Answer:
Interest = $188,264.78
Explanation:
given data
present value = $245,000
rate = 20 %
finance closing costs = 3 percent
time = 30 year
fixed rate mortgage = 5 % annual = [tex]\frac{0.05}{12}[/tex] monthly
to find out
interest will the borrower pay
solution
we will apply here present value of annuity formula for find annuity that is
present value annuity = Annuity × [tex]\frac{1-(1+r)^{-t}}{r}[/tex] ..........1
put here value we get
$245,000 × 0.80 × 1.03 = Annuity × [tex]\frac{1-(1+\frac{0.05}{12})^{-30*12}}{\frac{0.05}{12}}[/tex]
solve it we get
$201,880 = annuity × [tex]\frac{0.7762}{0.0042}[/tex]
annuity = $1,083.74
so now we get interest that is
interest = annuity × 360 - present value annuity ..............2
interest = $1,083.74 × 360 - ( $245,000 × 0.80 × 1.03 )
Interest = $188,264.78
How much life insurance would a person buy if he wants to leave enough money to ensure that their family will receive $40,000 dollars in interest, of constant year 0 value dollars? The interest rate expected from banks is 7.5 percent and the inflation rate is expected to be 3 percent per year.
Answer:
amount of insurance required = $888888.889
Explanation:
given data
cash flow = $40000
expected return = 7.5%
inflation rate = 3%
to find out
amount of insurance required
solution
we get here amount of insurance required that is equal to present value of perpetuity ..................1
so it will be
amount of insurance required = Cash flow ÷ (expected return - inflation rate) ....................2
put here value we get
amount of insurance required = [tex]\frac{40000}{0.075-0.03}[/tex]
amount of insurance required = $888888.889
What leadership approach is considered the most dominant among the styles and why?
Answer:
Democratic leadership approach
Explanation:
Democratic leadership, often recognized as participatory leadership, is a form of management style wherein team members play a much more participatory position in the procedure of making business decisions.
The option to engage is provided to all in such a framework, ideas are openly shared and conversation is promoted. Because the democratic process focuses solely on the equal rights of groups as well as the unlimited flow of information, the team leader is only there to provide advice and influence.
Such style of leadership will extend from private companies to schooling to the government to any entity. That's why it is considered to be most dominating.
Final answer:
While it is difficult to pinpoint a single dominant leadership style, democratic leadership is often celebrated for its effectiveness across a range of scenarios due to its emphasis on inclusivity and team engagement. However, the most effective leadership approach can vary significantly based on the situation at hand, highlighting the importance of adaptability in leadership practices.
Explanation:
Identifying a single dominant leadership style is challenging because effectiveness largely depends on the context in which the leadership is applied, including the nature of the task, the team's characteristics, and the broader environment. However, among the various leadership styles discussed, democratic leadership is often highlighted for its versatility and effectiveness in a wide range of scenarios. Democratic leaders actively involve team members in decision-making processes, which can lead to higher levels of engagement, creativity, and satisfaction among group members. This approach fosters a sense of ownership and empowerment within the team, contributing to cohesive team dynamics and enhancing overall productivity.
However, it's important to note that the most effective leadership style can vary significantly depending on the specific requirements of the situation. For instance, in crisis situations where quick, decisive action is needed, an autocratic leadership approach may be more effective. Similarly, in highly skilled, self-motivated teams, a laissez-faire leadership style might be preferable, as it gives individuals the autonomy to innovate and make decisions without constant oversight.
In addition to understanding different leadership styles, it's crucial for leaders to be adaptable and capable of employing various approaches as circumstances change. The ability to discern which style will be most effective in a given situation is a hallmark of great leadership. This agility enables leaders to navigate complex environments successfully, balancing between offering guidance and empowering their teams to operate autonomously.
My brother-in-law worked as a full-time school teacher in San Diego for 35 years. When he completed his 35 years of service, he retired and now receives -- based on his salary and years of service -- $6,000 per month for the rest of his life. This type of employer-sponsored retirement plan is best described with which of the following phrases:
(A) Fixed compensation
(B) Defined benefit
(C) Perpetual benefit
(D) Contingent benefit
(E) Defined contribution
Answer: (B) Defined benefit
Explanation:
Defined benefit is referred to as the type of the pension plan under which the employer tends to agrees to pay the particular pension amount after the retirement. The amount of the pension is thus driven by the annual earnings of the individuals i.e. the employee during their period of working. This is also referred to as the no. of years they have served the office.
The retirement plan described is a defined benefit plan, where the retiree receives a fixed amount per month based on salary and years of service.The correct answer is option-E.
The employer-sponsored retirement plan described in the question is best described as a defined benefit plan. In a defined benefit plan, the retirement benefits are based on a formula that takes into account the employee's salary and years of service. The retiree receives a fixed amount per month for the rest of their life, regardless of the investment performance of the plan.
Therefore, the correct answer is option-E.
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At the beginning of 2014 Country A's Net International Investment Position is - at book (or accounting) value - equal to $0. During 2014 Country A's residents purchase shares in Country B's stock market for $500, and Country A's government sells treasury bonds to Country B's residents for $500. Country A's Current Account Balance in 2014 and 2015 is 0, and no other financial account entries are recorded in Country A's balance of payments. At the end of 2015, however, Country B's shares owned by Country A residents have increased their value by 10%, while the Country A's treasury bonds owned by Country B's residents have lost 5% of their original market value. What is the market value of Country A's Net International Investment Position at the end of 2015
Answer:
$50; $550; $25; $475; $75
Explanation:
Increase in value:
= Investment made × Percentage change
= (500 × 10) ÷ 100
= 50
Thus, the increase in value of country A is $50.
New value = Original value + Increased value
= $500 + $50
= $550
Therefore, the new value of country A's investment in a foreign country at the end of 2015 is $550.
(b) The value of foreign country's investment in country A has decreased to 5%.
Decrease in value = Original value × Decreased value
= (500 × 5) ÷ 100
= 2,500 ÷ 100
= 25
Therefore, decrease in value of country A is $25.
New value = Original value - Decreased value
= $500 - $25
= $475
Thus, the value of foreign countries invests in the country A at the end of 2015 is $475.
Net international investment position:
= (value of country A's investment in a foreign country at the end of 2015) - (value of foreign countries investment in the country A at the end of 2015)
= $550 - $475
= $75
Thus, the market value of the country A's net international investment position at the end of 2015 is $75.
Final answer:
The current account balance can be calculated using the national saving and investment identity formula. If investment rises by $50 billion while the budget deficit and national savings remain the same, the current account balance would decrease by $50 billion.
Explanation:
The current account balance can be calculated using the national saving and investment identity formula:
Current Account Balance = National Savings - Domestic Investment.
In this case, the government budget deficit of $100 billion and total domestic savings of $1,500 billion are given.
Therefore, the current account balance would be $1,400 billion ($1,500 billion - $100 billion).
If investment rises by $50 billion while the budget deficit and national savings remain the same, the current account balance would decrease by -
= ($1,400 billion - $50 billion).
= $50 billion
In 2019, Wally had the following insured personal casualty losses (arising from one casualty in a Federally declared disaster area). Wally also had $42,000 AGI for the year before considering the casualty. Fair Market Value Asset Adjusted Basis Before After Insurance Recovery A $9,200 $8,000 $1,000 $2,000 B 3,000 4,000 -0- 4,000 C 3,700 1,700 -0- 900
Wally's casualty loss deduction is:
Final answer:
Wally cannot claim a casualty loss deduction because after calculating the deductible losses for each asset and applying the rules regarding insurance and AGI, the deductible amount is less than 10% of his AGI, resulting in no allowable deduction.
Explanation:
When calculating casualty loss deductions for tax purposes, there are specific steps that need to be followed. The tax rule states that for each casualty event, you subtract $100 from the value of the loss after reimbursement from insurance (but not below zero). After doing this for all individual casualties, you then subtract 10% of your adjusted gross income (AGI) from the total of all the losses.
Here is the calculation for Wally's losses:
Asset A loss: $9,200 (FMV before) - $8,000 (FMV after) = $1,200 loss - $1,000 (insurance recovery) = $200 deductible loss before $100 rule. Applying $100 rule: $200 - $100 = $100.
Asset B: Since the FMV after is equal to the FMV before, there is no deductible loss here despite the lack of insurance recovery.
Asset C loss: $3,700 - $1,700 = $2,000 loss - $900 (insurance recovery) = $1,100 deductible loss before $100 rule. Applying $100 rule: $1,100 - $100 = $1,000.
Adding the deductible losses of Asset A and C gives us $100 + $1,000 = $1,100. Next, we apply the rule to subtract 10% of AGI from the total losses: $1,100 - (10% of $42,000) = $1,100 - $4,200 results in a negative number. Therefore, Wally cannot claim any casualty loss deduction because his AGI is too high relative to the amount of the losses after insurance recoveries and applying the IRS rules.
Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from today. The dividend should grow rapidly - at a rate of 21% per year - during Years 4 and 5, but after Year 5, growth should be a constant 8% per year.
1. If the required return on Computech is 18%, what is the value of the stock today?
Answer:
$10.98
Explanation:
Dividend per year;
D1 to D2 = 0
D3 = 1.25
D4 = 1.25 (1.21) = 1.5125
D5 = 1.5125 (1.21) = 1.8301
D6 = 1.8301 (1.08) =1.9765
Find Present values of each dividend at 18% required return;
PV( D1 to D2) = 0
PV( D3) = 1.25/1.18³ = 0.7608
PV( D4) = 1.5125 / (1.18^4) = 0.7801
PV( D5) = 1.8301 / (1.18^5) = 0.8000
PV( D6 onwards) [tex]= \frac{\frac{1.9765}{(0.18-0.08)} }{1.18^{5} } \\ \\ =\frac{19.765}{2.2878}[/tex]
PV( D6 onwards) = 8.6393
Next, sum up the PVs;
= 0 + 0.7608 + 0.7801 + 0.8000 + 8.6393
= 10.98
Therefore, this stock is valued at $10.98
In addition to the size of the GDP, some other factors that affect the value of the American dollar are its relative _____________ compared to other currencies and the relative stability of the governments that issue those currencies..
Answer:
The correct word for the blank space is: scarcity.
Explanation:
Besides scarcity, some other factors influence the U.S. dollar value such as government stability, supply and demand, market psychology, and technical factors. When the U.S. exports goods it creates a demand for American dollars because customers must pay in that currency. The value of the U.S. dollar can be gauged by monitoring events like the Gross Domestic Product (GDP) since it reveals what is happening in the economy.
According to a company's unadjusted trial balance at Dec. 31, the balance in the Unearned Revenue account was $800. This balance represents receipt of four months of service received on December 1 from a customer. The monthly contract service to be provided is for the months of Dec., Jan., Feb. and March. The required adjusting entry for Dec. 31 would be:
Answer:
Explanation:
The adjusting entry is shown below:
Unearned revenue A/c Dr $200
To Service revenue A/c for $200
(Being the unearned revenue is recorded)
We simply debited the unearned revenue account and credited the service revenue account so that the correct posting can be done
The computation is shown below:
= Unearned revenue balance ÷ number of months
= $800 ÷ 4 months
= $200
Final answer:
The correct adjusting entry for December 31 for the unearned revenue is to debit the Unearned Revenue account and credit the Revenue account by $200 to recognize one month's worth of service provided in December.
Explanation:
The student's question pertains to adjusting journal entries for unearned revenue at the end of an accounting period. According to the information provided, the company received payment for services that are to be performed over four months, starting from December 1. Since the company has provided one month of service (December) by December 31, it needs to recognize this as earned revenue.
The adjusting entry required on December 31 would debit the Unearned Revenue account and credit the Revenue account to reflect that service has been provided for one month. The calculation for the adjustment would be $800 divided by 4 (total months of service), resulting in $200 of revenue earned in December.
Adjusting Entry on December 31:
Debit Unearned Revenue: $200
Credit Revenue: $200
Selling insurance without a license without misappropriating premium funds is a ________.
Answer:
Selling insurance without a license without misappropriating premium funds is a class 4 felony.
Explanation:
The sale of insurance without a license without misappropriating funds is a class 4 felony that attracts a fine up $5,000 and 5 years imprisonment. This is in accordance with Illinois Laws Regulations.
Suppose the government of Iraq is deciding what kind of monetary policy and exchange rate regime to choose. The government wants to ensure stability in international trade and investment by pegging the Iraqi dinar to the U.S. dollar. Which of the following policy choices will achieve this goal?
a. Maintaining capital controls with no independent monetary policy
b. Controlling the interest rate in the country and imposing restrictions on foreign exchange trading
c. Foregoing monetary policy autonomy without imposing capital controls
To achieve stability in international trade and investment, the government of Iraq should choose option c: Foregoing monetary policy autonomy without imposing capital controls.
Explanation:To achieve stability in international trade and investment by pegging the Iraqi dinar to the U.S. dollar, the government of Iraq should choose option c: Foregoing monetary policy autonomy without imposing capital controls.
This means that Iraq will give up its ability to independently adjust monetary policy, such as interest rates, while not implementing restrictions on the flow of capital. This allows the exchange rate between the Iraqi dinar and the U.S. dollar to remain stable.
By pegging the Iraqi dinar to the U.S. dollar, Iraq aligns its currency value with a more stable and widely accepted currency, which can attract foreign investment and promote confidence in international trade.
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Terrapin Company engages in the following external transactions for November. Purchase equipment in exchange for cash of $22,400. Provide services to customers and receive cash of $6,000. Pay the current month's rent of $1,700. Purchase office supplies on account for $1,000. Pay employee salaries of $1,700 for the current month. Required: Record the transactions. Terrapin uses the following accounts: Cash, Supplies, Equipment, Accounts Payable, Service Revenue, Rent Expense, and Salaries Expense.
Answer:
Purchase equipment in exchange for cash of $22,400
Debit Equipment account $22,400
Credit Cash account $22,400
Being entries to record the purchase of equipment for cash
Provide services to customers and receive cash of $6,000
Debit Cash account $6,000
Credit Service Revenue account $6,000
Being entries to recognize revenue earned from service rendered to customer.
Pay the current month's rent of $1,700
Debit Rent expense account $1,700
Credit Service Revenue account $1,700
Being entries to recognize the payment of rent expense.
Purchase office supplies on account for $1,000
Debit Supplies account $1,000
Credit Cash account $1,000
Being entries to recognize the payment for office supplies.
Pay employee salaries of $1,700 for the current month
Debit Salaries Expense account $1,700
Credit Cash account $1,700
Being entries to recognize the payment of employee's salaries.
Explanation:
Information given about Terrapin
Purchase equipment in exchange for cash of $22,400. Provide services to customers and receive cash of $6,000. Pay the current month's rent of $1,700. Purchase office supplies on account for $1,000. Pay employee salaries of $1,700 for the current month.To record these transactions, the following entries will be posted
Purchase equipment in exchange for cash of $22,400
Debit Equipment account $22,400
Credit Cash account $22,400
Being entries to record the purchase of equipment for cash
Provide services to customers and receive cash of $6,000
Debit Cash account $6,000
Credit Service Revenue account $6,000
Being entries to recognize revenue earned from service rendered to customer.
Pay the current month's rent of $1,700
Debit Rent expense account $1,700
Credit Service Revenue account $1,700
Being entries to recognize the payment of rent expense.
Purchase office supplies on account for $1,000
Debit Supplies account $1,000
Credit Cash account $1,000
Being entries to recognize the payment for office supplies.
Pay employee salaries of $1,700 for the current month
Debit Salaries Expense account $1,700
Credit Cash account $1,700
Being entries to recognize the payment of employee's salaries.
Transactions for the Terrapin Company are recorded using debit and credit entries affecting equipment, cash, service revenue, rent expense, supplies, accounts payable, and salaries expense.
Explanation:To record the external transactions for the Terrapin Company, we use debit and credit accounting as follows:
Purchase equipment for cash: Debit Equipment $22,400, Credit Cash $22,400.Provide services and receive cash: Debit Cash $6,000, Credit Service Revenue $6,000.Pay rent for the current month: Debit Rent Expense $1,700, Credit Cash $1,700.Purchase office supplies on account: Debit Supplies $1,000, Credit Accounts Payable $1,000.Pay employee salaries for the current month: Debit Salaries Expense $1,700, Credit Cash $1,700.These journal entries affect various accounts on the balance sheet and income statement, such as assets, liabilities, revenues, and expenses.
Select which option best completes the following statement: In pure Scrum, the team reports to the____________.Select one:
a. Scrum Master
b. No One
c. Project Manager
d. Product Owner
Answer:
The correct answer is B
Explanation:
Scrum is the process or procedure framework, in which the complex knowledge work is managed with the primary focus on the development of the software, though it is used in other fields and slowly started to explore for complex or difficult work, advanced technologies and research.
In the process of pure scrum, the tea, would not report to any person or team as the testers, designers and the developers likely to share the roles with each other.
Final answer:
The team in pure Scrum reports to no one since teams are self-organising, with the Scrum Master facilitating the process and the Product Owner managing the product backlog.
Explanation:
The correct answer to the question is: In pure Scrum, the team reports to no one. This is because in Scrum, traditionally there is no role of a project manager and the teams are considered to be self-organising. The Scrum process emphasizes cross-functionality and collaboration within the team, where decision-making is a shared responsibility. The Scrum Master facilitates the process and addresses impediments but does not act as a manager to whom the team reports. Conversely, the Product Owner is responsible for managing the product backlog and ensuring that the product delivers value, but again, the team does not report to them in the traditional sense.
Sally Ferguson, CFA, is a hedge fund manager. Ferguson utilizes both futures and forward contracts in the fund she manages. Ferguson makes the following statements about futures and forward contracts:
Statement 1: A futures contract is an exchange traded instrument with standardized features.
Statement 2: Forward contracts are marked to market on a daily basis to reduce credit risk to both counterparties.
Are Ferguson's statements correct?
(A) Only one of these statements is correct.
(B) Both statements are correct.
(C) Neither statement is correct.
Answer:
The correct answer is letter "B": Both statements are correct.
Explanation:
A futures contract is a type of forward contract between a buyer and a seller of an asset. They agree to exchange goods and money at a future date but at a price and quantity determined today. Futures contracts are standardized, regulated, and free of counterparty risk. In difference to other forward contracts, futures contracts are traded in secondary markets such as the Chicago Mercantile Exchange and the Intercontinental Exchange.
A forward contract is an agreement to buy and sell an asset at a future date. The price of the asset is fixed at the time the contract is executed. They are similar to a futures contract but forward contracts do not trade in an exchange.
Jennifer, Martin, and Edsel form a limited liability company called Big Apple, LLC, to operate a bar in New York City. Jennifer, Martin, and Edsel are member-managers of the LLC. One of Jennifer’s jobs as a member-manager is to drive the LLC’s truck and pick up certain items of supply for the bar each Wednesday. On the way back to the bar on Wednesday after picking up the supplies for that week, Jennifer negligently runs over a pedestrian, Tilly Tourismo, on a street in Times Square. Tilly is severely injured and sues Big Apple, LLC to recover monetary damages for her injuries. Who is liable? Why?
Answer and explanation:
Big Apple, LLC is liable because in a member-managed LLC each of the members has the same rights and responsibilities with the firm. The accident happened while Jennifer was on duty. Regardless she acted negligently, as part of the LLC, she should not be charged individually but jointly.
Big Apple, LLC could be held liable for Jennifer's actions under vicarious liability as Jennifer was performing her duties at the time of the incident. The corporate shield of an LLC protects individual members from personal liability, but the LLC itself can be held responsible for actions taken by its members within the scope of their business duties.
Liability in Limited Liability Companies:
In the scenario provided, Big Apple, LLC may be held liable for the injuries sustained by Tilly Tourismo due to the negligence of Jennifer, one of its member-managers, while performing her duties for the LLC. This situation is grounded in the legal principle of vicarious liability, where an entity can be held responsible for the actions of its agents or employees conducted within the scope of their employment.
Unlike sole proprietorships or partnerships, where owners could face personal liability for business debts or damages, limited liability companies (LLCs) and corporations offer protection to owners\' personal assets, mitigating personal liability. This is known as the corporate shield. However, corporations and LLCs can still be held accountable for the actions of their agents under the doctrine of respondeat superior.
In conclusion, while Jennifer was acting in the capacity of her duties for the LLC, Big Apple, LLC will likely bear the liability for the accident. However, Jennifer could also face personal liability if it is determined that she acted outside the scope of her employment or if her actions were criminally negligent.
he management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1 $ 58,000 $ 4,000 2 $ 8,000 $ 8,000 3 $ 11,000 4 $ 14,000 5 $ 17,000 6 $ 15,000 7 $ 13,000 8 $ 11,000 9 $ 10,000 10 $ 10,000(1) Determine the payback period of the investment. (2) Would the payback period be affected if the cash inflow in the last year were several times as large?
Answer:
1. 5.8 years
2. No
Explanation:
1. In the payback, we analyze in how many years the invested amount is recovered. The computation is shown below:
In year 0 = $58,000 + $8,000 = $66,000
In year 1 = $4,000
In year 2 = $8,000
In year 3 = $11,000
In year 4 = $14,000
In year 5 = $17,000
In year 6 = $15,000
and so on
If we sum the first 5 year cash inflows than it would be $54,000
Now we deduct the $54,000 from the $66,000 , so the amount would be $12,000 as if we added the sixth year cash inflow so the total amount exceed to the initial investment. So, we deduct it
And, the next year cash inflow is $`15,000
So, the payback period equal to
= 5 years + $12,000 ÷ $15,000
= 5.8 yeas
In 5.8 yeas, the invested amount is recovered.
2, No, it does not affect the last year cash flow as the full amount is recovered in 5.8 years
An analyst is forecasting net income for Excellence Corporation for the next fiscal year. Her low-end estimate of net income is $250,000, and her high-end estimate is $350,000. Prior research allows her to assume that net income follows a continuous uniform distribution. The probability that net income will be greater than or equal to $337,500 is ________. 0.125
Answer:
12.5%
Explanation:
We are estimating the probability to be greater than or equal to $337,500
This probability will be
P(X > $337,500) = (high-end estimate - 337500) / (337500 - low-end estimate)
P(X > $337,500) = (350000-337500) / (350000-250000) = 0.125
= 0.125*100
= 12.5%
Great Skot expects to have cash receipts in June of $532,160. Skot’s cash disbursements in June are $581,720, including an interest payment on a bond issue of $32,000. If Skot wishes to maintain a cash balance of $40,000, how much will Skot have to borrow if it started the month with a cash balance of $52,000?
a.$37,560
b. Surplus of $2,440. Will not have to borrow
c.$5,560
d. Surplus of $34,440. Will not have to borrow
Answer:
a.$37,560
Explanation:
Cash balance $40,000 at month end = Cash balance $52,000 at beginning + cash receipts in June of $532,160 - cash disbursements of $581,720 + New borrowing
⇔ $40,000 = $2,440 + new borrowing
⇔ New borrowing = $40,000 - $2,440 = $37,560
If Skot wishes to maintain a cash balance of $40,000, Skot have to borrow $37,560 if it started the month with a cash balance of $52,000
Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year 19,500 Unit product cost $ 35 Projected annual selling and administrative expenses $ 56,000 Estimated investment required by the company $ 460,000 Desired return on investment (ROI) 20 % The company uses the absorption costing approach to cost-plus pricing. Required: 1. Compute the markup required to achieve the desired ROI. (Round your Required ROI answers to the nearest whole percentage (i.e, 0.1234 should be entered as 12). Round your "Markup Percentage" answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34.)) 2. Compute the selling price per unit. (Round your intermediate and final answers to 2 decimal places. g
Answer:
See below.
Explanation:
First we calculate per units costs,
Per unit product cost = $35
Per unit selling and admin cost = 56000/19500 = $2.87/unit
In order to obtain mark up that earns ROI of 20% we first calculate the ROI in $ terms and divide by the planned production. This will be the per unit profit required to earn the desired ROI.
ROI in $s = 460,000*0.20 = $92,000
ROI required per unit = 92,000/19500 = $4.71/unit
Required Gross profit = (4.71 + 2.87) = $7.58/unit (this covers costs and ROI)
The mark up then,
Selling price = Unit production cost + Required Gross profit
Selling price = 35 + 7.58 = $42.58
Mark up = Gross profit / Cost per unit
Mark up = 7.58/35 = 21.66%
Hope that helps.
On December 31, 2008, Pico acquired $250,000 par value of the outstanding $1,000,000 bonds of its subsidiary, Sico, in the market for $200,000. On that date, Sico had a $100,000 premium on its total bond liability.Which one of the following is the net amount of gain or loss that will be recognized by Pico in its December 31, 2008, consolidated financial statements as a result of its intercompany bonds?A. $25,000B. $50,000C. $75,000D. $150,000
Answer:
C. $75000
Explanation:
Upon consolidation of financial statements all inter-related/company sales/provision for unrealized profits (PUPs) need to be eliminated in full. In this case, there are two important things to focus on,
FIRST, the bonds have been issued at a discount and
SECOND, there is a total $100,000 premium on the bond liability, but because only 25% ($250,000/$1,000,000× 100 = 25%) of the bonds are inter-company, only 25% of the premium is eliminated. Thus, $25,000 of premium and the $50000 of discount totaling $75000 achieved is the total net amount of gain that PICO will recognize in its December 31, 2018 consolidated financial statements.
Paney Company makes calendars. Information on cost per unit is as follows:Direct materials $1.50Direct labor 1.20Variable overhead 0.90Variable marketing expense 0.40Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10.
What is the contribution margin ratio?
a. 50%b. 44%c. 60%d. 40%e. 36%
Answer:
Option C : Contribution Margin Ratio is 60%
Explanation:
Contribution Margin Ratio = (Contribution per Unit ÷ Selling Price per Unit)× 100
where: Contribution per unit = Selling price per unit minus Variable Costs per unit
Per Unit
Selling Price $10.00
Less Variable Costs:
Direct Materials $(1.50)
Direct Labor $(1.20)
Variable Overhead $(0.90)
Variable Marketing $0.40
Contribution $6.00
Contribution Margin Ratio $6.00 ÷$10.00 × 100 = 60%
The board of commissioners of the City of Hartmoore adopted a General Fund budget for the year ending June 30, 2017, that included revenues of $1,432,500, bond proceeds of $427,500, appropriations of $980,000, and operating transfers out of $480,000. If this budget is formally integrated into the accounting records, what journal entry is required at the beginning of the year? If this budget is formally integrated into the accounting records, what later entry is required?
Answer:
See explanation section
Explanation:
Req. A
As the general fund budget is formally integrated, the journal entry at the beginning requires to make the revenue debit and appropriations to be credit. And there must be a balancing figure to integrate the operational transfers.
Debit Revenues $1,432,500
Debit Bond proceeds 427,500
Credit Appropriations $980,000
Credit Operating transfers out 480,000
Credit Fund balance (Balance debit - credit) 400,000
Fund balance is the budgetary amount.
Req. B
At the end of the accounting period, the fund balance needs to be removed by making it debit. Most importantly, as the year wears out, all the budgetary plans will be transferred. Therefore, the journal entry is-
Debit Appropriations $980,000
Debit Operating transfers out 480,000
Credit Fund balance (Req. A) $400,000
Credit Revenues $1,432,500
Credit Bond proceeds 427,500
A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2011. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14,703,109.
Using straight-line amortization, what is the carrying value of the bonds on December 31, 2013?
a. $14,752,673
b. $14,955,466
c. $14,725,375
d. $14,747,642
Answer:
d. $14,747,642
Explanation:
For computing the carrying value of the bonds , first we have to determine the discount amortization for 3 years which are shown below:
= (Issued amount - proceeds from the bonds) ÷ time period × number of years
= ($15,000,000 - $14,703,109) ÷ 20 years × 3 years
= $44,533.80
Now the carrying value would be
= Proceeds from the bonds + discount amortization for 3 years
= $14,703,109 + $44,533.80
= $14,747,642
Test-driven development is an important practice of extreme programming (xp).
a. True
b. False
Final answer:
The statement is true; test-driven development is a cornerstone practice in Extreme Programming (XP), focusing on writing tests before writing the actual code to improve software quality and responsiveness.
Explanation:
The statement is true; test-driven development (TDD) is indeed an important practice of Extreme Programming (XP). Test-driven development is a software development process where test cases are defined and created before the software is developed. The basic steps of TDD involve writing a test for a new feature, running the test to see that it fails (since the feature isn't implemented yet), writing the simplest code that can make the test pass, and then refactoring the code to meet the standards of cleanliness and efficiency.
Extreme Programming is an agile software development methodology that aims to produce higher-quality software and higher quality of life for the development team. It encourages frequent releases in short development cycles, which is intended to improve productivity and introduce checkpoints where new customer requirements can be adopted.
XP practices, including TDD, are built around the goal of improving software quality and responsiveness to changing customer requirements. By integrating TDD into the development process, developers can catch defects early and ensure that each new feature is properly tested before it is integrated into the codebase. This leads to more robust and reliable software.
Kansas farmers sell $1,500 of wheat to food processors. Processors sell $3,500 of flour to bakers. Bakers use the flour to produce $5,500 bread and sell it to consumers. Additionally, U.S. car makers import $17,500 of steel from China and produce cars. $12,500 of cars are sold to Uber and $16,000 of cars are sold to U.S. consumers. What is the GDP of the U.S. in 2018?
Answer:
$17,000
Explanation:
In bread all the raw materials and value addition is domestic hence will be a part of GDP i.e $5500 will be added.
In case of cars irrespective to whom it is sold the value produced domestically will be a part of GDP,
hence,
total value:
= 12500 + 16000
= $28,500
but $17500 is not produced domestically (imported) hence will not be a part of GDP.
Hence,
Added in GDP:
= 28,500 - 17,000
= $11,500 will be added in GDP
Therefore, GDP of the U.S. in 2018:
= $5,500 + $11,500
= $17,000
Rob, Bill, and Steve form Big Company. Rob performs $45,000 of services for his 45 shares of the company. Bill transferred property with a basis of $5,000 for $75,000 of stock (75 shares). Steve contributes cash of $100,000 for his 100 shares. Which of the three must recognize income in the year of the formation?
Answer:
Rob and Bill.
Explanation:
Sandhill Electronics reported the following information at its annual meetings:
The company had cash and marketable securities worth $1,235,455, accounts payables worth $4,159,357, inventory of $7,134,300, accounts receivables of $3,454,000, short-term notes payable worth $1,122,400, and other current assets of $121,455.
What is the company's net working capital?
Answer:
$6,663,453
Explanation:
Cash and marketable securities = $1,235,455
Inventory = $7,134,300
Accounts Receivables = $3,454,000
Other current assets = $121,455
Total Current Assets:
= Cash and marketable securities + Inventory + Accounts Receivables + Other current assets
= $1,235,455 + $7,134,300 + $3,454,000 + $121,455
= $11,945,210
Accounts payable = $4,159,357
Short term notes payable = $1,122,400
Total Current Liabilities:
= Accounts payable + Short term notes payable
= $4,159,357 + $1,122,400
= $5,281,757
Net Working Capital = Total Current Assets - Total Current Liabilities
= $11,945,210 - $5,281,757
= $6,663,453
FarCry Industries, a maker of telecommunications equipment, has 6 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10 thousand bonds. If the common shares are selling for $27 per share, the preferred shares are selling for $15 per share, and the bonds are selling for 119 percent of par ($1,000), what weight should you use for debt in the computation of FarCry's WACC?
Final answer:
To calculate the weight for debt in FarCry's WACC, divide the market value of the bonds by the total market value of the firm's financing sources. The weight for debt is approximately 6.07%.
Explanation:
In computing FarCry's WACC (Weighted Average Cost of Capital), the weight to be used for debt is calculated by dividing the market value of the debt by the total market value of the firm's financing sources. In this case, FarCry has 6 million common shares, 1 million preferred shares, and 10 thousand bonds. To calculate the weight for debt, we need to determine the market value of the bonds, which is calculated by multiplying the number of bonds (10 thousand) by the bond selling price (119% of par) and the par value ($1,000). So the market value of the bonds is $1,000 * 1.19 * 10,000 = $11,900,000. Now, we can calculate the weight for debt by dividing the market value of the bonds by the total market value of the firm's financing sources:
Weight for Debt = Market Value of Bonds / (Market Value of Common Shares + Market Value of Preferred Shares + Market Value of Bonds)
Market Value of Common Shares = Number of Common Shares * Market Price of Common Shares = 6 million * $27 = $162 million
Market Value of Preferred Shares = Number of Preferred Shares * Market
Price of Preferred Shares = 1 million * $15 = $15 million
Market Value of Bonds = $11,900,000
Weight for Debt = $11,900,000 / ($162,000,000 + $15,000,000 + $11,900,000) ≈ 0.0607 or 6.07%
Based on market values, Gubler's Gym has an equity multiplier of 1.56 times. Shareholders require a return of 11.31 percent on the company's stock and a pretax return of 4.94 percent on the company's debt. The company is evaluating a new project that has the same risk as the company itself. The project will generate annual aftertax cash flows of $297,000 per year for 9 years. The tax rate is 40 percent. What is the most the company would be willing to spend today on the project?
The question relates to business finance and requires calculating a new project's maximum initial investment based on cost of capital, expected future cash flows and taxation. We need to use the weighted average cost of capital (WACC) as the discount rate to determine the present value of the project's future after-tax cash flows. The maximum the company should be willing to invest is equal to this present value.
Explanation:The student's question is focused on finding the maximum investment a company should make in a project given certain constraints. To determine this, we can use the concept of the present value of future cash flows to establish a base for the company's potential investment. This requires an understanding of the cost of capital, which in this scenario includes the return required by equity and debt holders, as well as the impact of taxes.
Using the facts given in the question, the cost of equity is 11.31% and the after-tax cost of debt is 4.94% * (1 - 0.4) = 2.964%. Presuming the company is financed by both equity and debt and given the equity multiplier of 1.56, we can infer that the equity to asset ratio is the reciprocal of the equity multiplier, i.e., 1/1.56 = 0.641. Thus, the debt to asset ratio is 1 - 0.641 = 0.359.
We can then calculate the weighted average cost of capital (WACC) = (0.641 * 11.31%) + (0.359 * 2.964%) = 7.8904%. The WACC serves as the discount rate used in the present value calculation of the project's future cash flows. Given the project will generate annual after-tax cash flows of $297,000 per year for 9 years, we can use this cash flow figure, the number of periods, and the calculated discount rate to compute the present value of an annuity, which gives us the maximum amount the company should be willing to spend on the project today.
The formula for the present value of an annuity is PV = CF * [(1 - (1 + r)^-n) / r], where CF is the annual cash flow, r is the discount rate, and n is the number of periods. Substituting in the known values we get: PV = $297,000 * [(1 - (1 + 7.89%)^-9) / 7.89%], which should give us the answer if calculated.
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The following information was reported by Young's Air Cargo Service for 2017: Net fixed assets (beginning of year) $ 1,860,000 Net fixed assets (end of year) 2,280,000 Net operating revenues for the year 3,230,000 Net income for the year 1,600,000 Compute the company's fixed asset turnover ratio for the year. (Round your answer to 2 decimal places.)
Answer:
1.56
Explanation:
Data provided in the question:
Net fixed assets (beginning of year) = $1,860,000
Net fixed assets (end of year) = $2,280,000
Net operating revenues for the year = $3,230,000
Net income for the year = $1,600,000
Now,
company's fixed asset turnover ratio for the year
= Net operating revenues ÷ Average total assets
Also,
Average total assets
= [Net fixed assets (beginning of year) + Net fixed assets (end of year) ] ÷ 2
= [ $1,860,000 + $2,280,000 ] ÷ 2
= $2,070,000
Therefore,
Company's fixed asset turnover ratio for the year
= $3,230,000 ÷ $2,070,000
= 1.56
Which one of the following is not an advantage of "early and continuous delivery of valuable software?a. Working software is a good measure of progress. b. Allows for customer to see software early and provide feedback. c. % Complete is an effective and accurate measure of project completion in large projects. d. Failing early is better than failing late.
Answer:
The correct answer is C
Explanation:
Continuous delivery as well early means that the company is very effective in performing or delivering their projects. In short, means that they ensures that the software or project to be released reliably at any time. And is in state where they could build a good reputation in the market.
Advantage or benefit of the early as well as continuous delivery of the software states the accurate as well as effective measure of the completion of the project.
The statement '% Complete is an effective and accurate measure of project completion in large projects' is not an advantage of early and continuous delivery of software. Agile principles value working software over percentage metrics for project completion.
Explanation:Advantages of Early and Continuous DeliveryThe concept in question refers to the principles of agile software development, where the early and continuous delivery of valuable software is advocated. This approach offers several advantages:
Working software as the primary measure of progress.It allows for the customer to see the software early and provide feedback.Failing early is better than failing late, as it provides a chance to make corrections sooner.The option that is not an advantage is 'c. % Complete is an effective and accurate measure of project completion in large projects.' This statement does not align with the principles of agile software development because percentage complete is not an effective measure compared to working functionality, especially in large projects where complexities make this metric less reliable.