Answer:
Everything else being equal, you should invest if the discounted value of the security's expected future cash flows is greater than or equal to the current cost of the security.
Explanation:
You would use the capital budgeting technique known as net present value (NPV) . In order for a project or investment to be accepted, the sum of the present values of future cash inflows generated by the project should be greater than the initial amount invested or the initial cost. If the PV of the future cashflows is lower than the initial cost of capital, the investment would be rejected. On the other hand, if they are equal, the investor would be indifferent between accepting or rejecting the investment.
During 2018, Colorado Company stock was sold for $9,400. The fair value of the stock on December 31, 2018, was Clemson Corp. stock—$19,100; Buffaloes Co. stock—$20,500. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2017. (b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2018. (c) Prepare the adjusting journal entry needed on December 31, 2018.
Explanation:
The journal entries are as follows
a. Unrealized Holding Gain or Loss Dr $1,310
To Fair value Adjustment $1,310
(Being the unrealized gain or loss is recorded)
2. Cash $9,410
Loss on Sale of Investment $490 ($9,900 - $9,410)
To Equity Investment $9,900
(Being the sale of the stock is recorded)
3. Fair value Adjustment $1,020
To Unrealized Holding Gain or Loss $1,020
(Being the fair value adjustment is recorded)
The computation is shown below:
Stock Cost Fair Value Unrealized Gain(Loss)
Clemson Corp. Stock $20,200 $19,410 -$790
Buffaloes Co. stock $20,200 $20,700 $500
Net unrealized gain (loss) -$290
2017 -$1,310
Fair value adjustment -$1,020
When conducting a SWOT analysis, information about turnover, profit margins, and staff quality can be used to identify: Company opportunities and threats Environmental strengths and weaknesses Company strengths and weaknesses Environmental opportunities and threats
Answer:
Company strengths and weaknesses
Explanation:
SWOT analysis is a strategic technique that help to identify company´s risk or weakness and how to overcome with it´s strength and opportunity. It can be used at any platform. It is useful analysis for future course of action that help the company to grow and prepare itself from any possible threat.
SWOT stands for Stength, Weakness, opportunity and threat.
In a SWOT analysis, turnover, profit margins, and staff quality are used to identify a company's internal strengths and weaknesses. Opportunities and threats are derived from external factors.
Explanation:When conducting a SWOT analysis, details about turnover, profit margins, and staff quality can certainly be employed to identify company's strengths and weaknesses. The strengths and weaknesses part of a SWOT analysis pertain to internal factors, such as staff quality and financial performance (e.g., turnover and profit margins). Strengths are what the company excels in, giving it an advantage over competitors, while weaknesses are places where the company can improve. Meanwhile, opportunities and threats generally refer to external factors that may impact the company, such as market trends or regulatory changes, and not directly tied to internal operational data like turnover or profit margins.
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Grady is a member of a large family and received the following payments this year.
For each payment, determine whether the payment constitutes realized income and determine the amount of each payment Grady must include in his gross income. (Leave no answer blank. Enter zero if applicable.)
a) A gift of $30,600 from Grady’s grandfather.
b) 680 shares of GM stock worth $282 per share inherited from Grady’s uncle. The uncle purchased the shares for $82 each, and the shares are worth $287 at year-end.
c) A gift of $53,000 of Ford Motor Bonds. Grady received the bonds on October 31, and he received $1,590 of semiannual interest from the bonds on December 31.
d) A loan of $7,200 for school expenses from Grady’s aunt.
Answer:
Explanation:
a) The gift is realized income and it is completely excluded from gross income
b) Inheritances are realized income but are entirely excluded from gross income. The increase in the value of the shares during the year has not yet been realized. so it is realized income and completely excluded from gross income
c) The gift of the bonds is realized income that is entirely excluded from gross income. The interest accrued up to October 31st and is excluded because it was accrued at the time of the gift. As such, the accrued income was part of the gift. Grady is taxed on $1590/3 = 530 of interest that accrued after the date of the gift (he is taxed on it when he receives the gift)
d) A bona fide loan is not realized income so it is completely excluded from gross income
Grady's gift of $30,600, inheritance of GM stock, and $7,200 loan are not considered taxable and must not be included in his gross income. Only the $1,590 of interest from the Ford Motor Bonds is considered taxable income and should be included in Grady's gross income.
Explanation:When looking at the payments Grady received and determining which constitute realized income and what must be included in his gross income for tax purposes:
a) A gift of $30,600 from Grady's grandfather is not considered realized income for tax purposes because gifts are not taxable to the recipient. Therefore, Grady does not need to include this amount in his gross income. The amount he must include is $0.b) The 680 shares of GM stock inherited from Grady's uncle constitute realized income, but under current tax laws, inheritances are not considered taxable income. Grady would only be taxed on any gains if he were to sell the stocks. Thus, the value of the inherited stock is not included in gross income, and the amount to include is $0. However, the value at year-end is not relevant unless the stock is sold.c) The gift of $53,000 of Ford Motor Bonds is not considered realized income because it is a gift. However, the $1,590 of semiannual interest from the bonds that Grady received is taxable income and must be included in his gross income. Therefore, the amount he must include is $1,590.d) A loan of $7,200 for school expenses from Grady's aunt is not considered realized income, as loans are not taxable and must be repaid. The amount he must include is $0.
Say that you purchase a house for $212,000 by getting a mortgage for $190,000 and paying a $22,000 down payment. If you get a 30-year mortgage with an interest rate of 8 percent, what are the monthly payments? What would the loan balance be in ten years?
Answer:
1) Monthly payments:
[tex]Payment=\$1,394.15[/tex]
2) Balance in ten years:
[tex]Balance=\$166,676.94[/tex]
Explanation:
1. What are the monthly payments?
The formula to compute the monthly payment of a loan is:
[tex]Payment=Loan\times \dfrac{r(1+r)^n}{(1+r)^n-1}[/tex]
Where:
Payment is the monthly paymentr is the monthly interes rate: 8% / 12 = 0.08/12n is the number of months: 12 × 30 = 360Loan = $190,000Substitute and compute:
[tex]Payment=\$ 190,000\times \dfrac{r(1+(0.08/12))^{360}}{(1+(0.08/12))^{360}-1}[/tex]
[tex]Payment=\$1,394.15[/tex]
2. What would the loan balance be in ten years?
There is a formula to calculate the balance in any number of years:
[tex]Balance=Loan(1+r)^n-Payment\times \bigg[\dfrac{(1+r)^n-1}{r}\bigg][/tex]
Substitute with n = 10 × 12 and compute:
[tex]Balance=\$190,000(1+(0.08/12))^{(10\times 12)}-\$1,394.15\times \bigg[\dfrac{(1+(0.08/12))^{(10\times 12)}-1}{(0.08/12)}\bigg][/tex]
[tex]Balance=\$166,676.94[/tex]
Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance of $1,885,000 and Teresa Schafer, Drawing has a balance of $770,000. (a) Journalize the entry required to close the Teresa Schafer, Drawing account. (b) Determine the amount of Teresa Schafer, Capital at the end of the period.
Answer:
See explanation section
Explanation:
A) Closing Journal entry to record of closing the journal entry -
Debit Teresa Schafer, Capital $770,000
Credit Teresa Schafer, Drawing $770,000
(To close the drawing accounts to capital account)
B) Teresa Schafer, Opening Capital $1,885,000
Add: Net Income= $840,000
Less: Drawings= $(770,000)
Capital at the end of the period = $1,955,000
Note: Calculation of Net Income
Revenues $3,190,000
Expenses $(2,350,000)
Net Income $840,000
To close Teresa Schafer, Drawing account, debit Teresa Schafer, Capital for $770,000 and credit Teresa Schafer, Drawing for the same amount. Moreover, the ending value of Teresa Schafer, Capital is $2,955,000, which is calculated from its opening balance and subtracting the drawings, and adding the net income.
Explanation:To answer this question, we first need to understand the nature of the Capital and Drawing accounts in accounting. Teresa Schafer, Capital is an owner's equity account that holds the net worth of the business. It increases with credits and decreases with debits.
On the other hand, Teresa Schafer, Drawing is an owner’s draw account that represents the amount of money that Teresa has withdrawn from the business for personal use over the fiscal year. This account decreases the owner’s equity and has a normal debit balance.
(a) To close the drawing account, we would credit Teresa Schafer, Drawing for $770,000 and debit Teresa Schafer, Capital for the same amount: Debit: Teresa Schafer, Capital $770,000 Credit: Teresa Schafer, Drawing $770,000.
(b) To calculate the ending balance of Teresa Schafer, Capital, we take the initial capital balance of $1,885,000, subtract the drawings of $770,000, and add the net income (total revenues of $3,190,000 less total expenses of $2,350,000): $1,885,000 - $770,000 + ($3,190,000 - $2,350,000) = $2,955,000 So, the amount of Teresa Schafer, Capital at the end of the period is $2,955,000.
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Record transactions of purchasing company. On October 5, Splish Brothers Company buys merchandise on account from Bramble Company. The selling price of the goods is $4,700, and the cost to Bramble Company is $2,820. On October 8, Splish Brothers returns defective goods with a selling price of $720 and a fair value of $125.Record the transactions of Splish BrothersCompany, assuming a perpetual approach.
Final answer:
Splish Brothers Company records a debit to Inventory and a credit to Accounts Payable for $4,700 on the purchase date. When returning defective goods, they debit Accounts Payable and credit Inventory for $720.
Explanation:
On October 5, when Splish Brothers Company buys merchandise from Bramble Company on account, the journal entry on Splish Brothers' books, assuming a perpetual inventory system, would be to debit Inventory for $4,700 and credit Accounts Payable for $4,700, reflecting the purchase of merchandise.
On October 8, when Splish Brothers returns defective goods, they would record the return by debiting Accounts Payable for $720 and crediting Inventory for $720, which shows the reduction of obligation to Bramble Company as well as the decrease in inventory due to the return of defective goods. The fair value of the returned goods is not relevant to this entry on Splish Brothers' books as it pertains to the valuation on Bramble Company's side.
Agri Farm Ventures produces cases of food products. Each case contains an assortment of fruits, vegetables, and other fresh produce. Each case costs $5 and sells for $15. If there are any cases not sold by the end of the day, these are sold to another company for $3 a case to process. The probability that the daily demand will be 100 cases is 0.3, the probability that daily demand will be 200 cases is 0.4, and the probability that daily demand will be 300 cases is 0.3. Agri Farm Ventures has a policy of making sure customers are always satisfied. Hence, if its own supply of cases of food products is less than the demand, it buys the necessary products from a competitor. The estimated cost of doing this is $16 per case. Question 1 1 pts Refer to the Agri Farm Ventures problem. What are the decision alternatives
Answer:(1) They should be producing 300 cases each day because it result in the highest EMV of $1,800 (2) The cases that are not sold by the end of the day should be sold to another company to process in order to reduce their loss (3) When their own supply is less than demand they should buy necessary products from a competitor in order to ensure that they do not lose their customers.
Explanation:
We compute a decision table to solve the question as follows
When demand is 100 cases
At decision table
100 =( 100 × 15)- (100 ×5)
=1,500 - 500
=1,000
At decision table
200 = (100×15)- (100×5)-(100×16)-(100×15)
=(1,500 - 500 )-( 1,600 - 1,500)
=1,000 - 100
=900
At decision table
300= (100 × 15) - (100 × 5) - (200 × 16) - (200 × 15)
= (1,500 - 500) - (3,200 - 3,000)
= 1,000 - 200
=800
EMV when demand is 100 cases
= 0.3 (1000) + 0.4 (900) + 0.3 (800)
=300 + 360 + 240
=900
When demand is 200 cases
At decision table
100 = (100 × 15) - (200 × 5 ) + (100 × 3)
= (1,500 -1000) + 300
=500 + 300
= 800
At decision table
200 = (200 ×15) - (200 × 5)
= 3,000 - 1,000
= 2,000
At decision table
300 = (200 × 15) - (200 × 5) - (100 × 16)- (100 × 15)
= (3,000 - 1,000) - (1,600 - 1,500)
= 2,000 - 100
= 1,900
EMV when demand is 200 cases
0.3 (800) + 0.4 (2,000) + 0.3 (1,900)
=240 + 800 + 570
= 1,610
When demand is 300 cases
At decision table
100 = (100 × 15) - (300 × 5) + (200 × 3)
= (1,500 - 1,500) + (600)
= 0 + 600
= 600
At decision table
200= (200 × 15) - ( 300 × 5) + (100 × 3)
= (3,000 - 1,500) + (300)
= 1,500 + 300
= 1,800
At decision table
300 = (300 × 15) - (300 × 5)
= (4,500 - 1,500)
= 3,000
EMV when demand is 300
0.3 ( 600) + 0.4 (1,800) + 0.3 (3,000)
= 180 + 720 + 900
=1,800
The decision alternatives based on the decision table is that
(1) They should be producing 300 cases each day because it result in the highest EMV of $1,800
(2) The cases that are not sold by the end of the day should be sold to another company to process in order to reduce their loss
(3) When their own supply is less than demand they should buy from competitors in order to ensure that they do not lose their customers
Answer:
Explanation:
We need to calculated the expected return for each scenario
Probability of 100 cases sold
(100*15)-(100*5)=$1000
200 cases there is also a possibility that supply will be greater than the demand so the case will be sold to competitor so 100 cases bought from competitor at $16 cost and sold for $15
[(100*$15)-(100*$5) ] +[(100*$16)-(100*$15)=$900
300 cases there is also a possibility that supply will be greater than the demand so the case will be sold to competitor so 200 cases bought from competitor at $16 cost and sold for $15
[(100*$15)-(100*$5)]+[(200*$16)-(200*$15)]=$800
Then calculate the probabilites of each to see the decisions
$1000*0.3=$300
$900*0.4=$360
$800*0.3=$240
Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods.
a. Calculate each country's productivity and real GDP per person.
b. Which country is better off?
Answer:
A. Productivity
Country A = 20 goods per hour
Country B = 25 goods per hour
Country A = 128 goods per person
Country B = 135 goods per person
Country b is better off
Explanation:
Productivity = Total output / total productive hours
For country A = 128,000 / (800 × 8) = 20 goods per hour
For country B = 270,000 / ( 1800 x 6) = 25 goods per hour.
Real GDP per person = Total output/ total population
For country A = 128,000 / 1000 = 128 goods per person
For country B = 270,000 / 2,000 = 135 goods per person
Country B is better off because its real GDP per person is higher when compared with country B.
I hope my answer helps you
Consider the case of the Henderson Company.
The financial managers at the Henderson Company have been monitoring the company’s receivables and have compiled the following information:
• All sales are on credit. Henderson’s current terms are 2/10 net 30.
• 10% of Henderson’s customers take advantage of the discount.
• Payments from its remaining customers are received, on average, in 53 days.
• Estimated credit sales are $170.000 million annually.
• Variable costs are 82% of gross sales.
• Credit evaluation and collection costs are 10% of gross sales.
• There are no bad debts to consider in this analysis.
Using the preceding information, fill in the blanks in the following analysis.
Credit Analysis:
I. General Credit Policy Information
Credit terms 2/10 net 30
Days sales outstanding (DSO) for all customers ?
DSO for customers who take the discount (10%) 10 days
DSO for customers who forgo the discount (90%) 53 days
II. Annual Credit Sales and Costs ($ millions)
Gross sales $170.000
Net sales ?
Amount paid by discount customers
Amount paid by non discounted customers $153.000
Variable operating costs (82% of gross sales) $139.40
Bad debts $0.0
Credit evaluation and collection costs (10% of gross sales) $17.00
Answer:
I) Days sales outstanding (DSO) for all customers? 48.7days
= (53*0.9)+(10*0.1) = 48.7 days
II) Net sales? $166.600
The Net sales = Gross sales - sales allowance
The discount amount due for the 10% discount customers = 2% of the 10% of 170 mn ==> 0.02 * 0.1 * 170 ===> 0.34 mn
∴ The Net sales = 17 - 0.34 mn = 16.66 mn
Amount paid by discount customers? $13.600
Explanation:
I. General Credit Policy Information
Credit stamps 2/10 Net 30
Days sales outstanding (DSO) for all customers 48.7days
DSO for customers who take the discount (10%) 10days
DSO for customers who forgo the discount (90%) 53days
II. Annual Credit Sales and Costs ($ millions)
Gross sales $170.000
Net sales? $166.600
Amount paid by discount customers $13.600
Amount paid by non discounted customers $153.000
Variable operating costs (82% of gross sales) $139.40
Bad debts $0.0
Credit evaluation & collection costs (10% of gross sales) $17.00
Answer:Answer:
DSO for all customers is approx. 49days
DSO for customers who take the 10days discount offer is 10days
DSO for the 90% credit customers is 53days
ii annual credit sales is $170million and annual variable costs is $139.4million ( 82% of Gross sales) and discount paid to the 10 percentile customer is $340,000 (2% of $17Million)
iii. Credit Evaluation costs is $17million (10% of Gross sales)
iv. Bad debts is zero
V. AR balance for total customers at year end is $23Million
vi. AR balance for customers who took the discount at year end is $472,000
vii. AR balance for the 90% credit customers at year end is $22.5Million
Explanation:
DSO is calculated as Accounts receivable balance divided by Total credit sales multiplied by number of days in the period reviewed
In this question the DSO for either circumstances was provided as 10days and 53days respectively.
By interposing for the 90% customers (53days = x divided by $153million multiplied by 360days) x being the unknown AR is derived to be $22.5m
By interposing for the 10% customers (10days = x divided by $17million multiplied by 360days) x being the unknown AR is derived to be $472,000
Total AR is thus derived to be $23million and to ta DSO is 49days.
Mandalay had cash flow from operations (in millions) of $358, cash flows from investments of -$160, cash flows from financing of -$198, and net income of $53. Mandalay had free cash flow of: a. $160 b. $0 c. $198 d. $251
Answer:
The correct answer is:
$0 (b.)
Explanation:
Free cash flow refers to the cash a company generates after the cash that goes out to support operations and maintain capital asset have been made up for. It refers essentially to all the cash available to the owners of a business after all the operation expenses and investment capital has been accounted for. It is worthy of note that Free Cash Flows (FCFs) are different from net income.
In order to calculate the free cash flow, we have to identify all the cash inflows and the cash outflows, and subtract the cash outflows from the cash inflow.
Cash inflow = Cash flow from operations = $358 million
Cash outflow = cash flow from investment + cash flow from financing (They are denoted by the negative (-) sign)
Cash outflows (millions)= -$160 + (-$198) = -$358 million.
Therefore Free cash flow (million)= 358 - 358 = $0
You are looking at a one-year loan of $12,000. The interest rate is quoted as 8.4 percent plus two points. A point on a loan is simply 1 percent (one percentage point) of the loan amount. Quotes similar to this one are very common with home mortgages. The interest rate quotation in this example requires the borrower to pay two points to the lender up front and repay the loan later with 8.4 percent interest. What rate would you actually be paying here? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Interest rate What is the EAR for a one-year loan with a quoted interest rate of 11.4 percent plus two points? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Is your answer affected by the loan amount? Yes No
Answer:
Explanation:
Mortgage rates are influenced by many different factors including demand from homebuyers and homeowners for new loans, current economic conditions, inflation, and demand from investors to buy mortgage loan debt
Mortgage interest rates have a very significant impact on the overall long-term cost of purchasing a home through financing. On the one hand, mortgage borrowers are seeking the lowest possible rates; on the other, mortgage lenders must manage their risk through the interest rates they charge. The lowest mortgage interest rates are only available to borrowers with the most solid finances and stellar credit histories.
While the financial health of borrowers affects how good an interest rate they can get, larger economic factors and government financial policy affect the whole mortgage rate universe. You can boil it down to these five important factors. All represent basic rules of supply and demand in one form or another. It's a little technical, but learning these principles will give you a good way to think about what you're paying now and what could be coming
Answer a.
Effective Annual Rate of a loan is 8.92%
Answer b.
Effective Annual rate R is 12.27%
Answer is not affected by Loan amount as certain percentage of loan that is deducted as points.
Explanation:
Answer a
Points deducted = 2 or 2%
April = 8.4%
Monthly rate (i)= 8.4%/12= 0.007
Months in a year = 12
Effective Annual Rate of a loan =( (1+(i/(1-points)))^months in year)-1
((1+(0.007/(1-2%)))^12)-1
=0.08916311096 or 8.92%
So Effective Annual Rate of loan is 8.92%
Answer b
quoted interest rate = 11.4%
Monthly rate (i)= 11.4%/12=0.0095
Months in year = 12
points deducted= 2 or 2%
EAR of loan =((1+(i/(1-points))) ^months in year)-1
((1+(0.0095/ (1-2%))) ^12)-1
=0.1227334817 or 12.27%
Answer is not affected by Loan amount as certain % of loan is deducted as points.
Final answer:
Calculate the effective interest rate on a loan with points included and then determine the EAR for a loan with an interest rate and points. Loan amount impacts total interest paid but not the interest rate percentage.
Explanation:
Mortgage rates are influenced by many different factors including demand from homebuyers and homeowners for new loans, current economic conditions, inflation, and demand from investors to buy mortgage loan debt
Mortgage interest rates have a very significant impact on the overall long-term cost of purchasing a home through financing. On the one hand, mortgage borrowers are seeking the lowest possible rates; on the other, mortgage lenders must manage their risk through the interest rates they charge. The lowest mortgage interest rates are only available to borrowers with the most solid finances and stellar credit histories.
While the financial health of borrowers affects how good an interest rate they can get, larger economic factors and government financial policy affect the whole mortgage rate universe. You can boil it down to these five important factors. All represent basic rules of supply and demand in one form or another. It's a little technical, but learning these principles will give you a good way to think about what you're paying now and what could be coming
Answer a.
Effective Annual Rate of a loan is 8.92%
Answer b.
Effective Annual rate R is 12.27%
Answer is not affected by Loan amount as certain percentage of loan that is deducted as points.
Answer a
Points deducted = 2 or 2%
April = 8.4%
Monthly rate (i)= 8.4%/12= 0.007
Months in a year = 12
Effective Annual Rate of a loan =( (1+(i/(1-points)))^months in year)-1
((1+(0.007/(1-2%)))^12)-1
=0.08916311096 or 8.92%
So Effective Annual Rate of loan is 8.92%
Answer b
quoted interest rate = 11.4%
Monthly rate (i)= 11.4%/12=0.0095
Months in year = 12
points deducted= 2 or 2%
EAR of loan =((1+(i/(1-points))) ^months in year)-1
((1+(0.0095/ (1-2%))) ^12)-1
=0.1227334817 or 12.27%
Answer is not affected by Loan amount as certain % of loan is deducted as points.
Average fixed costs a. are defined as the change in total costs divided by the change in output. b. will always increase as output increases. c. will always decrease as output expands. d. will remain unchanged as output expands.
Answer:
Option (c) is correct.
Explanation:
Average fixed costs is determined by dividing the total fixed costs by the amount of output produced.
For example:
Total fixed cost = $5,000
Number of units initially produced = 100 units
Therefore, the average fixed cost at 100 units is calculated as follows:
[tex]\frac{Total\ fixed\ cost}{Ot\ produced}[/tex]
[tex]=\frac{5,000}{100}[/tex]
= $50 per unit
Now, suppose the number of units produced increases from 100 units to 200 units. Then, the average fixed cost is calculated as follows:[tex]=\frac{Total\ fixed\ cost}{Ot\ produced}[/tex]
[tex]=\frac{5,000}{200}[/tex]
= $25 per unit
Therefore, we can conclude that as the output of a particular firm increases, as a result the average fixed cost decreases.
Average fixed costs will remain unchanged as output expands.
Explanation:Average fixed cost is the total fixed cost per unit of output. Average variable cost is the total variable cost per unit of output. Average total cost is the sum of all costs per unit of output.
The average fixed cost must always decline with output because a fixed cost is being spread over more units of output. Hence, when the average total cost curve eventually increases, it is because the increasing variable cost component eventually dominates the declining average fixed cost component.
Therefore, the correct answer is d. will remain unchanged as output expands.
During World War II, both Germany and England had plans for a paper weapon: they each printed the other's currency, with the intention of dropping large quantities by airplane, so as to increase the other's money supply. Select all of the following reasons that might have made this an effective weapon. Support for the opposing country would rise.Relative prices would become more variable.It would create additional seigniorage revenue for the country.Menu and shoeleather costs would rise.The banking system would fail.Hyperinflation could undermine the public's confidence in the economy.\
Answer:
Relative prices would become more variable.
Menu and shoeleather costs would rise.
Hyperinflation could undermine the public's confidence in the economy.
Explanation:
The first reason that would make this to be effective is the hyperinflation that it will create and this is very bad for the economy as too much money will be chasing fewer goods.
Examples of what the effect of a paper money would be include: extreme hyperinflation can reduce the confidence of the public in the economy and economic policy; variability of the relative price between the countries will rise; shoeleather and menu costs will rise; it will result in an arbitrary change in tax liability; the level of uncertainty in the economy will rise and there will be an arbitrary wealth redistribution.
it should be noted this action would not deny the government seigniorage revenue from the inflation that would follow as the public will get the money dropped by the foreign airplanes.
World War II was a war that is commonly known in history. During World War II, both Germany and England had plans for a paper weapon. This may might this have been an effective weapon because;
Hyperinflation could undermine the public's confidence in the economy.
A paper weapon might have been effective for all the reasons that hyperinflation is bad. Note that a great increase in the money supply will also increase menu cost and thus making relative prices more variable;
When there is hyperinflation found to be very extreme, it can bring down the people's confidence in the economy of the country and economic policy.
Hyperinflation often takes place in times of war and economic turmoil in the production economy and this can lead to a surge in prices for basic goods
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b. True or false: an income elasticity of demand of 0.45 for all medical products implies that consumption will be higher among low-income people than among high-income groups. Explain
Answer:
False.
Explanation:
Elasticity of demand is a measure of the responsiveness of changes in demand to change in price.
The value of elasticity shows type of good. Negative elasticity indicates that a good is inferior, and people will buy it when their income is low. But once income rises they will buy more luxurious goods. That is not the case here as elasticity is positive.
When elasticity is positive the good is a normal good and increase in income will result in increase in amount demanded of the good.
In the scenario give a positive elasticity of 0.45 should result in higher consumption among higher income people than lower income people.
Time is money in any business environment. To be successful in the business world, you must be able to create concise and easy-to-read messages. As you revise, eliminate flabby expressions, long lead-ins, fillers, redundancies, and empty words. Your audience will appreciate your brevity. Which of the following sentences contain flabby expressions? Check all that apply. I worked on the MarkMaster campaign for the period of 35 hours last week. Help yourself to the cookies in the break room. Until our copier is replaced, please use the one on the third floor. In very few cases will he return text messages. In addition to the above, the client is of the opinion that, as a general rule, Comic Sans font is childish.
Answer:
The correct answers are letters "A", "C", "D", and "E".
Explanation:
Flabby expressions are wordy segments that confuse the meaning of the messages intended to be transmitted. Using concise verbs will reduce the use of flabby expressions which is to give the message a direct sound. Flabby expressions should be trimmed so the segment expressed can be easily understood.
Expressions like "for the period of", "in very few cases", "in addition to", or "as a general rule" are considered flabby in sentences and should be avoided.
Final answer:
The sentences that contain flabby expressions, which should be revised for conciseness, include the first, the fourth, and the last sentences. These sentences include unnecessary phrases that add to wordiness and can be omitted without changing their meaning.
Explanation:
In the context of business writing, where conciseness is highly valued, the sentences needing revision due to their flabby expressions are:
I worked on the MarkMaster campaign for the period of 35 hours last week.
In very few cases will he return text messages.
In addition to the above, the client is of the opinion that, as a general rule, Comic Sans font is childish.
By eliminating expressions such as 'for the period of,' 'in very few cases,' and 'of the opinion that, as a general rule,' the writing becomes more efficient and powerful. This editing also reduces unnecessary words and redundancies that do not add meaning to the sentences.
a retirement plan guarantees to pay you a fixed amount for 25 years. at the time of retirement, you will have $100,000 to your credit in the plan. the plan anticipates earning 7% interest annually over the period you receive benefits. assume the first payment occurs one year from your retirement date, how much will your annual benefits be
Answer:
The annual benefits will be$8,581.05
Explanation:
The applicable formula is the present value of an ordinary annuity,which is given as;
PV=A*(1-(1+r)^-N)/r
PV is the amount that would be in the plan at retirement which is $100,000
A is the annual benefits which is unknown
n is the number of years the investment would take which is 25 years
r is the rate of return on investment which is 7%
A=PV/(1-(1+r)^-N)/r
A=100000/(1-(1+7%)^-25/7%
A=100000/1-(1.07)^-25/0.07
A=100000/(1-0.184249178 )/0.07
A=100000/11.65358317
A=$8581.05
Final answer:
To calculate the annual benefits from the retirement plan, the present value of an annuity formula is used with a known present value of $100,000, interest rate of 7%, and duration of 25 years to find the fixed annual benefit amount.
Explanation:
The question involves calculating the annual benefits a retiree would receive from a retirement plan that guarantees a fixed amount for 25 years with an initial credit of $100,000 anticipating a 7% annual interest rate. To find the annual benefits, we need to use the formula for the present value of an annuity. The formula can be described as PV = PMT imes rac{1 - (1 + r)^{-n}}{r} where PV is the present value, PMT is the annuity payment, r is the interest rate per period, and n is the number of periods.
Since we know the present value (PV = $100,000), the interest rate (r = 7% or 0.07), and the number of periods (n = 25 years), we can rearrange the formula to solve for PMT, which represents the annual benefits. The calculation will give us the fixed amount the retiree can expect to receive annually for the next 25 years.
Susan is convinced that she needs to save for her own retirement needs and not rely on Social Security to take care of her in her old age. She has 30 years until she retires. She will follow the advice of her financial planner, which likely includes:_________
Answer: A financial planner is a qualified investment professional who helps individuals and corporations meet their long-term financial objectives. Financial Planners do their work by consulting with clients to analyze their goals, risk tolerance, life or corporate stages and identify a suitable class of investments for them. From there they may set up a program to help the client meet those goals by distributing their available savings into a diversified collection of investments designed to grow or provide income as desired.
Financial planners work closely with individuals and corporations to help them achieve their financial goals.
Some financial planners may hold a "CFP®" credential as a professional designation to establish their qualifications and knowledge-base.
Financial planning includes help with budgeting, investing, saving for retirement, tax planning, insurance, coverage and many more.
Explanation: The main elements of a financial plan include a retirement strategy, a risk management plan, a long-term investment plan, a tax reduction strategy, and an estate plan.
Concord Industries collected $105,000 from customers in 2019. Of the amount collected, $25,300 was for services performed in 2018. In addition, Concord performed services worth $39,000 in 2019, which will not be collected until 2020. Concord Industries also paid $73,800 for expenses in 2019. Of the amount paid, $29,800 was for expenses incurred on account in 2018. In addition, Concord incurred $42,100 of expenses in 2019, which will not be paid until 2020. (a) Compute 2019 cash-basis net income. Cash-basis net income $enter the cash-basis net income
Answer:
$31,200
Explanation:
Cash basis income recognition records transactions as per receipts and payments in cash and ignores the period they relate to. Cash basis of accounting is not in accordance with matching principle of accounting.
Cash basis of accounting is not recommended by either IFRS or US GAAPs since it overlooks the incomes earned and expenses incurred during a period.
In the given case, Net Income based upon cash basis would be computed as follows:
All cash receipts during the year 2019 - All expenses paid during the year 2019
= 105,000 - 73,800
= $31,200
The 2019 cash-basis net income for Concord Industries is calculated by subtracting the cash payments for expenses ($73,800) from the cash collected from customers ($105,000), resulting in a cash-basis net income of $31,200.
To compute the 2019 cash-basis net income for Concord Industries, we need to consider only the cash transactions that occurred during the year.
Therefore, we will include cash collected from customers and cash paid for expenses in 2019, ignoring any services performed or expenses incurred in different years that were not paid or collected in 2019.
The cash collected from customers in 2019 is $105,000. However, of this amount, $25,300 was for services performed in 2018, which means this amount is not considered for the 2019 cash-basis net income.
The cash paid for expenses in 2019 is $73,800, and this entire amount is relevant as it represents cash outflows for the year. Therefore, the 2019 cash-basis net income is calculated as follows:
2019 Cash Collections - 2019 Cash Payments = Cash-basis Net Income
$105,000 (cash collected) - $73,800 (cash paid for expenses) = $31,200
The cash-basis net income for Concord Industries in 2019 is $31,200.
You wish to purchase a $1,000 bond from a friend who needs the money. There are 7 years remaining until the bond matures, and interest payments are quarterly. You decide to offer $750.08 for the bond because you want to earn exactly 16% per year compounded quarterly on the investment. What is the annual bond rate of interest?
Answer:
The annual bond rate of interest = 9.8%
Explanation:
A denotes the annual coupon:
750.08 = A(P/A, 16%, 7) + ([tex]\frac{1,000}{(1+0.16)}[/tex]⁷
Annuity factor at 16% at 7 years = 4.039 (By cumulative present value table)
750.08 = 4.039 A + 353.83
4.039 A = 396.25
A = (396.25 ÷ 4.039)
A = 98.11
Calculating annual bond rate:
r = (98.11 ÷ 1,000) × 100
r = 9.811%
The annual bond rate being rounded off is 9.8% (answer).
Albert and Alberta love the University of Florida and want to support the school in every way. They always like to drink Gatorade after they are done working out at the gym. The gym decides not carry Gatorade in their vending machines anymore and switches to Powerade. Albert and Alberta refuse to drink anything but Gatorade so they switch their gym membership to one that carries Gatorade. Albert and Alberta are portraying what component of Brand Equity?A. LoyaltyB. AssociationsC.Product BrandD. AwarenessE.Perceived Quality
Answer:
A. Loyalty
Explanation:
Brand Equity is the term used to describe the identity of a specific brand that has been built to be recognized and followed by its customers with loyalty.
Loyalty related to Brand Equity is the main factor in placing product quality and image as one of the company's marketing strategies. This is because it makes the consumer "fall in love" with the product offered, refusing to exchange it for similar ones, but who do not have the same identity. An example of this can be seen in the question above, where Albert and Alberta refuse to stay at a gym that does not offer their favorite drink. Because of this, they prefer to leave this gym and look for one that provides the drink they want.
Answer:
The correct answer is letter "A": Loyalty.
Explanation:
American doctor and University of Florida Professor J. Robert Cade (1927-2007) and his research team created energy drink Gatorade in 1965 after observing Gator football players getting sick during Florida heats.
As Albert and Alberta love the University of Florida they are likely to be identified with any iconic item from that University. Thus, if they usually drink Gatorade it will be difficult for them to accept any other rehydration drink other than Gatorade. By changing gym memberships just because in their current gym they do not offer Gatorade they are showing loyalty to the University of Florida.
In a random sample of 651 computer scientists who subscribed to a web-based daily news update, it was found that the average salary was $46,816 with a population standard deviation of $12,557. Calculate a 91 percent confidence interval for the mean salary of computer scientists.
Answer:
[tex]46816-1.70\frac{12557}{\sqrt{651}}=45979.35[/tex]
[tex]46816+1.70\frac{12557}{\sqrt{651}}=47652.65[/tex]
So on this case the 91% confidence interval would be given by (45979.35;47652.65)
Explanation:
Previous concepts
A confidence interval is "a range of values that’s likely to include a population value with a certain degree of confidence. It is often expressed a % whereby a population means lies between an upper and lower interval".
The margin of error is the range of values below and above the sample statistic in a confidence interval.
Normal distribution, is a "probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean".
[tex]\bar X=46816[/tex] represent the sample mean for the sample
[tex]\mu[/tex] population mean (variable of interest)
[tex]\sigma=12557[/tex] represent the population standard deviation
n=651 represent the sample size
Solution to the problem
The confidence interval for the mean is given by the following formula:
[tex]\bar X \pm z_{\alpha/2}\frac{\sigma}{\sqrt{n}}[/tex] (1)
Since the Confidence is 0.91 or 91%, the value of [tex]\alpha=0.09[/tex] and [tex]\alpha/2 =0.045[/tex], and we can use excel, a calculator or a table to find the critical value. The excel command would be: "=-NORM.INV(0.045,0,1)".And we see that [tex]z_{\alpha/2}=1.70[/tex]
Now we have everything in order to replace into formula (1):
[tex]46816-1.70\frac{12557}{\sqrt{651}}=45979.35[/tex]
[tex]46816+1.70\frac{12557}{\sqrt{651}}=47652.65[/tex]
So on this case the 91% confidence interval would be given by (45979.35;47652.65)
Steamroller Company sells two products—J and B. Steamroller predicts that it will sell 7400 units of J and 6500 units of B in the next period. The unit contribution margins are $2.90 and $6.30 for products J and B, respectively. What is the weighted-average unit contribution margin?
Answer:
The weighted-average unit contribution margin is $4.50 per unit.
Explanation:
Weighted Average contribution margin is the average contribution margin of all products company sells.
Sale
Product J = 7,400
Product B = 6,500
Unit contribution margin
Product J = $2.9
Product B = $6.3
Contribution of Product J = 7,400 x $2.9 = $21,460
Contribution of Product B = 6,500 x $6.3 = $40,950
Total Contribution = $21,460 + 40,950 = $62,410
Total Sales Unit = 7,400 + 6,500 = 13,900 units
Weighted average contribution margin = Total Contribution / Total sales unit
Weighted average contribution margin = $62,410 / 13,900 units
Weighted average contribution margin = $4.49 per unit
Weighted average contribution margin = $4.5 per unit
In the long run, a(n) ______ orientation may be better for companies, perhaps because it increases employees’ awareness of ethics issues at work. a. code b. obedience c. values d. compliance e. individual
Answer:
The correct answer is letter "C": values.
Explanation:
Every company must establish a Code of Ethics. This is a type of handbook that allows employees to know what are the positive behaviors expected from them at work and what type of actions are not desired and can be even penalized. Thus, values keep employees and managers aware of ethical issues that could be taking place which is beneficial for entities in the long term since workers would be likely to avoid them.
Final answer:
The correct answer is 'c. values orientation' which reflects a company culture that promotes ethical behavior and improved awareness of ethical issues at work, influencing ethical decision-making and contributing to long-term organizational success.
Explanation:
In the context of organizational ethics and behavior, the correct answer to the question is c. values orientation. A values orientation within a company emphasizes an ethical culture where values such as integrity, accountability, and a commitment to doing what is right are highly promoted. This type of orientation can improve awareness of ethical issues within the workplace. It potentially leads to better ethical decision-making across the organization, which can contribute to long-term success.
For example, when employees have a clear understanding of the core values and the ethical expectations within their organization, it may influence how they interact with colleagues, make decisions, and serve customers or clients. The impact of a values orientation is substantial because it encourages employees to internalize the principles that guide their behavior rather than simply following rules or directives.
Furthermore, as part of a values-oriented culture, organizational leaders may establish training programs, create forums for ethical discussions, and recognize employees who demonstrate the company's values in action. By doing so, they help ensure that their values orientation translates into everyday practices that support a responsible and ethical business environment.
A worker is indifferent between job one lasting 4 hours a day, job two lasting 8 hours a day, and job three lasting 12 hours a day. Job two pays $10 an hour and tangency between the indifference curve and the budget constant occurs at 8 hours. One can conclude that
a. job one pays less per day but more per hour.
b. job three pays more per day and more per hour.
c. both A and B are true
d. neither A nor B are true
Answer:
both (a) and (b) are true
That is:
a. job one pays less per day but more per hour.
b. job three pays more per day and more per hour.
Explanation:
An indifference curve is one that shows all combinations of a good or activity that gives the same level of satisfaction to the consumer, and so the consumer is indifferent.
In this instance the worker is indifferent between job one lasting 4 hours a day, job two lasting 8 hours a day (pays $10 an hour), and job three lasting 12 hours a day.
For the worker to be indifferent job one must pay more per hour and less per day. Whole job 3 wi pay more per day and more per hour.
In a principal-agent relationship a. the principal wants the agent to act on her own behalf b. the agent wants the principal to act on his behalf c. the principal wants the agent to act on the behalf of others d. the agent wants the principal to act on the behalf of others
Answer:
The correct answer is letter "A": the principal wants the agent to act on her own behalf.
Explanation:
The principal-agent problem arises when a principal (stakeholder) hires an agent (manager) to act on his or her behalf but the instructions given by the principal generate a conflict of interest for the agent. Usually, agents have their own points of view on how to handle businesses based on their operations. However, principals may request agents to drive the company towards a different destiny securing the principals' interest.
Sally and Tom disagree over the amount of money due under their contract. To avoid involving any third party in a resolution of the dispute, Sally and Tom might prefer to use the alternative dispute resolution method of a. Arbitration; b. litigation. c. mediation. d. negotiation
Answer:
d. negotiation
Explanation:
Negotiation is process by which parties in a dispute settle their differences. It aims for achievement of agreement and compromise between the parties, and to avoid argument and dispute. The parties try to achieve the best possible outcome.
Negotiation involves 5 stages:
- Preparation
- Set ground rules
- Clarification and justification
- Bargaining and solving problems
- Implementation
Sally and Tom will try to use the negotiation method to resolve their differences without involving a third party.
In previous years, Cox Transport reacquired 2 million treasury shares at $20 per share and, later, 1 million treasury shares at $26 per share. If Cox now sells 1 million treasury shares at $29 per share and determines cost as the weighted-average cost of treasury shares, by what amount will Cox’s paid-in capital—share repurchase increase? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)
Cox’s paid-in capital—share repurchase will increase by $7 million.
Explanation:To calculate the increase in Cox's paid-in capital—share repurchase, we first need to find the weighted-average cost of the treasury shares. Cox reacquired 2 million shares at $20 and 1 million shares at $26. Therefore, the total cost is (2 million * $20) + (1 million * $26) = $40 million + $26 million = $66 million. The total number of shares reacquired is 2 million + 1 million = 3 million shares. The weighted-average cost per share will be the total cost divided by the total number of shares, which is $66 million / 3 million = $22 per share.
Next, Cox sold 1 million treasury shares at $29 per share. This sale brought in $29 million. Because these shares were bought at a weighted-average cost of $22 per share, the sale resulted in a gain of $29 - $22 = $7 per share, or $7 million in total. Therefore, Cox’s paid-in capital—share repurchase will increase by $7 million.
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Cox Transport's paid-in capital will increase by $7 million due to the sale of 1 million treasury shares at $29 per share. The weighted-average cost per treasury share was calculated to be $22. The profit from this transaction is $29 million in proceeds minus $22 million in costs, resulting in a $7 million increase.
Determining the Increase in Paid-in Capital
To determine the increase in Cox Transport’s paid-in capital from the sale of treasury shares, first, we need to calculate the weighted-average cost per treasury share previously acquired.
Step 1: Calculate the Total Cost of Treasury Shares
2 million shares at $20 per share: 2,000,000 * $20 = $40 million
1 million shares at $26 per share: 1,000,000 * $6 = $26 million
Total cost: $40 million + $26 million = $66 million
Step 2: Calculate the Weighted-Average Cost per Share
Total shares = 2 million + 1 million = 3 million shares
Weighted-average cost per share = $66 million / 3 million shares = $22 per share
Step 3: Determine Proceeds from the Sale
1 million shares sold at $29 per share: 1,000,000 * $29 = $29 million
Step 4: Determine Cost of Shares Sold
Cost of 1 million shares = 1,000,000 * $22 = $22 million
Step 5: Calculate Increase in Paid-in Capital
Increase in paid-in capital = Sale proceeds - Cost of shares sold= $29 million - $22 million = $7 million
Therefore, Cox’s paid-in capital—share repurchase will increase by $7 million.
Rey Company’s single product sells at a price of $225 per unit. Data for its single product for its first year of operations follow. Direct materials $ 29 per unit Direct labor $ 37 per unit Overhead costs Variable overhead $ 15 per unit Fixed overhead per year $ 493,000 per year Selling and administrative expenses Variable $ 27 per unit Fixed $ 218,000 per year Units produced and sold 29,000 units 1. Prepare an income statement for the year using absorption costing 2. Prepare an income statement for the year using variable costing.
Answer:
Part 1. Prepare an income statement for the year using absorption costing
Sales ($225×29,000) 6,525,000
Less Cost of Sales
Opening Stock 0
Add Cost of Manufactured Goods ($95.83×29,000) 2,842,000
Less Closing Stock 0 2,842,000
Gross Profit 3,683,000
Less Expenses
Selling and Administrative Expenses:
Variable ($27×29,000) 783,000
Fixed 493,000 218,000
Net Income 2,682,000
Part 2. Prepare an income statement for the year using variable costing
Sales ($225×29,000) 6,525,000
Less Cost of Sales
Opening Stock 0
Add Cost of Manufactured Goods ($81.00×29,000) 2,349,000
Less Closing Stock 0 2,349,000
Contribution 4,176,000
Less Expenses
Fixed Manufacturing Costs 493,000
Selling and Administrative Expenses:
Variable ($27×29,000) 783,000
Fixed 493,000 218,000
Net Income 2,682,000
Explanation:
Part 1. Prepare an income statement for the year using absorption costing
Absorption Costing, also known as Full Costing includes Fixed Manufacturing as part of Product Cost.
All Non - Manufacturing Costs are then Presented as Period Costs
Product Cost Per Unit:
Direct materials 29.00
Direct labor 37.00
Variable overhead 15.00
Fixed Overhead 430000/29000 14.83
Total Product Cost 95.83
Part 2. Prepare an income statement for the year using variable costing
Variable Costing, also known as Marginal Costing only includes Variable Manufacturing Costs as part of Product Costs
Fixed Manufacturing and All Non - Manufacturing Costs are then Presented as Period Costs.
Product Cost Per Unit:
Direct materials 29.00
Direct labor 37.00
Variable overhead 15.00
Total Product Cost 81.00
Answer:
absorption cost
Sales revenue 6,525,000
COGS (2,842,000)
Gross Profit 3,683,000
S&A expense (1,001,000)
Operating Income 2,682,000
variable cost
Sales revenue 6,525,000
Variable Cost (3,132,000)
Contribution 3,393,000
Fixed Cost (711,000)
Net Income 2,682,000
Explanation:
Under absorption cost all the fixed cost are capitalized:
units cost:
493,000 / 29,000 units = 17 unit fixed overhead cost
29 materials + 37 labor + 15 varaible overhead 17 fixed overhead = 98 unit cost
Sales revenue 29,000 x 225 = 6,525,000
COGS 29,000 x 98 =(2,842,000)
Gross Profit 3,683,000
Selling and adminsitrative cost:
27 x 29,000 + 218,000 = (1,001,000)
Operating Income 2,682,000
Variable cost:
29 materials + 37 labor + 15 varaible overhead + 27 S&A = 108 unit cost
Sales revenue 29,000 x 225 = 6,525,000
Variable Cost 29,000 x 108 =(3,132,000)
Contribution 3,393,000
Fixed Cost 493,000 + 218,000 = (711,000)
Net Income 2,682,000
What is the most common factor in the code of ethics for many professional organizations?
Answer:
The correct answer is: information, training, and credentials are based on evidence-based practice.
Explanation:
Business ethics, in addition to having a responsibility for the common good, is a commitment to permanent respect for all its associates: its staff, its customers, its investors, its suppliers, its creditors and the State as representative of the society.
Thus, ethics should contribute to strengthening the credibility and reliability of the entire society in the company, managing to satisfy the wishes and attending to the rights of all its stakeholders.
Employees whose values match the values of the organization they work for generally ________________ than employees whose values don't match the organization.
Answer:
Employees whose values match the values of the organization they work for generally SHOW MORE COMMITMENT TO THEIR JOBS than employees whose values don't match the organization.
Explanation:
Workplace values are the guiding principles that are most integral to the way a company works. Simply put, company's values, and the culture they create can spell the difference between success and failure.
The way people behave is deeply rooted in their values, when employees share their company's values, they make more informed decisions and are more committed to their jobs.
Sharing same values with the organization one works with increases the rate of productivity as one tends to be more motivated and dedicated to the job.
Therefore, the answer that best suits the question is that employees whose values match the values of the organization SHOW MORE COMMITMENT TO THEIR JOBS than employees whose values don't match the organization.