Answer: 1.2
Explanation:
The Coefficient of Variation tells the accuracy of the mean. If it is high then there is a large dispersion around the mean. A smaller figure indicates that the mean is more accurate/ precise.
Coefficient of Variation = Standard Deviation / Expected Return
Coefficient of Variation = 30%/25%
Coefficient of Variation = 1.2
Long-term debt ratio 0.3
Times interest earned 10.0
Current ratio 1.2
Quick ratio 1.0
Cash ratio 0.4
Inventory turnover 3.0
Average collection period 73 days
Use the above information from the tables to work out the following missing entries, and then calculate the company’s return on equity.
Net sales _____$
Cost of goods sold
Selling, general, and administrative expenses 20.00
Depreciation 30.00
Earnings before interest and taxes (EBIT) _____$
Interest expense
Income before tax _____$
Tax (35% of income before tax)
Net income _____$
On January 1, 2021, Legion Company sold $270,000 of 4% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $169,056, priced to yield 10%. Legion records interest at the effective rate. Legion should report bond interest expense for the six months ended June 30, 2021, in the amount of: (Round your answer to the nearest dollar amount.)
Answer:
Interest expense = $8453
Explanation:
We can calculate Bond interest expense by multiplying Carrying value of the bond with the effective interest rate and the period of time,
DATA
Carrying value of bond = $169,056
Effective interest rate = 10%
Period of time = 6 months
Interest expense =?
Calculation
Interest expense = Carrying value x Effective interest rate x Time period
Interest expense = $169,056 x 10% x [tex]\frac{6months}{12months}[/tex]
Interest expense = $8453
In this module, you learned about the risks or costs associated with financial goals. What are the risks or costs associated with your goal, and how can you overcome these challenges
Answer with Explanation:
My goal is to start a business totally based on a new idea with great potential to influence the lives of the people of America. For this I had worked on a startup idea for couple of years and continuously reforming it.
The biggest risks associated with this goal is funding problems, business risks, market research, innovation issues and Software designing issues.
Now these are some risks that I face but I overcome these challenges by:
Risks Solution
Funding Risk: By presenting my startup idea on a international competition by writing business proposal based on well researched market, product innovation and the financial prospect of the business. There are numerous accelerator programs operated by the state and other organizations that encourage startups and helps with numerous facilities. So I will also present my idea here to secure funding from a wider number of investors.
Business Risks: Giving special considerations to business risks and their mitigation strategies.
Innovation: The products will be innovative enough to generate handsome amount of profit and must be capable of giving tough time to its competitors.
Market Research: The best performing businesses know who their customers are and what they are desiring from them. So market research would capable of identifying my potential customers and that it must be representative of the sample taken.
Software Designing: The software design must be user friendly and must effectively resolve users issues. Furthermore, it must be continuously updated with better features and friendly functioning.
A manufacturing company has variable overhead costs of $2.50 per unit and fixed costs of $5,000 per month. Each unit requires 4 hours of direct labor and the company expects to produce 2,000 units each month. The standard overhead rate will be
Answer:
Standard Overhead rate is $1.25 per Direct labor hours
Explanation:
Total variable cost (2000 unit * $2.50) = $5,000
Total fixed cost = $5,000
Estimated Overhead cost = $10,000
Estimated Direct labor hour = 2000 unit * 4 hours = 8,000 hours
Standard Overhead rate = Estimated overhead cost / Estimated Direct labor hour
Standard Overhead rate = $10,000 / 8,000 hours
Standard Overhead rate = $1.25 per Direct labor hours
On January 1, 2021, Splash City issues $320,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Required:Assuming the market interest rate on the issue date is 8%, the bonds will issue at $320,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Journal entries are given below
Explanation:
Entry for the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021, are prepared as follows
January 01, 2021 (Splash City issues $320,000 of 8% bonds)
Debit Credit
Cash 320,000
Bonds payable 320,000
June 30, 2021 (Interest paid)
Debit Credit
Interest expense $12,800
Cash $12,800
Working
Interest expense = $320,000 x 8% x 6/12
Interest expense = $12,800
December 31, 2021 (Interest paid)
Debit Credit
Interest expense $12,800
Cash $12,800
Working
Interest expense = $320,000 x 8% x 6/12
Interest expense = $12,800
_____ is a method for determining the estimated annual costs and benefits for a project and the resulting annual cash flow.
Answer:
Cash flow analysis, is the right answer.
Explanation:
“Cash flow analysis” is the method that determined the actual cash that goes out of the business and the actual cash that comes in the business. Basically this method is used for financial purposes. This method exhibits the actual cost that the business has incurred and the actual benefit it has earned. Moreover, new investors that invest in the company primarily sees the financial report of the company and then take the decision to invest.
Quantitative Problem 1: Assume today is December 31, 2017. Barrington Industries expects that its 2018 after-tax operating income [EBIT(1 – T)] will be $450 million and its 2018 depreciation expense will be $65 million. Barrington's 2018 gross capital expenditures are expected to be $110 million and the change in its net operating working capital for 2017 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 4.5% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is 9%; the market value of the company's debt is $3 billion; and the company has 180 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Using the free cash flow valuation model, what should be the company's stock price today (December 31, 2017)? Do not round intermediate calculations. Round your answer to the nearest cent. $ per share
Answer:
$29.630
Explanation:
For computation of stock price first we need to follow some steps which is shown below:-
Free cash flow = EBIT (1 - T) + Depreciation - Capital expenditure - Working capital
= $450 million + $65 million - $110 million - $30 million
= $375 million
Value of firm = Free cash flow ÷ (WACC - Growth)
= $375 million ÷ (9% - 4.5%)
= $375 million ÷ 0.045
= $8,333.33 million
Value of equity = Value of firm - Value of debt
= $8,333.33 million - $3,000 million
= $5,333.33 million
Stock price = Value of equity ÷ Outstanding shares
= $5,333.33 million ÷ 180 million
= $29.630
Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Compute the division's return on investment:
Answer:
14.7%
Explanation:
The computation of return on investment is shown below:
Return on Investment = Net Income ÷ Average total assets × 100
where,
Net Income is
= Sales - Cost of goods sold - Operating expense
= $4,525,000 - $2,550,000 - $1,372,000
= $603,000
And,
Average total assets = $4,100,000
So,
Return on Investment is
= $603,000 ÷ $4,100,000 × 100
= 14.7%
XARA is a newly emerging wine company. After extensive market research, XARA divides its market into wine enthusiasts, casual drinkers and restaurants. Each category has its own needs, traits and marketing goals. In this scenario, XARA has engaged in market _________.
Answer: segmentation
Explanation:
Market segmentation is when a business market that is made up of different customers is being divided, into smaller groups or segments based on some characteristics.
From the question, we are informed that XARA is a newly emerging wine company. After extensive market research, XARA divides its market into wine enthusiasts, casual drinkers and restaurants. Each category has its own needs, traits and marketing goals. In this scenario, XARA is using market segmentation.
Market research is a systematic attempt to acquire data about target markets and customers: learn everything you can about them, starting with their names. It is considered as the crucial part of business strategy.
XARA is a newly emerging wine company. After extensive market research, XARA divides its market into wine enthusiasts, casual drinkers and restaurants. Each category has its own needs, traits and marketing goals. In this scenario, XARA is using market segmentation.
Market segmentation is when a business market that is made up of different customers is being divided, into smaller groups or segments based on some characteristics.
To know more about Market, refer to the link:
https://brainly.com/question/13959285
The accounts receivable turnover is computed as __________ divided by __________. sales; accounts receivable sales; average accounts receivable sales; net income accounts receivable; net income
Answer:
sales ; average accounts receivables
Explanation:
Accounts receivable turnover refers to how a business firm manage its assets. Businesses, companies uses accounts receivables to know and quantify how perfectly goods bought on credit by their customers are being paid back. It also measures how business gives credit and collects back it's debt .It is calculated as net sales divided by average accounts receivables.
Longman Company manufactures shirts. During June, Longman made 1,900 shirts but had budgeted production at 2,150 shirts. Longman gathered the following additional data:
Variable overhead cost standard $0.80 per DLHr
Direct labor efficiency standard 4.50 DLHr per shirt
Actual amount of direct labor hours 8,620 DLHr
Actual cost of variable overhead $10,344
Fixed overhead cost standard $0.10 per DLHr
Budgeted fixed overhead $968
Actual cost of fixed overhead $1,033
Required:
a. Calculate the variable overhead cost variance.
b. Calculate the variable overhead efficiency variance.
c. Calculate the total variable overhead variance.
d. Calculate the fixed overhead cost variance.
e. Calculate the fixed overhead volume variance
Answer:
a. variable overhead cost variance- $3,448 Unfavorable
b. variable overhead efficiency variance- $ 56 unfavorable
c. total variable overhead variance - $3,504 Unfavorable
d. fixed overhead cost variance - $65 unfavorable
e. Fixed overhead volume variance -$ 112.5 unfavorable
Explanation:
Variable overhead rate variance $
8,620 hours should have cost (8,620 × $0.80) 6896
but did cost 10,344
Variable overhead rate variance 3,448 Unfavorable
Variable overhead rate variance =$3,448 unfavorable
Efficiency variance Hours
190 units should have taken (1,900 × 4.50 hrs) 8,550
but did take 8,620
Efficiency variance in hours 70 unfavorable
Standard rate × $0.80
Efficiency variance $ 56 unfavorable
Efficiency variance =$ 56 unfavorable
Total variable overhead= rate variance +efficiency
Total variable overhead = $3,448 UF + $ 56 UF = $3,504 U
Total variable overhead = $3,504 Unfavorable
Fixed overhead cost variance
$
Budgeted cost 968
Actual cost 1,033
Fixed overhead cost Variance 65 unfavorable
Fixed Overhead Volume
Units
Budgeted units 2,150
Actual units 1,900
Variance 250
Standard fixed cost per unit (Notes) $0.45
Volume Variance 112.5 unfavorable
Standard fixed overhead cost per unit
= standard hours × standard Fixed overhead rate = 4.5 × $0.1= $0.45
a. variable overhead cost variance- $3,448 Unfavorable
b. variable overhead efficiency variance- $ 56 unfavorable
c. total variable overhead variance - $3,504 Unfavorable
d. fixed overhead cost variance - $65 unfavorable
e. Fixed overhead volume variance -$ 112.5 unfavorable
Sea Blue manufactures flotation vests in Charleston, South Carolina. Sea Blue's contribution margin income statement for the month ended December 31, 2018, contains the following data:
Sea Blue
Income Statement
For the Month Ended December 31, 2018
Sales in Units 32,000
Net Sales Revenue $608,000
Variable Costs:
Manufacturing 96,000
Selling and Administrative 108,000
Total Variable Costs 204,000
Contribution Margin 404,000
Fixed Costs:
Manufacturing 124,000
Selling and Administrative 94,000
Total Fixed Costs 218,000
Operating Income $186,000
Suppose Overboard wishes to buy 4,600 vests from Sea Blue. Sea Blue will not incur any variable selling and administrative expenses on the special order. The Sea Blue plant has enough unused capacity to manufacture the additional vests. Overboard has offered $15 per vest, which is below the normal sales price of $19.
1. Identify each cost in the income statement as either relevant or irrelevant to Sea Blue's decision.
a. Variable Manufacturing Costs
b. Variable Selling and Administrative Costs
c. Fixed Manufacturing Costs
d. Fixed Selling and Administrative Costs
2. Prepare a differential analysis to determine whether Sea Blue should accept this special sales order.
3. Identify long-term factors Sea Blue should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Sea Blue's managers also should consider the following:
A. Will Sea Blue's other customers find out about the lower sale price Sea Blue accepted from Overboard? If so, will these other customers demand lower sale prices?
B. Will the special order customer come back again and again, asking for the same reduced price?
C. How will Sea Blue's competitors react? Will they retaliate by cutting their prices and starting a price war?
D. All of the above
E. None of the above
Answer:
1. Variable Cost
Manufacturing 96,000 ( Relevent )
Selling and administrative 108,000 ( Irrelevent )
Fixed Cost
Manufacturing 124,000 ( Irrelevent )
Selling and administrative 94,000 (Irrelevent )
2. $55,200
3. A. If the regular customer found out about this order and will demand a lower price?
B. Will this order customer come back again and again asking the same reducted price?
C. Will this order price will start a price war with the competitors?
Explanation:
1. Calculation to Identify each cost in the income statement as either relevant or irrelevant to Sea Blue's decision.
Variable Cost
Manufacturing 96,000 ( Relevent )
Selling and administrative 108,000 ( Irrelevent )
Fixed Cost
Manufacturing 124,000 ( Irrelevent )
Selling and administrative 94,000 (Irrelevent )
2. Preparation of a differential analysis to determine whether Sea Blue should accept this special sales order.
Differential analysis
Expected increase in income in revenue
( 4,600 vest * $15 per vest ) 69,000
Less :Expected increase in Variable manufacturing
( 4,600 vest * $3 per vest) (13,800)
=$55,200
Variable manufacturing cost of $96,000 / divide by 32,000 units will give us $3
Based on the above calculation Sea blue should accept this order reason been that the order will increase their operating income by the amount of $55,200.
3. The manager of Sea blue should know that the sale might affect their regular sale in long run.
Therefore In addition to determining the special order's effect on operating profits, Sea Blue's managers also should consider:
A. If the regular customer found out about this order and will demand a lower price?
B. Will this order customer come back again and again asking the same reducted price?
C. Will this order price will start a price war with the competitors?
A company’s common stock has a market value of $63.18 per share and its next dividend is expected to be $3.26 per share. The stock’s beta is 1.2, the tax rate is 35%, and the market risk premium is 6.1% per year. The yield to maturity for the company’s long-term debt is 6.4% per year. If the riskiness of the company’s equity requires that it provide a risk premium of 3.2% per year over the yield on its long-term debt, what is the company’s annual cost of internal equity financing?
Answer:
Cost of equity = 9.6%
Explanation:
The cost of equity is the return a firm theoretically pays to its equity investors, In order to calculate the cost of equity here we need to add up the yield to maturity for the company's long term debt and the risk premium per year over the yield on its long term debt.
Solution
Cost of equity = Yield to maturity + Risk premium
Cost of equity = 6.4% + 3.2%
Cost of equity = 9.6%
Chester's balance sheet has $105,038,000 in equity. Further, the company is expecting net income of 3,000,000 next year, and also expecting to issue $4,000,000 in new stock. If there are no dividends paid what will beChester's book value?
Answer:
$112,038,000
Explanation:
The book value is computed as shown below:
= Equity balance + net income + issue of new stock
= $105,038,000 + $3,000,000 + $4,000,000
= $112,038,000
Currently Baldwin is paying a dividend of $1.10 (per share). If this dividend stayed the same, but the stock price rose by 10% what would be the dividend yield
Answer:
Dividend yield = 227.06%
Explanation:
Assuming the Closing stock market summary for Baldwin company is $44.05
Dividend yield = Dividend * 100 / (Price* (1 + growth rate) )
Dividend yield = 1.10 * 100 / (44.05 * (1+0.10) )
Dividend yield = 1.10 * 100 / (44.05 * 1.10)
Dividend yield = 110 / 48.455
Dividend yield = 2.2706
Dividend yield = 227.06%
Which of the following statements is CORRECT? a. Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate. b. Short-term debt is favored by firms because, while it is generally more expensive than long-term debt, it exposes the borrowing firm to less risk than long-term debt. c. Commercial paper is a form of short-term financing that is primarily used by large, strong, financially stable companies. d. Trade credit is provided only to relatively large, strong firms. e. Commercial paper is typically offered at a long-term maturity of at least five years.
Answer: Commercial paper is a form of short-term financing that is primarily used by large, strong, financially stable companies.
Explanation:
Commercial papers a promissory notes which are issued by companies on a short term basis that are unsecured. It should be noted that that they are used by the strong, large, and financially stable companies.
Commercial paper are issued in order to finance payroll, and also meet a company's short-term liabilities.
BMM Industries pays a dividend of $2 per quarter. The dividend yield on its stock is reported at 4.8%. What is the stock price?
Morgan Company issues 10%, 20-year bonds with a par value of $720,000 that pay interest semiannually. The current market rate is 9%. The amount paid to the bondholders for each semiannual interest payment is:
Answer:
$36,000
Explanation:
Calculation for the amount to be paid to the bondholders for each semiannual interest payment
Using this formula
Semiannual interest payment = Face value Amount*Interest Rate*Time
Let plug in the formula
Semiannual interest payment = $720,000*0.10*0.50
Semiannual interest payment = $36,000
The amount paid to the bondholders for each semiannual interest payment is $36,000
Which of the following is an example of an oligopolistic market with a standardized product?
A) The market for breakfast cereal.
B) The market for aluminum.
C) The market for jewelry.
D) The market for automobiles.
Answer:
B) The market for aluminum.
Explanation:
An oligopoly is a market form in which the market or industry is dominated by a small group of large sellers. Oligopolies can result from various forms of collusion that reduce market competition which then majorly leads to higher prices for consumers. They have their own market structure.
Oligopolistic market with standardised product is an homogeneous oligopoly that is an oligopoly in which firm produce a standardised product. And a good example of that is the Aluminum market.
Where can you go in the Banking Center to review downloaded bank feed transactions that have already been matched to existing transactions in QuickBooks Online?a. For Review tabb. Reviewed tabc. Recognized tab d. Excluded tab
Answer:
Where can you go in the Banking Center to review downloaded bank feed transactions that have already been matched to existing transactions in QuickBooks Online?
a. For Reviewed tab
Explanation:
In QuickBooks online, you have the Reviewed tab where you can download at least the last 90 days of transactions, made with your bank or credit card. QuickBooks is also able to categorize all the downloaded transactions you have done. In the reviewed tab you can find all the accepted bank transactions.
Suppose the rate of inflation was 2 percent in India from 2008-2012 and, over that same period, the inflation rate in the United States was 2.7 percent. Based on these inflation trends, which of the following is true?
a. The PPP condition implies that the rupee has depreciated relative to the dollar.
b. The PPP condition implies that the rupee has appreciated relative to the dollar
Answer:
b. The PPP condition implies that the rupee has appreciated relative to the dollar
Explanation:
Remember, the inflation rate looks at how the prices of goods and services in a country increases over a period of time, and it's effects on the the purchasing value or power of money in the country.
As in this scenario, India had 2 percent inflation rate while United States had 2.7 which is a higher price increases not in a different period but the same one, meaning that the Purchasing power parity (PPP) condition of the rupee has appreciated relative to the dollar from 2008-2012.
On July 1, Shady Creek Resort borrowed $400,000 cash by signing a 10-year, 9% installment note requiring equal payments each June 30 of $62,328. What is the journal entry to record the first annual payment
Answer:
Journal Entry
Debit Credit
Interest Expense $36,000
Notes Payable $26,328
Cash $62,328
Workings
Interest portion for one year = 400,000 * 9% = $36,000
Total installment paid = $62,328
So, principal portion repaid = $62,328 - $36,000
= $26,328
a company bought a piece of equipment for A200 and expects to use it for eight years. The company that plans to
Answer:
The correct option b. $2,567.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
A company bought a piece of equipment for $49,200 and expects to use it for eight years. The company then plans to sell it for $4,000. The company has already recorded depreciation of $42,632.60. Using the double-declining-balance method, what is the company's annual depreciation expense for the upcoming year? (Round your answer to the nearest whole dollar amount.)
a. $11,300.
b. $2,567.
c. $19,200.
d. $1,642.
The explanation to the answer is now given as follows:
Note: See the attached excel file for the calculation of the annual depreciation expenses.
Double declining depreciation method is an accelerated depreciation technique due to the fact the depreciation expenses are charged faster under it than under straight-line depreciation method.
The depreciation of double declining method is calculated by by multiplying the rate of straight-line depreciation method by 2.
From the question, the already recorded depreciation of $42,632.60 is the accumulated depreciation expenses for the 7th year.
Since the upcoming year is the 8th year which is the last year, the depreciation expense for it can be calculated as by adjusting for the residual value of $4,000 follows:
Equipment cost = $49,200
Accumulated Depreciation = $42,632.60
Residual value = $4,000
Estimated useful life = 8 years
Therefore, we have:
Straight line method depreciation rate = 1 / Estimated useful life = 1 / 8 = 0.125, or 12.50%
Double declining depreciation rate = Straight line method depreciation rate * 2 = 12.50% * 2 = 25%
Beginning book value of the equipment in the upcoming year or in the 8th year = Equipment cost - Accumulated Depreciation = $49,200 - $42,632.60 = $6,567.40
Annual depreciation expense for the upcoming year or for the 8th year = Beginning book value of the equipment - Residual value = $6,567.40 - $4,000 = $2,567
Therefore, the correct option b. $2,567.
A car dealership union negotiates a contract that dramatically increases the salaries of all salesmen. If one of the salesmen is thinking of changing careers to be a hardware salesman, his opportunity cost:___________.
a. Would not be affected
b. Of becoming a hardware salesman would decrease
c. Of becoming a hardware salesman would increase
d. None of the above
Answer:
c. Of becoming a hardware salesman would increase
Explanation:
Opportunity cost defines that when a person gets to benefit from another than he received. So, that person takes another benefit from where he gets more benefit or we can say that he will choose the best alternative.
According to the given situation, A car dealership association is negotiating a contract that significantly increases all salesmen 's wages. Now, the Opportunity cost when one of the salespersons feels that shifting the path to hardware is of becoming a hardware salesperson that would increase.
Hence, the right answer is C
A mother, aged 60, wishes to withdraw monies from her variable annuity to pay for her son's college education. Which statement is true regarding the taxation of the withdrawal?
A. The withdrawal is 100% taxable
B. Any amount withdrawn above the cost basis is taxable
C. Any amount withdrawn above the cost basis is taxable, and is subject to a 10% penalty tax
D. The withdrawal is not subject to tax
Answer:
Any amount withdrawn above the cost basis is taxable
Explanation:
This woman is above 59½ years at age 60. If she was least than 60, she would be owing a 10% penalty on the taxable amount of this withdrawal. But since she is above this age she has to pay income taxes on the whole taxable amount of the funds she withdrew. Variable annuities would never be taxed the money is withdrawn. Therefore option B is the best answer for This question.
Instead of a dividend of $1.60 per share, the company has announced a share repurchase of $16,000 worth of stock. How many shares will be outstanding after the repurchase?
Answer:
9,690 stocks
Explanation:
some information is missing:
Market Value Balance Sheet
Cash $45,300 Equity $515,300
Fixed assets $470,000
Total $515,300 Total $515,300
total number of shares outstanding = 10,000
stock's market price = $515,300 / 10,000 = $51.53
stocks repurchased = $16,000 / $51.53 = 310.50, but we must round down to 310 stocks
stocks outstanding after repurchase = 10,000 - 310 = 9,690
A firm recently reported EBITDA of $3.95 million, depreciation of $1.20 million, and had a tax rate of 40%. The firm's expenditures on fixed assets and net operating working capital totaled $1.2 million. How much was its free cash flow, in millions
Answer:
Free cash flow=$2.37
Explanation:
Calculation for how much was its free cash flow, in millions
Using this formula
Free cash flow =[ (Operating income * (1- tax rate) + Depreciation- Expenditures on fixed assets and net operating working capital]
Where,
Operating income =$3.95
(1- tax rate) = (1 - .40)
Depreciation=$1.20
Expenditures on fixed assets and net operating working capital=$1.2
Let plug in the formula
Free cash flow = [($3.95 * (1 - .40) + $1.20 - $1.2]
Free cash flow=$3.95*0.60+$1.20-$1.2
Free cash flow=$2.37+$1.20-$1.2
Free cash flow=$3.57-$1.2
Free cash flow=$2.37
Therefore the amount of its free cash flow, in millions will be $2.37
Which of the following is a true statement about the limitation on business interest deductions? This limitation is not imposed on businesses with average annual gross receipts of $25 million of less for the prior three taxable years. A. Interest disallowed by this limitation is carried back three years and then forward five years B. The limitation is calculated as a percentage of the taxpayers total taxable income C. This limitation is not imposed on businesses with average annual gross receipts of $26 million or less for the prior three taxable years D. All of the choices are false E. All of the choices are true
Answer:
Limitation on Business Interest Deductions:
B. The limitation is calculated as a percentage of the taxpayers total taxable income
Explanation:
30% (or 50% for years 2019 and 2020, as amended by the CARES Act) of the adjusted taxable income of a business is the limit of business interest expense that is allowed by the IRS. The excess after this limitation may be carried forward by the tax paying organization to future tax years indefinitely until the interest expense is completely applied.
Following the CARES Act, "the business interest expense deduction limitation does not apply to certain small businesses whose gross receipts are $26 million or less, electing real property trades or businesses, electing farming businesses, and certain regulated public utilities. The $26 million gross receipts threshold, which applies for the 2020 tax year, is adjusted annually for inflation."
Assume the Apple division of the Gala Company had the following results last year (in thousands). Managements required rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 30%. What is Apple division's residual income
Answer:
$50,000
Explanation:
The computation of the residual income for each division is shown below:
As we know that
Residual income = Operating income - target income
where,
Operating income is given in the question
And, the target income could be calculated by
= Average invested assets × required rate of return
= $4,500,000 × 10%
= $450,000
So, the residual income is
= $500,000 - $450,000
= $50,000
You own a portfolio that has a total value of $235,000 and it is invested in Stock D with a beta of .82 and Stock E with a beta of 1.43. The beta of your portfolio is equal to the market beta. What is the dollar amount of your investment in Stock D?
Answer:
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