Answer:
Option (a) is correct.
Explanation:
Alland can produce 32 units of food per person per year or 16 units of clothing per person per year:
Opportunity cost of producing a unit of food = (16 ÷ 32)
= 0.5 units of clothing
Opportunity cost of producing a unit of clothing = (32 ÷ 16)
= 2 units of food
Georgeland can produce 36 units of food per year or 18 units of clothing:
Opportunity cost of producing a unit of food = (18 ÷ 36)
= 0.5 units of clothing
Opportunity cost of producing a unit of clothing = (36 ÷ 18)
= 2 units of food
Therefore, the Georgeland has a absolute advantage in producing both the goods because it can produce more quantity of both the goods with the same resources as Alland. But the Georgeland has not having comparative advantage in producing either of the goods.
MySpace is a social network that is targeted primarily to people under the age of 25 years old. In 2005, when MySpace was the leading social network, News Corp, owner of The Wall Street Journal and Fox News, bought the firm for $580 million. Since then, its membership has declined precipitously due to changing consumer preferences. As a result, News Corp. sold MySpace to a group of investors for a paltry $38 million in mid-2011. This is an example of how __________ forces impact the marketing environment. A. economic B. competitive C. social D. technological E. regulatory A B C D E
Answer:
Social
Explanation:
In this secanrio social forces affected MySpace performance and they were eventually sold at $38 million from an initial value of $580 million.
Social factors affect consumer behaviour, through influence of a person or group on another through culture social class, reference groups and family.
My Space targeted only people below 25 years, so this means they cannot interact with people in other age groups. They lost appeal for MySpace as a result.
Suppose Susan is an avid reader and buys only comic books. Susan deposits $1,000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a comic book is priced at $10.00. Initially, the purchasing power of Susan's $1,000 deposit is _________comic books.
Final answer:
The initial purchasing power of Susan's $1,000 deposit is the ability to purchase 100 comic books, since each comic book costs $10.00.
Explanation:
The question you've asked is about how to calculate the initial purchasing power of Susan's $1,000 deposit in a bank with a nominal interest rate of 5%. Since Susan only buys comic books priced at $10.00 each, the purchasing power of her deposit is simply the number of comic books she can buy with $1,000.
If one comic book costs $10.00, then Susan can buy $1,000 / $10.00 = 100 comic books. This calculation does not require considering the interest rate because it asks for the initial purchasing power, meaning how much Susan can buy at the time of her deposit before any interest accrues.
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon US Treasury note with three years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 7.70%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:
Answer:
The value of the treasury note is $ 876,205.93
Explanation:
I simply discounted all relevant cash flows using the discount factor formula 1/(1+r)^N,where r is the yield to maturity divided by 2 as the interest is paid twice a year and N is the number of years of the bond 3, multiplied by number of interest payments in a year,2.
Find attached for details.
What is Mary’s relationship to the heavenly beings standing above her (God the Father on the right; the dove, symbolizing the Holy Spirit, in the center; and Jesus on the left) as well as to the miners at work in the mountain? What is the significance of the crown above her head and her outstretched arms?
Answer:
In the painting of the coronation of Mary, Mary is being crowned by Jesus and God.
Explanation:
In the painting, "The Coronation of the Virgin", Mary, is being crowned by Jesus, the Son and God, the Father. The relationship that Mary had with Jesus, the Son was that she gave birth to Him. Mary was the mother of Jesus and a worshiper of God, the Father. The Holy Spirit is the part of the Trinity.
According to the scriptures of the Bible, Mary conceived Jesus, the Son of God through the Holy Spirit and gave birth to Jesus, the savior of the world.
The significance of the crown is that she is being crowned for being a faithful servant to God by obeying God. The outstretched arms represents that she is welcoming the family.
Mary’s relationship to the heavenly beings was that she was willed an exceptional role in the work of eternal salvation.
In the Catholic faith, Mary was assumed into heaven and stayed with Jesus who was her divine son. She was referred to as a queen due to her divine motherhood of Jesus Christ.
As Christ is the king of the world, it is believed that Mary is the queen over the Earth because she played a pivotal role in the divine redemption as she is the mother of the savior.
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One of the Gestalt principles, _____, refers to drawing connections between things that occur in sequence.
Answer:
Continuity
Explanation:
One of the Gestalt principles, Continuity, refers to drawing connections between things that occur in sequence.
Gestalt principle are group principle of psychology that define about how human brain percieve objects when it see group of element or sequence or certain patterns.
Gestalt has certain principle of visual perception to undertand how human brain create structure of an object:
SimilarityProximityCommon regionContinuity.Closure.Focal point.Figure ground.In the given case, It talk about continuity principles that refer human brain percieve element to be more related to each other if it is arranged in line or curve than which are not arranged.
A supply chain refers to: A. The internal sequence of operations consisting of purchasing, fabrication, assembly, and distribution B. The route from the producer upstream through the distributors to the customer C. The design and management of processes across organizational boundaries to meet the real needs of the end customer D. The chain of activities that includes market research, design, production and distribution
Answer:
B. The route from the producer upstream through the distributors to the customer.
Explanation: Supply chain is a set of linked Activities that are interconnected the links the producers,to the distributors and suppliers to the end users.or customers. The management of this chain of activities is regarded as SUPPLY CHAIN MANAGEMENT (SCM).
Supply chain can also be referred to as the route from the producer upstream through the distributors to the customer, SUPPLY CHAIN MANAGEMENT IS ONE OF THE MOST ESSENTIAL ACTIVITIES REQUIRED IN THE ENTIRE MANUFACTURING, DISTRIBUTION AND MARKETING PROCESSES AS IT ENSURES THE AVAILABILITY OF RESOURCES, AND FINISHED GOODS THROUGH EFFECTIVE AND EFFICIENT DISTRIBUTION TO THE CUSTOMERS.
Teenage Fanclub Printings sold annual subscriptions to their magazine for $30,000 in December 2017. The magazine is published monthly. The new subscribers received their first magazine in January 2018. 19. Show the adjusting entry should be made in January if the subscriptions were originally recorded as a liability? 0. What amount will be reported on the January 2018 balance sheet for Unearned Subscription Revenue?
Answer: Debit Unearned revenue (liability) $2,500, Credit Revenue $2,500.
Balance in unearned revenue as at 31 January 2018 is $30,000 - $2,500 = $27,500.
Explanation: In the answer above, it was assumed that the sale of the annual subscriptions took place at the end of December 2017. If it had taken place at the beginning of December 2017, the balance in the unearned revenue would reduce by 2 months.
The subscriptions were recorded as a liability because the total amount was not earned when the sale transaction took place. Unwinding of the unearned revenue to revenue takes place at the time the subscribers get their magazine.
Therefore, monthly unwinding of unearned revenue to revenue would be $30,000 / 12 = $2,500. The adjusting entries Teenage Fanclub Printings would have raised when the initial sale took place would be: Debit Account receivable / Cash $30,000, Credit Unearned revenue $30,000. Monthly unwinding of unearned revenue will therefore be Debit Unearned revenue $2,500 Credit Revenue $2,500 till the revenue is fully recognized and the unearned revenue becomes nil.
The adjusting entry should be
Unearned revenue (liability) $2,500
Revenue $2,500.
The Balance in unearned revenue should be $27,500
Adjusting entry & the balance in unearned revenue:The adjusting entry is
Unearned revenue (liability) $2,500 ($30,000 / 12 months)
Revenue $2,500
(being the adjusting entry is recorded)
here the liability is debited as it decreased while the revenue is credited as it increased.
Now the balance in the unearned revenue should be
= $30,000 - $2,500
= $27,500
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A country's overall level of interest rates should have an impact on the financial account of the BOP. Relatively low real interest rates should normally stimulate an outflow of capital seeking higher interest rates in other country currencies.a.True.b. False.
Answer:True
Explanation:
A country over all level of interest rate should have impact on the financial account of balance of payment because the BOP is the sources and the use of foreign exchange.
A company has determined that its optimal capital structure consists of 43 percent debt and the rest is equity. Given the following information, calculate the firm's weighted average cost of capital.kd = 7.0 %Tax rate = 35 %P0 = $ 28.86 Growth = 4.9 %D1 = $ 0.94 Show your answer to the nearest .1%
Answer:
31.5%
Explanation:
Given from the question kd = 7.0 %
Tax rate = 35 %
P0 = $ 28.86
Growth g = 4.9 %
D1 = $ 0.94
First find the cost of common stock by
rS = D1/P0 + g
=0.94/$28.86 + 0.49
=0.523
= 52.3%
Finally, calculate the weighted average cost of capital WACC,
using rs= 0.523,
Tax rate =43% =0.43
Equity E 100% - 43% = 57% =0.57 and
kd=7.0 % = 0.07
so WACC = (D/A)(1 - Tax rate)kd+(E/A)rs
= 0.43(1 - 0.43)(0.07) + 0.57(0.523)
0.0172 + 0.298
= 0.315
= 31.5%
A good that has a lot of substitutes, that is a luxury and is relatively inexpensive will most likely have a price elasticity of demand that is a. a little higher than 1 b. closer to 10 c. a little lower than 1 d. exactly 1
Answer:
The answer is A.
Explanation:
The price elasticity of demand is a little higher than 1.
This means it is price elastic. That is, the demand is sensitive to price. Why? -
1. The good has a lot of substitutes, meaning the bargaining power of buyers is high. Any increase in the price of the good will lead to customers switching to the substitutes.
2. Also, the good is also a luxury good and not a necessity. Luxury goods, unlike necessity goods are not essential. So an increase in price might see customers moving away.
If a demand is inelastic to price, price elasticity of demand will be less than one.
Lin Corporation has a single product whose selling price is $120 per unit and whose variable expense is $80 per unit. The company’s monthly fixed expense is $50,000. Required: 1. Calculate the unit sales needed to attain a target profit of $10,000. 2. Calculate the dollar sales needed to attain a target profit of $15,000.
Answer:
1) Break-even point= 1,500 units
2) Break-even point (dollars)= $195,000
Explanation:
Giving the following information:
The selling price is $120 per unit and variable expense is $80 per unit. The company’s monthly fixed expense is $50,000.
1) To calculate the break-even point in units, we need to use the following formula:
Break-even point= (fixed costs + desired profit)/ contribution margin
Break-even point= (50,000 + 10,000)/ (120 - 80)
Break-even point= 1,500 units
2) Now, we need to calculate the break-even point in dollars:
Break-even point (dollars)= (fixed costs + desired profit)/ contribution margin ratio
Break-even point (dollars)= 65,000/ (40/120)= $195,000
To attain a target profit of $10,000, Lin Corporation needs to sell 250 units. To attain a target profit of $15,000, Lin Corporation needs to make $45,000 in sales.
Explanation:To calculate the unit sales needed to attain a target profit of $10,000, we need to consider the contribution margin per unit. The contribution margin per unit is calculated by subtracting the variable expense per unit from the selling price per unit. In this case, the contribution margin per unit is $120 - $80 = $40. To attain a target profit of $10,000, we divide the target profit by the contribution margin per unit: $10,000 / $40 = 250 units.
To calculate the dollar sales needed to attain a target profit of $15,000, we can use the same approach. The contribution margin ratio is calculated as the contribution margin per unit divided by the selling price per unit. In this case, the contribution margin ratio is $40 / $120 = 1/3. To attain a target profit of $15,000, we divide the target profit by the contribution margin ratio: $15,000 / (1/3) = $45,000.
Hazardous Materials (HazMat) are regulated by several different government agencies. The five main federal agencies involved in HazMat regulation are the Pipeline and Hazardous Materials Safety Administration (PHMSA), Occupational Health and Safety Administration (OSHA), Nuclear Regulatory Commission (NRC), Environmental Protection Agency (EPA), and ___________.
Answer:
Department of transportation (DOT)
Explanation:
HazMat(hazardous materials) are hazardous substances in quantities that may pose a high risk to health, property, and the environment. HAZMATs include substances such as as toxic chemicals, fuels, nuclear waste products, and biological, chemical, and radiological agents.
HazMat is a substance that may pose serious threat to property, life or the environment if such substances are not well stored, shipped or handled.
The Alpha-Beta affiliated group has consolidated taxable income of $400,000 and tentative general business credit of $80,000 in the current year. The maximum general business credit that can be used on the consolidated return is
$80000 will be used on consolidation return
Explanation:
The maximum general business credit that can be used on the consolidated return is $80,000 because it the greater of the following
A) Total tentative general business credit
B) 25% of amount of regular tax liability which will be less than $80,000
So out of 2 conditions A) is greater so $80,000 can be used on consolidated return
Thus, maximum $80000 will be used.
The majority of customers who stop patronizing a particular store do so because:
a. Its prices are too high
b. Its quality is too low
c. An indifferent employee treated them poorly
d. It failed to advertise enough
Answer: C An indifferent employee treated them poorly
Explanation:
One can clearly see that for the store to have retained patronage shows that the store do not need advertisement neither is price a factor. A firm (store) competitive advantage is in customer's perception of its products and services. If they are viewed to be good, they will get patronage. If customers are treated poorly, they will most likely switch to the next available outlet. A classical case of "customer is king".
On April 1, Moloney Meat Distributors sold merchandise on account to Fronke’s Franks for $1,600 on Invoice 1001, terms 3/10, n/30. Payment was received in full from Fronke’s Franks, less discount, on April 10. Required: Record the transactions on April 1 and April 10.
Answer:
April 1
Dr. Account receivable $1,600
Cr. Sales $1,600
April 10
Dr. Cash $1,552
Dr. Sales Discount $48
Cr. Account receivable $1,600
Explanation:
Term 3/10, n/30 means there is a discount of 3% is available on payment of due amount within discount period of 10 days after sale and net credit period of 30 days.
According to given data
Sales = $1,600
As the payment is made within discount period, so discount will be availed
Discount = $1,600 x 3% = $48
Payment = $1,600 - $48 = $1,552
Discount of $48 is an expense.
Given the following financial statements for GM, the return on assets is ______ percent? (Write your answer as a percentage, rounding to the nearest 100ths place value—e.g., 5.25. Omit the percent sign in your answer.)
Final answer:
The return on assets can be calculated by dividing the net income by the average total assets and expressing it as a percentage.
Explanation:
The return on assets can be calculated by dividing the net income by the average total assets and expressing it as a percentage.
Return on Assets (ROA) = Net Income / Average Total Assets
For General Motors (GM), to calculate the return on assets, you would need the net income and average total assets data from their financial statements.
Free trade Multiple Choice encourages growth by promoting the rapid spread of new inventions and innovations. encourages growth by effectively eliminating all patent and copyright barriers to growth. discourages growth by increasing competitive pressures on domestic firms. discourages growth compared to situations where the government strongly controls foreign trade.
Answer:
Encourages growth by promoting the rapid spread of new inventions and innovations.
Explanation:
A free trade agreement is a pact that is made between two or more nations to lower barriers to imports and exports among them. Under a free trade policy, goods and services can be purchased and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to prevent their exchange.
Free trade accelerates economic growth, enhanced efficiency, increased innovation, and the higher fairness that comes with a rule-based system.
Mildred has two children, Aaron and Irving, who are qualifying persons for the Child and Dependent Care Credit. Aaron has $4,000 in dependent care expenses, and Irving has none. All other tests are met. Mildred's credit is based on __________ of expenses. A) $2,000 B)$3,000 C)$4,000 D)$6,000
Answer:
$4,000
Explanation: the Child and Dependent Care Credit will be paid based on the $4,000 expenses incurred for Aaron.
Find the cost of building a new fabrication plant that will be 33% bigger than a similar plant that cost $8 million to build. The appropriate capacity exponent is 0.90.
Solution:
Let the size of old plant be x
New plant is 33% bigger than the old plant.
So,
Size of the new plant [tex]=x+(0.33 * x)[/tex]
= x + 0.33x = 1.33x
Cost of the old plant = $8 million
Capacity exponent = 0.90
Calculate the cost of new plant -
Cost of new plant = Cost of old plant * (Size of new plant/Size of old plant)capacity exponent
Cost of new plant =[tex]=\$ 8 \text { million } *(1.33 \mathrm{x} / \mathrm{x})^{0.90}[/tex]
Cost of new plant =[tex]\text { S8 million } *(1.33)^{0.90}[/tex] = $10.34 million
Thus,
The cost of building new plant is $10.34 million.
Final answer:
To find the cost for a fabrication plant 33% larger than a plant costing $8 million, the new plant capacity is calculated as $10.64 million. Due to the capacity exponent of 0.90, the cost increase is less than the capacity increase, resulting in a new cost of $10.248 million.
Explanation:
To find the cost of building a new fabrication plant that is 33% bigger than a similar plant that cost $8 million to build, we start by recognizing that this is a math problem involving economies of scale and the specific capacity exponent, which is 0.90 in this case. The capacity exponent is often used to determine how costs scale with production capacity.
First, we calculate the new size of the plant by increasing the similar plant size by 33%. Since the original plant cost $8 million, we find the increased capacity:
New Capacity = Original Capacity x (1 + Percentage Increase)
New Capacity = $8 million x (1 + 0.33)
New Capacity = $8 million x 1.33
New Capacity = $10.64 million
However, due to the capacity exponent of 0.90, the cost increase will be less than proportional to the increase in capacity:
New Cost = Original Cost x (New Capacity / Original Capacity) ^ Capacity Exponent
New Cost = $8 million x (1.33) ^ 0.90
New Cost = $8 million x 1.281
New Cost = $10.248 million
[The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company’s most recent year is given: Office Total Company Chicago Minneapolis Sales $ 450,000 100.0 % $ 90,000 100 % $ 360,000 100 % Variable expenses 243,000 54.0 % 27,000 30 % 216,000 60 % Contribution margin 207,000 46.0 % 63,000 70 % 144,000 40 % Traceable fixed expenses 100,800 22.4 % 46,800 52 % 54,000 15 % Office segment margin 106,200 23.6 % $ 16,200 18 % $ 90,000 25 % Common fixed expenses not traceable to offices 72,000 16.0 % Net operating income $ 34,200 7.6 % Required:
1-a. Compute the companywide break-even point in dollar sales.
1-b. Compute the break-even point for the Chicago office and for the Minneapolis office.
1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?
Answer:
Part 1-a: The breakeven of the complete company is $375652.17
Part 1-b: The breakeven for the Chicago Office is $66857.14 while that of the Minneapolis office is $135000.
Part 1-c: The value of breakeven for the company is more than that of the Chicago and Minneapolis office.
Explanation:
Part 1-a
For the whole company
[tex]Contribution \,Ratio=\dfrac{Contribution\, Margin \times 100}{Sales}[/tex]
Here the Contribution Margin is $207,000
Sales is $450,000
So the contribution ratio is given as
[tex]Contribution \,Ratio=\dfrac{207000 \times 100}{450000}\\Contribution \,Ratio=46\%[/tex]
Now Fixed cost of the company is given as sum of the traceable fixed expenses and non-traceable expenses which are given as
[tex]Fixed \,Cost=Traceable\, Fixed\, Expenses+Non-traceable\, Fixed\, Expenses[/tex]
Here
Traceable fixed expenses are $100,800
Non traceable fixed expenses are 72,000
[tex]Fixed \,Cost=Traceable\, Fixed\, Expenses+Non-traceable\, Fixed\, Expenses\\Fixed \,Cost=100800+72000\\Fixed \,Cost=172800[/tex]
Now the Breakeven is given as
[tex]Breakeven=\dfrac{Fixed\,Cost}{Contribution\,Ratio}\\Breakeven=\dfrac{172800}{46\%}\\Breakeven=\dfrac{172800}{0.46}\\Breakeven=\$375652.17[/tex]
So the breakeven of the complete company is $375652.17
Part 1-b
ChicagoFor the Chicago office
[tex]Contribution \,Ratio=\dfrac{Contribution\, Margin \times 100}{Sales}[/tex]
Here the Contribution Margin is $63,000
Sales is $90,000
So the contribution ratio is given as
[tex]Contribution \,Ratio=\dfrac{63000 \times 100}{90000}\\Contribution \,Ratio=70\%[/tex]
Traceable fixed cost for Chicago are $46,800
Now the Breakeven is given as
[tex]Breakeven=\dfrac{Fixed\,Cost}{Contribution\,Ratio}\\Breakeven=\dfrac{46800}{70\%}\\Breakeven=\dfrac{46800}{0.70}\\Breakeven=\$66857.14[/tex]
So the breakeven of the Chicago office is $66857.14
MinneapolisFor the Minneapolis office
[tex]Contribution \,Ratio=\dfrac{Contribution\, Margin \times 100}{Sales}[/tex]
Here the Contribution Margin is $144,000
Sales is $360,000
So the contribution ratio is given as
[tex]Contribution \,Ratio=\dfrac{144000 \times 100}{360000}\\Contribution \,Ratio=40\%[/tex]
Traceable fixed cost for Chicago are $54,000
Now the Breakeven is given as
[tex]Breakeven=\dfrac{Fixed\,Cost}{Contribution\,Ratio}\\Breakeven=\dfrac{54000}{40\%}\\Breakeven=\dfrac{54000}{0.40}\\Breakeven=\$135000[/tex]
So the breakeven of the Minneapolis office is $135000
Part 1-c
The sum of the breakeven for the Chicago and Minneapolis office is $66857.14+$135000=$201857.14
The value of breakeven for the company is $375652.17
As the value of breakeven for the company is more than that of the Chicago and Minneapolis office.
Final answer:
The companywide break-even point is $375,750, calculated by dividing total fixed costs by the contribution margin ratio. The Chicago office's break-even point is $66,861, and the Minneapolis office's break-even point is $135,000. The companywide break-even point is not equal to the sum of both offices' break-even points.
Explanation:
To calculate the companywide break-even point in dollar sales, we use the formula Break-even Point (BEP) = Total Fixed Costs / (Total Sales - Variable Costs). From the given information, total fixed costs are the sum of traceable fixed expenses and common fixed expenses not traceable to offices, which equals $100,800 + $72,000 = $172,800.
The total sales and variable costs are given as $450,000 and $243,000 respectively. Therefore:
BEP = $172,800 / ($450,000 - $243,000)BEP = $172,800 / $207,000BEP = 0.835To find the dollar amount of the break-even point, we multiply the BEP ratio by total sales:
BEP in dollars = 0.835 * $450,000BEP in dollars = $375,750The break-even point for each office is calculated separately using the same formula, including only the fixed costs traceable to that office.
For the Chicago office:
BEP = $46,800 / ($90,000 - $27,000)BEP = $46,800 / $63,000BEP = 0.7429BEP in dollars = 0.7429 * $90,000BEP in dollars = $66,861For the Minneapolis office:
BEP = $54,000 / ($360,000 - $216,000)BEP = $54,000 / $144,000BEP = 0.375BEP in dollars = 0.375 * $360,000BEP in dollars = $135,000The companywide break-even point is not equal to the sum of the Chicago and Minneapolis break-even points. When adding up the break-even points of both offices, we get $66,861 (Chicago) + $135,000 (Minneapolis) = $201,861, which is less than the companywide break-even point of $375,750.
13. Josiah would like to set up an account to provide for some retirement funding. He plans to retire in 30 years and can invest in an account paying 7%. Because he plans to do some traveling during the first ten years of his retirement, he would like to have enough money to begin withdrawing $5,000 per year at the beginning of each year. The first withdrawal would occur at the beginning of the 31st year. At retirement he would also like to move the funds to a safer account that might pay only 5%. How much must he now deposit in his 7% account to accomplish his dream?
Answer:
$6568.36
Explanation:
Money he wishes to have in future is $50 000 as he wishes to withdraw $5000 at the beginning on each year for the first ten years
$5000*10= $50000
Present value = FV/ (1+r)^n
50000/(1+0.07)^30
=$6568.36
Therefore he must invest 6568.36
Jefferson's recently paid an annual dividend of $1.31 per share. The dividend is expected to decrease by 4% each year. How much should you pay for this stock today if your required return is 16%?
Answer:
$6.29
Explanation:
Dividend is $1.31 per share
Decreased by 4%
Required return is 16%
Therefore:
Price = [$1.31 × (1 - .04)]/[.16 - (-.04)] = $6.29
Answer:
I should pay $10.92 per share for the stock today as shown below
Explanation:
The maximum price a rational investor could pay for a share is given by the formula:
Po=Div/rate of return-growth rate
Po is the price to paid
Rate of return here is 16%,which is similar to return on equity
The growth rate of the share of the dividend is 4%
Po=$1.31/(0.16-0.04)
Po =$10.92
The price has factored in both the dividend yield and gains yield of the share.
dividend yield is the return earned by share through dividends
gains yield is another return earned by share through appreciation in its price in the market place-stock exchange
Total return on return on share is the sum of both.
Which of the following statements is true if total fixed costs decrease while the sales price per unit and variable cost per unit remain constant? A. The contribution margin decreases. B. The contribution margin increases. C. The breakeven point increases. D. The breakeven point decreases.
Answer:
D. The breakeven point decreases.
Explanation:
Breakeven point of a business is defined as the point where it's total cost and total revenues are equal, at this point there is no gain or loss. Hen revenue is above this point profit is made, and when revenue is below this point there is loss.
The formula for break-even is
Breakeven point= Total fixed cost/(Sales price per unit- Variable cost per unit)
Since sales price and variable cost is constant, let's say
(Sales price per unit- Variable cost per unit)= constant (k)
So when we cross-multiply in the formula
Breakeven* k= Total fixed cost
It shows that Breakeven point is directly proportional to Total fixed cost.
So a reduction in Total fixed cost will result in a reduction in Breakeven point.
The process for converting present values into future values is called compounding. This process requires knowledge of the values of three of four time-value-of-money variables. Which of the following is not one of these variables?
a. The trend between the present and future values of an investment
b. The interest rate (I) that could be earned by deposited funds
c. The duration of the deposit (N)
d. The present value (PV) of the amount deposited
Answer:
The correct answer is letter "A": The trend between the present and future values of an investment.
Explanation:
Compounding is the process in which earnings of an investment are reinvested to earn more profits in a determined period of time. In other words, present values are used to convert them into future values expecting they will be higher. Compounding can also be defined as interest on interest.
To compute compounding figures it is necessary the interest rate that could be earned out of an investment and its duration and the present value of the investment in dollars quantity.
Thus, the trend between the present and future value of the investment remains useless for compounding.
Exercise 3-12 Oriole Design was founded by Thomas Grant in January 2011. Presented below is the adjusted trial balance as of December 31, 2017. ORIOLE DESIGN ADJUSTED TRIAL BALANCE DECEMBER 31, 2017 Debit Credit Cash $11,155 Accounts Receivable 21,655 Supplies 5,155 Prepaid Insurance 2,655 Equipment 60,155 Accumulated Depreciation-Equipment $35,155 Accounts Payable 5,155 Interest Payable 162 Notes Payable 5,400 Unearned Service Revenue 5,755 Salaries and Wages Payable 1,408 Common Stock 10,155 Retained Earnings 3,655 Service Revenue 61,655 Salaries and Wages Expense 11,455 Insurance Expense 958 Interest Expense 162 Depreciation Expense 7,400 Supplies Expenses 3,400 Rent Expense 4,350 $128,500 $128,500 Prepare an income statement for the year ending December 31, 2017. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) ORIOLE DESIGN Income Statement $ $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare a statement of retained earnings for the year ending December 31, 2017. (List items that increase retained earnings first.) ORIOLE DESIGN Statement of Retained Earnings $ : $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare an unclassified balance sheet at December 31. (List assets in order of liquidity.) ORIOLE DESIGN Balance Sheet Assets $ $ : $ Liabilities and Stockholders' Equity $ $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Answer the following questions. (Round interest rate to 0 decimal places, e.g. 5%.) (1) If the note has been outstanding 6 months, what is the annual interest rate on that note? (Hint: Assume that the amount of interest payable in the trial balance relates to the note payable in the trial balance.) The annual interest rate % (2) If the company paid $17,500 in salaries and wages in 2017, what was the balance in Salaries and Wages Payable on December 31, 2016? The balance in Salaries and Wages Payable $
Answer:
Oriole Design as the following Key results, explanation and workings have been shown below:
A
Net Profit $33,930Closing retained Earnings $37,585Net Assets $47,740Shareholders Equity $47,740B Interest rate on Notes Payable is 1.5%
C. Total Wages and Salaries Payable as at Dec 31 2016 = $7,453
Explanation:
Oriole Design
Income Statement
For the Year ending December 31 2017
Revenue $61,655
Expenses
Salaries & Wages $11,455
Insurance Expense $958
Interest Expense $162
Depreciation Expense $7,400
Supplies Expense $3,400
Rent Expense $4,350
Total Expenses = $27,725
Net Profit = $33,930
Oriole Design
Statement of Retained Earnings
For the Year Ending December 31 2017
Opening Balance $3,655
Add Net Profit $33,930
Closing Retained Earnings = $37,585
Oriole Design
Balance Sheet
As at December 31st 2017
Assets
Cash $11,155
Accounts Receivable $21,655
Supplies $5,155
Prepaid Insurance $2,655
Equipment $60,155
Less Accumulated Depreciation on Equipment -$35,155
Total Assets = $65620
Liabilities
Account Payable $5,155
Interest Payable $162
Notes Payable $5,400
Unearned Service Revenue $5,755
Salaries & Wages Payable $1,408
Total Liabilities = $17,880
Net Assets = $47,740
Shareholder's Equity
Common Stock $10,155
Closing Retained Earnings $37,585
Total Shareholder's Fund = $47,740
B. Notes Payable = $5,400
Interest Payable = $162
Duration of Notes as at December 31 2017 = 6months
Interest Rate = 162/5400 x 6/12 x 100%
=1.5%
C.
Salaries and Wages Payable Closing Dec 31 2017 = $1,408
Salaries and Wages expensed in 2017 = $11,455
Salaries and Wages Paid in Cash in 2017 = $17,500
Payment relating to Previous Year balance = $17,500 - $11,455 = $6,045
Payment outstanding from last year not yet cleared $1,408
Total Wages and Salaries Payable as at Dec 31 2016 = $6,045 + $1,408 = $7,453
Calculate the total revenue and expenses to prepare the income statement. Create the statement of retained earnings using the beginning balance and the net income. Prepare the balance sheet by summing up the assets, liabilities, and stockholder's equity. Lastly, answer the two associated questions using logical calculations.
Explanation:The first step in preparing the documents is to calculate revenues and expenses. The total revenue for Oriole Design in 2017 can be found by adding the Service Revenue of $61,655 to the Unearned Service Revenue of $5,755 resulting in $67,410. Expenses amount to $28,725 found by adding Salaries and Wages Expense, Insurance Expense, Interest Expense, Depreciation Expense, Supplies Expenses, and Rent Expense together. This results in a Net Income of $38,685 ($67,410 - $28,725).
Next, you should prepare the statement of retained earnings starting with the beginning balance of retained earnings of $3,655 and add the net income calculated above of $38,685 to get a total of $42,340.
Third, prepare the unclassified balance sheet. Assets total at $100,175 ($11,155 + $21,655 + $5,155 + $2,655 + $60,155), liabilities total at $12,175 ($5,155 + $162 + $5,400 + $1,408), and stockholders' equity is $88,000 ($10,155 + $42,340 (Retained Earnings from Statement of Retained Earnings) + $35,155). These balance out as they should.
As for the questions: (1) The annual interest rate can be found by multiplying the interest expense by 2 (as it was a 6 month note) and then dividing by the note payable amount. This gives us an interest rate of 6%. (2) The balance of Salaries and Wages Payable at the end of 2016 can be found by taking the total paid in 2017 and subtracting the Salaries and Wages Expense paid in 2017 and the amount Payable at the end of 2017. This is $4,553.
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Lasiter Corp. reported net credit sales of $2,000,000 and cost of goods sold of $1,400,000 for 2014. On January 1, 2014, accounts receivable was $250,000. Amounts owed by customers increased by $20,000 during 2014. Rounding to two decimal places, what is Lassiter's accounts receivable turnover rate for 2014
Answer:
The correct answer is 7.69.
Explanation:
According to the scenario, the given data are as follows:
Net credit sales = $2,000,000
Cost of goods sold = $1,400,000
Account receivable = $250,000
During year Account receivable = $250,000 + $20,000 = $270,000
So, we can calculate the accounts receivable turnover rate by using following formula:
Turnover rate = Net credit sales ÷ Average account receivable
Where Average account receivable = ($250,000 + $270,000) ÷ 2
= $260,000
So, by putting the value we get,
Turnover rate = $2,000,000 ÷ $260,000
= 7.69
Hence, the accounts receivable turnover rate is 7.69.
The managerial accountant at XYZ Company told her friend that the company expects to announce a major recall in a few weeks. The friend promptly sells all her stock in XYZ. The accountant violated which IMA Statement of Ethical Professional Practice standards?
Answer: The managerial accountant at XYZ Company told her friend that the company expects to announce a major recall in a few weeks. The friend promptly sells all her stock in XYZ. The accountant violated IMA statement of ethical professional practice standards of Competence.
Explanation:
The IMA statement of ethical professional practice standards of Competence states that each member has the responsibility to provide information that supports the decision and recommend something accurate, clear and timely.
The managerial accountant at XYZ company provided information that was not very accurate. Based on that information, his friend immediately sells his stock in XYZ company. So, in this case, the manager has not helped his friend in taking a viable decision.
1. Barry Cain invested $38,000 cash to start an appliance repair business. 2. Hired an employee to be paid $500 per week, starting tomorrow. 3. Paid two years' rent in advance, $10,800. 4. Paid the worker's weekly wage. 5. Recorded revenue earned and received for the week, $2,900.
Answer:
No. Account Titles & Explanation Debit Credit
1.
Cash $38,000
Barry Capital Account $38,000
2.
No Entry Requires as Employee are only Hired there id no financial transaction involved in hiring the employees only.
3.
Prepaid Rent $10,800
Cash $10,800
4.
Wages Expense $500
Cash $500
5.
Cash $2,900
Revenue $2,900
Explanation:
1. Cash paid is the capital contribution in the business so cash account will be debited and capital account will be credit as per their nature.
2. Hired an employee does not need any transaction as there is no financial involvement in just hiring an employee.
3. Prepaid expense is actually an asset for us as we paid expenses in advance which is not incurred yet. It will be recognized as expense with passage of time.
4. Payment to worker is an expenses against a credit to cash as wage is paid in cash.
5. Revenue earned should be recorded and also received so cash will be debited for the receipt from sales and revenue shold be debited due to its nature of account.
On January 1, 2021, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $534,000 by Elmira on December 31, 2023. The effective interest rate is 6%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):1. How much sales revenue would Wright recognize on January 1, 2020, for this transaction?2. Prepare journal entries to record the sale of merchandise on January 1, 2020 (omit any entry that might be required for the cost of the goods sold), the December 31, 2020, interest accrual, the December 31, 2021, interest accrual, and receipt of payment of the note on December 31, 2022Required 1: How much sales revenue would Wright recognize on January 1, 2018, for this transaction? (Round your final answer to nearest whole number.)
ales revenue_________
Required 2: - Record the sale of goods on January 1, 2018 in exchange for the long term note.
- Record the interest accrual on December 31, 2018.
- Record the interest accrual on December 31, 2019.
- Record the interest revenue in 2020 and collection of the note..
Solution:
1. (i)
Sales revenue = Present value of the note receivable
= $528,000 x .86384 = $456,108
Present value of $1: n = 3, i = 5% (PV of $1)
(ii)
December 31, 2018:
Interest revenue: ($456,108 x 5%) = $22,805
December 31, 2019:
Interest revenue: (($456,108 + $22,805) x 5%) = $23,946
December 31, 2020:
Interest revenue: (($456,108 + $22,805 + $23,946) x 5%) = $25,143
2. Journal entries to record the sale of merchandise on January 1, 2020
Date General Journal Debit Credit.
Jan 01, 2018 Note receivable 528,000
Discount on note receivable 71,892
Sales revenue 456,108
Dec 31' 2018 Discount on note receivable 22,805
Interest revenue 22,805
Dec 31, 2019 Discount on note receivable 23,946
Interest revenue 23,946
Dec 31' 2020 Cash 528,000
Discount on note receivable 25,143
Interest revenue 25,143
Note receivable 528,000
The sales revenue that will be recognized is $456108.
How to calculate the sale revenue?From the information given, the sales revenue will be calculated thus:
= Value of note × PVF of receivable
= $528000 × 0.8638
= $456108
Also, the interest revenue will be calculated thus:
December 2018:
Interest Revenue = $22805
December 2019:
Interest revenue = $23946
December 2020:
Interest revenue will be:
= ($456108 + $22805 + $23946) × 5%
= $25143
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Michael Hamwey is a realtor. He organized the business as a corporation on August 16, 2017. The business received $65,000 cash from Hamwey and issued common stock. Consider the following facts as of August 31, 2017.
a.
Hamwey has $14,000 in his personal bank account and $63,000 in the business bank account.
b.
Hamwey owes $9,300 on a personal charge account at a local department store.
c.
Hamwey acquired business furniture for $10,500 on August 24. Of this? amount, the business owes $3,000 on accounts payable at August 31.
d.
Office supplies on hand at the real estate office total $4,000
e.
Hamwey?'s business owes $115,000 on a note payable for some land acquired for a total price of $159,000.
f.
HamweyHamwey?'s business spent $18,000 for a Realty GroupRealty Group
?franchise, which entitles him to represent himself as an agent.
Realty GroupRealty Group is a national affiliation of independent real estate agents. This franchise is a business asset.
g.
Hamwey owes $196,000 on a personal mortgage on his personal? residence, which he acquired in 2012 for a total price of $424,000.
Requirements
1. Prepare the balance sheet of the real estate business of
Michael Hamwey ?Realtor, Inc., at
August 31?, 2017.
2. Does it appear that the realty business can pay its? debts? How can you? tell?
3. Identify the personal items given in the preceding facts that should not be reported on the balance sheet of the business.
Requirement 1. Prepare the balance sheet of the real estate business of
Michael Hamwey ?Realtor, Inc., at August 31?, 2017.
? (Do not classify the balance sheet into current and? long-term sections. If a box is not used in the balance sheet leave the box? empty; do not select a label or enter a? zero.)
Answer:
1. Michael Hamwey Realtor Inc.
Balance Sheet as at August 31 2017
Land $159,000
Furniture $10,500
RealtyGroup Franchise $18,000
Cash $65,000
Office Supplies $4,000
Accounts Payable $3,000
Liability for Land acquired $115,000
Net Assets = $138,500
Common Stock $65,000
2. no it wont be able to fulfill its debt obligation within 1 year without disposing of Assets or converting the loan to a long term liability
3. The Following items should not be included in the Balance sheet of the Realtor Inc because they are personal to Hamwey
a. Hamwey Bank balance $14,000
b. Hamwey bank balance in the Business Account $63,000
c. Hamwey's debt at local department store $9,300
d. Hamwey's Mortgage on his personal residence $196,000
Explanation:
1. Michael Hamwey Realtor Inc.
Balance Sheet as at August 31 2017
Land $159,000
Furniture $10,500
RealtyGroup Franchise $18,000
Cash $65,000
Office Supplies $4,000
Accounts Payable $3,000
Liability for Land acquired $115,000
Net Assets = $138,500
Common Stock $65,000
2. The Realtor Business looks unhealthy considering the Quick Ratio or working Capital ratio, and will be unable to fulfill its debt obligation without disposing of Assets or converting the Loan to a long term Liability.
Working Capital Ratio = (Bank + supplies in hand) divided by (the Accounts payable + Note Payable)
=$69,000/$118,000 = 0.58times
*assumption: note payable is assumed to fall due within 1 year
The Available resource in the Business isn't sufficient to meet its immediate obligations
3. The Following items should not be included in the Balance sheet of the Realtor Inc because they are personal to Hamwey
a. Hamwey Bank balance $14,000
b. Hamwey bank balance in the Business Account $63,000
c. Hamwey's debt at local department store $9,300
d. Hamwey's Mortgage on his personal residence $196,000
Final answer:
The balance sheet for Michael Hamwey Realtor, Inc. includes assets totaling $254,500 and liabilities of $118,000, with stockholder's equity at $65,000, indicating a positive financial position. Personal items such as Hamwey's personal bank account, charge account, and mortgage are excluded from the business balance sheet.
Explanation:
To prepare the balance sheet for Michael Hamwey Realtor, Inc. as of August 31, 2017, we first identify the assets, liabilities, and equity from the provided information. Assets include cash at the business bank account, business furniture, office supplies, a franchise, and land, while liabilities include accounts payable and a note payable. The equity is contributed through the issuance of common stock.
AssetsCash: $63,000Business Furniture: $10,500Office Supplies: $4,000Franchise: $18,000Land: $159,000LiabilitiesAccounts Payable: $3,000Note Payable: $115,000Stockholder's EquityCommon Stock: $65,000To assess the ability of the business to pay its debts, we look at the ratio of assets to liabilities. Despite having substantial liabilities, the business's assets exceed its liabilities, indicating a positive net position which suggests the business can cover its debts in the short term.
Personal items that should not be reported on the balance sheet include Hamwey's personal bank account balance, personal charge account, and personal mortgage. These are separate from the business and do not impact its financial statements.