Answer: That they are risky
Explanation:
Bonds tend to give a low return compared to other investments such as stocks which is because they offer a constant payout. However even with bonds there will still be those that promise a higher return than the others and this is because they are riskier.
Bonds are debt instruments which means that the rate they pay is directly related to the risk attached. This is because the interest payment is meant to compensate you for the risk you are taking by getting that bond.
If the yield/return is high it would therefore follow that the risk Is high as well. Your Grandfather should therefore be aware of this risk before investing because riskier bonds might not pay back.
What's the present value of $4,500 discounted back 5 years if the appropriate interest rate is 4.5%, compounded semiannually?
Answer:
The present value = $3,602.30
Explanation:
To calculate this, we will use the formula for calculating the future value for an amount invested, compounded semiannually at a certain interest rate. This is done as follows:
[tex]FV\ =\ PV(1+\frac{r}{n})^{(n\times t)}\\[/tex]
where:
FV = Future value = $4,500
PV = Present value = ??
r = interest rate = 4.5% = 4.5/100 = 0.045
n = number of compunding period per year = semiannually = 2
t = time = 5
[tex]4,500\ =\ PV(1+\frac{0.045}{2})^{(2\times 5)}\\\\4,500 = PV( 1+0.0225)^{10}\\4,500 = PV(1.0225)^{10}\\4,500 = PV (1.249203)\\Dividing\ both\ sides\ by\ 1.249203\ and\ making\ PV\ the\ subject\ of\ the\ formula\\\PV = \frac{4,500}{1.249203} \\PV= 3,602.297[/tex]
Therefore, the present value = $3,602.30
A local restaurant increases the prices on its burgers as soon as it begins a promotional campaign. Which of the following is most likely to be true?
a) The promotional campaign featured how much better their burgers are.
b) The promotional campaign focused on the value per dollar.
c) The promotional campaign made demand more elastic.
d) All of the above.
Answer: The promotional campaign featured how much better their burgers are
Explanation:
The most likely reason why a local restaurant will increase the prices on its burgers as soon as it begins a promotional campaign is that the promotional campaign featured how much better their burgers are.
Through the promotional campaign, the message has been passed to the customers and anyone interested that the burgers are better and customers will enjoy value for their money.
Assuming that the firm is maximizing profits, the marginal cost of the last unit produced equals:________
Price Quantity Total cost
10 10 80
9 20 100
8 30 130
7 40 170
6 50 230
5 60 300
4 70 380
a. $4
b. $40
c. $5
d. $50
e. $6
Answer: b. $40
Explanation:
A firm maximises its profits where Marginal Revenue equals marginal cost.
Marginal revenue is the additional revenue gained by selling one more unit of production.
At 40 units, the marginal revenue is equal to;
= Total revenue at 40 units - total revenue at 30 units
= ( 7 * 40) - ( 8 * 30)
= 280 - 240
= $40
At 40 units the marginal cost is;
= total cost at 40 units - total cost at 30 units
= 170 - 130
= $40
MR=MC which is $40.
Beta is Question 10 options: a) A measure of the volatility of returns on an individual stock relative to the market b) Relates the risk-return trade-offs of individual assets to the market returns c) The computed cost of capital determined by multiplying the cost of each item in the optimal capital structure by its weighted presentation in the overall capital structure and summing up the results d) The cost of the last dollar of funds raised
Answer: a) A measure of the volatility of returns on an individual stock relative to the market
Explanation:
Beta is indeed a measure of the volatility of returns on an individual stock relative to the return on the market as a whole.
It is used in the Capital Asset Pricing Model which enables for the calculation of the stock's expected return.
Market Beta is always 1. Therefore betas measure shows how much more or less volatile than the market return, the stock return is. For instance, a beta of 2 means that the stock's returns are twice as volatile as the markets and a beta of 0.5 means the returns are only half as volatile as the market.
The declaration, record, and payment dates in connection with a cash dividend of $77,000 on a corporation's common stock are October 1, November 7, and December 15.
Required:
Journalize the entries required on each date.
Answer:
Oct 1
Dr Cash Dividend $77,000
Cr Dividend Payable $77,000
Nov 7
No Entry required on the record date
Dec 15
Dr Dividend Payable $77,000
Cr Cash
Explanation:
Preparation of the Journal entries for each date
Based on the information given we were told that the cash dividend of the amount of $77,000 was a corporation's common stock are October 1, November 7, and December 15 which means that the transaction will be recorded as:
Oct 1
Dr Cash Dividend $77,000
Cr Dividend Payable $77,000
Nov 7
No Entry required on the record date
Dec 15
Dr Dividend Payable $77,000
Cr Cash
Petrus Framing's cost formula for its supplies cost is $2,300 per month plus $6 per frame. For the month of March, the company planned for activity of 861 frames, but the actual level of activity was 856 frames. The actual supplies cost for the month was $7,790. The activity variance for supplies cost in March would be closest to:
Answer:
$30 Favorable
Explanation:
Calculation for the activity variance for supplies cost in March
Using this formula
Activity variance = (Actual units - Budgeted units) * Variable cost
Where,
Actual units=856
Budgeted units=861
Variable cost=$6
Let plug in the formula
Activity variance=(856-861) * $6
Activity variance=5*$6
Activity variance=$30 Favorable
Therefore the activity variance for supplies cost in March would be closest to: $30 Favorable
The practice of changing prices for products in real time in response to supply and demand conditions is referred to as
Answer:
Dynamic pricing
Explanation:
In simple words, Dynamic pricing, often alluded to as rising rates, vibrant pricing as well as period-based pricing, relates to the pricing technique under which companies set variable prices for goods or commodities on the basis of existing consumer demands. A main benefit of competitive pricing seems to be the opportunity to increase the income with each consumer.
The fixed cost of a production system is $20,000, and the variable cost per unit product is $17. The product has a revenue of $28 per unit. Calculate the breakeven quantity and determine the profit or loss amount when 1,500 units are produced. g
Answer:
Results are below.
Explanation:
Giving the following information:
Fixed costs= $20,000
Unitary variable cost= $17
Selling price= $28 per unit.
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= 20,000 / (28 - 17)
Break-even point in units= 1,818 units
Now, the profit for 1,500 units:
Loss= 1,500*11 - 20,000= -$3,500
The _____focuses on bringing different talents and perspectives together to make the best organizational decisions and to produce innovative, competitive products and services..
Answer:
Paradigm
Explanation:
Definition: a typical example or pattern of something; a model.
The following data relate to the Denver Company's operations for the year ended December 31, 20XX:
Direct Materials Purchases $100,000
Indirect meterial usage 10,000
Indirect labor 10,000
Direct Labor 300,000
Sales salaries 100,000
Administrative salaries 50,000
Factory water and electricity 20,000
Advertising expenses 60,000
Depreciation-sales and general office 40,000
Depreciation-factory 50,000
Beginning Inventories:
Direct Materials $20,000
Work In Progress 60,000
Finished goods 80,000
Ending Inventories:
Direct Materials $30,000
Work in Progress 50,000
Finished goods 60,000
Required:
Prepare a statement of cost of goods manufactured.
Answer:
Cost of goods manufactured= $490,000
Explanation:
Giving the following information:
Overhead:
Indirect material usage 10,000
Indirect labor 10,000
Factory water and electricity 20,000
Depreciation-factory 50,000
Total overhead= 90,000
To calculate the cost of goods manufactured, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
Direct materials= 100,000 + 20,000 - 30,000= 90,000
cost of goods manufactured= 60,000 + 90,000 + 300,000 + 90,000 - 50,000
cost of goods manufactured= $490,000
Onslow Co. purchases a used machine for $178,000 cash on January 2 and readies it for use the next day at a $2,840 cost. On January 3, it is installed on a required operating platform costing $1,160, and it is further readied for operations. The company predicts the machine will be used for six years and have a $14,000 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.Required:Prepare journal entries to record the machine's disposal under each of the following separate assumptions: a. It is sold for $22,000 cash. b. It is sold for $88,000 cash. c. It is destroyed in a fire and the insurance company pays $32,500 cash to settle the loss claim.
Answer:
All the requirements are solved below
Explanation:
Purchase = $178,000
Ready to use cost = $2,480
Installation cost = $1,160
Salvage value = $14,000
Depreciation method = Straight line
Useful life = 6 years
Solution
Requirement A If sold for $22,000
Entry DEBIT CREDIT
Cash $22,000
Accumulated depreciation $140,000
Profit/loss on disposal $20,000
Machinery $182,000
Requirement B If sold for $88,000
Entry DEBIT CREDIT
Cash $82,000
Accumulated depreciation $140,000
Profit/loss on disposal $40,000
Machinery $182,000
Requirement C If destroyed in fire and insurance company paid $32,500
Entry DEBIT CREDIT
Cash $30,000
Accumulated depreciation $140,000
loss from fire $12,000
Machinery $182,000
Workings
Cost =$178,000 + $2,480 + $1,160
Cost = $182,000
Accumulated depreciation = ([tex]\frac{182,000-14,000}{6}x5[/tex]
Accumulated depreciation = 140,000
Whispering Corporation began 2017 with a $94,200 balance in the Deferred Tax Liability account. At the end of 2017, the related cumulative temporary difference amounts to $352,400, and it will reverse evenly over the next 2 years. Pretax accounting income for 2017 is $505,400, the tax rate for all years is 40%, and taxable income for 2017 is $388,500.
Part 1
Compute income taxes payable for 2017.
Income taxes payable
$
Part 2
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit Credit
Part 3
Prepare the income tax expense section of the income statement for 2017 beginning with the line "Income before income taxes.". (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Answer:
1. Income tax payable = Taxable income for 2017 * Income tax rate
Income tax payable = $388,500 * 40%
Income tax payable = $155,400
2. Journal Entry
Account Titles and Explanations Debit Credit
Income tax expense $202,160
($505,400*40%)
Deferred tax liability $46,760
($202,160-$155,400)
Income tax payable $155,400
($388,500*40%)
3. Income Statement (Partial)
For the Year Ended Dec 31, 2017
Income before income taxes $505,400
Income tax expense
Current $155,400
Deferred $46,760 $202,160
Net Income $303,240
Bob: Listen, donuts are made to bring joy into our lives and to wake up our glazed faculties. Just let them be distributed according to unchanging moral principles of justice. The donuts will distribute themselves according to natural principles. We just take what we want and the leftovers will be appreciated by those who enjoy them most. Don't overcomplicate this. Where's the chocolate milk? End Part 2
Answer:
National law school of thought
Explanation:
The natural law school of thoughts refers to analyze the behavior of humans also it figured out the moral rule occurs from the behaviors.
It is inherent laws that are applied to all societies, communities, etc also it is common for all whether it is mentioned or officially announced
It should be rational and reasonable too
Therefore the given scenario represents the National law school of thought
As the athletic shoe buyer for Sports Authority, how would you go about forecasting sales for a new Nike running shoe?
Answer:
The answer is below
Explanation:
I would go about forecasting sales for a new Nike running shoe in the following ways:
1. Check past sales history: Examining Nike's sales history to check and differentiate which items have high sales well and those items that didn’t. This will help anticipate and forecast sales for the new Nike running shoe by putting it side by side with a similar product.
2. Conduct detailed market research: This is vital to predicting prospective sales in order to determine if the shoes will sell satisfactorily.
Making research to infer specifically the products, consumers wants will give Nike a current idea of what is in vogue. Thus, by conducting detailed research and discovering what their consumers prefer and disfavor, they will have the ability to predict sales for a new item.
Wookie Company issues 8%, five-year bonds, on January 1 of this year, with a par value of $108,000 and semiannual interest payments.
Semiannual Period-End Unamortized Premium Carrying Value
(0) January 1, issuance $8,271 $116,271
(1) June 30, first payment 7,444 115,444
(2) December 31, second payment 6,617 114,617
Use the above straight-line bond amortization table and prepare journal entries for the following:
a) The issuance of bonds on January 1.
b) The first interest payment on June 30.
c) The second interest payment on December 31.
Answer:
See the journal entries and explanation below.
Explanation:
The journal entries will look as follows
a) The issuance of bonds on January 1.
Date Accounts title Debit ($) Credit ($)
Jan. 1 Cash 111,671
Premium on Bonds Payable 8,271
Bonds Payable (w.1) 108,000
(To record issuance of bonds.)
b) The first interest payment on June 30.
Date Accounts title Debit ($) Credit ($)
Jun. 30 Interest Expense (w.4) 3,493
Premium on Bonds Payable (w.2) 827
Cash (w.3) 4,320
(To record first interest payment)
c) The second interest payment on December 31.
Date Accounts title Debit ($) Credit ($)
Dec. 31 Interest Expense (w.4) 3,493
Premium on Bonds Payable (w.5) 827
Cash (w.6) 4,320
(To record second interest payment)
Workings:
w.1: Bond payable = Cash - Premium on Bonds Payable = $111,671 - $8,271
w.2: Premium on Bonds Payable = January 1 Unamortized Premium - June 30 Unamortized Premium = $8,271 - $7,444 = $827
w.3: Cash = $108,000 * 8% * (6 / 12) = $4,320
w.4: Interest expense = w.3 - w.2 = $4,320 - $827 = $3.493
w.5: Premium on Bonds Payable = June 30 1 Unamortized Premium - December 31 Unamortized Premium = $7,444 - $6,617 = $827
w.6: Cash = $108,000 * 8% * (6 / 12) = $4,320
w.7: Interest expense = w.6 - w.5 = $4,320 - $827 = $3,493
Heather Smith is considering a bond investment in Locklear Airlines. The $1,000 par value bonds have a quoted annual interest rate of 8 percent and the interest is paid semiannually. The yield to maturity on the bonds is 12 percent annual interest. There are 10 years to maturity.Required:Compute the price of the bonds based on semiannual analysis.
Answer:
Price of bond = $770.60
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond for Heather Smith can be worked out as follows:
Step 1
PV of interest payments
Semi annul interest payment
= 8%× 1000 × 1/2 =40
Semi-annual yield = 12/2 = 6% per six months
Total period to maturity (in months) = (2 ×10) = 20 periods
PV of interest =
40 × (1- (1+0.06)^(-20)/0.06) = 458.796
Step 2
PV of Redemption Value
= 1,000 × (1.06)^(-20) = 311.80
Step 3 :Price of bond
= 458.796 + 311.80 = 770.60
Price of bond = $770.60
Bronco Corporation discovered these errors in August of Year 3:
Year Depreciation Overstated Prepaid Expense Omitted
1 $2500 $3000
2 4000 2000
Assume all current items are two months in duration. Net Income for Year 2 was $18,000. Assume all errors are discovered in August of Year #3. The Year #2 books are closed. The net effect on Year #3 Beginning Retained Earnings caused by the August Year #3 correcting journal entries was:
a. $5,500
b. $6,500
c. $6,000
d. $8,500
e. $4,500
Answer:
e. $4,500
Explanation:
Year Depreciation overstated Prepaid expense omitted
1 $2,500 $3,000
2 $4,000 $2,000
Year 2's net income = net income (year 2) + overstated depreciation (year 2) + omitted prepaid expenses (year 1) - omitted prepaid expenses (year 2) = $18,000 + $4,000 + $3,000 - $2,000 = $23,000
This means that year 2's net income was understated by $5,000.
But year 1's net income was overstated by = $2,500 - $3,000 = -$500.
The adjustment on the retained earnings account should be $5,000 - $500 = $4,500
Green Inc. made no adjusting entry for accrued and unpaid employee wages of $38,000 on December 31. This error would Multiple Choice Understate assets by $38,000. Overstate net income by $38,000. Understate net income by $38,000. Have no effect on net income.
Answer:
The answer is B. Overstate net income by $38,000.
Explanation:
Accrued expense is an expense that has been enjoyed or incurred but has been paid for. Examples of an accrued expense are unpaid wages/salary, unpaid electricity bill etc.
Usually, the adjusting entry for accrued expense is to debit the expense and debit increases expense while credit decreases it. Since there is no adjusting entry, that means no expense is being recognized on the income statement for this transaction. Hence, the net income increases (overstated). because ordinarily expense reduces net income.
On July 1, 20Y7, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July:
A. Opened a business bank account with a deposit of $25,000 from personal funds.
B. Purchased office supplies on account, $1,850.
C. Paid creditor on account, $1,200.
D. Earned sales commissions, receiving cash, $41,500.
E. Paid rent on office and equipment for the month, $3,600.
F. Withdrew cash for personal use, $4,000.
G. Paid automobile expenses (including rental charge) for the month, $3,050, and miscellaneous expenses, $1,600.
H. Paid office salaries, $5,000.
I. Determined that the cost of supplies on hand was $950; therefore, the cost of supplies used was $900.
What would the Financial Statement look like?
Answer:
Explanation:
A) Debit cash 25,000 , credit capital 25,000
B)Credit Payable 1850 , Debit supplies 1850
C) Credit cash (1200), Debit payable (1200)
D) Debit cash 41,500 , credit sales commission 41,500
E)Credit cash (3600). debit rent 3,600
F)Credit cash ( 4000), debit drawings 4000
G)credit cash (4,650), debit automobile 3,050,miscellaneous 1600
H) Credit cash (5,000), debit salaries 5000
i)Credit supplies (900) debit supplies expense 900
Overall total
Cash = 25000-1200+41500-3600-4000=4650-5000 48,050
Supplies = 1850 -900 =950
Account payable = 1850-1200 =650
Capital = 25,000
Drawing =4000
Sales commission = 41,500
Salaries = 5,000
Rent = 3,600
Automobile expenses =3050
Miscellaneous expenses =1600
Supplies expenses = 900
Income statement
Revenue ( sales commission ) 41,500
Expenses
salaries 5,000
Rent 3,600
Supplies 900
Automobile 3,050
Miscellaneous 1,600
Total expenses 14,150
Gross profit 27,350
Statement of financial position
Assets
Cash 48,050
Supplies 950
Total 49,000
Liabilities
Account payable 650
Capital 25,000
Drawing (4000)
Total 21,650
Owners equity 27,350
Total liabilities and equities 49,000
Owners equity = ( sales commission - salaries - rent -supplies - automobile -miscellaneous )
Suppose you have $ cash today and you can invest it to become worth $ in years. What is the present purchasing power equivalent of this $ when the average inflation rate over the first years is % per year, and over the last years it will be % per year?
Answer: $900,599.04
Explanation:
The present purchasing power equivalent is the present worth of this investment.
The investment will earn 5% for the first 7 years and then 9% for the next 10.
As there are different rates, the present worth calculation will have to reflect that.
At the end of the first 7 years, the present worth of the invested amount given 10 more years of investing at 9%. The Present worth is;
= 3,000,000(Present worth factor, 9%, 10 years)
= 3,000,000 * 0.4224
= $1,267,200
Then what is the Present worth of $1,267,200 in the current year given that it will be invested for 7 years at 5% to get to $1,267,200.
= 1,267,200 (Present worth factor, 5%, 7 years)
= 1,267,200 * 0.7107
= $900,599.04
A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $38,000 for A and $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $19.
a. Determine each alternative’s break-even point in units. (Round your answer to the nearest whole amount.)
QBEP,A units
QBEP,B units
b. At what volume of output would the two alternatives yield the same profit? (Round your answer to the nearest whole amount.)
c. If expected annual demand is 10,000 units, which alternative would yield the higher profit?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Machine A:
Fixed costs= $38,000
Unitary cost= $7
Machine B:
Fixed costs= $31,000
Unitary cost= $11
Revenue per unit= $19
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
Machine A:
Break-even point in units= 38,000 / (19 - 7)
Break-even point in units= 3,167
Machine B:
Break-even point in units= 31,000 / (19 - 11)
Break-even point in units= 3,875
Now, we need to determine the indifference point:
Machine A= 38,000 + 7x
Machine B= 31,000 + 11x
x= number of units
We will equal both formulas and isolate x:
38,000 + 7x = 31,000 + 11x
7,000 = 4x
1,750=x
Indifference point= 1,750 units
Finally, the total cost for 10,000 units:
Machine A= 38,000 + 7*10,000= $108,000
Machine B= 31,000 + 11*10,000= $141,000
Disturbed Corp. needs to raise $57 million to fund a new project. The company will sell shares at a price of $23.70 in a general cash offer and the company's underwriters will charge a spread of 7.5 percent. The direct flotation costs associated with the issue are $725,000 and the indirect costs are $445,000. How many shares need to be sold?
Answer: 2653438 shares
Explanation:
From the information given in the question, the following can be deduced:
The share price will be:
= $23.70 × (1 - 7.5%)
= $23.70 × (1 - 0.075)
= $23.70 × 0.925
= $21.9225
The money that will be raised will be:
= 57,000,000 + 725,000 + 445,000
= $58,170,000
The number of shares that are needed to be sold will be:
= $58,170,000/$21.9225
= 2653438 shares
A stock had returns of 15.51 percent, 22.47 percent, −8.68 percent, and 9.43 percent over four of the past five years. The arithmetic average return over the five years was 12.71 percent. What was the stock return for the missing year?
Answer:
24.82%
Explanation:
Arithmetic average = sum of observations / number of observations
Let x = the stock return for year 5
12.71 % = (15.51% + 22.47% −8.68% + 9.43 + x) /5
Multiply both sides by 5
63.55% = (5.51% + 22.47% −8.68% + 9.43 + x)
63.55% = 38.73% + x
x = 63.55% - 38.73% = 24.82%
Domingo Corporation uses the weighted...
Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 2,300 units. The costs and percentage completion of these units in beginning inventory were:
Cost Percent Complete
Materials costs $7,400 50%
Conversion costs $3,600 20%
A total of 8,700 units were started and 8,000 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
Cost
Materials costs $160,600
Conversion costs $122,300
The ending inventory was 85% complete with respect to materials and 75% complete with respect to conversion costs. How many units are in ending work in process inventory in the first processing department at the end of the month?
a. 700.
b. 1,700.
c. 6.400.
d. 2,700.
Answer:
3,000 units
Explanation:
Calculation for How many units are in ending work in process inventory
Using this formula
Ending work in process units =Beginning work in process units + Units started into production - Transferred to the second processing department units
Let plug in the formula
Ending work in process units= 2,300 units + 8,700 units - 8,000 units
Ending work in process units= 3,000 units
Therefore 3,000 units are in the ending work in process inventory in the first processing department at the end of the month.
Internal rate of return method The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $149,630 and annual net cash flows of $45,000 for each of the six years of its useful life. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. Open spreadsheet Determine the internal rate of return for the proposal.
Answer:
Testerman Construction Co.
Internal rate of return method in analyzing capital expenditure:
Present value of expenditure = $149,630
Present of cash inflows annuity = $149,630 (using 20% discount rate and present value annuity factor of 3.3251 x $45,000)
NPV = $0 (PV of cash outflow - PV of cash inflow)
Therefore, the IRR = 20%
Explanation:
a) Data and Calculations:
Investment cost = $149,630
Annual net cash flows = $45,000
Investment period = 6 years
Annuity of future cash flows = 3.3251
b) Testerman’s IRR (Internal Rate of Return) is a capital budgeting and analysis tool which determines the discount rate that makes the present value of future inflows equal to the present value of outflows from a project. This IRR helps the managers to determine the projects that add value and are worth undertaking. IRR is based on assumptions. Similar projects with the same IRR will differ in returns due to the differences in timing and the size of the cash, the amount of debts and equity used to generate the returns, and the assumption of a constant reinvestment may which IRR makes.
Costs that are capitalized because they are expected to have future value are called product costs; costs that are expensed are called period costs. This classification is important because it affects the amount of costs expensed in the income statement and the amount of costs assigned to inventory on the balance sheet. Product costs are commonly made up of direct materials, direct labor, and overhead. Period costs include selling and administrative expenses.
A service company has which of the following costs
a. Direct Material
b. Overhead Costs
c. Product Costs
d. Expensed in the period incurred
Answer:
b. Overhead Costs
d. Expensed in the period incurred
Explanation:
-Direct material refers to the cost of the material used to manufacture a product.
-Overhead costs are the costs related to the operation of the business and they can't be assigned to a good or service.
-Product Costs are the costs to manufacture a product.
-Expensed in the period incurred are the period costs which are costs not related to the production of a good.
According to these definitions, a service company has the following costs: overhead costs and expensed in the period incurred because these are costs that are not related to the creation of a product.
On the other hand, the other options direct material and product costs are not right because these costs are directly related to products.
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $4.3 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $4.6 million. The company wants to build its new manufacturing plant on this land; the plant will cost $11.8 million to build, and the site requires $700,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project? (Enter your answer as a positive value in dollars, not millions of dollars, e.g., 1,234,567.)
Answer:
$17.1 million
Explanation:
The proper cash flow amount to use as the initial investment in fixed assets when evaluating this project can be calculated as follows
DATA
Fair value of land = 4.6 million
Cost to build a plant = 11.8 million
Grading cost = 0.7 million
Solution
Initial investment = Fair value of land + Cost to build a plant + Grading cost
Initial investment = $4.6 million + $11.8 million + $0.7 million
Initial investment = $17.1 million
Yan Yan Corp. has a $3,000 par value bond outstanding with a coupon rate of 5.2 percent paid semiannually and 25 years to maturity. The yield to maturity on this bond is 4.8 percent. What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$3,173.63
Explanation:
For computing the price of the bond we need to apply the present value i.e to be shown in the attachment
Given that,
Future value = $3,000
Rate of interest = 4.8% ÷ 2 = 2.4%
NPER = 25 years × 2 = 50 years
PMT = $3,000 × 5.2% ÷ 2 = $78
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the price of the bond is $3,713.63
Indigo Corporation had the following tax information.
Year Taxable Income Tax Rate Taxes Paid
2015 $294,000 35% $102,900
2016 332,000 30% 99,600
2017 399,000 30% 119,700
In 2018, Indigo suffered a net operating loss of $487,000, which it elected to carry back. The 2018 enacted tax rate is 26%.
Prepare Indigo’s entry to record the effect of the loss carryback.
Account titles Debit Credit
Answer:
Explanation:
Given that:
Indigo Corporation had the following tax information.
Year Taxable Income Tax Rate Taxes Paid
2015 $294,000 35% $102,900
2016 332,000 30% 99,600
2017 399,000 30% 119,700
In 2018, Indigo suffered a net operating loss of $487,000, which it elected to carry back. The 2018 enacted tax rate is 26%.
The objective is to prepare the Indigo's entry to record the effect of the loss carryback.
The Income Tax Refund Receivable = Taxable income(2018) × Tax rate(2018) + ( net operating loss - Taxable income(2018) ) × Tax rate(2018)
(332000 × 30%)+(476000-332000) × 30%
The Income Tax Refund Receivable = (332000 × 0.30)+(476000-332000) × 0.30
The Income Tax Refund Receivable = 99600 + 144000× 0.30
The Income Tax Refund Receivable = 99600 + 43200
The Income Tax Refund Receivable = 142800
Therefore, Indigo Corporation ENtry can be prepared as follows:
Account titles Debit Credit
Income Tax Refund Receivable 142800
Benefit Due to Loss Carryback 142800
To record the effect of the loss carryback
The open systems anchor of organizational behavior states that: 1 point A. organizations affect and are affected by their external environments. B. organizations can operate efficiently by ignoring changes in the external environment. C. people are the most important organizational input needed for effectiveness. D. organizations should avoid internal conflicts to achieve efficiency. E. organizations should be open to internal competition to be able to obtain a sustainable competitive advantage.
Answer:
A. organizations affect and are affected by their external environments.
Explanation:
An organizational behavior can be defined as the study of people's opinions, feelings, actions and how people perceive an organization.
The open systems anchor of organizational behavior states that organizations affect and are affected by their external environments. The external environment comprises of factors such as;
1. Criteria set by the regulatory agencies where the organization is operating.
2. The state of the economy, either recessionary or inflationary.
3. The policies adopted by the government.
4. The investor's needs or requirements.
5. The culture of the business environment.
