Final answer:
To determine the price you are willing to pay for the bond today, you must calculate the present value of the annual coupon payments for the next 5 years and the present value of the expected sale price in 5 years, all discounted at your required return of 10%.
Explanation:
To price the bond you are considering purchasing today, we'll need to discount the cash flows from the bond (the annual coupon payments and the expected sale price in 5 years) back to the present using your required return of 10%. First, we calculate the present value of the annual coupon payments you would receive for the next 5 years. The bond has a 9% annual coupon on a $1,000 par value, which equals $90 per year. Next, we have to estimate the sale price of the bond in 5 years, assuming that the YTM will then be 7.5%. This is equivalent to finding the present value of the remaining cash flows (15 years of $90 coupons plus the $1,000 par value at maturity) discounted at the new YTM of 7.5%. Finally, we sum the present value of the 5 years' worth of coupon payments and the present value of the price we expect to sell the bond for after 5 years, both discounted at your required return of 10%.
To calculate this precisely requires use of the present value formula for an annuity and a complex calculation for the sale price in 5 years, which is beyond the scope of this explanation but is usually done using financial calculators or spreadsheet software.
Assume the following data for Jones Company for the current fiscal year: Beginning Inventory 10 units at $ 7 each March 18 purchase 15 units at $ 9 each June 10 purchase 20 units at $10 each October 30 purchase 12 units at $11 each On December 31, a physical count reveals 18 units in ending inventory. Under the weighted average method, the cost of ending inventory as reported on the balance sheet would be (rounded answer to the nearest dollar): Select one: a. $170 b. $167 c. $192 d. $142 e. $179
Answer:
a. $170
Explanation:
For computing the ending inventory first we have to determine the average cost per unit which is shown below:
= (Beginning inventory units × price per unit + purchase inventory units × price per unit + purchase inventory units × price per unit + purchase inventory units × price per unit) ÷ (Beginning inventory units + purchase inventory units + purchase inventory units + purchase inventory units)
= (10 units × $7 + 15 units × $9 + 20 units × $10 + 12 units × $11) ÷ (10 units + 15 units + 20 units + 12 units)
= ($70 + $135 + $200 + $132) ÷ (57 units)
= ($537) ÷ (57 units)
= $9.42 per unit
Now the ending inventory is
= $9.42 × 18 units
= $169.56 i.e $170
Tool Manufacturing has an expected EBIT of $95,000 in perpetuity and a tax rate of 21 percent. The firm has $265,000 in outstanding debt at an interest rate of 5.8 percent, and its unlevered cost of capital is 11.7 percent. What is the value of the firm according to M&M Proposition I with taxes? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$697,102.99
Explanation:
VU = EBIT(1 - tC)/RU
EBIT =$95,000
tC=21%
RU=11.7%
Hence
VU = ($95,000)(1 - .21)/.117
VU=($95,000)(0.79)/.117
VU=$75,050/0.117
VU = $641,452.99
The value of the levered firm:
VL = VU + tCD
VU=$641,452.99
tCD=0.21($265,000)
VL = $641,452.99+ .21($265,000)
VL=$641,452.99+$55,650
VL=$697,102.99
Therefore the value of the firm according to M&M Proposition I with taxes is $697,102.99
If a firm applies its overall cost of capital to all its proposed projects, then the divisions within the firm will tend to ______. Group of answer choices receive less funding if they represent the riskiest operations of the firm avoid risky projects so that they will receive more funding become less risky over time based on the projects that are accepted have equal probabilities of receiving funding for their projects propose higher risk projects than if separate discount rates were applied to each project
Answer:
receive less funding if they represent the riskiest operations of the firm
Explanation:
In simple words, the cost of capital is represented as weighted average and its represents the level or return expected by the investors and represents the level of risk of the firm on average. Therefore, managers tends to lift up or down this return depending upon the risk of the potential project to be taken.
Thus, if the average return will be applied for all projects then high risk projects will get less funding and low risk project will get excess funding.
Steady As She Goes Inc. will pay a year-end dividend of $3.40 per share. Investors expect the dividend to grow at a rate of 5% indefinitely.
a. If the stock currently sells for $34.00 per share, what is the expected rate of return on the stock?
b. If the expected rate of return on the stock is 16.5%, what is the stock price?
Answer:
a.
15%
b.
29.57
Explanation:
The price of a stock whose dividends are expected to grow at a constant rate forever can be calculated using the constant growth model of the dividend discount model approach. The DDM values the stock based on the preset value of the expected future dividends from the stock. The price of the stock today under this model is,
P0 = D1 / r - g
Where
P0 = Price of stock
D1 = Future Dividend
r = Expected rate of return
g = Growth rate
a.
As we have the price of the price of the stock, we need to calculate the expected rate of return by extracting the formula.
r = (D1 / P0) + g
As per given data
P0 = Price of stock = $34
D1 = Future Dividend = $3.40
g = Growth rate = 5% = 0.05
Placing Values in the formula
r = ( $3.4 / 34 ) + 0.05
r = 0.15 = 15%
b.
As per given data
D1 = Future Dividend = $3.40
g = Growth rate = 5% = 0.05
r = Expected rate of return = 16.5%
Placing Values in the formula
P0 = D1 / r - g
P0 = $3.40 / (16.5% - 5%)
P0 = $29.57
Robert Company sold inventory to an Australian company for 50,000 Australian dollars on April 1, 20X0 with settlement to be in 60 days. On the same date, Robert entered into a 60-day forward contract to sell 50,000 Australian dollars at a forward rate of $1.164 in order to manage its exposed foreign currency receivable. The forward contract is not designated as a hedge. The spot rates were as follows:
April 1 1 Australian dollar = $1.167
May 31 1 Australian dollar = $1.16
Based on the preceding information, had Robert not used the forward exchange contract, what would have been the foreign currency transaction gain or loss for the year?
a. Gain of $200
b. Gain of $150
c. Loss of $350
d. Loss of $200
Answer:
c. Loss of $350
Explanation:
Sales in terms of AUD 50,000.00
Spot Rate on Apr 01 per AUD 1.1670
Total Payment that is to be received on April 1 = 50,000*1.167 58,350.000
The Spot Rate on May 31 per AUD 1.1600
Total Payment to be received on May 31 = 50,000×1.16 =58,000.0000
Therefore,
Loss Suffered due to payment received after 60 Days in $ = 58,350 - 58,000 350.00
Myles Manufacturing Company's accounting records reflect the following inventories: Dec. 31, 2014 Dec. 31, 2013 Raw materials inventory $620,000 $820,000 Work in process inventory 300,000 220,000 Finished goods inventory 380,000 100,000 During 2014, $900,000 of raw materials were purchased, direct labor costs amounted to $1,000,000, indirect labor costs amounted to $300,000, and manufacturing overhead was $960,000. Based upon the above information, cost of goods sold for the year is: Select one: a. $2,400,000. b. $2,380,000. c. $2,480,000. d. $2,700,000. e. $2,100,000.
Answer:
Myles Manufacturing Company
Cost of Goods Sold = $2,700,000
Explanation:
Cost of Goods Sold:
Beginning Inventory of Raw Materials = $820,000
Purchase of Materials = $900,000
Less closing inventory of Raw Materials = $620,000
Cost of Raw Materials used in production = $1,100,000
Opening WIP = $220,000
Cost of Raw Materials used in production = $1,100,000
Direct Labour = $1,000,000
Manufacturing Overhead = $960,000
Less Closing WIP = $300,000
Cost of Goods Manufactured = $2,980,000
Opening Finished Goods = $100,000
Cost of Goods Manufactured = $2,980,000
Less closing Finished Goods = $380,000
Cost of Goods Sold = $2,700,000
Why should a time allotment for each topic be included on an agenda? a.Setting time allotments ensures that meeting participants can take a break after dealing with each agenda item. b.Restricting the time spent on each issue will prevent participants from getting sidetracked. c.Limiting the amount of time for each topic will result in all topics being covered within the meeting's timeframe.
Answer:
Limiting the amount of time for each topic will result in all topics being covered within the meeting's timeframe.
Explanation:
Time allocation when undertaking a project or a program is one of they key preliminary steps when preparing for an undertaking.
Proper time allocation ensures project success by ensuring all activities are carried out in a timely manner and within the scheduled project time.
In this scenario proper time allocation will result in all topics being covered within the meeting's timeframe.
This saves time used to cover all relevant topics, and also frees up time for the meeting participants to implement resolutions made from the meeting.
Sheridan Company borrows $43,400 on July 1 from the bank by signing a $43,400, 8%, one-year note payable. (a) Prepare the journal entry to record the proceeds of the note. (b) Prepare the journal entry to record accrued interest at December 31, assuming adjusting entries are made only at the end of the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Answer:
Sheridan Company
Journal Entries
Sr. No Particulars Debit Credit
1 Cash $ 43,400
Notes Payable $ 43,400
Sheridan Company borrows $43,400 on July 1 from the bank by signing a $43,400, 8%, one-year note payable.
2 Interest Expense $ 1736
Interest Payable $ 1736
Recorded Interest Accrued for 6 months
Explanation:
Calculation of Interest Payable
$ 43,400 * 8%= 3472
For 6 months = $ 3472/2= $ 1736
Notes Payable is a liability and interest Payable is also a liability .The Notes Payable will be due in one years time that is on 30 th June of the next year. From July to December there are 6 months so interest is calculated for 6 months.
Sheridan records a debit of $43,400 to Cash and a credit of $43,400 to Notes Payable when the note is issued. At the end of the year, Sheridan must also recognize $1,736 of accrued interest with a debit Interest Expense and a credit credit-to-interest payable.
Explanation:The subject deals with the concept of note payable and interest accrual in the field of Accounting. Let's calculate the interest and prepare the journal entries.
Proceeds of the note: When Sheridan borrows money, it will receive cash from the bank and have a note payable (liability). The journal entry to record this transaction will be:Debit: Cash $43,400
Credit: Notes Payable $43,400
Debit: Interest Expense $1,736
Credit: Interest Payable $1,736
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An employee earns $5,950 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The employee has $200 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $168 and contributes $84 to a retirement plan each month. What is the amount the employer should record as payroll taxes expense for the employee for the month of January?
Final answer:
The employer's payroll taxes expense for an employee earning $5,950 per month is $812.18 for January, which includes the employer's contributions to Social Security, Medicare, FUTA, and SUTA.
Explanation:
To calculate the payroll taxes expense the employer should record for the employee for the month of January, we must consider the employer's portion of the FICA taxes, federal unemployment tax (FUTA), and state unemployment tax (SUTA). The employee earns $5,950 per month, and based on the FICA tax rates provided, the employer must pay the same rates for Social Security (6.2%) and Medicare (1.45%) as the employee. For FUTA and SUTA, the rates are 0.6% and 5.4%, respectively, but only on the first $7,000 of an employee’s earnings. Therefore, the employer's payroll tax expense for January can be calculated as follows:
Social Security = 6.2% of $5,950 = $368.90Medicare = 1.45% of $5,950 = $86.28FUTA = 0.6% of $5,950 (Note: FUTA applies to the first $7,000 each year, so if this is the first month, we compute it on the full monthly earnings) = $35.70SUTA = 5.4% of $5,950 (Note: Same condition as for FUTA) = $321.30Adding these values together gives us the total payroll taxes expense for January:
$368.90 (Social Security) + $86.28 (Medicare) + $35.70 (FUTA) + $321.30 (SUTA) = $812.18
The employer should record a payroll taxes expense of $812.18 for the employee for the month of January.
Mondo Snow Removal's cost formula for its vehicle operating cost is $1,060 per month plus $429 per snow-day. For the month of January, the company planned for activity of 11 snow-days, but the actual level of activity was 13 snow-days. The actual vehicle operating cost for the month was $6,310. The activity variance for vehicle operating cost in January would be closest to:
Answer:
Activity variance = $858 unfavorable
Explanation:
The activity variance occurs as result of the difference between the actual level of work (activity) done and the budgeted level of work as planned.
$
Planned budget (1060 + (429× 11)) = 5,779
Flexible budget (1060 + (429 ×13) = 6,637
Activity variance 858 unfavorable
If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will: Question 6 options: tend to look for another job or withdraw from the labor market. accept the job because a wage below the reservation utility is very attractive. seek a larger fringe benefit package. use the job as the basis for a career, assuming that wages will increase beyond the marginal revenue product over time.
Answer:
If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will use the job as the basis for a career.
Explanation:
Reservation Utility or wage for an employee is the minimum level of utility guaranteed by his/her contract of employment before endorsement.
If a prospective employee is not offered his/her reservation utility or reservation wage, it could be because, He/she is an intern.
A skilled skilled professional with years of experience would scarcely experience this issue.
Therefore if an entry level prospective employee or intern is faced with this scenario, he/she could spin it to their advantage by using the job as the basis for a career.
Final answer:
A prospective employee who isn't offered a reservation wage will likely continue the job search or exit the labor market. The reservation wage is the minimum wage a worker will accept, including factors beyond pay. This baseline determines whether a job offer is acceptable or if the search for employment should continue.
Explanation:
If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will tend to look for another job or withdraw from the labor market. A reservation wage is the lowest wage that an unemployed worker would accept for a job, encompassing not just financial compensation but also other job characteristics such as working conditions and opportunities for advancement. The concept is that a potential employee will continue their job search until the offered wage meets or exceeds their reservation wage. This job search process can also be depicted using a reservation wage curve, displaying a negative relationship between the reservation wage and the duration of a person's job search, indicating that as time goes on, the individual might adjust their expectations in accordance with market conditions and personal financial pressures.
Conversely, accepting a job with a wage below one's reservation wage is unlikely as it would mean the worker is settling for less than the minimum they had determined acceptable. The reservation wage becomes a baseline for job acceptance decisions, and a worker is likely to keep looking for better opportunities if offers fall below this threshold.
with practical illustrations, discuss how managers can leverage on organizational behaviour components to maximize business success
Answer:
Through personality, leadership, Communication and culture.
Also, politics and power.
Explanation:
The concept or the behaviour that is known as or refer to as or called " organizational behaviour" can simply be defined as the way of people or workers in a particular company or organization. That is to say the way people behave in a particular organization or company.
Managers can leverage on organizational behaviour components to maximize business success through;
(1). LEADERSHIP: leadership style should go in line with the organization objectives. Leadership styles are different, it might be a style in which the leaders have to coach the workers and build relationships with workers will likely be able to get new ideas or it might be a situation in which the leader gives the directives and the workers just have to obey.
(2). COMMUNICATION: the various ways in which leaders and workers communicate in organizations is also different which include the use of technology in Communication e.g e-mails and the rest which can be used in discussion of matters in the organization. Good Communication in the company leads to more leads.
(3). CULTURE: Organizations culture are the things in which all workers must follow in their day to day interactions. Good organization cultures lead to efficiency.
Your Economics instructor assigns your class to investigate factors associated with the gross domestic product (GDP) of nations. Each student examines a different factor (such as life expectancy, literacy rate, etc.) for a few countries and reports to the class. Apparently some of your classmates do not understand Statistics very well because you know several of their conclusions are incorrect. Explain the mistakes in their statements below: a) "My correlation of -0.772 shows that there is almost no association between GDP and infant mortality rate." b) "There was a correlation of 0.44 between GDP and continent." c) "There was a very strong correlation of 1.22 between life expectancy and GDP." d) "The correlation between literacy rate and GDP was 0.83. This shows that countries wanting to increase their standard of living should invest heavily in education." e) "The correlation of 0.90 means that as GDP goes up, imports drop by 90%."
Several correlations were misinterpreted, either by associating non-numerical categories, ascribing proportions using correlation, extending correlations outside their range, misjudging the strength of correlation, or incorrectly attributing a cause-and-effect relationship.
Explanation:Each of these statements incorrectly applies correlation in a few ways:
Statement a) is incorrect since correlation value from -1 to -0.7 usually signifies a strong negative relationship, or in this case, as GDP increases, infant mortality decreases. Statement b) is incorrect because correlation cannot be applied on categorical variable. A GDP cannot be accurately correlated with a continent because continents are not numerical entities.Statement c) is incorrect as a correlation coefficient can only have values within the range of -1 to +1. Thus, a correlation of 1.22 is invalid.Statement d) though there's a strong correlation, directly implying this is causation and policy prescription may be misleading. Correlation doesn't imply causation.Statement e) is incorrect because correlation only signifies a relationship between two sets of data; it does not signify a proportionate causative effect. A correlation of 0.90 does not mean a 90% decrease in imports with an increase in GDP.Learn more about Correlation Misinterpretation here:
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Sleep Tight, Inc., manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $37,000, $30,000, and $25,000, respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $45,000, $35,000, and $19,000, respectively. Direct materials purchases were $560,000, direct labor was $232,000 for the year, and factory overhead was $147,000. Prepare a cost of goods sold budget for Sleep Tight, Inc.
Answer:
COGS= $932,000
Explanation:
Giving the following information:
Beginning inventory:
Finished goods= $37,000
Work in process= $30,000
Direct materials= $25,000
Ending inventory:
Finished goods= $45,000
Work in process= $35,000
Direct materials= $19,000
Direct materials purchases were $560,000
direct labor was $232,000
factory overhead was $147,000.
First, we need to calculate the cost of goods manufactured:
cost of goods manufactured= beginning WIP + direct materials used + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 30,000 + (25,000 + 560,000 - 19,000) + 232,000 + 147,000 - 35,000
cost of goods manufactured= $940,000
Now, we can calculate the cost of goods sold:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 37,000 + 940,000 - 45,000
COGS= 932,000
The cost of goods sold budget for Sleep Tight, Inc. is calculated by adding the direct materials used, direct labor, and factory overhead to determine the cost of goods manufactured, then adjusting for changes in work in process and finished goods inventories. The COGS for the year is $932,000.
The cost of goods sold (COGS) budget for Sleep Tight, Inc. can be prepared by combining both the costs incurred throughout the year and the changes in inventory levels. To calculate the total COGS, we start with the beginning inventory for each category, add the purchases and production costs, and then subtract the ending inventory.
Cost of Goods Manufactured (COGM)
Direct Materials Used:
Beginning Materials Inventory: $25,000
+ Direct Materials Purchases: $560,000
- Ending Materials Inventory: $19,000
= Direct Materials Used: $566,000
Direct Labor: $232,000
Factory Overhead: $147,000
Total Manufacturing Costs: Direct Materials Used ($566,000) + Direct Labor ($232,000) + Factory Overhead ($147,000) = $945,000
Work in Process:
Beginning WIP Inventory: $30,000
+ Total Manufacturing Costs: $945,000
- Ending WIP Inventory: $35,000
= Total Work in Process: $940,000
Calculated COGS
Beginning Finished Goods Inventory: $37,000
+ Cost of Goods Manufactured: $940,000
- Ending Finished Goods Inventory: $45,000
= Cost of Goods Sold: $932,000
An outside supplier has offered to produce and sell the part to the company for $30.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition to the facts given above, assume that the space used to produce part J56 could be used to make more of one of the company's other products, generating an additional segment margin of $13,000 per year for that product. What would be the impact on the company's overall net operating income of buying part J56 from the outside supplier and using the freed space to make more of the other product
Complete question:
Rama Corporation is presently making part J56 that is used in one of its products. A total of 4,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity:
Direct materials____ $1.80 per unit
Direct labour_______$7.80 per unit
Variable overhead__ $7.90 per unit
Supervisor's salary__$2.30 per unit
Depreciation of special equipment________$6.90 per unit
Allocated general overhead_________$6.60 per unit
An outside supplier has offered to produce and sell the part to the company for $30.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition to the facts given above, assume that the space used to produce part J56 could be used to make more of one of the company's other products, generating an additional segment margin of $13,000 per year for that product.
What would be the impact on the company's overall net operating income of buying part J56 from the outside supplier and using the freed space to make more of the other product
Answer:
The company's net operating income will decline by $31,000 per year, if they buy part J56 from the outside supplier, despite using the freed space to make more of other product.
Explanation:
Given:
Total produced a year = 4000 units
Relevant cost if Rama corporation produces the part internally =
(Direct material) $1.80 + (Direct labour) $7.8 + (Variable overhead) $7.90 + (Supervisor's salary) $2.30 = $ 19.80 per unit.
The total cost of production will be=
$19.80 * 4000
= $79,200
If they buy from the external supplier, the total cost would be=
$30.80 * 4000
= $123,200
Since they would generate $13,000 producing another product using the freed space. The net cost of buying from the supplier will be:
$123,200 - $13,000
= $110,200
The company will make a loss of $31,000 ($79,200 - $110,200) if they buy part J56 from the outside supplier, despite using the freed space to make more of other product.
You have $14,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14 percent and Stock Y with an expected return of 8 percent. Assume your goal is to create a portfolio with an expected return of 11.35 percent. How much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Answer:
Investment in stock x = $7816.67
Investment in stock y = $6183.33
Explanation:
The computation of invest in Stock X and Stock Y is shown below:-
Let the weight be x
x × 14% + (1 - x) ×8%
= 11.35%
0.14x + 0.08 - 0.08x
= 0.1135
0.14x - 0.08x
= 0.1135 - 0.08
0.06x = 0.335
x = 0.335 ÷ 0.06
x = 55.83%
Investment in stock x = x × Stock portfolio
= 55.83% × $14,000
= $7816.67
Investment in stock y = 1 - 0.5583 × $14,000
= $6183.33
Final answer:
To achieve an 11.35% expected return on a $14,000 portfolio, invest $9,945.00 in Stock X (14% return) and $4,055.00 in Stock Y (8% return).
Explanation:
To create a portfolio with an expected return of 11.35 percent using Stock X with a 14 percent return and Stock Y with an 8 percent return, you can use the following allocation method:
Let the amount of money invested in Stock X be $X and in Stock Y be $Y.
We know that X + Y = $14,000 because that is the total investment available.
We want the portfolio's expected return to be 11.35%, so the equation for this is 0.14X + 0.08Y = 0.1135($14,000).
We can then use these two equations to solve for X and Y.
Substituting the total investment into the expected return equation gives us: 0.14X + 0.08(14,000 - X) = 1,591.
Simplify to solve for X: X = ($1,591 - 0.08($14,000)) / (0.14 - 0.08).
Calculate X to find the amount to invest in Stock X: X = $9,945.00 (rounded to two decimal places).
Subtract X from the total investment to find Y: Y = $14,000 - $9,945 = $4,055.00 (rounded to two decimal places).
You would invest $9,945.00 in Stock X and $4,055.00 in Stock Y.
Constant growth: Moriband Corp. paid a dividend of $2.15 yesterday. The company's dividend is expected to grow at a steady rate of 5 percent for the next several years. If stocks of companies like Moriband require a rate of return of 15 percent, what should be the market price of Moribund stock?
Answer:
The market price of moribund stock is $22.58
Explanation:
Let,
Dividend = D0 = $2.15
Growth rate = g = 5%
rate of return = R = 15%
Market price = P0 = D1 ÷ (R - g)
= D0 (1 + g) ÷ (R - g)
= $2.15(1 + 0.05) ÷ 0.15 - 0.05
= $2.15(1.05) ÷ 0.1
= $2.2575 ÷ 0.1
= $22.575
Approximately $22.58
The market price for moribund stock is $22.58
Answer:
$22.6
Explanation:
Dividend Valuation method is used to value the stock price of a company based on the dividend paid, its growth rate and rate of return. The price is calculated by calculating present value of future dividend payment.
As per given data
Dividend = $2.15
Growth rate = 5%
Discount rate = 15%
Formula to calculate the value of stock
Price = Dividend ( 1 + growth rate ) / ( Rate or return - growth rate )
Price = $2.15 ( 1 + 5% ) / ( 15% - 5% )
Price = $2.15 (1.05) / (0.15 - 0.05 )
Price = $2.26 / 0.10
Price = $22.6
Differential Analysis for a Lease or Buy Decision Sloan Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $125,500. The freight and installation costs for the equipment are $1,600. If purchased, annual repairs and maintenance are estimated to be $2,500 per year over the five-year useful life of the equipment. Alternatively, Sloan can lease the equipment from a domestic supplier for $30,000 per year for five years, with no additional costs. Prepare a differential analysis dated December 3 to determine whether Sloan should lease (Alternative 1) or purchase (Alternative 2) the equipment. Hint: This is a "lease or buy" decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner. If an amount is zero, enter "0". Use a minus sign to indicate a loss.
Answer:
Alternative 2 (purchase equipment) should be selected because it reduces costs by $10,400.
Explanation:
Alternative 1 (lease):
less price per year $30,000 x 5 years = $150,000
Alternative 2 (purchase):
initial investment = $125,500 + $1,600 = $127,100
maintenance cost per year = $2,500 x 5 years = $12,500
Differential Analysisalternative 1 alternative 2 differential
lease purchase effect
Revenues $0 $0 $0
Costs:
Purchase price $0 -$125,500 -$125,000
Freight and installation $0 -$1,600 -$1,600
Repair and maintenance $0 -$12,500 -$12,500
(5 years)
Lease -$150,000 $0 $150,000
(5 years)
Income / loss -$150,000 -$139,600 $10,400
Alternative 2 (purchase equipment) should be selected because it reduces costs by $10,400.
The records of Norton, Inc. show the following for July. Standard labor-hours allowed per unit of output 1.2 Standard variable overhead rate per standard direct labor-hour $ 45 Good units produced 60,000 Actual direct labor-hours worked 73,600 Actual total direct labor $ 2,370,000 Direct labor efficiency variance $ 48,000 U Actual variable overhead $ 3,072,000 Required: Compute the direct labor and variable overhead price and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
Answer:
Direct labor rate variance = $162,000 U
Direct labor efficiency variance = $48,000 U
Variable overhead rate variance = $240,000 F
Variable overhead efficiency variance = $72,000 U
Explanation:
As per the data given in the question,
Direct labor efficiency variance = (Standard hour - Actual hour) × Standard rate
-$48,000 = (60,000 * 1.2 - 73,600) × Standard rate
Standard rate = -$48,000 ÷ -1,600
= 30
Direct labor rate variance = (Standard rate × Actual hour - Direct labor)
= (30 × 73,600 - $2,370,000)
= -$162,000
= $162,000 U
Direct labor efficiency variance = $48,000 U
Variable overhead rate variance = (Direct labor hour × Actual hour - actual variable overhead)
= ($45 × 73,600 -$3,072,000)
= $240,000 F
Variable overhead efficiency variance = (72,000 - 73,600) × $45
= $72,000 U
Ron, the manager of a shipping company, introduces a set of communications, activities, and facilities designed to change health-related behaviors in ways that reduce health risks and subsequent medical costs. The program aims at specific health risks, such as high blood pressure, high cholesterol levels, smoking, and obesity. Based on these offerings, Ron has introduced a(n) _____.
Answer:
Employee wellness program
Explanation:
Employee welfare program insurance is a facility that most employers provide for their employee. This program is offered by employers to protect employees from health risks such as downgrade or smoking and drinking. as given in question, Ron is trying to reduce the health risks of his employees through communication. Therefore, we can conclude that Ron has introduced an employee welfare program.Beaver Valley Oil Refinery produces various grades of petroleum products at its refinery operations. All of the following may be considered an initiative undertaken as a part of the company's CSR efforts except a.donating heating fuel to the local community center so that it can host more community events and expand its outreach to the rural populations outside the city limits b.investing funds in equipment to conserve water at all refinery operations c.installing equipment to reduce greenhouse gas emissions at its refinery operations d.providing training to the accounting staff so they better understand FASB requirements for applying accounting standards for financial reporting
Final answer:
Corporate Social Responsibility involves initiatives that benefit society, typically focusing on environmental sustainability and social responsibility.
Explanation:
Corporate Social Responsibility (CSR) is a business model that aims to benefit society through various initiatives. In the context of Beaver Valley Oil Refinery, initiatives such as donating heating fuel to the local community center and providing training to the accounting staff for financial reporting standards would not typically align with traditional CSR efforts, as these activities are not directly related to environmental sustainability or social responsibility.
A properly implemented CSR effort can lead to increase in sales, higher profit margins, increase in productivity, an excellent brand image, stronger customer relationship, increased operational cost saving.
You are an economic consultant and have been contacted by an official from a developing country. She tells you that her country’s economy is currently growing at 2 percent per year. She asks you how long it will take for her country’s economy to double in size; you tell her it will take 35 years. She then asks you what the government can do to shorten the time necessary to double the size of the country’s economy. What should you tell her?
Answer:
Encourage the development of growth-positive institutions.
Explanation:
Base on the scenario been described in the question, when she ask you She then asks you what the government can do to shorten the time necessary to double the size of the country’s economy, the best answer you can give to her is to encourage the development of growth-positive institutions. Because this is what will shorten shorten the time necessary to double the size of the country’s economy.
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports-the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 60 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost Cost Cost per per per Month Course Student $2,900 $280 $1,220 $ 75 $5,000 $2,200 $3,900 $ 44 $ 5 For example, administrative expenses should be $3,900 per month plus $44 per course plus $5 per student. The company's sales should average $900 per student. The company planned to run four courses with a total of 60 students; however, it actually ran four courses with a total of only 54 students. The actual operating results for September appear below: Actual Revenue $51,100 Instructor wages $10,880 Classroom supplies $16,650 Utilities $ 1,930 Campus rent $ 5,000 Insurance $ 2,340 Administrative $ 3,802 expenses
Required:
Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Gourmand Cooking School Flexible Budget Performance Report For the Month Ended September 30 Actual Flexible Results Budget 4 54| Planning Budget Courses Students $ 51,100 | Revenue Expenses: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense Net operating income 10,880 16,650 1,930 5,000 2,340 3,802 40,602 10,498 $
The flexible budget performance report for Gourmand Cooking School shows an unfavorable revenue variance of $2,900, an unfavorable spending variance of $13,806, and an unfavorable activity variance of $2,046.
Explanation:Gourmand Cooking School Flexible Budget Performance ReportThe creation of the performance report comprises calculating expected expenses and revenue based on actual number of courses and enrolled students. Given the cost formulas, the calculated expenses would be:
Instructor wages: $2,900 + ($280 x 4) + ($1,220 x 54) = $10,780Classroom supplies: $75 x 54 = $4,050Utilities: ($5,000 / 60) x 54 = $4,500Campus rent: $2,200 Insurance: $3,900 + ($44 x 4) + ($5 x 54) = $4,266Total expenses predicted: $26,796. Planned revenue was $900 x 60 = $54,000. But actual revenue is $51,100.
Consequently, the variances are:
Revenue Variance: $54,000 - $51,100 = $2,900 (U)Spending variance: $40,602 - $26,796 = $13,806 (U)Activity Variance: $26,796 - $24,750 = $2,046 (U)Learn more about Budget Performance Report here:https://brainly.com/question/31503288
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Unavoidable fixed costs areA.relevant to the decision of whether to discontinue the department.B.irrelevant to the decision of whether to discontinue a product line because they will not differ between alternatives.C.irrelevant to the decision of whether to discontinue a product line because they will differ between alternatives.D.none of the above.
Answer:
Irrelevant to the decision of whether to discontinue the product line because they will not differ between alternatives.
Explanation:
Fixed costs can be defined as expenses that remain constant during a particular period of time, these costs does not change with an increase or reduction in the volume of production. Fixed costs tends to remain the same even when the organisation experiences a massive sale of their products in the market. Example of fixed costs include rent, loan.
Unavoidable fixed costs can be described as the costs incurred by a company during the introduction of the product into the market. This type of cost does not have the tendency to fluctuate when the production process is discontinued.
MC Qu. 54 Maxim manufactures a hamster food product... Maxim manufactures a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $2.20 and total fixed costs are $10,000. The hamster food can be sold as it is for $9.45 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,400 cost. The additional processing will yield 10,000 bags of Premium Green and 3,400 bags of Green Deluxe, which can be sold for $8.45 and $6.45 per bag, respectively. The net advantage (incremental income) of processing Green Health further into Premium Green and Green Deluxe would be:
Answer:
$14,030
Explanation:
The computation of the net advantage of processing is shown below:
In this question we have to compare the sales revenue between two cases
In the first case
Sales revenue is
10,000 bags × $8.45 = $84,500
3,400 bags × $6.45 = $21,930
Total sales = $106,430
Less: additional cost -$2,400
Net sales revenue $104,030
In the second case
The sales revenue is
10,000 bags × $9 = $90,000
Therefore, the incremental income is
= $104,030 - $90,000
= $14,030
Many proposers in the ultimatum game offer half to the responder with whom they are paired. This behavior could be motivated by: Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. a. Fear that an unequal split might be rejected by a fair-minded responder.b. A desire to induce the responder to reject the offer.c. A strong sense of fairness on the part of the proposers.d.Unrestrained greed on the part of the proposers.
Answer: option C is the most correct answer. A strong sense of fairness on the part of the proposers.
Explanation: The ultimatum game is a type of game that is used to experiment the economy, which comprise of two players, which are the proposers and the responder. In this game, the proposer is given a sum of money, which he has to decide the amount which the responder will receive. The proposer will only want to share the amount in equal part, just to be fair to the responder in the game. It's either the responder accepts the money or rejects it.
On January 1, 2021, Harrington, Inc. signed a 10-year noncancelable lease for a heavy duty drill press from Jones Equipment Inc. The lease stipulated annual payments of $260,000 starting at the beginning of the first year, with title passing to Harrington at the expiration of the lease. Harrington treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Harrington uses straight-line amortization for all of its plant assets. Aggregate lease payments were determined to have a present value of $1,668,591, based on implicit interest of 9%. In its 2021 income statement, what amount of amortization expense should Harrington report from this lease transaction
Answer: $126,773.19
Explanation:
First the $260,000 must be subtracted from the present value.
= 1,668,591 - 260,000
= $1,408,591
This was done because the $260,000 was paid in the beginning of the year and has thus reduced the liability.
The amortization expense will therefore be,
= 1,408,591 * 0.09
= $126,773.19
In its 2021 income statement, Harrington should report $126,773.19 as amortization expenses.
As applied to mortgage loans, which of the following statements is FALSE? By increasing the number of payments per year you increase your effective borrowing rate. Advertised rates are annual percentage rates. A spreadsheet uses the periodic interest rate, not the annual percentage rate. You can find a monthly payment by dividing the annual payment by 12.
Answer:
The statement that is false about mortgage loans is Advertised rates are annual percentage rates.
Explanation:
Mortgage loan refers to a loan that uses real estate as collateral to receive cash upfront to be redeemed after the loan repayment is completed. if the loan is not remitted as at when due , the lender lays claim to the real estate property.
By increasing the number of payments per year you increase your effective borrowing rate.
When you use a spreadsheet to calculate your interest rates, it uses the periodic interest rate, not the annual percentage rate.
You can find a monthly payment by dividing the annual payment by 12.
However, advertised interest rate are not the same as your loan's annual percentage rate (APR) because other charges like mortgage insurance, closing costs, discount points and loan origination fees apply.
An American-style option with six months to maturity has a strike price of $42. The underlying stock now sells for $50. The call premium is $14.
a. If the company unexpectedly announces it will pay its first-ever dividend four months from today, you would expect that:
1. the call price would increase.
2. the call price would decrease.
3. the call/put price would not change.
4. the put price would decrease?
b. What is the intrinsic value of the call?
c. What is the time value of the call?
Answer:
(a) The call price would decrease (b) $8 per share (c) $6 per share
Explanation:
Solution:
The Call option is the right to sell a specified security at a specified price on a future date.
(a) The value of call option/ price will decrease
Since after payment of dividend, the market price of share will decrease
Hence, value of call option will decrease
(b)The Intrinsic Value = Market Price - Strike price
= $50 - $42
= $8 per share
(c)The time Value = Option Premium - Intrinsic Value
= 14-8
= $6 per share
Final answer:
The call price is expected to decrease with the announcement of a dividend, while the put price might increase. The call's intrinsic value is $8, and its time value is $6.
Explanation:
The unexpected announcement of a dividend payment by the company can have several effects on option prices:
The call price would likely decrease due to the expected drop in the underlying stock price when the dividend is paid out.The put price might increase as the underlying stock price is expected to drop by the dividend amount on the ex-dividend date.The intrinsic value of the call can be calculated as the current stock price minus the strike price:
Intrinsic Value = Current Stock Price - Strike Price
Intrinsic Value = $50 - $42 = $8
The time value of the call is the difference between the total option premium and the intrinsic value:
Time Value = Call Premium - Intrinsic Value
Time Value = $14 - $8 = $6
Really Great Corporation manufactures industrialminussized landscaping trailers and uses budgeted machineminushours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:Budgeted output units42 comma 400 unitsBudgeted machineminushours10 comma 600 hoursBudgeted variable manufacturing overhead costs for 42 comma 400 units$ 349 comma 800Actual output units produced28 comma 800 unitsActual machineminushours used14 comma 400 hoursActual variable manufacturing overhead costs$ 403 comma 200What is the budgeted variable overhead cost rate per output unit?
Answer:
Allocated overhead per unit= $132 per unit
Explanation:
Giving the following information:
Budgeted machine-hours= 10,600 hours
Budgeted variable manufacturing overhead costs for 42,400 units $349,800
We need to calculate the estimated overhead rate, then allocate overhead to each unit:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 349,800/10,600
Estimated manufacturing overhead rate= $33 per machine hour
Each unit requires:
Machine hour per unit= 42,400/10,600= 4 machine hour
Allocated overhead per unit= 33*4= $132 per unit