Answer:
The fair price per share today is $96.40
Explanation:
The fair price per share can be calculated using the DDM approach whereby the expected future dividends are discounted back to calculate the fair value of the share today.
The fair price per share will be,
P0 or V = 4 / (1+0.05) + 3.5 / (1+0.05)² + [(3.5 * (1+0.014)) / 0.05 - 0.014] / (1+0.05)²
Fair price per share = $96.40
Answer:
$96.403(Approx)
Explanation:
Using The dividend discount model (DDM) which is a method or technique that is used in the valuation of a company's stock price based on the premise that the company’s stock is worth of all of its potential dividend payments, discounted back to their current value.
Value after year 2=(D2*Growth rate)/(Required return-Growth rate)
=(3.5*1.014)/(0.05-0.014)
=98.583
Hence fair price=Future dividend and valu x Present value of discounting factor(rate%,time period)
=4/1.05+3.5/1.05^2+98.583/1.05^2
=$96.403(Approx)
Associated Breweries is planning to market unleaded beer. To finance the venture, it proposes to make a rights issue with a subscription price of $10. One new share can be purchased for each two shares held. The company currently has outstanding 100,000 shares priced at $40 a share. Assuming that the new money is invested to earn a fair return, give values for the following: (Do not round intermediate calculations. Enter your answers in dollars not millions.)
Associated Breweries can raise $500,000 from the proposed rights issue priced at $10 per share, given there are 100,000 shares outstanding. However, to determine the value of the rights issue and the investment in unleaded beer, it's important to consider the price point for the beer, market competition, and potential return for the investors.
Explanation:Associated Breweries is proposing a rights issue to raise funds for their new unleaded beer venture. The subscription price is $10 which means this is the price that shareholders will have to pay for the new shares. With rights issue, one new share can be purchased for each two shares held. Because there are 100,000 shares outstanding priced at $40 a share, if each shareholder bought the new shares, the company would raise $500,000. However, the new money needs to earn a fair return.
In terms of the cost of unleaded gasoline in the Bay Area, this is not relevant to this business scenario. Instead, the company would want to consider the price point for the unleaded beer, market competition, and potential return for their investors. Understanding these factors can help determine the value of their rights issue and the investment in unleaded beer.
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Crane Corp. has a gross profit margin of 30.00 percent, sales of $36,000,000, and inventory of $15,000,000. What is its inventory turnover ratio? (Round answer to 2 decimal places, e.g. 15.25.)
Answer:
Crane Corp.'s inventory turnover ratio is 1.68 times
Explanation:
Inventory turnover ratio an efficiency ratio that indicates how many times a company sells and replaces its stock of goods during a particular period
Inventory turnover ratio is calculated by using following formula:
Inventory turnover ratio = Cost of Goods Sold/Inventory
Crane Corp. has a gross profit margin of 30.00 percent.
Gross profit margin = Gross Profit/ Sales = (Sale - Cost of Goods Sold)/Sales
Cost of Goods Sold = Sales - Gross profit margin x Sales = $36,000,000 - $36,000,000 x 30% = $25,200,000
Inventory turnover ratio = $25,200,000/$15,000,000 = 1.68 times
Demand is more elastic: a. for broadly defined goods than for narrowly defined ones. b. for goods with many substitutes than for goods with only a few. c. in the short run than in the long run. d. for necessities than for luxuries. e. for goods with no substitutes.
Answer:
The correct answer is letter "B": for goods with many substitutes than for goods with only a few.
Explanation:
Elasticity is a characteristic of certain items by which changes in their price represent a change in their quantity demanded. Demand elasticity is calculated by dividing the percentage change in quantity demanded by the percentage change in price. If the result is equal or greater than (1) the demand is elastic. If the demand is lower than 1, then it is inelastic.
Goods with many substitutes are considered elastic because minimal changes in their price represent considerable changes in their quantity demanded. As consumers have different options from where to select if the price of one of the substitutes increase (for instance), the quantity demanded for that good could face a drastic drop.
Marshall Officer is a stockholder in Endrun Investments, which is organized as a C Corporation. Endrun recently lost a major court decision and will probably be forced into bankruptcy. In fact, the damages awarded are so great that, even if all of its assets are sold and the proceeds are used to pay its debts, Endrun is likely to still owe money to its creditors.
If Endrun does go bankrupt, Marshall and the other stockholders will:
A) be personally responsible for all remaining debts.
B) lose their investment but nothing else.
C) be entitled to full reimbursement of any investment losses.
D) automatically qualify for federal reimbursement for any losses suffered by the firm.
Answer:
B) lose their investment but nothing else.
Explanation:
When a company becomes bankrupt and its assets were unable to settle it's obligations as is the case of Endrum Investments, the shareholders lose the value they had in their shares.
A C corporation is one in which the business is a seperate entity from the shareholders. The shareholders are not liable for any action taken against the company.
In this instance since the shares are the assets of the company, they will be liquidated to settle the damages awarded in court. Shareholders are not liable for the extra debt owed by the business.
Fern Corporation manufacturers a single product that has a selling price of $25.00 per unit. Fixed expenses total $33,000 per year, and the company must sell 5,500 units to break even. If the company has a target profit of $12,000, sales in units must be:
Answer:
7,500 units
Explanation:
Given that,
Selling price = $25 per unit
Fixed expenses = $33,000 per year
Break even units sell = 5,500 units
Target profit = $12,000
Total break- even sale in Dollar:
= Selling price × Break even units sell
= $25 × 5,500 units
= $137,500
Break- even Point = Fixed Costs ÷ Contribution Margin per Unit
Therefore,
Contribution Margin per unit:
= Fixed Costs ÷ Break-Even points
= $33,000 ÷ $137,500
= 0.24 per unit
Sales amount:
= (Fixed costs + Target profit) ÷ Contribution margin per unit
= ($33,000 + $12,000) ÷ 0.24
= $187,500
Sales in units = Sales in amount ÷ Selling price per unit
= $187,500 ÷ $25
= 7,500 units
The following transactions are being entered into the accounting system. Using the Chart of Accounts (attached), determine the changes to the balance sheet, income statement, job cost ledger, and equipment ledger as the result of entering each of the following transactions:
a. A $4,000 invoice for concrete charged to job cost code 102.01.32300M.
b. A $23,400 invoice from a subcontractor for HVAC charged to job cost code 201.01.231 00S, 15% retention is withheld from the invoice.
c. A $1,500 bill for Office 1 rent.
d. A $2,000 of depreciation for Office 2.
e. A 120,000 bill to a client for Job 225, and the client holds 10% retention
f. The first loan payment of S2,435 for an equipment, which includes $1655.8 in principal and $779.2 9 in interest.
g. A S4,500 of depreciation for a dump truck.
h. A piece of equipment was sold for S65,000 in cash. It was purchased for $125,000 and $70,000 of depreciation has been taken. There are no outstanding loans for this equipment.
Answer:
A. Balance sheet + $4000, in WIP or finished good under inventory and + $4000 accounts payable. Income statement + $4000 on cost of sales if job is sold. Job cost ledger + $4000, Equipment ledger no effect.
B. Balance sheet + $23400 WIP, - Bank 85% of invoice, + accounts payable 15% of invoice. INCOME STATEMENT no effect, Job cost legder + 23400 on overheads, Equipment no effect
c. Balance sheet - bank $1500, Income statement +1500 expense, job costing no effect, equipment no effect.
d. Balance sheet +$2000 accumulated depreciation, Income statement +$ 2000 depreciation, Job costing no effect, Equipment no effect.
e. Balance sheet + $12000 Accounts receivables, + $108000 Bank, Income statement + $120000 sales, Job costing no effect, Equipment no effect.
f. Balance sheet -$1655.8 loan, -$2435 bank, income statement + $779.2 expenses(interest), Job costing no effect, equipment no effect.
g. Balance sheet + $4500 accumulated depreciation, Income statement +$4500 depreciation, job costing no effect, equipment no effect only truck asset.
h. Balance sheet - $55000 Equipment, +$65000 bank, Income statement + $10000 gain on sale of asset. Job costing no effect, Equipment - $55000
Explanation:
Retention by client creates an asset
retention by business creates liability
some of the figures affect some of the accounts only when a condition occurs e.g for a cost in the job costing to affect income statement it must be finished and sold so to be cost of sale.
costs incurred in production are not expenses rather are capitalized to the product and create asset either WIP, FINISHED GOOD OR MATERIAL
A sporting goods company has a distribution center that maintains inventory of fishing rods. The fishing rods have the following demand, lead time, and cost characteristics: Average demand = 100 units per day, with a standard deviation of 12 units Average lead time = 12 days with a standard deviation of 2 days 250 days per year Unit cost = $25 Desired service level = 95% Ordering cost = $50 Inventory carrying cost = 20% The basic question: How many fishing rods should the distribution center carry to provide the desired service level? There are, of course, many other specific questions, such as EOQ? Average cycle stock?
Solution:
Average demand = 100 units per day, with a standard deviation of 12 units
Average lead time = 12 days with a standard deviation of 2 days
250 days per year
unit cost = $25 , desired service level = 95% , Ordering cost = $50 , Inventory carrying cost = 20%
Lets say
Average demand = Ad
Average lead time = At
Unit cost = U
Desired service level = Dl
Ordering cost = O
Inventory carrying cost = Icc
Standard deviation =S
Thus,
S of demand at Dl = [tex]12 * 12^{\wedge} 2[/tex] = 205 units
SS = 1.65 multiply with 205 = 339 units
Total units in a day = 250 multiply with 100 = 25000
EOQ = [tex]$(2 * 25000 \text { units per year } * 50 \text { per order }) /(25 \text { per unit* } 0.2)$[/tex] = 708 units
here 25 and 0.2 is unit cost and invetory cost
TAC
annual ordering cost
O = [tex]50 * 25000 / 708[/tex] = 1765.5
Annual inventory cost
Icc = [tex]25^{*} 0.2^{*}(708 \text { units } / 2)[/tex] = 1770
Annual product cost = Pc
25 multiply with 25000 = 625000
total = O +Icc+Pc
625000+1770+1765.5 = 628535.5
If the service level increases from 95% to 99%, cost will dec per unit
A landscaping company accepts MasterCard as payment for $1,000 worth of services. MasterCard charges a service fee of 2 percent. Which of the following would be recorded by the store? Multiple Choice Debit $20 to Service Fee Expense Debit $1,000 to Cash Credit $980 to Service Revenue Credit $980 to Cash
Answer:
Dr Cash 1020
Cr Service revenue 1000
Cr Service fee 20
Explanation:
Service fee is expense of individual who is purchasing not store's expense.
- Total cash received by store is $ 1020 because 2% is service charges by master card,its is income of master card not store so store will treat as liability.
The only revenue of store is $1000.
Calculate the Kuznets Ratio for Bangladesh based on size distribution: The lowest 40% receives 17.3% of national income and the highest 20% receives 45.3%.
Answer:
Kuznets Ratio = 2.62
Explanation:
Kuznet Ratio = % share of income received by richest 20%
% share of income received by poorest 40%
Given : The lowest 40% receives 17.3% of national income and the highest 20% receives 45.3%.
So, Kuznets Ratio = 45.3 / 17.3
= 2.62
You are earning $40,000 per year as a branch manager at Dunkin Donuts. You are planning on leaving your job and going back to college; upon learning this, your branch manager offers you a 10% increase in salary to stay. Knowing this, how does the opportunity cost of going to college change?
Answer:
It increases the opportunity cost because you are foregoing more money for college.
Explanation:
Opportunity cost is the benefit profit, or value of something that is missed or given up when an individual chooses one alternative over another.
The 10% rise in salary offered by the branch manager increases the opportunity cost of going to college. This is because the higher cost (money) you could have earned by not going to college is foregone.
Final answer:
The opportunity cost of attending college includes the foregone increased salary of $44,000 due to the 10% raise offer at Dunkin Donuts, which is higher than the original salary of $40,000.
Explanation:
The opportunity cost of going back to college has increased due to the branch manager's offer of a 10% salary increase to stay at Dunkin Donuts. If you are currently earning $40,000 and are offered a 10% increase, that would mean an additional $4,000, bringing your new salary to $44,000 per year. Therefore, if you choose to go to college instead of accepting this salary increase, the opportunity cost now includes this potential extra earnings, which can accumulate significantly over time, much like saving $5 a day on lunch can add up to a substantial amount such as the cost of a decent vacation over a year.
However, in some cultures, business transactions routinely involve bribery. Nevertheless, if you are offered a bribe, politely uphold your own ethical standards and refuse the offer without insulting your business partner.True or False?
Answer:
The statement is: True.
Explanation:
Anywhere around the world, receiving bribes is unethical and unprofessional. Individuals offering and accepting bribes show their only drivers in life is money and not values. Unfortunately, even if in most cases bribes and other acts of corruption are legally sanctioned, bribes are still used to facilitate negotiations or influence public authorities' decisions.
If offered a bribe, an individual must refrain to accept it and, if possible, report this event to a lead for future reference. It is needless to open up a fight with the person offering the bribe but rejecting his or her proposal is vital to demonstrate the type of professional the corrupt individual has in front.
Final answer:
True, offering and accepting bribes is illegal and unethical, regardless of local customs. Laws like the FCPA and OECD Anti-Bribery Convention internationally prohibit bribery, necessitating that companies refuse such offers and maintain ethical business practices.
Explanation:
The statement provided suggests that if a bribe is offered during a business transaction, one should refuse it while maintaining professionalism and not offending the other party – which is true. Globally, corruption and particularly bribery are not only unethical but also illegal. Laws like the US Foreign Corrupt Practices Act (FCPA) and the OECD Anti-Bribery Convention prohibit bribery of government officials and others, regardless of cultural norms that may seem to accept such practices. Accepting bribes can lead to grave legal risks, undermine public interests, promote a culture of corruption, and result in severe legal penalties and public relations damage for the corporation involved.
Furthermore, behaviors that may appear as normal business practices in some cultures can be considered corrupt in others. The Chinese concept of guanxi, for example, refers to building networks of personal connections that could, under some circumstances, cross the line into corrupt practices. Thus, while some behaviors like gift-giving can have legitimate cultural roots, they can also, if not managed carefully, lead to unethical and illegal activities.
Therefore, companies are encouraged to develop internal policies that comply with anti-corruption legislation and maintain ethical negotiation practices, including transparent dealings and the avoidance of any form of bribery. In light of differing global standards, this manifesto of ethical business conduct becomes even more significant.
Under which of the following conditions is job dissatisfaction less predictive of turnover?
when employees are highly educated
when employees are presented with unsolicited job offers
when employees are highly skilled
when employees consider their current jobs to be unattractive
when employment opportunities are plentiful
Answer: When employees are presented with unsolicited job offers
Explanation:
When an employee is presented with unsolicited job offers, job dissatisfaction is less predictive of turnover and this is because the employee is very likely to leave because of the lure of other jobs than their attractiveness. This can also happen because the employee perceives that it is easy to leave especially when he feels that employment opportunities are plenty and many.
The supplies account had a beginning balance of $1,804. Supplies purchased during the period totaled $3,283. At the end of the period before adjustment, $439 of supplies was on hand. Required: Prepare the adjusting entry for supplies on December 31. Refer to the Chart of Accounts for exact wording of account titles.
Answer: The adjusting entry is:
Debit ($) Credit ($)
Supplies expenses 4,648
Supplies 4,648
Being adjustment to account for supplies expenses incurred at year end
Explanation: The supplies account is an asset account, so it has a debit balance. To arrive at the supplies expenses amount journalzed above, we have to do a movement schedule for the supplies account as follows:
Opening balance $1,804
Purchases during the period 3,283
Supplies expenses (XXX)
Balance 439
To get the value of XXX above, we do $1,804+3,283-XXX=439; using subject of the formula, XXX = $1,804+3,283-439 = $4,648.
1. The ceteris paribus assumptions means: a. favors are returned in kind. b. this is proof of the matter. c. from many, one. d. other things are equal.
Answer:
The correct answer is letter "D": other things are equal.
Explanation:
"Ceteris paribus" is a phrase in Latin that means "other things held constant". The term is widely used in Economics mainly when talking about variables that could influence others but part of other variables remain constant allowing a phenomenon to happen. The phrase is mostly heard while applying the demand and supply law.
Answer:
d. other things are equal.
Explanation:
d is the correct answer
Justin Cement Company has had the following pattern of earnings per share over the last five years: Year Earnings per Share 20X1 $ 4.00 20X2 4.24 20X3 4.49 20X4 4.76 20X5 5.05 The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings.
a. Project earnings and dividends for the next year (20X6).
b. If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (P0) at the beginning of 20X6?
Answer:
(a) $5.353; $2.1412
(b) $30.59
Explanation:
Given that,
Year Earnings per Share
20X1 $4.00
20X2 $4.24
20X3 $4.49
20X4 $4.76
20X5 $5.05
Dividends = 40 percent of earnings
Constant growth rate for earnings:
= [tex]\frac{EPS\ for\ any\ year}{EPS\ for\ the\ previous\ year} - 1[/tex]
= [tex]\frac{4.24}{4} - 1[/tex]
= 1.06 - 1
= 0.06 or 6%
(a) EPS for 20X6:
= EPS for 20X5 × (1 + 6%)
= $5.05 × 1.06
= $5.353
Dividend for 20X6:
= 40% × EPS for 20X6
= 40% × $5.353
= $2.1412
(b) Given that,
Required rate of return (Ke) = 13 percent
Stock Price at the beginning of 20X6:
[tex]=\frac{Dividend\ for\ 20X6}{(Required\ rate\ of\ return - Constant\ growth\ rate)}[/tex]
[tex]=\frac{2.1412}{(0.13 - 0.06)}[/tex]
= $30.59
Bonds are issued on June 1 that have interest payment dates of April 1 and October 1. Bond interest expense for the year ended December 31, 2009, is for a period of:
A. Three months.
B. Four months.
C. Six months.
D. Seven months.
Answer:
D. Seven months.
Explanation:
Bond is defined as a debt instrument that shows the indebtedness big the bond issuer to the bond holder. They are units of cooperates debt issued by companies and they are tradeable. For example corporate bond and municipal bonds.
When a bond is issued on June 1 , with repayment of October 1 and April 1. The interest expense by October will be for 4 months.
However as at December 31, 2009 the accrued interest that will be recognised will be for October to December (that is for 3 months). Though it has not been paid it will be recognised at the end of the accounting period.
This gives a total of 7 months interest expense.
The bond interest expense is accounted for from the date of issuance, June 1, to the year-end, December 31, totaling six months. Answer choice C, which represents a six-month period, is the correct period for recording bond interest expense in this case.
Explanation:The question is related to the interest expense calculation for a bond for a specific period within a financial year. Given the bonds are issued on June 1 and have interest payment dates of April 1 and October 1, we have to determine the period for which the interest expense should be recorded until year-end, December 31, 2009.
As the bonds were issued on June 1, the interest calculation starts from this date. The first interest payment date after June 1 would be October 1, and the second would be the following April 1. However, since we are interested in the period ending December 31, 2009, we should only consider the payments up to this date. From June 1 to October 1 is four months. After the interest payment in October, another two months of interest accrue until December 31. Thus, the total interest expense for the period is for six months.
A. Three months.B. Four months.C. Six months. D. Seven months.The correct answer is C. Six months.
Mark's team is extremely ambitious. Irrespective of tight deadlines, it takes up a high-priority project that required a heavy investment. Eventually, the team is unable to meet the project schedule and the company goes bankrupt. Which self-limiting behavior of Mark's team most likely led the company to bankruptcy?a. Risky shiftb. Groupthinkc. Group-hated. Social loafing
The correct option is - A ( Risky shift)
Explanation:
Risk is the product of the probability and impact of an event. In this case A Cyber event.
There are 4 main ways to handle risk: Avoidance, mitigation, transfer and acceptance.
To avoid risk usually means to stop the activity or process which poses that risk. For instance: to avoid the risk of a hacker gaining access to the company through the internet, a company may choose to cut off all connection to the internet.
Avoidance is highly irregular, it will interfere with business processes and usually used as a last resort when the risk cannot be handled in any other way. Avoidance is mostly used by military and government organizations.
The following are budgeted data:
January February March
Sales in units 16,600 23,200 19,600
Production in units 19,600 20,600 19,300
One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 25% of the following month's production needs. Purchases of raw materials for February would be budgeted to be:
Garrison 16e Rechecks 2017-10-03
Multiple Choice
A.20,925 pounds
B.20,575 pounds
C.20,275 pounds
D.18,325 pounds
Answer:
Purchases of raw materials for February would be budgeted to be C.20,275 pounds
Explanation:
One pound of material is required for each finished unit.
The inventory of materials at the end of February = 25% x 19,300 = 4,825 pounds
The inventory of materials at the end of January = 25% x 20,600 = 5,150 pounds
The materials used to produce finished unit in February = 20,600 pounds.
Purchases of raw materials for February = The materials used to produce finished unit in February + The inventory of materials at the end of February - The inventory of materials at the end of January = 20,600 + 4,825 - 5,150 = 20,275 pounds
O. Sawyer discovered problems in coordinating the work flow going from her department to marketing. To solve the problem, she identified some situations that needed correction and asked employees to submit their suggestions for improvement. After their suggestions were summarized, the employees selected one for implementation. Next, a supervisor was given responsibility and authority to oversee implementation and to keep Sawyer informed. Sawyer's actions exhibit the ____ leadership style.
Answer: Democratic
Explanation: Democratic leadership style is the style of leadership which
gives team members the opportunity to participate in the decision making processes. This type of leader ensures that the people are allowed to feel among and it enhances their ownership culture.
THE STEPS TAKEN BY O. SAWYER IS TYPICAL OF A DEMOCRATIC LEADERSHIP WHICH INVOLVED THE TEAM MEMBERS THE OPPORTUNITY TO SUBMIT THEIR OWN SUGGESTIONS FROM WHERE THE ONE OF THE SOLUTIONS WAS GOTTEN.
raffle is being held at a benefit concert. The prizes are awarded as follows: 1 grand prize of $6,600.00, 3 prizes of $800.00, 3 prize of $65.00, and 10 prizes of $20.00. Suppose 14500 raffle tickets are sold, if you buy one ticket for $1.00 then what is your expected value for this raffle?
Answer:
-0.352
Explanation:
Total number of raffle tickets sold = 14,500
1 grand prize of $6,600, 3 prizes of $800, 3 prizes of $65 and 10 prizes of $20.
Therefore,
Probability of winning 1 grand prize of $6,600 = [tex]\frac{1}{14,500}[/tex]
Probability of winning 3 prizes of $800 = [tex]\frac{3}{14,500}[/tex]
Probability of winning 3 prizes of $65 = [tex]\frac{3}{14,500}[/tex]
Probability of winning 10 prizes of $20 = [tex]\frac{10}{14,500}[/tex]
Expected value:
[tex]=[(\frac{1}{14,500}\times 6,600) + (\frac{3}{14,500}\times 800) + (\frac{3}{14,500}\times 65) + (\frac{10}{14,500}\times 20)] - 1[/tex]
[tex]=(0.455+0.166+0.013+0.014)-1[/tex]
= 0.648 - 1
= -0.352
Final answer:
The expected value of purchasing one ticket in the raffle is approximately -$0.352. This value suggests an expected loss of $0.352 per ticket when considering the prize distribution and the total number of tickets sold.
Explanation:
To calculate the expected value for a raffle ticket you have purchased, we will need to consider the total value of all prizes, the number of each type of prize, the total number of tickets sold, and the cost of the raffle ticket.
The following prizes are awarded in the raffle:
1 grand prize of $6,600.00
3 prizes of $800.00
3 prizes of $65.00
10 prizes of $20.00
Total number of tickets sold: 14,500
Now, to calculate the expected value for one ticket:
Calculate the total prize money: (1 times $6600) + (3 times $800) + (3 times $65) + (10 times $20) = $6600 + $2400 + $195 + $200 = $9,395.00
Divide the total prize money by the total number of tickets to find the expected value per ticket: $9,395 / 14,500 = approximately $0.648
Subtract the cost of one ticket ($1) from the expected value per ticket to find the expected gain or loss: $0.648 - $1 = -$0.352
The expected value of one raffle ticket in this scenario is approximately -$0.352, meaning an expected loss of $0.352 per ticket.
You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 3 years; at the following year, an amount of $3,000 per year until year 11; and then an amount of $6,000 per year until year 25. If your required rate of return (APR) is 11% compounded annually, what is the present value today of these cash flows?
Answer:
Present value of these cash flows are $24,580
Explanation:
Net present value is the sum of present value of all future cash inflows and outflows of a project using discounting method by a required rate of return. It measure the net value of the project's cash flows in present value term.
All the calculation and working is in the attached MS Excel file please find it.
The present value of the investment opportunity is $24,924.23, considering the given cash flow structure and an 11% annual interest rate.
To calculate the present value (PV) of the given cash flows, we need to discount each cash flow back to its present value, using the 11% annual interest rate:
Nothing for the next 3 years: PV = 0
$3,000 per year from year 4 to year 11 (8 years total):
We use the formula for the present value of an annuity: PV = C [1 - (1 + r)⁻ⁿ] / r where C = $3,000, r = 0.11, n = 8
Calculate the immediate present value of these 8 payments at year 3:
PV = 3000 [1 - (1 + 0.11)⁻⁸] / 0.11PV = 3000 [1 - 0.4342] / 0.11PV = 3000 × 5.1381PV = $15,414.30Now, discount this back to the present value at year 0:
PV = $15,414.30 / (1 + 0.11)³PV = $15,414.30 / 1.3676PV = $11,272.26$6,000 per year from year 12 to year 25 (14 years total):
We use the formula for the present value of an annuity: PV = C [1 - (1 + r)⁻ⁿ] / r where C = $6,000, r = 0.11, n = 14
Calculate the present value at year 11:
PV = 6000 [1 - (1 + 0.11)⁻¹⁴] / 0.11PV = 6000 [1 - 0.2418] / 0.11PV = 6000 × 6.8931PV = $41,358.60Now, discount this back to the present value at year 0:
PV = $41,358.60 / (1 + 0.11)¹¹PV = $41,358.60 / 3.031PV = $13,651.97Summing up these present values:
Total PV = $11,272.26 + $13,651.97 = $24,924.23
The natural and organic confectionary product category is currently in the ________ stage of the product life cycle as evidenced by increasing rate of sales growth, broadened distribution, and a proliferation of organic peanut butter cup flavors.
Options:
A. growth
B. maturity
C. decline
D. introduction
Answer: A. Growth
Explanation: A product lifecycle is a term used to describe the overall steps which a product undergo before eventual withdrawal from the market.
The product lifecycle is made of the following stages
(1) Product initiation stage where the product is just being made available to the market.
(2) PRODUCT GROWTH STAGE WHERE THE PRODUCT IS EXPERIENCING EXPONENTIAL GROWTH, AND BROADENED DISTRIBUTION WITH HIGH PROFITABILITY ETC
The product stabilisation stage where the growth or development of the product is stable especially because of the introduction of several other competitors.
The the product decline stage where the product's sales is dropping and no longer profitable etc.
Unit contribution margin is A. The contribution margin in dollars for all products. B. The contribution margin as a percentage for a single unit. C. The contribution margin as a percentage for all products. D. The contribution margin in dollars for a single product.
Answer:
The correct answer is:
The contribution margin in dollars for a single product. (D.)
Explanation:
The unit contribution margin is the amount in dollars by which the price of selling a product exceeds the total variable cost incurred in the manufacture of that product. Mathematically it is the selling price of a product minus the total variable cost incurred on the single product. It is the proportion of sales revenue that is not consumed by variable costs, hence is used for the coverage of fixed costs.
The importance of unit contribution margin is that it is used to calculate the break-even price of the product, when fixed costs are made up for. It measures how growth in sales translates to growth in profits.
For each of the following cases, state whether the statement is true for LIFO or for FIFO. Assume that prices are rising. (a) select a method results in a higher quality of earnings ratio. (b) select a method results in higher phantom profits. (c) select a method results in higher net income. (d) select a method results in lower taxes. (e) select a method results in lower net cash provided by operating activities.
Answer: D. select a method results in lower taxes. (e) select a method results in lower net cash provided by operating activities
Explanation: Statement for LIFO and FIFO are rising definitely the organisation would want to reduce its taxes to significant amount and its operating activities would be checked during this period because it boils down to the price at which the product is being manufactured and sold out to the different customers that buys the company good. Last in first out and first in First out. This rule is used in warehousing and inventory management.
Savallas Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year:
Computer-hours...........................................................85,000
Fixed manufacturing overhead cost.............................$1,275,000
Variable manufacturing overhead per computer-hour.....$3.00
During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company%u2019s warehouse. The company%u2019s cost records revealed the following actual cost and operating data for the year:
Computer-hours........................................60,000
Manufacturing overhead cost..............$1,350,000
Inventories at year-end:
Raw materials..........................$400,000
Work in process.................................$160,000
Finished goods..................................$1,040,000
Cost of goods sold.................................$2,800,000
1.
Compute the company%u2019s predetermined overhead rate for the year
2. Compute the underapplied or overapplied overhead for the year.
3.
Assume the company closes any underapplied or overapplied overhead directly to cost of goods sold. Prepare the appropriate journal entry.
4.
Assume that the company allocates any underapplied or overapplied overhead to work in process, finished goods, and cost of goods sold on the basis of the amount of overhead applied during the year that remains in each account at the end of the year. These amounts are $43,200 for work in process, $280,800 for finished goods, and $756,000 for cost of goods sold. Prepare the journal entry to show the allocation.
5.
How much higher or lower will net operating income be for the year if the underapplied or overapplied overhead is allocated rather than closed directly to cost of goods sold?
Answer:
Part 1. Compute the company%u2019s predetermined overhead rate for the year
Predetermined overhead rate = $15 / Computer Hour
Part 2. Compute the underapplied or overapplied overhead for the year.
Underapplied Overheads are: $1,350,000 - $900,000 = $450,000
Part 3. Assume the company closes any underapplied or overapplied overhead directly to cost of goods sold. Prepare the appropriate journal entry.
Cost of goods sold $450,000 (debit)
Overhead Account $450,000 (credit)
Part 4. Company allocates any underapplied or overapplied overhead to work in process, finished goods, and cost of goods sold on the basis of the amount of overhead applied during the year that remains in each account at the end of the year:
Work In Process $18,000 (debit)
Finished Goods $73,008 (debit)
Cost of Goods Sold $315,000 (debit)
Overhead Account $450,000(credit)
Explanation:
Part 1. Compute the company%u2019s predetermined overhead rate for the year
Predetermined overhead rate = Budgeted Overheads / Budgeted Activity
= $1,275,000/ 85,000
= $15 / Computer Hour
Part 2. Compute the underapplied or overapplied overhead for the year.
Applied Overheads = Actual hours × Predetermined overhead rate
= 60,000 × $15
= $900,000
Actual Overheads = given = $1,350,000
Applied Overheads $900,000 < Actual Overheads $1,350,000, thus we have an underapplied situation
Therefore Underapplied Overheads are: $1,350,000 - $900,000 = $450,000
Part 3. Assume the company closes any underapplied or overapplied overhead directly to cost of goods sold. Prepare the appropriate journal entry.
Cost of goods sold $450,000 (debit)
Overhead Account $450,000 (credit)
Part 4. Company allocates any underapplied or overapplied overhead to work in process, finished goods, and cost of goods sold on the basis of the amount of overhead applied during the year that remains in each account at the end of the year:
Allocations:
Totals Weighted Average% Allocation
Work In Process $43,200 4% $18,000
Finished Goods $280,800 26% $73,008
Cost of Goods Sold $756,000 70% $315,000
Total $1,080,000 100% $450,000
Journals:
Work In Process $18,000 (debit)
Finished Goods $73,008 (debit)
Cost of Goods Sold $315,000 (debit)
Overhead Account $450,000(credit)
The predetermined overhead rate for the year is $15 per computer-hour. The underapplied overhead for the year is $75,000. If the underapplied overhead is allocated rather than closed directly to cost of goods sold, the net operating income will be $5,000 higher.
Explanation:To compute the company's predetermined overhead rate, divide the estimated manufacturing overhead cost by the estimated computer-hours. In this case, the predetermined overhead rate is $15 per computer-hour ($1,275,000 / 85,000 computer-hours).
The underapplied or overapplied overhead is computed by subtracting the applied overhead from the actual overhead. In this case, the underapplied overhead is $75,000 ($1,350,000 - ($15 x 60,000 computer-hours)).
If the company closes any underapplied or overapplied overhead directly to cost of goods sold, the journal entry would be:
Cost of Goods Sold 75,000
Manufacturing Overhead 75,000
If the company allocates the underapplied or overapplied overhead based on the amount of overhead applied during the year that remains in each account, the journal entry would be:
Work in Process 43,200
Finished Goods 280,800
Cost of Goods Sold 756,000
Manufacturing Overhead 80,000
If the underapplied or overapplied overhead is allocated rather than closed directly to cost of goods sold, the net operating income for the year will be $5,000 higher ($80,000 - $75,000 = $5,000).
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Dollar General uses a cost leadership strategy. The Dollar General slogan is "Save time. Save money. Every day!®" Dollar General will be more effective if it has a mechanistic structure. Which of the following reasons explain this? Check all that apply.
-Narrow spans of management ensure that employees operate efficiently.
-Centralized decision making allows the organization to place tighter controls on the way work is done and, in the process, achieve economies of scale
Answer:
Narrow spans of management ensure that employees operate efficiently.
Centralized decision making allows the organization to place tighter controls on the way work is done and, in the process, achieve economies of scale.
Explanation: When the spans of management is narrow, proper supervising and controlling and coordination of work is done to achieve effective and efficient work done by the Employees.
A centralised decision making process helps the Organisation to have a tight control on its spendings and in the way work is done, this will help the Organisation to cut cost and take strategic decisions for organisational growth and development.
A mechanistic structure with narrow spans of management and centralized decision-making aligns well with Dollar General's cost leadership strategy, driving efficiency and economies of scale.
Explanation:Dollar General, using a cost leadership strategy, is suggested to be more effective with a mechanistic structure for several reasons. First, narrow spans of management ensure that employees operate efficiently because it simplifies supervision and communication channels, which is essential for maintaining low costs. Second, centralized decision-making allows the organization to enforce tighter controls, helping not only in achieving economies of scale but also in maintaining the uniformity and cost-effectiveness of the work being done.
Currently, Warren Industries can sell 20 dash year, $1 comma 000-par-value bonds paying annual interest at a 9% coupon rate. Because current market rates for similar bonds are just under 9%, Warren can sell its bonds for $980 each; Warren will incur flotation costs of $20 per bond. The firm is in the 28% tax bracket. a. Find the net proceeds from the sale of the bond, Upper N Subscript d. b. Calculate the bond's yield to maturity (YTM) to estimate the before-tax and after-tax costs of debt. c. Use the approximation formula to estimate the before-tax and after-tax costs of debt.
Answer:
a. Cash proceeds $960
b. Cost of Debt Before tax 9.4% and after tax 6.8%
c. Cost of Debt Before tax 9.39% and after tax 6.76%
Explanation:
a.
Cash proceed from the sale of bond is the net selling price and the floating cost of the bonds.
Cash proceed = Selling price - Floating cost = $980 - $20 = $960
b.
Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity.
Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
Yield to maturity = [ $90 + ( $1,000 - $960 ) / 20 ] / [ ( $1,000 + $960 ) / 2 ]
Yield to maturity = 9.4%
Cost of debt before tax = 9.4%
Cost of debt after tax = 9.4% ( 1 - 0.28 ) = 6.8%
c.
Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
Yield to maturity = [ $90 + ( $1,000 - $960 ) / 20 ] / [ ( $1,000 + $960 ) / 2 ]
Yield to maturity = 9.39%
Cost of debt before tax = 9.39%
Cost of debt after tax = 9.19% ( 1 - 0.28 ) = 6.76%
Zach wants to take his family on a cruise in 4 years and he estimates the cost of the cruise will be $16,500. How much money should he deposit each month into an account that pays 3.99% monthly in order to have the needed money?
Answer:
$118.83 per month that Zach must save.
Explanation:
This is a future value annuity as we know the cruise will cost $16500 in 4 years time as estimated by Zach for the cruise.
Fv is the future value for the annuity which is $16500
we also have i the interest rate which is 3.99% monthly
n is the number of periods in which the monthly amount is saved 4 x 12 =48
now we will substitute to the following formula and solve for C the monthly payments that Zach saves for the cruise:
Fv =C [((1+i)^n -1)/ i] now we substitute
$16500 = C[((1+3.99%)^48 -1)/3.99%)] then solve for C
$16500/[(1+3.99%)^48 -1)/3.99%] = C
C = $118.83 that Zach must save per month for 4 years to afford the cruise.
All of the following will cause a shift in the demand curve for oranges except ______.
A. an increase in the price of apple juice.
B. more people start drinking orange juice for breakfast.
C. a decrease in the price of oranges.
D. a new study suggest that orange juice is good for healthy bones.
E. excessive rain in northern Florida might cause supply of oranges to decrease.
Answer:
The correct answer is letter "D": a new study suggest that orange juice is good for healthy bones.
Explanation:
The demand curve represents the relationship between the price and the quantity demanded for a good or service. When the price rises, the quantity demanded falls and the demand curve shifts leftwards. If the price decreases, the quantity demanded increases and the demand curve shifts rightwards.
Thus, if a new study unveils the beneficial properties of oranges in keeping bones healthy, the reaction of consumers is uncertain. It is supposed to increase the demand for oranges but that does not necessarily need to happen.
The following information is available for Robstown Corporation for 20Y8:
Inventories January 1 December 31
Materials $352,000 $436,200
Work in process 632,000 590,800
Finished goods 606,200 574,000
December 31
Advertising expense $295,400
Depreciation expense-office equipment 43,800
Depreciation expense-factory equipment 56,340
Direct labor 669,400
Heat, light, and power-factory 22,220
Indirect labor 77,000
Materials purchased 659,200
Office salaries expense 185,300
Property taxes-factory 18,500
Property taxes-office building 31,600
Rent expense-factory 33,000
Sales 3,015,000
Sales salaries expense 418,000
Supplies-factory 15,200
Miscellaneous costs-factory 9,700
Required:
a. Prepare the 20Y8 statement of cost of goods manufactured.
b. Prepare the 20Y8 income statement.
Answer:
1. Cost of goods manufactured = $1,672,160
2. Net income = $336,540
Explanation:
Requirement 1
Robstown Corporation
statement of cost of goods manufactured
For the year ended 20Y8
Direct Materials
Beginning materials inventory $352,000
Add: Materials purchased $659,200
Materials available for use = 1,011,200
Less: Ending materials inventory = ($436,200)
Direct materials used = 575,000
Direct labor = 669,400
Prime cost = 1,244,400
Add: Factory overhead
Depreciation expense-factory equipment $56,340
Heat, light, and power-factory 22,220
Indirect labor 77,000
Property taxes-factory 18,500
Rent expense-factory 33,000
Supplies-factory 15,200
Miscellaneous costs-factory 9,700
Total factory overhead = 231,960
Manufacturing cost = $1,476,360
Add: Work in process, January 1 = $632,000
Less: Work in process, December 31 = ($436,200)
Cost of goods manufactured = $1,672,160
Requirement 2
Robstown Corporation
Income statement
For the year ended 20Y8
Sales 3,015,000
Less: Cost of goods sold (Note - 1) ($1,704,360)
Gross profit = $1,310,640
Less: Administrative and selling expense
Advertising expense $295,400
Depreciation expense-office equipment 43,800
Office salaries expense 185,300
Property taxes-office building 31,600
Sales salaries expense 418,000
Total cost $974,100
Net income = $336,540
(Note - 1) Cost of goods manufactured + Beginning finished goods - Ending finished goods = $1,672,160 + 606,200 - 574,000 = $1,704,360.
Final answer:
The student is provided with a step-by-step calculation of the Statement of Cost of Goods Manufactured and the Income Statement for Robstown Corporation for 20Y8. Direct materials, direct labor, and manufacturing overhead were calculated to determine the total cost of goods manufactured. These figures were then used to compute the cost of goods sold and, finally, the net income after accounting for operating expenses.
Explanation:
Statement of Cost of Goods Manufactured
Direct Materials:
Beg. Inventory Materials: $352,000
+ Materials Purchased: $659,200
= Materials Available for Use: $1,011,200
- Ending Inventory Materials: $436,200
= Materials Used: $575,000
Direct Labor: $669,400
Manufacturing Overhead:
Depreciation Expense-Factory Equipment: $56,340
Heat, Light, and Power-Factory: $22,220
Indirect Labor: $77,000
Supplies-Factory: $15,200
Miscellaneous Costs-Factory: $9,700
= Total Manufacturing Overhead: $180,460
Total Manufacturing Costs:
Materials Used: $575,000
+ Direct Labor: $669,400
+ Manufacturing Overhead: $180,460
= Total Manufacturing Costs: $1,424,860
+ Beg. Work in Process: $632,000
- Ending Work in Process: $590,800
= Total Cost of Goods Manufactured: $1,466,060
Income Statement for 20Y8
Sales: $3,015,000
Cost of Goods Sold:
Beg. Finished Goods: $606,200
+ Cost of Goods Manufactured: $1,466,060
= Goods Available for Sale: $2,072,260
- Ending Finished Goods: $574,000
= Cost of Goods Sold: $1,498,260
Gross Profit: Sales - Cost of Goods Sold
= $3,015,000 - $1,498,260
= $1,516,740
Operating Expenses:
Advertising Expense: $295,400
Depreciation Expense-Office Equipment: $43,800
Office Salaries Expense: $185,300
Property Taxes-Office Building: $31,600
Rent Expense-Factory: $33,000
Sales Salaries Expense: $418,000
= Total Operating Expenses: $1,007,100
Net Income: Gross Profit - Operating Expenses
= $1,516,740 - $1,007,100
= $509,640