Answer:
$680
Explanation:
Using the FIFO method
Closing Stock = [ 360 × $11 ] + [ ( 400 - 360 ) × $10 ]
= $3,960 + $400
= $4,360
Using the LIFO method
Closing Stock = [ 320 × $9 ] + [ ( 400 - 320 ) × $10 ]
= $2,880 + $800
= $3,680
Therefore,
The amount of Phantom Profit
= Closing Stock using the FIFO method - Closing Stock using the LIFO method
= $4,360 - $3,680
= $680
Prepare journal entries to record the following transactions entered into by the Ayayai Corp.: (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
2021
June 1 Received a $12,000, 8%, 1-year note from Dan Gore as full payment on his account.
Nov. 1 Sold merchandise on account to Barlow, Inc., for $16,000, terms 3/10, n/30.
Nov. 5 Barlow, Inc., returned merchandise worth $1,300.
Nov. 9 Received payment in full from Barlow, Inc.
Dec. 31 Accrued interest on Gore's note.
2022
June 1 Dan Gore honored his promissory note by sending the face amount plus interest.
Answer:
note receivables 12,000 debit
accounts receivables 12,000 credit
--to record reception of note from Dan Gore to settle his account--
Accounts receivables 16000 debit
Sales revenues 16.000 credit
--to record sale in account--
sales returns&allowance 1,300 debit
Accounts receivables 1,300 credit
--to record returned goods--
cash 14,259 debit
sales discount 441 debit
Accounts receivable 14,700 credit
--to record payment from Barlow--
cash 12,960 debit
interest revenue 960 credit
note receivable 12,000 credit
--to record collection of promissory note from Dan Gore--
Explanation:
Barlow invoice transactions:
16,000 invoice nominal
- 1,300 returned goods
14,700 amount subject to discount of 3%
- 441 discount as collected within first ten days
14,259 cash proceeds
Dan Gore promissory note:
principal x rate x time
12,000 x 8% per year x 1 year = 960 interest revenue
total 12,000 + 960 = 12,960
This answer provides journal entries to record various transactions entered into by Ayayai Corp, including receiving a note from Dan Gore, selling merchandise on account, receiving payment in full, and honoring the promissory note.
Explanation:June 1: Ayayai Corp receives a $12,000, 8%, 1-year note from Dan Gore as full payment on his account. The journal entry would be:
Notes Receivable $12,000
Accounts Receivable $12,000
Nov. 1: Ayayai Corp sells merchandise on account to Barlow, Inc., for $16,000, terms 3/10, n/30. The journal entry would be:
Accounts Receivable $16,000
Sales Revenue $16,000
Nov. 5: Barlow, Inc., returns merchandise worth $1,300. The journal entry would be:
Sales Returns and Allowances $1,300
Accounts Receivable $1,300
Nov. 9: Ayayai Corp receives payment in full from Barlow, Inc. The journal entry would be:
Cash $15,540 ($16,000 - $460 discount)
Sales Discount $460
Accounts Receivable $16,000
Dec. 31: Ayayai Corp accrues interest on Gore's note. Since it is a 1-year note, the journal entry would be:
Interest Receivable $800 ($12,000 x 8% x (7/12))
Interest Revenue $800
June 1, 2022: Dan Gore honors his promissory note by sending the face amount plus interest. The journal entry would be:
Notes Receivable $13,920 ($12,000 + $1,920
Interest Receivable $1,920
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You just returned from some extensive traveling throughout the Americas. You started your trip with $20,000 in your pocket. You spent 3.1 million pesos while in Chile and 548,200 pesos in Colombia. Then on the way home, you spent 47,500 pesos in Mexico. Assume the exchanges rates you encountered were $1 = Ps562 in Chile; $1 = Ps1,928 in Colombia; and $.0767 = Ps1 in Mexico. How many dollars did you have left by the time you returned to the U.S.?
Answer:
$10,556.40
Explanation:
The computation is shown below:
= Pocket money - Chile expenses - Colombia expenses - Mexico expenses
where,
Pocket money = $20,000
Chile expense = 3,100,000 × $1 ÷ 562 = $5,516.01
Colombia expense = 548,200 × $1 ÷ 1,928 = $284.34
Mexico expense = 47,500 × $0.767 ÷ 1 = $3,643.25
Now put these values to the above formula
So, the value would be equal to
= $20,000 - $5,516.01 - $284.34 - $3,643.25
= $10,556.40
Kaila Company's financial statements show a net income of $567,000 in 2019. The following items also appear on Kaila's balance sheet: Depreciation expense $120,000 Accounts receivable decrease 36,000 Inventory increase 84,000 Accounts payable increase 24,000
Using the indirect method, what is Tu's net cash flow from operating activities in 2019?
Answer:
$663,000
Explanation:
Using the indirect method Kaila Company's financial statements
Cash flows from operating activities Amount in $
Net income 567,000.00
Depreciation expense 120,000.00
Decrease in account receivables 36,000.00
Increase in inventory (84,000.00)
Increase in account payable 24,000.00
Net cash flow from operating activities 663,000.00
Depreciation expense is added back as it was deducted from the computation of net income. it is a non cash item hence the addition back. A decrease in current asset represents and inflow of cash while an increase represents an outflow of cash hence, the treatment given to Decrease in account receivables and increase in inventory. An increase in a current liability represents an inflow of cash hence the treatment of Increase in account payable above.
Net cash flow from operating activities is $663,000
A constant cost, perfectly competitive market is in long-run equilibrium. At present, there are1,000 firms each producing 400 units of output. The price of the good is $60. Now suppose there isa sudden increase in demand for the industryʹs product which causes the price of the good to riseto $64. In the new long-run equilibrium, how will the average total cost of producing the goodcompare to what it was before the price of the good rose?
A) The average total cost will be higher than it was before the price increase because ofdiseconomies of scale arising from the increased demand.
B) The average total cost will be lower than it was before the price increase because ofeconomies of scale.
C) The average total cost will be the same as it was before the price increase.
D) The average total cost will be higher than it was before the price increase since the increase indemand will drive up input prices.
Answer:
The correct answer is option A.
Explanation:
Diseconomies of scale refers to the situation when the average cost of production increases with the scale of production.
In a constant perfectly competitive market that is operating at long run equilibrium, the price is $60. Each firm is producing 400 units of output.
Since the firms are in long run equilibrium, the price will be equal to the average total cost.
Now, with an increase in the demand for the product the price increases to $64.
The individual demand curve of the firms will move upwards. This will cause the average total cost to increase as well. The new ATC will be $64.
This happens because of diseconomies of scale involved in the increasing the volume if output after a certain point.
Capitalism is a social system within which individuals are free to exchange with one another on the basis of clear and stable "rules of the game." An important role for those rules is to help avoid injustice which occurs when people are treated unfairly. According to Paul Heyne, the rules-maker should____________.
Answer:
According to Paul Heyne, the rules- maker should take into account individual needs to make a more just society.
Explanation:
Capitalism is based mainly on the fact that the actions of the State are minimized, for which Paul Hayne passed his theory that if the basic needs of individuals are met and society becomes more just.
Which of the following statements about the Phonemic Chart for English is incorrect? Select one:
a. Each symbol represents an individual sound of the language irrespective of the way it appears in the standard written script.
b. The phonemic chart provides a set of symbols, each one intended to represent an individual sound of the language
c. There is always a correspondence between the number of letters and number of sounds
d. There are a few different phonemic charts for English
There are a few different phonemic charts for English is the following statements about the Phonemic Chart for English is incorrect.
d. There are a few different phonemic charts for English
Explanation:
The 'phonemic chart' is a lot of images that speak to every one of the sounds in communicating in English. The phonemic graph is likewise valuable for rehearsing elocution since it empowers you to imagine the individual sounds you are experiencing difficulty inside English and practice those sounds precisely.
There are 44 Phonemes in English. In spite of there being only 26 letters in the English language, there are roughly 44 one of a kind sounds, otherwise called phonemes.
The 44 sounds help recognize a single word or significance from another. Different letters and letter mixes are known as graphemes are utilized to speak to the sounds.
Answer:
C
Explanation:
On January 1, 2017, Garzon purchased 6% bonds issued by PBS Utilities at a cost of $40,000, which is their par value. The bonds pay interest semiannually on July 1 and January 1. For 2017, prepare entries to record Garzon's July 1 receipt of interest and its December 31 year-end interest accrual. (Do not round your intermediate calculations.)
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Burnett Corp. pays a constant $8.75 dividend on its stock. The company will maintain this dividend for the next 10 years and will then cease paying dividends forever. If the required return on this stock is 12 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Final answer:
The current share price calculation for Burnett Corp. involves discounting the promised $8.75 dividends over 10 years at a required return rate of 12 percent, using the present value formula for an annuity.
Explanation:
The student's question involves calculating the current share price of Burnett Corp., which pays a constant dividend and has a finite dividend-paying period. To find the share price, we must discount the stream of $8.75 dividends that will be received over the next 10 years back to present value terms using the required return rate of 12 percent. This is a typical problem encountered in finance and investment courses and involves the use of the present value formula for a finite annuity.
Dividends are a way for companies to share profits with shareholders, and the amount a shareholder receives is proportional to the number of shares owned. As noted, stable companies, like utility firms and well-known brands, often provide dividends as a way to return value to shareholders. The historic trends show a shift from higher dividends in the past to a focus on capital gains in more recent times.
Learning curve theory states that as the quantity of a product produced________ , the man-hours per unit expended producing the product_________-
Answer:
Learning curve theory states that as the quantity of a product produced increase , the man-hours per unit expended producing the product decrease.
Explanation:
The learning curve states that if a person performs similar task again and again, then after a period of time there will be an improvement in his/her performance.
It is calculated using following formula.
Y = ax^b
.
Y = cumulative average time per unit or batch.
a = time taken to produce initial quantity.
X = the cumulative units of production or, if in batches, the
cumulative number of batches.
b = the learning index or coefficient, which is calculated as:
log learning curve percentage ÷ log 2. So b for an
90 per cent curve would be log 0.9 ÷ log 2 = – 0.152
Which would likely require a cost development using reproduction cost?
A. Condominium
B. Historic landmark
C. Manufactured dwelling
D. Modern retail building
Answer: Option C
Explanation: Manufactured dwelling implies a trailer, a camper van or perhaps an engineered residence. It relates to a formation, portable in one or maybe more parts, that is built on a continuous frame and, when linked to the necessary services, is intended to be used even without a perpetual structure.
In simple words, Manufactured accommodation (usually referred to as U.S. mobile homes) is a form of precast concrete accommodation that is primarily constructed in manufacturing plants and then transferred to use locations. Thus, from the above we can conclude that the correct option is C.
Suppose selected comparative statement data for the giant bookseller Barnes & Noble are presented here. All balance sheet data are as of the end of the fiscal year (in millions).
2017
2016
Net sales $5,121.8 $5,286.7
Cost of goods sold 3,540.6 3,679.8
Net income 75.9 135.8
Accounts receivable 81 107.1
Inventory 1,203.5 1,358.2
Total assets 2,993.9 3,249.8
Total common stockholders’ equity 921.6 1,074.7
Compute the following ratios for 2017. (Round asset turnover to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 2.5%)
(a) Profit margin
Entry field with correct answer
%
(b) Asset turnover
Entry field with incorrect answer
times
(c) Return on assets
Entry field with correct answer
%
(d) Return on common stockholders’ equity
Entry field with incorrect answer
%
(e) Gross profit rate
Entry field with correct answer
%
Answer: a) 1.48%
B) 1.64%
C) 0.024%
D)0.08 times
E) $1,581.2
Explanation:
GLOBE researchers identified six cultural dimensions that were determined to be applicable across all global cultures for assessing culturally endorsed implicit theories of leadership (CLTs). Which of the following reflects the degree to which managers involve others in making and implementing decisions?
a. team-oriented leadership
b. participative leadership
c. autonomous leadership
d. humane-oriented leadership
Answer:
The correct answer is (B)
Explanation:
In participative leadership managers usually involve employees in making and implementing various decisions. Participative leadership is a type of democracy which help managers and employees to work together to achieve a common goal. Managers usually ask employees to join them in decision making and everybody is free to speak and suggest different measures. Although, very few managers use a participative leadership style.
According to the Uniform Securities Act, there is an exemption from registration for investment advisers who solely service institutional investors. Institutional investors are defined as___________.
Answer:
Institutional investors are those who have been designated as such by the rule or order of the state Administrator
Explanation:
An institutional investor refers to a non-bank entity or company that exchanges investments in sufficiently large numbers of shares or dollars to qualify for favorable treatment and reduced compensation.
An institutional investor is indeed an entity which works in its stakeholders ' interest. Institutional investors encounter lower regulations for security since they are considered to be much more experienced and ideally able to support themselves.
Institutional investors gets the tools and technical knowledge rarely available to small investors for thorough research into a range of investment choices.
#1 Your retirement portfolio comprises 200 shares of the S&P 500 fund (SPY) and 100 shares of iShares Barclays Aggregate Bond Fund (AGG). The price of SPY is $134 and that of AGG is $110. If you expect the return on SPY to be 10% in the next year and the return on AGG to be 8%, what is the expected return for your retirement portfolio?
Answer:
Explanation:
Expected return of portfolio is weighted average return of the components of portfolio.
Total portfolio = (200 * $134) + (100 * $110) = $37,800
Weight of S&P 500 = 26,800/37,800 = 70.90%
Weight of AGG = 11,000/37,800 = 29.10%
Expected return = (70.90% * 10%) + (29.10% * 8%) = 9.42%
A lumber mill bought a shipment of logs for $58,000. When cut, the logs produced a million board feet of lumber in the following grades. Compute the cost to be allocated to Type 1 and Type 2 lumber, respectively, if the value basis is used. (Do not round your intermediate calculations.) Type 1 - 400,000 bd. ft. priced to sell at $0.12 per bd. ft. Type 2 - 400,000 bd. ft. priced to sell at $0.06 per bd. ft. Type 3 - 200,000 bd. ft. priced to sell at $0.04 per bd. ft.
a. $58,000; $24,000.
b. $34,800; $17,400.
c. $10,944;$5,800.
d. $24,000; $8,000.
e. $16,000; $16,000.
Answer:
b. $34,800; $17,400.
Explanation:
The computation of the allocation cost is shown below:
For type 1:
= 400,000 × $0.12 per bd.ft
= $48,000
For type 2
= 400,000 × $0.06 per bd.ft
= $24,000
For type 2
= 200,000 × $0. p04er bd.ft
= $8,000
The For type 1
= $48,000 ÷ $80,000 × $58,000
= $34,800 would be
= $48,000 +$24,000 + $8,00
= $80,000
Now the allocation cost would be
For type 1
= Type 1 cost ÷ Total cost × shipment cost
= $48,000 ÷ $80,000 × $58,000
= $34,800
For type 2
= Type 2 cost ÷ Total cost × shipment cost
= $24,000 ÷ $80,000 × $58,000
= $17,400
Which Texas regulatory board, established in 1891, is considered one of the most powerful state regulatory bodies in the United States because of its powers over the petroleum industry?
Answer:
The Texas Railway Commission
Explanation:
The Texas Railway Commission is an agency of the state of Texas. Headquartered in Austin, William B. Travis State Office Building. In Texas, the commission regulates the oil industry, the liquefied petroleum gas industry, coal mining and uranium mining. It had been supervising the railways until October 1, 2005, which was undertaken by the Texas Department of Transportation. It is the oldest regulator in the United States, established in 1891 according to the Texas State Legislative Council. From 1930, he established the international oil price until he was displaced by the Organization of Petroleum Exporting Countries (OPEC) in 1973. In 1984, the federal government gained competence in transportation and regulation of railways, trucks and buses, but continued to be called the Texas Railway Commission. With an annual budget of $ 79 million, its management focuses entirely on oil, gas, mining, LPG, oil and gas pipelines.
Which of the following statements is NOT true regarding the requirements and objectives associated with an Integrated Baseline Review (IBR)?
A. The IBR identifies the risks associated with executing to the current Performance Measurement Baseline and integrated master schedule.
B. Subsequent IBRs may be required whenever an established Performance Measurement Baseline (PMB) is unachievable and a new PMB is required.
C. The IBR is conducted exclusively by the Government and contractor business management staff and technical staff are rarely included.
D. The IBR assesses the validity of the Performance Measurement Baseline (PMB) and the Integrated Master Schedule (IMS).
E. Participants in an IBR typically include the Government PM and technical staff, along with the related contractor's staff.
Answer:
D
Explanation:
The other options are true regarding the requirements and objectives associated with IBR
Statement C is not true concerning the Integrated Baseline Review (IBR). Despite government and contractor business management personnel's involvement, technical staff are not uncommon in the IBR process. They have a critical role in reviewing the project's technical objectives. The correct option is C.
Explanation:The statement C is NOT true regarding the requirements and objectives associated with an Integrated Baseline Review (IBR). The IBR process is not conducted exclusively by the Government and contractor business management staff.
Instead, it also includes technical staff—who are critical in reviewing the technical objectives of the project. Whilst statements A, B, D, and E are indeed true regarding the objectives and requirements of an IBR. A well-run IBR consists of individuals from various roles, including the Government PM and technical staff, and the related contractor's staff.
This dispersion of responsibility is essential to effectively monitor risks, validate baselines, and ensure baseline achievability. Therefore, technical staff play a crucial role in the IBR process and are not rarely included. The correct option is C.
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A bank's assets consist of $1,000,000 in total reserves, $2,100,000 in loans, and a building worth $1,200,000. Its liabilities and capital consist of $3,000,000 in demand deposits and $1,300,000 in capital. Refer to Exhibit 17-2. If the bank is required to keep reserves equal to one-third of deposits, what is the level of the bank's excess reserves? How much could it loan out as a result?
a. $700,000; $2,100,000
b. $300,000; $900,000
c. zero; zero
d. $300,000; $300,000
Answer:
Option (c) zero ; zero
Explanation:
Data provided in the question:
Bank's assets in total reserve = $1,000,000
Loans = $2,100,000
Building worth = $1,200,000
Demand deposits = $3,000,000
Capital = $1,300,000
Required reserves = one-third of deposits
Now,
Required reserves = one-third of $3,000,000
or
Required reserves = $3,000,000 ÷ 3
= $1,000,000
Thus, excess reserves = Total reserve - Required reserves
= $1,000,000 - $1,000,000
= $0 i.e zero
also,
Amount bank could loan = Amount of excess reserve
= zero
Hence,
Option (c) zero ; zero
n January 1, 2018, Waller Sales issued $ 20 comma 000 in bonds for $ 18 comma 300. These are eightminusyear bonds with a stated rate of 12%, and pay semiannual interest. Waller Sales uses the straightminusline method to amortize the bond discount. After the second interest payment on December 31, 2018, what is the bond carrying amount?
Answer:
$18,106.25
Explanation:
For computing the carrying value of the bonds , first we have to determine the discount amortization for 8 years which are shown below:
= (Issued amount - proceeds from the bonds) ÷ time period
= ($20,000 - $18,300) ÷ 8 years × 2 years
= $106.25
Now the carrying value would be
= Proceeds from the bonds + discount amortization for 8 years
= $18,000 + $106.25
= $18,106.25
Since the time period is 8 which are paid in semi-annual so we double the time period
An employee earns $5,750 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 earned 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 $192 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $160 and contributes $80 to a retirement plan each month. What is the amount of net pay for the employee for the month of January? (Round your intermediate calculations to two decimal places.)
(A) $4,832.12
(B) $4,878.12
(C) $4,567.62
(D) $4,961.50
(E) $4,521.62
Answer:
Option (B) is correct.
Explanation:
Net Pay for the employee:
= Wages Per Month - Federal Income Taxes Withheld - FICA Social Security - FICA Medicare - Health Insurance - Health Insurance
= $5,750 - $192 - $356.5 - $83.38 - $160 - $80
= $4,878.12
Therefore, the amount of net pay for the employee for the month of January is $4,878.12.
A stock has a beta of 1.4, an expected return of 17.2 percent, and lies on the security market line. A risk-free asset is yielding 3.2 percent. You want to create a portfolio that is comprised of the stock and the risk free and will have a portfolio beta of 0.6. What is the expected return on this portfolio?
Answer:
the portfolio's return will be Ep(r)= 9.2 %
Explanation:
if the stock lies on the security market line , then the expected return will be
Ep(r) = rf + β*( E(M)- rf)
where
Ep(r) = expected return of the portfolio
rf= risk free return
E(M) = expected return of the market
β = portfolio's beta
then
Ep(r) = rf + β*( E(M)- rf)
E(M) = (Ep(r) - rf ) / β + rf
replacing values
E(M) = (Ep(r) - rf ) / β + rf
E(M) = ( 17.2% - 3.2%) /1.4 + 3.2% = 13.2%
since the stock and the risk free asset belongs to the security market line , a combination of both will also lie in this line, then the previous equation of expected return also applies.
Thus for a portfolio of β=0.6
Ep(r) = rf + β*( E(M)- rf) = 3.2% + 0.6*(13.2%-3.2%) = 9.2 %
Ep(r)= 9.2 %
At a ________ interest rate people would hold more funds in cash since the opportunity cost of having cash is low..
Answer:
low
Explanation:
The opportunity cost of having cash is the amount that we can earn from the interest of the deposited funds. If the interest rate is low, the earning from depositing money will not enough to buy goods that more expensive in the future due to inflation. Thus, it is better to hold cash to buy things at present when the prices have not gone up yet.
The balance sheet below reflects Zee Bank after its purchase of $65 million in government securities from the Fed. Assume a required reserve ratio of 10%, that banks hold no excess reserves, and that all currency is deposited into the banking system.
Assets Liabilites and net worth Reserves $15 million Liabilities: Checking Deposits $150 million Loans $275 million Net Worth $205 Treasuries $65 million
How did the purchase of $65 million in government securities from the Fed affect the money supply? Choose one:
A. The money supply increased by $65 million.
B. The money supply increased by $650 million.
C. The money supply decreased by $650 million.
D. The money supply decreased by $65 million.
Answer:
Option (C) is correct.
Explanation:
The money multiplier = 1 ÷ reserve ratio
= 1 ÷ 0.1
= 10
If a bank purchases $65 million of government securities from the Fed then this will reduce the money supply in the economy because the money from the bank is going.
The decrease in money supply:
= purchase amount × money multiplier
= 65 × 10
= 650 million
Jay has a tax basis of $26,000 in his partnership interest at the beginning of the partnership tax year. The following amounts of partnership debt were allocated to Jay and are included in his beginning-of-the-year tax basis: (1) recourse debt—$15,000, (2) qualified nonrecourse debt—$3,000, and (3) nonrecourse debt—$1,700. There were no changes to the debt allocated to Jay during the tax year. If Jay is allocated a $29,000 loss for the current year, how much of the loss will be suspended under the tax basis and at-risk limitations?
Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
NewLinePhone Corp. is very risky, with a beta equal to 2.8 and a standard deviation of returns of 32%. The risk-free rate of return is 3% and the return on the market is 11%. NewLinePhone's marginal tax rate is 35%. Use the capital asset pricing model to estimate NewLinePhone's cost of retained earnings. 19.7% 23.9% 22.1% 25.4%
Answer:
Risk-free rate (Rf) = 3%
Market return (Rm) = 11%
Beta (β) = 2.8
Ke = Rf +β(Rm - Rf)
Ke = 3 + 2.8(11 - 3)
Ke = 3 + 2.8(8)
Ke = 3 + 22.4
Ke = 25.4%
Explanation:
Cost of retained earnings is a function of risk-free rate plus beta multiplied by risk-premium. Risk premium is the difference between market return and risk-free rate,
To estimate NewLinePhone Corp.'s cost of retained earnings using the capital asset pricing model (CAPM), we can use the formula: Cost of Retained Earnings = Risk-Free Rate + Beta x (Market Return - Risk-Free Rate). Given the provided values, the cost of retained earnings for NewLinePhone Corp. is estimated to be 25.4%.
Explanation:To estimate NewLinePhone Corp.'s cost of retained earnings using the capital asset pricing model (CAPM), we can use the formula:
Cost of Retained Earnings = Risk-Free Rate + Beta x (Market Return - Risk-Free Rate)
Given that NewLinePhone Corp. has a beta of 2.8, a risk-free rate of return of 3%, and a market return of 11%, we can plug in the values:
Cost of Retained Earnings = 0.03 + 2.8 x (0.11 - 0.03) = 0.03 + 2.8 x 0.08 = 0.03 + 0.224 = 0.254 or 25.4%
Onshore Bank has $20 million in assets with risk-adjusted assets of $10 million. CET1 capital is $500,000, additional Tier I capital is $50,000, and Tier II capital is $400,000. How will each of the following transactions affect the value of the CET1, Tier I, and total capital ratios? What will the new values of each ratio be? Saunders, Anthony. Financial Institutions Management: A Risk Management Approach (p. 649). McGraw-Hill Higher Education. Kindle Edition.
Explanation:
The current value of the Tier I ratio is 5 percent and the total ratio is 9 percent.
a. The bank repurchases $100,000 of common stock with cash.
The capital of tier one now becomes $500,000-$100,000=$400,000 and total capital of the bank decreases to $400,000+$400,000 = $800,000 (the sum of the two tiers' capital). The Tier I ratio decreases to [tex] (400,000/10,000,000)*100 [tex]= 4 percent and the total capital ratio decreases to[tex] (800,000/10,000,000)*100 [tex]= 8 percent.
b. The bank issues $2,000,000 of CDs and uses the proceeds to issue mortgage loans.
The risk weight for mortgages is 50 percent. Thus, risk-weighted assets increase to $10 million + $2 million (.5) = $11 million. The Tier I ratio decreases to $500,000/$11 million = 4.54 percent and the total capital ratio decreases to 8.18 percent.
c. The bank receives $500,000 in deposits and invests them in T-bills.
T-bills have a 0 risk weight so risk-weighted assets remain unchanged. Thus, both ratios remain unchanged.
d. The bank issues $800,000 in common stock and lends it to help finance a new shopping mall. The developer has an A- credit rating.
Tier I equity increases to $1.3 million and total capital increases to $1.7 million. Since the developer has an A- credit rating, the loan’s risk weight is 50 percent. Thus, risk-weighted assets increase to $10 million + $800,000 (.5) = $10.4 million. The Tier I ratio increases to $1.3m/$10.4m = 12.50 percent and the total capital ratio increases to 16.35 percent.
e. The bank issues $1,000,000 in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds.
Tier I capital is unchanged. Total capital increases to $1.9 million. General obligation municipal bonds fall into the 20 percent risk category. So, risk-weighted assets increase to $10 million + $1 million (.2) = $10.2 million. Thus, the Tier I ratio decreases to $500,000/$10.2 million = 4.90 percent and the total capital ratio decreases to 18.63 percent.
f. Homeowners pay back $4,000,000 of mortgages, and the bank uses the proceeds to build new ATMs.
The mortgage loans were Category 3 (50%) risk weighted. The ATMs are Category 4 (100%) risk weighted. Thus, risk-weighted assets increase to $10 million - $4 million (.5) + $1 million (1.0) = $12 million. The Tier I capital ratio decreases to $500,000/$12 million = 4.17 percent and the total capital ratio decreases to 7.50 percent.
Farrah owns 5,000 shares of stock in DAS, Inc. with a market value of $15,000. DAS declares a 20% stock dividend. After the dividend is paid, Farrah owns :
a. 5,000 shares with a market value of $18,000.
b. 6,000 shares with a market value of $15,000.
c. 6,000 shares with a market value of $18,000.
d. 5,100 shares with a market value of $15,300.
Answer:
Number of shares own will be 6000 and market value will be $15000
So option (b) will be the correct option
Explanation:
We have given that Farrah owns 5000 shares with a market value of $15000
Now it is declare that dividend = 20 % stock dividend
Now after the dividend paid number of shares own by Farrah [tex]=5000\times 1.2=6000[/tex]
As the dividend has only effect on number of shares own so the market value will be the same as $15000
So number of shares own will be 6000 and market value will be $15000
So option (b) will be the correct option
What is the point of difference between illegal gratuity and bribery scheme?a. Illegal gratuities are made before deals are approved.b. Compared to illegal gratuities, briberies occur relatively infrequently and are usually quite small.c. Illegal gratuities usually involve the use of actual or threatened force, fear, or economic duress.d. Illegal gratuities do not necessarily involve an intent to influence a business decision but rather to reward someone for making a favorable decision.
Answer:
d. Illegal gratuities do not necessarily involve an intent to influence a business decision but rather to reward someone for making a favorable decision.
Explanation:
Bribery schemes are used in order to directly influence a business decision making by offering money or other benefits; bribes may be accompanied by the use of actual or threatened force, fear, or economic duress. Illegal gratuities do not necessarily involve that influence intent and can, sometimes, be dished out aiming to reward a person or company for a favorable decision.
Therefore, the answer is alternative d.
Spending on the structures, equipment, and software that provide the industrial capacity to produce goods and services for all sectors of the economy is called ___.
Answer:
Investment Spending
Explanation:
Investment spending are expenditures on equipment that are used to create or produce more goods and services. Investment spending are also capital intensive, and sometimes called capital consumption.
At December 31, 2017 Crane Company had 290000 shares of common stock and 9000 shares of 5%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2017 or 2018. On January 30, 2019, prior to the issuance of its financial statements for the year ended December 31, 2018, Crane declared a 100% stock dividend on its common stock. Net income for 2018 was $1130000. In its 2018 financial statements, Crane's 2018 earnings per common share should be (rounded to the nearest penny)
Answer:
$1.87 per share
Explanation:
The formula to compute the earning per share is shown below:
Earning per share = (Net income - preference dividend) ÷ (Number of shares)
where,
Preference dividend would be
= Number of shares × par value per share × dividend rate
= 9,000 shares × $100 × 5%
= $45,000
And, the number of shares would be
= 290,000 + 290,000
= 580,000 shares
we take 290,000 shares again because of 100% stock dividend declared
And, the net income is $1,130,000
Now put these values to the above formula
So, the value would be equal to
= ($1,130,000 - $45,000) ÷ (580,000 shares)
= $1.87 per share