Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $30,000 and has cash on hand of $20,000 contributed by Lanni's owners.
a. Lanni takes out a bank loan. It receives $50,000 in cash and signs a note promising to pay back the loan over three years.
b. Lanni uses the cash from the bank plus $20,000 of its own funds to finance the development of new financial planning software.
c. Lanni sells the software product to Microsoft, which will market it to the public under the Microsoft name.
d. Lanni accepts payment in the form of 2,000 shares of Microsoft stock. Lanni sells the shares of stock for $70 per share and uses part of the proceeds to pay off the bank loan.
Required:
a. Prepare its balance sheet just after it gets the bank loan.
b. What is the ratio of real assets to total assets?
c. Prepare the balance sheet after Lanni spends the $70,000 to develop its software product.
Answer:
Lanni Products
a. Lanni Products
Balance Sheet after the bank loan
Assets:
Cash $70,000
Equipment 30,000
Total assets $100,000
Liabilities:
Bank Loan $50,000
Equity $50,000
Liabilities + Equity $100,000
b. Ratio of real assets to total assets = $30,000/$100,000 = 0.3 or 30%
c. Lanni Products
Balance Sheet after spending the bank loan
Assets:
Cash $0
Software $70,000
Equipment 30,000
Total assets $100,000
Liabilities:
Bank Loan $50,000
Equity $50,000
Liabilities + Equity $100,000
Explanation:
a) Data and Calculations:
Lanni Products
Balance Sheet before the bank loan
Assets:
Cash $20,000
Equipment 30,000
Total assets $50,000
Equity $50,000
b) Lanni's Balance Sheets show its financial positions after each of the above mentioned transactions. They rely on the accounting equation with assets = liabilities and equity. With each transaction posted correctly, the equation remains in balance.
5. A manufacturing company decides to buy solar cells in anticipation of rising electricity costs. The company is modeling its purchase to have $20,000 for the first year, and this saving increases 5% each year for the next 20 years as the solar cells generate enough electricity to compensate for the rising power bills. If the expected rate of return for the company equals 8%, what is the maximum amount of initial investment that makes this a desirable and profitable project
If the expected rate of return for the company equals 8%, the maximum amount of initial investment that makes this a desirable and profitable project is $11,385.20.
What is the present value?The present value is the discounted value of some future cash flows. It is computed using the present value formula or table. It can also be computed using an online finance calculator as follows:
For this project, we first calculate the future value of the cost-savings from the solar project based on $20,000 and 5% increases for 20 years as follows.
N (# of periods) = 20 years
I/Y (Interest per year) = 5%
PV (Present Value) = $20,000
PMT (Periodic Payment) = $0
Results:
FV = $53,065.95 ($20,000 + $33,065.95)
Total Interest = $33,065.95
Thereafter, we compute the present value of the above future value based on an 8% expected rate of return as follows:
N (# of periods) = 20 years
I/Y (Interest per year) = 8%
PMT (Periodic Payment) = $0
FV (Future Value) = $53,065.95
Results:
PV = $11,385.20
Total Interest = $41,680.75
Thus, if the expected rate of return for the company equals 8%, the maximum amount of initial investment that makes this a desirable and profitable project is $11,385.20.
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method of producing surplus value. As an employer, what are your responsibilities towards employees and society?
Answer:
The primary responsibilities include the following. First, employers should provide their employees with good environment, a place a place of work and ensure that the employees have access to that place. This is through delivering equipment, tools, training all other things they require to do their job.
Explanation:
Marleen is a 52-year-old participant in the XYZ cash balance plan. She has been a participant in the plan for the last twenty years. XYZ, which has over 10,000 employees, is having financial difficulty and Marleen is concerned about the security of her pension. Which of the following is correct? a. The cash balance plan formula cannot be lowered in the future for current participants, but could be changed for new participants. b. The cash balance plan assets may include up to 25% of XYZ stock. c. The cash balance plan and its benefits are fully protected by the PBGC. d. Termination of the plan may affect vesting for some employees, but Marleen's vesting will not be impacted.
Answer:
d)Termination accelerates vesting, but based on Marleen's tenure, she is fully vested already.
Explanation:
We are informed about Marleen a 52-year-old participant in the XYZ cash balance plan. we are told that She has been a participant in the plan for the last twenty years. XYZ, which has over 10,000 employees, is having financial difficulty and Marleen is concerned about the security of her pension.
In this case let us consider the given options one after the other.
OPTION A, The cash balance plan formula cannot be lowered in the future for current participants, but could be changed for new participants.
✓This wrong, here plan sponsor can decide to do some adjustments in benefits in time future.
OPTION B)The cash balance plan assets may include up to 25% of XYZ stock.
✓This is wrong, here plan sponsor's stock can have cash balance plan assets up to 10% put into it.
OPTION C)The cash balance plan and its benefits are fully protected by the PBGC.
✓This is wrong, the PBGC only protect the benefits just for annual limit and not totally.
Hence "OPTION D" which is Termination accelerates vesting, but based on Marleen's tenure, she is fully vested already is correct.
Concord Company purchases equipment on January 1, Year 1, at a cost of $498,000. The asset is expected to have a service life of 12 years and a salvage value of $44,820.
Required:
a. Compute the amount of depreciation for each of Years 1 through 3 using the straight-line depreciation method.
b. Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years'-digits method.
Answer:
depreciable value = $498,000 - $44,820 = $453,180
a. depreciation expense per year = $453,180 / 12 years = $37,765
depreciation expense year 1 = $37,765
depreciation expense year 2 = $37,765
depreciation expense year 3 = $37,765
b. total digits = 12+11+10+9+8+7+6+5+4+3+2+1 = 78
depreciation expense year 1 = 12/78 x $453,180 = $69,720
depreciation expense year 2 = 11/78 x $453,180 = $63,910
depreciation expense year 3 = 10/78 x $453,180 = $58,100
Faith Bonds sells furniture and earns nine percent commission on her total sales. Last month she had $33,500 in sales. How much did she earn? *
Answer:
3015
Explanation:
33500*.09=3015
Answer: 2,865
Explanation: To get this answer you would have to divided 33,500 and 9%
Professor Smith and Professor Jones are going to produce a new introductory textbook. As true scientists, they have laid out the production function for the book as: q=S1/2J1/2 Where q is the number of pages in the finisjed book, S is the number of working hours spent by Smith, and J is the number of working hours spent by Jones. After having spent 900 hours preparing the first draft, time which he valued at $3 per working hour, Smith has to move on to other things and cannot contribute any more to the book. Required:
a. How many hours will Jones have to spend to produce a finished book of 150 pages? Of 300 pages? Of 450 pages?
b. What is the marginal cost of the 150th page of the finished book? Of the 300th page? Of the 450th page?
The time taken that Jones will spend to produce a finished book of 150 pages is 25 hours.
How to calculate the time taken?The number of hours to produce a finished book of 150 pages will be:
q = ✓SJ
150 = ✓900 × ✓J
J = 150²/30²
J = 25
The number of hours to produce a finished book of 300 pages will be:
J = (300)² / 30²
= 100
The number of hours to produce a finished book of 450 pages will be:
= 450² / 30²
= 225 hours.
The marginal cost of the 150th page of the finished book will be:
= 4q/150
= (4 × 150)/150
= 4
The marginal cost of the 300th page of the finished book will be:
= (4 × 300)/150
= 8
The marginal cost of the 450th page of the finished book will be:
= (4 × 450) / 150
= 12
In conclusion, the marginal cost of the 450th page is $12.
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Which of the following is true of the master budget of a company?
a. It is a moving 12-month budget.
b. It corresponds to the calendar year of a company.
c. It is a comprehensive financial plan for an organization as a whole.
d. It is always prepared for a 5-year period.
Answer:
C, it's a plan for the entire organization.
2. The feature of the general version of the arbitrage pricing theory (APT) that offers the greatest potential advantage over the simple CAPM is the: a. Identification of anticipated changes in production, inflation, and term structure of interest rates as key factors explaining the risk-return relationship b. Superior measurement of the risk-free rate of return over historical time periods c. Variability of coefficients of sensitivity to the APT factors for a given asset over time d. Use of several factors instead of a single market index to explain the risk-return relationship
Answer: Use of several factors instead of a single market index to explain the risk-return relationship
Explanation:
Arbitrage pricing theory (APT) is when the return on an asset is forecasted when the linear relationship which exist between the expected return of the asset and the macroeconomic variables are being considered.
Capital Asset Pricing Model (CAPM) helps in showing the relationship that take place between systematic risk and an asset expected return.
The feature of the general version of the arbitrage pricing theory (APT) that offers the greatest potential advantage over the simple CAPM is the use of several factors instead of a single market index to explain the risk-return relationship as it's more robust when compared to the CAPM.
Jordan is 55 and wants to retire in 12 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 97. He currently has a salary of $100,000 and expects that he will need about 82% of that amount annually if he were retired. He can earn 9 percent in his portfolio and expects inflation to continue at 3 percent. Jordan currently has $325,000 invested for his retirement. His Social Security benefit in today's dollars is $30,000 per year at normal age retirement of age 67. How much does he need to save each year at year end to meet his retirement goals? a. $9,252. b. $8,432. c. $6,245. d. $7,659.
Answer:
$9,252.23 ≈ a. $9,252
Explanation:
Jordan will retire at 67 and expects to live 30 more years. Be believes that he will need approximately $82,000 (in current dollars) per year to live while he is retired. his social security benefits are $30,000 (in current dollars) per year, so that means that he needs to cover the remaining $52,000. In order to calculate this, I will assume that Jordan receives his first distribution on his 67th birthday (annuity due) and each distribution is made on an annual basis and received on the subsequent birthdays until he turns 96 (30th distribution).
The $52,000 that Jordan expects to need once he retires must be adjusted to inflation (3%). In 12 years they will equal $52,000 x (1 + 3%)¹² = $74,139.57
Using an excel spreadsheet, I calculated the present value of Jordan's 30 distributions using a 9% discount rate = $1,100,465.22
Jordan currently has $325,000 in his retirement account and in 12 years (age 67), his account will be worth $325,000 x (1 + 9%)¹² = $914,116.05
this means that Jordan will be $1,100,465.22 - $914,116.05 = $186,349.17 short
using the future value of an annuity formula, we can calculate the annual contribution:
annual contribution = future value / annuity factor
future value = $186,349.17 FV annuity factor, 9%, 12 periods = 20.141annual contribution = $186,349.17 / 20.141 = $9,252.23 ≈ $9,252
True or False: Expectations are an important consideration for both demand-pull and cost-push inflation.
Answer:
The correct answer is false
Kingbird Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows.
Employee Future Years of Service
Jim 3
Paul 4
Nancy 5
Dave 6
Kathy 6
On January 1, 2020, the company amended its pension plan, increasing its projected benefit obligation by $88,560.
Required:
Compute the amount of prior service cost amortization for the years 2020 through 2025 using the years-of-service method, setting up appropriate schedules.
Answer:
Total number of years remaining for employees = 3 + 4 + 5 + 6 + 6 = 24 years.
Projected benefit of $88,560.
Year Annual Amortization
2020 88,560 * 5/24 $18,450
2021 88,560 * 5/24 $18,450
2022 88,560 * 5/24 $18,450
2023 88,560 * 4/24 $14,760
2024 88,560 * 3/24 $11,070
2025 88,560 * 2/24 $7,380
Total $88,560
Every year the projected benefit is amortized by the number of employees still working divided by the total number of years for all the employees.
Over the years, the Securities and Exchange Commission (SEC) has delegated its statutory authority to establish accounting principles for publicly traded companies in the United States. This delegated authority impacts which organization(s)
The delegated authority of the Securities and Exchange Commission (SEC) on establishing accounting principles for publicly traded companies in the United States impacts all publicly held companies.
What is the role of the SEC?The Securities and Exchange Commission (SEC) is a well-recognized U.S. government oversight agency.
It is responsible for regulating the securities markets and protecting investors' investments.
It does this, by:
Maintaining fair, orderly, and efficient marketsEnsuring compliance with financial regulationsEnsuring transparency in financial reportingFacilitating capital formation.Thus, the delegated authority of the Securities and Exchange Commission (SEC) on establishing accounting principles for publicly traded companies in the United States impacts all publicly held companies.
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Marcus is studying networking with an emphasis on cybersecurity at a local university. As part of his research, he wants to visit certain hacker sites but is concerned that his laptop would be vulnerable to passive threats while visiting them. He doesn't have the funds for expensive security equipment.
Required:
What is the least expensive option he has at hand?
The least expensive option that Marcus has is to build a firewall that would help to prevent attacks from the hackers.
What is an internet fire wall?This is also known as a security device. This device would help to safe guard Marcus's computer by filtering the traffic and also blocking any form of public internet.
This option would be the most viable thing for him to do as he continues to carry out this research.
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On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $200,000 in cash. The equipment had originally cost $180,000 but had a book value of only $110,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $300,000 in net income in 2021 (not including any investment income) while Brannigan reported $98,000. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $4,000 per year. What is consolidated net income for 2021
Answer: $322,000
Explanation:
Consolidated income = Net income from Ackerman + Net Income from Brannigan + Excess depreciation - Amortization of unpatented tech - Gain from transfer of equipment
Excess depreciation = New depreciation of equipment - Old depreciation
Depreciation is straight line;
= (200,000/5 years) - (110,000/5)
= $18,000
Gain from transfer of equipment
= Sales - Book value
= 200,000 - 110,000
= $90,000
Consolidated income = 300,000 + 98,000 + 18,000 - 4,000 - 90,000
= $322,000
Paula sells boomerangs. The price elasticity of demand for boomerangs is 0.54. If Paula wishes to increase her revenue, should she raise or lower the price of boomerangs? Explain your answer in a few sentences.
To increase her Revenue when selling Boomerangs, Paula should decrease the price rather than increase it.
What is the price elasticity of demand?This refers to how much the demand for a product (wish for the buyers to buy the product) changes when there is a price change.
What does a 0.54 in price elasticity of demand mean?This ratio implies that if the price changes by 1% the demand changes by 0.54%. This means there is not a very big change in the demand or the product is not very elastic, and therefore if the increases the price the revenue will stay the same.
Based on this, to increase her Revenue Paula should decrease the price since this can catch the attention of new potential customers.
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Scott Company had sales of $12,350,000 and related cost of goods sold of $7,500,000. Scott provides customers a refund for any returned or damaged merchandise. At the end of the year, Scott estimates that customers will request refunds for 0.8% of sales and estimates that merchandise costing $48,000 will be returned. Journalize the adjusting entries on December 31 to record the expected customer returns. Refer to the Chart of Accounts for exact wording of account titles.
The adjusting journal entries to record the adjustments in the books of Scott Company are as follows:
Journal Entries:December 31;
Debit Sales $98,800
Credit Cash Refundable $98,800
To record expected cash refunds.Debit Inventory $48,000
Credit Cost of goods sold $48,000
To record expected merchandise returns.Data Analysis:Sales = $12,350,000
Cost of goods sold = $7,500,000
Estimated percentage refunds = 0.8% of sales
Expected Refunds = $98,800 ($12,350,000 x 0.8%)
Returned goods = $48,000
Sales $98,800
Cash Refundable $98,800
Inventory $48,000
Cost of goods sold $48,000
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Your uncle has $90,000 that he wishes to invest now in order to use the accumulation for purchasing a retirement annuity in five years. After consulting with his financial adviser, he has been offered four types of fixed income investments, labeled as investments A, B, C, and D. Investments A and B are available at the beginning of each of the next five years (call them years 1 to 5). Each dollar invested in A at the beginning of a year returns $1.20 (a profit of $0.20) two years later, in time for immediate reinvestment. Each dollar invested in B at the beginning of a year returns $1.36 three years later.
Answer:
The question is incomplete, it is missing the last part:
...
Investments C and D will each be available at one time in the future. Each dollar invested in C at the beginning of year 2 returns $1.66 at the end of year 5. Each dollar invested in D at the beginning of year 5 returns $1.12 at the end of year 5.
Your uncle is obligated to make a balloon payment on an existing loan, in the amount of $24,000, at the end of year 3. He wants to cover that payment out of these funds as well.
First of all, you must invest enough money in B in order to pay your debt.
present value = future value / expected return
present value = $24,000 / $1.36 = $17,647.06
you have $90,000 - $17,647.06 = $72,352.94 to invest in A.
at the end of year 2, you will have:
future value = present value x expected return = $72,352.94 x $1.20 = $86,823.53
then you should invest that money ($86,823.53) in invested D and at the end of year 4 you will have:
future value = $86,823.53 x $1.66 = $144,127.06
finally, you should invest $144,127.06 in investment E and at the end of ear 5 you will have:
future value = $144,127.06 x $1.12 = $161,422.31
Why is it recommended that you focus more on quadrant 2 (PLAN) to be productive?
a.
Focusing on this quadrant increases planning and helps you meet your goals
b.
Focusing on this quadrant increases stress
c.
Focusing on this quadrant ensures you will never encounter a distraction
d.
Focusing on this quadrant will help you meet other people’s needs
Answer:
The reason that it is recommended to focus more on quadrant 2 (PLAN) to be productive is:
a. Focusing on this quadrant increases planning and helps you meet your goals.
Explanation:
This second quadrant of Stephen Covey's 7 Habits of Highly Effective People focuses on planning. The leader undertakes planning when it is important but not when it is urgent. This means that the leader is enabled to plan in a crisis-free moment and environment. The leader in this quadrant does not act in response to crisis. She is well-prepared for every crisis. It is the most important quadrant that any leader should aspire to be in at all times.
There is a new country called Tiderce where the people's political opinions lead them to divide themselves into five different groups, representing different outlooks on how the legislature should approach public policy. These five groups based on political convictions in turn result in the formation of five political parties (each named after an animal mascot). The five parties are listed below in order from most liberal to most conservative. In the first election for the legislature in this country the people vote for their candidates and/or their parties as follows, with the vote in the whole country being the same as the vote in every part of it:_______.
Lion 20%
Tiger 24%
Bear 13%
Antelope 18%
Gazelle 25%
Which could result in the Gazelle Party’s having exactly 75% of the seats in the legislature?
Proportional representation
single member districts and majority winners
single member districts and plurality winners
Answer:
"Lion and Tiger" is the right choice.
Explanation:
Two sides are joining together in an alliance. Around each other, Lion as well as Tiger have 20 + 24 = 44% elections. Therefore no political party forms the above large percentage throughout the sequential manner. Only within chronology will parties join hands, as they are listed in order from some of the more progressive to many of the conservative, and therefore only platforms based on the common ideologies can show solidarity.Lion and Gazelle, for instance, will not join an alliance because their philosophies remain contrary.
Suppose that with free trade, the cost to the United States of importing a sweater from Mexico is $20.00, and the cost of importing a sweater from China is $18.00. A sweater produced in the United States costs $25.00. Suppose further that before NAFTA, the United States maintained a tariff of 15% against all sweater imports. Then, under NAFTA, all tariffs between Mexico and the United States are removed, while the tariff against imports from China remains in effect. Assume that the tariff does not affect the world price of sweaters.
Before NAFTA, the United States imported sweaters from: _________
Based on the price of sweaters, it was likely that because NAFTA, the United States imported sweaters from China.
Why did the U.S. import sweaters from China?Nations will generally import from nations that charge the cheapest amount for the goods and services being imported.
Before NAFTA made Mexican sweaters cheaper thanks to the removal of tariffs, Chinese sweaters were cheaper at $18.00 which means the U.S. likely imported sweaters from China.
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In order to sell a product at a profit, the product must be priced higher than the total cost to build the unit, plus period expenses and overhead. At the end of last year, Digby had their product Daze aimed at the Americas Budget segment. Use the Globe's Product Analysis to find Daze's production cost (labor materials) in the Americas region. Exclude possible inventory carrying costs. Assume period expenses and overhead total 50% of their production cost. What is the minimum price the product could have been sold for in the American region to cover the unit cost, period expenses, and overhead
Answer:
$17.02.
Explanation:
Complete question: Name Daze Units Sold 987 Price $23 Customer Satisfaction 21 Accuracy 7.2 Speed 7.2 Service Life 14,000 Age 3.3 Region Kit Yes Material Costs $6.79 Labor Costs $4.56 Contribution Margin 49.27% . What is the minimum price the product could have been sold for in the American region to cover the unit cost, period expenses, and overhead?
Minimum price of the product = (6.79+4.56)*150%
Minimum price of the product = $17.02
Since, period expenses and overhead costs are 50% of production costs which are $11.35, the minimum price of the product is $17.02.
If a family spends its entire budget in a given time frame, the family can afford either 10 restaurant meals or 30 home meals. Assuming the family spends its entire budget on just these two goods, what is the opportunity cost of one extra restaurant meal in the time frame? (Round your answer to two decimal places.)
The opportunity cost of one extra restaurant meal in the time frame is 3 home meals.
What is opportunity cost?Opportunity cost of the next best option forgone when one alternative is chosen over other alternatives. When the family chooses to go for the restaurant meal, they forgo the opportunity for a home meal.
Opportunity cost = 30 / 10 = 3
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AuctionCo sells used products collected from different suppliers. Assume a customer purchases a used bicycle through AuctionCo for $300. AuctionCo agrees to pay the supplier $200 for the bicycle. The bicycle will be shipped to the customer by the original bicycle owner.Required:Assume AuctionCo takes control of this used bicycle before the sale and pays $200 to the supplier. Under this assumption, how much revenue would AuctionCo recognize at the time of the sale to the customer?Assume AuctionCo never takes control of this used bicycle before the sale. Instead, the bicycle is shipped directly to the customer by the original bicycle owner, and then AuctionCo pays $200 to the supplier. Under this assumption, how much revenue would AuctionCo recognize at the time of the sale to the customer?Assume AuctionCo promises to pay $200 to the supplier regardless of whether the bicycle is sold, but the bicycle will continue to be shipped directly from the supplier to the customer. Under this assumption, how much revenue would AuctionCo recognize at the time of the sale to the customer?
Answer:
$300 $100 $300
Explanation:
1. AuctionCo takes control of this used bicycle before the sale and pays $200 to the supplier.
Having taken control of the bicycle before the sale, the transaction will be treated as that of AuctionCo so the entire revenue will be theirs.
= $300
2. AuctionCo never took control.
Revenue will be the agency fee;
= Sales price - Supplier sales price
= 300 - 200
= $100
3. Assume AuctionCo promises to pay $200 to the supplier regardless of whether the bicycle is sold but the bicycle will continue to be shipped directly from the supplier to the customer.
= $300
Revenue is $300 because by being the ones to pay the supplier regardless of the occurrence of the transaction, they take control.
which of the following is referred to as self service machine a. GSM b. ISO c. ATM d. calculator
Answer:
ATM
Explanation:
Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of meekers is $40. Suppose that the world price of meekers is $39. Assume that Meekertown is too small to influence the world price of meekers once it enters the international market. If Meekertown allows free trade, then it will meekers. Given current economic conditions in Meekertown, complete the following table by indicating whether each of the statements is true or false. Statement True False Meekertownian consumers were worse off without free trade than they are with it. Meekertownian producers were worse off without free trade than they are with it.
Answer:
it's not just the way you look like you do it and you don't want it was in the best place an artist would have said you would have been playing a little bit more and a little more of the time than you would be okay with a little more than one thing in a while you have a better th the better th and a lot more than a lot more to me for a while and it was the best thing in my office for the first one of the year now I think it is the most popular movie in a long sleeve and the better of the game end is a great deal of that is it for a while now and it's a good thing in this world and the other thing you have is the fact of that matter of the day for a good reason and the better th and more of a good thing to say
Discuss why South Africa as a country has a scarcity of skilled workers, and how this can be changed more especially in terms of education.Motivate your answer by providing examples to show understanding.
South Africa, as a country still experiences a scarcity of skilled workers. This should not be, given the country's population size.
What is the scarcity of skilled workers?The scarcity of skilled workers means that South African companies cannot attract the manpower they need to power the South African industry and economy.
However, this scarcity can become a thing of the past if many more South African companies can start investing in the education sector by giving out scholarships, grants, and endowing academic chairs in the universities.
This was how the economy of the United States was enabled to flourish until today. South African companies can emulate their footsteps.
Thus, South Africa, given its enormous population, has no business experiencing a scarcity of skilled workers.
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Two companies require identical skills and training from their workers. Both employ 10,000 people. On average, RealSafe has one worker fatality per year, while NotsoSafe has two worker fatalities per year. Jobs at RealSafe pay $50,000/year, while jobs at NotsoSafe pay $50,500/year. In the space below, answer the following questions, delineated by question number:_______.
1. Why do these jobs with identical requirements pay different salaries, based on the information presented here?2. What is the risk for a worker of a fatal accident at each company? What is the pay premium associated with that risk?3. The value of a statistical life is the difference in wage divided by the difference in risk. What is the value of a statistical life for workers with these skills and training?4. Do you expect this value of a statistical life to be appropriate for the population as a whole? Why or why not?
Explanation:
1. If the salary paid by both companies were same people would prefer to work at Realsafe since it more safer. But not too safe provides a higher pay which makes people accept the higher risk over there.
2.The for a worker at Realsafe is 1/10000, while at not to safe it’s 2/10000. The premium associated with that risk Is the $500/year from not to safe.
3. Value of statistical life
= 1*$500 / 1/10000
= 5,000,000.
4. If the value of statistical life is constant across all the population it’s acceptable and valid.
On June 1, 2018, Andre Company and Agassi Company merged to form Lancaster Inc. A total of 800,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis. On April 1, 2020, the company issued an additional 400,000 shares of stock for cash. All 1,200,000 shares were outstanding on December 31, 2020. Lancaster Inc. also issued $600,000 of 20-year, 8% convertible bonds at par on July 1, 2020. Each $1,000 bond converts to 40 shares of common at any interest date. None of the bonds have been converted to date. Lancaster Inc. is preparing its annual report for the fiscal year ending December 31, 2020. The annual report will show earnings per share figures based upon a reported after-tax net income of $1,540,000. (The tax rate is 20%.) Determine the following for 2020. (a) The number of shares to be used for calculating
The number of shares to be used for calculating the basic earnings per shares will be 1100000.
How to calculate shares?Based on the information given, the calculation for the shares will be depicted below:
The basic earnings per share will be:
= (800000 × 3/12) + (1200000 × 9/12)
= 200000 + 900000
= 1100000
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At the end of its first month of operations, a company reported Revenue of $37,000. It also reported Wages Expense, $6,000; Rent Expense, $5,000; and Utilities Expense, $1,000. Calculate net income reported on the income statement at month-end.
Answer:
25,000
Explanation:
The net income reported on the income statement at the end of the month is $25,000.
At the end of its first month of operations, the company reported a Revenue of $37,000. Alongside this, it disclosed various expenses, including Wages Expense of $6,000, Rent Expense of $5,000, and Utilities Expense of $1,000. To calculate the net income reported on the income statement at the month-end, we need to subtract the total expenses from the revenue.
Total Expenses = Wages Expense + Rent Expense + Utilities Expense
Total Expenses = $6,000 + $5,000 + $1,000
Total Expenses = $12,000
Net Income = Revenue - Total Expenses
Net Income = $37,000 - $12,000
Net Income = $25,000
Therefore, the net income reported on the income statement at the end of the month is $25,000.
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