The Treasury bill rate is 4% and the market risk premium is 7%.

Project Beta Internal rate of return %
P 1.0 14
Q 0 6
R 2.0 18
S 0.4 7
T 1.6 20

Required:
a. What are the project costs of capital for new ventures with betas of 0.75 and 1.75?
b. Which of the following capital investments have positive NPVs?

1. P
2. Q
3. R
4. S
5. T

Answers

Answer 1

Answer:

the answer is going to be 3. R


Related Questions

_____is the function of coordinating the diverse activities and human resources of a company to produce a smooth-running operation.
a) planning.
b) directing.
c) controlling.
d) accounting.

Answers

Answer:

b) directing

Explanation:

The four main management functions are:

planningorganizingdirectingcontrolling

Originally, there were 5 main management functions developed by Henri Fayol (staffing was the fifth one) in the early 20th century. Fayol's management theory is still applied today, although it has been modified and updated.

Which of the following statements is false?
A) All of the governmental funds use the modified accrual basis of accounting.
B) Debt service funds are required to report accrued interest payable.
C) General fixed assets that are acquired with governmental fund resources are recorded as expenditures in the governmental funds but are displayed as capital assets in the governmental-wide financial statements.
D) Permanent funds reflect resources that are legally restricted so that principal may not be expended and earnings are used to benefit the government or its citizenry.

Answers

Answer: Debt service funds are required to report accrued interest payable.

Explanation:

The modified accrual basis of accounting is utilized for governmental funds. It should also be noted that permanent funds reflect resources that are legally restricted so that principal may not be expended and earnings are used to benefit the government or its citizenry.

Therefore, the option that debt service funds are required to report accrued interest payable is not true.

A stock has an expected return of 8.19 percent and its reward-to-risk ratio is 6.9 percent. If the risk-free rate is 2.15 percent, what is the stock's beta

Answers

Answer:

0.87

Explanation:

The beta of the stock can be calculated by rearranging the Reward to risk ratio formula. The Reward to risk ratio is given below

DATA

Risk free rate of return = 2.15%

Reward to risk ratio  = 6.9%

Expected return = 8.19%

Beta =?

Reward to risk ratio = (expected return - risk free rate) / beta.

6.9% = ( 8.19% - 2.15%) / beta

6.9% = 6.04%/beta

beta = 6.04% / 6.9%

beta = 0.87

Innovation efforts of the firm often benefit from partnering with non-business entities such as universities and government agencies.
A. True
B. False

Answers

A. True!!! that’s the answer

Read the scenario, and answer the question.You are a manager attending a presentation about conflict resolution. You notice that the speaker seems at ease and comfortable in front of a large audience. You are to talk to the speaker and ask her what she does to be so relaxed. After the presentation, you decide Choose the best response the speaker could give in the scenario above.
a. I read from my notes and make sure the room is darkened.
b. I just go into a room and say what is on my mind.
c. I rehearse repeatedly and practice stress reduction techniques

Answers

Answer: I rehearse repeatedly and practice stress reduction techniques

Explanation:

The best response that the speaker can give will be that "rehearse repeatedly and practice stress reduction techniques".

By rehearsing repeatedly and practice stress reduction techniques, one will be at ease and comfortable in front of a large audience.

A company has 825 shares of $50 par value preferred stock outstanding, and the call price of its preferred stock is $63 per share. It also has 17,000 shares of common stock outstanding, and the total value of its stockholders' equity is $626,575. The company's book value per common share equals:

Answers

Answer:

Book Value Per Common Share = $33.80

Explanation:

Book Value Per Common Share = Stockholders' equity - Shares * Call Price per shares) / Shares of common stock outstanding

= ($626,575 - 825*63) / 17000

= ($626,575 - $51,975) / 17,000

= $574,600 / 17,000

= $33.80

Lopez Company uses both standards and budgets. For the year, estimated production of Product X is 500,000 units. Total estimated cost for materials and labor are $1,400,000 and $1,700,000.
Compute the estimates for (a) a standard cost and (b) a budgeted cost. (Round standard costs to 2 decimal places, e.g. 1.25.)

Answers

Answer:

a. Standard cost = Total estimated cost of material ÷ Estimated production

= $1,400,000 / 500,000 unit

= $2.80 per unit

Thus, the standard cost of material is $2.80, and the budgeted cost is $1,400,000.

b. Standard cost = Total estimated cost of labor / Estimated production

= $1,700,000 / 500,000

= $3.40  per unit

Thus, standard cost of labor is $3.40 and budgeted cost is $1,700,000.

Read the scenario, and answer the question. Your friend Lorenzo is trying to decide on a career path. He has narrowed down his search to two choices. Before he selects a major, he wants to know more about the two careers and the skills needed for each profession. What advice would you give Lorenzo?
a. Volunteer at a nonprofit organization.
b. Monitor the classified ads.
c. Interview someone in each of your chosen fields.

Answers

Answer: Interview someone in each of your chosen fields.

Explanation:

From the question, we are informed that Lorenzo is trying to decide on a career path and that he has narrowed down his search to two choices but that before he selects a major, he wants to know more about the two careers and the skills needed for each profession.

The best advice is for him to interview someone in each of your chosen fields. By doing this, he'll be able to understand the options available to him and have better knowledge on both career paths and hence make a better decision.

Granite Stone Creamery sold ice cream equipment for $17,600. Granite Stone originally purchased the equipment for $94,000, and depreciation through the date of sale totaled $73,000. What was the gain or loss on the sale of the equipment

Answers

Answer:loss on the sale of the equipment =$3,400

Explanation:

---We first compute the book value of the equipment

 Cost of asset=$94,000

accumulated depreciation = $73,000

Book Value of assets =  Cost of asset-accumulated depreciation

= $94,000 - $73,000= $21,000

---Gain or Loss on the asset

Sale value of equipment = $17,600

Book value of equpment= $21,000

loss on sale of equipment  = Sale value of equipment-Book value of equipment=$17,600-  $21,000= -$3,400

Gabriel, Harris and Ida are members of Jeweled Watches, LLC. What are their options with respect to the management of their firm?

Answers

Answer:

They could be a Member-managed Limited Liability Company or a Manager-managed Limited Liability Company.

Explanation:

A Limited Liability Company is usually run by two or more partners. In managing this type of company, the members might choose to manage the company themselves. This is known as a member-managed Limited Liability Company. In such cases, if any member makes a decision in behalf of the business, with his signature appended to it, such a decision is considered legally binding on all other members of the company. Every member also has a say in the company's decision-making.

If they choose to be a manager-managed Limited Liability Company, they can appoint one or more non-members to manage the company for them. They do not interfere with how the manager chooses to run the company. They can still make important decisions but this is quite limited. However, they can choose to remove the manager/managers as they will.

Mortgage insurance rates vary with the perceived riskiness of the loan.Which of the following scenarios would result in a higher mortgage insurance premium?
A) Lower loan-to-value ratio
B) Shorter loan term
C) Stronger credit record of the borrower
D) A "cash-out" refinancing loan

Answers

Answer: D) A "cash-out" refinancing loan

Explanation:

A "cash-out" refinancing loan refers to when a person replaces the mortgage that they have on a house with a newer, larger mortgage than the balance of the previous mortgage on the house.

The difference between this new mortgage and the old one can then be withdrawn in cash.

This would attract a higher mortgage insurance premium because the value of debt has now increased because as earlier mentioned, the new mortgage will be larger than the previous one so to cater for this, the insurance premiums will rise.

Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.75 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. The firm has a target debt-equity ratio of .8, a cost of equity of 11.5 percent, and an aftertax cost of debt of 4.3 percent. The cost-saving proposal is somewhat riskier than the usual projects the firm undertakes; management uses the subjective approach and applies an adjustment factor of +3 percent to the cost of capital for such risky projects. What is the maximum initial cost the company would be willing to pay for the project?

Answers

Answer:

$18,191,268.19

Explanation:

the company's WACC = (weight of equity x Re) + (weight of debt x after tax cost of debt) = (0.6 x 11.5%) + (0.4 x 4.3%) = 6.9% + 1.72% = 8.62%

discount rate adjustment factor = 8.62% + 3% = 11.62%

to determine the value of the project:

$1,750,000 / (11.62% - 2%) = $1,750,000 / 9.62% = $18,191,268.19

If the initial outlay is $18,191,268.19, then the project's NPV = $0. This is the maximum amount that the firm should be willing to invest in this project.

Sand Key Development Company estimates that it will generate an operating income of $7.25 million. Which financing option should Sand Key use?

Answers

Answer: debt financing option

Explanation:

Debt financing is a way by which an economic agent such as the individual, firm or the government gets enough money in order to meet a particular need.

Debt financing can be through loans from family and friends, personal loans, bank loans, credit cards etc. Since Sand Key Development Company estimates that it will generate an operating income of $7.25 million, the company can use debt financing.

Trendy Coats is looking at financials to prepare end of year reports. Actual hours used were 4,000. Standard hours allowed were 5,000. Actual wage paid per hour was $13. The total labor flexible budget variance was ($23,000) Favorable. What was Trendy Coat’s standard price? Select one: a. $15.00 b. $12.00 c. $17.00 d. $13.50

Answers

Answer

a) $15

Explanation:

We will use the formula for Total labor variance to arrive at Standard rate.

Total labor variance = (Actual hours × Actual rate) - (Standard hours × Standard rate)

Substituting the data above into the formula, we'll have;

-$23,000 = (4,000 × $13) - (5,000 × SR)

-$23,000 = $52,000 - 5,000SR

Collect like terms

5,000SR = $52,000 + $23,000

5,000SR = $75,000

SR = $75,000 / 5,000

SR = $15

rue or False: The following statement accurately describes how firms make decisions related to issuing new common stock. Taking flotation costs into account will reduce the cost of new common stock.

Answers

Answer: False

Explanation:

Flotation costs are the costs that are incurred by a company whenever the company is issuing new securities. They are fee that are charged by the financial institutions for services such as legal and underwriting services.

Flotation costs are additional costs associated that are incurred when a new common stock is raised.

Logan Corporation issued $800,000 of 8% bonds on October 1, 2006, due on October 1, 2011. The interest is to be paid twice a year on April 1 and October 1. The bonds were sold to yield 10% effective annual interest. Logan Corporation closes its books annually on December 31.

Instructions

(a) Prepare the amortization schedule (effective interest method) through October 1, 2007.

(b) Prepare the adjusting entry for December 31, 2007. Use the effective-interest method.

(c) Compute the interest expense to be reported in the income statement for the year ended December 31, 2007.

Answers

Answer:

a)

period     interest       interest       discount     amortized      bond's

               payment     expense     on BP          discount        carrying value

0                                                     49,320.60                        750,679.40

1               32,000       37,533.97   43,786.63   5,533.97       756,213.37

2              32,000       37,810.67    37,975.96   5,810.67       762,024.04

3              32,000       38,101.20    31,874.76     6,101.20       768,125.24

4              32,000       38,406.26   43,786.63   6,406.26      774,531.50

b)

December 31, 2017, accrued interest on bonds payable

Dr Interest expense 19,050.60

    Cr Interest payable 16,000

    Cr Discount on bonds payable 3,050.60

c)

total interest expense year 2007:

($37,533.97/2) + $37,810.67 + ($38,101.20/2) = $18,776.99 + $37,810.67 + $19,050.60 = $75,638.26

Explanation:

the market price of the bonds:

$800,000 / 1.05¹⁰ = $491,130.60

$32,000 x 8.1109 (PV annuity factor, 4%, 10 periods) = $259,548.80

market price = $750,679.40

discount on bonds payable $49,320.60

discount amortization first payment = (750,679.40 x 0.05) - 32,000 = 5,533.97

discount amortization second payment = (756,213.37 x 0.05) - 32,000 = 5,810.67

discount amortization third payment = (762,024.04 x 0.05) - 32,000 = 6,101.20

discount amortization fourth payment = (768,125.24 x 0.05) - 32,000 = 6,406.26

__________ refers to difficulties in the communication process
that might arise due to some type of interference or distortion that occurs during transmission of a message, resulting in disruption of the communication process.

a.
Feedback

b.
Decoding

c.
Noise

d.
Encoding

e.
Channel

Answers

Answer:

c.  Noise

Explanation:

-Feedback is the answer given by the receiver.

-Decoding is the process in which the receiver interprets the message.

-Noise is any interference that affects the communication process.

-Encoding is when the sender translates his/her thoughts into a message.

-Channel is the method used to send the message.

According to these definitions, the answer is that noise refers to difficulties in the communication process  that might arise due to some type of interference or distortion that occurs during transmission of a message, resulting in disruption of the communication process.

Noise refers to difficulties in the communication process that might arise due to some type of interference or distortion that occurs during transmission of a message, resulting in disruption of the communication process.

Communication noise are simply those things that influences effective communication and that affects the interpretation of conversations.

There are different types of noise. They include physical, semantic, psychological, and physiological.

Each of the above types interferes with the process of communication in different ways.

Noise is also regarded as obstruction to the process of coding and decoding information.

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The Soma Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $60 a night. Operating costs are as follows:

Salaries $9,700 per month
Utilities 2,700 per month
Depredation 1,300 per month
Maintenance 700 per month
Maid service 8 per room
Other costs 34 per room

Required:
a. Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars.
b. If the Inn plans to renting an average of 50 rooms per day (assuming a 30-day month), what is (1) the monthly margin of safety dollars and (2) the margin of safety ratio?

Answers

Answer:

The Soma Inn

a. Determination of the inn's break-even point:

1. number of rented rooms per month:

= Fixed Costs/Contribution per room

= $14,400/$18

= 800 rooms

2. dollars:

= Fixed Costs/Contribution margin ratio per room

= $14,400/0.3

= $48,000

2. Renting average of 50 rooms per day,

a) Monthly margin of safety in dollars

Current Sales = 50 rooms x $60 x 30 days = $90,000

Break-even Sales = $48,000

Margin of safety = Current Sales minus Break-even Sales

= $42,000 ($90,000 - $48,000)

b) Margin of safety ratio:

= Margin of safety/Current Sales x 100

= $42,000/$90,000 x 100

= 46.67%

Explanation:

a) Data and Calculations:

Fixed costs:

Salaries       $9,700 per month

Utilities          2,700 per month

Depreciation 1,300 per month

Maintenance   700 per month

Total         $14,400 per month

Variable costs:

Maid service  8 per room

Other costs 34 per room

Total          $42 per room ($3,150 = $41 x 75 rooms)

Rent          $60 per room ($4,500 = $60 x 75 rooms)

Contribution per room = $18 ($60 - $42)

Contribution per night = $1,350 (75 x $18)

Contribution margin ratio per room = Contribution per room margin/Rent per room x 100

= $18/$60 x 100

=  0.3 or 30%

The Soma Inn's contribution margin per room is equal to the rent per room minus the variable cost per room.  Similarly, the contribution margin ratio per room is the contribution margin per room divided by the rent per room, and then multiplied by 100.

The Soma Inn's margin of safety is the difference between the rent per month and the break-even sales.  The Margin of safety ratio for the Inn is the ratio of current sales minus the breakeven sales, and then divided by current sales, multiplied by 100.

c) Once the purchases of merchandise have been computed, to compute the cost of goods sold becomes easier.  The cost of goods sold for Ahmed Company is the difference between the cost of goods available for sale and the ending inventories of merchandise.

"Gettysburg Grocers’ "stock is expected to pay a year-end dividend, D1, of $2.00 per share. The dividend is expected to grow at a constant rate of 5%, and the stock has a required return of 9%. What is the expected price of the stock five years from today?

Answers

Answer:

$63.81

Explanation:

Current price is computed as follows:

= Expected dividend / (required rate of return - growth rate)

= $ 2 / (9% - 5%)

= $ 50

So, the price in 5 years will be as follows:

= Current price x (1 + growth rate)^5

= $ 50 x 1.05^5

= $50 x 1.2762

= $ 63.81

Coca-Cola, a company that does business in almost every national market, can most accurately be classified as: a. a multinational company. b. a leveraged company. c. a franchisee. d. a wholly owned subsidiary.

Answers

Answer:

A. a multinational company

The percent change in nominal gross domestic product (GDP) minus the percent change in price level equals

Answers

Answer:

Real GDP

Explanation:

Nominal GDP less percent change in price levels equals to real GDP

Nominal GDP is GDP calculated using current year prices

Real GDP is GDP using base year prices. it has been adjusted for inflation.

Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year

Compared to countries with less economic freedom, countries with more economic freedom achieve higher per person income levels, but they also have higher poverty rates.grow more rapidly, but the income levels of the poor are largely unaffected by the higher growth rates of the freer economies.achieve both higher income levels per person and lower rates of poverty.grow less rapidly and experience higher poverty rates.

Answers

Answer:

The correct answer is: Achieve higher per person income levels, but they also have higher poverty rates.

Explanation:

What happens is that in countries with greater economic freedom, there is the free market, which is an economic form of the capitalist system that allows trade to be conducted free of external forces, being guided by the law of supply and demand. This system allows greater economic interaction with internal and external economic agents whose main objective is to generate profits.

The strong industrialization resulting from the capitalist system causes the greatest economic growth in a country and can increase the levels of per capita income, but it also generates greater social inequality that directly affects the growth of poverty rates. Generally, the main indicators of economic growth, such as GDP, have some limitations to indicate the distribution of wealth because they do not consider variables that include the well-being of the population.

Consider a 10 year bond with a face value of $1000 that has a coupon rate of 5.3%, with semiannual payments. What is the coupon payment for this bond?

Answers

Answer:

$26.5

Explanation:

the question says that the bond has a face value equal to 1000 dollars

coupon rate = 5.3%

and that the bond pays semiannually. semiannually means that it pays after 6 months.

semi annual coupon payment formula is given by = coupon rate/2 multiplied by face value

= 5.3%/2 multiplied by 1000

= 0.0265 x 1000

= $26.5

therefore from this calculation, the coupon payment on the bond is $26.5 dollars in every six months or semiannually.

The Restaurant Group manufactures the bags of frozen French fries used at its franchised restaurants. Last​ week, purchased and used pounds of potatoes at a price of per pound. During the​ week, 2,100 direct labor hours were incurred in the plant at a rate of $12.45 per hour. The standard price per pound of potatoes is $1.00​, and the standard direct labor rate is $12.15 per hour. Standards indicate that for the number of bags of frozen fries​ produced, the factory should have used 95,000 pounds of potatoes and 2,000 hours of direct labor.
1. Determine the direct material price and quantity variances. 2. Think of a plausible explanation for the variances found in Requirement 1.3. Determine the direct labor rate and efficiency variances. 4. Could the explanation for the labor variances be tied to the material's variances? Explain.

Answers

Answer:

Explanation:

The question was missing the actual amount of potatoes used and their actual price = 98,000 pounds at $0.85 per pound:

1. Determine the direct material price and quantity variances.

direct materials price variance = AQ x (AP - SP) = 98,000 x ($0.85 - $1) = $14,700 favorable

direct material quantity variance =  SP x (AQ - SQ) = $1 x (98,000 - 95,000) = $3,000 unfavorable

2. Think of a plausible explanation for the variances found in Requirement 1

Since the actual price of potatoes was less than the standard price, the price variance was favorable. But since the actual quantity used was more than the standard quantity, the quantity variance was unfavorable.

3. Determine the direct labor rate and efficiency variances.

direct labor rate variance = AH x (AR - SR) = 2,100 x ($12.45 - $12.15) = $630 unfavorable

direct labor efficiency variance = SR x (AH - SH) = $14.15 x (2,100 - 2,000) = $1,415 unfavorable

4. Could the explanation for the labor variances be tied to the material's variances?

Probably the labor efficiency variance since more materials had to be processed, but the labor rate variance is completely independent from the materials variances.

Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2013. (Round your answers to 2 decimal places.)?
Current ratio
Acid-test ratio
Gross margin ratio
NELSON COMPANY
Unadjusted Trial Balance
January 31, 2013
Debit Credit
Cash $ 24,600
Merchandise inventory 12,500
Store supplies 5,900
Prepaid insurance 2,300
Store equipment 42,900
Accumulated depreciation—Store equipment $ 19,950
Accounts payable 13,000
J. Nelson, Capital 39,000
J. Nelson, Withdrawals 2,100
Sales 115,200
Sales discounts 2,000
Sales returns and allowances 2,250
Cost of goods sold 38,000
Depreciation expense—Store equipment 0
Salaries expense 31,300
Insurance expense 0
Rent expense 14,000
Store supplies expense 0
Advertising expense 9,300
Totals $ 187,150 $ 187,150
Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Nelson Company uses a perpetual inventory system.
a. Store supplies still available at fiscal year-end amount to $2,800.
b. Expired insurance, an administrative expense, for the fiscal year is $1,500.
c. Depreciation expense on store equipment, a selling expense, is $1,675 for the fiscal year.
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,300 of inventory is still available at fiscal year-end.

Answers

Answer:

NELSON COMPANY

A. Current Ratio = Current Assets/Current Liabilities

= $38,500/$13,000

= 2.96 : 1

B. Acid-test Ratio = Current Assets - Inventory/Current Liabilities

= $24,600/$13,000

= 1.89 : 1

C. Gross margin ratio = Gross margin/Net Sales x 100

= $70,750/$110,950 x 100

= 63.77%

Explanation:

a) Data and Calculations:

NELSON COMPANY

1. Unadjusted Trial Balance  as of January 31, 2013

                                                       Debit     Credit

Cash                                          $ 24,600

Merchandise inventory                12,500

Store supplies                               5,900

Prepaid insurance                         2,300

Store equipment                        42,900

Accumulated depreciation—

    Store equipment                                  $ 19,950

Accounts payable                                         13,000

J. Nelson, Capital                                        39,000

J. Nelson, Withdrawals                2,100

Sales                                                            115,200

Sales discounts                          2,000

Sales returns and allowances   2,250

Cost of goods sold                  38,000

Depreciation expense—

      Store equipment              0

Salaries expense                     31,300

Insurance expense                 0

Rent expense                         14,000

Store supplies expense         0

Advertising expense              9,300

Totals                                $ 187,150       $ 187,150

2. Adjusted Trial Balance as of January 31, 2013

                                                       Debit     Credit

Cash                                          $ 24,600

Merchandise inventory                10,300

Store supplies                                2,800

Prepaid insurance                             800

Store equipment                         42,900

Accumulated depreciation—

    Store equipment                                  $ 21,625

Accounts payable                                         13,000

J. Nelson, Capital                                        39,000

J. Nelson, Withdrawals                2,100

Sales                                                            115,200

Sales discounts                          2,000

Sales returns and allowances   2,250

Cost of goods sold                  40,200

Depreciation expense—

      Store equipment                 1,675

Salaries expense                     31,300

Insurance expense                   1,500

Rent expense                         14,000

Store supplies expense           3,100

Advertising expense               9,300

Totals                               $ 188,825      $ 188,825

3. NELSON COMPANY

Income Statement for the year ended January 31, 2013:

Sales Revenue                                     $110,950

Cost of goods sold                                40,200

Gross profit                                          $70,750

Depreciation expense—

      Store equipment                 1,675

Salaries expense                     31,300

Insurance expense                   1,500

Rent expense                         14,000

Store supplies expense           3,100

Advertising expense               9,300    60,875  

Net Income                                         $ 9,875

4. Sales Revenue                    $115,200

   Sales discount & allowances (4,250)

  Net Sales Revenue             $110,950

5. NELSON COMPANY

Balance Sheet as of January 31, 2013:

Assets:

Cash                                                         $ 24,600

Merchandise inventory                               10,300

Store supplies                                               2,800

Prepaid insurance                                            800

Current Assets:                                           38,500

Store equipment                         42,900

Accumulated depreciation—

    Store equipment                   (21,625)     21,275

Total Assets                                             $ 59,775

Liabilities + Equity:

Accounts payable                                       $13,000

J. Nelson, Capital                                         39,000

J. Nelson, Withdrawals                                 (2,100 )

Net Income                                                 $ 9,875

Total Liabilities + Equity                         $ 59,775

a) Nelson Company's current ratio is the measure of the company's ability to settle maturing short-term liabilities with short-term financial resources.  It is is measured as the relationship between current assets and current liabilities.

b) Nelson's acid-test ratio takes away the encumbrances that can slow the conversion of current assets into cash for the settlement of current liabilities.  In this case, the inventory, stores supplies, and prepaid insurance are excluded.

c) Nelson has a robust gross margin ratio of more than 60%.  This means that it is able to limit the cost of goods sold to below 40%.  However, management of Nelson Company is unable to control its periodic costs in order to generate reasonable net income, as it can only turn less than 9% of the sales into returns for J. Nelson.

According to the NELSON COMPANY

Current ratio

A. The Current Ratio = Current Assets/Current Liabilities

Then = $38,500/$13,000

now = 2.96 : 1

B. After that Acid-test Ratio = Current Assets - Inventory/Current Liabilities

Then = $24,600/$13,000

Now = 1.89 : 1

C. When the Gross margin ratio = Gross margin/Net Sales x 100

Then = $70,750/$110,950 x 100

Now = 63.77%

1. when Unadjusted Trial Balance  as of January 31, 2013

                                                      Debit     Credit

Cash                                          $ 24,600

Merchandise inventory                12,500

Store supplies                               5,900

Prepaid insurance                         2,300

Store equipment                        42,900

Accumulated depreciation—

   Store equipment                                  $ 19,950

Accounts payable                                         13,000

J. Nelson, Capital                                        39,000

J. Nelson, Withdrawals                2,100

Sales                                                            115,200

Sales discounts                          2,000

Sales returns and allowances   2,250

Cost of goods sold                  38,000

Depreciation expense—

     Store equipment              0

Salaries expense                     31,300

Insurance expense                 0

Rent expense                         14,000

Store supplies expense         0

Advertising expense              9,300

Totals                                $ 187,150       $ 187,150

2. when Adjusted Trial Balance as of January 31, 2013

                                                      Debit     Credit

Cash                                          $ 24,600

Merchandise inventory                10,300

Store supplies                                2,800

Prepaid insurance                             800

Store equipment                         42,900

Accumulated depreciation—

   Store equipment                                  $ 21,625

Accounts payable                                         13,000

J. Nelson, Capital                                        39,000

J. Nelson, Withdrawals                2,100

Sales                                                            115,200

Sales discounts                          2,000

Sales returns and allowances   2,250

Cost of goods sold                  40,200

Depreciation expense—

     Store equipment                 1,675

Salaries expense                     31,300

Insurance expense                   1,500

Rent expense                         14,000

Store supplies expense           3,100

Advertising expense               9,300

Totals                               $ 188,825      $ 188,825

3. NELSON COMPANY

Income Statement for the year ended January 31, 2013:

Sales Revenue                                     $110,950

Cost of goods sold                                40,200

Gross profit                                          $70,750

Depreciation expense—

     Store equipment                 1,675

Salaries expense                     31,300

Insurance expense                   1,500

Rent expense                         14,000

Store supplies expense           3,100

Advertising expense               9,300    60,875  

Net Income                                         $ 9,875

4. Sales Revenue                    $115,200

  Sales discount & allowances (4,250)

 Net Sales Revenue             $110,950

5. NELSON COMPANY

Balance Sheet as of January 31, 2013:

Assets:

Cash                                                         $ 24,600

Merchandise inventory                               10,300

Store supplies                                               2,800

Prepaid insurance                                            800

Current Assets:                                           38,500

Store equipment                         42,900

Accumulated depreciation—

   Store equipment                   (21,625)     21,275

Total Assets                                             $ 59,775

Liabilities + Equity:

Accounts payable                                       $13,000

J. Nelson, Capital                                         39,000

J. Nelson, Withdrawals                                 (2,100 )

Net Income                                                 $ 9,875

Total Liabilities + Equity                         $ 59,775

When the Nelson Company's current ratio is the measure of the company's ability to settle maturing short-term liabilities with short-term financial resources.  also, It is measured as the relationship between current assets and also current liabilities.

Although when Nelson's acid-test ratio takes away the encumbrances that can slow the conversion of current assets into cash for the settlement of current liabilities.  Thus, In this case, the inventory, stores supplies, and also prepaid insurance are excluded.

When Nelson has a robust gross margin ratio of more than 60%. This means that it can limit the cost of goods sold to below 40%. Thus, the management of Nelson Company is unable to control its periodic costs to generate reasonable net income, also as it can only turn less than 9% of the sales into returns for J. Nelson.

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https://brainly.com/question/18371489

Gabriele Enterprises has bonds on the market making annual payments, with eleven years to maturity, a par value of $1,000, and selling for $982. At this price, the bonds yield 7.6 percent.

Required:
What must the coupon rate be on the bonds?

Answers

Answer:

The answer is 7.35 percent

Explanation:

N(Number of periods) = 11years

I/Y(Yield to maturity) = 7.6 percent

PV(present value or market price) = $982

PMT( coupon payment) = ?

FV( Future value or par value) = $1,000.

We are using a Financial calculator for this.

N= 11; I/Y = 7.6; PV = -$982; FV= $1,000; CPT PV= $73.52

Therefore, coupon rate is ($73.52/$1,000) x 100 percent

=7.35 percent

Suppose that short-term municipal bonds currently offer yields of 4%, while comparable taxable bonds pay 5%. Which gives you the higher after-tax yield if your combined tax bracket is:

Answers

Answer:

1.Taxable bonds

2Taxable bonds

3.They have the same after-tax yield

4.

municipal bond

Explanation:

The missing tax brackets are zero,10%,20% and 30%

Zero % tax rate:

municipal bond pays 4%

taxable bonds after tax yield=5%*(1-0)=5%

10% tax rate

municipal bond pays 4%

taxable bond after tax yield=5%*(1-10%)=4.5%

20% tax rate

municipal bond pays 4.0%

taxable bond after tax yield=5%*(1-20%)=4.0%

30% tax rate

municipal bond pays 4.0%

taxable bond after tax yield=5%*(1-30%)=3.50%

"expects to generate free cash flows of $200,000 per year for the next five years. Beyond that time, free cash flows are expected to grow at a constant rate of 5 percent per year forever. If the firm’s average cost of capital is 15 percent, the market values of the firm’s debt and preferred stock are $400,000 and $100,000, respectively. There are 125,000 shares of stock outstanding. What is the value of the firm’s stock"

Answers

Answer:

The value of the firm's stock is $703,920

The price is $5.63 per share ($703,920/125,000 shares)

Explanation:

a) Data and Calculations:

Free cash flows = $200,000

Present value of the free cash flows = $200,000 x Annuity Factor, for 5 years at cost of capital of 15% x (1 + growth rate)

= $200,000 x 3.352 x 1.05

= $703,920

Therefore, common equity = $703,920

To calculate Company XYZ's free cash flows in their present value, they are discounted, using the present value table.  The resulting amount is equivalent to the value of the common stock.  The company's free cash flow is the amount that is left after settling operating expenses and capital expenditure.

You purchased shares of stock one year ago at a price of $62.37 per share. During the year, you received dividend payments of $1.77 and sold the stock for $69.49 per share. If the inflation rate during the year was 2.07 percent, what was your real return?

Answers

Answer:

real rate of return= 10.93%

Explanation:

The return on equity is the sum of the dividends earned and capital gains made during the holding period of the investment.

Dividend is the proportion of the profit made by a company which is paid to shareholders.  

Capital gains is another type of the return made on an equity investment as a result of increase in the value of the shares. It is difference between the cost of the share and the value at the time of disposal.

Therefore, we can can compute the return on the investment as follows:

Capital gain =  $69.49- 62.37 = 6.92

Dividend -= 1.77

Nominal return on stock= (1.77 + 6.92)/ 62.37 × 100 =  13.93 %

Inflation is the increase in the price level.It erodes the value of money.rise in the price of money  

Nominal interest is that quoted for investment or loan transactions. It has not been been adjusted for inflation.  

Real interest rate is the amount of interest in terms of the the quantity of good and services that can be purchased. It is the nominal interest rate adjusted for inflation.  

The relationship between inflation, real return and nominal return rate is given using the Fishers Effect;  

N = ( (1+R) × (1+F)) - 1  

N- nominal rate, R-real rate, F- inflation  

real rate of return = (1.1393)/ (1.027)- 1 = 0.1093

real rate of return = 0.1093 × 100 = 10.93%

real rate of return= 10.93%

Presented below is the 2021 income statement and comparative balance sheet information for Tiger Enterprises.
TIGER ENTERPRISES
Income Statement
For the Year Ended December 31, 2021
($ in thousands)
Sales revenue $ 9,000
Operating expenses:
Cost of goods sold $ 3,800
Depreciation expense 280
Insurance expense 300
General and administrative expense 2,200
Total operating expenses 6,580
Income before income taxes 2,420
Income tax expense (968)
Net income $ 1,452
Balance Sheet Information ($ in thousands) Dec. 31,2021 Dec. 31, 2020
Assets:
Cash $ 380 $ 240
Accounts receivable 770 870
Inventory 700 640
Prepaid insurance 90 40
Equipment 2,500 2,000
Less: Accumulated depreciation (920) (640)
Total assets $ 3,520 $ 3,150
Liabilities and Shareholders' Equity:
Accounts payable $ 320 $ 400
Accrued liabilities (for general & administrative expense) 320 440
Income taxes payable 220 190
Notes payable (due 12/31/2022) 1,040 800
Common stock 980 840
Retained earnings 640 480
Total liabilities and shareholders' equity $ 3,520 $ 3,150
Required:
Prepare Tiger’s statement of cash flows, using the indirect method to present cash flows from operating activities. (Hint: You will have to calculate dividend payments).

Answers

Answer and Explanation:

The Preparation of Tiger’s statement of cash flows, using the indirect method is shown below:-

                                      TIGER ENTERPRISES

                                         Income Statement

                         For the Year Ended December 31, 2021

Particulars                                                                 Amount

Cash flow from operating activities

Net income                                                               $1,452

Non cash adjustment effects

Depreciation expenses                $280

Changes in operating assets and liabilities

Decrease in accounts receivable $100

Increase in inventory                     ($60)

Increase in prepaid insurance      ($50)

Decrease in accounts payable     ($80)

Decrease in accrued liabilities     ($120)

Increase in income tax payable   $30                     $100

Net cash flow from operating activities                  $1,552

Cash flow from investing activities

Equipment purchased                 ($500)

Net cash flow investing activities                           ($500)

Cash flow from financing activities

Issuance of notes payable        $240

Issuance of common stock       $140

Payment of dividends                ($1,292)

Net cash flow from financing activities                ($912)

Net increase in cash                                              $140

Jan 1 Cash                                                               $240

Dec 32 Cash                                                           $380

Working note:-

Retained earning Opening balance          $480

Add: Net income                                        $1,452

Less: Retained earning closing balance   $640

Paid dividend                                               $1,292

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