A firm must choose from six capital budgeting proposals outlined below. The firm is subject to capital rationing and has a capital budget of​ $1,000,000; the​ firm's cost of capital is 15 percent. Please show the work.

Project Initial Investment IRR NPV
1 $200,000 19% $100,000
2 400,000 17 20,000
3 250,000 16 60,000
4 200,000 12 -5,000
5 150,000 20 50,000
6 400,000 15 150,000

Using the internal rate of return approach to ranking projects, which projects should the firm accept?

Using the net present value approach to ranking projects, which projects should the firm accept?

Answer:

On IRR basis projects 1, 2, 3, and 5 will be selected.

On NPV basis projects 1, 3, 5,  and 6 will be selected.

Explanation:

The firm will accept or choose all the project that has a higher or equal internal rate of interest than cost of capital. However, in the given case project 4 has a lower internal rate of interest (12 percent) than the cost of capital. Thus, projects 1, 2, 3, and 5 will be chosen by the firm. While the firm has budget constraints so it will have no money for projects 4 and 6.

The firm will select all the projects with positive NPV when there is no budget constraint. But in case of budget constraint, the firm will select the project that has high NPV. Thus, Project 1, 6, 3, and 5 will be selected and there will be no money left for projects 2 and 4.

Park Corporation is planning to issue bonds with a face value of $750,000 and a coupon rate of 7.5 percent. The bonds mature in 4 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and also uses a discount account. Assume an annual market rate of interest of 8.5 percent.
Required:
1. Provide the journal entry to record the issuance of the bonds.
2. Provide the journal entry to record the interest payment on June 30 and December 31 of this year.
3. What bonds payable amount will Claire report on this year's December 31 balance sheet?

A food worker reheats fried rice

Bolster Foods’ (BF) balance sheet shows a total of $25 million long-term debt with a coupon rate of 8.50%. The yield to maturity on this debt is 8.00%, and the debt has a total current market value of $27 million. The balance sheet also shows that the company has 10 million shares of stock, and the stock has a book value per share of $5.00. The current stock price is $20.00 per share, and stockholders' required rate of return, rs, is 12.25%. The company recently decided that its target capital structure should have 35% debt, with the balance being common equity. The tax rate is 40%. Calculate WACCs based on book, market, and target capital structures. What is the sum of these three WACCs?

The office product division in Hyacinth Company reported $11,250 net operating income with $75,000 average operating assets this year. The office product division has a new investment opportunity that would increase net operating income by $4,375 with $35,000 additional investment.
1. Which of the following statements is TRUE given that the company's minimum required rate of return is 10%?
Multiple Choice:
O Regardless of whether the division is evaluated on the basis of ROI or Residual income, the manager will not accept the new investment because it is bad for the company.
O If the division is evaluated on the basis of Residual income, the manager of the office product division would not accept the new investment because it is bad for the company.
O If the division is evaluated on the basis of Residual income, the manager of the office product division would accept the new investment because it is good for the division.
O If the division is evaluated on the basis of ROI, the manager of the office product division would accept the new investment because it is good for the division.
O If the division is evaluated on the basis of ROI, the manager of the office product division would not accept the new investment because it is bad for the company.

Walters manufactures a specialty food product that can currently be sold for $21.20 per unit and has 19,200 units on hand. Alternatively, it can be further processed at a cost of $11,200 and converted into 11,200 units of Deluxe and 5,200 units of Super. The selling price of Deluxe and Super are $31.80 and $19.20, respectively. The incremental net income of processing further would be: Multiple Choice $37,760. $48,960. $17,200. $43,200. $11,200.

Some of Intel's financial statement data includes:

2015 2016

Total assets 105,000 125,000

Net income 10,000 11,000

Sales 95,000 100,000

Equity 30,000 32,000

Compute Intel's return on equity (ROE) for 2016.

A deficit in a nation’s current account means:

A. it must limit the flow of foreign capital investment
B. it must have a deficit in its financial account as well
C. it must increase interest rates to attract foreign investment
D. there must be a surplus in its financial account
E. there must be more exports than imports for the nation.

Two firms, A and B, each currently dump 20 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives each firm 10 pollution permits, which it can either use or sell to the other firm. It costs Firm A $100 for each ton of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each ton of pollution that it eliminates before it reaches the river. After the two firms buy or sell pollution permits from each other, we would expect that:_________.

Two new​ variables, the market value of the firm​ (a measure of firm​ size, in millions of​ dollars) and stock return​ (a measure of firm​ performance, in percentage​ points), are added to the​ regression: ModifyingAbove ln (Earnings )with caret equals 3.86 minus 0.28 Female plus 0.37 ln (MarketValue )plus 0.004 Return(Earnings)=3.86−0.28Female+0.37ln(MarketValue)+0.004Return​, ​ (0.030.03​) ​ (0.040.04​) ​ (0.0040.004​) ​ (0.0030.003​) n​ = 46,670, Upper R overbar squared R2 ​= 0.345. If MarketValue increases by 4.644.64​%, what is the increase in​ earnings

who profits incentives

Opponents of tax reforms intended to raise saving argue that such reforms a. favor those with high income, and that saving may not rise because of the substitution effect. b. favor those with high income, and that saving may not rise because of the income effect. c. favor those with low income, and that saving may not rise because of the substitution effect. d. favor those with low income, and that saving may not rise because of the income effect.

Concord County owned an idle parcel of real estate consisting of land and a factory building. Concord gave title to this realty to Pharoah Company as an incentive for Pharoah to establish manufacturing operations in the County. Pharoah paid nothing for this realty, which had a fair value of $230000 at the date of the grant. Pharoah should record this nonmonetary transaction as a:_______

a. Credit to Contribution Revenue for $280000
b. Memo entry only
c. Credit to Donated Capital for $280000.
d. Credit to Comprehensive Income for $280000.

Suppose that Greece and Switzerland both produce oil and olives. Greece's opportunity cost of producing a crate of olives is 5 barrels of oil while Switzerland's opportunity cost of producing a crate of olives is 10 barrels of oil.
By comparing the opportunity cost of producing olives in the two countries, you can tell that _______ has a comparative advantage in the production of olives and ________ has a comparative advantage in the production of oil.
Suppose that Greece and Switzerland consider trading olives and oil with each other. Greece can gain from specialization and trade as long as it receives more than ________ of oil for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than ________ of olives for each barrel of oil it exports to Greece. Based on your answers to the previous question, which of the following terms of trade (that is, price of olives in terms of oil) would allow both Switzerland and Greece to gain from trade?
a. 2 barrels of oil per crate of olives
b. 12 barrels of oil per crate of olives
c. 9 barrels of oil per crate of olives
d. 1 barrel of oil per crate of olives

Suppose Chef Plus manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $ 35. Chef Plus projects sales of 650 ​10-inch skillets per month. The production costs are $ 6 per skillet for direct​ materials, $ 4 per skillet for direct​ labor, and $ 1 per skillet for manufacturing overhead. Chef Plus has 25 ​10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 30​% of the next​ month's sales. Selling and administrative expenses for this product line are $ 1 comma 400 per month. How many​ 10-inch skillets should Chef Plus produce in​ July?

You have a $5,000 medical bill and health insurance with a $500 deductible. You also have a 80/20 co-insurance, meaning the insurance pays 80% and the insured pays 20%. What is your total out-of-pocket expense for the original $5,000 bill?

William has an A.A. in general studies, but he does not know what career he wants to pursue. He decides to get a job for a year before going back to school. He wants a job near home in an office. He enjoys collaborating with other employees. William places a lot of value on freedom of thought and action at work. He needs about $50,000 per year.

William interviews at a company as an entry level sales person. He learns that it takes about 15 minutes to drive to the office. His job would be to work in a cubicle on a phone talking to potential clients from a script. The job pays about $50,000 per year with the possibility for performance-based bonuses.

Which factor makes this job a poor fit for William?

a. The company is in a bad location.
b. He wants more freedom in how he makes sales.
c. He is opposed to sales work.
d. The job does not pay enough money.

What’s businesses can I do online that cost very little to start?

Candlewood LLC started business on September 1, 2019, and adopted a calendar year. During 2020, Candlewood incurred $6,500 in legal fees for drafting the LLC's operating agreement and $3,000 in accounting fees for tax advice of an organizational nature, for a total of $9,500 of organizational costs. Candlewood also incurred $30,000 of preopening advertising expenses and $24,500 of salaries and training costs for new employees before opening for business, for a total of $54,500 of startup costs. The LLC wants to take the largest deduction available for these costs.
If required, round any division to five decimal places and use in subsequent computations. Round your final answers to the nearest dollar.
In 2019, the LLC may deduct $___________ as organizational expenses and $____________ as startup expenses.

On January 1, Year 1, Parker Company issued bonds with a face value of $75,000, a stated rate of interest of 6 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 8 percent at the time the bonds were issued. The bonds sold for $69,011. Parker used the effective interest rate method to amortize the bond discount. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Required a. Prepare an amortization table. b. What is the carrying value that would appear on the Year 4 balance sheet? c. What is the interest expense that would appear on the Year 4 income statement? d. What is the amount of cash outflow for interest that would appear in the operating activities section of the Year 4 statement of cash flows?

York’s outstanding stock consists of 80,000 shares of noncumulative 6.5% preferred stock with a $5 par value and also 250,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends.
2016 total cash dividends $15,500 2018 total cash dividends $225,000
2017 total cash dividends 24,000 2019 total cash dividends 375,000
Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. Also compute the total dividends paid to each class for the four years combined.
Per Value Dividend Rate Dividend Per Number of Preferred
Per Preferred Share Preferred Share Preferred Share Dividend
Annual Preferred Dividend:
Total Cash Paid to Paid to Dividends in
Dividend Paid Preferred Common Arrears at year-end
2016 15,500
2017 24,000
2018 225,000
2019 375,000
Total: $639,500

Currently, Bruner Inc.'s bonds sell for $1,110. They pay a $120 annual coupon, have a 15-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the difference between this bond's YTM and its YTC

Huey Company acquires 100% of the stock of Solar Corporation on January 1, 2019, for $2,400,000 cash. As of that date Solar had the following account balances: Book Value Fair value Cash $300,000 $300,000 Accounts receivable 325,000 325,000 Inventory 350,000 400,000 Building-net (10 year life) 1,000,000 900,000 Equipment-net (5 year life) 300,000 400,000 Land 600,000 900,000 Accounts Payable 125,000 125,000 Bonds Payable (Face amount $1,000,000, due 12/31/2023) 2,000,000 2,050,000 Common stock 700,000 Additional paid-in capital 250,000 Retained earnings 880,000 In 2019 and 2020, Solar had net income of $250,000 and $240,000, respectively. In addition, Solar paid dividends of $16,000 in both years. Inventory is assumed to be sold in 2019. Assume straight line amortization/ depreciation for assets and bonds payable. What is the amount of goodwill at date of acquisition?

Scenario 13-3 Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce. Refer to Scenario 13-3.


Ziva's economic profit from farming equals


a. $130.

b. −$130.

c. −$80.

d. $170.

The Milwaukee Bucks are considering whether they should add an additional vending area, at a cost of $500,000, to the new arena in downtown Milwaukee. They will only make the investment if it will result in an ROR of 15% or higher. The revenue is expected to be between $138,000 and $165,000 per year for five years. Use a present worth analysis to determine if the decision to invest is sensitive to the projected range of revenue.

Tennies Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 3,800 client-visits, but its actual level of activity was 3,790 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for November: Data used in budgeting: Fixed element per month Variable element per client-visit Revenue - $ 36.40 Personnel expenses $ 30,500 $ 11.40 Medical supplies 1,700 6.80 Occupancy expenses 8,600 2.90 Administrative expenses 6,900 0.20 Total expenses $ 47,700 $ 21.30 Actual results for November: Revenue $ 138,146 Personnel expenses $ 73,672 Medical supplies $ 28,292 Occupancy expenses $ 19,101 Administrative expenses $ 7,427 The activity variance for personnel expenses in November would be closest to:

In the Month of March, Baldwin Corporation received orders of 158 units at a price of $15.00 for their product Bolt. Baldwin uses the accrual method of accounting and offers 30 day credit terms. Baldwin delivers 106 units in March and the balance of 53 units in April. They received payment for 53 units in March, 53 units in April, and 53 units in May. How much revenue is recognized on the March income statement from this order

Barnes Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $214,000; and fixed costs $71,800. Management is considering the following independent courses of action to increase net income. Compute the net income to be earned under each alternative. 1. Increase selling price by 10% with no change in total variable costs or sales volume. Net income $Enter the net income in dollars 2. Reduce variable costs to 55% of sales. Net income $Enter the net income in dollars 3. Reduce fixed costs by $23,000. Net income $Enter the net income in dollars Which course of action will produce the highest net income? Select an option

The Refining Department of Crystal Cane​ Sugar, Inc. had 69 comma 000 tons of sugar to account for in December. Of the 69 comma 000 ​tons, 55 comma 000 tons were completed and transferred to the Boiling​ Department, and the remaining 14 comma 000 tons were 60​% complete. The materials required for production are added at the beginning of the process. Conversion costs are added equally throughout the refining process. The weightedminusaverage method is used. Calculate the total equivalent units of production for conversion co

The method by which consumers acquire products and services

Arena Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead.The standard cost card for the company’s only product is as follows:Inputs Standard Quantityor Hours Standard Price or Rate Standard CostDirect materials 1.2 pounds $ 5.50 per pound $ 6.60Direct labor 0.90 hours $ 21.00 per hour 18.90Fixed manufacturing overhead 0.90 hours $ 4.50 per hour 4.05Total standard cost per unit $ 29.55The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $81,000 and budgeted activity of 18,000 hours.During the year, the company completed the following transactions:Purchased 35,400 pounds of raw material at a price of $4.60 per pound.Used 32,180 pounds of the raw material to produce 26,900 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 23,810 hours at an average cost of $20.60 per hour.Applied fixed overhead to the 26,900 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $67,800. Of this total, $3,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $64,000 related to depreciation of manufacturing equipment.Completed and transferred 26,900 units from work in process to finished goods.Sold (for cash) 27,100 units to customers at a price of $36.60 per unit.Transferred the standard cost associated with the 27,100 units sold from finished goods to cost of goods sold.Paid $149,000 of selling and administrative expenses.Closed all standard cost variances to cost of goods sold.The company calculated the following variances for the year:Materials price variance $ 31,860 FMaterials quantity variance $ 550 FLabor rate variance $ 9,524 FLabor efficiency variance $ 8,400 FFixed manufacturing overhead budget variance $ 13,200 FFixed manufacturing overhead volume variance $ 27,945 FTo answer the following questions, you will need to record transactions a through i in the worksheet below. This worksheet is similar to the worksheets in your text except that it has been split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of depreciation.Cash Raw Materials Work in Process Finished Goods PP&E (net) = Materials Price Variance Materials Quantity Variance Labor Rate Variance Labor Efficiency Variance FOH Budget Variance FOH Volume Variance Retained Earnings 1/1 $1,200,000 $29,700 $0 $70,920 $505,400 = $0 $0 $0 $0 $0 $0 $1,806,020 a. = b. = c. = d. = e. = f. = g. = h. = i. = 12/31 = The ending balance in the PP&E (net) account will be closest to:A. $505,400B. $441,400C. $396,455D. $501,600