Answer:
The dollar cost of using a money market hedge to hedge 200,000 British pounds of payable due in 180 days is $400,152.38.
Explanation:
A money market hedge refers to a method that employed to to preserve the value of a foreign currency transaction in the domestic currency of a company in order to reduce the exchange rate or currency risk that is associated with business transactions with a foreign company.
For this question, the dollar cost of using a money market hedge can be calculated as follows:
Amount needed to invest in British pounds = Amount needed to hedge / (1 + British interest rate) = £200,000 / (1 + 0.05) = £190,476.19
Since this is in British pounds, we have to convert to the US dollars to obtain the amount of the US dollars that is needed to exchange as follows:
Amount needed to invest in the US dollars = Amount needed to invest in British pounds * Spot rate of the pound = £190,476.19 * $2.02 = $384,761.90
We can now calculate the amount needed to repay loan after 180-day as follow:
Amount needed to repay loan after 180-day = Amount needed to invest in the US dollars * (1 + U.S. interest rate) = $384,761.90 * (1 + 0.04) = $400,152.38
Therefore, the dollar cost of using a money market hedge to hedge 200,000 British pounds of payable due in 180 days is $400,152.38.
What are examples of career fields Skills USA prepares students for? Check all that apply.
health science
O education
agriculture
construction
manufacturing
transportation
information technology
public safety
Answer:
everything except education and agriculture
Explanation:
hope this helps •_•
Answer:
Everything except education and ariculture
Explanation:
edu 2021
Imagine you want to use conflict in a positive way. You decide to create a sense of competition among your team members. Which of these tactics could create competition?]
Answer:
a. Acknowledge top performers in the company newsletter.
Explanation:
Conflict among group members could be used for improved results by enhancing the dispute in a constructive manner. This can be achieved by recognizing and rewarding the best performers accordingly.
Therefore according to the given situation, for deciding a sense of competition you need to acknowledge the top performance in the newsletter of the company so that the employees gots motivated that results in their coming better job opportunities
Hence, the correct option is a
Which of the following ratios indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?
A. Margin of safety ratio
B. Costs and expenses ratio
C. Profit ratio
Answer:
The correct answer is the option A: Margin of safety ratio.
Explanation:
To begin with, the name of "Margin of Safety", in the field of business and accounting, is refered to a ratio whose main purpose is to establish the point in where the company knows that it has to sale obligately due to the fact that at that point the company can be sure that they have covered the fixed costs of it and after that point every sale will became a profit for the company. So that is why that this ratio indicates the percentage of each sales dollar that is available to cover those costs.
The business case for why companies should act in a socially responsible manner includes: Select one: a. It generates internal benefits including employee recruiting, workforce retention, training, and improved worker productivity b. It reduces the risk of reputation-damaging incidents c. It is in the best interest of shareholders and offers potential for increased buyer patronage d. All of the above
Answer:
d. All of the above
Explanation:
All alternatives are correct due to the fact that when a company acts in a socially responsible manner, it achieves several internal and strategic benefits that help in the success of the business.
Currently, organizations are no longer just profitable entities but are also promoters of positive social transformations for the locality in which they operate and for the world.
Being socially responsible includes having benefit programs for stakeholders, which includes improving the perception with which the company is seen, generating a position that attracts shareholders, retains employees, generates greater job satisfaction, which increases productivity and retention of staff.
Generally, corporate governance programs include the review and culture of continuous improvement of organizational processes, which reduces costs, risks and waste, which contributes to the generation of competitive and profitable advantages for the organization.
It is always necessary for an agent to disclose the identity of the principal to any third person with whom he is contracting; otherwise the contract becomes void.
a. True
b. False
A product selling in France has a price to the channel of EUR 10.00, fixed costs of EUR 33 million, and variable costs of EUR 4.50. How many units does the company have to sell to break even
Answer:
Break-even point in units= 6,000,000
Explanation:
Giving the following information:
Selling price= $10
Unitary variable cost= $4.5
Fixed costs= 33,000,000
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 33,000,000 / (10 - 4.5)
Break-even point in units= 6,000,000
Consider a university that purchases replacement chairs for its classrooms. The purchasing manager knows that the annual demand for replacement chairs is 500. The pricing schedule is as follows: Use the following Excel solution to this quantity discount problem with constant carrying cost. Carrying cost = $ 15 Ordering cost = $ 200 Annual Demand = 500
Quantity Price Q Discount Q Total Cost
100 $130 115.47 115.47 $ 66,732.05
200 $122 115.47 200.00 $ 63,000.00
500 $120 115.47 500.00 $ 63,950.00
What is the inventory ordering cost using the economic order quantity?
A. $1,000
B. $866
C. $500
D. $200
Answer:
b. $866
Explanation:
Annual demand from the question = D = $500
the ordering cost = S = $200
then the cost of carrying H = $15
we have to calculate the economic order quantity
= sqr(2*D*S)/H
= sqr(2 x 500 x 200)/25
= sqr(13333.3333)
this equals 115.469
which is approximately 115.5
next we have to calculate inventory ordering cost
= (D * S)/EOQ
= 200 *500/115.5
= 865.5
When approximated becomes $866
The inventory ordering cost using the economic order quantity is: B. $866.
First step is to calculate the Economic order quantity
Economic order quantity =√(2×D×S)/H
Where:
D=Annual demand=$500
S=Ordering cost=$200
H=Holding cost =$15
Let plug in the formula
Economic order quantity =(2 x 500 x 200)/15
Economic order quantity =√200,000/15
Economic order quantity =√13333.3333
Economic order quantity =115.46
Economic order quantity = 115.5 (Approximately)
Second step is to calculate the inventory ordering cost using this formula
Inventory ordering cost= (Annual demand× Ordering cost )/Economic order quantity
Let plug in the formula
Inventory ordering cost= (200×500)/115.5
Inventory ordering cost=100,000/115.5
Inventory ordering cost=$865.8
Inventory ordering cost=$866 (Approximately)
Inconclusion the inventory ordering cost using the economic order quantity is: B. $866.
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Winnwbagel corp. currently sells 25,200 motor homes per year at 37,800 each, and 10,080 luxury motor coaches per year at $71,400 each. The company wants to introduce a new portable camper to fill out its product line., it hopes to sell 15,960 of these campers per year at $10,080 each. An independent consultant has determined that if the company introduces the new campers, it should boost the sales of its existing motor homes by 3,780 units per year, and reduce the sales of its motor coaches by 756 units per year. What is the amount to use as the annual sales figure when evaluating this project?
a. $237,293,280.
b. $262,271,520.
c. $357,739,200.
d. $95739200.
e. $160,876,800.
f. $249,782,400.
Answer:
Option C is correct
Annual sales figure =$ 357,739,200
Explanation:
Annual sales figure for Winnebago corp after the introduction f the new portable campers would be the sum of the annual sales figure for motor homes, luxury homes (after the introduction of new product) and the camper.
Note that the only the impact of the introduction of the new product would be considered on sales would . The existing sales figures are not not relevant because they are not incremental.
Also,any reduction in sales figure as result of the introduction of a new product would be deducted.
These explanations are incorporated into the analysis below:
Product type Quantity Price Sales figure ($'000)
Motor homes 3780 37,800 142,884
Luxury homes 756 71,400 (53,978.4)
Camper 15,969 (10,080 ) 160,967.52
Total sales 357,739.20
Annual sales figure =$ 357,739,200
Sheffield Auto Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $19,902. All sales are subject to a 7% sales tax. Compute sales taxes payable. Sales taxes payable
Answer:
Sales tax = Total sales / 100 + Sales Tax rate * Sales Tax rate
Sales tax = {$19,902 / (100 + 7)} * 7
Sales tax = ($19,902 / 107) * 7
Sales tax = $1,302
Date Account Title and Explanation Debit Credit
Cash $19,902
Sales Tax payable $1,302
Sales revenue $18,600
($19,902 / 107 * 100)
(To record sales and sales taxes payable)
Answer:
1,302
Explanation:
Sales without tax x (100%+sales tax rate) = sales with tax
sales without tax x 1.07 (100%+7%) = 19902
sales without tax = 19902/1.07
sales without tax = 18600
sales with tax - sales without tax = sales tax payable
19902 - 18600 = 1302
Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $35 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: Per Unit 15,000 Units per Year Direct materials $ 14 $ 210,000 Direct labor 10 150,000 Variable manufacturing overhead 3 45,000 Fixed manufacturing overhead, traceable 6 * 90,000 Fixed manufacturing overhead, allocated 9 135,000 Total cost $ 42 $ 630,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside su'
Answer:
financial disadvantage = $435,000 - $525,000 = ($90,000)
Explanation:
outside vendor offer: cost per unit $35 x 15,000 = $525,000
production costs:
direct materials $14 x 15,000 = $210,000 direct labor $10 x 15,000 = $150,000 variable manufacturing overhead $3 x 15,000 = $45,000 fixed manufacturing overhead, traceable $6 x 15,000 = $90,000 ($60,000 are non-avoidable) fixed manufacturing overhead, allocated $9 x 15,000 = $135,000 (all are non-avoidable) total cost $42 x 15,000 = $630,000avoidable production costs = $435,000
financial disadvantage = avoidable costs - cost to purchase carburetors from outside vendor = $435,000 - $525,000 = ($90,000)
Which of the following statements is true?
A. Investment in another company's common stock is classified as a cash outflow from financing activities in the statement of cash flows.
B. Losses on the sale of long-term assets are an adjustment reported in the operating activities section of the statement of cash flows under the indirect method.
C. Dividends paid are classified as a cash outflow from operating activities in the statement of cash flows.
D. Re-payment of long-term debt is classified as a cash outflow from investing activities in the statement of cash flows.
Answer:
The answer is B.
Explanation:
Loss on the sale of long-term assets is an adjustment which will be added back to the net income. This is under the cash flow from operations when preparing cash flow using an indirect method.
Option A is incorrect because investment in another company is under investing activities.
Option C is incorrect because dividend paid are usually under financing activities (cash outflow)
Option D is incorrect because repayment of long term debt is a cash outflow under financing activities.
Suppose an industry earns a rate of return of 10%, which is twice as high as that of competitive industries, 5%. How much is the price overcharge of that industry, if its capital is valued at half its annual revenue
Answer:
Let us assume that both the industries are having an investment of $100,000
The profit of the given industry which is having 10% rate of return will be $100,000 * 10% = $10,000
The other industry which is having the Rate of return of 5% will earn a profit of $100,000 * 5% = $5000.
As the capital is just half of the revenue, it signifies that the total revenue will be $200,000 . So the same value of $10,000 will be 5% of the total revenue. On the other hand, $5,000 would be 2.5% of total revenue.
Thus, the first stated industry will charge 2.5% more than the other industry.
In a competitive industry, it takes a fixed ratio of one skilled worker and two unskilled workers to produce a unit of output. If the immigration of unskilled workers lowers the wage of unskilled workers, it will likely
Answer:
The answer is that the ratio is likely the same.
Explanation:
There is no equivalent of how many unskilled worker can replace a skilled worker. Also, it's a fixed ratio of one skilled worker and two unskilled workers to produce a unit of output. Therefore, even though the wage of unskilled workers decreases because of a surplus in immigration of unskilled workers, and assume that the rest is the same, firms won't hire more unskilled workers.
The _________ price is the price at which a dealer is willing to sell a security. A. bid B. ask C. clearing D. settlement
Answer: B. ask
Explanation:
The ask also known as the offer price is the price at which seller is willing to sell a security after which the buyer must have stated a bid price of how much he or she wants to pay for the security. The bid price is known to be always lower than the ask price , of which the difference between both prices is called a bid-ask spread.
For example, if an investor wants to buy a security, he or she will first determine how much the seller is willing to sell it for, which is the ask price--- least price the seller is willing to sell the security for. However on the other hand, the seller in order to sell his or her security will first determine the highest price at which a buyer would be willing to pay for the security.
Last year Harrington Inc. had sales of $325,000 and a net income of $19,000, and its year-end assets were $250,000. The firm's total-debt-to-total-capital ratio was 15.0%. The firm finances using only debt and common equity and its total assets equal total invested capital. Based on the DuPont equation, what was the ROE
Answer:
8.94%
Explanation:
Firstly, we will need to find total equity and total debt of Harrington Inc inorder to apply the Dupont equation for getting ROE
Harrington's total debt = 15.00 % × $250,000
= $37,500
Harrington's total equity will be; applying accounting equation
Asset = Liabilities + Owner's equity
Owner's equity = Assets - Liabilities
= $250,000 - $37,500
= $212,500
Therefore, using the Dupont equation, we can calculate the ROE as;
(NI/Sales) × (Sales/Total assets) × (Total assets/Total common equity)
= 19,000/325,000 × 325,000 /250,000 × 250,000/212,500
= 8.94%
At a decision point in a decision tree, which machine would you select when trying to maximize payoff when the anticipated benefit of selecting machine A is $45,000 with a probability of 90%; the expected benefit of selecting machine B is $80,000 with a probability of 50% and the expected benefit of selecting machine C is $60,000 with a probability of 75%
Answer:
Machine to select for maximum payoff:
Expected Outcomes:
A = $45,000 x 90% = $40,500
B = $80,000 x 50% = $40,000
C = $60,000 x 75 % = $45,000
C has the highest expected outcome of $45,000
Choose C.
Explanation:
Anticipated benefits:
A = $45,000 with pr = 90%
B = $80,000 with pr = 50%
C = $60,000 with pr = 75%
The expected benefit or outcome Machine A is obtained by multiplying the anticipated benefit with its probability of occurrence. This gives a value that has been weighed. The decision rule is to choose the machine with the highest outcome.
Online B2B enables companies to enhance their performance by Multiple Choice reducing procurement costs. making supply-chain management unnecessary. making looser inventory control possible. lengthening order cycle time.
Answer:
reducing procurement costs.
Explanation:
Online business to business (B2B) marketing enables companies to enhance their performance by reducing procurement costs.
An online business to business (B2B) can be defined as a type of market where a business sells goods and services to another business online.
In an online business to business marketing or e-commerce, the cost of buying a product is usually lesser when compared to other channels of sales because the seller do not have to charge so much as sales are usually transparent and done automatically.
Hence, companies that are engaged in B2B are able to improve their performance and cut down the costs of procurement for goods and services.
Espinoza Company is a wholesale distributor that uses activity-based costing for all of its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity based costing system:
Overhead costs:
Wages and salaries 220,000
Other expenses 150,000
Total $510,000
Distribution of resource consumption:
Filling Orders Activity Cost Pools Customer Support Other Total
Wages and salaries 35% 55% 10% 100%
Other expenses 35% 50% 15% 100%
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The activity measures for the activity cost pools for the year are as follows:
Activity Cost Pool Activity
Filling orders 3,500 orders
Customer support 15 customers.
What would be the overall activity rate for the filling orders activity cost pool?
Answer:
Espinoza Company
Activity rate for the filling orders activity cost pool:
Overhead for filling orders divided by number of orders
= $130,500/3,500
= $37.29 per order
Explanation:
a) Data and Calculations:
Overhead costs:
Wages and salaries 220,000
Other expenses 150,000
Total $510,000
Distribution of resource consumption:
Filling Orders Activity Cost Pools
Filling Orders Customer Support Other Total
Wages and salaries 35% 55% 10% 100%
Other expenses 35% 50% 15% 100%
Filling orders 3,500 orders
Customer support 15 customers
Overhead Allocation:
Filling Orders Customer Other Total
Support
Wages and salaries $77,000 $121,000 $22,000 $220,000
Other expenses 53,500 75,000 22,500 150,000
Total $130,500 $196,000 $44,500 $370,000
Activity rate for filling orders = $130,500/3,500 = $37.29 per order
ABC or Activity Based Costing technique uses activity pools to accumulate and distribute overhead costs so that costs can be allocated based on the level of activity undertaken for each activity pool.
Espinoza Company: The Activity rate for the filling orders activity cost pool:
The Overhead for filling orders divided by the number of orders is
= $130,500/3,500
= $37.29 per order
Calculation of Costa) Data and also Calculations:
Overhead costs:
The Wages and salaries 220,000
Then Other expenses 150,000
The total is $510,000
Then Distribution of resource consumption:
After that Filling Orders Activity Cost Pools
Filling Orders Customer Support Other Total
Wages and salaries 35% 55% 10% 100%
Other expenses 35% 50% 15% 100%
Then Filling orders 3,500 orders
Then the Customer support is 15 customers
Overhead Allocation:
Filling Orders Customer Other Total
Support
Wages and salaries $77,000 $121,000 $22,000 $220,000
Other expenses 53,500 75,000 22,500 150,000
The Total $130,500 $196,000 $44,500 $370,000
Activity rate for replenishing orders = $130,500/3,500 = $37.29 per order
ABC or When The Activity Based Costing technique uses activity pools to accumulate and distribute overhead costs so that costs can be allocated based on the level of activity undertaken for each activity pool.
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How much of the contract price should Maya allocate to the machine, installation, and training, respectively?
Answer:
I looked for the missing information and found the following:
total contract price = $920,000
individual prices:
machine = $800,000 installation = $100,000training = $100,000total = $1,000,000Maya should allocate each performance obligation in the same proportion as if they were sold separately:
machine = ($800,000 / $1,000,000) x $920,000 = $736,000installation = ($100,000 / $1,000,000) x $920,000 = $92,000training = ($100,000 / $1,000,000) x $920,000 = $92,000Employees in a department are considered a team only when they directly interact and coordinate work activities with each other.
a. True
b. False
Answer:
True
Explanation:
Team can be defined as way in which group of people or individuals come together in one accord in order to carryout a task or an assignment for the purpose of achieving their aim,goals or objectives, which is why working together as a team either in a company or an organisation is vital and paramount because it help to create unity among employees and to enable the employees to interact and effectively coordinate their work activities with one another which will lead to the growth and success of the organisation or company.
Which phase of the HRIS system development life cycle involves identifying new needs and defining the system's scope
Answer:
Analysis phase
Explanation:
Human resource information system (HRIS) is a collection of systems and processes that provides an easy way to manage human resources, processes, and data of the organisation.
There are various processes in HRIS life cycle:
- Planning is the long range and short range forecast of resources that are to be used to implement HRIS.
- Analysis is the most important stage where needs to be met are identified.and scope is determined.
- Design is where blueprint is drafted
- Implementation is when tested and released live.
- Maintenance to fix bugs and improve the system
- Needs analysis
- Needs analysis planning
- Observation
- Exploration
- Evaluation
- Prioritisation
- Reporting
Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because
The question is incomplete:
Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because
a. it costs the owners of the baseball teams more money to buy the beer from distributors
b. demand is much higher at a baseball game than at a bar
c. baseball team owners have market power and can change a higher price when they are the only sellers of beer
d. the government forces the owners of baseball teams to change price.
e. the owner's baseball teams are not profit maximizing
Answer:
c. baseball team owners have market power and can change a higher price when they are the only sellers of beer
Explanation:
The situation at the major league baseball stadiums is that the owner of the team is the only one that sells the beer which means that they have the power to establish the price they want as people won't have another option to buy the beer in the stadium and they will try to get as much benefits as possible by setting a high price. According to this, the answer is that this is mainly because baseball team owners have market power and can change a higher price when they are the only sellers of beer .
The other options are not right because the owners of the teams pay the same price for the beer as everyone else, the demand is not higher at the baseball game, the government doesn't regulate the prices and the owners are trying to get as much profits as possible.
"Frank bought a house for $100,000. He put 20% down and borrowed the rest from the bank. However, the value of the house has now increased to $160,000 and he has paid off $20,000 of the bank loan. What is the equity that Frank has in his home
Answer:
$100,000
Explanation:
The computation of the equity in his home is shown below;
Given that
Increased in the value of the house = $160,000
And, the amount he has to paid is
= Borrowed amount - down payment
= $80,000 - ($100,000 × 20%)
= $80,000 - $20,000
= $60,000
So, the equity is
= $160,000 - $60,000
= $100,000
hence, the equity value is $100,000
Answer:
The equity that Frank has in his home is $100000
Explanation:
The purchase price of house = $100000
The down payment = 20% or $100000 ×20% = $20000
The remaining amount paid by bank = $80000
The increased value of house = $160,000
Payment of loan amount = $20000
The Value of house is $160000 and he pays $20000 to the bank as a part of loan payment so reaming amount that he has to pay the bank is ($80000-20000) = $60000.
Thus, his equity will be $100000.
White Lion Homebuilders has a current stock price of $22.35 per share, and is expected to pay a per-share dividend of $2.03 at the end of the year. The company’s earnings’ and dividends’ growth rate are expected to grow at the constant rate of 9.40% into the foreseeable future. If White Lion expects to incur flotation costs of 3.750% of the value of its newly-raised equity funds, then the flotation-adjusted (net) cost of its new common stock (rounded to two decimal places) should be .
Answer:
18.84%
Explanation:
the flotation adjusted cost of new common stock = [expected dividend / (net proceeds from stock issuance)] + expected growth rate
expected dividend = $2.03net proceeds from stock issuance = $22.35 x (1 - flotation costs) = $22.35 x 0.9625 = $21.5119expected growth rate = 9.4%the flotation adjusted cost of new common stock = [$2.03 / $21.5119] + 9.4% = 9.44% + 9.4% = 18.84%
State the effect (cash receipt or payment and amount) of each of the following transactions, considered individually, on cash flows:
a. Retired $300,000 of bonds, on which there was $3,000 of unamortized discount, for $312,000.
b. Sold 7,000 shares of $20 par common stock for $50 per share.
c. Sold equipment with a book value of $48,800 for $70,300.
d. Purchased land for $479,000 cash.
e. Purchased a building by paying $93,000 cash and issuing a $90,000 mortgage note payable.
f. Sold a new issue of $300,000 of bonds at 98.
g. Purchased 3,200 shares of $35 par common stock as treasury stock at $69 per share.
h. Paid dividends of $2.10 per share. There were 22,000 shares issued and 4,000 shares of treasury stock.
Answer:
a. Retired $300,000 of bonds, on which there was $3,000 of unamortized discount, for $312,000.
decrease cash flows from financing activities by $312,000
b. Sold 7,000 shares of $20 par common stock for $50 per share.
Increased cash flows from financing activities by $350,000
c. Sold equipment with a book value of $48,800 for $70,300.
increased cash flows from investing activities by $70,300, decrease cash flows from operating activities by $21,500 (= $70,300 - $48,800)
d. Purchased land for $479,000 cash.
decrease cash flow from financing activities by $479,000
e. Purchased a building by paying $93,000 cash and issuing a $90,000 mortgage note payable.
decrease cash flow from investing activities by $183,000, and increase cash flow from financing activities by $90,000
f. Sold a new issue of $300,000 of bonds at 98.
increase cash flows from financing activities by $294,000
g. Purchased 3,200 shares of $35 par common stock as treasury stock at $69 per share.
decrease cash flows from financing activities by $220,800
h. Paid dividends of $2.10 per share. There were 22,000 shares issued and 4,000 shares of treasury stock.
decrease cash flows from financing activities by $37,800
The Hirt & Block mutual fund has assets of $147 million, liabilities of $7 million and 7 million shares outstanding. The shares trade at $21.60 per share. What is the percentage load fee?
Answer: 8%
Explanation:
The load fee would be the excess percentage amount charged on the share over the Net Asset Value per share.
= [tex]\frac{Trading price per share - Net Asset Value per share}{ Net Asset Value per share}[/tex]
Net Asset value Per share = (Assets - Liabilities) / Number of shares
= (147 - 7) / 7
= $20
Load fee
= [tex]\frac{Trading price per share - Net Asset Value per share}{ Net Asset Value per share}[/tex]
= [tex]\frac{21.60 - 20}{20}[/tex]
= 8%
A project with an initial cost of $27,250 is expected to generate cash flows of $6,600, $8,700, $9,100, $8,000, and $7,400 over each of the next five years, respectively. What is the project's payback period?
Answer:
It will take 4 years and 130 days to recover for the initial investment.
Explanation:
Giving the following information:
A project with an initial cost of $27,250 is expected to generate cash flows of $6,600, $8,700, $9,100, $8,000, and $7,400
The payback period is the time required to recover for the initial investment:
Year 1= 6,600 - 27,250= -20,650
Year 2= 8,700 - 20,650= -11,950
Year 3= 9,100 - 11,950= -2,850
Year 4= 8,000 - 2,850= 5,150
To be more accurate:
(2,850/8,000)*365= 130
It will take 4 years and 130 days to recover for the initial investment.
Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process:
Budgeted unit sales 500
Selling price per unit $1,970
Cost per unit $1,460
Variable selling and administrative expenses (per unit) $ 50
Fixed selling and administrative expenses (per year) $196,000
Interest expense for the year $ 13,000
Required:
Prepare the company’s budgeted income statement using an absorption income statement format shown below.
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:
Sales in Units
April 74,000
May 85,000
June 114,000
July 92,000
The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month’s sales. The inventory at the end of March was 7,400 units.
Required:
Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total.
Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Total cash receipts $310,000 $430,000 $360,000 $380,000
Total cash disbursements$365,000 $335,000 $325,000 $345,000
The company’s beginning cash balance for the upcoming fiscal year will be $25,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.
Required:
Complete the company's cash budget for the upcoming fiscal year. (Cash deficiency, repayments, and interest, should be indicated by a minus sign.)
The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:
Ending Balances
Cash ?
Accounts receivable $ 8,500
Supplies inventory $ 4,700
Equipment $ 36,000
Accumulated depreciation $ 14,600
Accounts payable $ 2,200
Common stock $ 5,000
Retained earnings ?
The beginning balance of retained earnings was $32,000, net income is budgeted to be $16,300, and dividends are budgeted to be $2,700.
Required:
Prepare the company’s budgeted balance sheet. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
Gig Harbor Boating
Budgeted Income Statement using absorption costing format:
Sales Revenue $985,000
Cost of Boats Sold 730,000
Gross profit $255,000
Total variable selling and
administrative expenses $25,000
Fixed selling and
administrative expenses (per year) 196,000 $221,000
Income before interest and taxes $34,000
Interest expense for the year 13,000
Pretax Income $21,000
2. Down Under Products, Ltd. of Australia
Production Budget for the second quarter
April May June Total
Sales in Units 74,000 85,000 114,000 273,000
Ending Inventory 8,500 11,400 9,200 9,200
Beginning Inventory 740 8,500 11,400 740
Units to be produced 81,760 87,900 111,800 241,460
3. Garden Depot
Summary of Cash Budget for the upcoming fiscal year:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Beginning cash bal. $25,000 $10,000 $63,800 $98,800
Total cash receipts $310,000 $430,000 $360,000 $380,000
Total cash available $335,000 $440,000 $423,800 $478,800
Total cash
disbursements ($365,000) ($335,000) ($325,000) ($345,000)
Bank loan (repyt) 40,000 (40,000)
Bank loan Interest (1,200)
Cash Balance ($30,000) $63,800 $98,800 $133,800
Required Minimum $10,000 $10,000 $10,000 $10,000
4. Mecca Copy
Budgeted Balance Sheet for the coming year:
Budgeted Balance Sheet for the next year:
Ending Balances
Cash $ 18,200
Accounts receivable $ 8,500
Supplies inventory $ 4,700
Equipment $ 36,000
Accumulated depreciation $ 14,600 $ 21,400
Total Assets $ 52,800
Accounts payable $ 2,200
Common stock $ 5,000
Retained earnings $ 45,600
Total Liabilities and Equity $ 52,800
Explanation:
1. Gig Harbor Boating:
Data and Calculations:
Budgeted unit sales 500
Selling price per unit $1,970
Sales Revenue = $985,000 ($1,970 x 500)
Cost per unit $1,460
Cost of Boats Sold = $730,000 ($1,460 x 500)
Variable selling and administrative expenses (per unit) $ 50
Total variable selling and administrative expenses = $25,000 ($50 x 500 )
Fixed selling and administrative expenses (per year) $196,000
Interest expense for the year $ 13,000
2. Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:
a) Data and Calculations:
March April May June July
Sales in Units 7,400 74,000 85,000 114,000 92,000
Ending Inventory 740 8,500 11,400 9,200
Beginning Inventory 740 8,500 11,400 9,200
Units to be produced 81,760 87,900 111,800
3. Garden Depot
Data and Calculations:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Beginning cash bal. $25,000 $10,000 $63,800 $98,800
Total cash receipts $310,000 $430,000 $360,000 $380,000
Total cash available $335,000 $440,000 $423,800 $478,800
Total cash
disbursements ($365,000) ($335,000) ($325,000) ($345,000)
Bank loan (repyt) 40,000 (40,000)
Bank loan Interest (1,200)
Cash Balance ($30,000) $63,800 $98,800 $133,800
Required Minimum $10,000 $10,000 $10,000 $10,000
4. Mecca Copy:
Data and Calculations:
Budgeted Balance Sheet for the next year:
Ending Balances
Cash ?
Accounts receivable $ 8,500
Supplies inventory $ 4,700
Equipment $ 36,000
Accumulated depreciation $ 14,600
Accounts payable $ 2,200
Common stock $ 5,000
Retained earnings ?
Retained Earnings:
Beginning = $32,000
Net income = 16,300
Dividends = (2,700)
Ending = $45,600
Gig Harbor Boating's budgeted income statement gives a snapshot into the future of its revenue, cost of boats sold, gross profit, and pretax income. Thus, it uses the projections to guide management towards the achievement of its targets.
Similarly, Down Under Products, Ltd. of Australia prepares a production budget for the second quarter to determine how much units it needs to produce to meet sales or customers' demand.
Garden Depot, as a retailer, ascertains its cash needs by preparing budgeted cash flows for the coming year.
Finally, Mecca Copy cannot operate its center without an idea about its financial position for the next year. Therefore, it prepares a budgeted balance sheet. All these budgets guide managements of these various entities and prepare them for taking necessary actions to plan and keep their companies afloat.
You can spend $150 on either a new Kindle or a new pair of boots. If you choose to buy the new kindle, the economic cost of it is:
Answer:
$300
Explanation:
The economic cost is the sum of implicit cost and explicit cost.The implicit cost is the cost by implication, which is the cost of alternative forgone.
The explicit cost is the actual cost requiring actual cash flow in settling it.
Economic cost=cost of new kindle+cost of alternative forgone(new pair of boots)
Economic cost=$150+$150
The explicit cost is also the cost incurred from accounting point of view
Debt financing has one important advantage that the early Modigliani and Miller (MM) propositions ignored: the interest on business debt is tax deductible. This benefit means that the amount of taxes that a business is required to
pay will be reduced by a phenomenon called an interest tax shield, which is a function of the amount of debt in the firm's capital structure and its tax rate. In contrast, the dividends that a corporation pays on its common and
preferred shares are not tax deductible.
Consider the case of Green Llama Foodstuffs, Inc.:
At the beginning of the year, Blue Chipmunk Foodstuffs, Inc. had an unlevered value of $8,500,000. It pays federal and state taxes at the marginal rate of 40%, and currently has $2,500,000 in debt capital in its capital structure.
According to MM Proposition I with taxes, Green Llama Foodstuffs is allowed to recognize a tax shield of ___________, and the levered value of the firm is:
a. $7,100,000
b. $12,500,000
c. $9,900,000
d. $4,500,000
Answer:
c. $9,500,000
Explanation:
Un-levered value = $8,500,000
Tax= 40% = 0.4
Debt capital= $2,500,000
Tax shield = Debt capital * Tax
Tax shield = $2,500,000 * 0.4
Tax shield = $1,000,000
Levered value = Unlevered value + Tax shield
Levered value = $8,500,000 + $1,000,000
Levered value = $9,500,000
