Answer:
Assets increased by $60,000
Explanation:
Accounting information : Stockholders' Equity = Assets - Liabilities
Assets = Stockholders' Equity + Liabilities
$105,000 - $45,000 = $60,000
Assets increased by $60,000
Using the fixed-order-quantity model, which of the following is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $80, and a holding cost per unit per year of $4?
A) $849.
B) $1,200.
C) $1,889.
D) $2,267.
E) $2,400.
Answer:
E. $2,400
Explanation:
Given that;
Annual demand = 36,000 units
Cost per order = $80
Holding cost per unit per year = $4
Firstly, we will need to calculate the EOQ.
EOQ = √2DS / H
= √ 2 × 36,000 × $80 / $4
EOQ = 1,200 units
Total ordering cost per year therefore is
= Annual demand / EOQ × Cost per order
= (36,000 / 1,200) × $80
= $2,400
An FHA-insured loan in the amount of $157,500 at 5.5% for 30 years closed on July 17. The first monthly payment is due on September 1. Using a 360-day year and assuming that interest is being paid for the day of closing, what was the amount of the interest adjustment the buyer had to make at the settlement? Real Estate
Answer:
$336.88
Explanation:
Interest adjustment refers to a one time interest payment that must be paid by the buyer for the accrued interest between the day when the sale was closed and the end of the month. In this case, we are told to use a 360 day year, that means that all months will have 30 days. Therefore, the number of days of July will be 14, not 15.
total interest for 14 days = $157,500 x 5.5% x 14/360 = $336.875 = $336.88
Laurel, Inc., and Hardy Corp. both have 8 percent coupon bonds outstanding, with semiannual interest payments, and both are currently priced at the par value of $1,000. The Laurel, Inc., bond has five years to maturity, whereas the Hardy Corp. bond has 16 years to maturity. a. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of each bond
Answer:
Laurel bond will decrease by 7.72%
Hardy bond will decrease by 15.8%
Explanation:
current bond price $1,000
interest rate 8%
Laurel bond matures in 5 years, 10 semiannual payments
Hardy bonds matures in 16 years, 32 semiannual payments
if market interest increases to 10%
Laurel bond:
$1,000 / (1 + 5%)¹⁰ = $613.91
$40 x 7.7217 (annuity factor, 5%, 10 periods) = $308.87
market price = $922.78
% change = -7.72%
Hardy bond:
$1,000 / (1 + 5%)³² = $209.87
$40 x 15.80268 (annuity factor, 5%, 32 periods) = $632.11
market price = $841.98
% change = -15.8%
Crane Corporation has 2,000 shares of stock outstanding. It redeems 500 shares for $370,000 when it has paid-in capital of $300,000 and E & P of $1,200,000. The redemption qualifies for sale or exchange treatment for the shareholder. Crane incurred $13,000 of accounting and legal fees in connection with the redemption transaction and $18,500 of interest expense on debt incurred to finance the redemption. What is the effect of the distribution on Crane Corporation's E & P? Also, what is the proper tax treatment of the redemption expenditures?
Answer and Explanation:
The corporation crane would have to bring down it's E & P because of the redemption. It would bring it down to about 300000which is a 25% reduction in 1200000 the E&P amount.
Because the stock redemption brought about sales and exchange treatment,. Cranes E&P account is reduced . The expense of 13000 will not be deducted from. Tax fees are not deductible against redemption.
g Within the context of corporation law, the concept of double taxation means that: Question 20 options: the government taxes both management salaries and dividends to managers the tax rate for corporations is double that of individuals the government taxes both earnings to corporations and dividends to individual shareholders the government taxes both earnings and retained earnings of the corporation
Answer: the government taxes both earnings to corporations and dividends to individual shareholders
Explanation:
Double taxation occurs when an income, asset, good or any other financial transaction is being taxed twice.
Within the context of corporation law, the concept of double taxation means that the government taxes both earnings to corporations and dividends to individual shareholders.
Edwards Electronics recently reported $11,250 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was its net cash flow?
Answer: $4032.85
Explanation:
The following can be derived based on the information in the question:
Sales = $11,250
Less: operating cost = $5,500
Less: depreciation = $1,250
Operating income = $4500
Operating income = $4500
Less: Interest charges = $218.75
Taxable income = $4281.25
Taxable income = $4281.25
Less: Taxes = $1498.4
Net income = $2782.85
Net cash flow = Net Income + Depreciation
= $2782.85 + $1250
= $4032.85
N.B:
Interest charges= 6.25% × $3500
= 0.0625 × $3500
= $218.75
Taxes = 35% × $4281.25
= 0.35 × $4281.25
= $1498.4
As an HR manager, what tool would you most likely use to determine the compensation of employees found in competitor firms
Answer:
The correct approach will be "Compensation surveys ".
Explanation:
Compensation surveys help people to make carefully considered commercial management by providing you with accurate metrics predicated on your market, size of the organization, and the relatively close expertise competitors. Individuals allow us to better understand as well as analyze the talent economy, instead of being mandated either by market.Amna works as a receptionist at a fashion magazine. One morning, her boss walks into the office and shouts at her, telling her that the front office is a mess and she needs to clean it instantly. After her boss leaves the room, Amna goes to the front office and violently slams trash into the bin. Which of the following best describes Amna's anger?
Answer:
can you tell the options
A 15-year annuity pays $1,300 per month, and payments are made at the end of each month. The interest rate is 10 percent compounded monthly for the first six years and 8 percent compounded monthly thereafter. What is the present value of the annuity
Answer:
162075.97 dollars.
Explanation:
The time period of annuity = 15 years
Annuity amount = $1300 per month
The interest rate for the first six-year = 10%
Monthly interest rate = 10% / 12 = 0.83%
Thus number pf periods = 6 * 12 = 72
Interest rate for another 9 years = 8%
Monthly interest rate = 8% / 12 = 0.67%
Number of period = 8 * 12 = 96
Use the below formula to find the present value of the annuity.
[tex]\text{Present value of annuity} =\frac{A(1-(1+r)^{-n})}{r} \\\\= \frac{1300(1-(1+0.0083)^{-72})}{0.0083} + \frac{1300(1-(1+0.0067)^{-96})}{0.0067} \\= 162075.97 dollars.[/tex]
If antitrust laws did not prohibit efforts to restrict competition in markets, then:________
A. attempts at collusion with rival firms would probably often fail.
B. all firms in the economy would earn negative economic proht in the long run.
C. all firms in the market would earn zero economic profit in the long run.
D. no firms would attempt to collude on price and/or quantity.
E. attempts at collusion with rival firms on price and or/quantity would succeed all the time.
Answer:
A. attempts at collusion with rival firms would probably often fail.
Explanation:
An antitrust law can be defined as a statute or legal framework developed by the federal and state government of the United States of America, which regulates the actions and conducts of business entities so as to protect end users (customers) from predatory business activities and to boost competitiveness among businesses.
In the United States of America, an example of an antitrust law is the Sherman Act of 1890.
Generally, if antitrust laws did not prohibit efforts to restrict competition attempts at collusion with rival firms would probably often fail.
Collusion can be defined as an illegal, secret and uncompetitive agreement between rivalry parties in attempt to destroy the market equilibrium through actions such as illegal-pricing.
Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows:
August 30,600 units
September 18,800 units
October 31,800 units
November 26,500 units
December 29,000 units
The company wants to maintain monthly ending inventories of Jurislon equal to 17% of the following month's production needs. On July 31, this requirement was not met since only 10,400 kilograms of Jurislon were on hand. The cost of Jurislon is $19 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months.
The total cost of Jurislon to be purchased in August is:
a) $1,438,310
b) $1,407,710
c) $1,415,700
d) $1,484,210
Answer:
I think it's (B)
I hope that's right
Lohn Corporation is expected to pay the following dividends over the next four years: $12, $9, $8, and $3.50. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever. If the required return on the stock is 14 percent, what is the current share price?
Answer:
The current share price is 56.60
Explanation:
The expected dividend by Lohn Corporation in 1st year, D1 = $12
The expected dividend by Lohn Corporation in 2nd year, D2 = $9
The expected dividend by Lohn Corporation in the third year, D3 = $8
The expected dividend by Lohn Corporation in the fourth year, D4 = $3.50
Given the interest rate = 14%
Now use the present value of all dividends and then add all to find the current share price.
Present value (PV) = Future value / (1+r)^n
r = interest rate
n = time period
PV of D1 = 12 / 1.14 = 10.53
PV of D2 = 9 / 1.14^2 = 6.93
PV of D3 = 8 / 1.14^3 = 5.40
PV of D4 = 3.50 / 1.14^4 = 2.07
D5 = 3.50 * 1.07 = 3.745
P4 = D5 / (14%-7%) = 53.5
PV of P4 = 53.5 / 1.14^4 = 31.68
The Stock price = 10.53 + 6.93 + 5.40 + 2.07 + 31.68
The Stock price = 56.60
Problem 16-15 MM and Taxes [LO2] Meyer & Co. expects its EBIT to be $111,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt, and its cost of equity is 12 percent and the tax rate is 22 percent. The company borrows $165,000 and uses the proceeds to repurchase shares. a. What is the cost of equity after recapitalization? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
a) 12.87%
b) 11.03%
Explanation:
EBIT with no debt = $111,000
net income = $111,000 x (1 - 22%) = $86,580
total value of the firm with no debt = $86,580 / 12% = $721,500
value of the firm after debt is taken = $721,500 + ($165,000 x 22%) = $757,800
debt to equity ratio after debt is taken = $165,000 / ($757,800 - $165,000) = 27.834%
new cost of equity (Re) = 12% + [(12% - 8%) x 27.834% x (1 - 22%)] = 12.87%
WACC = (0.72166 x 12.87%) + (0.27834 x 8% x 0.78) = 9.288% + 1.737% = 11.025$ = 11.03%
A futures contract is a contract that essentially gives the owner of the contract the ability to buy some specific amount of a good at a given price at a point in the future. In a 1984 paper entitled "Orange Juice and the Weather," economist Richard Roll showed that the price of frozen orange juice futures could be used to predict errors in weather forecasts for Florida made by the National Weather Service. That is, there were times in which the price of orange juice futures did a better job of predicting the temperatures in Florida than did the National Weather Service! Given this information, which of the following would the efficient markets hypothesis suggest was occurring?
a. Investors in orange juice futures were using publicly available information that scientists at the National Weather Service were not using
b. Scientists at the National Weather Service had private information that they were not making available to the public when issuing weather forcasts
c. The futures market was on an extended lucky streak
d. Frozen orange juice futures must have been a riskier investment than the stock market since you had to bet against scientific experts to do well
Answer:
A
Explanation:
Investors in orange juice futures were using publicly available information that scientists at the National Weather Service were not using which would the efficient markets hypothesis suggests was occurring. The correct option is A.
What are the features of the efficient market hypothesis?The efficient market hypothesis (EMH) holds that all stocks are perfectly priced based on their inherent investment properties, which all market participants have equal knowledge of. Financial theories are subjective. In other words, there are no proven laws in finance.
According to the efficient market hypothesis, new information is immediately reflected in stock prices, and thus neither technical nor fundamental analysis can generate excess returns. The efficient market hypothesis has been called into question on theoretical and empirical grounds.
Thus, the ideal selection is option A.
Learn more about the efficient market hypothesis here:
https://brainly.com/question/15075799
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Is most organization change forced on the organization by external factors or fostered from within? Explain.
Explanation:
Changes in a company's macroenvironment will be the most responsible for changes in its organizational processes.
Looking historically, it is possible to see how much the work and business environment has been directly impacted by changes in society.
Currently, the biggest change we can perceive is the phenomenon of globalization, caused by technological changes, which have made it possible to reduce distances and speed up the exchange of information, which has facilitated companies to reach international markets, increase their market and gain advantages strategic and competitive globally.
Galles Corporation is evaluating an extra dividend versus a share repurchase. In either case, $13,000 would be spent. Current earnings are $2.00 per share, and the stock currently sells for $50 per share. There are 5,000 shares outstanding. Ignore taxes and other imperfections.
a. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth per share. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)
Alternative I Extra dividend
Price per share $
Shareholder wealth $
Alternative II Repurchase
Price per share $
Shareholder wealth $
b. What will the company's EPS and P/E ratio be under the two different scenarios? (Do not round intermediate calculations. Round your final answers to 2 decimal places, e.g., 32.16.)
Alternative 1
EPS $
P/E ratio
Alternative II
EPS $
P/E ratio
Answer:
$13,000 must be either spent as a dividend or used to repurchase stocks
they can be used to repurchase $13,000 / $50 = 260 stocks
or pay an extraordinary dividend of $13,000 / 5,000 = $2.60
A) assuming a perfect capital market:
if stocks are repurchased, then the price of the stocks will not change
if a cash dividend is paid, after the dividend is paid, the price of the stocks will fall to $50 - $2.60 = $47.40
B) current EPS = $2, so net income = $10,000
if stocks are repurchased, then the EPS = $10,000 / (5,000 - 260) = $2.11
if a cash dividend is paid, EPS will not change
current P/E ratio = $50 / $2 = 25
if stocks are repurchased, then the P/E ratio = $50 / $2.11 = 23.7
if a cash dividend is paid, then the P/E ratio = $47.40 / $2 = 23.7
You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 4.1 percent indefinitely. The company just paid a dividend of $3.20 and you feel that the required return on the stock is 10.3 percent. What is the price per share of the company's stock?
Answer:
Price of stock = $53.73
Explanation:
The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.
The model is given as
P = D×(1+g)/(r-g)
P- price, D- dividend payable now , r -cost of equity, g - growth rate in dividend
DATA:
P= ?
D- 3.20
g- 4.1%
r-10.3%
Price of stock = 3.20× 1.041/(0.103-0.041) = 53.73
Price of stock = $53.73
Regatta, Inc., has six-year bonds outstanding that pay an 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. How much will you be willing to pay for Regatta's bond today? Assume annual coupon payments. (Do not round intermediate computations. Round your final answer to the nearest dollar.)
Answer:
$1,065.76
Explanation:
Years to maturity = 6
Coupon rate = C=8.25%
Annual coupon = $1,000 * 0.0825 = $82.50
Current market rate = i = 6.875%
Present value of bond = 82.5 * PVIFA(6.875%,6) + 1,000 * PVIF(6.875%,6)
Present value of bond= 82.5 * 4.7850 + 1,000 * 0.6710
Present value of bond= 394.7625 + 671
Present value of bond= 1065.7625
Present value of bond= $1,065.76
The valuation calculating the present value of a future cash flow to determine its value today is called __________ valuation.
Answer:
Discounted cash flow(DCF).
Explanation:
This is explained to be an investment analysis model which is seen to calculate the value of investment on the basis of its future value. Thus evaluation model is seen to be discounted back to a present value in which time value of money is been used as a factor and is been put into consideration. It is also explained that investment’s worth is equal to the present value of all projected future cash flows. Cases directs us to see that boards are seen to subtract the amount spent on the investment from the present value of future cash flows to calculate the net present value of the investment. Therefore, they can easily sum how much the investment will make in today’s dollars and compare it with the cost of the investment.
When entering markets in a region, you should always choose the country with the lowest manufacturing costs for local production.
a. True
b. False
Answer:
b. False
Explanation:
Manufacturing costs are not the only thing that you have to consider when deciding where to start local production. E.g. you work for a multinational that wants to start selling its products in Africa. The country with the lowest production costs is probably South Sudan (or maybe some other country that is going through severe economic recessions or internal conflicts), but that doesn't necessarily mean that you are going to set up a facility there.
Production costs are just one factor to consider, other factors are as equally or even more important, e.g. market size, purchase power, economic stability, legal order and stability, etc. Why do you think that MB or BMW set up huge factories in America if production costs are much lower in most of the world.
"An investor has sold short stock worth $80,000 in a margin account, depositing the Regulation T margin requirement. If the market value of the stock falls to $65,000, what is the SMA in the account?"
Answer:
$15000.
Explanation:
The worth of stock that the investor sold = $80000
The fall in the market value of the stock = $65000
Since the value of the stock falls to $65000. thus, the SMA in the account can be calculated by eliminating the decreased amount from the stock value. Therefore, the SMA in the account will be 80000-65000 = $15000
Skysong Importers provides the following pension plan information. Fair value of pension plan assets, January 1, 2017 $2,177,000 Fair value of pension plan assets, December 31, 2017 2,559,000 Contributions to the plan in 2017 309,000 Benefits paid retirees in 2017 359,000 From the data above, compute the actual return on the plan assets for 2017. Actual Return on Plan Assets for 2017 is:
Answer:
$432,000
Explanation:
The computation of the actual return on the plan assets for the year 2017 is shown below:
Fair Value of plan as Dec 31,2017 $2,559,000
Less:
Fair Value of plan as Jan 1 , 2017 (-$2,177,000)
Increase in fair value $382,000
Less:-Contributions to the plan -$309,000
Add: Benefits to paid to retiree $359,000
Actual return on plan assets for 2017 $432,000
Prepare the journal entry to record Regis’s employer payroll taxes resulting from the January 8 payroll. Regis’s state unemployment tax rate is 5.4% of the first $7,000 paid to each employee. The federal unemployment tax rate is 0.6%.
Answer:
1a.
FICA-Social Security 5,369.20
FICA-Medicare 1,255.70
FUTA 519.60
SUTA 4,676.40
1B.
Dr Office salaries expense 25,760.00
Dr Sales salaries expense 60,840.00
Cr FICA—Social sec. taxes payable 5,369.20
Cr FICA—Medicare taxes payable 1,255.70
Cr Employee fed. inc. taxes payable 12,760.00
Cr Employee medical insurance payable 1,440.00
Cr Employee union dues payable 780.00
Cr Salaries payable 64,995.10
2.
Dr Payroll taxes expense 11,820.90
Cr FICA—Social sec. taxes payable 5,369.20
Cr FICA—Medicare taxes payable 1,255.70
Cr State unemployment taxes payable 4,676.40
Cr Federal unemployment taxes payable 519.60
Explanation:
1a. Calculation for the amounts for each of these four taxes of Regis Company.
REGIS Company’s:
Tax January 8 earnings
Subject to tax ×Tax Rate= Tax Amount
FICA-Social Security
86,600× 6.20%= 5,369.20
FICA-Medicare 86,600×1.45%= 1,255.70
FUTA 86,600×0.60%=519.60
SUTA 86,600× 5.40% =4,676.40
1B. Preparation of the journal entry to record Regis Company's January 8 employee payroll expenses and liabilities
Jan 8
Dr Office salaries expense 25,760.00
Dr Sales salaries expense 60,840.00
Cr FICA—Social sec. taxes payable 5,369.20
Cr FICA—Medicare taxes payable 1,255.70
Cr Employee fed. inc. taxes payable 12,760.00
Cr Employee medical insurance payable 1,440.00
Cr Employee union dues payable 780.00
Cr Salaries payable 64,995.10
2. Preparation of the journal entry to record Regis's employer payroll taxes resulting from the January 8 payroll
Jan 8
Dr Payroll taxes expense 11,820.90
(5,369.20+1,255.70+4,676.40+519.60)
Cr FICA—Social sec. taxes payable 5,369.20
Cr FICA—Medicare taxes payable 1,255.70
Cr State unemployment taxes payable 4,676.40
Cr Federal unemployment taxes payable 519.60
Calculation for the amount Subject to tax
Office salaries $25,760
Sales salaries $60,840
Subject to tax=$86,600
If the short-run market supply curve and the demand curve intersect above the long-run market supply curve, firms will experience ________ economic profits, meaning the price is ________ the minimum point on the average total cost curve.
Answer:
Positive and above, are the right answers.
Explanation:
In the short run price, the more than the price of long-run equilibrium hat means the firm is making an economic profit in the short run, and the price charged is more than the minimum of the average total cost. However, this positive economic profit will become zero in the long run because firms enter the market after looking at the positive economic profit. And this entry keeps continuing until the economic profit becomes zero
The valuation allowance account that is used in conjunction with deferred taxes relates:_______
Answer: contra asset
Explanation:
A contra asset account is one whereby the account balance will either be a negative balance or zero.
The valuation allowance account that is used in conjunction with deferred taxes relates contra asset.
Write a short history of the Federal Reserve (FED). Explain how it operates in the United States. What is the function of the FED
Answer:
Background
The Federal Reserve Bank or he Fed as it is popularly known, was created by an Act of Congress in 1913 to serve as the Central Bank of the United States of America. It is therefore the Principal Bank in the United States and serves as the bank of the US Government by default. As the Central Bank, the Fed is in charge of Financial Institutions in the country especially Banks. They also controls the amount of USD in circulation through different methods such as Open Market Operations, Discount and Reserve ares and requirements and the actual printing of money ( they decide how much money the Treasury Department's Bureau of Engraving and Printing should print).
Responsibilities
The Fed is in charge of Monetary policy which it uses to maintain interest rates and money supply in the United States. As already stated which some additions, the Fed's responsibilities are;
To act as the US Government's bankTo regulate and oversee financial institutionsInfluence money supply and interest rates.Modus Operendi
Open Market Operations - This is a method by which the Fed controls money supply. Using Open Market Operations (OMO), the Fed sells or purchases Government securities through a number of securities dealers who compete on a price basis. By buying Government securities the Fed puts money into the Economy as payment for the securities and when they sell they reduce money supply. Reserve Requirements - This is a percentage of total deposits that banks are to keep with the Fed to protect against Bank failure. This requirement can be increased or decreased to control the amount of money that banks hold and by extension money supply. Discount Rate - This is the interest charged on loans to banks from the Fed. Controlling it is also a tool in Monetary Policy.Which of the following are examples of interest rate futures contracts?
a. Corporate bonds
b. Treasury bonds
c. Eurodollars
d. T Bonds and Eurodollars
e. Corporate bonds and Treasury Bonds
f. Bitcoin Index futures
g. None of the above.
Answer:
Option D, T Bonds and Eurodollars , is the right answer.
Explanation:
Option D is correct because the future contract or interest rate future is the instruments that pay or offer the interest. However, the contract is an agreement on which buyer and seller are agreed for the future delivery of any interest that the asset bears. However, this contract gives the offer to the buyer and seller to lock the price of the asset that bears the interest in a future date. Moreover, this instrument is not a market traded instrument, these are the instrument used for a cash settlement. Thus, the same can be seen with option D. thus it is correct.
Suppose we have the following Treasury bill returns and inflation rates over an eight year period:Year Treasury Bills (%) Inflation (9%)1 7.82 9.422 8.6 13.043 6.44 7.554 5.6 5.355 6.02 7.316 8.25 9.677 11.23 13.988 12.85 13.37a. Calculate the average return for Treasury bills and the average annual inflation rate for this period.b. Calculate the standard deviation of Treasury bill returns and inflation over this period.c. What was the average real return for Treasury bills over this period?
Answer:
Year Treasury Bills Inflation Real return
1 7.82 9.42 -1.48
2 8.6 13.04 -3.93
3 6.44 7.55 -1.03
4 5.6 5.35 0.24
5 6.02 7.31 -1.20
6 8.25 9.67 -1.29
7 11.23 13.98 -2.41
8 12.85 13.37 -0.46
a. Average return for Treasury bill = (7.82 + 8.6 + 6.44 + 5.6 + 6.02 + 8.25 + 11.23 + 12.85) / 8
Average return for Treasury bill = 66.81 / 8
Average return for Treasury bill = 8.35125
Average return for Treasury bill = 8.35
Average annual inflation rate = (9.42 + 13.04 + 7.55 + 5.35 + 7.31 + 9.67 + 13.98 + 13.37) / 8
Average annual inflation rate = 79.69 / 8
Average annual inflation rate = 9.96125
Average annual inflation rate = 9.96
b. X bar = Average
Standard Deviation = (x-X)^2
For year 1 = (7.82 - 8.35)^2 = 0.2809. Hence, the Standard deviation of other years will be calculated and summed-up to give the Standard deviation of Treasury bill return and of Inflation over this period respectively.
Standard deviation of Treasury bill returns = 2.55
Standard deviation of inflation over this period = 3.20
c. Real return for Treasury bills = ((1+nominal return)/(1+inflation rate)-1)*100
For Year 1, Real return = (1 + 7.82%) / (1 + 9.42%) - 1) * 100
Real return = 1 + 0.078 / (1 + 0.0942) - 1 * 100
Real return = (1.078 / 1.0942) -1 * 100
Real return = 0.98519 - 1 * 100
Real return = -0.01480 * 100
Real return = -1.48
Hence, the average real return for Treasury bills over this period = (-1.48 + -3.93 + -1.03 + 0.24 + -1.20 + -1.29 + -2.41 + -0.46) / 8
Average real return for Treasury bills = -11.56 / 8
Average real return for Treasury bills = -1.445
Resling Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 9 helicopters makes between 1,300 and 2,300 round-trips per year. The records indicate that a helicopter that has made 1,300 round-trips in the year incurs an average operating cost of $600 per round-trip, and one that has made 2,300 round-trips in the year incurs an average operating cost of $450 per round-trip.
Required:
1. Using the high-low method, estimate the linear relationship y =a + bX , where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year.
2. Give examples of costs that would be included in a and in b.
3. If Reisen Travel expects each helicopter to make, on average, 1,200 round-trips in the coming year, what should its estimated operating budget for the helicopter fleet be?
Answer:
1. y = $255 + $0.15 X
2. Examples of costs that would be included in a and in b.
a - Fixed Cost
Example : Maintenance Cost over the period
b - Variable Cost
Example : Maintenance Cost after every flight
3. $435
Explanation:
linear relationship
Fist determine the high point and the low point
High : 2,300 round-trips
Low : 1,300 round-trips
Then determine the variable cost
Variable Cost = Difference between Overheads ÷ Deference in Independent variables
= ($600 - $450) ÷ (2,300 - 1,300)
= $0.15 per round-trip
Determine the fixed cost element
Fixed Cost = Total Overheads - Variable cost at a point
Choosing the Highest point this will be :
Fixed Cost = $600 - $0.15 × 2,300
= $255
Then the linear relationship y =a + bX will be : y = $255 + $0.15 X
Examples of costs that would be included in a and in b.
a - Fixed Cost
Maintenance Cost over the period
b - Variable Cost
Maintenance Cost after every flight
Operating budget for the helicopter fleet with 1,200 round-trips in the coming year
y = $255 + $0.15 X
= $255 + $0.15 × (1,200)
= $435
The first year of operations for Grayton Company is 2017. Given this information for 2017:_______. Pretax book income $90,000Estimated litigation expense 100,000Excess of tax over book depreciation 300,000Interest Income on municipal bonds 200,000 No other permanent or temporary differences exist. The litigation item will be paid in 2020 and is appropriately considered a noncurrent liability. The depreciation will reverse evenly over the next three years. Tax rate is 30%. Future net income is probable. Indicate the proper deferred tax amount (s) to appear on the 12/31/17 balance sheet a. A noncurrent liability of $90,000 b. A noncurrent liability of $60,000 c. A noncurrent asset of $30,000 and a noncurrent liability of $90,000 d. A current liability of $30,000 and a noncurrent liability of $10,000 e. A noncurrent asset of $90,000 and a noncurrent liability of $30,000
Answer:
b. A noncurrent liability of $60,000
Explanation:
Calculation to Indicate the proper deferred tax amount (s) to appear on the 12/31/17 balance sheet
First step is to calculate the Estimated litigation expense by multiplying it with the Tax rate percentage
($100,000 × 30%)
= $30,000
Second step is to calculate the Excess of tax over book depreciation by multiplying it with the Tax rate rate percentage
($300,000 × 30%)
= $90,000
The last step is to calculate for the proper deferred tax amount (s) to appear on the 12/31/17 balance sheet
$90,000-$30,000
=$60,000 noncurrent liability
Therefore the proper deferred tax amount (s) to appear on the 12/31/17 balance sheet will be A noncurrent liability of $60,000