Answer:
Tapered integration
Explanation:
Tapered integration is a term in organization theory that is a mix of market exchange and vertical integration. Advantages of vertical integration include risk protection, motivation tool for market and internal division, enlargement of input channels with little capital outlays,
the use of information on internal cost to discuss contracts with market.
Its disadvantages are monitoring issues, inefficiency and minimal production.
The following are two independent situations.
Situation 1: Conchita Cosmetics acquired 10% of the 204,600 shares of common stock of Martinez Fashion at a total cost of $15 per share on March 18, 2014. On June 30, Martinez declared and paid a $77,200 cash dividend. On December 31, Martinez reported net income of $123,100 for the year. At December 31, the market price of Martinez Fashion was $17 per share. The securities are classified as available-for-sale.
Situation 2: Monica, Inc. obtained significant influence over Seles Corporation by buying 32% of Seles's 32,800 outstanding shares of common stock at a total cost of $11 per share on January 1, 2014. On June 15, Seles declared and paid a cash dividend of $40,400. On December 31, Seles reported a net income of $87,500 for the year.
Required:
Prepare all necessary journal entries in 2014 for both situations.
Answer:
Explanation:
Situation 1:
March 18, 2014
investment at avialble for sale 3069000
Cash 3069000
To record the Investment at available for sale.
June 30
Cash 77200
dividend income 77200
To record the cash dividend.
December 31,
Cost of investment =204600*15 = 3069000
F.value of investment =204600*17 = 3478200
Gain/Loss = 409200
investment at avialble for sale 409200
Cash 409200
the invest is recorded at investment at avialble so the revaluation gain and loss will be recorded in the Other comprehensive income .
Situation 2:
invest in associate 360800
Cash 360800
To record the investment at cost
invest in associate (32800*4) 131200
Revaluation gain P/L (32800*4) 131200
to record the revaluation gain on investment in assocaite
Cash 40400
dividend income 40400
to record the dividend income
On July 10, Boogie Footware agrees to a contract to sell 800 pair of flapper shoes for $16,000 to Twenties, Inc. On September 1, after 500 pair of have been delivered, Boogie and Twenties modify the agreement to reduce the price of the remaining 300 pair of flapper shoes to $10 a pair. During September, Boogie delivers 200 pairs of shoes. How much revenue will Boogie recognize for the month of September?
A) $1, 375
B) $2,000
C) $1,625
D) $3,000
Answer:
B) $2,000
Explanation:
The revenue to be recognized in September will be dependent on the quantity sold during the month and the unit cost of each item as agreed in the contract. The product of the unit cost of a pair and the number of units delivered.
Given that Boogie delivers 200 pairs of shoes at $10 per pair, the total revenue to be recognized
= 200 * $10
= $2,000
The revenue Boogie will recognize for the month of September is $2,000 after modifying the agreement to sell the remaining 300 pairs at $10 each and delivering 200 pairs in September.
To determine this, let's review the details:
Boogie originally agreed to sell 800 pairs for $16,000, making the price per pair $20.
By September 1, 500 pairs have been delivered, leaving 300 pairs.
The agreement was modified to reduce the price of the remaining 300 pairs to $10 each.
During September, Boogie delivers 200 pairs.
For September:
New price per pair (for remaining 300 pairs) = $10
Number of pairs delivered in September = 200
Revenue for September = 200 pairs × $10 = $2,000
The revenue Boogie will recognize for the month of September is $2,000.
To get his company through some hard economic times, Ben's working hours have just been reduced from 40 hours a week to 33. Ben is upset about the reduction in time and pay, but he shows up at work every morning and is willing to patiently wait until economic times improve, and he can go back to working full time. Which of the following types of response is being displayed by Ben?
(A) voice
(B) neglect
(C) loyalty
(D) exit
(E) acceptance
Answer:
The correct answer is C) loyalty .
Explanation:
Organizational loyalty is an attitude of deep commitment of employees to the company and is manifested in the things that our subordinates are willing to give up or do with sacrifice for the sake of the organization.
In business management committees, time is often spent discussing how to increase employee loyalty to the company. Often some indices such as staff turnover, organizational climate and employee satisfaction are considered as key factors to increase loyalty. While it is true that improving these indicators is convenient, its impact is not necessarily direct on what we would call genuine loyalty.
(Annuity payments) Prof. Finance is thinking about trading cars. She estimates she will still have to borrow $26,000 to pay for her new car. How large will Prof. Finance's monthly car loan payment be if she can get a 5-year (60 equal monthly payments) car loan from the VTech Credit Union at 8.5 percent APR? Use five decimal places for the monthly percentage rate in your calculations.
Answer:
Explanation:
using the annuity formula = P=R*(1-(1+i )^-n)/i
p= 26000
i= 8.5/12=0.70833%
Payments=5*12=60
R=?
Since we have
26000=R*(1-(1+0.70833%)^-60)/0.70833%
26000=R* 0.34524/0.70833%
26000=R*48.74122
R=26000/48.74122
R=533.42931
The feminine personality of Whirlpool helps identify which styles and colors will be most appealing to buyers. The company now uses female voice-overs in its ads to align the advertising with the brand's personality more closely. This is an example of a company__________
Answer: Elaborating on a brand personality
Explanation: Brand personality is the attribution of a personal trait to a brand which helps the organization to mold the manner consumers feel about its commodity, service or purpose. In this case, characteristics of a human being like feminine voice-over signify the whirlpool personality through the person representing the brand along with advertising so as to be in the same position as the whirlpool brand.
Gordon has already worked 40 hours this week and is asked to come in to work again. Gordon is a manager who constantly has to make decisions about the business's operation. Is Gordon eligible for overtime pay?
Answer:No , he is not eligible for overtime pay.
Explanation:Who is Most Likely an Exempt Employee?
There are people who are exempt employees when it comes to qualifying for overtime pay due to their duties within the company.
Below is the list of exempt employees:
Senior management, corporate executives, company owners, company directors and similar white-collar executives are most often often exempt employees. Managers and supervisors who are responsible for making decisions on how work is performed , who set and oversee the financial aspects of the business , define pat level for employees,who are responsible for hiring all of these duties makes a manager exempt to overtime pay and we are told Gordon makes decisions about business's operation.
Answer:
Gordon is not eligible for overtime pay.
Explanation:
Based on the Fair Labor Standards Act (FLSA or Act), Gordon is the manager and have the right to make the decision which impacts on business operation. So, he will not be the one who will be covered and to be paid for overtime work.
Suppose that in an economy, net taxes and government spending are independent of income. It is determined that when government spending decreases by exist100 billion, income falls by exist1000 billion. In this economy the value of the MPS = ______. Enter your response rounded to two decimal places.) In this economy the value of the MPC = _____. (Enter your response rounded to two decimal places.)
Answer:
(1) In a closed economy, assuming investment demand is zero,
Y = C + G
Y - C = G
S = G, where
Y: Income, C: Consumption, S: Savings and G: Government spending
So,
S / Y = G / Y [dividing each side by Y]
[tex]\Delta \mathrm{S} / \Delta \mathrm{Y}=\Delta \mathrm{G} / \Delta \mathrm{Y}[/tex]
MPS = $100 billion / $1000 billion = 0.10
(2) MPC = 1 - MPS = 1 - 0.10 = 0.90
In a competitive industry a. the industry has high barriers to entry b. the industry has high barriers to exit c. the industry has high barriers to entry and exit d. the industry has no barriers to entry or exit
Answer:
The answer is D.
Explanation:
In a competitive industry like perfect competitive market, the industry has no barrier to entry or exit. Firms can freely enter the market as long as it can make its profit and leave the industry anytime the firm likes.
This no barrier to entry and exit lead to the large number of sellers that we have in this type of market. And this large number of sellers make competition strong that no seller can influence the price of the market.
In a competitive industry, there are no significant barriers to entry or exit, distinguishing it from markets where barriers exist that can potentially lead to monopolistic conditions.
Explanation:In a competitive industry, the correct answer to whether the industry has high barriers to entry or exit is d. the industry has no barriers to entry or exit. Perfectly competitive markets are characterized by the lack of barriers to entry or exit, allowing for numerous firms to enter and leave the market freely, which leads to the efficient allocation of resources. When there are significant barriers to entry, perfect competition is compromised, and the possibility of a monopoly increases. Barriers to entry can take various forms, including government-enforced barriers such as licensing and regulations, and non-government barriers like strong brand names or control of scarce resources.
Learn more about Barriers to Entry here:https://brainly.com/question/29656127
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You just won the lottery and the lottery commission will either give you $6 million as a lump sum, or 20 equal, annual payments of $500,000. Assume an interest rate of 6% per year, compounded annually. What should you do
Final answer:
To decide between the lump sum and the annuity, we calculate the present value of the annuity using the formula PV = PMT * [tex][(1 - (1 + r)^{-n}) / r][/tex]. With an interest rate of 6%, the present value of 20 annual payments of $500,000 is approximately $6,085,852, which is slightly higher than the $6 million lump sum.
Explanation:
To decide whether to take the $6 million lump sum or the 20 annual payments of $500,000, we need to calculate the present value of the annuity (the series of 20 payments). Present value analysis is a mathematical concept used to determine the equivalent value today of a series of future payments, given a specific interest rate.
The formula for the present value of an annuity is: PV = PMT * [[tex](1 - (1 + r)^{-n}) / r][/tex], where PMT is the annual payment ($500,000 in this case), r is the annual interest rate (6% or 0.06), and n is the number of years (20 years).
Plugging in the values, we get: PV = $500,000 * [(1 - (1 + 0.06)⁻²⁰) / 0.06]
Calculating the above, the present value of the annuity is approximately $6,085,852. If the present value of the annuity payments is more than the lump sum of $6 million, it would be better to choose the annuity payments, assuming the interest rate is reliable and stable. However, this decision also depends on personal factors such as the winner's age, financial stability, investment plans, and tax considerations.
A population of bears increased by 50% in 4 years. If the situation is modeled by an annual growth rate compounded continuously, which formula could be used to find the annual rate according to the exponential growth function? Leave your answer in terms of ln.
Answer:
[tex]r=\frac{ln(1.5)}{4}[/tex]
Explanation:
Given:
Total population after time (P) = 100% + 50% = 1 + 0.5 = 1.5
Starting population (p) = 100% = 1
Number of year (t) = 4 year
rate of growth = r
Computation:
Exponential growth function for population :
P = [tex]pe^{rt}[/tex]
1.5 = [tex]1\times e^{4\times r}[/tex]
1.5 = [tex]e^{4r}[/tex]
From taking log:
4r = ln(1.5)
[tex]r=\frac{ln(1.5)}{4}[/tex]
Answer:
ln(1.5)/4
Explanation:
If you are willing to purchase a house for $500,000 and you purchase the house for $500,000, this transaction will generate: a. $0 worth of buyer surplus and unknown amount of seller surplus. b. $0 worth of seller surplus and unknown amount of buyer surplus. c. No information provided. d. There is no surplus created for either of the party.
Answer:c. No information provided
Explanation:
The fact that the house would be sold for $500.000 does not give us direct information about how much the seller was expecting, only what he or she accepted to sell it for, depending on the conditions it could mean they had no better offer and needed to sell it and therefore accepted what was offered even if it meant to lose a bit o gain much less that what they wanted, so since we are not offered information on the expectations of the seller we cannot say anything about it, then the other options are false, because it could even mean loss and no surplus.
Obviously, the lifetime membership isn’t a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it’s a great deal. Suppose that the appropriate annual interest rate is 7.4%. What is the minimum number of years that Lloyd must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value basis) than paying $600 in annual membership dues? (Note: Round your answer up to the nearest year.)
Answer:
The minimum number of years that Lloyd must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value basis) than paying the annual membership dues is 23 years.
Explanation:
The question is incomplete.
Lloyd is a divorce attorney who practices law in Florida. He wants to join the American Divorce Lawyers Association (ADLA), a professional organization for divorce attorneys. The membership dues for the ADLA are $600 per year and must be paid at the beginning of each year. For instance, membership dues for the first year are paid today, and dues for the second year are payable one year from today. However, the ADLA also has an option for members to buy a lifetime membership today for $6,500 and never have to pay annual membership dues. Obviously, the lifetime membership isn't a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it's a great deal. Suppose that the appropriate annual interest rate is 7.4%. What is the minimum number of years that Lloyd must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value basis) than paying $600 in annual membership dues?
We have to equal the price of the lifetime membership with the present value of the annual membership. The anual membership present value is equal to a annuityof n years.
[tex]6,500=600*\sum_0^n\frac{1}{(1+0.074)^{n}} =600(\frac{1-(1.074)^{-n}}{0.074})\\\\\\\frac{6500}{600}*0.074= 1-(1.074)^{-n}\\\\1.074^{-n}=1-0.8017=0.1983\\\\-n*ln(1.074)=ln(0.1983)\\\\n=-ln(0.1983)/ln(1.074)=-(-1.6180)/0.0714=22.66\approx23[/tex]
A Nike women's-only store in California offers women's running, training, and sportswear products and also contains an in-store fitness studio for group and personal fitness training sessions. The store consistently earns profits in excess of $586,000 per year and is located on prime real estate in the center of town. The store owner pays $17,000 per month in rent for the building. A real estate agent approached the owner and informed her that she could add $6,900 per month to her firm's profits by renting out the portion of her store that she uses as a fitness studio. While the prospect of acquiring this rental income was enticing, the owner believed the use of that space as a fitness studio was an important contributor to her store's profits.
What is the opportunity cost of continuing to operate the fitness studio within the store?
Answer:
Opportunity cost = $6900 monthly or $82800 yearly.
Explanation:
Opportunity cost = $6900 monthly or $82800 yearly.
The opportunity cost is the gain forgone for the other alternative, or ultimately a loss to acquire other opportunity.
Here, the opportunity cost is gain of $6900 forgone to operate the fitness studio within the store by Nike.
The opportunity cost of operating the fitness studio within the store is $6,900 per month, which is the amount the owner could earn by renting out the space instead.
The opportunity cost of continuing to operate the fitness studio within the store is the amount of money the store owner foregoes by not renting out the space. In this case, the owner has been offered $6,900 per month to rent out the space. Thus, by keeping the fitness studio running and not renting the space out, the owner is foregoing an additional profit of $6,900 per month.
Using the Yoga Center example, the situation shows different scenarios where the business must make decisions based on potential revenues, variable costs, and fixed costs. The contrast in scenarios also illustrates when a business should shut down in the short run or stay open to minimize losses, depending on whether the revenues can cover the variable costs. The situation serves as an example to illustrate the concepts of opportunity cost and decision-making based on costs and potential income.
Self-employment taxes: a. Are calculated based on unearned income such as interest and dividends as well as net earnings from self-employment. b. Are not affected by wages the taxpayer earns as an employee. c. Consist of Medicare tax and Social Security tax. d. Apply to taxpayers with less than $400 in self-employment earnings.
Answer:
C. Consist of Medicare tax and Social Security tax.
Explanation:
Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.
You figure self-employment tax (SE tax) yourself using Schedule SE (Form 1040 or 1040-SR). Social Security and Medicare taxes of most wage earners are figured by their employers. Also you can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. Wage earners cannot deduct Social Security and Medicare taxes.
Answer: i think its c
Explanation: thx for the points :D
"In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits"
Answer:
b. constant returns to scale because average total cost is constant as output rises.
Explanation:
The question has options. Below is the complete question.
Complete Question
In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits
a. diseconomies of scale because total cost is rising as output rises.
b. constant returns to scale because average total cost is constant as output rises.
c. diseconomies of scale because average total cost is rising as output rises.
d. economies of scale because average total cost is falling as output rises.
The correct answer is explained below.
In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits constant returns to scale because average total cost is constant as output rises.
Answer:
The answer is Constant returns to scale
Explanation:
Constant returns to scale is when a firm changes its inputs (labour or capital) and these changes lead to a proportionate increase or decrease in output. For example, when the total cost incurred to produce kayaks was $15,000, output was 30kayaks. The input to output ratio is 500(15,000÷30)
And when the total cost incurred to produce kayaks was increased to $20,000, output was 40kayaks. The input to output ratio is still 500(20,000÷40)
The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then sold the cars after three years of use. The company’s present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives: what is the net present value of the cash flows assocaited with the purchase alternatives
Answer:
NPV = -$149,319.44
Explanation:
Ten cars will be needed, which can be purchased at a discounted price of $18,000 each. If this alternative is accepted, the following costs will be incurred on the fleet as a whole:
Annual cost of servicing, taxes and licensing $5,100 Repairs, first year $3,000 Repairs, second year $5,500 Repairs, third year $7,500the required rate of return or discount rate for Riteway is 20%.
Cash flows:
CF₀ = -$180,000
CF₁ = -($5,100 +$3,000) = -$8,100
CF₂ = -($5,100 + $5,500) = -$10,600
CF₃ = ($9,000 X 10) - ($5,100 + $7,500) = $90,000 - $12,600 = $77,400
using an excel spreadsheet, we can calculate the NPV with r = 20%
NPV = -$180,000 + $30,680.56 = -$149,319.44
In a criminal tax case, Darth Vader was charged with several counts of tax evasion and filing a false income tax return, stemming from his diversion of funds from Jedi, Inc., a closely held corporation of which he was president, founder, and controlling shareholder. At trial, the U.S. sought to establish that Vader had received taxable income by systematically diverting funds from Jedi to support a lavish lifestyle. Vader gave millions of dollars of Jedi money to his mistress and millions of dollars to his wife, without reporting any of this money on his personal income tax returns. Vader siphoned off money primarily by writing checks to his employees and friends and having them return the cash to him, by diverting payments by Jedi customers, by submitting fraudulent invoices to Jedi and by laundering Jedi money through shell companies in Panama and St. Kitts-Nevis. In his defense, Vader sought to introduce evidence that Jedi had no retained earnings or current earnings or profits in the relevant taxable years. What result under §7201?
Answer:
Safeguard of Darth isn't suitable in light of the fact that he methodically redirected all the assets of Jedi misguidedly for reason for sidestepping charges. In this way the every one of those assets being referred to will be considered while ascertaining the tax pay of Jedi.
From that point forward, it very well may be presumed that the Jedi has any current winning/Retained acquiring or not.
in the event that Darth discovered guilty,under sec.7201 he will be at risk to punishment, intrigue and arraignment charges
Use the savings plan formula to answer the following question your goal is to create a college fun for your child suppose you find a fund that offers an apr of 7% how much should you deposit monthly to accumulate $87000 in 14 years?
Answer:
The monthly deposit to reach the goal should be of $507.21
Explanation:
Giving the following information:
Interest rate= 7% annual
deposit= monthly
Final value= $87000
n= 14 years
To calculate the monthly deposit, we need to use the following variation of the future value formula:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
i= 0.07/12= 0.00583
n= 14*12= 168
A= (87,000*0.00583) / [(1.00583^168) - 1]
A= $507.21
The monthly deposit to reach the goal should be of $507.21
Jack owns a local trucking company. With fuel costs being expensive, Jack wants to evaluate how much fuel, on average, he should store in his 9,000 gallon fuel tank. Each year Jack uses 90,000 gallons of diesel (usage is spread evenly throughout the year). Jack knows with certainly that he can have a load of fuel delivered in 5 days. The price of fuel is $3.09 per gallon and there is a separate $120 ordering fee per order. Jack thinks his holding cost per unit is 30%. If Jack orders at EOQ, what will be the average inventory of fuel in his 9,000 gallon tank?
A. ≈1,206 gallons
B. ≈2,578 gallons
C. ≈2,413 gallons
D. ≈2,290 gallons
Answer:
C. ≈2,413 gallons
Explanation:
For computing the average inventory, first we have to determine the economic order quantity which is shown below:
=[tex]\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
= [tex]\sqrt{\frac{2\times \text{90,000}\times \text{\$120}}{\text{\$0.927}}}[/tex]
= 4,827.1079 gallons
The carrying cost is
= Price of fuel × holding cost per unit
= $3.09 × 30%
= $0.927
Now the average inventory of fuel is
= Economic order quantity ÷ 2
= 4,827.1079 gallons ÷ 2
= 2,413 gallons
Final answer:
To determine Jack's average inventory of fuel in his 9,000 gallon tank, we can use the EOQ formula. The average inventory is approximately 2,413 gallons.
Explanation:
To determine the average inventory of fuel in Jack's 9,000 gallon tank, we need to use the Economic Order Quantity (EOQ) formula. The EOQ formula is given by:
EOQ = sqrt((2 * D * S) / H)
Where:
D = annual demand (90,000 gallons in this case)S = ordering cost per order ($120 in this case)H = holding cost per unit (30% of the fuel cost per gallon in this case)Given that the fuel tank has a capacity of 9,000 gallons, we can subtract the EOQ from the tank capacity to find the average inventory:
Average Inventory = 9,000 - EOQ
By plugging in the values and calculating, the average inventory of fuel in Jack's 9,000 gallon tank is approximately 2,413 gallons. Therefore, the correct answer is C. ≈2,413 gallons.
Dave is a plumber who uses the cash method of accounting. This year Dave requested that his clients make their checks payable to his son, Steve. This year Steve received checks in the amount of $109,500 for Dave's plumbing services. Which of the following is a true statement?
a. Dave is taxed on $109,500 of plumbing income this year.
b. Steve is taxed on $109,500 of plumbing income this year.
c. Steve is taxed on $109,500 of income from gifts received this year.
d. Dave may deduct the $109,500 received by Steve.
e. All of these are true
Answer:
Option A is correct
Explanation:
What we need to know to solve this question is how the cash method for accounting works in this scenario.
Thus, using the cash accounting method income is to be recognized when cash is received, thus the taxpayers for tax purposes will be reporting income when the income is received (in the form of services, cash, property, etc.).
The reserve ratio is the____________.A. Percentage of excess reserves held by banks.B. Fraction of deposits that banks hold as excess reserves.C. Number of deposit dollars the banking system canD. Percentage of total deposits that are held as bank reserves.
Answer:
D. Percentage of total deposits that are held as bank reserves.
Explanation:
The reserve ratio is the percentage of total deposits that are held as bank reserves. They are very important tools for controlling the financial market by the central bank.
If the reserve ratio or cash reserve ratio is lowered by the central bank, there is more money and commercial banks can disburse out more loans. When the central bank wants to control inflation due to high amount of money in the economy, it will increase the reserve ratio.Which of the following statements is CORRECT? a. During a period when a company is undergoing a change such as increasing its use of leverage or taking on riskier projects, the calculated historical beta may be drastically different from the beta that will exist in the future. b. If a company with a high beta merges with a low-beta company, the best estimate of the new merged company's beta is 1.0. c. If a newly issued stock does not have a past history that can be used for calculating beta, then we should always estimate that its beta will turn out to be 1.0. This is especially true if the company finances with more debt than the average firm. d. Logically, it is easier to estimate the betas associated with capital budgeting projects than the betas associated with stocks, especially if the projects are closely associated with research and development activities. e. The beta of an "average stock," which is also "the market beta," can change over time, sometimes drastically.
Answer:A. During a period when a company is undergoing a change such as increasing its use of leverage or taking on riskier projects, the calculated historical beta may be drastically different from the beta that will exist in the future.
Explanation: Leverage is a term used in Financial investment to mean the use of various borrowing options by an organisation in order to improve its potential to make profit or its potential to be Competitive.
Risky projects are projects known to high a high chances of loss,this type of projects can lead to severe consequence for business Organisations.
the beta of an investment is a measure of the risk which is caused by the exposure of an investment to general market changes as opposed to internal factors that can have severe negative impact on an investment.
Answer:
During a period when a company is undergoing a change such as increasing its use of leverage or taking on riskier projects, the calculated historical beta may be drastically different from the beta that will exist in the future.
Explanation:
The comparative balance sheets for Blossom Company show these changes in noncash current asset accounts: accounts receivable decreased $90,000, prepaid expenses increased $38,000, and inventories increased $50,000. Compute net cash provided by operating activities using the indirect method, assuming that net income is $196,000. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Answer:
Cash provided by operating activities is $198,000
Explanation:
Net Income $196,000
Decrease in receivable will increase the cash as more customers have paid than the new credit given in the period.
Increase in prepaid expense will decrease the cash balance as there more cash paid in advance against expenses than before.
Increase in inventory will increase the inventory cost and cash is paid against these expenses. More inventory means more cash outflow.
Decrease in receivable will be added and Increase in Prepaid expenses and Inventory will be deducted from operating cash flow calculation.
Cash provided by operating activities = Net Income + accounts receivable decreased - prepaid expenses increased - inventories increased
Cash provided by operating activities = $196,000 + $90,000 - $38,000 - $50,000
Cash provided by operating activities = $198,000
A company releases a five-year bond with a face value of $1,000 and coupons paid semiannually. If market interest rates imply a YTM of 8%, what should be the coupon rate offered if the bond is to trade at par?
Answer:
8% coupon rate would make the bond trade at par
Explanation:
To confirm the above ,I prepared a present value table with ytm at 8% and annual coupon at 8%, the resulting present value is $1000 the par value of the bond
On January 1, Year 1, Savor Corporation leased equipment to Spree Company. The lease term is 9 years. The first payment of $698,000 was made on January 1, 2018. The present value of the lease payments is $4,561,300. The lease is appropriately classified as an operating lease. Assuming the interest rate for this lease is 9%, how much interest revenue will Savor record in Year 1 on this lease
Answer:
The interest revenue will Savor record in Year 1 on this lease at 9% is $347,697
Explanation:
Present value of Lease Payment = $4,561,300
Less: First Payment on Jan 1, 2018 = $698,000
Remaining Balance = $3,863,300
Interest Revenue for Year 1 at 9% = $3,863,300 × 9%
Interest Revenue for Year 1 at 9% = $347,697
(Annuity payments) Calvin Johnson has a 5000 debt balance on his Visa card that charges 12.9 percent APR compounded monthly. In 2009 , Calvin's minimum monthly payment is 3 percent of his debt balance, which is $150. How many months (round up) will it take Calvin Johnson to pay off his credit card if he pays the current minimum payment of $150 at the end of each month?
Answer:
41.49 approx 42 months
Explanation:
To calculate the number of months, we use the formula for loan
p = r(pv) / 1 - (1+r)-n
make n subject of the formula
p ( 1 - ( 1+r) ^-n) = r(pv)
p - p (1+r)^-n = r(pv)
p (1+r)^-n = p-r(pv)
(1+r)^-n = (p-r(pv)) / p
( 1+r)^n = p / (p-r(pv))
n In( 1+r) = In (p / (p-r(pv))
n = In ( p/ ( p - r(pv)) / In ( 1 +r)
n is the number of months, p is the payment per months
pv is the present value of 5000
substitute the values given into the equation
n = (In ( 150 / (150 - ( 0.129 / 12 × 5000)) / ( In ( 1 + ( 0.129 / 12) = 41.49 approx 42 months
It would take Calvin approximately 43 months to pay off his credit card debt if he continues to make the minimum monthly payment of $150, using the formula for annuity payments.
Explanation:In this problem, we're dealing with an amortization type setup. The credit card debt can be modeled as an annuity, where Calvin Johnson pays a fixed amount each period (month), and the debt decreases over time. The formula that we can use here is:
n = [-log(1 - (r * P) / A)] / log(1 + r) where P represents the principal amount ($5000), A is the annuity payment ($150), r is the monthly interest rate (12.9% / 12 months), and n is the number of payments required.
n=-log(1-(0.01075*5000/150))/log(1+0.01075) = 42.825
Therefore, it would take Calvin approximately 43 months (rounded up) to pay off the credit card debt if he continues to make the minimum monthly payment of $150.
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This chapter discusses the discounted dividend and corporate valuation models for valuing common stocks. Three alternative approaches, the P/E multiple, Enterprise Values, and EVA approaches, were presented. Explain each approach and how you might use each one to value a common stock.
Answer: The P/E multiple and EVA approach and their use to value common stock.
P/E multiple: The term used for price/earnings multiple reflects the market price of a stock as the times of earnings per share of that company. It determines the investor's willingness towards the current market price of the stock.
Economic value added(EVA): this approach is a measure to evaluate a company stock based on economic value, it has added at a specified time. It considers the opportunity cost of capital invested in the business and the next operating profit generated by the business.
Explanation: The P/E multiple is the basis to analyze the stock price with the earnings so that the appropriate value of a stock is estimated.
The P/E approach can be used as a starting point in stock valuation. If a stock's P/E ratio is well above its industry average and if the stock's growth potential and risk are similar to other firms in the industry, the stock's price may be too high. To estimate a ball-park value multiply the firm's EPS by the industry average P/E ratio.
An alternative approach is based on the concept of Economic Value Added (EVA). Remember, EVA = Equity(ROE - rs). Companies increase their EVA by investing in projects that provide shareholders with returns greater than the cost of capital. When you purchase a firm's stock, you receive more than just the book value of equity—you also receive a claim on all future value that is created by the firm's managers.
Final answer:
Common stock valuation involves methodologies like the Discounted Dividend Model, P/E Multiple, Enterprise Value, and EVA approaches, each considering different facets such as future earnings, industry standards, firm valuation, and profitability after capital costs.
Explanation:
Valuing common stocks involves different methodologies, such as the Discounted Dividend Model, the Price/Earnings (P/E) Multiple approach, the Enterprise Value approach, and the Economic Value Added (EVA) approach. To understand each:
Discounted Dividend Model: This method estimates the price of share today by calculating the discounted present value of the flow of dividend payments. If dividends are uncertain, you use the expected dividend and adjust the discount rate to include a risk premium according to the stock's riskiness and investors' risk aversion.
P/E Multiple Approach: This method values stock by multiplying the current earnings per share by the average P/E ratio for companies within the same industry. It reflects what investors are willing to pay today for a dollar of the company's earnings.
Enterprise Value Approach: This valuation technique considers the total value of the firm, including not only equity but also debt and minus cash. It represents the price to buy the whole business and is often used to assess takeover targets.
Economic Value Added (EVA): This approach measures a company's financial performance based on the residual wealth calculation by deducting the cost of capital from the company's operating profits, adjusted for taxes on a cash basis.
Each of these methods plays a crucial role in helping analysts and investors determine what they should be willing to pay for stock by considering factors like future earnings, industry standards, overall value of the firm, and financial performance after accounting for the cost of capital.
Compare the yield to maturity and the current yield. How do you explain this relationship? (Select the best response.)A.If a bond sells at a discount, the yield to maturity is greater than the current yield.B.If a bond sells for its par value, the yield to maturity is greater than the current yield.C.If a bond sells at a premium, the yield to maturity is greater than the current yield.D.There is no certain relationship between the yield to maturity and the current yield.
Answer:
A - If a bond sells at a discount, the yield to maturity is greater than the current yield
Explanation:
Yield to maturity is the expected return if the bond is held till maturity. Current yiled is the return if the bond is sold today. There is an evident relationship between yield to maturity (TYM) and the current yield.
“When a bond's market price is above par, which is known as a premium bond, its current yield and YTM are lower than its coupon rate. Conversely, when a bond sells for less than par, which is known as a discount bond, its current yield and YTM are higher than the coupon rate. Only on occasions when a bond sells for its exact par value are all three rates identical” (Bloomenthal, 2020).
According to the above statements, options C, B and D are eliminated. This leaves option A (If a bond sells at a discount, the yield to maturity is greater than the current yield) as the correct answer. This is true because YTM is calculated on purchase price rather than par value, if the purchase price is less than par value, the YTM will be greater than the current yield.
Final answer:
The yield to maturity and current yield are measures used to assess returns on bonds. The yield to maturity is generally higher than the current yield when a A. bond sells at a discount and vice versa.
Explanation:
The yield to maturity and the current yield are two different measures used to assess returns on bonds. The yield to maturity represents the total return an investor can expect to receive if they hold the bond until it matures, taking into account the purchase price, coupon rate, and time to maturity. On the other hand, the current yield only considers the annual interest payments relative to the bond's current market price.
In general, the yield to maturity is higher than the current yield when a bond sells at a discount. This is because a bond selling at a discount has a higher yield relative to its purchase price, resulting in a higher yield to maturity. Conversely, if a bond sells at a premium (above its face value), the yield to maturity is lower than the current yield. Therefore, the correct answer is option A: If a bond sells at a discount, the yield to maturity is greater than the current yield.
A humane society reports that 19% of all pet dogs were adopted from an animal shelter.Assuming the truth of this assertion, find the probability that in a random sample of80 per dogs, between 15% and 20% were adopted from a shelter. You may assume thatthe normal distribution applies.
Answer:
The probability of pet dogs adopted between 15% and 20% is 0.4096.
Explanation:
Let X = number of pet dogs adopted from an animal shelter.
The proportion of pet dogs adopted from an animal shelter is, p = 0.19.
The sample of pet dogs selected is of size, n = 80.
A Normal approximation to Binomial can be applied in this case since,
np = 80 × 0.19 = 15.2 > 10n(1 - p) = 80 × (1 - 0.19) = 64.8 > 10So the sample proportion ([tex]\hat p[/tex]) of pet dogs adopted from an animal shelter follows a normal distribution.
Mean of [tex]\hat p[/tex] is:
[tex]\mu_{\hat p}=p=0.19[/tex]
Standard deviation of [tex]\hat p[/tex] is:
[tex]\sigma_{\hat p}=\sqrt{\frac{p(1-p)}{n} }[/tex]
Compute the probability of [tex]\hat p[/tex] between 15% and 20% as follows:
[tex]P(0.15\leq \hat p\leq 0.20)=P(\frac{0.15-0.19}{0.044}\leq \frac{\hat p-\mu_{\hat p}}{\sigma_{\hat p}}\leq \frac{0.20-0.19}{0.044}} )\\=P(-0.91<Z<0.23)\\=P(Z<0.23)-P(Z<-0.91)\\=0.591-0.1814\\=0.4096[/tex]
Thus, the probability of pet dogs adopted between 15% and 20% is 0.4096.
To find the probability of a specific range, we can use the concept of a normal distribution. By calculating the mean and standard deviation, we can find the z-scores and corresponding cumulative probabilities.
Explanation:To solve this problem, we can use the concept of a normal distribution. Given that 19% of all pet dogs are adopted from an animal shelter, we want to find the probability that between 15% and 20% of 80 pet dogs in a random sample are adopted from a shelter.
We can use the mean and standard deviation of the normal distribution to find the probability. The mean of the distribution is given by p*n, where p is the proportion of dogs adopted from a shelter (0.19) and n is the sample size (80). The standard deviation is calculated as √((p*(1-p))/n).
Using these values, we can calculate the z-scores for the lower and upper bounds of the range (0.15 and 0.20) and find the corresponding cumulative probabilities using a standard normal distribution table or a calculator.
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ABC sells 28 units for $50 each on December 15. Of the units sold, 14 are from the December 7 purchase and 14 are from the December 14 purchase. ABC uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on specific identification.
Answer:
Closing inventory based on Specific IDENTIFICATION
7 Dec purchase ( 20-16) = 4 * $16 = $64
14 Dec purchase ( 35 -14) = 21*$24 = $504
21 Dec purchase 30*$29 = $870
closing inventory 31 Dec = $1438
Explanation:
The question is incomplete but here is a complete one
Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 30 units for $40 each.
Purchases on December 7 20 units @ $16.00 cost
Purchases on December 14 35 units @ $24.00 cost
Purchases on December 21 30 units @ $29.00 cost
Required:
Monson sells 30 units for $40 each on December 15. Of the units sold, 16 are from the December 7 purchase and 14 are from the December 14 purchase. Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on specific identification.