each month 290
Pay fall semester tuition in September 4,400
Pay rent at the beginning of each month 400
Pay for food each month 220
Pay apartment deposit on September 2 (to be returned December 15) 600
Part-time job earnings each month (net of taxes) 1,020
a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except an overall cash decrease which should be indicated with a minus sign.
b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?
c. Priscilla can see that her present plan will not provide sufficient cash. If Priscilla did not budget but went ahead with the original plan, she would be $ short at the end of December, with no time left to adjust.

Answers

Answer:

a) Priscilla Wescott's

Cash budget

                                                                  Months

                                        Sept.            Oct.             Nov.           Dec.

beginning balance          8,220         3,220          3,330          3,340

football tickets                -110

other entertainment       -290            -290            -290            -290

semester tuition             -4,400

rent                                  -400            -400            -400            -400

food                                 -220            -220            -220            -220

apartment deposit          -600                                                     600

part time jobs earnings   1,020          1,020           1,020           1,020

ending balance                3,220         3,330           3,340          4,150

b) This is a static budget because it is being prepared in advance. A flexible budget adjusts a static budget to the real cash outflows and inflows.

c) The spring semester tuition costs $4,400 and she will only have $4,150, that means she will be $250 short.

A firm has a total market value of $10 million while its debt has a market value of $4 million. What is the after-tax weighted average cost of capital if the before-tax cost of debt is 10%, the cost of equity is 15%, and the tax rate is 35%

Answers

Answer:

11.6%

Explanation:

A firm total market value is $10 million

Its debt has a market value of $4 million

The before-tax cost of debt is 10%

= 10/100

= 0.1

The cost of equity is 15%

= 15/100

= 0.15

The tax rate is 35%

= 35/100

= 0.35

Therefore, the after-tax weighted average cost of capital can be calculated as follows

WACC= 0.4(0.10)(1-0.35) + 0.6(0.15)

= 0.04(0.65) + 0.09

= 0.026 + 0.09

= 0.116×100

= 11.6%

Hence the after-tax weighted average cost of capital is 11.6%

Suppose an industry earns a rate of return of 10%, which is twice as high as that of competitive industries, 5%. How much is the price overcharge of that industry, if its capital is valued at half its annual revenue

Answers

Answer:

Let us assume that both the industries are having an investment of $100,000

The profit of the given industry which is having 10% rate of return will be $100,000 * 10% = $10,000

The other industry which is having the Rate of return of 5% will earn a profit of $100,000 * 5% = $5000.

As the capital is just half of the revenue, it signifies that the total revenue will be $200,000 . So the same value of $10,000 will be 5% of the total revenue.  On the other hand, $5,000 would be 2.5% of total revenue.

Thus, the first stated industry will charge 2.5% more than the other industry.

using the T-accounts of the first national bank and the second national bank, describe what happens when Jane Brown writes a check for $55 on her account

Answers

Answer:

Please refer to the attached.

Before Jane Brown wrote the check, her account was $55 at First National Bank which is reflected by the checkable deposit of $55 which the bank will keep in reserve as an asset.

Joe Green has not received the money so his account at Second National will show $0 balances.

After the cheque has been written and deposited, Jane Brown's chekcable deposits at First national will become $0 as well as the reserves.

Joe Green on the other hand, having gained the $55 and deposited it will see his checkable deposits rise to $55 which the bank will keep in reserve as an asset.

Which of the following is an advantage of job specialization? 1 point A. The quality of work increases. B. Jobs can be mastered quickly. C. Employees are more involved with their jobs. D. The work is less repetitive. E. Task specialization has no clear advantages to the organization

Answers

Answer: B. Jobs can be mastered quickly.

Explanation:

Job specialization is when the employees in an organization focuses and concentrates on one particular aspect in a organization. Specialization makes employees more efficient and also effective at their role.

Also, jobs can be mastered quickly since the employees typically focuses on one particular aspect in the organization.

The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $32,000 $40,000 Useful life 4 years 9 years Estimated residual value 0 0 Estimated total income over the useful life $3,520 $14,400 Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place. 3D Printer 55 % Truck 8 %

Answers

Answer:

3D Printer 55 % Truck 8 %

Explanation:

The formula to compute the average rate of return for each proposal is shown  below:

The average rate of return = Average net income ÷ Average investment

Particulars                         3D printer         Truck

Average net income (a)           $880                     $1,600

                                        ($3,520 ÷ 4 years)      ($14,400 ÷ 9 years)

Average investment (b)   $16,000                         $20,000

                                         ($32,000 ÷ 2)              ($40,000 ÷ 2)

Average rate of return (a ÷ b)     55%                               8%

Stock price is $150. You see an at-the-money call option trading at $15, and at-the-money put trading at $5. The options have the same expiration date. You decide to buy a straddle. What will be the breakeven points of the strategy, i.e., at what stock prices will your profit will be exactly zero?a. Two breakeven points, S* = 145 and S* = 165b. Two breakeven points, S* = 135 and S* = 155c. One breakeven point, S* = 150d. Two breakeven points, S* = 130 and S* = 170

Answers

Answer:

D) Two break even points, S* = 130 and S* = 170

Explanation:

option a)

if the stock price is $145,

put option ⇒ you win $5 - $5 (option price) = no gain

call option ⇒ you lose $15 (option price)

WRONG ANSWER

option b)

if the stock price is $155,

put option ⇒ you lose $5 (option price)

call option ⇒ you win $5 - $15 (option price) = -$10 loss

WRONG ANSWER

option c)

if the stock price is $150,

put option ⇒ you lose $5 (option price)

call option ⇒ you lose $15 (option price)

WRONG ANSWER

option d)

if the stock price is $170,

put option ⇒ you lose $5 = -$5 loss

call option ⇒ you win $20 - $15 (option price) = $5 gain

total gain/loss = $0

if the stock price is $130,

put option ⇒ you win $20 - $5 (option price) = $15 gain

call option ⇒ you lose $15 (option price)

total gain/loss = $0

CORRECT ANSWER

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

In terms of communicative competency, effective leaders attempt to force their own ideas into group discussions.
a. True
b. False

Answers

Answer:

False

Explanation:

based on the characteristics of constructive conflicts, which of the following would help a manager create constructive conflicts during a debate?
1. Support the weaker members during a debate
2. Explain conflict in terms of interpersonal incompatabilities
3. Support the stronger memebrs during the debate
4. Keep the debate focused on the issue
5. Maintain competitive oreientation on the debate

Answers

Answer:

The correct answer is: 4. Keep the debate focused on the issue

Explanation:

A constructive conflict can be understood as different points of view that arise in an organization on the same issue.

Therefore, it can be a great way for the organization to enrich itself with new ideas, thoughts and different ways of carrying out actions that will help the organization to achieve its objectives and goals.

Therefore, the most suitable alternative for building a constructive conflict during a debate is for the manager to always focus on the issue discussed, and not for the debate to turn to support due to interpersonal relationships.

You own of the stock of a company that has 10 directors on its board. How much representation can you get on the board if the company has cumulative​ voting? How much representation can you ensure if the company has straight​ voting?

Answers

Answer:

B.With cumulative voting you are able to get proportional representation by putting all of your votes toward 3​directors, allowing you to elect representatives to 3 seats ​(30% of ten​ seats) on the board. B.With​ non-cumulative voting you vote on each director​ individually, and without a majority of the shares you cannot ensure that your representative will win any of the elections​ (you could lose 70% to 30% in each of the ten individual​ elections).

Explanation:

Cumulative voting is a method of voting that allows a shareholder to place all the votes they have to one or more person. Normally, during elections for a Board member, each shareholder will be given a certain number of votes and this is usually related to the number of shares they hold. In cumulative voting, they can place all these allowed votes in the corner of one person thereby increasing their chances of getting voted. By owning 30%, you will get 30% of the votes. If you decide to place all 30% for 3 people out of 10, you will get them elected.

With straight voting though, you can only vote once per share owned. That means that you cannot pledge all your votes to a single person or group of people. Should that happen, you cannot ensure that your representative will win as people may outvote your 30% in in each candidate.

James hires Franco for a painting job. Their contract explicitly states that Franco's employment can be terminated if he is employed by another party during the contract period. Two weeks into the job, James finds out that Franco is also working for a painting agency two blocks away and terminates his employment. This is an instance of ________.

Answers

Answer:

Condition subsequent.

Explanation:

This is rampant on agreement that deal with contracts as it is seen to be a situation that terminates a previously valid contract. Closely related legal concepts in cases of this kind are treated as conditions precedent and conditions concurrent. A condition subsequent in certain contracts are known to trigger the termination of the agreement of the said contract and also eliminates rights and obligations in the ends of the two parties. It is seen also in cases that when it occurs, it terminates any duty to perform and can also terminate rights and interests that were present under the terms of the contract.

One significant way that blacks were able to enjoy economic independence was by settling in the West on federally provided public land.
a. True
b. False

Answers

False is your answer have a nice day

Fill in the blanks to complete the sentence. Fixed costs equal $25,000; variable cost per unit is $2.50 and units produced are 10,000. The total budgeted costs is

Answers

Answer:

Total cost= $50,000

Explanation:

Giving the following information:

Fixed costs equal $25,000

Variable cost per unit is $2.50

Units produced=10,000

To calculate the total costs, we need to use the following formula:

Total cost= fixed costs + total variable cost

Total cost= 25,000 + 2.5*10,000

Total cost= $50,000

The Total budgeted cost when the fixed cost, variable cost per unit is given should be $50,000.

Calculation of the total budgeted cost:

Since

Fixed costs equal $25,000

The variable cost per unit is $2.50

Units produced=10,000

Now the following formula is used

Total cost= fixed costs + total variable cost

Total cost= 25,000 + 2.5*10,000

Total cost= $50,000

Basically we added the fixed cost and the total variable cost so that the total cost could come.

hence, The Total budgeted cost is $50,000.

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Selected data concerning operations of Cascade Manufacturing Company for the past fiscal year follow:

Raw materials used ..... $300,000

Total manufacturing costs charged to production during the year (includes raw materials, direct labor, and manufacturing overhead applied at a rate of 60 percent of direct labor costs) ..... 681,000

Cost of goods available for sale ...... 826,000

Selling and general expenses ...... 30,000

Beginning Inventories

Raw materials ...... $70,000

Work-in-process...... 85,000

Finished goods ...... 90,000

Ending Inventories

Raw materials ...... $80,000

Work-in-process ...... 30,000

Finished goods ....... 110,000

Determine each of the following:

a. Cost of raw materials purchased

b. Direct labor costs charged to production

c. Cost of goods manufactured

d. Cost of goods sold

Answers

Answer:

a.   Purchases $310,000

b.     Direct labor  $ 238,125

c. Cost of goods manufactured $ 736,000

d. Cost of goods sold $ 716,000

Explanation:

Cascade Manufacturing Company

Raw materials used ..... $300,000

Add Raw materials Ending  ...... $80,000

Less Raw materials  Beginning...... $70,000

a.   Purchases $310,000

Add Raw materials Ending to Raw materials used and subtract  Raw materials  Beginning to get  Raw materials  Purchases.

Total manufacturing costs $  681,000

Less Raw materials used ..... $300,000

Conversion Costs  $ 381,000

Conversion Costs = Direct Labor + Factory Overhead

$ 381,000=  x + 0.6 x

$ 381,000= 1.6x

b.   x=  Direct labor = $ 381,000/1.6=  $ 238,125

Factory Overhead= 0.6 *$ 238,125= $ 142875

Find Conversion Costs and then apply the ratio to get the direct labor costs.

c.

Cascade Manufacturing Company

Cost of goods manufactured

Raw materials  Beginning...... $70,000

Add Purchases $310,000

Less Raw materials Ending  ...... $80,000

Raw materials used ..... $300,000

Add Direct labor   $ 238,125

Factory Overhead $ 142875

Total manufacturing costs $  681,000

Add Work-in-process Beginning...... 85,000

Cost of goods available for manufacture $ 766,000

Less Work-in-process Ending...... 30,000

Cost of goods manufactured $ 736,000

Add and subtract as above to get the Cost of goods manufactured.

d.  Cascade Manufacturing Company

Cost of goods sold

Raw materials  Beginning...... $70,000

Add Purchases $310,000

Less Raw materials Ending  ...... $80,000

Raw materials used ..... $300,000

Add Direct labor   $ 238,125

Factory Overhead $ 142875

Total manufacturing costs $  681,000

Add Work-in-process Beginning...... 85,000

Cost of goods available for manufacture $ 766,000

Less Work-in-process Ending...... 30,000

Cost of goods manufactured $ 736,000

Add Finished goods Beginning...... 90,000

Cost of goods available for sale  $ 826,000

Less Finished goods Ending....... 110,000

Cost of goods sold $ 716,000

Add and subtract as above to get the Cost of goods sold.

Employees in a department are considered a team only when they directly interact and coordinate work activities with each other.

a. True
b. False

Answers

Answer:

True

Explanation:

Team can be defined as way in which group of people or individuals come together in one accord in order to carryout a task or an assignment for the purpose of achieving their aim,goals or objectives, which is why working together as a team either in a company or an organisation is vital and paramount because it help to create unity among employees and to enable the employees to interact and effectively coordinate their work activities with one another which will lead to the growth and success of the organisation or company.

​Keith, an employee of​ Sunbeam, Inc., has gross salary for May of​ $15,000. The entire amount is under the OASDI limit of​ $118,500 and thus subject to FICA. He is also subject to federal income tax at a rate of​ 20%. Which of the following is a part of the journal entry to record the disbursement of his net​ pay? (Assume a FICAOASDI Tax of​ 6.2% and FICAMedicare Tax of​ 1.45%.) (Round the final answer to the nearest​ dollar.)

Answers

Answer:

there are no options listed, but the journal entry to record Keith's salary should be:

May 31, wages expense

Dr Wages expense 15,000

Dr FICA taxes expense 1,147.50

Dr FUTA taxes expense 900

    Cr Federal income taxes withheld payable 3,000

    Cr FICA OASDI taxes withheld payable 930

    Cr FICA Medicare taxes withheld payable 217.50

    Cr FICA OASDI taxes payable 930

    Cr FICA Medicare taxes payable 217.50

    Cr Wages payable 10,852.50

I didn't include SUTA taxes or any other discount (e.g. health insurance, IRA contributions, union contributions, etc.) because sometimes they do not exist, but the previous ones always exist.

With regard to consideration in a sales contract, the UCC differs from the common law in that:_______
A) terms of a sales contract may be modified without additional consideration.
B) consideration is not required in sales contracts
C) terms in a sales contract may be modified as long as additional consideration is provided.
D) consideration exchanged must be equal or very closely equal in sales contracts.

Answers

Answer:

A) terms of a sales contract may be modified without additional consideration.

Explanation:

Generally speaking, common law applies to everybody in an equal manner, i.e. the law is the same for everyone. While UCC rules vary depending if the parties involved are merchants or not. UCC has two standards, one that applies to merchants and another one that applies to everyone else.

Common law applies to all contracts that are not covered by UCC rules. UCC rules only apply to the sale of goods and this doesn't include money or securities. Under UCC rules, new consideration is not a requirement to modify an existing contract. E.g. a buyer places an order for 3,000 units, but the seller only has 2,000 units available. The seller can send the 2,000 units and if the buyer accepts them, a new contract is formed.

Sauer Milk Inc. wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financial plans: Cost (aftertax) Weights Plan A Debt 3.0 % 15 % Preferred stock 6.0 10 Common equity 10.0 75 Plan B Debt 3.2 % 25 % Preferred stock 6.2 10 Common equity 11.0 65 Plan C Debt 4.0 % 35 % Preferred stock 6.7 10 Common equity 10.6 55 Plan D Debt 7.0 % 45 % Preferred stock 7.6 10 Common equity 12.6 45 a-1. Compute the weighted average cost for four plans.

Answers

Answer:

Plan A = 8.55%

Plan A =8.57%

Plan A =7.9%

Plan A =6.58%

Explanation:

The weighted average cost of capital can be computed by multiplying the Cost of capital (after tax) with the weights. The weighted average cost for four plans are as follows

WACC = Cost of capital x Weights

PLAN A

                                Weights      Cost of capital      WACC

Debt                         3.0 %                    15 %                0.45%    

Preferred stock       6.0                        10%                0.6%

Common equity      10.0                      75%               7.5%

WACC                                                                          8.55%

PLAN B

                                Weights      Cost of capital      WACC

Debt                         3.2 %                  25%                0.8%    

Preferred stock       6.2                      10%                0.62%

Common equity      11.0                      65%               7.15%

WACC                                                                         8.57%

PLAN C

                                Weights      Cost of capital      WACC

Debt                          4.0 %                   35 %                1.4%    

Preferred stock        6.7                        10%                0.67%

Common equity       10.6                      55%               5.83%

WACC                                                                          7.90%

PLAN D

                                Weights      Cost of capital      WACC

Debt                         7.0 %                   45 %                3.15%    

Preferred stock       7.6                       10%                 0.76%

Common equity       12.6                     45%                5.67%

WACC                                                                          6.58%

(a) What alternative formats could P&G have adopted for its balance sheet? Which format did it adopt? (b) Identify the various techniques of disclosure P&G might have used to disclose additional pertinent financial information. Which technique does it use in its financials? (d) What were P&G's cash flows from its operating, investing, and financing activities for 2017? What were its trends in net cash provided by operating activities over the period 2015 to 2017? Explain why the change in accounts payable and in accrued and other liabilities is added to net income to arrive at net cash provided by operating activities.

Answers

Answer:

P&G 2017 K-10:

a) Alternative formats for P&G Balance Sheet:

1. Report Format: Assets and Liabilities and Equity are listed from up to down.

2. Account Format: Assets and Liabilities and Equity are stated side by side.

3. Liquidity Format: The most liquid assets are listed first and then followed by permanent assets, and the same for liabilities.

4. Permanency Format: Noncurrent assets are stated first before current assets, and the same for liabilities.

P&G reported under US GAAP adopted the Report Format and listed balance sheet items according to their liquidity.

b) Techniques of disclosure of additional financial information:

1. Parenthetical Explanation

2. Notes to the Financial Statements

3. Cross-referencing

4. Valuation Allowances, e.g allowances for doubtful accounts, accumulated depreciation, etc.

5. Supporting Schedules

6. Comparative Statements, with about three years of financial statements.

c) P&G used Notes to the Financial Statements with supporting schedules and comparative statements.

d) 2017 Cash flows from:

1. Operating Activities = $12,753 million

2. Investing Activities = ($5,689 million)

3. Financing Activities = ($8,568 million)

e. Trends in net cash provided by operating activities over the period 2015 to 2017:

Net cash provided by operating activities:

2015 = $14,608 million

2016 = $15,435 million

2017 = $12,753 million

It increased from 2015 to 2016 and decreased in 2017 as stated above.

f) The change in accounts payable, accrued, and other liabilities is added to net income to arrive at net cash provided by operating activities because they involve cash outflows for the payment of purchases for goods and services used in generating the revenue that produces the net income.

Explanation:

P&G as a US headquartered entity reported under US GAAP with the adoption of Balance Sheet instead of reporting under IFRS with the adoption of Statement of Financial Position. P&G called its Income Statement "Consolidated Statement of Earnings" instead of the IFRS "Consolidated Income Statement."  Apart from nomenclature, the formats and disclosures are similar.

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