Answer:
In 2015, China would have been the lower-income country, with a per capita GDP of approximately 32,000.
We would use the rule of 70 to answer this question.
2015-1945= 70 years.
China annual growth rate is 7%. so according to the rule of 70.
=[tex]\frac{70}{7}[/tex] = 10 years is the time it takes China to double.
70/10 = China's GDP would double 7 times in these 70 years.
China GDP in 2015: 250 * 2 * 2 * 2 * 2 * 2 * 2 * 2= 32,000.
Japan GDP in 1945: $10,000
Since Japan's economy stops growing in 2005.
2005-1945 = 60 years.
Japan annual growth rate is 3.5%. so according to the rule of 70.
[tex]\frac{70}{3.5}[/tex] = 20 years is the time it takes Japan to double.
60/20 = China's GDP would double 3 times in these 60 years.
Japan GDP in 2015: 10,000 * 2 * 2 * 2= 80,000.
Ralph Waters owns forested land. The Department of the Interior has declared that a small fruitfly on his property is an endangered species and prevented the harvesting of trees there. Ralph: a. cannot harvest trees. b. is entitled to compensation for a taking. c. can challenge the determination in court. d. None of the above.
Answer:
c. can challenge the determination in court.
Explanation:
Ralph owns a forested land which he most likely purchased for the purpose of cutting timber. If the Department of the Interior has declared that a small fruitfly on his property is an endangered species and prevented the harvesting of trees, he can challenge this in court.
This is because the land is private property and the determination by the Department of the Interior will make the land useless to Ralph. Also the government only has the ability to enforce such directives on public property.
Savallas Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year:
Computer-hours...........................................................85,000
Fixed manufacturing overhead cost.............................$1,275,000
Variable manufacturing overhead per computer-hour.....$3.00
During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company%u2019s warehouse. The company%u2019s cost records revealed the following actual cost and operating data for the year:
Computer-hours........................................60,000
Manufacturing overhead cost..............$1,350,000
Inventories at year-end:
Raw materials..........................$400,000
Work in process.................................$160,000
Finished goods..................................$1,040,000
Cost of goods sold.................................$2,800,000
1.
Compute the company%u2019s predetermined overhead rate for the year
2. Compute the underapplied or overapplied overhead for the year.
3.
Assume the company closes any underapplied or overapplied overhead directly to cost of goods sold. Prepare the appropriate journal entry.
4.
Assume that the company allocates any underapplied or overapplied overhead to work in process, finished goods, and cost of goods sold on the basis of the amount of overhead applied during the year that remains in each account at the end of the year. These amounts are $43,200 for work in process, $280,800 for finished goods, and $756,000 for cost of goods sold. Prepare the journal entry to show the allocation.
5.
How much higher or lower will net operating income be for the year if the underapplied or overapplied overhead is allocated rather than closed directly to cost of goods sold?
Answer:
Part 1. Compute the company%u2019s predetermined overhead rate for the year
Predetermined overhead rate = $15 / Computer Hour
Part 2. Compute the underapplied or overapplied overhead for the year.
Underapplied Overheads are: $1,350,000 - $900,000 = $450,000
Part 3. Assume the company closes any underapplied or overapplied overhead directly to cost of goods sold. Prepare the appropriate journal entry.
Cost of goods sold $450,000 (debit)
Overhead Account $450,000 (credit)
Part 4. Company allocates any underapplied or overapplied overhead to work in process, finished goods, and cost of goods sold on the basis of the amount of overhead applied during the year that remains in each account at the end of the year:
Work In Process $18,000 (debit)
Finished Goods $73,008 (debit)
Cost of Goods Sold $315,000 (debit)
Overhead Account $450,000(credit)
Explanation:
Part 1. Compute the company%u2019s predetermined overhead rate for the year
Predetermined overhead rate = Budgeted Overheads / Budgeted Activity
= $1,275,000/ 85,000
= $15 / Computer Hour
Part 2. Compute the underapplied or overapplied overhead for the year.
Applied Overheads = Actual hours × Predetermined overhead rate
= 60,000 × $15
= $900,000
Actual Overheads = given = $1,350,000
Applied Overheads $900,000 < Actual Overheads $1,350,000, thus we have an underapplied situation
Therefore Underapplied Overheads are: $1,350,000 - $900,000 = $450,000
Part 3. Assume the company closes any underapplied or overapplied overhead directly to cost of goods sold. Prepare the appropriate journal entry.
Cost of goods sold $450,000 (debit)
Overhead Account $450,000 (credit)
Part 4. Company allocates any underapplied or overapplied overhead to work in process, finished goods, and cost of goods sold on the basis of the amount of overhead applied during the year that remains in each account at the end of the year:
Allocations:
Totals Weighted Average% Allocation
Work In Process $43,200 4% $18,000
Finished Goods $280,800 26% $73,008
Cost of Goods Sold $756,000 70% $315,000
Total $1,080,000 100% $450,000
Journals:
Work In Process $18,000 (debit)
Finished Goods $73,008 (debit)
Cost of Goods Sold $315,000 (debit)
Overhead Account $450,000(credit)
The predetermined overhead rate for the year is $15 per computer-hour. The underapplied overhead for the year is $75,000. If the underapplied overhead is allocated rather than closed directly to cost of goods sold, the net operating income will be $5,000 higher.
Explanation:To compute the company's predetermined overhead rate, divide the estimated manufacturing overhead cost by the estimated computer-hours. In this case, the predetermined overhead rate is $15 per computer-hour ($1,275,000 / 85,000 computer-hours).
The underapplied or overapplied overhead is computed by subtracting the applied overhead from the actual overhead. In this case, the underapplied overhead is $75,000 ($1,350,000 - ($15 x 60,000 computer-hours)).
If the company closes any underapplied or overapplied overhead directly to cost of goods sold, the journal entry would be:
Cost of Goods Sold 75,000
Manufacturing Overhead 75,000
If the company allocates the underapplied or overapplied overhead based on the amount of overhead applied during the year that remains in each account, the journal entry would be:
Work in Process 43,200
Finished Goods 280,800
Cost of Goods Sold 756,000
Manufacturing Overhead 80,000
If the underapplied or overapplied overhead is allocated rather than closed directly to cost of goods sold, the net operating income for the year will be $5,000 higher ($80,000 - $75,000 = $5,000).
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Demand is more elastic: a. for broadly defined goods than for narrowly defined ones. b. for goods with many substitutes than for goods with only a few. c. in the short run than in the long run. d. for necessities than for luxuries. e. for goods with no substitutes.
Answer:
The correct answer is letter "B": for goods with many substitutes than for goods with only a few.
Explanation:
Elasticity is a characteristic of certain items by which changes in their price represent a change in their quantity demanded. Demand elasticity is calculated by dividing the percentage change in quantity demanded by the percentage change in price. If the result is equal or greater than (1) the demand is elastic. If the demand is lower than 1, then it is inelastic.
Goods with many substitutes are considered elastic because minimal changes in their price represent considerable changes in their quantity demanded. As consumers have different options from where to select if the price of one of the substitutes increase (for instance), the quantity demanded for that good could face a drastic drop.
Under which of the following conditions is job dissatisfaction less predictive of turnover?
when employees are highly educated
when employees are presented with unsolicited job offers
when employees are highly skilled
when employees consider their current jobs to be unattractive
when employment opportunities are plentiful
Answer: When employees are presented with unsolicited job offers
Explanation:
When an employee is presented with unsolicited job offers, job dissatisfaction is less predictive of turnover and this is because the employee is very likely to leave because of the lure of other jobs than their attractiveness. This can also happen because the employee perceives that it is easy to leave especially when he feels that employment opportunities are plenty and many.
Mrs. Peterson’s triplets all want to attend the local private academy, where they are required to wear uniforms. Mrs. Peterson knows that the only way she can afford these uniforms is to shop early, put the uniforms on layaway, and pay a little every week. The total uniform cost for the three girls is $1817.75. If she put down a deposit of $600.00 and she could afford $105.00 per week, how long would it take her to pay off the uniforms? (Round to nearest whole number.)
Answer:
12 weeks
Explanation:
Data:
Let the total amount be: = $ 1 817. 75
Deposit paid = $ 600
Amount remaining after deposit = [tex]1 817.75 - 600[/tex]
= $ 1 217.75
Amount per week = $ 105.00
Therefore, the time taken to pay $ 1 217.75 = [tex]\frac{1 217.75}{105.00}[/tex]
= 11.59
= 12 weeks
You are earning $40,000 per year as a branch manager at Dunkin Donuts. You are planning on leaving your job and going back to college; upon learning this, your branch manager offers you a 10% increase in salary to stay. Knowing this, how does the opportunity cost of going to college change?
Answer:
It increases the opportunity cost because you are foregoing more money for college.
Explanation:
Opportunity cost is the benefit profit, or value of something that is missed or given up when an individual chooses one alternative over another.
The 10% rise in salary offered by the branch manager increases the opportunity cost of going to college. This is because the higher cost (money) you could have earned by not going to college is foregone.
Final answer:
The opportunity cost of attending college includes the foregone increased salary of $44,000 due to the 10% raise offer at Dunkin Donuts, which is higher than the original salary of $40,000.
Explanation:
The opportunity cost of going back to college has increased due to the branch manager's offer of a 10% salary increase to stay at Dunkin Donuts. If you are currently earning $40,000 and are offered a 10% increase, that would mean an additional $4,000, bringing your new salary to $44,000 per year. Therefore, if you choose to go to college instead of accepting this salary increase, the opportunity cost now includes this potential extra earnings, which can accumulate significantly over time, much like saving $5 a day on lunch can add up to a substantial amount such as the cost of a decent vacation over a year.
Data concerning Follick Corporation's single product appear below:
Selling price per unit....................... $ 220.00
Variable expense per unit............... $74.80
Fixed expense per month............... $141,240
The break-even in monthly dollar sales is closest to:
a. 3,111
b. 6,892
c. 4,040
d. 13,525
Answer:
$214,000
Explanation:
The computation of the break even point in dollars is shown below:
= (Fixed cost ) ÷ (Profit volume ratio)
where,
Fixed cost = $141,240
And the profit volume ratio would be
= (Contribution margin) ÷ (Sales) × 100
= ($145.20) ÷ ($220) × 100
= 66%
where Contribution margin equal to
= Selling price per unit - variable expense per unit
= $220 - $74.80
= $145.20
So, the break even in dollars is
= $141,240 ÷ 66%
= $214,000
This is the answer and the options that are given in the question are wrong
However, in some cultures, business transactions routinely involve bribery. Nevertheless, if you are offered a bribe, politely uphold your own ethical standards and refuse the offer without insulting your business partner.True or False?
Answer:
The statement is: True.
Explanation:
Anywhere around the world, receiving bribes is unethical and unprofessional. Individuals offering and accepting bribes show their only drivers in life is money and not values. Unfortunately, even if in most cases bribes and other acts of corruption are legally sanctioned, bribes are still used to facilitate negotiations or influence public authorities' decisions.
If offered a bribe, an individual must refrain to accept it and, if possible, report this event to a lead for future reference. It is needless to open up a fight with the person offering the bribe but rejecting his or her proposal is vital to demonstrate the type of professional the corrupt individual has in front.
Final answer:
True, offering and accepting bribes is illegal and unethical, regardless of local customs. Laws like the FCPA and OECD Anti-Bribery Convention internationally prohibit bribery, necessitating that companies refuse such offers and maintain ethical business practices.
Explanation:
The statement provided suggests that if a bribe is offered during a business transaction, one should refuse it while maintaining professionalism and not offending the other party – which is true. Globally, corruption and particularly bribery are not only unethical but also illegal. Laws like the US Foreign Corrupt Practices Act (FCPA) and the OECD Anti-Bribery Convention prohibit bribery of government officials and others, regardless of cultural norms that may seem to accept such practices. Accepting bribes can lead to grave legal risks, undermine public interests, promote a culture of corruption, and result in severe legal penalties and public relations damage for the corporation involved.
Furthermore, behaviors that may appear as normal business practices in some cultures can be considered corrupt in others. The Chinese concept of guanxi, for example, refers to building networks of personal connections that could, under some circumstances, cross the line into corrupt practices. Thus, while some behaviors like gift-giving can have legitimate cultural roots, they can also, if not managed carefully, lead to unethical and illegal activities.
Therefore, companies are encouraged to develop internal policies that comply with anti-corruption legislation and maintain ethical negotiation practices, including transparent dealings and the avoidance of any form of bribery. In light of differing global standards, this manifesto of ethical business conduct becomes even more significant.
You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 3 years; at the following year, an amount of $3,000 per year until year 11; and then an amount of $6,000 per year until year 25. If your required rate of return (APR) is 11% compounded annually, what is the present value today of these cash flows?
Answer:
Present value of these cash flows are $24,580
Explanation:
Net present value is the sum of present value of all future cash inflows and outflows of a project using discounting method by a required rate of return. It measure the net value of the project's cash flows in present value term.
All the calculation and working is in the attached MS Excel file please find it.
The present value of the investment opportunity is $24,924.23, considering the given cash flow structure and an 11% annual interest rate.
To calculate the present value (PV) of the given cash flows, we need to discount each cash flow back to its present value, using the 11% annual interest rate:
Nothing for the next 3 years: PV = 0
$3,000 per year from year 4 to year 11 (8 years total):
We use the formula for the present value of an annuity: PV = C [1 - (1 + r)⁻ⁿ] / r where C = $3,000, r = 0.11, n = 8
Calculate the immediate present value of these 8 payments at year 3:
PV = 3000 [1 - (1 + 0.11)⁻⁸] / 0.11PV = 3000 [1 - 0.4342] / 0.11PV = 3000 × 5.1381PV = $15,414.30Now, discount this back to the present value at year 0:
PV = $15,414.30 / (1 + 0.11)³PV = $15,414.30 / 1.3676PV = $11,272.26$6,000 per year from year 12 to year 25 (14 years total):
We use the formula for the present value of an annuity: PV = C [1 - (1 + r)⁻ⁿ] / r where C = $6,000, r = 0.11, n = 14
Calculate the present value at year 11:
PV = 6000 [1 - (1 + 0.11)⁻¹⁴] / 0.11PV = 6000 [1 - 0.2418] / 0.11PV = 6000 × 6.8931PV = $41,358.60Now, discount this back to the present value at year 0:
PV = $41,358.60 / (1 + 0.11)¹¹PV = $41,358.60 / 3.031PV = $13,651.97Summing up these present values:
Total PV = $11,272.26 + $13,651.97 = $24,924.23
Mark's team is extremely ambitious. Irrespective of tight deadlines, it takes up a high-priority project that required a heavy investment. Eventually, the team is unable to meet the project schedule and the company goes bankrupt. Which self-limiting behavior of Mark's team most likely led the company to bankruptcy?a. Risky shiftb. Groupthinkc. Group-hated. Social loafing
The correct option is - A ( Risky shift)
Explanation:
Risk is the product of the probability and impact of an event. In this case A Cyber event.
There are 4 main ways to handle risk: Avoidance, mitigation, transfer and acceptance.
To avoid risk usually means to stop the activity or process which poses that risk. For instance: to avoid the risk of a hacker gaining access to the company through the internet, a company may choose to cut off all connection to the internet.
Avoidance is highly irregular, it will interfere with business processes and usually used as a last resort when the risk cannot be handled in any other way. Avoidance is mostly used by military and government organizations.
The supplies account had a beginning balance of $1,804. Supplies purchased during the period totaled $3,283. At the end of the period before adjustment, $439 of supplies was on hand. Required: Prepare the adjusting entry for supplies on December 31. Refer to the Chart of Accounts for exact wording of account titles.
Answer: The adjusting entry is:
Debit ($) Credit ($)
Supplies expenses 4,648
Supplies 4,648
Being adjustment to account for supplies expenses incurred at year end
Explanation: The supplies account is an asset account, so it has a debit balance. To arrive at the supplies expenses amount journalzed above, we have to do a movement schedule for the supplies account as follows:
Opening balance $1,804
Purchases during the period 3,283
Supplies expenses (XXX)
Balance 439
To get the value of XXX above, we do $1,804+3,283-XXX=439; using subject of the formula, XXX = $1,804+3,283-439 = $4,648.
Peter owns an auto dealership. Peter hires Cara as a receptionist, Ben as a salesperson, Stacy as a mechanic, and the "Clean as a Whistle Co." to come in at night and clean the premises. Which situation is LEAST likely to result in liability for Peter?
a. Cara, with authority, buys office supplies from Office Stuff.
b. Ben sells a car at a$ 1 ,000 markdown, after Peter told him not discount more than$ 500.
c. Stacy forgets to put the oil plug back into Daria's car after an oil change, damaging the engine when the oil runs out.
d. Emeralda from " Clean as a Whilte Co." runs over patty Pedestrain in the dealership's parking lot.
Answer:
d. Emeralda from " Clean as a Whilte Co." runs over patty Pedestrain in the dealership's parking lot.
Explanation:
Liability is the degree to which a person is responsible for injury that happens to another party in a lawsuit. Peter owns an auto dealership. Peter hires Cara as a receptionist, Ben as a salesperson, Stacy as a mechanic, and "Clean as a Whistle Co." as cleaners.
Peter will be least liable if Emralda from "Clean as a Whistle Co." runs over Patty I'm the dealership's parking lot.
This is because Peter hired the company as a seperate entity from the cleaning company employees. The conduct of employees from the cleaning company is responsibility of "Clean as a Whistle Co."
Crane Corp. has a gross profit margin of 30.00 percent, sales of $36,000,000, and inventory of $15,000,000. What is its inventory turnover ratio? (Round answer to 2 decimal places, e.g. 15.25.)
Answer:
Crane Corp.'s inventory turnover ratio is 1.68 times
Explanation:
Inventory turnover ratio an efficiency ratio that indicates how many times a company sells and replaces its stock of goods during a particular period
Inventory turnover ratio is calculated by using following formula:
Inventory turnover ratio = Cost of Goods Sold/Inventory
Crane Corp. has a gross profit margin of 30.00 percent.
Gross profit margin = Gross Profit/ Sales = (Sale - Cost of Goods Sold)/Sales
Cost of Goods Sold = Sales - Gross profit margin x Sales = $36,000,000 - $36,000,000 x 30% = $25,200,000
Inventory turnover ratio = $25,200,000/$15,000,000 = 1.68 times
Dollar General uses a cost leadership strategy. The Dollar General slogan is "Save time. Save money. Every day!®" Dollar General will be more effective if it has a mechanistic structure. Which of the following reasons explain this? Check all that apply.
-Narrow spans of management ensure that employees operate efficiently.
-Centralized decision making allows the organization to place tighter controls on the way work is done and, in the process, achieve economies of scale
Answer:
Narrow spans of management ensure that employees operate efficiently.
Centralized decision making allows the organization to place tighter controls on the way work is done and, in the process, achieve economies of scale.
Explanation: When the spans of management is narrow, proper supervising and controlling and coordination of work is done to achieve effective and efficient work done by the Employees.
A centralised decision making process helps the Organisation to have a tight control on its spendings and in the way work is done, this will help the Organisation to cut cost and take strategic decisions for organisational growth and development.
A mechanistic structure with narrow spans of management and centralized decision-making aligns well with Dollar General's cost leadership strategy, driving efficiency and economies of scale.
Explanation:Dollar General, using a cost leadership strategy, is suggested to be more effective with a mechanistic structure for several reasons. First, narrow spans of management ensure that employees operate efficiently because it simplifies supervision and communication channels, which is essential for maintaining low costs. Second, centralized decision-making allows the organization to enforce tighter controls, helping not only in achieving economies of scale but also in maintaining the uniformity and cost-effectiveness of the work being done.
Y = F(K, L) = K1/2L1/2. Suppose that both countries start off with a capital stock per worker of 2. What are the levels of income per worker and consumption per worker? Round your answers to two decimal places.
Answer:
Income per worker = 1.41 ; If rate of savings is 20% or 0.20 - Savings = 0.28
Explanation:
Y is output or income per worker, is given as a function of factors - Capital & Labour.
Y = F (K,L) = K^1/2.L^1/2
Given : 'Capital per worker' = 2
So, labour = 1 & capital = 2
Income [Y] per worker = (2)^1/2 . (1)^1/2
I.4 x 1
= 1.41
Savings [S] is a function of Income [Y]
S = f (Y)
S = s.f(Y) ; where s represents ratio / proportion of income saved.
Example : If 's' savings rate is 20% i.e 0.20
S = (0.20) (1.41)
= 0.28
Kristina just won the lottery, and she must choose among three award options. She can elect to receive a lump sum today of $62 million, to receive 10 end-of-year payments of $9.5 million, or to receive 30 end-of-year payments of $5.6 million.
(a) If she thinks she can earn 7% annually, which should she choose?
(b) If she expects to earn 8% annually, which is the best choice?
(c) If she expects to earn 9% annually, which option would you recommend?
(d) Explain how interest rates influence her choice.
Answer:
a. Best deal is 30 end-of-year payments of $5.6 million
b. Best deal is 10 end-of-year payments of $9.5 million
c. Best deal is lump sum today of $62 million
Explanation:
Please see attachment for workings.
d. As the interest rate increases, the duration of value shortens. That is as the interest rate increases, the best choose based on their payment duration reduces
To choose the best option, we calculate the present value of each award option using the formula PV = CF / (1+r)^n. At 7% annually, Kristina should choose the lump sum option of $62 million. At 8% and 9% annually, the lump sum option is still the best choice. Interest rates influence the present value, with higher rates making lump sum payments more attractive.
To determine the best option for Kristina, we need to calculate the present value of each award option and choose the one with the highest present value. The formula to calculate the present value is: PV = CF / (1+r)n where PV is the present value, CF is the cash flow, r is the interest rate, and n is the number of periods.
a) 7% annuallyLump sum option: PV = $62 million / (1+0.07)0 = $62 million10 end-of-year payments option: PV = $9.5 million / (1+0.07)1 + $9.5 million / (1+0.07)2 + ... + $9.5 million / (1+0.07)10 = $59.71 million30 end-of-year payments option: PV = $5.6 million / (1+0.07)1 + $5.6 million / (1+0.07)2 + ... + $5.6 million / (1+0.07)30 = $84.77 millionTherefore, Kristina should choose the lump sum option as it has the highest present value of $62 million.
b) 8% annuallyLump sum option: PV = $62 million / (1+0.08)0 = $62 million10 end-of-year payments option: PV = $9.5 million / (1+0.08)1 + $9.5 million / (1+0.08)2 + ... + $9.5 million / (1+0.08)10 = $56.74 million30 end-of-year payments option: PV = $5.6 million / (1+0.08)1 + $5.6 million / (1+0.08)2 + ... + $5.6 million / (1+0.08)30 = $76.75 millionThe lump sum option is still the best choice with a present value of $62 million.
c) 9% annuallyLump sum option: PV = $62 million / (1+0.09)0 = $62 million10 end-of-year payments option: PV = $9.5 million / (1+0.09)1 + $9.5 million / (1+0.09)2 + ... + $9.5 million / (1+0.09)10 = $53.48 million30 end-of-year payments option: PV = $5.6 million / (1+0.09)1 + $5.6 million / (1+0.09)2 + ... + $5.6 million / (1+0.09)30 = $71.34 millionBased on an interest rate of 9% annually, Kristina should choose the lump sum option with a present value of $62 million.
d) Influence of interest ratesInterest rates have a significant impact on the present value of future cash flows. Higher interest rates result in lower present values. When interest rates increase, the present value of an annuity decreases, making lump sum payments more attractive. On the other hand, when interest rates decrease, the present value of an annuity increases, and the annuity option becomes more appealing. In this case, as the interest rate increases, the present value of the lump sum payment remains constant, but the present value of the annuity decreases, which makes the lump sum option more favorable.
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Which of the following are consistent with the efficient markets hypothesis? Check all that apply. You should spend several hours a day studying the business section of your local newspaper to determine which stocks to add to your investment portfolio. Stock markets reflect all available information about the value of stocks. At the market price, the number of people who believe the stock is overvalued exactly equals the number of people who think the stock is undervalued.
Answer:
The following statements are consistent with the efficient markets hypothesis:
Stock markets reflect all available information about the value of stocks.At the market price, the number of people who believe the stock is overvalued exactly equals the number of people who think the stock is undervalued.Explanation:
The efficient markets hypothesis is such a theory in financial economics which explains that security prices in a liquid market at a given time reflect all available information. The upper statements are consistent with this theory only and the statement "You should spend several hours a day studying the business section of your local newspaper to determine which stocks to add to your investment portfolio." is not inconsistent.Final answer:
According to the efficient markets hypothesis, stock markets reflect all available information and it is impossible to consistently outperform the market by studying publicly available information.
Explanation:
The efficient markets hypothesis (EMH) argues that stock markets reflect all available information about the value of stocks. According to EMH, this implies that stock markets are efficient in the sense that the current stock prices are the best estimates of true investment value, considering all public information. Therefore, consistently outperforming the market by using publicly available information or technical analysis should be impossible. Under this hypothesis:
Spending hours studying the business section of a newspaper to determine which stocks to buy should not consistently yield returns higher than the market average, as all information believed to influence stock prices is already factored in.Stock markets reflect all available information about the value of stocks, so the market price is the most accurate reflection of the stock's value at any given point.At the market price, the number of people who believe the stock is overvalued should equal the number of people who believe it is undervalued, indicating a market equilibrium based on the available information.Unit contribution margin is A. The contribution margin in dollars for all products. B. The contribution margin as a percentage for a single unit. C. The contribution margin as a percentage for all products. D. The contribution margin in dollars for a single product.
Answer:
The correct answer is:
The contribution margin in dollars for a single product. (D.)
Explanation:
The unit contribution margin is the amount in dollars by which the price of selling a product exceeds the total variable cost incurred in the manufacture of that product. Mathematically it is the selling price of a product minus the total variable cost incurred on the single product. It is the proportion of sales revenue that is not consumed by variable costs, hence is used for the coverage of fixed costs.
The importance of unit contribution margin is that it is used to calculate the break-even price of the product, when fixed costs are made up for. It measures how growth in sales translates to growth in profits.
Currently, Warren Industries can sell 20 dash year, $1 comma 000-par-value bonds paying annual interest at a 9% coupon rate. Because current market rates for similar bonds are just under 9%, Warren can sell its bonds for $980 each; Warren will incur flotation costs of $20 per bond. The firm is in the 28% tax bracket. a. Find the net proceeds from the sale of the bond, Upper N Subscript d. b. Calculate the bond's yield to maturity (YTM) to estimate the before-tax and after-tax costs of debt. c. Use the approximation formula to estimate the before-tax and after-tax costs of debt.
Answer:
a. Cash proceeds $960
b. Cost of Debt Before tax 9.4% and after tax 6.8%
c. Cost of Debt Before tax 9.39% and after tax 6.76%
Explanation:
a.
Cash proceed from the sale of bond is the net selling price and the floating cost of the bonds.
Cash proceed = Selling price - Floating cost = $980 - $20 = $960
b.
Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity.
Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
Yield to maturity = [ $90 + ( $1,000 - $960 ) / 20 ] / [ ( $1,000 + $960 ) / 2 ]
Yield to maturity = 9.4%
Cost of debt before tax = 9.4%
Cost of debt after tax = 9.4% ( 1 - 0.28 ) = 6.8%
c.
Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
Yield to maturity = [ $90 + ( $1,000 - $960 ) / 20 ] / [ ( $1,000 + $960 ) / 2 ]
Yield to maturity = 9.39%
Cost of debt before tax = 9.39%
Cost of debt after tax = 9.19% ( 1 - 0.28 ) = 6.76%
Bonds are issued on June 1 that have interest payment dates of April 1 and October 1. Bond interest expense for the year ended December 31, 2009, is for a period of:
A. Three months.
B. Four months.
C. Six months.
D. Seven months.
Answer:
D. Seven months.
Explanation:
Bond is defined as a debt instrument that shows the indebtedness big the bond issuer to the bond holder. They are units of cooperates debt issued by companies and they are tradeable. For example corporate bond and municipal bonds.
When a bond is issued on June 1 , with repayment of October 1 and April 1. The interest expense by October will be for 4 months.
However as at December 31, 2009 the accrued interest that will be recognised will be for October to December (that is for 3 months). Though it has not been paid it will be recognised at the end of the accounting period.
This gives a total of 7 months interest expense.
The bond interest expense is accounted for from the date of issuance, June 1, to the year-end, December 31, totaling six months. Answer choice C, which represents a six-month period, is the correct period for recording bond interest expense in this case.
Explanation:The question is related to the interest expense calculation for a bond for a specific period within a financial year. Given the bonds are issued on June 1 and have interest payment dates of April 1 and October 1, we have to determine the period for which the interest expense should be recorded until year-end, December 31, 2009.
As the bonds were issued on June 1, the interest calculation starts from this date. The first interest payment date after June 1 would be October 1, and the second would be the following April 1. However, since we are interested in the period ending December 31, 2009, we should only consider the payments up to this date. From June 1 to October 1 is four months. After the interest payment in October, another two months of interest accrue until December 31. Thus, the total interest expense for the period is for six months.
A. Three months.B. Four months.C. Six months. D. Seven months.The correct answer is C. Six months.
What type of residential survey, also called a drive-by survey, is designed to show the location of the house and other large structures on the property?
Answer:
It is called a "House Location" Survey, which is also sometimes called a "drive-by" survey, and its goal is to show the location of the house and other large structures on the property, as well as the orientation of those structures in relation to each other.
Nonconstant Growth. Tattletale News Corp. has been growing at a rate of 20% per year, and you expect this growth rate in earnings and dividends to continue for another 3 years.
a. If the last dividend paid was $2, what will the next dividend be?
b. If the discount rate is 15% and the steady growth rate after 3 years is 4%, what should the stock price be today?
Answer:
a) $2.4b) $30.29
Explanation:
a. If the last dividend paid was $2, what will the next dividend be?
Next dividend = last dividend + growthNext dividend = last dividend × (1 + growth rate)
Next dividend = $2 × (1 + 20%) = $2 × (1 + 0.20) =
Next dividend = $2 × (1.20) = $2.4
b. If the discount rate is 15% and the steady growth rate after 3 years is 4%, what should the stock price be today?
You have to calculate the price in two parts: 1) present value of the dividends for 3 years, and 2) present value of the dividends after 3 years.
i) Present value of the dividends for 3 years
Year Dividend PV
1 $2.40 [tex]\dfrac{\$2.40}{(1+0.15)^1}=\$ 2.09[/tex]
2 [tex]\$2.40\times (1+0.20)=\$2.88[/tex] [tex]\dfrac{\$2.88}{(1+0.15)^2}=\$ 2.18[/tex]
3 [tex]\$2.88\times (1+0.20)=\$3.46[/tex] [tex]\dfrac{\$3.46}{(1+0.15)^3}=\$ 2.27[/tex]
The present value of those three dividends is:
$2.09 + $2.18 + $2.27 = $6.54ii) Present value of the dividends since year 4.
Equation to discount a perpetuity with constant rate g less than the discount rate.
[tex]PV=\dfrac{\text{Dividend one year from now}}{r-g}[/tex]
Substitute with:
Dividend the year four = $3.46 × (1.04)r = 0.15g = 0.04[tex]PV=\dfrac{\$3.46\times (1.04)}{0.15-0.04}=\$ 36.13[/tex]
Since that is the value at the end of year 3, you need to discount it to the present day:
[tex]PV_0=\dfrac{\$36.13}{(1+0.15)^3}=\$23.75[/tex]
iii) Add the present values of the two streams of dividends:
Price = $6.54 + $23.75 = $30.29 ← answerBased on the Gordon Growth Model, the next dividend from Tattletale News Corp. would be $2.4 and the current stock price should be approximately $23.93.
Explanation:The concept involved in this question is the Gordon Growth Model which forms a pivotal part of corporate finance and valuation. In this case, we are using this model to calculate the dividends and the price of the Tattletale News Corp. stock.
a. The next dividend can be found by increasing the last dividend by the given growth rate. Hence, the growth of dividends is 20%, and the last dividend paid was $2. Thus, the next dividend can be calculated as:
Next Dividend = Last Dividend × (1 + growth rate) = $2 × (1 + 20/100) = $2.4
b. The price of the stock today is found by using the Gordon Growth Model after the next three years and then discounting it to the present value at the 15% discount rate. The Gordon Growth Model calculation is: Terminal Value = D/(k-g), where D is the dividend at the end of three years, k is the required rate of return or discount rate, and g is the steady growth rate.
First, we find D, which is the dividend paid at the end of 3 years (which would be grown at 20% per year):
D = [tex]\[2 \times (1 + \frac{20}{100})^3\][/tex]= $3.48
Then, we find the Terminal Value using the Gordon Growth Model:
Terminal Value = D/(k-g) = $3.48/(15%-4%) = $34.36
Finally, we discount this Terminal Value back to its present value:
Present Value = [tex]\[\frac{\$34.36}{(1 + \frac{15}{100})^3} = \$23.93\][/tex]
The stock price today should be around $23.93.
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For each of the following cases, state whether the statement is true for LIFO or for FIFO. Assume that prices are rising. (a) select a method results in a higher quality of earnings ratio. (b) select a method results in higher phantom profits. (c) select a method results in higher net income. (d) select a method results in lower taxes. (e) select a method results in lower net cash provided by operating activities.
Answer: D. select a method results in lower taxes. (e) select a method results in lower net cash provided by operating activities
Explanation: Statement for LIFO and FIFO are rising definitely the organisation would want to reduce its taxes to significant amount and its operating activities would be checked during this period because it boils down to the price at which the product is being manufactured and sold out to the different customers that buys the company good. Last in first out and first in First out. This rule is used in warehousing and inventory management.
Calculate the Kuznets Ratio for Bangladesh based on size distribution: The lowest 40% receives 17.3% of national income and the highest 20% receives 45.3%.
Answer:
Kuznets Ratio = 2.62
Explanation:
Kuznet Ratio = % share of income received by richest 20%
% share of income received by poorest 40%
Given : The lowest 40% receives 17.3% of national income and the highest 20% receives 45.3%.
So, Kuznets Ratio = 45.3 / 17.3
= 2.62
Packaging equipment for Xi Cling Wrap costs $60,000 and is expected to result in end-of-year net savings of $23,000 per year for 3 years. The equipment will have a market value of $10,000 after 3 years. The equipment can be leased for $21,000 per year, payable at the beginning of each year. Xi Cling’s MARR is 10 percent/year. Based on an internal rate of return analysis, determine if the packaging equipment should be purchased or leased.
Answer:
(a) Purchase the equipment
Annual worth (AW, $)
[tex]=-60,000 \mathrm{x} \mathrm{A} / \mathrm{P}(10 \%, 3)+23,000+[10,000 \mathrm{x} \mathrm{A} / \mathrm{P}(10 \%, 3) \mathrm{x} \mathrm{P} / \mathrm{F}(10 \%, 3)][/tex][tex]=-60,000 \times 0.4+23,000+[10,000 \times 0.4 \times 0.75][/tex]
= - 24,000 + 23,000 + 3,000
= 2,000
(b) Leasing
AW ($) = AW of cost of leasing + AW of annual benefits
[tex]=-21,000 \mathrm{x}(1.1) * *+23,000[/tex]
= - 23,100 + 23,000
= - 100
Since AW of savings from leasing option is negative and AW of benefits from purchase decision is positive, the equipment should be purchased.
**Since lease payments are at beginning of year, these are "annuity due" and annual lease payment is multiplied by (1 + MARR) to obtain AW.
To determine if the packaging equipment should be purchased or leased, we will calculate the Internal Rate of Return (IRR) of purchasing the equipment. If the IRR exceeds the Minimum Acceptable Rate of Return (MARR), it is more favorable to purchase the equipment. Otherwise, leasing may be the better option.
Explanation:Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of an investment equal to zero. To determine whether the packaging equipment for Xi Cling Wrap should be purchased or leased, we will calculate the IRR of purchasing the equipment and compare it to the MARR.
The initial cost of purchasing the equipment is $60,000. The net savings per year for 3 years is $23,000, and the market value of the equipment after 3 years is $10,000. We'll use these numbers to calculate the NPV of purchasing the equipment. Then, we'll calculate the NPV of leasing the equipment for 3 years at a cost of $21,000 per year.
After calculating the NPV for both purchasing and leasing, we'll compare the IRR of purchasing to the MARR of 10 percent/year to determine whether the packaging equipment should be purchased or leased.
The following situations suggest a strength or a weakness in internal control. Identify each as a strength or weakness, and give the reason for your answer. a. All employees must take at least five consecutive days off each year. b. The accounting department orders merchandise and approves invoices for payment. c. Cash received over the counter is controlled by the sales clerk, who rings up the sale and places the cash in the register. The daily sales are recorded in the accounting records by the accounting department. d. The officer who signs checks need not examine the payment packet because he is confident the amounts are correct.
Answer: Options A and C are strengths while options B and D are weaknesses. See explanation below.
Explanation:
a. All employees must take at least five consecutive days off each year.
This is a strength in internal control. This would help to maintain stability in operational process and ensure leave days are effectively utilized. It also prevents staff from taking the leave days in piecemeal and sporadic manner thereby disrupting the operational process and causing team instability. It is also used to ensure leave days are promptly utilised and well accounted for.
b. The accounting department orders merchandise and approves invoices for payment.
This is a weakness in internal control. There should be a check and balance in this regard. In some organizations, proper scrutiny of the vendor and invoice is done by the Procurement Unit and the Expense Control Unit respectively. Even within the accounting department, there is approval hierarchy. Also, the unit within accounting department that is making the order should not be the one to approve the transaction.
c. Cash received over the counter is controlled by the sales clerk, who rings up the sale and places the cash in the register. The daily sales are recorded in the accounting records by the accounting department.
This is a strength in internal control as it ensures checks and balances. Fraud and error can be detected through this means. The accounting department should verify the transactions to the relevant supporting document before recording the transaction in the system.
d. The officer who signs checks need not examine the payment packet because he is confident the amounts are correct.
This is a weakness in internal control in the sense that checks signed by the officer is binding in the court of law. The officer cannot claim ignorance if anything goes wrong. There is therefore a need for proper scrutiny and relevant questions asked before checks are signed.
Each scenario describes a different aspect of internal control within a company. Employees taking time off is a strength, providing a check against fraud. The accounting departments duties might be considered a weakness due to lack of duty segregation. Cash handling could be both a strength or a weakness, depending on accountability procedures. The officer not needing to check payments is a weakness - it indicates a lack of checks and balances.
Explanation:The question is about identifying strength or weakness in internal control procedures in various situations. Let's analyze each:
All employees must take at least five consecutive days off each year: This is a strength. It's a good control mechanism which helps in preventing and detecting any fraudulent activities. A continuous absence might reveal irregularities performed by the employees in their daily tasks. The accounting department orders merchandise and approves invoices for payment: This could be seen as a weakness, as one of the key aspects of internal control is segregating duties. Here the accounting department is performing both ordering and approving, which can lead to conflict of interest and frauds. Cash received over the counter is controlled by the sales clerk who rings up the sale and places the cash in the register: This can be reviewed both as strength and weakness depending on further nuances. The sales clerk having control can be a strength if there is an established accountability procedure and a weakness if there is no cross-verification. The officer who signs checks need not examine the payment packet because he is confident the amounts are correct: This is a potential weakness. This may indicate a lack of checks and balances in the organization and could lead to potential control issues. Learn more about Internal Control Strengths and Weakness here:
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The following transactions are being entered into the accounting system. Using the Chart of Accounts (attached), determine the changes to the balance sheet, income statement, job cost ledger, and equipment ledger as the result of entering each of the following transactions:
a. A $4,000 invoice for concrete charged to job cost code 102.01.32300M.
b. A $23,400 invoice from a subcontractor for HVAC charged to job cost code 201.01.231 00S, 15% retention is withheld from the invoice.
c. A $1,500 bill for Office 1 rent.
d. A $2,000 of depreciation for Office 2.
e. A 120,000 bill to a client for Job 225, and the client holds 10% retention
f. The first loan payment of S2,435 for an equipment, which includes $1655.8 in principal and $779.2 9 in interest.
g. A S4,500 of depreciation for a dump truck.
h. A piece of equipment was sold for S65,000 in cash. It was purchased for $125,000 and $70,000 of depreciation has been taken. There are no outstanding loans for this equipment.
Answer:
A. Balance sheet + $4000, in WIP or finished good under inventory and + $4000 accounts payable. Income statement + $4000 on cost of sales if job is sold. Job cost ledger + $4000, Equipment ledger no effect.
B. Balance sheet + $23400 WIP, - Bank 85% of invoice, + accounts payable 15% of invoice. INCOME STATEMENT no effect, Job cost legder + 23400 on overheads, Equipment no effect
c. Balance sheet - bank $1500, Income statement +1500 expense, job costing no effect, equipment no effect.
d. Balance sheet +$2000 accumulated depreciation, Income statement +$ 2000 depreciation, Job costing no effect, Equipment no effect.
e. Balance sheet + $12000 Accounts receivables, + $108000 Bank, Income statement + $120000 sales, Job costing no effect, Equipment no effect.
f. Balance sheet -$1655.8 loan, -$2435 bank, income statement + $779.2 expenses(interest), Job costing no effect, equipment no effect.
g. Balance sheet + $4500 accumulated depreciation, Income statement +$4500 depreciation, job costing no effect, equipment no effect only truck asset.
h. Balance sheet - $55000 Equipment, +$65000 bank, Income statement + $10000 gain on sale of asset. Job costing no effect, Equipment - $55000
Explanation:
Retention by client creates an asset
retention by business creates liability
some of the figures affect some of the accounts only when a condition occurs e.g for a cost in the job costing to affect income statement it must be finished and sold so to be cost of sale.
costs incurred in production are not expenses rather are capitalized to the product and create asset either WIP, FINISHED GOOD OR MATERIAL
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,170,000 and will be sold for $1,370,000 at the end of the project. If the tax rate is 30 percent, what is the aftertax salvage value of the asset?
Answer:
After tax salvage value $1,278,852.8
Explanation:
MARCS five years class:
after four years we will have depreicate:
0.2 + 0.32 + 0.192 + 0.1152 = 0,8272
(Data from the attached MACRS)
tax basis of the asset:
6,170,000 x ( 1 - 0.8272) = 1.066.176
We will be taxed for the difference between the basis and the salvage value:
1,370,000 - 1,066,176 = 303,824 taxable gain:
303,824 x 30% = 91,147.2
After tax salvage value:
salvage valeu - income tax expense
1,370,000 - 91,147.2 = 1,278,852.8
For a present sum of $640,000, determine the annual worth (in then-current dollars) in years 1 through 4 if the market interest rate is 13% per year and the inflation rate is 5% per year.
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
The present sum of $640,000.
The market interest rate is 13% per year and the inflation rate is 5% per year.
First, we need to calculate the real interest rate.
Real interest rate= interest rate - inflation rate
Real interest rate= 13 - 5= 8%= 0.08
Now, using the following formula we can calculate the future value on each year:
FV= PV*(1+i)^n
FV1= 640,000*1.08= 691,200
FV2= 691,200*1.08= 746,496
FV3= 746,496*1.08= 806,215.68
FV4= 806,215.68*1.08= 870,712.93
The natural and organic confectionary product category is currently in the ________ stage of the product life cycle as evidenced by increasing rate of sales growth, broadened distribution, and a proliferation of organic peanut butter cup flavors.
Options:
A. growth
B. maturity
C. decline
D. introduction
Answer: A. Growth
Explanation: A product lifecycle is a term used to describe the overall steps which a product undergo before eventual withdrawal from the market.
The product lifecycle is made of the following stages
(1) Product initiation stage where the product is just being made available to the market.
(2) PRODUCT GROWTH STAGE WHERE THE PRODUCT IS EXPERIENCING EXPONENTIAL GROWTH, AND BROADENED DISTRIBUTION WITH HIGH PROFITABILITY ETC
The product stabilisation stage where the growth or development of the product is stable especially because of the introduction of several other competitors.
The the product decline stage where the product's sales is dropping and no longer profitable etc.