Answer:
Guaranteed payments received by a partner
Explanation:
Guaranteed payments from a partner is considered as passive income.
Portfolio income is income from various investments including shares, mutual funds, annuity, and shares. Such as interest, dividends, royalties, capital gains from stock sales.
The other types of income are earned income and passive income.
Portfolio income includes many types of income but one income it does not include is c. Guaranteed payments received by a partner.
Portfolio income:
Includes income that one earns from investments in companies they do not actively participate in. Includes royalties, dividends, and interest payments.Guaranteed payments to partners are income that are derived from a person actively involved in a company and so will not be considered to be portfolio income.
In conclusion, option c is correct.
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An entrepreneur is planning to start a factory to produce high-tech plastic containers in high volumes. She will use either an assembly line or batch process and has selected two possible sites, one in a small town and one in a big city. She has discovered the following: Based on the information just presented, which of the following should be chosen? A. Assembly line in city. B. Assembly line in small town. C. Batch process in city. D. Batch process in small town.
Answer:
(A). Assembly line in city.
Explanation:
In an assembly line manufacturing process, production is continuous. It involves adding parts to the product as it moves from one stage to another and is good for producing in high volumes.
Batch production is better for producing similar items in groups.
An assembly line in a city should be used by an entrepreneur who wants to produce high-tech plastic containers in high volumes because it is more efficient.
Answer:
Assembly line in a city
Explanation:
The question is to determine whether to start an assembly line or batch process in either a big city or a small town
Assembly Line
An assembly line represents a manufacturing process where a product continues to move from one workstation to another while relevant parts are progressively added from one station to another until the product is completed
Batch Processing
The batch processing type of manufacturing is such that a group of products are completed simultaneously or at the same time.
Based on this understanding,
It is advisable for the entrepreneur to select Assembly line in a city because since the production of the high-tech plastic containers will be produced in high volumes, then their is need access a large amount of capital to commence.
Secondly, the type of labour that will be required to carry out such work in the factory will be better accessed in the city .
Thirdly, an assembly line is more favourable to ensure quality process for the products since they are high tech in nature and close monitoring is required.
development is a joint approach among those who seek economic growth with "wise resource management, equitable distribution of benefits and reduction of negative effects on people and the environment from the process of economic growth."A. Parallel B. Global C. Sustainable D Unrestricted E. Holistic
Sustainable development is a joint approach among those who seek economic growth with "wise resource management, equitable distribution of benefits and reduction of negative effects on people and the environment from the process of economic growth".
Answer: Option C
Explanation:
An ideological movement for achieving the goals of human progress while at the same time maintaining the capacity of earth's natural to provide the natural resources and ecosystem services on which the economy and society rely is understood as "sustainable development".
One illustration of sustainable development is the use of recycled materials or renewable resources when constructing another is building a new community in a formerly unexplored area without damaging the habitat or harming the environment.
According to rational expectations, stock prices are actually... a. the discounted value of all future cash flows associated with the stock b. an estimation of what other individuals' perceptions are of the stock c. the underlying company's profits less liabilities on a per share basis d. impossible to estimate
Answer:
a. the discounted value of all future cash flows associated with the stock.
Explanation:
Stock prices can be seen as an estimated future value of the security. When investors buy shares they look at the performance of the business and buy shares based on this future analysis.
Also the issuer values the shares based on their future forecast of financial performance. For example when a share is issued for $1,000,000 the business would have estimated performance will justify the share price in the future.
While building the ancient pyramids, the Egyptians performed several management functions. They submitted written requests and consulted staff for advice before making decisions.
The Egyptians performed which of the following functions of management? Check all that apply.
a. Organizing
b. Planning
c. Controlling
d. Leading
Answer:
a, b and c i.e Organizing, Planning and Controlling
Explanation:
Note: Since more than one option is to be selected, the three terms have been provided as an answer
Organizing is the management function concerned with creation of organizational hierarchy, defining roles and objectives and authority and reporting responsibilities.
Planning refers to providing for unforeseen future events and deciding the ways to deal with them.
Directing refers to the management function of guiding, supervising and leading people with an objective to meet organizational goals and extract efficient performance.
In the given case, written request signifies planning, creation of a staff and consulting before arriving at decisions refers to organizing and controlling function.
The Egyptians performed planning, organizing, and leading functions of management while constructing the pyramids. They planned their actions, organized resources, and led their teams. However, it's unclear if they performed the controlling function.
Explanation:While constructing the ancient pyramids, the Egyptians performed certain key functions of management, including organizing, planning, and leading. Submitting written requests and seeking advice involves the process of planning, where they outline a roadmap for the completion of the objectives. Meanwhile, organizing is reflected in the structuring and coordination of the resources and activities. Lastly, leading is manifested in their manner of directing and engaging with their personnel. However, the function of controlling, which requires monitoring performance against a plan and making adjustments, is not clearly reported in the scenario given.
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An asset would be debited and a liability would be credited if the business
Question options:
bought equipment on account.
incurred an expense and paid it.*not the answer*
bought supplies for cash.
incurred an expense and didn't pay for the expense immediately.
Final answer:
When buying equipment on account, a business debits the asset account for equipment and credits the liability account, reflecting an increase in assets and liabilities respectively. This maintains the balance in the T-account and adheres to the accounting equation.
Explanation:
Understanding T-Accounts and Transactions
When a business bought equipment on account, it means that the business acquired equipment without immediate cash payment, promising to pay the supplier in the future. In accounting, this transaction is recorded in T-accounts by debiting the asset account for the equipment, as it represents something of value the business now owns. Simultaneously, the liability account is credited, reflecting the business's obligation to pay the supplier. Debiting increases the asset's balance, while crediting increases the liabilities, keeping the accounting equation (Assets = Liabilities + Owner's Equity) in balance.
For example, if a company purchases a $5,000 piece of equipment on account, the equipment account (asset) is debited by $5,000, and accounts payable (liability) is credited by $5,000.
T-Account Structure and Bank's Balance Sheet
The T-account layout includes assets on the left and liabilities and owner's equity (net worth) on the right. A bank uses T-accounts to manage and track its financial instruments such as loans, reserves, and securities. A bank's balance sheet also reflects these categories with assets like cash and loans made, liabilities such as customer deposits, and the net worth which is the difference between total assets and total liabilities and is also known as bank capital.
Classifying Costs as Materials, Labor, or Factory Overhead Indicate whether the following costs of Procter & Gamble (PG), a maker of consumer products, would be classified as direct materials cost, direct labor cost, or factory overhead cost: Cost Classification a. Depreciation on assembly line equipment in the Mehoopany, Pennsylvania, paper products plant b. Licensing payments for use of Disney characters on children products c. Maintenance supplies d. Packaging materials e. Paper used in bath tissue f. Plant manager salary for the Iowa City, Iowa, plant g. Resins for body wash products h. Salary of process engineers i. Scents and fragrances used in making soaps and detergents j. Wages of production line employees at the Pineville, Louisiana, soap and detergent plant
Answer:
Explanation:
The direct material cost is the cost which is incurred for the raw material
The direct labor cost is the cost which is incurred to pay the wages to assembly workers, the labor cost, etc
And, the factory overhead cost is the indirect cost which is required at the time of producing the product. Example - depreciation, repairs & maintenance, etc
So, the categorization is shown below:
a. Depreciation on assembly line equipment in the Mehoopany, Pennsylvania, paper products plant = factory overhead cost
b. Licensing payments for use of Disney characters on children products = factory overhead cost
c. Maintenance supplies = factory overhead cost
d. Packaging materials = direct material cost
e. Paper used in bath tissue = direct material cost
f. Plant manager salary for the Iowa City, Iowa, plant = factory overhead cost
g. Resins for body wash products = direct material cost
h. Salary of process engineers = factory overhead cost
i. Scents and fragrances used in making soaps and detergents = direct material cost
j. Wages of production line employees at the Pineville, Louisiana, soap and detergent plant = direct labor cost
The costs enlisted are classified as direct materials if they're raw materials used in production (paper, resins, scents), direct labor if they're wages paid to production line workers, and factory overhead if they're indirect costs related to production process (depreciation, licensing fee, maintenance supplies, wages of non-production staff).
Explanation:The costs described in the Procter & Gamble example can be classified as direct materials cost, direct labor cost, or factory overhead cost based on the roles they play in the manufacturing process.
Depreciation on assembly line equipment in the Pennsylvania plant - Factory Overhead Cost Licensing payments for use of Disney characters - Factory Overhead Cost Maintenance supplies - Factory Overhead Cost Packaging materials - Direct Materials Cost Paper used in bath tissue - Direct Materials Cost Plant manager salary in the Iowa City plant - Factory Overhead Cost Resins for body wash products - Direct Materials Cost Salary of process engineers - Factory Overhead Cost Scents and fragrances used in soaps and detergents - Direct Materials Cost Wages of production line employees - Direct Labor Cost Learn more about Cost Classification here:
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The overminustheminuscounter (OTC) market is a A. centrally located auction market. B. geographically dispersed auction market. C. telecommunications network connecting dealers. D. market solely for institutional traders.
Answer:
telecommunications network connecting dealers.
Explanation:
Over the counter market or OTC market is referred to that market in which members trade the currencies, stock among the parties without the broker. In this, trade has done electronically without meeting personally i.e. Dealer and broker connect via mobiles phones
This market is held through a network of dealers instead of a central broker. One example of over the counter market is the London stock exchange.
Answer:
The correct answer is letter "C": telecommunications network connecting dealers.
Explanation:
The Over-The-Counter Market (OTC) is a decentralized market in which unlisted securities trade. The OTC market is not a physical location. Prices are negotiated and trades are made from computer networks, phones, and e-mails. Dealers act as maker makers and quote prices at which they will buy and sell.
In your opinion, what are the core capabilities of Harley-Davidson Motor Company motorcycles? How do these capabilities help Harley-Davidson compete against foreign competitors such as Yamaha and Suzuki?
Answer:
The Core Capabillities of Harley davison are their devotion to the moter cycle industry and that they are more of an american platforme. When most americans buy something they would perfer is be made right here in the U.S.
Explanation:
Harley-Davidson's core capabilities include brand name reputation, portfolio management skills, and human resource competencies, providing a differentiation advantage and loyal customer base that are difficult for foreign competitors to match.
The core capabilities of Harley-Davidson Motor Company motorcycles include their brand name reputation, distinctive design and deep-rooted American heritage. These capabilities resonate with a specific segment of consumers, creating a high value for customers. They are difficult for competitors to imitate due to the cultural history and lifestyle association that is built into the Harley-Davidson brand.
Additionally, portfolio management skills and human resource competencies enable Harley-Davidson to innovate and maintain a specialized workforce, furthering its competitive edge. Compared to foreign competitors, such as Yamaha and Suzuki, which may excel in affordability and technological advancements, Harley-Davidson's strong customer loyalty and brand community give it leverage across markets and contribute to its differentiation advantage. This brand loyalty is also evident in the statistical finding that Harley-Davidson motorcycles represent 14 percent of all motorcycles sold, yet only 8 percent of stolen motorcycles are Harleys, indicating less theft relative to their market share.
Harley-Davidson's core capabilities provide a differentiation advantage, allowing the company to compete successfully by focusing not just on the product, but on the lifestyle and experience that comes with owning a Harley-Davidson motorcycle. This strategy is different from the competition that may focus primarily on product features or cost efficiency.
Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of October was $58,500. The following information for the month of November was available from company records:
Purchases: $114000
Freight-in: $3900
Sales: $188000
Sales Returns: $5200
Purchase Returns: $4300
In addition, the controller is aware of $8600 of inventory that was stolen during November from one of the company's warehouses.
Required:
a. Calculate the estimated inventory at the end of November, assuming a gross profit ratio of 40%.
b. Calculate the estimated inventory at the end of November, assuming a markup on cost of 100%.
Answer:
Please refer the attachment to have the solution with explanation
Compound growth in an economy can increase people’s standard of living for country Z. If the economy for country Z starts with a GDP of 150 and a growth rate of 2% per year, what will its GDP be after 15 years?
Answer:
The GDP after 15 years=202
Explanation:
The GDP also known as the Gross Domestic Product is the quantity of goods and services produced in a country during a certain period in time usually expressed in monetary terms. GDP usually illustrates how much the country's economy is growing and expanding.
To determine the GDP after 15 years, we can have the expression below;
F=P(1+r/n)^nt
where;
F=future GDP
P=initial GDP
r=growth rate per year
n=number of times the growth rate is applied per year
t=number of years
In our case;
F=unknown, to be determined
P=150
r=2%=2/100=0.02
n=1
t=15 years
Substituting;
F=150(1+0.02)^(15×1)
F=150(1.02)^15
F=201.88=202
The GDP after 15 years=202
Advantages of database approaches to AIS include: a. periodic reporting in accordance with GAAP b. real-time reporting as and when significant events occur and whenever required c. filtering data as events occur rather than when reports are generated d. both a. and b. e. both a. and c.
Answer:
b. real-time reporting as and when significant events occur and whenever required.
Explanation:
The aim of an AIS is to gather, archive, analyze and report on financial and accountant data that management or other parties involved may use in order to carry management decisions. Only the container for data storage is a database A database may be a computer, a structured data system, or a cabinet.
In a growing number of cities, stores are required either not to make available plastic or paper bags or to do so only for an additional fee. What kind of incentive is this fee?a. Neutral b. Direct c. Complementary d. Unintended e. Indirect
Answer:
The correct answer is letter "B": Direct.
Explanation:
Direct incentives are those that pursue making an immediate reaction in the audience to whom the incentive is directed. A direct incentive is usually applied when an urgent change must be made over a certain matter to avoid the exponential risks of not taking any action.
Thus, the fact that in most growing cities stores are not providing plastic bags is a direct incentive to stop polluting the environment.
The additional fee charged for plastic or paper bags in stores in some cities is a direct incentive, designed to encourage consumers to use reusable bags.
In this context, this fee can be classified as a
direct incentive
. Direct incentives are actions that can motivate individuals or businesses to alter their behavior in a particular way, usually to promote or discourage certain outcomes. In this case, the imposition of an additional fee for using plastic or paper bags is a direct incentive designed to reduce their usage and consequently, lessen the environmental impact of their disposal. This practice encourages customers to bring their own reusable bags to avoid the extra charge, hence, fostering environmentally beneficial behavior.
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Vaughn Manufacturing's prepaid insurance was $197000 at December 31, 2021 and $90300 at December 31, 2020. Insurance expense was $62000 for 2021 and $55000 for 2020. What amount of cash disbursements for insurance would be reported in Vaughn's 2021 net cash provided by operating activities presented on a direct basis?
Answer:
Cash disbursements for insurance would be $ 168,700.
Explanation:
In accrual based accounting expenses are recorded when they are incurred. The payment against item purchased does not make it qualified to be recorded as expense. Any advance payment made is recognize as asset untill performance obligation has been completed. So in order to determine amount of payment we will use following accounting equation.
Payments = Prepaid current period + expenses - opening prepaid balance
Payments = 197,000 + 62,000 - 90,300 = $ 168,700
The Aggregate Supply curve shows Group of answer choices a. the total quantity of output that firms will produce at a given price level. b. the potential output of an economy at a given price level. c. the downward sloping relationship between price level and output for suppliers.
Answer:
The correct answer is letter "A": the total quantity of output that firms will produce at a given price level.
Explanation:
Aggregate Supply is the total supply of goods and services an economy produces in a given period. It is the amount of goods companies plan to sell at given price levels. Essentially, aggregate supply is the relationship between price levels and the number of goods and services an economy produces.
During the current year, the company had the following summarized activities: Purchased short-term investments for $10,000 cash. Lent $5,000 to a supplier, who signed a two-year note. Purchased equipment that cost $18,000; paid $5,000 cash and signed a one-year note for the balance. Hired a new president at the end of the year. The contract was for $85,000 per year plus options to purchase company stock at a set price based on company performance. The new president begins her position on January 1 of next year. Issued an additional 2,000 shares of $0.50 par value common stock for $11,000 cash. Borrowed $9,000 cash from a local bank, payable in three months. Purchased a patent (an intangible asset) for $3,000 cash. Built an addition to the factory for $24,000; paid $8,000 in cash and signed a three-year note for the balance. Returned defective equipment to the manufacturer, receiving a cash refund of $1,000.
Answer:
short-term investment 10,000 debit
cash 10,000 credit
note receivables 5,000 debit
cash 5,000 credit
equipment 18,000 debit
cash 5,000 credit
note payable 13,000 credit
cash 11,000 debit
common stock 1,000 credit
additional CS 10,000 credit
cash 9,000 debit
note payable 9,000 credit
Patents 3,000 credit
cash 3,000 debit
Building 24,000 debit
cash 8,000 credit
note payable 16,000 credit
cash 1,000 debit
equipment 1,000 credit
Explanation:
To record the entries we need to alwasy make debit = credit
we must use account names to represent each concept which are quite easy you don't have to overthink ou write what it is telling you it happen
Whe nthe company use cash use cash account
when it purchase equipment use equiptment
What is the present value of a $100 perpetuity if the interest rate is 10%? Round your answer to the nearest cent.
Answer:
The correct answer is $1,000
Explanation:
According to the scenario, Given data are as follows :
Cash flow = $100
Interest rate = 10%
So, present value can be calculated by following method:
Present value = Cash Flow / Interest Rate
Present value = $100 / 10%
Present value = $100 / 0.1
Present value = $1,000
Hence, the correct answer is $1000.
Wildhorse Corp. has total current assets of $12,152,000, current liabilities of $5,849,000, and a quick ratio of 0.94. How much inventory does it have?
Answer:
Wildhorse Corp. has inventory of $6,653,940
Explanation:
The quick ratio is a liquidity ratio that indicates a company's ability to pay its current liabilities when they come due without needing to sell its inventory or get additional financing. The quick ratio is calculated by the following formula:
Quick ratio = (Cash & equivalents + Short Term investments + Accounts receivable)/Current Liabilities
(Cash & equivalents + Short Term investments + Accounts receivable) = Quick ratio x Current Liabilities = 0.94 x $5,849,000 = $5,498,060
Inventory = Total current assets - (Cash & equivalents + Short Term investments + Accounts receivable) = $12,152,000 - $5,498,060 = $6,653,940
Shen has plans to go to an opera and already has a $100 nonrefundable, nonexchangeable, and nontransferable ticket. Now Valerie, whom Shen has wanted to date for a long time, asks him to a party. Shen would prefer to go to the party with Valerie and forgo the opera, but he doesn't want to waste the $100 he spent on the opera ticket. From the perspective of an economist, if Van decides to go to the party with Amy, what has he just done?
1. Incorrectly allowed a sunk cost to influence his decision
2. Made a choice that was not optimal
3 Correctly ignored a sunk cost
Answer:
3. Correctly ignored a sunk cost
Explanation:
Sunk costs refer to those costs which have been incurred in the past, which are non recoverable and which have no current or future benefits.
Sunk costs are considered as irrelevant for decision making process as they do not relate to current period and have no future implications. For example, research and development expenditure incurred in the past represents a sunk cost.
In the given case, the ticket for opera was already purchased for $100 which can now neither be recovered nor transferred. Thus this cost is irrelevant for decision making as expenditure has already been made. When Shen decided to go for a party instead of the concert, Shen has correctly ignored a sunk cost.
Final answer:
Shen has correctly ignored a sunk cost by deciding to go to the party with Valerie instead of the opera for which he already has a nonrefundable ticket. His decision should be based on the opportunity costs and marginal benefits, not on the already spent money.
Explanation:
From an economist's perspective, if Shen decides to go to the party with Valerie, he has correctly ignored a sunk cost. The $100 he spent on the opera ticket is a sunk cost because it is nonrefundable, nonexchangeable, and nontransferable, meaning that this money is irretrievably gone regardless of what he chooses to do. Therefore, his decision to attend the party should be based on comparing the opportunity costs and the marginal benefits of attending either event, not on the sunk cost of the opera ticket.
As seen in the example of Selena, who debates whether to leave a terrible movie for which she has already paid, the sunk cost of the ticket price should not factor into her decision to stay or leave. The time she would spend watching the rest of the movie would be better spent doing something enjoyable, and that provides her with greater marginal benefits. The money is already spent, so she should focus on the benefits of current and future options and the opportunity costs of continuing to watch the movie.
Similarly, opportunity cost is a crucial concept that refers to the benefits sacrificed when one alternative is chosen over another. When Shen chooses to go to the party, he is essentially weighing the potential enjoyment and benefits of the date over attending the opera, not the monetary value that has already been expended on the opera ticket.
Larry is willing to invest a significant amount of money in the business and wants to work with you on a day-to-day basis in the operations of the business. If you choose to go into business with him, which form of non-corporate business ownership would be best suited for the business?
Answer:
The correct answer is: General partnership.
Explanation:
A General partnership is an organization where two or more owners operate the business. General partners usually share management duties profits and losses equally regardless of their partnership interest percentage. However, each partner ultimately has unlimited liability.
Answer:
General partnership.
Explanation:
I got this one right and all of the other questions so
I got 100% !!!!!!!!!!!!!!!
Galen Company income under variable costing is $1,050,000. Fixed production costs in ending inventory are $300,000 and $250,000 in beginning inventory. What is Galen Company's income under absorption costing?
Answer:
Income under absorption costing = $1,100,000
Explanation:
Marginal and absorption costing are two different methods to deal with fixed production overheads and and decide whether or not they are included in valuation of inventory.
Valuation of inventory
Opening and closing inventory are valued at variable cost under variable costing. Whereas in absorption costing, opening and closing inventory are valued at full production cost (including fixed production overheads).
Reconciling profits reported under two different methods
When inventory levels increase or decrease during a period then profits will differ under absorption and marginal costing because of fixed production cost.
Net Income under absorption costing = Income under variable costing + fixed production cost in ending inventory – fixed production cost in beginning inventory
= $1,050,000 + $300,000 - $250,000
= $1,100,000
Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.2. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 10%, it should increase the price by. If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be_________ than the effect 5 years from now
To reduce cigarette smoking by 10%, the government should increase the price of a pack by 50% due to an elasticity measure of 0.2. Thus the price would be increased by $2.5 from $5 to $7.5. The long-term effects of this price increase will be greater than the short term as people adapt and may reduce consumption or quit smoking all together.
Explanation:Public policy aimed at smoking involves strategies to shift demand through educational initiatives or price manipulation, depending on the elasticity of the demand for cigarettes. Studies indicate the price elasticity of demand for cigarettes is about 0.2, meaning the demand is relatively inelastic. For a clearer perspective, let's examine the proposed scenario and break it down in terms of price elasticity and demand.
Firstly, when the price elasticity of demand is less than 1, as in this case, it means demand is inelastic. That is, a 1% increase in price results in less than a 1% decrease in quantity demanded. To reduce smoking by 10%, we would need a 50% increase in price due to the elasticity measure of 0.2 (10%/0.2), hence the price of a pack of cigarettes should increase by $2.5 from $5 to $7.5.
In terms of the effect on smoking 1 year from now compared to 5 years from now, if the price increase remains, the long-term effects are likely to be greater than the short-term effects. This is mainly because behavior change, especially for addictive substances like cigarettes, usually takes some time. Over a longer period, people may adapt to the new price by quitting smoking or reducing consumption.
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For which of the following transactions would the use of the present value of an annuity due concept be appropriate in calculating the present value of the asset obtained or liability owed at the date of incurrence? A. A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement.
B. A capital lease is entered into with the initial lease payment due one month subse-quent to the signing of the lease agreement.
C. A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 7%.
D. A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 9%.
Answer:
A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement. The annuity begins with a payment
Explanation:
An annuity-due represnet an annuity were payment or deposits are perform at the beginning of the period.
B no. It doesn't start with a payment.
C no, there is no payment at issuance.
D same as C only the rates changes but this, do not change the essence of the annuity it is still a common annuity not annuity-due
Final answer:
The present value of an annuity due is used for scenario A, where the initial payment of a capital lease is made immediately upon signing the lease agreement.
Explanation:
The use of the present value of an annuity due concept would be appropriate in situations where payments are made at the beginning of each period. In the given scenarios, option A, which involves a capital lease with the initial lease payment due upon the signing of the lease agreement, fits this description. This is because the first payment is made immediately, and thus each subsequent payment is made at the beginning of the period. Calculating the present value of such a lease would require accounting for the fact that all payments are made one period earlier than they would be in an ordinary annuity. Therefore, scenario A is where the present value of an annuity due would be used to calculate the present value at the date of incurrence.
f interest rate parity (IRP) exists, then triangular arbitrage will not be possible. A. true. B. false.
Answer:
A. True
Explanation:
Arbitrage refers to a situation wherein a gain is made owing to price discrepancy or unevenness in two markets. The rule for arbitrage is to buy from the markets where price is less and sell in the markets where price is higher.
Triangular arbitrage occurs wherein 3 different currencies are involved and the exchange rates are not uniform i.e a discrepancy exists and interest rate parity does not hold true.
Interest rate parity refers to the concept wherein the disparity between two currency exchange rates is adjusted by the respective interest rates of the two countries. When interest rate parity exists, no arbitrage is possible as markets are fairly priced.
A company has a $20 million portfolio with a beta of 1.2. It would like to use futures contracts on a stock index to hedge its risk. The index futures is currently standing at 1080, and each contract is for delivery of $250 times the index. What is the hedge that minimizes risk? What should the company do if it wants to reduce the beta of the portfolio to 0.6?
Answer:
Part A:
Number of contracts=[tex]\frac{1.2*20,000,000}{270000}[/tex]
Number of contracts=88.889≅ 89 contracts.
The hedge that minimizes risk is to short 88 contracts
Part B:
Number of contracts=[tex]\frac{(0.6-1.2)*20,000,000}{270,000}=-44.44[/tex]
Number of contracts≅-44
The company should short 44 futures contracts.
Explanation:
Part A:
The formula we are going to use is:
Number of contracts=[tex]\frac{\beta*Portfolio\ Value}{Futures\ Value}[/tex]
Future Value=Index futures*Multiplier
Future Value=1080*$250
Future Value=$270,000
Number of contracts=[tex]\frac{1.2*20,000,000}{270000}[/tex]
Number of contracts=88.889≅ 89 contracts.
The hedge that minimizes risk is to short 88 contracts
Part B:
Number of contracts=[tex]\frac{(\beta'-\beta)*Portfolio\ Value}{Futures\ Value}[/tex]
where:
[tex]\beta'[/tex] is the new value=0.6
[tex]\beta[/tex]=1.2
Future Value=$270,000 (Calculated above)
Number of contracts=[tex]\frac{(0.6-1.2)*20,000,000}{270,000}=-44.44[/tex]
Number of contracts≅-44
The company should short 44 futures contracts
What is the overall change in cash resulting from: $300 increase in inventories, $150 increase in accounts payable, $120 decrease in accounts receivable, $60 decrease in other current assets, $150 decrease in other current liabilities?
(A) -$120
(B) -$240
(C) $180
(D) $120
Answer:
(A). - $ 120
Explanation:
The changes to cash are from the following rules
Increase in assets and decrease in liabilities is a decrease in cash
Decrease in assets and increase in liabilities is and increase in cash
Using the data in the question,
Cash Movement
increase in inventories $ 300 ( $ 300)
Increase in accounts payable $ 150 $ 150
Decrease in accounts receivable $ 120 $ 120
Decrease in other current assets $ 60 $ 60
Decrease in other current liabilities $ 150 ($ 150)
Net movement in Cash $ (120)
lpine Company solicited bids from several contractors to construct an addition to its office building. The lowest bid received was for $1,200,000. Alpine decided to construct the addition itself at a cost of $1,100,000. What amount should be recorded in the building account?
Answer:
The amount recorded in the building account will be $1,100,000.
Explanation:
Alpine company has asked for bids from various contractor to construct additions in its office building. many contractors replied with a bid offer among which the lowest was $1,200,000. Alpine decided to construct additions itself at a lower cost than the bid received. The amount which is recorded in office building account will be $1,100,000 at which the company has agreed to construct. The accounts of a company should reflect actual expenditures so the amount of $1,100,000 will be actual expenditure of construction which Alpine Company has determined.
The amount that should be recorded in the building account is $1,100,000.
Building is a fixed asset which are use for business operation by companies or organizations so as to earn or generate profit for their business.
Based on the information given we were told that the company construct the building at a cost of $1,100,000.
Which means that the building cost of the amount of $1,100,000 should be recorded in the building account as this is the actual amount that was spent to construct an addition to the building.
Inconclusion the amount that should be recorded in the building account is $1,100,000.
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Suppose you live in New York City and the government has imposed price ceilings on apartment rental rates. You want to rent an apartment from Smith, who says that unless you buy the furniture in the apartment for $4,000, he cannot rent the apartment to you. The condition of buying the furniture could be considered
a)a price ceiling.
b)a price floor.
c)a tie-in sale.
d)to be something no renter would agree to.
e)c and d
Answer:
The correct answer is letter "C": a tie-in sale.
Explanation:
A tie-in sale is one where the purchase or rent of an object is only possible if another is also bought. Companies tend to use this practice to offer goods and services in bundles where all the products being sold are not necessarily of interest to the buyer but generates more profit or the seller.
The condition that requires purchasing furniture to rent an apartment under a price ceiling in New York City is best described as a tie-in sale. Such practices enable landlords to circumvent rent control regulations and achieve higher effective rental rates.
Explanation:In the scenario described, the condition that you must buy the furniture in the apartment for $4,000 in order to rent the apartment can be considered a tie-in sale. A tie-in sale is a business practice where the seller conditions the sale of one product on the purchase of another product. Even under a price ceiling where the government has set a maximum legal price for renting apartments to prevent prices from rising too high, landlords may resort to practices like tie-in sales to extract more value from tenants, effectively bypassing the intent of the price ceiling regulation.
It's important to note that while this strategy allows the landlord to increase revenue, it doesn't necessarily reflect an actual increase in value or quality of services provided. Therefore, the renters might end up paying more without correspondingly higher quality housing, as landlords have fewer incentives to maintain or improve the property due to the constraints of rent control laws.
If estimated annual factory overhead is $546,000; overhead is applied using direct labor hours; estimated annual direct labor hours are 210,000; actual March factory overhead is $48,100; and actual March direct labor hours are 18,000; then overhead is:
a.$300 underapplied
b.$300 overapplied
c.$1,300 underapplied
d.$900 overapplied
e.$900 underapplied
Answer:
correct option is c.$1,300 under applied
Explanation:
given data
annual factory overhead = $546,000
annual direct labor hours = 210,000
March factory overhead = $48,100
March direct labor hours = 18,000
solution
we get here Predetermined overhead rate that is express as
Predetermined overhead rate = Estimated overhead ÷ Estimated labor hours ......................1
put here value
Predetermined overhead rate = [tex]\frac{546000}{210000}[/tex]
Predetermined overhead rate = $2.6 per labor hour
and
overhead applied is
overhead applied = Actual labor hours in march × Predetermined overhead rate ................2
overhead applied = 18000 × $2.6
overhead applied = $46,800
so we get Under or over applied overhead as
Under or over applied overhead = actual overhead - applied overhead ................3
put here value we get
Under or over applied overhead = $48100 - $46800
overhead = $1,300 under applied
so correct option is c.$1,300 under applied
Gabe Industries sells two products, Basic models and Deluxe models. Basic models sell for $ 44 per unit with variable costs of $ 25 per unit. Deluxe models sell for $ 52 per unit with variable costs of $ 25 per unit. Total fixed costs for the company are $ 1 comma 323.00. Gabe Industries typically sells three Basic models for every Deluxe model.
What is the breakeven point in total units?
a. 50 units
b. 63 units.
c. 29 units.
d.32 units
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Basic models sell for $ 44 per unit with variable costs of $ 25 per unit. Deluxe models sell for $ 52 per unit with variable costs of $ 25 per unit. Total fixed costs for the company are $1,323. Gabe Industries typically sells three Basic models for every Deluxe model.
First, we need to calculate the weighted sales participation:
Basic= 3/4= 0.75
Deluxe= 1/4= 0.25
Now, we need to calculate the weighted average selling price and variable cost:
weighted average selling price= (selling price* weighted sales participation)= (44*0.75 + 52*0.25)= 46
weighted average variable cost= (variable cost* weighted sales participation)= (25*0.75 + 25*0.25)= 25
Now, we can calculate the break-even point in units:
Break-even point (units)= Total fixed costs / (weighted average selling price - weighted average variable expense)
Break-even point= 1,323/ (46 - 25)= 63 units
Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $100. However, once built, the machine will last forever and will require no maintenance. The machine can be built immediately, but it will cost $1,000 to build. Your buddy wants to know if he should invest the money to construct it. If the interest rate is 9.5% per year. a. What should your buddy do? b. What is your advice if the machine takes one year to build?
Answer:
Explanation:
a ) We shall calculate the NPV of the project . If it is positive , then money can be invested
Cash outflow in the beginning =1000
Present value of perpetual annuity of 100 at 9.5 %
100 / .095
= 1052.63
which is more than initial cash outflow
So NPV is positive
Hence money can be invested.
b )
If machine takes one year to build , first year cash outflow of 100 will be absent
Present value of 100 after 1 year
= 100 / 1.095
= 91.32
So present value of annuity
= 1052.63 - 91.32
= 961.31
This is less than 1000 so
NPV is negative.
Hence money can not be invested.