Answer:
The interest amount is $29600.
Explanation:
Below are the following given values:
The par value of bonds that Morgan company issues = $740000
Interest paid = semi annually
Current interest rate = 7%
Now we have to find the total amount of interest at 8% that is compounded semiannually.
Below is the calculation of the interest amount.
Amount of interest for each semi-annual period: = face value × Coupon rate × 0.5
Here we multiply with 0.5 because interest is semi-annually.
Total interest = $740,000 × 8% × 0.5
Total interest = $29,600
Problem 14-12 Book Value versus Market Value [LO3] Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $76, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $105 million, a coupon rate of 5 percent, and sells for 95 percent of par. The second issue has a face value of $90 million, a coupon rate of 4 percent, and sells for 107 percent of par. The first issue matures in 25 years, the second in 8 years. Both bonds make semiannual coupon payments. a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) b. What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) c. Which are more relevant, the book or market value weights? Market value
Answer:
a. What are the company's capital structure weights on a book value basis?
common stocks' book value = 4,000,000 x $7 = $28,000,000
first bond = $105,000,000
second bond = $90,000,000
total book value = $223,000,000
capital structure:
common stocks = $28 / $223 = 0.1256
debt = $195 / $223 = 0.8744
b. What are the company’s capital structure weights on a market value basis?
common stocks' market value = 4,000,000 x $76 = $304,000,000
first bond = $99,750,000
second bond = $96,300,000
total book value = $500,050,000
capital structure:
common stocks = $304 / $500.05 = 0.6079
debt = $196.05 / $500.05 = 0.3921
c. Which are more relevant, the book or market value weights?
The market value is always more relevant and it is used to calculate the company's WACC.
By shifting aggregate demand, monetary policy can affect ________ and ________.
a. Real gross domestic product (GDP); unemployment
b. Interest rates; unemployment
c. Real GDP; interest rates
d. Money supply; real GDP
e. Money supply; unemployment
Answer: a. Real gross domestic product (GDP); unemployment
Explanation:
Monetary policy refers to the Central Bank of a country changing the supply of money as well as the interest rate in the country to either stimulate, slow down or keep the economy stable.
When expansionary monetary policy is implemented for instance, it will lead to more money in the economy as well as a reduced interest rate. This will spur companies to borrow to invest and consumers to borrow to consume. This will shift Aggregate Demand to the right and lead to a higher real GDP.
As earlier said, companies to borrow to invest and start up new projects or expand. This will need more labor so more people will be hired thereby pushing the unemployment rate downward.
Contractionary monetary policy would have the opposite effect.
Cynthia Knott's oyster bar buys fresh Louisiana oysters for $3 per pound and sells them for $8 per pound. Any oysters not sold that day are sold to her cousin, who has a nearby grocery store, for $2 per pound. Cynthia believes that demand follows the normaldistribution, with a mean of 100 pounds and a standard deviation of 20 pounds. How many pounds should she order each day? Refer to the standard normal table LOADING... for z-values.
Answer:
111 pounds
Explanation:
The number of pounds Cynthia should order each day can be calculated as follows
Calculation
Standard deviation = 20
Mean = 100
Cost of actual utilization = 8-3 = 5
Cost of Under utilization = 4-2 = 2
Probability of sale = Co/(Cu+Co)
Probability of sale = 5/(5+2)
Probability of sale =0.714
Z score at above probability = z = 0.57
hence cynthia should order= mean+z*standard deviation
Order = 100+0.57*20
Order = 111.4 or 111 pounds
Which of the following is not normally viewed as an adjustment to the principal of an estate? Multiple Choice Insurance expenses. Debts incurred prior to death. Dividends declared prior to death. Investment commissions and other costs. Funeral expenses.
Answer:
Correct Answer:
E. Funeral expenses.
Explanation:
Adjustment to the principal of an estate is a process which allow a trustee to make adjustments between income and principal over a given period of time. This income could be as a result of minor or major money earned as well as the debts incurred.
In some parts of the country, the buyer and the seller never meet at closing; the paperwork is handled by an escrow agent in a process called
Answer:
Closing escrow
Explanation:
Closing escrow refers to completing the sale and transfering the ownership from the seller to the buyer in a process in which a third party that would be the escrow agent maintains the papers and the money until the operation is closed. According to this, the answer is that in some parts of the country, the buyer and the seller never meet at closing; the paperwork is handled by an escrow agent in a process called closing escrow because the escrow agent keeps the funds and the paperwork until the transaction is complete and because of that the buyer and the seller don't need to meet at closing.
Mr. and Mrs. Haley are purchasing beachfront property in an upscale development. The home comes equipped with all furnishings. The Haleys want to get a mortgage that will cover the purchase price plus all the furnishings. What kind of mortgage are they looking for?
Answer: Package Mortgage
Explanation:
The Package Mortgage is a type of mortgage offered to prospective home buyers who want to buy a house that is already fully furnished. This way they do not have to spend extra on buying the furniture. They could just pay for everything as a Package.
The downside of this is that it is higher than other related mortgages and so draws a higher mortgage payment. Also, the collateral will not just include the property itself, but the furniture that the house came with.
The following data relate to direct labor costs for the current period: Standard costs 6,000 hours at $12.00 Actual costs 7,500 hours at $11.60 What is the direct labor rate variance?
A. $15,000 unfavorable
B. $3,000 favorable
C. $17,400 unfavorable
D. $2,400 favorable
Answer: $3000 favorable
Explanation:
The information provided in the question are:Standard costs 6,000 hours at $12.00 and the Actual costs 7,500 hours at $11.60.
The direct labor rate variance will be calculated as:
= (7,500 × $ 12) - (7,500 × $11.60)
= $90,000 - $87,000
= $3,000 Favorable
It is favorable since the standard rate is more than the actual rate.
What would be the best answer
Answer:
The correct answer is :- Measurable gain
Listed below are several transactions. For each transaction, indicate whether the cash effect of each transaction is reported in a statement of cash flows as an operating, investing, financing, or noncash activity. Also, indicate whether the transaction is a cash inflow or cash outflow, or has no effect on cash. The first answer is provided as an example
Transaction Financing Type of Activity Cash Inflow or Outflow
1. Issuance of common stock.
2. Sale of land for cash
3. Purchase of treasury stock.
4. Collection of an account receivable
5. Issuance of a note payable
6. Purchase of inventory
7. Repayment of a note payable
8. Payment of employee salaries.
9. Sale of equipment for a notereceivable.
10. Issuance of bonds
11. Investment in bonds.
12. Payment of interest on bonds payable.
13. Payment of a cash dividend
14. Purchase of a building
15. Collection of a note receivable. Cash inflow
Answer:
1. financing : cash inflow
2. investing : cash inflow
3. financing : cash outflow
4. operating : cash inflow
5. financing : cash inflow
6. operating : cash outflow
7. financing : cash outflow
8. operating : cash outflow
9. non-cash activity : no effect on cash
10. financing : cash inflow
11. Investing : cash outflow
12. operating : cash outflow
13. Investing : cash outflow
14. Investing : cash outflow
15. investing : cash inflow
Explanation:
The Cash flow Statement reports Cash Flow from 3 sources, namely (1) Cash flow from Operating , (2) Cash flow from Financing and (3) Cash Flow from Investing Activities
Cash flow from Operating Activities - Reports cash flows arising from ordinary course of business trading. Example is collection of an account receivable.
Cash flow from Financing Activities - Reports cash flow arising from acquisitions and sale of investment or non-current assets. Example is purchase of a building.
Cash Flow from Investing Activities - Reports cash flow arising from sources of finance. Example is Issuance of bonds.
Non-cash activity - Non-cash activity have no effect on cash and are not included in Statement of Cash flow. Example is a ale of equipment for a note receivable.
Our company manufactures and sells electric staplers for $16 each. If 10,000 units were sold in December, and management forecasts 4% growth in sales each month, the number of electric stapler sales budgeted for March should be:_____.
A) 10,000.
B) 11,249.
C) 10,400.
D) 10,816.
E) 11,000.
Answer:
B) 11,249.
Explanation:
The computation of the number of electric stapler sales budgeted for Marchis shown below:
On Jan
= 10,000 units × 1.04
= 10,400 units
On feb
= 10,400 units × 1.04
= 10,816 units
On march
= 10,816 units × 1.04
= 11,248.64 units
Hence, the correct option is B. 11,249
therefore all other options are wrong
We simply multiplied the unit sales with the growth rate
A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:
Activity Cost Pool Budgeted Cost Product A Product B
Activity 1 $87,000 3,000 2,800
Activity 2 $62,000 4,500 5,500
Activity 3 $93,000 2,500 5,250
Annual production and sales level of Product A is 34,300 units, and the annual production and sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of Product A under activity-based costing?
a. $3.00
b. $2.00
c. $10.28
d. $15.00
e. $2.33
Answer:
a. $3.00
Explanation:
Calculation of activity rate for activity 1
Activity rate = Budgeted cost of activity 1/Total budgeted activity
=$87,000 / (3,000 + 2,800)
=$87,000/5,800
=$15
Calculation of activity rate for activity 2.
Activity rate = Budgeted cost of activity 2 /Total budgeted activity
=$62,000 / (4,500+5,500)
=$62,000 / 10,000
=$6.20
Calculation of activity rate for activity 3
Activity rate = Budgeted cost of activity 3 / Total budgeted activity
=$93,000 / (2,500+5,250)
=$93,000 / 7,750
=$12
Calculation of total overhead cost of product A.
Total overhead cost = Activity1 + Activity2 + Activity3
Total overhead cost = (3,000×$15) + (4,500×$6.20) + (2,500×$12)
Total overhead cost = $45,000+$27,900+$30,000
Total overhead cost = $102,900
Thus, the total overhead cost allocated to product A is $102,900.
Calculation of overhead cost per unit.
Overhead cost per unit = Total overhead cost allocated / Number of units produced
= $102,900 / 34,300
= $3 per unit
Thus, the overhead cost per unit of product A is $3
6. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income
Answer: $2,430
Explanation:
Sales were based on a volume of 1,000 units.
Previous sales price = 105,000/1,000 = $105
Previous Sales volume = 100
Variable expenses = 73,500/1,000 = $73.50
New sales volume = 1,000 - 100 = 900
New sales price = 105 + 2 = $107
Net Operating Income = Sales - Varible Costs - Fixed costs
= (900 * 107) - ( 73.50 * 900) - 27,720
= 96,300 - 66,150 - 27,720
= $2,430
On January 1, 2021, Laramie Inc. acquired land for $6.2 million. Laramie paid $1.2 in cash and signed a 6% note requiring the company to pay the remaining $5 million plus interest on December 31, 2022. An interest rate of 6% properly reflects the time value of money for this type of loan agreement. For what amount should Laramie record the purchase of land
Answer:
The amount Laramie should record the purchase of land is $6.2 million.
Explanation:
The costs of a fixed asset refer to the purchase price and other relevant costs which are incurred in order to the location and working condition required to operate the fixed asset in way that it is intended.
The other relevant costs that are added to the purchase price to arrive at the cost of the fixed assets include professional fees, non-refundable taxes or levies, and among others.
If any trade discount or rebate is given, this will be deducted from the purchase price to arrive at the cost.
Any interest required to be paid on the delayed payment in order to reflects the time value of money are not part of the cost of the asset but expensed in the year they are incurred.
From the question, the land acquired is a fixed asset. Based on the explanation above, the total cost of the asset is $6.2 million. The interest from the 6% interest rate on the remaining $5 million will be part of the cost of the land but it will be expensed in the year they are incurred.
Therefore, the amount Laramie should record the purchase of land is $6.2 million.
Which of the following entries correctly reflects the entry for recording the wages of all factory workers?
a. Work in Process Inventory Wages Expense Cash
b. Work in Process Inventory Manufacturing Overhead Wages Payable
c. Wage Expense Work in Process Inventory
d. Direct Labor Expense Indirect Labor Expense Wages Payable
Answer; b. Work in Process Inventory Manufacturing Overhead Wages Payable
Explanation;
Factor workers are considered to be directly related to the production of the good. As a result, the wages paid to them are added to the inventories produced to show that they are part of the cost of the goods produced. Their wages will therefore be debited to Work in Process Inventory.
The wages will then be credited to the Manufacturing Overhead Wages Payable as this is the liability account that deals with wages owed to people working in the factory.
Which of the following fall risk factors apply to William Jefferson? Select all that apply.
a. Confusion
b. Postural hypotension with dizziness
c. Unable to ambulate independently
d. History of falls
e. Impaired judgment
f. Incontinence
g. Sensory deficit
h. Increased anxiety
i. Medications affecting blood pressure or consciousness
j. Age (older than 65)
k. Decreased level of cooperation
Answer:
Treatment of dementia and or delirium comes with the following risk factors:
d) if it is related to head injury
j) Age
H) Increase anxiety
I) Medications affecting blood pressure or consciousness
Explanation:
Dementia refers to the gradual deterioration in memory and at least one other cognitive area in an alert person.
This can be caused by Age , Down’s Syndrome , Head injury etc.
Cheers!
Some of the following future cash flows have been expressed in then-current (future) dollars and others in CV dollars. Use an interest rate of 10% per year and an inflation rate of 6%. Find the present worth with all cash flows expressed in future dollars.
Year Cash flow, $ Expressed as
0 17,100 CV
3 46,500 Then-current
4 12,300 Then-current
7 26,900 CV
The present worth with all cash flows expressed in future dollars is $_______.
Answer:
$62,267.91
Explanation:
first we must calculate the interest rate = 10% + 6% + (10% x 6%) = 16.6%
now we can use the present value formula:
present value = future value / (1 + rate)ⁿ
present values for:
cash flow year 0 = $17,100cash flow year 3 = $46,500/1.166³ = $29,333.06cash flow year 4 = $12,300/1.166⁴ = $6,654.43cash flow year 7 = $26,900/1.166⁷ = $9,180.42total present value = $62,267.91
Answer:
The present worth with all cash flows expressed in future dollars is $62267.91The comparative condensed income statements of Marks Corporation are shown below. MARKS CORPORATION Comparative Condensed Income Statements For the Years Ended December 31 2017 2016 Net sales $620,000 $500,000 Cost of goods sold 450,000 400,000 Gross profit 170,000 100,000 Operating expenses 54,000 40,000 Net income $116,000 $60,000 Prepare a horizontal analysis of the income statement data for Marks Corporation using 2016 as a base. (Round percentages to 1 decimal place, e.g. 12.1%.) MARKS CORPORATION Condensed Income Statements For the Years Ended December 31 Increase or (Decrease) During 2016 2017 2016 Amount Percentage Net sales $620,000 $500,000 $ % Cost of goods sold 450,000 400,000 % Gross profit 170,000 100,000 % Operating expenses 54,000 40,000 % Net income $116,000 $60,000 $ % Prepare a vertical analysis of the income statement data for Marks Corporation in columnar form for both years. (Round percentages to 1 decimal place, e.g. 12.1%.) MARKS CORPORATION Condensed Income Statements For the Years Ended December 31 2017 2016 Amount Percentage Amount Percentage Net sales $620,000 % $500,000 % Cost of goods sold 450,000 % 400,000 % Gross profit 170,000 % 100,000 % Operating expenses 54,000 % 40,000 % Net income $116,000 % $60,000 %
Answer:
Marks Corporation
1. Horizontal Analysis:
2017 2016 Increase %
Net sales $620,000 $500,000 $120,000 24%
Cost of goods sold 450,000 400,000 50,000 12.5%
Gross profit 170,000 100,000 70,000 70%
Operating expenses 54,000 40,000 14,000 35%
Net income $116,000 $60,000 56,000 93%
2. Vertical Analysis:
2017 % 2016 %
Net sales $620,000 100% $500,00 100%
Cost of goods sold 450,000 72.6% 400,000 80%
Gross profit 170,000 27.4% 100,000 20%
Operating expenses 54,000 8.7% 40,000 8%
Net income $116,000 18.7% $60,000 12%
Explanation:
Data and Calculations:
MARKS CORPORATION Comparative Condensed Income Statements For the Years Ended December 31
2017 2016 Increase %
Net sales $620,000 $500,000 $120,000 24%
Cost of goods sold 450,000 400,000 50,000 12.5%
Gross profit 170,000 100,000 70,000 70%
Operating expenses 54,000 40,000 14,000 35%
Net income $116,000 $60,000 56,000 93%
For the horizontal analysis, the 2017 figure is compared to the 2016 figure. The Percentage increase is the difference divided by the base year, 2016's figures, before being multiplied by 100.
For the vertical analysis, the base is the sales figure. The relationship between the sales and other elements are established through ratio analysis.
Lambert Manufacturing has $100,000 to invest in either Project A or Project B. The following data are available on these projects (Ignore income taxes):
Project A Project B
Cost of equipment needed now $100,000 $60,000
Working capital investment needed now $0 $40,000
Annual cash operating inflows $40,000 $35,000
Salvage value of equipment in 6 years $10,000 $0
Refer to Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Both projects will have a useful life of 6 years and the total cost approach to net present value analysis. At the end of 6 years, the working capital investment will be released for use elsewhere. Lambert's required rate of return is 14%. The net present value of Project B is:_____.
A) $90,356.
B) $76,115.
C) $36,115.
D) $54,356.
Answer:
C) $36,115.
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
For project A
Cost of the equipment = $60,000 + 440,000 = $100,000
Cash flow in year 0 = $-100,000
Cash flow each year from year 1 to 6 = $35,000
I = 14%
NPV = $36,115.
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Raggs, Ltd. a clothing firm, determines that in order to sell x suits, the price per suit must be pequals160 minus 0.75 x. It also determines that the total cost of producing x suits is given by Upper C (x )equals4000 plus 0.5 x squared. a) Find the total revenue, Upper R (x ). b) Find the total profit, Upper P (x ). c) How many suits must the company produce and sell in order to maximize profit? d) What is the maximum profit? e) What price per suit must be charged in order to maximize profit?
Answer:
Please refer to the below for answers.
Explanation:
As per the above information, the following can be deduced;
•The price per suit (P)= 160-0.75x
•Total cost of producing x suit is given as C(x) = 4,000+0.5x^2
(a) The total revenue is R(x);
= (Numbers of units) * (Price per unit)
R(x) = x * (160-0.75x)
R(x) = 160x - 0.75x^2
(b) The total profit is P(x);
= Total revenue - Total costs
P(x) = R(x) - C(x)
P(x) = (160x - 0.75x^2) - (4,000 + 0.5x^2)
P(x) = 160x - 0.75x^2 - 4,000 - 0.5x^2
P(x) = -1.25x^2 + 160x - 4,000
(c). To find the maximum value of P(x), we will need to find first the derivative of P'(x)
d/dx*P(x) = d/dx(-1.25x^2 + 160x - 4,000)
P'(x) = - d/dx(1.25x^2) + d/dx(160x) - d/DX(4,000)
P'(x) = -2.5x + 160
The next is to find the critical points.
P'(x) = 0
-2.5x + 160 = 0
-2.5x . 10 + 160 . 10 = 0 . 10
-25x + 1,600 = 0
-25x + 1,600 - 1,600 = 0 - 1,600
-25x = -1,600
x = 64
We will also use the second derivative test to know if there is an absolute maximum because f(c) is the absolute maximum value if f''(c) < 0
Therefore,
d/dx*P'(x) = d/dx (-2.5x + 160)
P''(x) = -d/dx (-2.5x) + d/dx (160)
P''(x) = -2.5
Hence, (64) is negative , and so profit is maximized when 64 suits are produced and sold.
(d) The maximum profit is denoted as;
P(64) = -1.25(64)^2 + 160(64) - 4,000
P(64) = -64^2 * 1.25 + 10,240 - 4,000
P(64) = 6,240 - 64^2 * 1.25
P(64) = 6,240 - 5,120
P(64) = $1,120
Therefore , the clothing firms makes $1,120 as profit by producing and selling 64 suits.
(e) The price per unit to needed to make the maximum profit is thus;
P = 160 - 0.75x
Where x is 64
P = 160 - 0.75(64)
P = 160 - 48
P = $112
Second only to the sole proprietorship, the partnership is among the oldest of business entities to develop. By the time of the development and implementation of the English Common Law in the 16th Century, the law of business partnerships was already highly developed. This was the case despite the fact that a majority of partnership business owners were illiterate. In businesses that involve numerous members of the same family, the preferred business choice of conduct is the partnership. What advantages may occur for the family members by conducting business in this form
Answer:
1. A higher level of commitment and dedication
2. A less tense working environment
3. Employee consideration
Explanation:
Partnerships are forms of businesses that require the involvement of two or more partners. Family members may constitute the partners in a business. Just like every other type of business formation, partnerships have several advantages to family members. These include;
1. A higher level of commitment and dedication: Since their livelihood is dependent on this stream of income, the family members would put in their best to ensure increased output. They would also be willing to make sacrifices in order to get things done.
2. A less tense working environment: Unlike in some other strictly run businesses, partnerships with family members who are known to each other would create a calm atmosphere for business dealings.
3. Employee consideration: Workers would be given better considerations like leave and promotions when it is due to them. These things might be otherwise difficult to attain in a tense business setting.
After the posting of the accounts payable ledger and general ledger is completed, the total of the accounts payable ledger balances should equal the general ledger balance of
Answer: Accounts Payable
Explanation:
The General Ledger has a record of all the financial transactions that take place in the company. It therefore has an Accounts Payable account that records payables that the company has incurred.
The firm will also have an Accounts Payable Ledger that will also record the payables that the firm has incurred. When the entries have been made in this ledger and also in the General Ledger, the balances should be equal to reflect proper record keeping.
If the balances are not equal then an accounting error has been made that needs to be found and rectified.
Do-well bonds have a face value of 1000 and are currently quoted at 86.725. The bonds have coupon rate of 6.5 percent. What is the current yield on these bonds?
Answer:
The current yield is 7.50 per cent.
Explanation:
The face value of the bonds = 1000
Current quoting = 86.725
The coupon rate = 6.5 %
Now we have to find the current yield by using the above information. Below is the calculation for current yield.
Price = 86.725% of 1000 = 867.25
Coupon = 0.065 * 1000 = 65
The Current yield = (Annual coupon/price) × 100
Current yield is = (65 / 867.25) * 100
Current yield is = 7.50 per cent.
Which of the following is a good example of a manufacturing-related key success factor?
a. Global distribution capabilities
b. High labor productivity
c. Accurate filling of buyer orders
d. Short delivery time capability
Answer:
b. High labor productivity
Explanation:
High labor productivity is a good example of a manufacturing related key success factor because it reduces wages expenses. The reduction of wages and overall efficiency in production result into increase in the profitability of the firm. It also gives the firm a good competitive advantage over others in the market.
Match each activity that generates portfolio income to the context in which it is generated.
Let's match each portfolio asset with its defintion
trading paper assets. It involves buying and selling of stocks, bonds, mutual funds, derivatives, and currencies. The paper asset is a representation of an underlying asset that can be of many types: stock, bonds, etc. Literally it is a piece of paper where the ownership of an asset is stated.
stocks: It represents ownership in a corporation. The capital of such company is divided in equally-valued shares which are sold in the financial markets and the buyers become its owners in the proportion of the value of the shares they have purchased.
mutual funds: It is a financial investment that pools money from investors to invest in securities. They have certain advantages if compared to investing individually on securities. They enable to reach economies of scale when conducting investments, they involve a higher level of diversification, more liquidity and they are controlled by professionals.
derivative: It is a contract whose value derives from other financial assets. More specifically, its value depends on an underlying, which can be an asset, an index, etc. Derivative contracts can be issued with a multiplicity of objectives: to protect other investment against price variations (insurance), to speculate, etc.
Assume you are risk-averse and have the following three choices. Expected Value Standard Deviation A $ 1,870 $ 1,520 B 2,000 840 C 1,590 710 a. Compute the coefficient of variation for each. (Round your answers to 3 decimal places.) b. Which project will you select
Answer:
a. The Coefficient of variation is expressed as;
= Standard Deviation/Expected return
Choice A
= 1,520/1,870
= 0.813
Choice B
= 840/2,000
= 0.42
Choice C
= 710/1,590
= 0.447
b. The coefficient of variation measures the volatility of the return of the investment. The more volatile it is, the more risky it is. A risk Averse investor would go for the one with the least Coefficient which is Choice B in this case.
Light Me Up Lamps has variable expenses of 40% of sales and monthly fixed expenses of . The monthly target operating income is . What is Light Me Up Lamps' operating leverage factor at the target level of operating income?
Answer: B. 3.25
Explanation:
Operating Leverage enables a company know how much their income will increase by if they manage to increase their revenue.
The formula is;
= Contribution Margin / Net Income
[tex]\frac{Fixed Costs + Net Income}{ Net Income} \\= \frac{80,000 + 180,000}{80,000} \\= 3.25[/tex]
= 3.25
You deposit $1,100 at the end of each year into an account paying 9.1 percent interest.
(a) How much money will you have in the account in 19 years?
(b) How much will you have if you make deposits for 38 years?
Answer:
a.
The money that we will have in account is $51156.41
b.
The money that we will have in account is $318808.31
Explanation:
a.
The deposits made in the account represent an annuity pattern as the deposits made are of a constant amount, are made after equal interval of time and are for a defined time period. Thus, to calculate the value of money that we will have after 19 years, we will use the formula for the future value of annuity.
The formula for the future value of annuity is attached.
FV = 1100 * [ (1+0.091)^19 - 1 / 0.091 ]
FV = $51156.41178
b.
The same formula for the future value of annuity will be used and we will change n from 19 to 38.
FV = 1100 * [ (1+0.091)^38 - 1 / 0.091 ]
FV = $318808.3149
When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting:
Answer:
A discretionary fiscal policy.
Explanation:
A discretionary fiscal policy is a policy guideline out in place by Government with the aim of either shrinking or expanding the economy. This kind of policy is usually associated with either an increase or decrease in the tax rates or levels which will increase government revenue or decrease in government revenue or be focused on increasing or decreasing government spendings on the economy either through increasing or decreasing investment in infrastructures etc
Some of the following problems would be suitable for solution by engineering economic analysis.
Which ones are they?
(a) Would it be better to buy a car with a diesel engine or a gasoline engine?
(b) Should an automatic machine be purchased to replace three workers now doing a task by hand?
(c) Would it be wise to enroll for an early morning class to avoid traveling during the morning traffic rush hour?
(d) Would you be better off if you changed your major?
(e) One of the people you might marry has a job that pays very little money, while another has a professional job with an excellent salary. Which one should you marry?
Answer:
(a) Would it be better to buy a car with a diesel engine or a gasoline engine?
Explanation:
Note that this option has an economic appeal which is cost comparison. Engineering analysis here would seek to determine the economic advantage of such purchase.
For example, one may consider from the engineering economics perspective the fuel consumption ratio per mile for diesel engines and gasoline engines their relative cost per liter.
Classify the following cash flows as either operating, investing, or financing activities assume indirect method.
1. Received cash from sale of equipment at a gain.
2. Received cash dividends from investments.
3. Cash paid to purchase investments in securities.
4. Issued preferred stock for cash.
5. Paid interest on the debt.
6. Paid accounts payable with cash.
7. Paid cash for rent.
8. Received cash from the sale of property at a loss.
9. Paid short-term debt with cash. 10. Paid long-term debt with cash.
Answer:
Cash Flow Method
1. Received cash from sale of Investing activities
equipment at a gain -
2. Received cash dividends Operating activities
from investments.
3. Cash paid to purchase Investing activities
investments in securities.
4. Issued preferred stock for Financing activities
cash.
5. Paid interest on the debt. Operating activities
6. Paid accounts payable with Operating activities
cash.
7. Paid cash for rent. Operating activities
8. Received cash from the sale Investing activities
of property at a loss.
9. Paid short-term debt with cash. Operating activities
10. Paid long-term debt with cash. Financing activities