Suppose Cho is considering emigrating from her home country.A fictional country of Flaxon has the same policies and institutions as Cho's home country, except that it has greater price stability. If Cho's decision to emigrate is based solely on the prospects for economic growth, she would

Answers

Answer 1

Answer: Migrate to Flaxon

Explanation:

If Flaxon country has the same policies and institutions as Cho's home country but also has greater price stability, Cho would emigrate if she wanted more economic growth because Price stability contributes to the growth of the economy.

Price stability means that the country is not going to experience inflation (deflation) that is too high (low) and lasts too long as well as one that is erratic.

This benefits the economy because;

Savings will not be easily eroded by inflation.Decisions can be made easier as inflation rates can be better predictable. For instance, people can save or invest at a particular rate that they know will bring them real return as it will be over the inflation rate.  Unexpected deflation will not cause companies to make losses which can increase unemployment and company shutdowns and,Financial institutions can borrow out loans at more stable rates for investments because in a less stable market they would have to charge higher rates to ensure that they do not make losses should inflation change. These stable rates will attract companies and individuals who will use the funds for investment and improve the economy.

Related Questions

When the actual cost of direct materials used exceeds the standard cost, the company must have experienced an unfavorable direct materials price variance.

a. True
b. False

Answers

Answer:

True

Explanation:

The cost was bigger than they had budgeted for, so it was an unfavorable variance.

Dextra Computing sells merchandise for $9,000 cash on September 30 (cost of merchandise is $7,200). Dextra collects 7% sales tax. Record the entry for the $9,000 sale and its sales tax. Also record the entry that shows Dextra sending the sales tax on this sale to the government on October 15.
View transaction list
Journal entry worksheet
Record the cash sales and 9% sales tax.
Note: Enter debits before credits.
Date General Journal Debit Credit
Sep 30
Record entry Clear entry View general journal

Answers

Answer:

Sept 30

DR Cash ........................... $9,630

CR Sales ..........................................$9,000

CR Sales Tax Payable...................$630

(To record Sales and Sales taxes)

Working

Cash = 9,000 + (9,000 * 7%)

= $9,630

Sales tax = 9,630 - 9,000

= $630

Sept 30

DR Cost of Goods Sold .....................$7,200

CR Merchandise Inventory ...................................$7,200

(To record cost of goods sold)

Oct 15

DR Sales Tax Payable...........................$630

CR Cash...............................................................$630

(To record remittance of Sales Tax)

The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with a. 9 units of output. b. 15 units of output. c. 21 units of output. d. 30 units of output.

Answers

Answer:

b. 15 units of output.

Explanation:

information regarding sales price and quantity demanded is missing, so I looked it up (see attached file):

units              sales revenue            total costs            profits

9                       $216                            $36                     $180

15                      $270                           $54                     $216

21                      $252                           $72                     $180

30                     $90                             $99                     ($9)

Prepare journal entries to record the following four separate issuances of stock. A corporation issued 7,000 shares of $20 par value common stock for $168,000 cash. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $34,000. The stock has a $1 per share stated value. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $34,000. The stock has no stated value. A corporation issued 1,750 shares of $25 par value preferred stock for $77,750 cash.

Answers

Answer: Please see explanation column for answer

Explanation:

1. For shares issued in excess of par value common stock

Amount                          Debit                           Credit

Cash                            $168,000

Common stock  at $20 ( 7000 x 20)              $140,000

Paid in excess of par value common stock

(168,000 - 140,000)                                          $28,000

2. For shares issued to Promoters at stated value

Amount                                    Debit                             Credit

Organisational expenses       $34,000

Common stock  at $1 ( 3,500x 1)                               $3,500

Paid in capital in excess of stated value

common stock(34,000 - 3,500)                               $30, 500

3. For shares issued to Promoters at no stated  value

Amount                                               Debit                    Credit

Organisational expenses                $34,000

Common stock  at $1 no par value                               $34,000

4.For shares issued in excess of par value preferred  stock

Amount                          Debit                                  Credit

Cash                              $77,750

preferred  stock  at $25(1,750 x 25)                         $43,750

Paid in capital in excess of par value

Preferred stock(77,750 -43,750)                               $34,000

The BRS Corporation makes collections on sales according to the following schedule: 40% in month of sale 55% in month following sale 5% in second month following saleThe following sales have been budgeted: Sales April $210,000 May $160,000June $150,000 Budgeted cash collections in June would be:______.a. $150,840.b. $158,000.c. $149,000.d. $150,000.

Answers

Answer:

Total cash collection= $158,500

Explanation:

Giving the following information:

Cash collection:

40% in the month of sale

55% in the month following sale

5% in the second month following sale

Sales:

April $210,000

May $160,000

June $150,000

Cash collection June:

Sales in cash from June= 150,000*0.4= 60,000

Sales on account from May= 160,000*0.55= 88,000

Sales on account from April= 210,000*0.05= 10,500

Total cash collection= $158,500

. A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price

Answers

Answer:

The answer is $18.29

Explanation:

We have many formulas to arriving at the stock price but here we use Gordon growth model.

Formula for getting stock price is:

D1/r - g

Where:

D1 - is the next year dividend or expected dividend to be paid next.

r is the rate of return

g is the growth rate

$0.75/0.105 - 0.064

$0.75/0.041

$18.29.

Therefore, the stock's current price is $18.29

On January 1, the listed spot and futures prices of a Treasury bond were 95.4 and 95.6. You sold $100,000 par value Treasury bonds and purchased one Treasury bond futures contract. One month later, the listed spot price and futures prices were 95 and 94.4, respectively. If you were to liquidate your position, your profits would be a Group of answer choices $125 profit. $1,060.50 loss. None of the options are correct. $125 loss. $1,062.50 profit.

Answers

Answer:

None of the options are correct.

Explanation:

We start by calculating the net change of the treasury bond position.

= $95,125 - $95,000

= $125

The long treasury bond position gains $125 after a month.

We will also calculate the net change of the treasury bond futures contract.

= $94,125 - $95,187.50

= -$1,062.50

Therefore, Net profits is;

= $125 - $1,062.50

= -$937.50

Someone offers to buy your car for four, equal annual payments, with the first payment coming 2 years from today. If you think that you could sell your car to another purchaser for an immediate payment of $9,000 and the interest rate is 10%, what is the minimum annual payment that you would accept from this buyer?

Answers

Answer:

4i8484884858585848484i

Following is information on two alternative investments being considered by Jolee Company. The company requires a 6% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1). (Use appropriate factor(s) from the tables provided.) Project A Project B Initial investment $ (174,325 ) $ (152,960 ) Expected net cash flows in year: 1 41,000 44,000 2 60,000 53,000 3 72,295 68,000 4 87,400 81,000 5 59,000 30,000For each alternative project compute the net present value.

Answers

Answer and Explanation:

The computation of the net present value is presented in the attachment below:

For project A, the net present value is $91,771.53 and for project B, the net present value is $79,390.69

It is computed after considering the discounting factor that comes from

= 1 ÷ (1 + discount rate)^number of years

for year 1, it is

= 1 ÷ (1 + 0.06)^1

The same applied for the remaining years

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

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

Weighted-average number of shares outstanding $



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

Weighted-average number of shares outstanding $

Answers

Answer:

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

= $312,000 + $19,800

= $331,800

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

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

= $312,000 + $29,700

= $341,700

Rent expense of $3,000 is allocated to Department A and Department B based on square footage. Department A has 5,000 square feet and Department B has 2,500 square feet.

The dollar amount of rent expense allocated to Department B is:_______

Answers

Answer:

$1,000

Explanation:

Calculation for the Dollar amount of rent expense allocated to department B

Using this formula

Expense allocated to Department B= Rent expense allocated to Department A and B* Department B square feet/Department A and Department B Square foot

Let plug in the formula

Expense allocated to department B =$3,000*2,500/5,000+2,500

Expense allocated to department B= $3,000 * 2,500 / 7,500

Expense allocated to department B =$7,500,000/7,500

Expense allocated to department B= $1,000

Therefore the Dollar amount of rent expense allocated to department B will be $1,000

A bond par value is $1,000 and the coupon rate is 5.1 percent. The bond price was $946.02 at the beginning of the year and $979.58 at the end of the year. The inflation rate for the year was 2.6 percent. What was the bond's real return for the year

Answers

Answer:

the bond's real return for the year is 6.18 %.

Explanation:

First find the nominal return of the bond then the real return as follows :

PV = - $946.02

Pmt = $1,000 × 5.10% = $51

P/yr = 1

FV = $979.58

n = 1

r = ?

Using a Financial Calculator, the nominal return of the bond, r is 8.9385 %.

Real Return = ( 1 + nominal return) / (1 + inflation rate) -1

                   =  (1 + 0.089395) / (1 + 0.026) - 1

                   = 0.0618 or 6.18 %

In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2017 were as follows.
Budget Actual
Indirect materials $14,200 $13,700
Indirect labor 19,100 19,900
Utilities 11,400 12,100
Supervision 4,600 4,600
All costs are controllable by the department manager.
Prepare a responsibility report for April for the cost center.

Answers

Answer:

                            HANNON COMPANY

                           Assembly Department

           Manufacturing Overhead Cost Responsibility Report

                     For the Month Ended April 30,2017

Controllable Cost     Budget$   Actual$   Difference$   Remark  

Indirect materials       14,200       13,700         500         Favourable

Indirect Labor             19,100        19,900       -800         Unfavourable

Utilities                        11,400        12,100        -700         Unfavourable

Supervision                 4,600        4,600           0                 None

Total                            49,300       50,300    -1,000       Unfavourable

Ray's Satellite Emporium wishes to determine the best order size for its best-selling satellite dish (model TS111). Ray has estimated the annual demand for this model at 1,500 units. His cost to carry one unit is $80 per year per unit, and he has estimated that each order costs $22 to place.
Using the EOQ model, how many should Ray order each time?

Answers

Answer:

28.72 units

Explanation:

Calculation of how many should Ray order each time using EOQ model

Using this formula

EOQ= √2DS/H

Where,

D=Annual demand 1,500 units

S=Order costs $22

H=Holding Costs $80 per unit

Let plug in the formula

EOQ=√2*1,500*$22/$80

EOQ=√66,000/$80

EOQ=√825

EOQ=28.72 units

Therefore Using the EOQ model, Ray should order 28.72 units each time.

Members of the board of directors of have received the following operating income data for the year ended: May 31, 2018:
Members of the board are surprised that the industrial systems product line is not profitable. They commission a study to determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by and decrease fixed selling and administrative expenses by $10,000.
Requirements:
1. Prepare a differential analysis to show whether Safety Point Safety Point should drop the industrial systems product line.
2. Prepare contribution margin income statements to show Safety Point's Safety Point's total operating income under the two alternatives: (a) with the industrial systems line and (b) without the line. Compare the difference between the two alternatives' income numbers to your answer to Requirement 1.
3. What have you learned from the comparison in Requirement 2?
Product Line
Industrial Household
Systems Total
Net Sales Revenue $340,000 $370,000 $710,000
Cost of Goods Sold:
Variable 36,000 46,000 82,000
Fixed 250,000 69,000 319,000
Total Cost of Goods
Sold 286,000 115,000 401,000
Gross Profit 54,000 255,000 309,000
Selling and Administrative Expenses:
Variable 65,000 72,000 137,000
Fixed 45,000 22,000 67,000
Total Selling and Administrative
Expenses 110,000 94,000 204,000
Operating Income
(Loss) ($56,000) $161,000 $105,000

Answers

Question Completion:

Safety Point Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $50,000 and decrease fixed selling and administrative expenses by $10,000.

Answer:

Safety Point Company

1. Differential Analysis, showing Safety Point Dropping the Industrial Systems Product Line:

Net Sales Revenue                     $370,000

Cost of Goods Sold:

 Variable                                         46,000

 Fixed                                           269,000

Total Cost of Goods  Sold             315,000

Gross Profit                                    55,000

Selling and Administrative Expenses:

 Variable                                       72,000

 Fixed                                           57,000

Total Selling and Administrative

 Expenses                                  129,000

Operating Income  (Loss)         ($74,000)

2. Safety Point Company's Contribution Margin Income Statements for the year ended May 31, 2018, under the two alternatives:

                                                     Without                 With

                                                        Industrial Systems

Net Sales Revenue                     $370,000          $710,000

Variable costs:

 Cost of Goods Sold                      46,000               82,000

 Selling and Administrative           72,000              137,000

Total Cost of Goods  Sold              118,000            219,000

Contribution Margin                    252,000            491,000

Fixed Expenses:

 Cost of goods sold                   269,000            319,000

 Selling and Administrative         57,000              67,000

Total  Fixed Expenses                326,000           386,000

Operating Income  (Loss)         ($74,000)         $105,000

3. The comparison in requirement 2 shows that eliminating the Industrial Systems Product Line makes Safety Point Company unprofitable with an operating loss of $74,000.  This loss cannot be compared to the total operating income of $105,000 which is made with the industrial systems.  So, it is not the Industrial System Product line that is causing Safety Point Company to record a loss of $56,000.  It is the fixed cost of $60,000 which cannot be eliminated with the elimination of the Industrial System product line that causes the loss and reduces total operating for the company.

Explanation:

a) Data:

Safety Point

Income Statement for the year ended May 31, 2018:

                                                              Product Line

                                                      Industrial      Household

                                                      Systems        Systems           Total

Net Sales Revenue                     $340,000      $370,000      $710,000

Cost of Goods Sold:

 Variable                                         36,000          46,000          82,000

 Fixed                                           250,000          69,000        319,000

Total Cost of Goods  Sold            286,000          115,000        401,000

Gross Profit                                    54,000         255,000       309,000

Selling and Administrative Expenses:

 Variable                                       65,000            72,000        137,000

 Fixed                                            45,000           22,000         67,000

Total Selling and Administrative

 Expenses                                    110,000           94,000      204,000

Operating Income  (Loss)          ($56,000)       $161,000     $105,000

A 70-year old client wants to invest in U.S. Treasury securities. When performing the suitability determination, the client informs the registered representative that he is looking for after-tax income, liquidity, and to avoid market risk. The registered representative should be LEAST concerned with the:

Answers

Answer: client's age

Explanation:

From the question, we are informed that a 70-year old client wants to invest in U.S. Treasury securities and that when performing the suitability determination, the client informs the registered representative that he is looking for after-tax income, liquidity, and to avoid market risk.

The client's age should be the least the registered representative should be concerned about. Rather, the representative should be concerned with the coupon of the recommended treasury securities and the tax bracket of the client for tax purposes.

You manufacture wine goblets. In mid- June you receive an order for 10,000 goblets from Japan. Payment of ¥400,000 is due in mid- December. You expect the yen to rise from its present rate of $1=¥107 to $1 to ¥120 by December 2020. You can borrow yen at 6% a year. What should you do?

Answers

Answer:

I will borrow yen at 6% a year.

Explanation:

a) Data and Calculations:

Payment for 10,000 = ¥400,000

Spot rate = $1 = ¥107

Forward rate = $1 to ¥120

Borrow ¥400,000, the interest cost = ¥24,000 = $224.30/2 (¥24,000/107) = $112.15 for six months

Value of ¥400,000 borrowed in dollars = $3,738.32 (¥400,000/107)

Loan Repayment of ¥400,000 in dollars = $3,333,33 (¥400,000/120)

Gain from forward contract = $404.99

Interest cost for borrowing =      112.15

Overall debt hedging gain =  $292.84

By borrowing yen at 6% per annum, you will make an overall gain of $292.84.  This is not comparable to the foreign exchange loss of $404.99 that you will incur without borrowing yen.  Taking advantage of the the debt hedging, the supplier is able to save foreign exchange loss.

The risk-free rate is 6% and the expected rate of return on the market portfolio is 13%. a. Calculate the required rate of return on a security with a beta of 1.25.

Answers

Answer:

The required rate of return is r = 0.1475 or 14.75%

Explanation:

The required rate of return is the minimum return that investors demand/expect on a stock based on the systematic risk of the stock as given by the beta. The expected or required rate of return on a stock can be calculated using the CAPM equation.

The equation is,

r = rRF + Beta * (rM - rRF)

Where,

rRF is the risk free raterM is the return on market

r = 0.06 + 1.25 * (0.13 - 0.06)

r = 0.1475 or 14.75%

Which of the following statements would best characterize someone who is not culturally competent in working with others from different cultures?a. The person varies the rate of their speaking.b. The person uses facial expressions when communicating.c. The person pays attention to verbal and non-verbal behavior.d. The person fills "silence" during conversations.

Answers

Answer: The person fills "silence" during conversations

Explanation:

Culture is simply regarded as people's way of life. The way if life include their food, the kind of music they listen to, their religion, language, their beliefs, values etc.

Someone who is not culturally competent in working with others from different cultures would usually be silent during conversations. This is because the person doesn't know much about the culture and can't really be involved in the conversation.

5. Kroger can use __________ gathered from ClickList orders to determine which products they should keep more or less of in stock.

Answers

Answer: Data analytics

Explanation:

Data analytics simply has to do withcanalyzing raw data to make conclusions about a particular information. Data analytics is used by organizations in order to optimize their business performance.

Kroger can use data analytics gathered from ClickList orders to determine which products they should keep more or less of in stock.

22. On January 1, 2021, Princess Corporation leased equipment to King Company. The lease term is eight years. The first payment of $675,000 was made on January 1, 2021. The equipment cost Princess Corporation $3,600,000. The present value of the lease payments is $3,961,183. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 10%, how much interest revenue will Princess record in 2022 on this lease

Answers

Answer:

$293,980.13

Explanation:

Calculation of how much of the interest revenue Princess will record in 2022 on the lease

First Step is to find the interest for year 2021

Present Value January 1, 2021 $3,961,183

Less Payment January 1, 2021 (675,000)

=$3,286,183

Hence,

2021 Interest =$3,286,183× 10%

2021 Interest = $328,618.3

Second Step

Second Payment $675,000

Less Interest (328,618.3)

Reduced balance $346,381.7

Third Step is to find the how much interest revenue will Princess record in 2022 on the lease

2021 $3,286,183

Less Reduced balance (346,381.7)

January 1 2022 Liability = $2,939,801.3× 10%

2022 Interest Revenue =$293,980.13

Therefore the amount of interest revenue that Princess will record in 2022 on the lease will be $293,980.13

Suppose the country of Stan has fixed its exchange rate to the dollar. The official exchange rate is 0.50 U.S. dollars per rupee. Suppose market conditions are such that the actual equilibrium exchange rate is 0.25 U.S dollars per rupee.
1. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price at official exchange rates? ___________ Are products bought from Stan a good deal?
2. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price if you could buy at the equilibrium exchange rate?
3. Will foreigners want to demand Stan’s rupees to buy goods at the official rate? Explain.
4. Will people in Stan want to buy U.S. goods at the official exchange rates? Will they being supplying or demanding their rupees?
5. Will the monetary authorities in Stan have to buy up a surplus of their currency or sell their currency to meet a shortage of their currency to keep the exchange rate at 0.50 dollars per rupee?

Answers

Answer and Explanation:

1. At 0fficial exchange rate:

100 * 0.5 = $50

what I want to buy would be purchased at $50

at market exchange rate:

0.25 x 100 = $25

products bought from this place are not a good deal as I am paying more than the market exchange rate.

2. at equilibrium exchange rate:

100 x 0.25% = $25

the price is $25

3. from answers 1 and 2, I will not want demand Stan's rupees. the products are costly to get.

4. Stan's currency is obviously overvalued. the people from this country now has increased purchasing power so they can purchase goods in dollars, therefore they would be supplying their currency.

5. They will have to buy up the surplus of rupees so that they can easily keep up with maintaining the rupee at half a dollar.

balance sheet reports assets of $6900000 and liabilities of $2700000. All of Ivanhoe’s assets’ book values approximate their fair value, except for land, which has a fair value that is $410000 greater than its book value. On 12/31/21, Oriole Corporation paid $7030000 to acquire Ivanhoe. What amount of goodwill should Oriole record as a result of this purchase?

Answers

Answer: $2,420,000‬

Explanation:

Goodwill is the amount over the fair value of a company that it is purchased for.

Goodwill = Acquisition price - Net Assets

Net Assets = Assets - Liabilities

= (6,900,000 + 410,000) - 2,700,000

= $4,610,000‬

Goodwill = 7,030,000 - 4,610,000

= $2,420,000‬

If bookstore ABC Books determines it is going to sell books at its profit-maximizing price of $15 in a market facing monopolistic competition, calculate total profit for the store

ABC Books Revenue and Cost

Quantity Price Total Revenue Marginal Revenue Total Cost Marginal Cost

0 $26 $0 $325

10 $23 $230 $23 $365 $4

20 $20 $400 $17 $425 $6

30 $18 $540 $14 $505 $8

40 $16 $640 $10 $605 $10

50 $14 $700 $6 $725 $12

60 $12 $720 $2 $865 $14

Answers

Answer: $35

Explanation:

Profit will be the Total Revenue less the total costs involved with selling the goods.

Total Revenue at $16 is $640.

Total Cost at $16 is $605.

Profit = 640 - 605

= $35

Note; Your question has $15 as the maximizing price which is not available in the table. It might be a typo so I attached the question.

If United Airlines acted as a "price leader" and all other airlines simply charged the same prices

that United Airlines charged, then could this action be illegal because it is a form of "silent collusion?"

A. There is no such term in microeconomics known as "tacit" or "silent collusion."

B. Matching the prices of the price leader firm is a good example of a competitive market.

C. The U.S. Anti-Trust Department has always considered this business behavior as suspicious

and it does consider this pricing strategy to be illegal.

D. The famous 1982 anti-monopoly IBM court case said that this pricing strategy within an

industry is legal as long as the firms fill out quarterly reports to keep the U.S. Anti-Trust

Answers

Answer:

D

Explanation:

The airline industry is an example of an oligopoly

An Oligopoly is when there are few large firms operating in an industry. While, a monopoly is when there is only one firm operating in an industry.

Oligopolies are characterised by :

price setting firms

product differentiation

profit maximisation

high barriers to entry or exit of firms

downward sloping demand curve

the action taken by the other airlines is known as tacit collusion.

Tacit collusion is when other companies adopt the price of the price leader

Tacit collusion is not illegal while the explicit collision is illegal.

The difference between total sales revenue and total cost of goods sold is the: A. Trade margin B. Gross marketing contribution C. Net marketing contribution D. All of the above

Answers

Answer:

A. Trade margin

Explanation:

The profit obtained from trading operations is known as gross profit or trade margin.This is calculated as sales less costs of goods sold.

The difference between total sales revenue and total cost of goods sold is the gross marketing contribution.

The following information is considered:

When the cost of goods sold is deducted from the sales revenue so the gross marketing contribution should come. Neither it is trade margin, nor net marketing contribution.In other words, the difference is called as gross margin.

Therefore we can conclude that the correct option is B.

Learn more: brainly.com/question/16115373

Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a ​% weight in​ equity, ​% in preferred​ stock, and ​% in debt. The cost of equity capital is ​%, the cost of preferred stock is ​%, and the pretax cost of debt is ​%. What is the weighted average cost of capital for Ford if its marginal tax rate is ​%?

Answers

Complete Question:

Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 10% weight in equity, 25% in preferred stock, and 65% in debt. The cost of equity capital is 17%, the cost of preferred stock is 11%, and the pretax cost of debt is 9%. What is the weighted average cost of capital for Ford if its marginal tax rate is 40%?

Answer:

7.96%

Explanation:

We can calculate WACC using the formula:

WACC = Cost of equity * Equity %age / 100%         +          

After Tax Cost of Debt * Debt %age / 100%            +        

Cost of Preferred Stock * Preferred Stock %age / 100%

Here,

Cost of equity is 17%

Cost of preferred stock is 11%

Post tax cost of debt = Pre-Tax cost *  (1 - Tax rate)

This implies,

Post tax cost of debt = 9% * (1 - 40%) =  5.4%

Equity weight is 10% weight in equity

Preferred stock weight is 25%

Debt Weight is 65%

By putting value in the formula given in the attachment, we have:

WACC = 17% * (10% / 100%)      +     11% * (25% / 100%)    +    5.4% * (65% / 100%)

WACC = 1.7%   +   2.75%   +    3.51%

WACC = 7.96%

Velocity Company estimates the following for the next year, when common stock is expected to trade at a price-earnings ratio of 7. Earnings before interest and taxes $45 million Interest expense $5 million Effective income tax rate 30% Preferred stock dividends $10 million Common shares outstanding 2 million Common stock payout ratio 25% What is Velocity's approximate expected common stock market price per share next year?

Answers

Answer:

$63

Explanation:

The computation of the expected common stock market price per share for the next year is shown below:

Price earning ratio = Share price ÷ earning per share

where

Price earning ratio is 7

Earning per share is

= (Net income - preference dividend) ÷ number of common shares outstanding

= {($45 million - $5 million) × (1 - 0.30) - $10 million)} ÷ 2 million shares

= $9

Now placing these values to the above formula

So, the expected common stock market price is

= 7 × $9

= $63

Which of the following items would be a way to manipulate the cash flow from operating activities amount on the statement of cash flows?

a.
Adding depreciation back to net income to determine cash flow from operating activities.

b.
Including interest expense and tax expense in the calculation of cash flow from operating activities.

c.
Recording an item that should be recorded as an operating activity as an investing activity.

d.
The cash flow statement cannot be manipulated.

Answers

Answer:

C. Recording an item that should be recorded as an operating activity as an investing activity.

Explanation:

Hope it helped

The answer to the question is c

A company has a net cash inflow from operating activities of $793,000, a net cash outflow of $58,000 from investing activities and a net cash inflow of $100,800 from financing activities. The company paid $128,000 in interest, $188,500 in income taxes, and $204,000 in cash dividends. Which of the following statements about the statement of cash flows is not correct?a. The statement of cash flows will show a net increase in cash and cash equivalents of $838, 500. b. If the direct method is used, the $125,000 of interest paid and the $187,000 of income taxes paid will be reported in the cash flows from operating activities. c. The cash dividends of $201,000 paid will be reported as a cash outflow in the cash flow from investing activities section. d. Supplemental disclosures required for a company using the indirect method include the amount of interest and the amount of income taxes paid.

Answers

Answer:

Incorrect Statement about the Statement of Cash Flows:

c. The cash dividends of $201,000 paid will be reported as a cash outflow in the cash flow from investing activities section.

Explanation:

Cash dividends of $201,000 will be reported as a cash outflow in the financing activities section and not the investing activities section.

Statement of Cash Flows is broadly divided into three, the operating, investing, and financing activities sections.  The operating activities section show the cash flows from the normal business of the enterprise.  The investing activities section shows the acquisition and disposal of investments made by the company in cash.  While, the financing section shows the inflow and outflow of cash resulting from the funding of the business by stockholders and noncurrent creditors.

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