Answer:
The share at the current year will be worth $ 17.23
Explanation:
We solve for the earnins in four years:
[tex]1.15 \times (1+0.4)^3(1+0.03)^1=FV[/tex]
Earnigns at 4th year: 3.250268
We pay 75% which is: 3.25 x 75% = 2.44
Now we use the gordonal model:
[tex]\frac{Dividends}{return - grow}[/tex]
2.44 / (0.12 - 0.03) = 2.44/0.09 = 27.11
Last, we discount this as it is 4 years into the future.
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity $27.1100
time 4.00
rate 0.12000
[tex]\frac{27.11}{(1 + 0.12)^{4} } = PV[/tex]
PV 17.2289
The value of a Sinclair Pharmaceuticals share today can be calculated using a combination of the Dividend Discount Model and the Gordon Growth Model, taking into account the high growth over the next three years followed by a steady growth, and also the company's decision to start pay dividends after 4 years.
Explanation:The value of a share for Sinclair Pharmaceuticals today can be calculated using the Dividend Discount Model (DDM). The DDM is a method of valuing a company's stock by using predicted dividends and discounting them back to present value. First, we need to calculate the expected earnings for the first three years when the annual growth is 40%, and then for the years after that when the annual growth is 3%.
Since Sinclair will not pay dividends for the first three years, and all earnings will be reinvested, dividends will start at year 4. The dividend in year 4 will be 75% of the earnings in that year. This dividend can then be discounted back to present value using the 12% equity cost of capital.
The value of the Sinclair Pharmaceuticals shares after year 3 can be calculated by using the Gordon Growth Model, which is a version of the DDM that assumes a constant rate of dividend growth. The present value of these future dividends can then be calculated using the 12% equity cost of capital.
The total value of a Sinclair Pharmaceuticals share today is then the sum of the present value of the dividends for year 4 and the present value of the dividends from year 5 and onwards.
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A car loan requiring quarterly payments carries an APR of 8%. What is the effective annual rate of interest?
Answer:
Effective annual rate 8.24%
Explanation:
We solve for the effective rate by calcualte how much is the value of the APR with quarterly compounding.
[tex](1+\frac{APR}{M} )^m = 1 + EAR[/tex]
[tex](1+0.08/4)^4 = 1+ EAR\\(1+0.08/4)^4 -1 = EAR\\\\EAR = 0.08243216[/tex]
Final answer:
The Effective Annual Rate (EAR) for an 8% APR with quarterly compounding is approximately 8.24%, which is higher than the nominal APR due to the effects of compound interest.
Explanation:
The student's question pertains to the conversion of an Annual Percentage Rate (APR) to the Effective Annual Rate (EAR) of interest when payments are made quarterly. APR represents the nominal interest rate provided on a yearly basis without taking into account the effect of compounding within the year. However, when an APR is given, and payments or interest compounding occur more frequently than annually, the actual interest rate is higher than the nominal rate due to the effects of compound interest. To determine the EAR, one must take into account the frequency of compounding.
The formula to calculate the Effective Annual Rate when interest is compounded quarterly is EAR = (1 + APR/n)ⁿ - 1, where 'APR' is the annual percentage rate and 'n' is the number of times interest is compounded per year. For quarterly compounding, n = 4.
To calculate the EAR for an 8% APR compounded quarterly: EAR = (1 + 0.08/4)⁴ - 1. Doing the calculation: EAR = (1 + 0.02)⁴ - 1, EAR = 1.08243216 - 1, EAR = 0.08243216, or an effective annual rate of about 8.24%.
Therefore, although the APR is 8%, the actual interest accrued over a year due to quarterly compounding will be slightly higher at approximately 8.24%. This is the effective annual rate of interest that the borrower would experience.
Problem 1-1A (Video) Ohno Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Ohno’s monthly manufacturing cost and other expense data are as follows. Rent on factory equipment $11,300 Insurance on factory building 1,700 Raw materials (plastics, polystyrene, etc.) 84,800 Utility costs for factory 1,000 Supplies for general office 300 Wages for assembly line workers 65,700 Depreciation on office equipment 800 Miscellaneous materials (glue, thread, etc.) 1,300 Factory manager’s salary 6,500 Property taxes on factory building 500 Advertising for helmets 15,100 Sales commissions 11,000 Depreciation on factory building 1,600 Enter each cost item on your answer sheet, placing the dollar amount under the appropriate headings. Total the dollar amounts in each of the columns.Compute the cost to produce one helmet.
Answer:
cost per helmet: $17.52
Explanation:
The manufacturing cost only should be considered that is overhead,labor and materials.
Overhead
Rent on factory equipment 11,300
Depreciation on factory building 1,600
Property taxes on factory building 500
Miscellaneous materials (glue, thread, etc.) 1,300
Factory manager’s salary 6,500
Insurance on factory building 1,700
Utility costs for factory 1,000
Depreciation on office equipment 800
Total Overhead: 24,700
Raw materials (plastics, polystyrene, etc.) 84,800
Wages for assembly line workers 65,700
Total Manufacturing Cost 175,200
helmet produced: 10,000
cost per Helment: 175,200 / 10,000 = $17.52
The total monthly cost of producing helmets is $174,400. When this total cost is divided by the number of helmets produced in a month (10,000), the result is $17.44. Therefore, the cost to produce one helmet is $17.44.
To figure out the cost to produce one helmet, all costs associated with production need to be added up. These include rent on factory equipment ($11,300), insurance on factory building ($1,700), raw materials ($84,800), utility costs ($1,000), wages for assembly line workers ($65,700), miscellaneous materials ($1,300), factory manager's salary ($6,500), property taxes on factory building ($500), and depreciation on factory building ($1,600).
The sum of these costs is $174,400. This total cost is then divided by the number of helmets produced per month, which is 10,000. $174,400 / 10,000 = $17.44.
Therefore, the cost to produce one helmet is $17.44.
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Marcos Company reported the following items on its financial statements for the year ending December 31, 2016:
Sales $ 560,000
Cost of goods sold $400,000
Salary expense 40,000
Interest expense 30,000
Dividends 20,000
Income tax expense 25,000.
Required:
1. How much will be reported as retained earnings on Las Palmas' balance sheet at December 31, 2017, if this is the first year of operations?
Answer:
$35,000
Explanation:
Gross Profit:
= Sales - Cost of Goods sold
= $560,000 - $400,000
= $160,000
Income before tax:
= Gross Profit - Salary Expense - Interest expense
= $160,000 - $40,000 - $30,000
= $90,000
Income after tax:
= Income before tax - Tax
= $90,000 - $25,000.
= $65,000
Transfer to Retained Earnings:
= Income after tax - Dividend
= $65,000 - $30,000
= $35,000
Closing Retained Earnings:
= Net Income (After tax) - Dividend payment
= $65,000 - $30,000
= $35,000
To calculate the retained earnings on the balance sheet, subtract the total expenses from the sales revenue to find the net income. Then, subtract any dividends paid out from the net income to find the retained earnings.
Explanation:To calculate the retained earnings on the balance sheet, we need to consider the net income of the company for the first year of operation. Net income is calculated by subtracting the total expenses from the sales revenue. In this case, net income would be calculated as: $560,000 (sales) - $400,000 (cost of goods sold) - $40,000 (salary expense) - $30,000 (interest expense) - $25,000 (income tax expense) = $65,000.
The retained earnings can then be calculated by subtracting any dividends paid out from the net income. In this case, the dividends paid out are $20,000, so the retained earnings would be: $65,000 - $20,000 = $45,000.
Therefore, the amount reported as retained earnings on the balance sheet at December 31, 2017, if this is the first year of operations, would be $45,000.
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5. You have just made your first $2,000 contribution to your individual retirement account. (a) Assuming you earn a 12% rate of return and make no additional contributions, what will your account be worth when you retire in 45 years
Answer:
$327,975.21
Explanation:
The computation is shown below:
Future value = Present value × (1 + interest rate)^number of years
where,
Present value = $2,000
Rate = 12%
Number of years = 45 years
So, the future value
= $2,000 × (1 + 0.12)^45
= $2000 × 163.987603871
= $327,975.21
Basically we applied the future value formula by considering the present value, time period, and the number of years
Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies increases by 5%, the quantity of raskels sold decreases by 4% and the quantity of kipples sold increases by 5%. Your job is to use the cross-price elasticity between guppy gummies and the other goods to determine which goods your marketing firm should advertise together.
Answer:
Guppy gummies and Raskels
Explanation:
The relevant elasticity here is the cross-price elasticity of demand. Cross-price elasticity of demand or simply cross elasticity of demand measures the degree of responsiveness of the quantity demanded of a product as a result of change in the price of another product, ll other things being equal.
The formula for calculating is stated as follows:
[tex]E_{c} = \frac{Percentage change in quantity demand of good X}{Percentage change in the price of good Y}[/tex]
= %Δ in the quantity of X ÷ %Δ in the Price of good Y
We can use the formula to determine the elasticity of the goods as follows:
1. Cross elasticity of Guppy gummies and Raskels (Ecgr)
%Δ in the price of guppy gummies = 5%
%Δ in the quantity of raskels = = - 4%
Ecgr = - 4% / 5% = - 0.80
1. Cross elasticity of Guppy gummies and Kipples (Ecgk)
%Δ in the price of guppy gummies = 5%
%Δ in the quantity of Kipples = 5%
Ecgk = 5% / 5% = 1.00
Decision Rule:
When cross elasticity is negative, it implies the two products are complements. In this case, Guppy gummies and Raskels are complements.
When cross elasticity is positive, it implies the two products are substitutes. In this case, Guppy gummies and Kipples are substitutes.
Decision:
Since, Guppy gummies and Raskels are complements while, Guppy gummies and Kipples are substitutes; therefore, the marketing firm should advertise Guppy gummies and Raskels that are compliments together. This is because increase in the sales of one will lead to an increase in the sales of the other one.
Wallace and Simpson formed a partnership with Wallace contributing $92,000 and Simpson contributing $72,000. Their partnership agreement calls for the income (loss) division to be based on the ratio of capital investments. Wallace sold one-half of his partnership interest to Prince for $63,000 when his capital balance was $84,000. The partnership would record the admission of Prince into the partnership as:
Answer:
Given that,
Wallace contributing = $92,000
Simpson contributing = $72,000
Wallace capital balance = $84,000
Wallace sold one-half of his partnership interest to Prince for $63,000,
Now, 50% of the share is transferred to the prince:
= 50% of Capital balance of Wallace (at that time)
= 50% × $84,000
= $42,000
Therefore, the journal entry is as follows:
Wallace capital A/c Dr. $42,000
To Prince capital $42,000
(To record the transfer of share)
The Alliance Corp. expects to sell the following number of units of copper cables at the prices indicated, under three different scenarios in the economy. The probability of each outcome is indicated.
Outcome Probability Units Price
A 0.20 315 $38
B 0.50 550 53
C 0.30 870 73
What is the expected value of the total sales projection?
Answer:
$36,022
Explanation:
Given that,
Outcome A:
Probability = 0.20
Units = 315
Price = $38
Outcome B:
Probability = 0.50
Units = 550
Price = $53
Outcome C:
Probability = 0.30
Units = 870
Price = $73
Therefore,
Expected value of the total sales projection:
= Outcome A + Outcome B + Outcome C
= (0.20 × 315 × $38) + (0.50 × 550 × $53) + (0.30 × 870 × $73)
= $2,394 + $14,575 + $19,053
= $36,022
The expected value of the total sales projection is $36,346.
Explanation:The expected value of the total sales projection can be calculated by multiplying the number of units sold in each scenario by the corresponding probability and price, and then summing up those values. In this case, we have three scenarios: A, B, and C. Here are the calculations:
Now, we can find the total expected value by summing up the values for each scenario:
Total expected value = $2,394 + $14,575 + $19,377 = $36,346
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Builder Products Inc. uses the weighted-average method in its process costing system. It manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Cooking, is given below:Production data:Pounds in process, May 1; materials 100% complete; conversion 90% complete 83,000Pounds started into production during May 480,000Pounds completed and transferred out ?Pounds in process, May 31; materials 75% complete; conversion 25% complete 43,000Cost data:Work in process inventory, May 1:Materials cost $128,300Conversion cost $53,900Cost added during May:Materials cost $666,940Conversion cost $296,395Required:a. Compute the equivalent units of production for materials and conversion for Mayb. Compute the cost per equivalent unit for materials and conversion for Mayc. Compute the cost of ending work in process inventory for materials, conversion and in total for Mayd. Compute the cost of units transferred out to the next department for materials, conversion and in total for Maye. Prepare a cost reconciliation report for May
Answer:
We stablish that both the cost assigned and the cost accounted for the department matches at $1,327,735.00
Explanation:
Physical Unit Information
Units charged to production:
Beginning 83,000
Started 480,000
Total units accounted for by the Department 563000
Units to be assigned costs: Equivalent Units
Physical Units DM Conversion
Beginning 83,000 0 27,000
Started and completed 437,000 437,000 437,000
Transferred 520,000 437,000 464,000
Ending 43,000 32,250 10,750
Total units to be assigned costs 563,000 469250 474750
Costs per equivalent unit:
Direct Materials Conversion
Total cost $795,240 $350,295
Total equivalent units 469,250 474,750
Cost per equivalent unit $1.69 $0.74
Costs charged to production:
Direct Materials Conversion Total
Beginning $128,300.00 $53,900.00 $182,200.00
Costs incurred $795,240.00 $350,295.00 $1,145,535.00
Total costs accounted for by the Department $1,327,735.00
Cost allocated to completed and partially completed units:
Beginning $128,300.00 $53,900.00 $182,200.00
To complete beginning $- $19,921.99 $19,921.99
Cost of completed WIP $202,121.99
Started and completed $740,585.79 $322,441.11 $1,063,026.89
Transferred $1,265,148.88
Ending $54,654.21 $7,931.90 $62,586.12
Total costs assigned by the Department $1,327,735.00
The equivalent units of production, cost per equivalent unit, cost of ending inventory, cost of units transferred out, and cost reconciliation report for May are all computed using the provided production and cost data for Builder Products Inc.
Explanation:The equivalent units of production for materials and conversion for May are computed by adding the completed units and a portion of the units still in process. Using the provided data, the equivalent units for materials are 500,000 (=480,000 units started + 83,000 units * 0% + 43,000 units * 75%) and for conversion are 482,275 (=480,000 units started + 83,000 units * 10% + 43,000 units * 25%).
The cost per equivalent unit for materials and conversion for May are then calculated by dividing the total cost by the equivalent units of production. Thus, the cost per equivalent unit for materials is $1.59 ($795,240/500,000) and for conversion is $0.72 ($350,295/482,275).
The cost of ending work in process inventory can be obtained by multiplying the cost per equivalent unit by the percentage completion of the inventory for materials and conversions. For materials, it is $64,450 (=43,000*75%*$1.59) and for conversion, it is $7,740 (=43,000*25%*$0.72). Therefore, total cost of ending work in process inventory is $72,190 ($64,450 + $7,740).
Cost of units transferred out is calculated as the difference between the total cost and the cost of ending work in process inventory. Therefore, the cost transferred out for materials is $730,790 ($795,240 - $64,450), for conversion is $342,555 ($350,295 - $7,740), and in total is $1,073,345 ($730,790 + $342,555).
In a cost reconciliation report for May, we start with the beginning inventory costs and costs added during May. Then we subtract the cost of units transferred out and the ending Work in Process inventory costs to get zero. In this case, the beginning inventory is $182,200, costs added is $963,335, cost of units transferred is $1,073,345, and ending Work in Process is $72,190, which equals zero when balanced correctly.
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Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods. Group of answer choices True False
Answer:
True
Explanation:
Both the countries can achieve gains from the trade because the trade is largely based on the principle of comparative advantage. The principle of comparative advantage states that a country has a comparative advantage in producing a good if it produces that good with a lower opportunity cost than the other country.
Trade is not based on the absolute advantage but on the comparative advantage. A country is having a absolute advantage in producing a commodity if it uses the minimum resources than the other country.
It doesn't matter which country has a absolute advantage in a trade.
Pina Corporation entered into an operating lease agreement to lease equipment from Badger, Inc. on January 1, 2017. The lease calls for annual lease payments of $30,000, beginning on January 1, for each of the 3 years of the lease. In addition, Badger will pay Pina $6,000 as a cash incentive for entering the lease by January 1, 2017. In relation to the lease agreement, Pina incurred the following costs.
Salaries of employees involved in the investigation of the lease $3,000
Lease document preparation costs incurred after execution of the lease 500
Pinas incremental borrowing rate is 9%.
Required:
a. If the value of the lease liability is $82 773, what amount wil Pina record as the value of th operating lease?
Answer:
= $80,273
Explanation:
Value of the right of use asset = Value of lease liability - cash incentive received + costs incurred for lease
= $82,773 -$ 6,000 + $3,000 + $500
=$80,273
Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. Company is currently operating at 75 percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent.Segmented income statements appear as follows:Product Original Strawberry OrangeSales $ 33,300 $ 42,400 $ 50,900 Variable costs 23,310 38,160 40,720 Contribution margin $ 9,990 $ 4,240 $ 10,180 Fixed costs allocated to each product line 4,600 6,400 7,800 Operating profit (loss) $ 5,390 $ (2,160 ) $ 2,380 Required:a. Prepare a differential cost schedule.Status Quo Alternative:DropStrawberryDifference (all lower underthe alternative)Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) b. Should Cotrone drop the Strawberry product line?YesNo
Relevant Information:
The relevant information is as under:
Segmented income statements appear as follows:
Product Original Strawberry Orange
Sales 65,200 85,600 102,400
Variable costs (44,000) (77,200) (80,200)
Contribution margin 21,200 8,400 22,200
Fixed costs allocated (9,400) (12,000) (14,200)
Operating profit (loss) 11,800 (3,600) 8,000
Answer:
The product not be closed because it is generating net cash flows of ($3,060), which will generate loss for the organization. The better option would be to not abandoning the manufacturing of Strawberry.
Explanation:
Relevant costing says that any savings or losses are relevant if it satisfy following three conditions:
Is a cash flow.Future related (Not arising due to Past bindings).Differential or Incremental in nature.Its crystal clear that any inflows and outflows that are considered would be cash in nature, not related to past events it must be arising as a consequence of taking the decision whose consequences are we considering now, I mean it must arise in future due to the decision made which are considering. The last condition is the concept of differential that lies in the heart of relevant costing and is easily understood by following the following steps:
Step 1: What are the losses or savings if we don't make decision?
Step 2: What are the losses or savings if we make the decision?
Step 3: The difference between step one and two is differential or incremental cost.
Here we learned that relevant cost arises if we take the decision (closing manufacturing of Strawberry), and it doesn't arises if we don't take the decision (not abandoning manufacturing of Strawberry).
Relevant costs associated with the decision are as under:
Step 1 Step 2 Step 3
Make Decision If we Don't Differential
Revenue loss (85,600) - (85,600)
Variable Costs Savings 77,200 - 77,200
Fixed costs Savings (W1) 5340 - 5340
Operating Profit (3,060)
Working1: Fixed costs Savings
Total Fixed costs =21400+12000+14200 = $35,600
The saving is 15% of the total fixed cost and is as under:
Fixed costs Savings = $35,600 * 15% = $5340
Note:
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Current Attempt in Progress Restate the following income statement for a retailer in contribution format. Sales revenue ($100 per unit) $ 66,000 Less cost of goods sold ($56 per unit) 36,960 Gross margin 29,040 Less operating costs: Commissions expense ($6 per unit) $ 3,960 Salaries expense 7,900 Advertising expense 5,800 Shipping expense ($3 per unit) 1,980 19,640 Operating income $ 9,400
Answer:
Contribution Margin Income Statement for the year end MM DD, YY
$ $
Sales revenue ($100 per unit) 66,000
Less: Variable Cost
Less cost of goods sold ($56 per unit) 36,960
Commissions expense ($6 per unit) 3,960
Shipping expense ($3 per unit) 1,980
42,900
Contribution Margin 23,100
Less: Fixed Cost
Salaries expense 7,900
Advertising expense 5,800
13,700
Net Income 9,400
Calculate the price of a zero coupon bond that matures in 10 years if the market interest rate is 6 percent. (Assume semi-annual compounding and $1,000 par value.)
Answer:
Price of coupon is $553.7098
Explanation:
Using the formula
Price = Face value/(1+rate)^periods
Face value= $1,000
Rate for semiannual= 6/2= 3
Periods for semiannual= 10*2= 20
Therefore
Price= 1,000/(1+0.03)^20
Price= 1,000/(1.03)^20
Price 1000/1.806= 553.7098
Mr. and Mrs. Dane and their six children own 100 percent of the stock in three family corporations. Do these corporations qualify as an affiliated group eligible to file a consolidated corporate tax return?
Mr. and Mrs. Dane and their six children may be an affiliated group eligible to file a consolidated corporate tax return if they meet the IRS criteria of common control and unitary business. An individual who owns a corporation and is the sole employee is liable for federal income tax, self-employment tax, and possibly corporate income tax, depending on the structure of the corporation.
Explanation:The question pertains to whether Mr. and Mrs. Dane and their six children, who own 100 percent of the stock in three family corporations, are considered an affiliated group eligible to file a consolidated corporate tax return. Under IRS regulations, a group of corporations may file a consolidated tax return if they are engaged in a unitary business under common control. Typically, common control entails direct ownership of at least 80 percent of the voting power and value of the stock. If Mr. and Mrs. Dane and their children meet these criteria with each of their family corporations, they could potentially file a consolidated return. However, there are additional rules and complexities to consider when determining eligibility for filing a consolidated return.
Regarding the question about the types of federal tax an individual would have to pay if they own a corporation and are the only employee, the individual will generally be responsible for several types of taxes. These typically include federal income tax, self-employment tax (which covers Social Security and Medicare taxes), and potentially corporate income tax, depending on the corporate structure. If the corporation is a C corporation, it would pay its own corporate income tax, whereas if it's an S corporation or LLC taxed as a disregarded entity, income and losses are passed through to the owner's personal tax return.
You just graduated and landed your first job in your new career.
You remember that your favorite finance professor told you to begin the painless job of saving for retirement as soon as possible, so you decided to put away $2,000 at the end of each year in a Roth IRA.
Your expected annual rate of return on the IRA is 7.5%.
How much will you accumulate at retirement after 40 years of investing ***(note: this may assume that you are even retiring early)*** ?
which is best choice:
A). $1,088,632
B). $94,426
C). $247,921
D). $454,513
Answer:
correct option is D). $454,513
Explanation:
given data
Annuity = $2000
rate = 7.5 % = 0.075
time period = 40 year
solution
we get here Future value of annuity that is express as
Future value of annuity = Annuity × [tex]\frac{(1+r)^t -1}{r}[/tex] ......................1
here r is rate and t is time period so now put value and we get
Future value of annuity = $2000 × [tex]\frac{(1+0.075)^{40} -1}{0.075}[/tex]
Future value of annuity = $454513.03
so correct option is D). $454,513
The correct answer is D) $454,513, which is obtained by using the future value of an annuity formula that considers a $2,000 annual contribution, a 7.5% expected annual rate of return, and a 40-year investment period.
The question involves calculating the future value of an annuity when you plan to save $2,000 annually at the end of each year in a Roth IRA, with an expected annual rate of return of 7.5% over 40 years. To find the accumulated amount at retirement, we will use the future value of an annuity formula:
FV = P × [( 1 + r)^n – 1] / r
Where:
FV = Future Value of the annuity
P = Annual payment ($2,000)
r = Annual interest rate (7.5% or 0.075)
n = Number of years (40)
By plugging in the values:
FV = $2,000 × [( 1 + 0.075)^40 – 1] / 0.075
Therefore, After calculating the formula, we find that the amount you will accumulate at retirement after 40 years of investing is $454,513.
A small business owner visits his bank to ask for a loan. The owner states that she can repay a loan at $2,500 per month for the next two years and then $3,000 per month for another two years after that. If the bank is charging customers 6.5 percent APR, how much would it be willing to lend the business owner?
Answer:
Present value = $115,278.17
Explanation:
Given data:
Monthly repay amount for 2 year = $2500
Monthly repay amount for another 2 year = $3500
APR =6%
monthly interest rate = 6.50/12 = 0.54167%
Present value is calculated as
Present value [tex]= \frac{monthly payment}{(1 + monthly rate)^n} [/tex]
Present value [tex]= \frac{2500}{(1 + 0.54167\%)^1} +\frac{2500}{(1 + 0.54167\%)^2} +........ + \frac{2500}{(1 + 0.54167\%)^{24}} + \frac{3000}{(1 + 0.54167\%)^{25}} + ...... + \frac{3000}{(1 + 0.54167\%)^{48}}[/tex]
Present value [tex]= 2500\times \frac{(1-(\frac{1}{1.0054167})^{24})}{0.0054167} + 3000\times \frac{(1-(\frac{1}{1.0054167})^{24})}{0.0054167}[/tex]
Present value = $115,278.17
You wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $24,000 for 25 years after retirement. During the period before retirement you can earn 10 percent annually, while after retirement you can earn 12 percent on your money. What annual contributions to the retirement fund will allow you to receive the $24,000 annuity? Use Appendix C and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.
Answer:
$3,286.52
Explanation:
PVA= A×({1 −[1 / (1 + i)n]} / i)= $24,000 ×({1 −[1 / (1.12)25]} / .12)
= $188,235.34
FVA= A×{[(1 + i)n−1] / i}A=
FVA/ {[(1 + i)n−1] / i}= $188,235.34 / {[(1.10)20−1] / .10}= $3,286.52
To determine the annual deposit into an account earning 10 percent that is necessary to accumulate$188,235.34 after 20 years, solve for the annuity:
N= 20
I/Y=10
PV=0
PMT=CPT PMT -3286.52
FV=188 235.34
Answer: $3,286.52
The mission of the _____________________ is to protect consumers and to make sure that business is competitive by eliminating practices harmful to business. Federal Trade Commission (FTC) Federal Financial Institutions Examination Council (FFIEC) National Credit Union Administration (NCUA) Office of Thrift Supervision
Answer:
The correct answer is letter "A": Federal Trade Commission (FTC).
Explanation:
The Federal Trade Commission (FTC) is an independent American agency that has the mission of promoting consumer rights and the abolition and prevention of practices that affect free competition. The FTC is in charge of investigating fraud and misleading advertisements.
The Museum of America is preparing for its annual appreciation dinner for contributing members. Lastâ year, 525 members attended the dinner. Tickets for the dinner were $ 24 per attendee. The profit report for lastâ year's dinner follows.
Ticket sales $12,600
Cost of dinner 15,300
Gross Margin 2,700
Invitations and paperwork 2,500
Profit (loss) $ 5,200
This year the dinner committee does not want to lose money on the dinner. To help achieve itsâ goal, the committee analyzed lastâ year's costs. Of the â$15,300 cost of theâ dinner, â$9,000 were fixed costs and â$6,300 were variable costs. Of the â$2,500 cost of invitations andâ paperwork, â$1,975 were fixed and â$525 were variable.
Requirement:
1. Prepare last year's profit report using the contribution margin format.
Answer:
Contribution Margin $ 5775
Net Loss ( $ 5,200 )
Explanation:
Ticket sales $12,600
Less
Variable Costs
Cost of dinner
Variable Costs ( 15,300- 9000) $ 6,300
Invitations and paperwork (variable costs) $ 525
Less Fixed Expenses
Cost of dinner (fixed costs) $ 9000
Invitations and paperwork (fixed costs) $ 1975
Net Loss ( $ 5,200 )
Contribution Margin is obtained by deducting variable costs from sales and then the profit or loss is obtained by deducting fixed costs from the contribution margin.
Failure to record amounts earned for services provided to customers but NOT yet paid results in which of the following?
a. Net income being overstated
b. No effect on total assets
c. Stockholders' equity being overstated
d. Total assets being understated.
Answer:
The correct answer is letter "D": Total assets being understated.
Explanation:
In Accounting, Total Assets represents all the resources a firm possesses from where the company expects to make a profit. It is the result from adding the company's non-current assets (realizable not in the current period) and the current assets (expected to be realized in the current period).
Thus, if the non-realizable amounts a company earns from providing services are not recorded, the total assets will be understated.
Failure to record amounts earned for services but not yet paid results in total assets being understated. That's because the company doesn't record an account receivable, thus its total assets appear lower.
Explanation:The failure to record amounts earned for services provided to customers but not yet paid results in d. Total assets being understated. This is because, under accrual accounting, which most firms use, income is recorded when it is earned, and expenses are recorded when they are incurred, not when cash changes hands.
When a company delivers a service but hasn't received payment, it's supposed to record an account receivable, increasing its total assets. If it fails to do so, its total assets will be understated. In other words, the company will be 'worth less' on paper than it actually is which clearly, is not an accurate representation of its financial health or value.
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Which of the following statements is true of costing systems? A. A construction company would likely use a process costing system. B. An accounting firm would likely use a job order costing system. C. A job order costing system would be used by manufacturers of baking utensils. D. A process costing system would be used by manufacturers of customminusmade perfumes.
Answer:
B. An accounting firm would likely use a job order costing system
Explanation:
The job order costing is the cost which is depended upon the various job needs that reflects the differential costing based on the instructions given by the customer.
On the other hand, the process costing deals with different processes that are held in the company premises.
As we cant say which costing is used but the job order costing is used by the accounting firm as it gives the various services depending upon the customer needs and for that separate fees is to be charged.
Consider the following income statement: Sales $510,944 Costs 332,416 Depreciation 77,300 EBIT ________? Taxes (32%) ________? Net income ________? What is the amount of the depreciation tax shield?
Answer:
$101,228; $68,835; $24,736
Explanation:
Given that,
Sales = $510,944
Costs = $332,416
Depreciation = $77,300
Tax rate = 32%
EBIT:
= Sales - costs - Depreciation
= $510,944 - $332,416 - $77,300
= $101,228
Net income = EBIT - Taxes
= $101,228 - ($101,228 × 32%)
= $101,228 - $32,393
= $68,835
Depreciation tax shield:
= Depreciation × Tax rate
= $77,300 × 32%
= $24,736
Badger World Wide manufactures military, work, sport, and casual footwear and leather accessories under a variety of brand names, such as Caterpillar, Hush Puppies, Wolverine, and Steve Madden. The following transactions occurred during a recent month.
a. Made cash sales of $54,600 (example).
b. Purchased $4,650 of additional supplies on account.
c. Borrowed $62,600 on long-term notes.
d. Purchased $25,200 in additional equipment, paying in cash.
e. Incurred $29,700 in selling expenses, paying two-thirds in cash and owing the rest on account.
f. Paid $8,200 in rent for this month, and $8,200 for next month.
Required:
For each of the transactions, complete the table below, indicating the account, amount, and direction of the effect (+ for increase and − for decrease) of each transaction under the accrual basis. Include revenues and expenses as subcategories of stockholders’ equity, as shown for the first transaction, which is provided as an example. Also, determine the company’s preliminary net income. (Enter any decreases to account balances with a minus sign.)
Answer:
a) The table is completed in the explanation
b) Net income = $16,700
Explanation:
The question is to complete a calculation table for each of the transactions as follows:
Transaction Assets = Liabilities + Stockholders Equity
a. Cash $54,000 Revenue 54,000
b. Supplies +4,650 Account Payable +4,650
c. Cash +62,600 Notes Payable +62,600
d. Equipment +25,200
Cash -$25,200
e. Cash -$19,800 Accounts Payable +9,900 Sell Exp -29,700
f. Prepaid Expense +$8,200 rent Exp -8,200
Cash -$16,400
$93.850 $77,150 $16,700
2. Calculate the Preliminary Net income for the company
Description Amount
Sales Rev. $54,600
Subtract:
Selling Expenses ($29,700)
Rent Expenses ($8,200)
Net Income $16,700
The transactions affected various accounts under the accrual basis in different ways, some increasing and some decreasing. The preliminary net income for the month was calculated to be $16,700.
Explanation:Transaction (a): Cash account increases by $54,600 (+). Revenues increase by $54,600 (+), affecting stockholders' equity positively.
Transaction (b): Supplies account increases by $4,650 (+). Accounts Payable increases by $4,650 (+), affecting stockholders’ equity negatively.
Transaction (c): Cash account goes up by $62,600 (+). Long-term Notes Payable increase by $62,600 (+), which doesn't affect stockholders' equity directly.
Transaction (d): Equipment account increases by $25,200 (+). Cash account decreases by $25,200 (-), which doesn't affect stockholders’ equity directly.
Transaction (e): Selling expenses amount to $29,700 (+), which decreases stockholders' equity. Cash goes down by $19,800 (-) and Accounts Payable go up by $9,900 (+).
Transaction (f): Prepaid Rent account goes up by $8,200 (+). Cash account decreases by $16,400 (-). Rent Expense decreases stockholders’ equity by $8,200 (-).
Preliminary Net Income: This is the total Revenue minus the Expenses. If we count the revenues as $54,600 and selling expenses as $29,700 and rent expense as $8,200, the preliminary net income will come out to $16,700.
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Martin wrote Dall and offered to sell Dall a building for $200,000. he offer stated it would expire 30 days from April 1. Martin Changed his mind and does not wish to be bound by this offer. If a legal dispute arises between the parties regarding whether there has been a valid acceptance of the offer, which one of the following is correct?
If Dall categorically rejects the offer on April 10, Dall cannot validly accept within the remaining stated period of time.
Answer:
If the offer is rejected by the Dall then the offer is no more in place. The particular reason is that Martin is not required to tell Dall that the offer is no more in place. Suppose Martin is wishing to close his offer and till now Dall has not declined the offer. So Martin will have to communicate Dall that the offer is been closed. If Dall has communicated Martin that he has rejected the offer, then this means the offer essence has vanished. Hence Martin has no liability towards Dall, if Dall sues him.
You invest $500 in a savings account that pays 8.5% annual interest compounded quarterly. What will the total account balance be after 2 years?
Answer:
$591.60
Explanation:
The computation of the future value after two years is shown below:
Future value = Present value × (1 + rate)^number of years
where,
Present value = $500
Rate = 8.5% ÷ 4 = 2.125%
Number of years = 2 year × 4 = 8 years
So, the future value after two years is
= $500 × (1 + 2.125%)^8
= $500 × 1.1831956282
= $591.60
On August 1, 2021, Limbaugh Communications issued $22 million of 11% nonconvertible bonds at 105. The bonds are due on July 31, 2041. Each $1,000 bond was issued with 40 detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of Limbaugh Communications’ no par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2021, the market value of the common stock was $48 per share and the market value of each warrant was $10.
Answer:
Following is attached the required solution for the question.
I hope it will help you!
Explanation:
Square Hammer Corp. shows the following information on its 2018 income statement: Sales = $398,000; Costs = $298,000; Other expenses = $7,900; Depreciation expense = $15,400; Interest expense = $14,200; Taxes = $21,875; Dividends = $11,500. In addition, you’re told that the firm issued $5,700 in new equity during 2018 and redeemed $4,200 in outstanding long-term debt.
Net income is calculated by subtracting total costs, depreciation expense, other expenses, interest expense, and taxes from total sales. The equity issuance and long-term debt redemption do not factor into the net income calculation.
Explanation:The subject of your question is related to the calculation of net income for Square Hammer Corp. using the provided income statement and additional information. Fundamental to this is an understanding of business financial equations.
First, we begin with the total sales of $398,000. Subtracting the total costs ($298,000), depreciation expense ($15,400), other expenses ($7,900), interest expense ($14,200), and taxes ($21,875) from the sales gives us the net income.
The equity issuance and long-term debt redemption are unrelated to net income calculations as they represent changes in financing, not operations. These activities are reflected in the statement of cash flows, though, which is linked to but separate from the income statement.
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The Akron Slugger Company produces various types of wooden baseball bats. It has calculated the average cost per unit of a production level of 7 comma 700 bats to be $ 14. If $ 22 comma 500 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, her forecast for 8 comma 600 bats will be (Round any intermediary calculations to the nearest cent.)
Answer:
[tex]\arge\boxed{\large\boxed{\$ 117,788}}[/tex]
Explanation:
Assume the cost equation to be:
[tex]Cost(x)=Fixed\text{ }costs+Variable\text{ }costs\\\\Cost(x)=A+Bx[/tex]
Where [tex]x[/tex] is the number of units (wooden baseball bats) produced.
The average cost per unit of production level is the total cost divided by the number of units produced:
[tex]Average\text{ }cost(x)=Cost(x)/x\\\\Average\text{ }cost(x)=(A+Bx)/x\\[/tex]
You are given that the average cost per unit of a production level of 7,700 bats is $14, then:
[tex]14=(A+7,700B)/7,700[/tex]
You are also given that the fixed costs are $22,500, thus A = 22,500. Hence, you can substitute the value of A in the previous equation and find B:
[tex]14=(22,500+7,700B)/7,700\\\\14\times 7,700=22,500+7,700B\\\\107,800-22,500=7,700B\\\\85,300/7,700=B\\\\B=11.08[/tex]
Now you can complete the cost equation:
[tex]Cost(x)=\$ 22,500+11.08x[/tex]
And to predict the total costs for 8,600 bats you must subsitute x with 8,600 in the previous equation:
[tex]Cost(8,600)=\$ 22,500+11.08(8,600)=\$ 117,788[/tex]
Suppose that the total benefit and total cost from a continuous activity are, respectively, given by the following equations:
B(Q) = 100 + 36Q – 4Q^2 and C(Q) =80 + 12Q.
(Note: MB(Q) = 36 – 8Q and MC(Q) = 12.)
Use a negative sign (-) where appropriate.
a. Write out the equation for the net benefits.
b. What are the net benefits when Q = 1? Q = 5?
c. Write out the equation for the marginal net benefits.
Answer:
a. 20 + 24Q - 4Q^2
b. 40 ; 40
c. 24 - 8Q
Explanation:
The equations are as follows:
a. The net benefit is
= Total benefits - Total costs
where,
Total benefits = B(Q) = 100 + 36Q – 4Q^2
Total costs = 80 + 12Q.
So, the net benefit is
= 100 + 36Q - 4Q^2 - 80 - 12Q
= 20 + 24Q - 4Q^2
b. When Q = 1,
N(Q) = 20 + 24 ×1 - 4×1^2
= 40
When Q = 5,
N(Q) = 20 + 24 × 5 - 4×5^2
= 40
c. MNB(Q) = dN(Q) ÷ dQ
= 24 - 8Q
We use the derivatives
The equation for net benefits is NB(Q) = 20 + 24Q - 4Q^2. When Q = 1, the net benefits are 40, and when Q = 5, the net benefits are also 40. The equation for marginal net benefits is MNB(Q) = 24 - 8Q.
Explanation:a. The equation for net benefits is NB(Q) = B(Q) - C(Q). Substituting the given equations for B(Q) and C(Q), we have NB(Q) = (100 + 36Q - 4Q^2) - (80 + 12Q). Simplifying further, NB(Q) = 20 + 24Q - 4Q^2.
b. To find the net benefits when Q = 1, we substitute Q = 1 into the equation NB(Q). NB(1) = 20 + 24(1) - 4(1)^2 = 20 + 24 - 4 = 40. Similarly, when Q = 5, NB(5) = 20 + 24(5) - 4(5)^2 = 20 + 120 - 100 = 40.
c. The equation for marginal net benefits is calculated by taking the derivative of the net benefits equation. Taking the derivative of NB(Q) = 20 + 24Q - 4Q^2, we get the marginal net benefits equation as MNB(Q) = 24 - 8Q.
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Which of the following options correctly completes the sentence?
The social security lump-sum election means the taxpayer elects to treat the lump-sum social security benefit as if the benefits:
a) For prior years had been received in those years, by amending the prior-year returns.
b) Had been evenly allocated among the reported years.
c) For prior years had been received in those years.
d) For prior years were received in the current years.
Answer:
The correct answer is letter "D": For prior years were received in the current years.
Explanation:
The Social Security lump-sum election refers to a payment made in the current year based on similar payments sent on previous years. That payment could be subject to taxes. The Average Gross Income (AGI) of the taxpayer will determine if the lump-sum is taxable or not.