Answer:
$4,000
Explanation:
The accrual concept is of the opinion that expense should be recognized when incurred and not necessarily when the expense is paid for.
The insurance payment made was for two years, hence, at the end of the first year ended 31 December, which is the 8 months after the payment has been made, hence, 8-month insurance expense would be recognized in the first year.
May 1-December 31=8 months
insurance expense=two-year payment*8 months/2 years
insurance expense=$12,000*8/24
insurance expense for the first year=$4,000
When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products that company is using
Answer: Absorption costing
Explanation:
Absorption costing believes that all costs that went into the production of a good or service should be absorbed by/ apportioned to those same goods and services regardless of if the costs are direct or indirect.
It works by first assigning the direct costs such as labor and material and then it apportions the indirect costs such as the variable and fixed manufacturing overhead costs. Absorption costing is the preferred costing method for presenting financial statements outside the company by both IFRS and U.S. GAAP.
Hanna, Marnie, and Jessa have operated a partnership as filmmakers for a number of years. At the end of the year, before any allocation of profits, the partners have the following capital account balances:
Hanna $25.000
Marnie 15.000
Jessa 10.000
The partnership agreement states that profits should be allocated in proportion to the capital account balances. If the partnership earns $600,000 in the current year, how much of the profit will be allocated to Marnie?
a. $600,000.
b. $180,000.
c. $200,000.
d. $150,000.
Answer: b. $180,000
Explanation:
Profit should be allocated according to capital account balances. Marnie's capital account proportion is:
= 15,000 / (25,000 + 15,000 + 10,000)
= 15,000 / 50,000
= 30%
If the profit is $600,000, Marnie's share is:
= 30% * 600,000
= $180,000
Pet Place Supplies Inc., a pet wholesale supplier, was organized on May 1. Projected sales for each of the first three months of operations are as follows:May$134,000June155,000July169,000All sales are on account. Sixty-five percent of sales are expected to be collected in the month of the sale, 30% in the month following the sale, and the remainder in the second month fol-lowing the sale.Prepare a schedule indicating cash collections from sales for May, June, and July
Answer:
Pet Place Supplies Inc.
Schedule of Cash from Sales for May, June, and July:
May June July
Cash collections:
60% month of sale $80,400 $93,000 $101,400
30% ffg month of sale 40,200 46,500
10% second month 13,400
Total cash collections $80,400 $133,200 $161,300
Explanation:
a) Data and Calculations:
May June July
Projected credit sales $134,000 $155,000 $169,000
Cash collections:
60% month of sale $80,400 $93,000 $101,400
30% ffg month of sale 40,200 46,500
10% second month 13,400
Total cash collections $80,400 $133,200 $161,300
To urban-dwelling, educated tech-savvy consumers, when they use Zipcar, car-sharing service, instead of owning a car, they save money while reducing their carbon footprint. What is effective about this position statement?
Answer: It addresses all five key elements of an effective position statement.
Explanation:
In this scenario, the most effective thing about this position statement is that it addresses all the five key elements of an effective position statement.
The target market is identified, the category of customers which are the prospective customers is identified as well. The company's differentiators as well as the mission and vision is also in effect.
If ABC’s sales are $1,000,000, while accounts receivable is $100,000, inventory is $45,000, and fixed assets are $132,000, what is ABC’s fixed asset turnover?
Answer:
Fixed asset turnover= 7.58
Explanation:
Giving the following information:
Sales revenue= $1,000,000
Fixed assets= $132,000
To calculate the fixed asset turnover, we need to use the following formula:
Fixed asset turnover= sales revenue / fixed assests
Fixed asset turnover= 1,000,000 / 132,000
Fixed asset turnover= 7.58
Which one of the following affects cash during a period?
a. Recording depreciation expense
b. Declaration of a cash dividend
c. Write-off of an uncollectible account receivable
d. Payment of an accounts payable
Answer: d. Payment of an accounts payable
Explanation:
The payment of an accounts payable affects cash because it means that cash was used to pay off the payable in question and therefore the cash that the company holds has now reduced.
In the Statement of Cashflows, this is accounted for under the Operating Activities of the business. A decrease in accounts payable is subtracted from the net income to show that cash has reduced.
Oliver's long-term care policy covers only services in a nursing facility and pays nothing for services provided at home or in the community. What kind of LTC policy does Oliver own?
Question options:
a. facility-challenged
b. substandard
c. tier 1
d. noncomprehensive
Answer:
d. noncomprehensive
Explanation:
Oliver has a noncomprehensive long term care(LTC). A non comprehensive long term care is policy that restricts services to the ones provided at a nursing facility, and so Oliver pays for the benefits of only the services of a nursing facility . It is different from a comprehensive long term care where services cover and can be provided at an adult day care, home, assisted living facilities, or at nursing facilities.
Oliver's policy which does not cover nursing facilities provided at home or in the community is known as a Non-comprehensive health insurance policy. So, the correct option is D.
A non-comprehensive policy is a type of policy that covers only expenses related to the health of the customer that are provided in the hospital in-house premises only.
It is to be noted that there are no nursing facility expenses reimbursed or paid to the policy holder in case of health issues faced, if any. There are several other types of policies which reimburse such expenses.In a non-comprehensive policy, the policy holder is entitled to receive health benefits of only core hospitalization and any other expenses like bedding, medications, out-house nursing facilities, etc.The premium to be paid on the non-comprehensive policy is less compared to a comprehensive policy as the benefits to be availed are also less and so the drill.Hence, the correct option is D that the non-comprehensive policy does not cover nursing facilities taken in-house or at the community.
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15. Ilang lalawigan ang bumubuo sa Gitnang Mindanao?
Answer:
6 region any meron SA mindanao
The quantity demanded for money is higher in Japan than in the United States because: telecommunications and information technology is more advanced in the United States than in Japan. Japanese interest rates are higher than those in the United States. Japanese interest rates are lower than those in the United States. Japanese consumers use credit cards more than people in the United States.
Answer:
Japanese interest rates are lower than those in the United States.
Explanation:
The demand for money (the decision to hold money) is inversely related to interest rate. if interest rate is high, individuals would prefer to hold bonds and the demand for money would fall. if interest rate is low, individuals would prefer to hold money.
the opportunity cost of holding money is what would have been earned if money was invested. if interest rate is low, individuals would prefer to hold more money because the amount that would be earned if money was invested in bonds would be low, so the opportunity cost of holding money would be low
If the demand for money is higher in Japan than in the United States, it is because interest rates are lower in Japan
The ogvernment is bound by the acts of its agents committed within the scope of their agents authority, such as express and actual authroity.
A. True
B. False
Answer: True
Explanation:
Express and actual authority refers to the agent's power to act on behalf of a principal, which had been granted by the agreement that already took place between the agent and principal.
It should be noted that government is bound by the acts of its agents which are committed within the scope of their agents authority, like the express and actual authroity.
Therefore, the correct answer is True.
The weekly total cost of baking pies at Tasty Tortes is given by TC = 0.01 Q 1.5. Tasty’s marginal cost of producing 10,000 pies a week is:
Answer: $1.50
Explanation:
TC = 0.01Q⁰.⁵
You get marginal cost when you differentiate the total cost.
MC = dTC / dQ
= 1.5 * 0.01 * Q¹.⁵ ⁻ ¹
= 0.015 * Q⁰.⁵
When Q is 10,000, the marginal cost is:
= 0.015 * 10,000⁰.⁵
= $1.50
Two athletes of equal ability are competing for a prize of $10,000. Each is deciding whether to take a dangerous performance-enhancing drug. If one athlete takes the drug, and the other does not, the one who takes the drug wins the prize. If both or neither take the drug, they tie and split the prize. Taking the drug imposes health risks that are equivalent to a loss of X dollars
Required:
a. Draw a $2 payoff matrix describing the decisions the athletes face.
b. For what X is taking the drug the Nash equilibrium?
c. Does making the drug safer (that is, lowering X) make the athletes better or worse off? Explain.
Answer:
a) attached below.
b) for $x < $5000 will cause taking the drug to be part of the Nash equilibrium
c) will make the athletes feel better because the value their payoff will increase
Explanation:
a) 2 * 2 payoff matrix describing the decision faced by the athletes
attached below
when both players take the drug the payoff for each player = $5000 - x
when neither player takes the drug the payoff for each player = $5000
When only one player takes the drug his payoff = $10000 - x
b) If we consider the value of $x to be involved in the Nash equilibrium then
; $5000 - $x > 0 becomes the best response
hence for $x < $5000 will cause taking the drug to be part of the Nash equilibrium
c) Lowering the negative effect of the drug ( i.e. when the value of x is reduced )
will make the athletes feel better because the value their payoff will increase
Jammer Company uses a weighted average perpetual inventory system and reports the following:
August 2 Purchase 24 units at $18.50 per unit. August 18 Purchase 26 units at $20.00 per unit. August 29 Sale 48 units. August 31 Purchase 29 units at $21.50 per unit.
What is the per-unit value of ending inventory on August 31? (Round your per unit answers to 2 decimal places.)
Answer: $21.36
Explanation:
Weighted average inventory system works by taking the average of the inventory prices on the different days.
Price on August 29 which is date of sale:
= {(Units purchased on August 2 * Unit cost on August 2) + ( Units purchased on August 18 * Unit cost on August 18)] / (Units purchased on August 2 + Units purchased on August 18)
= [ ( 24 * 18.50) + (26 * 20) ] / (24 + 26)
= $19.28 per unit
48 units were sold so the number of units left are:
= 24 + 26 - 48
= 2 units
Price on August 31
= [ (Units remaining on August 29 * Unit cost on August 29) + ( Units purchased on August 31 * Unit cost on August 31)] / (Units remaining on August 29 + Units purchased on August 31)
= [ (2 * 19.28) + (29 * 21.50) ] / ( 2 + 29)
= $21.36
On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 6%. The contract calls for four rent payments of $14,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $98,000 and were expected to have a useful life of seven years with no residual value. Both firms record amortization and depreciation semiannually. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease.
Answer:
Nath-Langstrom Services, Inc.
And
ComputerWorld Leasing
1. Journal entries by Nath-Langstrom Services for the first year of the lease:
Jan. 1, 2021:
Debit Right of Use Asset $52,039.38
Credit Lease Liability $52,039.38
To record the Right of Use Asset.
June 30, 2021:
Debit Interest Expense $1,561.18
Debit Lease Liability $12,438.82
Credit Cash $14,000
To record the semiannual payment of the lease liability.
Debit Lease Amortization Expense $13,010
Credit Accumulated Amortization $13,010
To record amortize the Right of Use Asset.
December 31, 2021:
Debit Interest Expense $1,188.02
Debit Lease Liability $12,811.98
Credit Cash $14,000
To record the semiannual payment of the lease liability.
Debit Lease Amortization Expense $13,010
Credit Accumulated Amortization $13,010
To amortize the Right of Use Asset.
2. Journal Entries by ComputerWorld Leasing for the first year of the lease:
Jan. 1. 2021:
Debit Lease Receivable $52,039.38
Credit Leased Assets $52,039.38
To record the lease receivable.
June 30, 2021:
Debit Cash $14,000
Credit Interest Income $1,561.18
Credit Lease Receivable $12,438.82
To record the receipt of the first lease payment.
Debit Depreciation Expense $7,000
Credit Accumulated Depreciation $7,000
To depreciate the leased asset.
December 31, 2021:
Debit Cash $14,000
Credit Interest Income $1,188.02
Credit Lease Receivable $12,811.98
To record the receipt of lease payment.
Debit Depreciation Expense $7,000
Credit Accumulated Depreciation $7,000
To depreciation the leased asset.
Explanation:
a) Data and Calculations:
Annual interest rate = 6%
Semiannual rental payment = $14,000
Period of lease = 2 years
Number of lease payments = 4
Cost of computers to ComputerWorld = $98,000
Estimated useful life of computers = 7 years
Residual value = $0
N (# of periods) 4
I/Y (Interest per year) 6
PMT (Periodic Payment) 14000
FV (Future Value) 0
Results
PV = $52,039.38
Sum of all periodic payments $56,000.00
Total Interest $3,960.62
Schedule
Period PV PMT Interest FV
1 $52,039.38 $14,000.00 $1,561.18 $39,600.56
2 $39,600.56 $14,000.00 $1,188.02 $26,788.58
Year #1 end
3 $26,788.58 $14,000.00 $803.66 $13,592.23
4 $13,592.23 $14,000.00 $407.77 $0.00
We must take into account the provisions of the lease contract and the relevant accounting guidelines for operating leases in order to create the journal entries for Nath-Langstrom Services, Inc. (the lessee) and ComputerWorld Leasing (the lessor) for the first year of the lease.
Given
Cost = $98,000
semiannually = $7,000 = $14,000/ 2
Required to pass Journal entries in the books of Nath-Langstrom Services, Inc. and ComputerWorld Leasing
1. Journal entries recorded by Nath-Langstrom Services, Inc.:
On January 1, 2021 (lease inception):
Lease Right-of-Use Asset $98,000
Lease Liability $98,000
On June 30, 2021 (first semiannual payment):
Lease Liability $7,000
Cash $7,000
On December 31, 2021 (second semiannual payment):
Lease Liability $7,000
Cash $7,000
2. Journal entries recorded by ComputerWorld Leasing (the lessor):
On January 1, 2021 (lease inception):
Lease Receivable $98,000
Equipment $98,000
On June 30, 2021 (first semiannual payment):
Cash $7,000
Lease Receivable $7,000
On December 31, 2021 (second semiannual payment):
Cash $7,000
Lease Receivable $7,000
Therefore, the following are the required journal entries in the books of Nath-Langstrom Services, Inc. and ComputerWorld Leasing.
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Stock Rit Rmt ai Beta
A 10.6 15Â Â Â 0 0.8
Z Â 9.8 8 0 1.1
Rit = return for stock i during period t
Rmt = return for the aggregate market during period t
What is the abnormal rate of return for Stock Z during period t using only the aggregate market return (ignore differential systematic risk)?
a. 3.40
b. 4.40
c. 1.80
d. -4.40
E.
-1.70
Answer:
1.8 option c
Explanation:
this question has a very simple solution
the following definitions
Rit = return for stock i during period t
Rmt = return for the aggregate market during period t
The abnormal rate of return for stock z is = Rit - Rmt
Rit = 9.8
Rmt = 8
9.8 - 8 = 1.8
therefore the abnormal rte of return for stock z is = 1.8, which is option c
You are an economist studying the small country of Mardodus. As you look at the data, you see Mardodus has experienced an influx of updated technology to its manufacturing plants, service industry and the medical field in the last three years. This change boosted the growth of the country’s productivity by 75%, yet you see that wages have been very slow to respond to this growth. As you begin to analyze the natural unemployment rate for this time frame, what do you most likely discover?
Answer: Natural rate of unemployment will decrease because the productivity growth in the short term has passed up wage growth.
Explanation:
The natural unemployment rate simply means the lowest unemployment rate where the inflation in the economy is stable.
Based on the information given in the question, if the natural unemployment rate for this time frame.is analyzed, the natural rate of unemployment will reduce due to the fact that the productivity growth in the short term has passed up wage growth.
The adjusted trial balance for Cowboy Company follows: Cowboy Company Adjusted Trial Balance December 31, 2020 ACCOUNT NAMEDEBITCREDIT Cash 156,750 Accounts Receivable 4,500 Prepaid Rent 7,800 Building 145,000 Accumulated Depreciation - Building 65,000 Accounts Payable 5,500 Salaries Payable 1,300 Interest Payable 2,000 Unearned Revenue 24,000 Notes Payable 60,000 Cowboy, Capital 98,000 Cowboy, Withdrawals 22,000 Fees Earned 156,000 Wages Expense 35,000 Rent Expense 20,100 Supplies Expense 7,800 Utilities Expense 3,600 Depreciation Expense 9,000 Interest Expense 250 Totals411,800411,800 Prepare the closing journal entries
Answer:
Cowboy Company
Closing Entries:
Debit Fees Earned 156,000
Credit Income Summary 156,000
To close the revenue account to the income summary.
Debit Income Summary 75,750
Credit:
Wages Expense 35,000
Rent Expense 20,100
Supplies Expense 7,800
Utilities Expense 3,600
Depreciation Expense 9,000
Interest Expense 250
To close the expenses to the income summary.
Debit Net Income 80,250
Credit Cowboy, Capital 80,250
To close the income summary to the Capital account.
Explanation:
a) Data and Calculations:
Cowboy Company
Adjusted Trial Balance
December 31, 2020
ACCOUNT NAME DEBIT CREDIT
Cash 156,750
Accounts Receivable 4,500
Prepaid Rent 7,800
Building 145,000
Accumulated Depreciation - Building 65,000
Accounts Payable 5,500
Salaries Payable 1,300
Interest Payable 2,000
Unearned Revenue 24,000
Notes Payable 60,000
Cowboy, Capital 98,000
Cowboy, Withdrawals 22,000
Fees Earned 156,000
Wages Expense 35,000
Rent Expense 20,100
Supplies Expense 7,800
Utilities Expense 3,600
Depreciation Expense 9,000
Interest Expense 250
Totals 411,800 411,800
A mutual fund sold $58 million of assets during the year and purchased $64 million in assets. If the average daily assets of the fund were $216 million, what was the fund turnover
Answer: 26.85%
Explanation:
Based on the information given in the question, the fund turnover will be calculated thus:
Funds sold = $58 Million
Average Daily Assets = $216 Million
Fund Turnover = Fund Sold / Average Daily Assets
Fund Turnover = $58 Million / $216 million
= 26.85%
For several years, Mountain Home University had used IBM computers. Recently, Apple Computers offered them a better machine at lower a price for one of the University's labs; however Mountain Home did not buy them because the _____ costs were too high. Group of answer choices transactional opportunity marginal switching
Answer:
switching
Explanation:
From the question we are informed about instance where by For several years, Mountain Home University had used IBM computers. Recently, Apple Computers offered them a better machine at lower a price for one of the University's labs; however in this case, Mountain Home did not buy them because the switching costs were too high. Switching costs can be regarded as the costs that a consumer pays due to switching of particular brands or products. Switching costs can appear as effort-based monetary base or time-based. Companies that has difficult-to-perfect products as well as low competition can make use of
high switching costs in order to maximize profits.
Assume that a hypothetical economy with an MPC of 0.75 is experiencing severe recession. Instructions: In part a, round your answers to 2 decimal places. Enter positive numbers. In part b, enter your answers as whole numbers. a. By how much would government spending have to rise to shift the aggregate demand curve rightward by $25 billion? $ billion. How large a tax cut would be needed to achieve the same increase in aggregate demand? $ billion. b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt (because it maintains a balanced budget, G = T).
Answer:
a-1. Amount of rise in government expenditure required = $6.25 billion
a-2. Tax multiplier = -3
b. The combination is as follows:
Increase in spending = $25 billion
increase in taxes = $25 billion
Explanation:
a-1. By how much would government spending have to rise to shift the aggregate demand curve rightward by $25 billion? $ billion.
Spending multiplier = 1 / (1 - MPC) = 1 / (1 - 0.75) = 4
Amount of rise in government expenditure required = Change in aggregate demand / Spending multiplier = $25 / 4 = $6.25 billion
a-2. How large a tax cut would be needed to achieve the same increase in aggregate demand? $ billion.
Tax multiplier = - MPC / (1 - MPC) = - 0.75 / (1 - 0.75) = -3
Amount of tax cut required = Change in aggregate demand / Tax multiplier = $25 / (-3) = $8.33 billion
b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt (because it maintains a balanced budget, G = T).
The amount is the amount of the balanced budget, which has a multiplier of one. This indicates that spending and taxes need be increased by $25 billion each to boost GDP by $125 billion. Therefore, the combination is as follows:
Increase in spending = $25 billion
increase in taxes = $25 billion
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4,300,000 $ 3,130,000 $ 1,170,000 Variable expenses 1,403,000 994,000 409,000 Contribution margin 2,897,000 2,136,000 761,000 Fixed expenses 2,250,000 1,350,000 900,000 Net operating income (loss) $ 647,000 $ 786,000 $ (139,000 ) A study indicates that $378,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 20% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department?
Answer:
Bed & Bath
The financial disadvantage of discontinuing the Linens Department is:
= $1,004,000.
Explanation:
a) Data and Calculations:
Department Total Hardware Linens
Sales $ 4,300,000 $ 3,130,000 $ 1,170,000
Variable expenses 1,403,000 994,000 409,000
Contribution margin 2,897,000 2,136,000 761,000
Fixed expenses 2,250,000 1,350,000 900,000
Net operating income (loss) $ 647,000 $ 786,000 $ (139,000 )
The financial disadvantage of discontinuing the Linens Department is:
Allocated fixed costs = $378,000
Hardware sales lost = 626,000 ($3,130,000 * 20%)
Total disadvantage = $1,004,000
What annual rate of return is earned on a $13,000 investment made in year 2 when it grows to $17,000 by the end of year 7?
A. 10.64%.
B. 4.28%.
C. 8.04%.
D. 5.51%.
Answer:
It would be D. 5.51%
Answer:
D
Explanation:
It's accumulating for 5 years
[tex]17000=13000(1+i)^5\\1.307692308=(1+i)^5\\\sqrt[5]{1.307692308} =1+i\\i=.05511[/tex]
1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,400, the monthly sales volume increases by 100 units, and the total monthly sales increase by $9,500? 1-b. Should the advertising budget be increased?
Answer:
a. Income before advertising budget increase:
= Contribution margin - Fixed costs
= (38 * 3,600) - 79,000
= $57,800
Income after advertising budget increases:
= Sales - Variable expenses - Fixed expenses
Sales = (3,600 + 100 units) * 95 per unit
= $351,500
Variable expenses = 60% * 351,500
= $210,900
Fixed expenses = 79,000 + 8,400 advertising
= $87,400
Income = 351,500 - 210,900 - 87,400
= $53,200
b. Income decreased with the increase in advertising so Advertising budget should not be increased.
Refer to Exhibit 4-3. Suppose that the government imposes a price ceiling at a price of $12. The result would be a ________________ of _____________ units of good Z.
Answer:
The correct option is c. shortage, 70. That is, the result would be a shortage of 70 units of good Z.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Exhibit 4-3
PRICE OF GOOD Z:
$10 // QD: 300 // QS: 160
$12 // QD: 250 // QS: 180
$14 // QD: 200 // QS: 200
$16 // QD: 150 // QS: 220
Refer to Exhibit 4-3. Suppose that the government imposes a price ceiling at a price of $12. The result would be a ________________ of _____________ units of good Z.
a. surplus, 70
b. surplus, 20
c. shortage, 70
d. shortage, 20
The explanation of the answers is now provided as follows:
A price ceiling can be described as a maximum price set by the government whereby it is illegal to sell the good above it. A price ceiling will cause a product shortage if it is set below the product's equilibrium price.
Equilibrium price is the price at which quantity demanded (QD) is equal to the quantity supplied (QS).
From Exhibit 4-3, QD is equal to QS is equal to 200 at the price of $14. This implies that the ceiling price of $12 imposed by the government is below the equilibrium price.
Based Exhibit 4-3. the units of shortage of goods Z at $12 can be calculated as follows:
Units of shortage of goods Z at the price of $12 = QD at the price of $12 – QS at the price of $12 = 250 - 180 = 70 units
Therefore, the correct option is c. shortage, 70. That is, the result would be a shortage of 70 units of good Z.
First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually. If you made a deposit of $17,000 in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
You expect to receive the annual property Net Operating Income (NOI) from a certain property as followsYear 1 $20,000 Year 2 $22,000 Year 3 $30,000 Year 4 $31,000 Year 5 $40,000 In addition, you expect that you can sell the property at the end of the 5th year for 10 times its expected NOI of that year.A. If your opportunity cost of capital (OCC) is 10%, 1) What is the Present Value of the Property Income over the 5 years? 2) What is the Present Value of the Net Sales Proceeds received in Year 5 3) What is the Total Present Value of the property given the 5 year holding period? 4) Ifyou offer to pay the amount you calculate in Ques A3) above to purchase the property, what would be your total return on the investment? 5) If you offer to pay the amount you calculate in Ques A3) to purchase the property, what do you forecast to be the appreciation in value on the property B. If you pay $350,000 for the property at Year 0, what is the net present value (NPV) of a deal? C. In the situation given in the previous question, what is the IRR?
Answer:
Year 1 Year 2 Year 3 Year 4 Year 5
1. Present value $18,180 $18,172 $22,530 $21,173 $24,840
2. Present value of the net sales proceeds = $248,400
3. Total present value of the property = $104,895
4. Total return on the investment = $143,505
5. Forecasted appreciation in value on the property = $295,105
5B. The net present value (NPV) of the deal, if you pay $350,000 at Year 0 = -$101,600
5C. The IRR, using the short-cut method, = 15%
Explanation:
a) Data and Calculations:
Opportunity cost of capital (OCC) = 10%
NOI at the end of the 5th year = $40,000
Selling price at the end of the 5th year = $400,000 ($40,000 * 10)
Year 1 Year 2 Year 3 Year 4 Year 5
Net Operating
Income (NOI) $20,000 $22,000 $30,000 $31,000 $40,000
Discount factor 0.909 0.826 0.751 0.683 0.621
1. Present value $18,180 $18,172 $22,530 $21,173 $24,840
2. Present value of the net sales proceeds = $248,400 ($400,000 * 0.621)
3. Total present value of the property = $104,895 ($18,180 + $18,172 + $22,530 + $21,173 + $24,840)
4. Total return on the investment = $143,505 ($248,400 - $104,895)
5. Forecasted appreciation in value on the property = $295,105 ($400,000 - $104,895)
5B. The net present value (NPV) of the deal, if you pay $350,000 at Year 0 = -$101,600 ($248,400 - $350,000)
5C. The IRR, using the short-cut method, = 15% (100%/5 * 75%)
Capital budgeting is the process of planning and controlling investments in assets that are expected to produce cash flows for one year or less. This statement is:
Answer:
True
Explanation:
It is True that Capital budgeting is the process of planning and controlling investments in assets that are expected to produce cash flows for one year or less.
The cost of preferred stock
Preferred stock is a hybrid security, because it has some characteristics typical of debt and others typical of equity. The following table lists various characteristics of preferred stock. Determine which of these characteristics is consistent with debt and which is consistent with equity.
Characteristics Debt Equity
Dividends are fixed
Usually has no specified maturity date
Consider the case of Tamin Enterprises:
At the present time, Tamin Enterprises does not have any preferred stock outstanding but is looking to include preferred stock in its capital structure in the future. Tamin has found some institutional investors that are willing to purchase its preferred stock issue provided that it pays a perpetual dividend of $11 per share. If the investors pay $97.95 per share for their investment, then Tamin's cost of preferred stock (rounded to four decimal places) will be:_____.
Answer:
Dividends are fixed ⇒ Debt
Preferred dividends are fixed much like the interest payments made on debt which makes this a characteristic of debt.
Usually have no specified maturity date ⇒ Equity
Equity does not have an expiration or maturity date and preferred shares share this same characteristic.
Cost of preferred stock.
The value of a Preferred stock is calculated by the formula:
Price = Dividend / Cost of preferred stock
97.95 = 11 / Cp
97.95 * Cp = 11
Cp = 11/ 97.95
= 11.23%
process which is followed to monitor the movement of stock in a company
Answer:
it known as stock control
In 2019, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2020. What is Teller’s break-even point in units for 2020? g
Answer:
Break-even point in units= 1,500
Explanation:
Giving the following information:
Selling price= $600
Unitary variable cost= $420
Fixed cost= $270,000
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 270,000 / (600 - 420)
Break-even point in units= 1,500
