Answer:
Please see the journal entries for the two treasury stock transactions.
Explanation:
• Purchase of treasury stock
Treasury stock Dr $5,600
To Cash account Cr $5,600
(Being the purchase of treasury stock that is recorded)
For recording the above, treasury stock was debited because it increased the treasury while cash credited because it decreased the assets.
• Sale of treasury stock
Cash account Dr $4,070
To Treasury stock Cr $3,700
To paid in capital- treasury stock Cr $370
Explanation
° Purchase of treasury stock
Treasury stock
= 560 shares × $10 per share
= $5,600
° Sales of treasury stock
Cash receipt
= 370 shares × $11 per share
= $4,070
Treasury stock
= 370 shares × $10 per share
= $3,700
Paid in capital treasury stock
= 370 shares × ($11-$10)
= $370
Nature's Garden, a new restaurant situated on a busy highway in Pomona, California, specializes in a chef's salad selling for $7. Daily fixed costs are $1,710, and variable costs are $4 per meal. With a capacity of 950 meals per day, the restaurant serves an average of 900 meals each day.Requried:a. Determine the current average cost per meal.b. A busload of 30 Girl Scouts stops on its way home from the San Bernardino National Forest. The leader offers to bring them in if the scouts can all be served a meal for a total of $150. The owner refuses, saying he would lose $0.60 per meal if he accepted this offer. How do you think the owner arrived at the $0.60 figure? Comment on the owner's reasoning.c. A local businessman on a break overhears the conversation with the leader and offers the owner a one-year contract to feed 300 of the businessman's employees one meal each day at a special price of $4.50 per meal. Should the restaurant owner accept this offer? Why or why not?
Answer:
Nature's Garden
a. Determination of the current average cost per meal:
Variable cost per meal = $3,800 ($4 x 950) based on full capacity
Fixed costs per day = $1,710
Total costs = $5,510
Average cost per meal = $5,510/950 = $5.80
b. Girl Scouts' offer of $150 for 30 girls:
Offered price per person = $5 ($150/30)
Projecting a loss of $0.60 per meal, this gives a total loss of $18 ($0.60 x 30)
Projected revenue from the offer = $150 + $18 = $168
Projected revenue per meal = $168/30 = $5.60
Actual revenue to be received per meal = $5.00
Loss of $0.60
The owner arrived at the $0.60 loss because his total costs per meal was $5.60.
c. Since the variable cost per meal is $4, the restaurant owner could accept the offer if the additional 300 meals will not increase his daily fixed costs due to lack of capacity. If the fixed costs increase with this addition, then it may not be reasonable to accept the offer. Based on this offer, the contribution to defraying fixed costs, given present capacity, is only $0.50 ($4.50 - $4) per meal.
Explanation:
Selling price of chef's salad = $7
Daily fixed costs = $1,710
Variable costs per meal = $4
Meals capacity per day = 950
Average meals = 900
Nature's Garden has a fixed cost of $1,710 based on current capacity of 950 meals per day. The fixed cost may increase with increasing capacity. This fact must be borne in mind when making decisions.
In an international communication process carried out by a company, the sales force of the company that conveys the encoded message to the intended receiver acts as a(n)
Answer: message channel
Explanation:
In an international communication process carried out by a company, the sales force of the company that conveys the encoded message to the intended receiver acts as a message channel.
The sales force are said to act as a.mesage channel because they are the ones that pass the message across to the intended receiver.
TB MC Qu. 9-251 Turrubiates Corporation makes a product that ... Turrubiates Corporation makes a product that uses a material with the following standards: Standard quantity 6.7 liters per unit Standard price $ 1.20 per liter Standard cost $ 8.04 per unit The company budgeted for production of 2,500 units in April, but actual production was 2,600 units. The company used 18,000 liters of direct material to produce this output. The company purchased 18,800 liters of the direct material at $1.30 per liter. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for April is:
Answer:
Direct material quantity variance= $696 unfavorable
Explanation:
Giving the following information:
Standard quantity 6.7 liters per unit
Standard price $ 1.20 per liter
Actual production was 2,600 units.
The company used 18,000 liters of direct material to produce this output.
To calculate the direct material quantity variance, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Standard quantity= 6.7*2,600= 17,420
Direct material quantity variance= (17,420 - 18,000)*1.2
Direct material quantity variance= $696 unfavorable
True or false: A flexible budget reporting sales volumes at three different levels will have the same fixed costs.
Answer:
True
Explanation:
A flexible budget is a budget in which you modify the activity levels to reflect changes in sales to help the company adjusts to different circumstances that may occcur. Also, in this budget the fixed costs remain constant and the variable costs change with the activity levels. According to this, the answer is that the statement that says that a flexible budget reporting sales volumes at three different levels will have the same fixed costs is true.
It is true that a flexible budget presenting sales volumes at three levels would have the same fixed expenses.
Flexible budget:A flexible budget is one in which activity levels are adjusted to reflect sales performance, allowing the organization to respond to unforeseen events.
Furthermore, in this budget, fixed expenditures stay constant while variable costs vary according to activity levels. The assumption that a flexible budget reporting sales volumes at three distinct levels will have the same fixed expenses.
Find out more information about 'Flexible budget'.
https://brainly.com/question/25353134?referrer=searchResults
The advantages of using typedef do not include:a. Making programs more portable by allowing data types to be easily changed to meet system specifications.b. Making type names shorter.c. Making programs more readable.d. Increasing the efficiency of accessing struct member variables.
Answer:
d. Increasing the efficiency of accessing struct member variables.
Explanation:
In the programming language C and C++ there is a keyword i.e typedef that function is to provide a new name. It is to be used to develop an extra name for the other data type but it does not develop a new data type
Here the advantage of using typedef is as follows
1. It allows the data types for meeting the specifications of the system
2. The name would become shorter
3. Readable program
but it does not increase the efficiency
Hence, the last option is correct
Ball Bearings, Inc., faces costs of production as follows:Quantity Total Fixed Costs (Dollars) Total Variable Costs (Dollars)0 100 01 100 502 100 703 100 904 100 1405 100 2006 100 360(a.) Complete the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production.
(b.) The price of a case of ball bearings is $50. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations.The firm's profit in this case is...(c.) True or False: This was a wise decision.(d.) Vaguely remembering his introductory economics course, the company's chief financial officer tells the CEO it is better to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that quantity.At this level of production, the firm's profit is...True or False: This is the best decision the firm can make.
Answer:
Ball Bearings, Inc.
a) Calculations of Costs of Production:
Qty Total Fixed Total Total Marginal Average Average Average
Costs ($) Variable Costs ($) Costs ($) Fixed Variable Total
Costs ($) Costs ($) Costs ($) Costs ($)
0 100 0 100 100 100 0 100
1 100 50 150 50 100 50 150
2 100 70 170 20 50 35 85
3 100 90 190 20 33 30 63
4 100 140 240 50 25 35 60
5 100 200 300 60 20 40 60
6 100 360 460 160 17 60 77
b) For the first ball bearings, the profit in this case is a loss of $100 (Revenue - Total costs; $150 - 50).
c) False
d) At this level of production, the firm's profit, is a loss of $100. This is the best decision the firm can make: False.
Explanation:
a) Data:
Costs of production as follows:
Quantity Total Fixed Costs ($) Total Variable Costs ($)
0 100 0
1 100 50
2 100 70
3 100 90
4 100 140
5 100 200
6 100 360
a) Ball Bearings, Inc. can become profitable when the total revenue exceeds the total costs (variable and fixed). Ball's marginal cost is the additional cost that the corporation incurs for producing one additional unit of ball bearings. Its average fixed, variable, and total costs are computed by dividing the total fixed, variable, and total costs by the number of ball bearings produced.
A company's strategy evolves over time as a consequence of : Select one: a. The need to keep strategy in step with changing market conditions and changing customer needs and expectations b. The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy c. The need to respond to the newly-initiated actions and competitive moves of rival firms d. All of the above
Answer:
The correct answer is the option D: All of the above.
Explanation:
To begin with, a company's primary strategy that focus on completing the main goal of the company of increasing the sales and with that the profits is considered to be the most important element that the business has in order to keep existing and therefore that as the time passes and the context around the organization changes, that strategy evolves. And there are a lot of reasones why that could happen, including the market conditions that vary over the pass of years as well as the need to react to the competitors decisions in order to keep fighting for the market. And other consequence that may help the change of the strategy is the effort itself of managers to make the strategy better as ideas turn to came out.
Eakins Inc.'s common stock currently sells for $15.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings
Answer:
1.12%
Explanation:
By how much would the cost of new stock exceed the cost of retained earnings = Cost of new equity - Cost of retained earnings
Cost of retained earnings = ((2.75 * 70%) / 15) + 6.00%
Cost of retained earnings = ((2.75 * 0.7) / 15) + 0.06
Cost of retained earnings = 0.1283 + 0.06
Cost of retained earnings =0.1883
Cost of retained earnings = 18.83%
Cost of new equity= ((2.75 * 70%) / (15 * (1 - 8%) ) + 6.00%
Cost of new equity= 19.95%
Hence, Cost of new equity - Cost of retained earnings
= 19.95% - 18.83%
= 1.12%
The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)
Answer:
Operating Activity
Explanation:
The Indirect method, reconciles the Operating Profit to the Operating Cash Flow by adjusting the following items (1) Non Cash flow items previously added or deducted from Operating Profit and (2) Changes in Working Capital items.
Amortization of bond premium is an item of non-cash flow that was previously deducted from Operating Profit and needs to be added back.
On July 1, 2017, Lopez Company paid $1,400 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31, 2017. Zim Company has a Supplies account balance of $5,400 on January 1, 2017. During 2017, it purchased $2,200 of supplies. As of December 31, 2017, a supplies inventory shows $900 of supplies available. Prepare the journal entries to reflect expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31, 2017.
Answer:
Lopez Company
the journal entries to record prepaid insurance:
July 1, 2017, 6 months of insurance are prepaid
Dr Prepaid insurance 1,400
Cr Cash 1,400
the adjusting entry made on December 31 to record insurance expense:
December 31, 2017, insurance expense
Dr Insurance expense 1,400
Cr prepaid insurance 1,400
Zim Company
supplies account initial balance $5,400
then it purchased $2,200 worth of supplies during the year
final account balance $900
supplies expense = $5,400 + $2,200 - $900 = $6,700
Adjusting journal entry:
December 31, 2017, supplies expense
Dr Supplies expense 6,700
Cr Supplies 6,700
Ending balances:
Supplies expense account $6,700Supplies account $900A company would like to evaluate two incentive schemes that take effect once the worker exceeds standard performance. In the first case the benefits are split 30% to the worker and 70% to the company up to 120% performance. If the worker exceeds 120% performance, all of the earnings go to the worker. In the second case, all earnings beyond standard performance are split 50/50 between the worker and the company.
a. Plot the earnings for each scheme.
b. Derive the equations for worker earnings and normalized unit labor costs for each scheme
c. Find the point at which the two plans break even.
d. Which do you think would the company prefer?
Answer:
B) plan 1 : worker earning y = x - 0.14 , unit labor = [tex]\frac{x-(0.14)}{x}[/tex]
plan 2 : worker earning y = 0.5x + 0.5, unit labor = (0.5x + 0.5) / x
C) At 128%
D ) plan D IS PREFERABLE
Explanation:
In the first case Benefits are split : 30% to worker , 70% to company ( up to 120% ) performance
In the second case benefits 50% go to the worker and 50% go the company
B) The equations for worker earnings and normalized unit labor costs for each scheme
Plan 1 :
y ( percentage earning of worker ) = 1
unit labor cost = Y / 1
y = 0 - 30
unit labor = 0.3 / x
y = x - 0.14 therefore unit labor = [tex]\frac{x-(0.14)}{x}[/tex]
plan 2 :
y ( percentage earning of worker ) = 1, y = 0.5x + 0.5
unit labor cost : Y / 1 = (0.5x + 0.5) / x
C ) The point at which the two plans break even
0.5x + 0.5 = x - 0.14
0.5 + 0.14 = x - 0.5x
0.64 = x(1 - 0.5 )
x = 0.64 / 0.5 = 1.28 = 128%
D) The company would prefer plan 1
When preparing an income statement vertical analysis, each revenue and expense is expressed as a percent of net income.
A. True
B. False
Lindley Corp.'s stock price at the end of last year was $33.50, and its book value per share was $25.00. What was its market/book ratio
Answer:
1.34
Explanation:
Computation for the market/book ratio
Using this formula
Market/book ratio=Stock price/Book value per share
Let plug in the formula
Market/book ratio=$33.50/$25.00
Market/book ratio=1.34
Therefore the Market/book ratio will be 1.34.
Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $7.9 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. The land would net $10.7 million if it were sold today. The company now wants to build its new manufacturing plant on this land; the plant will cost $21.9 million to build, and the site requires $940,000 worth of grading before it is suitable for construction.
Required:
What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?
Answer:
$33,540,000
Explanation:
initial investment:
opportunity cost of land (resale price of land) = $10,700,000building cost of the facilities = $21,900,000other expenses related to the site (grading) = $940,000total $33,540,000The purchase cost of the land is considered a sunk costs, since it is not relevant now. What is relevant is the price at which the land could be sold at the moment of starting the project.
a. What were HCA's liabilities-to-assets ratios and times-interest-earned ratios in the years 2005 through 2009?
b. What percentage decline in EBIT could HCA have suffered each year between 2005 and 2009 before the company would have been unable to make interest payments out of operating earnings, where operating earnings is defined as EBIT?
c. How volatile have HCA's cash flows been over the period 2005 - 2009?
d. Calculate HCA's return on invested capital (ROIC) in the years 2005 - 2009.
HCA INC
ANNUAL INCOME STATEMENT
($ MILLIONS, EXCEPT PER SHARE)
Dec09 Dec08 Dec07 Dec06 Dec05
Sales $ 30,052 $ 28,374 $ 26,858 $ 25,477 $ 24,455
Cost of Goods Sold 24,826 24,023 22,480 21,448 20,391
Gross Profit 5,226 4,351 4,378 4,029 4,064
Depreciation 1,425 1,416 1,426 1,391 1,374
Operating Profit 3,801 2,935 2,952 2,638 2,690
Interest Expense 1,987 2,021 2,215 955 655
Non-Operating Income/Expense 188 256 661 179 412
Pretax Income 2,002 1,170 1,398 1,862 2,327
Total Income Taxes 627 268 316 625 725
Minority Interest 321 229 208 201 178
Net Income $ 1,054 $ 673 $ 874 $ 1,036 $ 1,424
ANNUAL BALANCE SHEET
ASSETS Dec09 Dec08 Dec07 Dec06 Dec05
Cash & Equivalents $ 312 $ 465 $ 393 $ 634 $ 336
Net Receivables 3,692 3,780 3,895 3,705 3,332
Inventories 802 737 710 669 616
Other Current Assets 1,771 1,319 1,207 1,070 931
Total Current Assets 6,577 6,301 6,205 6,078 5,215
Gross Plant, Property & Equipment 24,669 23,714 22,579 21,907 20,818
Accumulated Depreciation 13,242 12,185 11,137 10,238 9,439
Net Plant, Property & Equipment 11,427 11,529 11,442 11,669 11,379
Investments at Equity 853 842 688 679 627
Other Investments 1,166 1,422 1,669 1,886 2,134
Intangibles 2,577 2,580 2,629 2,601 2,626
Deferred Charges 418 458 539 614 85
Other Assets 1,113 1,148 853 148 159
TOTAL ASSETS 24,131 24,280 24,025 23,675 22,225
LIABILITIES
Long Term Debt Due In One Year 846 404 308 293 586
Accounts Payable 1,460 1,370 1,370 1,415 1,484
Taxes Payable - 224 190 - -
Accrued Expenses 2,007 1,912 1,981 1,868 1,825
Total Current Liabilities 4,313 3,910 3,849 3,576 3,895
Long Term Debt 24,824 26,585 27,000 28,115 9,889
Deferred Taxes - - - 390 830
Minority Interest 1,008 995 938 907 828
Other Liabilities 2,825 2,890 2,612 1,936 1,920
TOTAL LIABILITIES 32,970 34,380 34,399 34,924 17,362
Preferred Stock 147 155 164 125 -
Common Stock 1 1 1 1 4
Capital Surplus 226 165 112 - -
Retained Earnings (9,213) (10,421) (10,651) (11,375) 4,859
Common Equity (8,986) (10,255) (10,538) (11,374) 4,863
TOTAL EQUITY (8,839) (10,100) (10,374) (11,249) 4,863
TOTAL LIABILITIES & EQUITY $ 24,131 $ 24,280 $ 24,025 $ 23,675 $ 22,225
Answer:
HCA
a. HCA's Liabilities-to-assets ratios and times-interest-earned ratios in the years 2005 through 2009:
1. Liabilities-to-assets ratios = Total liabilities/Total Assets
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
136.63% 141.60% 143.18% 147.51% 78.12%
2. Times-interest-earned ratios = EBIT/Interest Expense
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
1.91 times 1.45 times 1.33 times 2.76 times 4.11 times
b. The percentage decline in EBIT that HCA could have suffered each year between 2005 and 2009 to make it unable to make interest payments out its operating earnings, where operating earnings is defined as EBIT:
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
191% 145% 133% 276% 411%
c. The volatility of HCA's cash flows over the period 2005 to 2009:
The standard deviation of the cash flows (cash and cash equivalents) is 115, showing that there is so much volatility in the cash flows.
d. HCA's return on invested capital (ROIC) in the years 2005 - 2009:
= Net Income - Dividend / Total Liabilities + Equity x 100
ROIC = 4.37% 2.77% 3.64% 4.38% 6.41%
Explanation:
a) Data and Calculations:
HCA INC
ANNUAL INCOME STATEMENT
($ MILLIONS, EXCEPT PER SHARE)
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
Sales $ 30,052 $ 28,374 $ 26,858 $ 25,477 $ 24,455
Cost of Goods Sold 24,826 24,023 22,480 21,448 20,391
Gross Profit 5,226 4,351 4,378 4,029 4,064
Depreciation 1,425 1,416 1,426 1,391 1,374
Operating Profit 3,801 2,935 2,952 2,638 2,690
Interest Expense 1,987 2,021 2,215 955 655
Non-Operating
Income/Expense 188 256 661 179 412
Pretax Income 2,002 1,170 1,398 1,862 2,327
Total Income Taxes 627 268 316 625 725
Minority Interest 321 229 208 201 178
Net Income $ 1,054 $ 673 $ 874 $ 1,036 $ 1,424
ANNUAL BALANCE SHEET
ASSETS Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
Cash & Equivalents $ 312 $ 465 $ 393 $ 634 $ 336
Net Receivables 3,692 3,780 3,895 3,705 3,332
Inventories 802 737 710 669 616
Other Current
Assets 1,771 1,319 1,207 1,070 931
Total Current
Assets 6,577 6,301 6,205 6,078 5,215
Gross Plant, Property
& Equipment 24,669 23,714 22,579 21,907 20,818
Accumulated
Depreciation 13,242 12,185 11,137 10,238 9,439
Net Plant, Property
& Equipment 11,427 11,529 11,442 11,669 11,379
Investments
at Equity 853 842 688 679 627
Other Investments 1,166 1,422 1,669 1,886 2,134
Intangibles 2,577 2,580 2,629 2,601 2,626
Deferred Charges 418 458 539 614 85
Other Assets 1,113 1,148 853 148 159
TOTAL ASSETS 24,131 24,280 24,025 23,675 22,225
LIABILITIES
Long Term Debt Due
In One Year 846 404 308 293 586
Accounts
Payable 1,460 1,370 1,370 1,415 1,484
Taxes Payable - 224 190 - -
Accrued
Expenses 2,007 1,912 1,981 1,868 1,825
Total Current
Liabilities 4,313 3,910 3,849 3,576 3,895
Long Term
Debt 24,824 26,585 27,000 28,115 9,889
Deferred Taxes - - - 390 830
Minority
Interest 1,008 995 938 907 828
Other
Liabilities 2,825 2,890 2,612 1,936 1,920
TOTAL LIA-
BILITIES 32,970 34,380 34,399 34,924 17,362
Preferred
Stock 147 155 164 125 -
Common
Stock 1 1 1 1 4
Capital
Surplus 226 165 112 - -
Retained
Earnings (9,213) (10,421) (10,651) (11,375) 4,859
Common
Equity (8,986) (10,255) (10,538) (11,374) 4,863
TOTAL
EQUITY (8,839) (10,100) (10,374) (11,249) 4,863
TOTAL LIABILITIES &
EQUITY $24,131 $ 24,280 $ 24,025 $ 23,675 $ 22,225
ii) Liabilities-to-assets ratio:
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
Liabilities 32,970 34,380 34,399 34,924 17,362
Assets 24,131 24,280 24,025 23,675 22,225
136.63% 141.60% 143.18% 147.51% 78.12%
iii) Times Interest Earned:
Operating Profit 3,801 2,935 2,952 2,638 2,690
Interest Expense 1,987 2,021 2,215 955 655
1.91 times 1.45 times 1.33 times 2.76 times 4.11 times
iv) Volatility: This is the degree of change of the cash flows, showing its tendency to change from one period to the other. As calculated, the volatility is very high, showing that the cash flows have higher risk of change. See below:
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
Cash & Equivalents $ 312 $ 465 $ 393 $ 634 $ 336
Mean = $428
Deviation from mean -116 37 -35 206 -92
Squared deviation 13,456 1,369 1,225 42,436 8,464
Sum of squared deviation = 66,950
Mean = 13,390
Square root of mean or Standard Deviation = 115
v) Return on Invested Capital = Net Income/Total liabilities + Equity
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
Net Income $ 1,054 $ 673 $ 874 $ 1,036 $ 1,424
TOTAL LIABILITIES &
EQUITY $24,131 $ 24,280 $ 24,025 $ 23,675 $ 22,225
ROIC = 4.37% 2.77% 3.64% 4.38% 6.41%
Do you believe the cash flows from investing activities should include not only the return of investment, but also the return on investment, that is the interest and dividend revenue?
Answer:
Yes. Cash flows from investing activities should also include return on investment.
Explanation:
Dividend and Interest revenue arise as a result of the Investments that were made by the company and as such constitutes cash flow from investing activities of a Company.
You own two bonds. Both bonds pay annual interest, have 7 percent coupons, and currently have 7 percent yields to maturity. Bond A has 5 years to maturity and Bond B has 10 years to maturity. If the market rate of interest changes unexpectedly to 6 percent, the price of Bond A will change by _____ percent and the price of Bond B will change by _____ percent.
Answer:
the price of Bond A will change by 4.21% and the price of Bond B will change by 7.36%.
Explanation:
Bonds A and B
current bond price $1,000
interest rate 7%
Bond A matures in 5 years, annual payments
Bond B matures in 10 years, annual payments
if market interest decreases to 6%
Bond A:
$1,000 / (1 + 6%)⁵ = $747.26
$70 x 4.2124 (annuity factor, 6%, 5 periods) = $294.87
market price = $1,042.13
% change = 4.21%
Bond B:
$1,000 / (1 + 6%)¹⁰ = $558.39
$70 x 7.3601 (annuity factor, 6%, 10 periods) = $515.21
market price = $1,073.60
% change = 7.36%
Bi-Lo Traders is considering a project that will produce sales of $33,300 and have costs of $19,700. Taxes will be $3,500 and the depreciation expense will be $1,900. An initial cash outlay of $1,600 is required for net working capital. What is the project's operating cash flow?
Answer: $10,100
Explanation:
Based on the information that have been given in the question, the project's operating cash flow goes thus:
Sales. $33,300
Less: cost. $19,700
Less: depreciation. $1,900
Profit before tax $11,700
Less: tax. $3500
Net profit. $8200
Add: depreciation. $1900
Operating cash flow. $10,100
Craig's Car Wash Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?
WACC: 10.00%
Year : Cash flows
0 : -$900
1 : $500
2 : $500
3 : $500
Answer:
Discounted payback period= 2 years 1 month
Explanation:
The discounted payback period is the estimated length of time in years it takes the present value of net cash inflow from a project to equate the net cash the initial cost
To work out the discounted payback period, we will compute present value of the cash inflow and then determine how long it will take for the sum to be equal to the initial cost. This is done as follows:
Year Cash flow DF Present value
0 900 × 1 = 900
1 500 × 1.1^(-1) = 454.55
2 500 × 1.1^(-2) = 413.22
2 500 × 1.1^(-3) = 375.66
Total PV for 2 years = 454.55 + 413.22 = 867.77
Balance of cash flow remaining to equal 900 = 900 -867.77 = 32.23
Discounted payback period = 32.23 /375.66 × 12 months
= 2 years 1 month
Discounted payback period= 2 years 1 month
Steel Tariffs Appear to Have Backfired on Bush
President Bush set aside his free-trade principles last year and imposed heavy tariffs on imported steel to help out struggling mills in Pennsylvania and West Virginia. Some economists say the tariffs may have cost more jobs than they saved, by driving up costs for automakers and other steel users.
Source: The Washington Post, September 19, 2003
Explain how a high tariff on steel imports can help domestic steel producers.
Explain how a high tariff on steel imports can harm steel users.
When a high tariff is placed on steel imports, U.S. steel producers produce______steel and they pay a ________price.
A. less; higher
B. more; lower
C. less; lower
D. more; higher
Answer:
Steel industry in the United States of America has had its up and down over the years. this is especially going by the fact that it is cheaper to import steel from outside America than to buy those produced in U.S. However, high tariff on steel import would enable the domestic steel producers to meet their obligation as well as recoup their investments in the steel industry in U.S.
For example, most construction based organisation would prefer to buy from domestic steel producer if the price and tariff of imported ones makes it extremely difficult to purchase.
On the other-hand, the high tariff placed on steel import could also harm steel users due to the fact that, the quality of steel which they buy from outside U.S would no longer be available to them.
Also, they would be forced to buy at whatever price from domestic producers whether they had need for the steel or not due to high tariff on imported ones.
When a high tariff is placed on steel imports, U.S. steel producers produce more steel and they pay a higher price.
Answer: D. more; higher
Explanation:
Question 7 of 10 How much should you save each year for maintenance on your home? $500 Whatever your home inspector recommends 7% of your gross income At least 1% of the purchase price
Answer: At least 1% of the purchase price
Explanation:
The 1% rule is a popular practice that estimates that 1% of a house´s purchase price should be expected to be required for maintenance every year. This is the case for a house that is less than five years old. Houses between 5 and 25 years old could range between a 1 and 4% annual maintenance budget, depending also on its location, the market, its size, and the impact of the weather.
Given the following data for Vinyard Corporation:
D=1000
V=4000
E=3000
V=4000
Calculate the proportions of debt (D/V) and equity (E/V) for the firm that you would use for
estimating the weighted average cost of capital (WACC):
A. 40% debt and 60% equity
B. 50% debt and 50% equity
C. 25% debt and 75% equity
D. none of the given values
Answer:
C
Explanation:
D / V = 1000 / 4000
Dividing 1000 by 4000 gives 0.25 = 25%
E / V = 3000 / 4000
Dividing 3000 by 4000 gives 0.75 = 75%
The 7 percent bonds issued by Modern Kitchens pay interest semiannually, mature in eight years, and have a $1,000 face value. Currently, the bonds sell for $987. What is the yield to maturity? B) 6.92 percent D) 7.22 percent A) 6.97 percent C) 6.88 percent E) 7.43 percent
Answer:
The answer is D. 7.22 percent
Explanation:
Interest payments are being made semiannually, this means it is being paid twice in a year
N(Number of periods) = 16 periods ( 8 years x 2)
I/Y(Yield to maturity) = ?
PV(present value or market price) = $987
PMT( coupon payment) = $35 ( [7 percent÷ 2] x $1,000)
FV( Future value or par value) = $1,000.
We are using a Financial calculator for this.
N= 16; PV = -987 ; PMT = 35; FV= $1,000; CPT I/Y= 3.61
3.61 percent is the Yield-to-maturity for semiannual
Therefore, the Yield-to-maturity of the bond annually is 7.22 percent (3.61 percent x 2)
The ______ rate of interest is the actual rate charged by the supplier and paid by the demander of fund
Answer:
nominal
Explanation:
There is a nominal rate that is the interest rate stated on a loan without taking into account the inflation or the compounding of interests and a real rate that is the one that is adjusted to reflect the real cost of the loan to the borrower. According to this, the answer is that the nominal rate of interest is the actual rate charged by the supplier and paid by the demander of fund because this is the rate that is stated when taking a loan.
In decision making under ________, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome
Answer: risk
Explanation:
In the decision making under risk, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome.
Unlike in uncertainties whereby the decision maker won't know the probability of the occurrence of the outcomes, in risk, one is aware.
Which of these conditions helped establish the foundation for a market revolution in the United States
Question Completion:
Choices: Rapid improvements in transportation and communication; the production of goods for a cash market; and the use of inventions and innovations to produce goods for a mass market.
Answer:
The condition that helped to establish the foundation for a market revolution in the United States is:
Rapid improvements in transportation and communication
Explanation:
Rapid improvements in transportation and communication spurred innovations. With innovations, capitalism was born. Innovations needed factories for mass production. In turn, according to American History, "factories and mass production increasingly displaced individual artisans and farmers," who survived at subsistent levels. Large farms grew and produced crops for distant markets, no longer only for family and local markets. Most of the crops were further processed, packaged, preserved, and shipped through cheap transportation systems like the Erie Canal, using steamboats. And the rest, they say, is history.
A divisional manager receives a bonus based on 10% of the residual income from the division. During the current year, the division reported revenues of $1,000,000 and expenses of $500,000. The division had $2,000,000 in average operating assets. The minimum required rate of return for the division was 15%. What was the amount of the manager's bonus
Answer:
The amount of the manager's bonus is $20,000
Explanation:
Residual income = Net income - ( average operating assets * minimum rate of return)
Net income= Revenues - Expenses = $1,000,000 - $500,000
Net income = $500,000
Residual income = 500,000 - (2,000,000 * 15%)
= 500,000 - $300,000
= $200,000
Managers bonus = $200,000 * 10%
Managers bonus = $20,000
Solve the consumer’s problem for John’s optimal demand for Germ-X and Purell. (You should find actual numbers representing the quantity of Germ-X chosen and the quantity of
Answer:
Hello your question is incomplete below is the missing part and the needed diagram
suppose John is shopping and has $20 to spend on hand sanitizer. He can go with Germ-X (G) at $1 per fluid ounce (pG=1), or he can purchase purell (P) at $1.25 per fluid ounce (Pp=1.25). His utility function for the two different hand sanitizers is as follows:
U = G +1.1P
where G and P are measured in fluid ounces.
Solve the consumer’s problem for John’s optimal demand for Germ-X and Purell. (You should find actual numbers representing the quantity of Germ-X chosen and the quantity of purell chosen
ANSWER: The solution = (Germ-x,Purell ) = (20,0).
Explanation:
The consumers problem for John's optimal demand for Germ-x and Purell as seen in the diagram can solved by John going maximizing his utility given the constraint of the budget,
that means that John will purchase/spend the constrained budget of ($20) on Germ-x since the unit price of Germ X is at $1 while Purell's unit price is at $1.25 per fluid ounce
Harry and Sally formed the Evergreen partnership by contributing the following assets in exchange for a 50 percent capital and profits interest in the partnership.
Basis Fair Market Value Harry:
Cash $30,000 $30,000
Land $100,000 $120,000
Totals $130,000 $150,000
Sally:
Equipment used in business $200,000 $150,000
Totals $200,000 $150,000
a. How much gain or loss will Harry recognize on the contribution?
b. How much gain or loss will Sally recognize on the contribution?
c. Should Sally consider selling the property to the partnership rather than contributing it?
A. Yes
B. No
Answer:
a) $0
Generally, partners recognize gain on property contributed to a partnership only when the cash they are deemed to receive from debt relief exceeds their basis in the partnership prior to the deemed distribution. Harry did not have any debt relief.
b) $0.
Partners may never recognize loss when property is contributed to a partnership even when they are relieved of debt.
c) Sally should consider selling the property to the partnership rather than contributing it. By selling the property, she could recognize the $50,000 built-in loss on the equipment.
Amy and Maxwell Walker have decided to invest their investment dollars: 40 percent in stocks, 30 percent in bonds, and 30 percent in cash equivalents. Over the past year, the market value of their bonds increased while the market value of their stocks declined. Using the asset allocation model, they should now
Answer:
C.use some of their cash equivalents to buy more stocks.
Explanation:
Data provided in the question
Stock = 40%
Bond = 30%
cash equivalent = 30%
The Market value of the bond rise
The market value of the stock falls
Based on the above information,
According to the asset allocation model, mostly everyone uses some of their cash equivalents i.e bank account, marketable securities to purchased more stock
Hence, the option c is correct
