Answer:
the effective cost of debt of Home Depot is 3.25 %.
Explanation:
Effective Cost of debt is the cost of debt after the tax shield.
In terms of the Tax Act, interest expense attract a deduction known as tax shield from income tax and this lowers the cost of debt financing as compared to equity financing.
Effective cost of debt = interest × ( 1 - tax shield)
= 5.00 % × (1 - 0.35)
= 3.25 %
The historical cost concept reflects the fact that financial accounting practice favors:________.
Reliability over relevance
Management's best guess over historical financial information
Relevance over reliability
Consensus market values over historical financial information
Answer:
Reliability over relevance
Explanation:
The historical cost principle states that assets must be recorded at purchase cost, disregarding any change in their market value. E.g. you purchased a land lot 10 years ago for $100,000 and now it is worth $500,000. It must be recorded at $100,000 since that was its original purchase cost.
Accounting tries to be as exact as possible, and if the carrying values started to change every period or even month by month because the accountant believed that the market value changed, then it would be a mess. Accountancy is not supposed to be a game of guessing, it is supposed to be as exact and reliable as possible.
An eight-year project is estimated to cost $528,000 and have no residual value. If the straight-line depreciation method is used and the average rate of return is 18%. determine the estimated annual net income.
Answer: $48,420
Explanation:
Average rate of return = Annual Net Income/ Average Investment
Average Investment
= (Beginning value of asset - ending value) / 2
= ( 538,000 + 0)/2
= $269,000
18% = Annual Net Income/269,000
Annual Net Income = 269,000 * 18%
Annual Net Income = $48,420
You have $11,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 15 percent and Stock Y with an expected return of 10 percent. Assume your goal is to create a portfolio with an expected return of 13.85 percent. How much money will you invest in Stock X and Stock Y?
Answer:
Invest $8,470 in XInvest $2,530 in Y.Explanation:
The following expressions can be formed;
Let x and y be the proportions
x + y = 1
0.15x + 0.1y = 13.85%
Expressing y in terms of x;
x + y = 1
y = 100 - x
0.15x + 0.1 ( 1 - x) = 13.85%
0.15x + 0.1 - 0.1x = 13.85%
0.05x = 13.85% - 0.1
x = 13.85%0.05 - 0.1/0.05
x = 77%
Invest 77% in X = 77% * 11,000
= $8,470
Invest in Y
= 11,000 - 8,470
= $2,530
If the Fed uses monetary policy to reduce the money supply and inflation, inflation expectations would
Answer: decrease
Explanation:
Monetary policy, is a policy that is used by the central bank in a country so as to control the supply of money and to achieve governmental aims.
If the Fed uses monetary policy to reduce the money supply and inflation, inflation expectations would fall.
It is difficult for marketers to trace the effects of online marketing communications.
a) true
b) false
Answer:
false
Explanation:
What arguments should be considered in assessing the burden that government debt imposes on future generations?
A. Much of the debt is held by foreigners so that the holders of government bonds are not also taxpayers.
B. Government budget deficits may crowd out private investment, lowering the future capital stock with fewer goods and services being produced in the future.
C. High levels of debt may lead to debt intolerance and increase the risk of default.
D. A and C only.
E. All of the above.
Answer:
E. All of the above.
Explanation:
A) This has happened to other countries, e.g. over 100 years ago, the US owned a very large portion of British foreign debt and it was able to influence British policies. Until that time, the British had been the largest in the world.
B) When government sell bonds, it withdraws money form the economy and increases interest rates, which in the long run will lower capital stock and hurt the economy.
C) The higher the debt level, the higher the interest that must be paid. This also applies to everyone. Imagine if you do not owe any money, and if you need to loan you have several options where to choose from. But if you are over your head in debt, banks will stop lending you money and you will have to look to more expensive sources of credit.
Runyon Incorporated reported the following results from last year’s operations: Sales $ 16,800,000 Variable expenses 12,230,000 Contribution margin 4,570,000 Fixed expenses 3,394,000 Net operating income $ 1,176,000 The company’s average operating assets were $7,000,000. Last year's turnover was closest to:
Answer:
2.4
Explanation:
Turnover is a concept in accounting that calculates how quickly a business conduct its operation.
The equation below will be used to calculate the turnover.
Turnover = Sales / Average operating assets
= $16,800,000 / $7,000,000
= 2.4
James has the choice of the following two Treasury Bills: A Government of Canada Treasury Bill for 98,000. The Canadian Treasury Bill matures in 120 days for 100,000. A U.S. Treasury Bill for 98,000. The U.S. Treasury Bill matures in 120 days for 100,000. Which of the following statements is NOT true?
A. The quoted rate for the Government of Canada Treasury Bill is 6.2075%
B. The quoted rate for the Government of Canada Treasury Bill exceeds the quoted
C. The annual effective yield rate earned by the Government of Canada Treasury Bill
D. The annual effective interest rate earned by the Govermment of Canada Treasury
E. The annual effective interest rate earned by the U.S. Treasury Bill is greater than rate for the U.S. Treasury Bill.
Answer:
E. The annual effective interest rate earned by the U.S. Treasury Bill is greater than rate for the U.S. Treasury Bill.
Explanation:
Treasury bills, or T-bills, are short term investments that are issued by the government. Unlike normal bonds which governments issued with interest payment, they do not have interest payments, but instead are sold at a discount. The Understanding how to calculate a T-bills yield and discount yield based on the maturity date is important to evaluate the investment.
At the beginning of the month, the Forming Department of Martin Manufacturing had 26,000 units in inventory, 30% complete as to materials, and 15% complete as to conversion. During the month the department started 76,000 units and transferred 86,000 units to the next manufacturing department. At the end of the month, the department had 16,000 units in inventory, 90% complete as to materials and 60% complete as to conversion. If Martin Manufacturing uses the weighted average method of process costing, compute the equivalent units for materials and conversion respectively for the Forming Department.
Answer:
materials = 100,400 units and conversion = 95,600 units
Explanation:
Computation of the equivalent units of production for materials
Units completed and transferred (86,000 × 100%) = 86,000
Units in Ending Work In Process (16,000 × 90%) = 14,400
Total equivalent units of production for materials = 100,400
Computation of the equivalent units of production for conversion cost
Units completed and transferred (86,000 × 100%) = 86,000
Units in Ending Work In Process (16,000 × 60%) = 9,600
Total equivalent units of production for Conversion cost = 95,600
You sell one IBM July 90 call contract for a premium of $4 and two puts for a premium of $3 each. You hold the position until the expiration date, when IBM stock sells for $95 per share. You will realize a ______ . A. $300 profit B. $100 loss C. $500 profit D. $200 profit
Answer: C. $500 profit
Explanation:
The total premium you will receive from selling both bearing in mind that contracts are per 100 each will be;
= (Call Premium + Put Premium) * 100
= (4 + ( 3 * 2)) * 100
= $1,000
As the prices went up, the only option that will be exercised will be the call option. The loss made when this happens will be;
= ( New Stock price - Exercise price) * 100
= ( 95 - 90) * 100
= $500
Total Profit (loss) made = Premium - loss
= 1,000 - 500
= $500
Flaherty is considering an investment that, if paid for immediately, is expected to return $140,000 five years from now. If Flaherty demands a 9% return, how much is she willing to pay for this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1)
Answer:
PV= $90,990.39
Explanation:
Giving the following information:
Future value= $140,000
Number of periods= 5 years
Rate of return= 9%
To calculate the price to pay today, we need to calculate the present value. We will use the following formula:
PV= FV/(1+i)^n
PV= 140,000 / (1.09^5)
PV= $90,990.39
Which one of the following stock index futures has a multiplier of 50 Hong Kong dollars times the index?
a. FTSE 100
b. Hang Seng
c. Nikkei
d. DAX-30
e. FTSE 100 and Hang Seng
Answer:
b. Hang Seng
Explanation:
Hong Kong's Hang Seng Index Futures and Hang Seng China Enterprises Index Futures operate with a contract multiplier of HK$50 (50 Hong Kong dollars) per point.
The Mini-Hang Seng Index Futures and the Mini-Hang Seng China Enterprises Index Futures operate with a contract multiplier of HK$10 per point.
You bought one of Great White Shark Repellant Co.'s 8 percent coupon bonds one year ago for $810. These bonds make annual payments and mature 14 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 11 percent. If the inflation rate was 3.4 percent over the past year, what was your total real return on investment?
Answer:
real rate of return = 4.77%
Explanation:
you purchased the bond at $810 with 14 years to maturity
now, 1 year later the bond's price is:
PV of coupon payment = $1,000 / 1.11¹³ = $257.51PV of coupon payments = $80 x 6.7499 (PV annuity factor, 11%, 13 periods) = $539.99market value = $797.50
total nominal returns = $80 (coupon payment) + ($797.50 - $810) = $67.50
the real rate of return = {[1 + ($67.50/$810)] / (1 + 3.4%)} - 1 = 4.77%
Hilton company reported net income of $30,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $5,000 was recorded. Using the indirect method, net cash provided by operating activities for the year is:_______
a. $25,000.
b. $45,000.
c. $29,000.
d. $30,000.
Answer:
a. $25,000
Explanation:
The computation of net cash provided by operating activities is shown below:-
Particulars Amount
Net Income $30,000
Add Depreciation $5,000
Less Increase in Accounts Receivables -$7,000
Less Decrease in Accounts Payable -$3,000
Net cash Provided by Operating Activities $25,000
When using discounted cash flow analysis for valuation, the appraiser must estimate the sale price at the end of the expected holding period. This price is referred to as the property's
Complete Question:
When using discounted cash flow analysis for valuation, the appraiser must estimate the sale price at the end of the expected holding period. This price (assuming selling expenses have yet to be accounted for) is referred to as the property's:
Group of answer choices
A. net sale proceeds
B. selling expenses
C. terminal value
D. current market value
Answer:
C. Terminal value.
Explanation:
When using discounted cash flow analysis for valuation, the appraiser must estimate the sale price at the end of the expected holding period. This price (assuming selling expenses have yet to be accounted for) is referred to as the property's terminal value.
Terminal value can be defined as the discounted value of all cash flows for a property after its forecast period or investment time in discounted cash flow analysis.
This ultimately implies that, the property's terminal value is primarily used for the estimation or determination of its value based on future cash inflow.
A client purchased 1,500 shares of stock from a broker-dealer, a registered market maker in this stock. The broker-dealer acted in a(n):
Complete Question:
A client purchased 1,500 shares of stock from a broker-dealer, a registered market maker in this stock. The broker-dealer acted in a(n):
Group of answer choices
a. Principal capacity and charged the client a markup
b. Agency capacity and charged the client a commission
c. Principal capacity and charged the client a commission
d. Agency capacity and charged the client a markup
Answer:
a. Principal capacity and charged the client a markup.
Explanation:
In this scenario, a client purchased 1,500 shares of stock from a broker-dealer, a registered market maker in this stock. The broker-dealer acted in a principal capacity and charged the client a markup.
A market maker can be defined as an individual or organization such as a broker-dealer who is usually willing to trade (buy and sell) stocks. This simply means that, a market maker is engaged in the business of trading shares of stock.
Generally, in the trading of stocks a market maker actually acts in a principal capacity and could charge his or her clients either a markup or markdown.
A markup can be defined as the difference between the amount of money paid by a customer and the market price of a stock being held by a broker-dealer.
Which of the following strategies seeks to increase the portfolio value by reinvesting current income in addition to capital gains?
A. Capital appreciation.
B. Capital preservation.
C. Return preservation.
D. Current income.
E. Total return.
Answer: D. Current income.
Explanation: A few examples of current income payments are dividends and interest payments. The current income investment strategies are those that attempt to increase the portfolio value by reinvesting current income in addition to capital gains. As such, they seek to identify investments that pay above-average distributions and is often of benefit to investors who desire reliable and high levels of income from an investment grade portfolio (short- and intermediate-term, investment grade corporate and agency obligations, and investment grade preferred securities).
Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise.
Preparing the liabilities section of the balance sheet
Luxury Suites Hotels includes the following selected accounts in its general ledger at December 31, 2018:
Prepare the liabilities section of Luxury Suites’s balance sheet at December 31, 2018.
Note Payable (long-term) $200,000
Accounts Payable $33,000
Bonds Payable (due 2022) 450,000
Discount on Bonds Payable 13,500
Interest Payable (due next year) 1,000
Salaries Payable 2,600
Estimated Warranty Payable 1,300
Sales Tax Payable 400
Answer:
Luxury Suites Hotels
Balance Sheet as of December 31, 2018:
Liabilities:
Current Liabilities:
Sales Tax Payable 400
Interest Payable (due next year) 1,000
Estimated Warranty Payable 1,300
Salaries Payable 2,600
Discount on Bonds Payable 13,500
Accounts Payable $33,000
Total current liabilities $51,800
Long-term Liabilities:
Note Payable (long-term) $200,000
Bonds Payable (due 2022) 450,000
Total long-term liabilities $650,000
Total liabilities $701,800
Explanation:
The Hotel's liabilities are the financial obligations that Luxury Suites Hostels owes the debt providers for funding its assets. They are divided into two: current and non-current or long-term liabilities. The obligations that are expected to be settled within the next one year are classified as current. The other obligations which are not expected to be settled within one year are called noncurrent or long-term liabilities. Liabilities are forms of leverage or gearing that a company employs to help her in generating profits for equity stockholders.
Olsson Corporation received a check from its underwriters for $72 million. This was for the issue of one million of its $5 par stock that the underwriters expect to sell for $72 per share. Which is the correct entry to record the issue of the stock
Answer:
Debit Cash for $72,000,000
Credit Common Stock for $5,000,000
Credit Paid in capital in excess of par for $67,000,000
Explanation:
The correct entry will be look as follows:
Account Name Dr ($) Cr($)
Cash 72,000,000
Common Stock (w.1) 5,000,000
Paid in capital in excess of par (w.2) 67,000,000
(To record the issue of one million of $5 par stock.)
Wokings:
w.1: Commons stock = 1,000,000 * $5 = $5,000,000
w.2: Paid in capital in excess of par = Amount received from underwriter - Common stock = $72,000,000 - $5,000,000 = $67,000,000
firm x projects an roe of 14% and it will maintain a pplowback ratio of .45 its earnings this year will be 3.60 per share investors expect 11% rate of retrun on the stock what price do you expect form x shares to sell for in 2 years
Answer:
$47.61 per share
Explanation:
As we know that:
Current Price = Expected Dividend / (Required Return - Growth Rate)
Here
Expected Dividend is $1.98 (Step1)
Required Return is 11%
Growth Rate is 6.3%
By putting values, we have:
Current Price = $1.98 / (0.11 - 0.063)
Current Price = $42.13
The price of Stock in 2 years will be adjusted by growth rate:
Price of Stock in 2 years = Current Price * (1 + Growth Rate)^2
Here
Current Price of the stock is $42.13 per share
Growth rate = ROE * Plowback Ratio = 14% * 0.45 = 6.30%
By putting values, we have:
Price of Stock in 2 years = $42.13 * 1.063^2
Price of Stock in 2 years = $47.61 per share
So, you should expect the share to sell at $47.61 in 2 years
Step 1: Find Expected Dividend
Expected Dividend = Expected Earnings * Payout Ratio
Here
Expected Earnings is $3.6 per share
Payout Ratio = 1 - Plowback Ratio = 1 - 0.45 = 55%
By putting values in the above equation, we have:
Expected Dividend = $3.60 * 55%
Expected Dividend = $1.98 per Share
Selected information from Dinkel Company's 2011 accounting records is as follows: Proceeds from issuance of common stock $ 400,000 Proceeds from issuance of bonds 1,200,000 Cash dividends on common stock paid 160,000 Cash dividends on preferred stock paid 60,000 Purchases of treasury stock 120,000 Sale of stock to officers and employees not included above 100,000 Dinkel's statement of cash flows for the year ended December 31, 2011, would show net cash provided (used) by financing activities of
Answer:
Cash flow from financing activities is $2,040,000
Explanation:
Cash flow from financing activities
Inflows
Proceeds from common stock $400,000
Proceed from common stock(Employees) $100,000
Issuance of bonds $1,200,000 $1,700,000
Outflows
Cash dividend on common stock $160,000
Cash dividend on preferred stock $60,000
Purchase of treasury stock $120,000 340,000
Cash flow from financing activities $2,040,000
The statement of cash flows (indirect method) reports depreciation expense as an addition to net income because depreciation
A. causes an inflow of funds for the replacement of assets.
B. reduces reported net income of the period but does not involve an outflow of cash for that period.
C. is a direct use of cash.
D. reduces reported net income and causes an inflow of cash.
Answer: B. reduces reported net income of the period but does not involve an outflow of cash for that period.
Explanation:
Depreciation is the wear and tear of an asset due to the use of the asset. When an asset is depreciated, such an asset is eventually sold at a scrap value.
The statement of cash flows (indirect method) reports depreciation expense as an addition to net income because depreciation reduces reported net income of the period but does not involve an outflow of cash for that period.
suppose the production function is q min k 2l. how much output is produced when 4 units of labor and 9 units of capital are employed
Answer:8 = output produced
Explanation:
Given production function as q = min k 2l
where k = capital units
and l = labor units
min= minimum
Suppose units of labor = 4 units
capital employed = 9 units
q = min k 2l
q = min 9, 2 x 4
q= min 9, 8
q =8 = output produced , since 8 is the minimum output produced.
The production function is the technical relationship between the input and the output quantities being produced by the organization. The main factors affecting the production function are the amount of capital and the number of labor.
The output produced is 8 units.
Computation:
Given,
The production function is q=min{K,2L}
Were,
K is the capital units
L is the labor units
Equation:
Q=min {K, 2L}
Substituting the value of K and L in the above equation.
Q=min {9,2x4}
Q=min{9,8}
Therefore, the outputs produced with 4 units of labor and 9 units of capital is 8 units to be produced.
To know more about production function, refer to the link:
https://brainly.com/question/24879976
There are five jobs in a factory. All these jobs have to go through two workstations for processing. Each job is processed on Workstation #1 and then on Workstation #2. The processing time for each job on each workstation is given below.
Job; Time on Workstation #1 (minutes); Time on Workstation #2 (minutes)
A; 50; 50
B; 20; 8
C; 25; 50
D; 30; 12
E; 11; 22
F; 11; 19
Using Johnson's sequencing rule, it can be concluded that the makespan of the sequence is:
a. more than 50 but less than or equal to 100 minutes.
b. more than 100 but less than or equal to 150 minutes.
c. more than 150 but less than or equal to 200 minutes.
d. more than 200 but less than or equal to 250 minutes.
Answer:
More than 150 but less than or equal to 200 minutes ( C )
Explanation:
using Johnson's sequencing rule
attached below is a tabular solution of showing the use of Johnson's sequencing rule
The End of job sequence B = 172 minutes which means that the make span of the sequence is More than 150 but less than or equal to 200 minutes
An array of firm resources includes interpersonal relations among managers in the firm, its culture, and its reputation with its customers and suppliers. Such competitive advantages are based upon
Answer: social complexity
Explanation:
Social complexity simply relates to how the existence of human beings are being studied. The things that are studied include armed conflicts, marriage practices, emigration patterns, political movements, natural disasters, etc.
Therefore, array of firm resources includes interpersonal relations among managers in the firm, its culture, and its reputation with its customers and suppliers. Such competitive advantages are based upon social complexity.
A service station uses 1,200 cases of oil a year. Ordering costs is $40 and annual carrying cost is $3 per case. The station owner has specified an annual service level of 99%. A. What is the optimal order quantity? B. What level of safety stock is appropriate if lead time demand is normally distributed with a mean of 80 cases and a standard deviation of 6 cases?
Answer:
a) 179 cases
b) 14 cases
Explanation:
EOQ = √(2SD/H)
D = annual demand = 1,200
S = order cost = 40
H = holding cost per unit = 3
EOQ = √[(2 x 1,200 x 40)/3] = 178.89 = 179 cases
z for 99% service level = 2.33
safety stock = 2.33 x 80 x (6/80) = 13.98 - 14 cases
Tara Westmont, the stockholder of Tiptoe Shoes, Inc. had annual revenues of $203,000, expenses of $112,700, and the company paid $25,200 cash in dividends to the owner (sole stockholder). The retained earnings account before closing had a balance of $315,000. The ending retained earnings balance after closing is:
a. $203,000
b. $65,100
c. $90,300
d. $380,100
e. $405,300
Answer:
The Ending balance = $380100. Thus option D is the correct answer.
Explanation:
The net income of the company is used or utilized in two ways at the end of the year. It is either paid out as dividend or retained in the business and transferred to the retained earnings account or both. To calculate the ending balance of retained earnings account, we use the following equation,
Ending balance = Opening balance + Net Income - Cash Dividends
First we need to determine the net income for the year.
Net Income = Revenue - Expenses
Net Income = 203000 - 112700
Net Income = $90300
Ending balance of retained earnings account will be,
Ending balance = 315000 + 90300 - 25200
Ending balance = $380100
A coupon bond pays annual interest, has a par value of $1,000, matures in 4 years, has a coupon rate of 10%, and has a yield to maturity of 12%. The current yield on this bond is
Answer:
The answer is 10.65 percent
Explanation:
We first find the curren price of the bond
N(Number of periods) = 4 years
I/Y(Yield to maturity) = 12 percent
PV(present value or market price) = ?
PMT( coupon payment) = $100 (10 percent x $1,000)
FV( Future value or par value) = $1,000.
We are using a Financial calculator for this.
N= 4; I/Y = 12; PMT = 100; FV= $1,000; CPT PV= -939.25
The market price of the bond is $939.25
Therefore, the current yield on this bond is 100/939.25
= 0.1065
Expressed as a percentage
10.65 percent
Visit California is responsible for promoting tourism in the state and recently ran a successful ad called "Average Joes" to share lifestyle attributes that are popular there. This an example of which type of advertising
Answer:
reminder institutional advertising
Explanation:
The reminder institutional advertising refers to a advertising in which the company focused to establish the goodwill or an image for the entity rather being promoting the company goods and services
Here in the given situation, it is mentioned that California is responsible for promoting tourism and it currently ran a successful Average joes for sharing the lifestyle so here it is establishing the goodwill
Therefore the above is the answer
An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. Which of the following should the investor consider when making a decision?
A. The investor should realize that the success of this restaurant is so heavily based on human resources that the business will likely be subject to inertia in the future.
B. The investor may find that the restaurant's financial statements undervalue the true value of its resources.
C. The investor should be aware that intangible assets are difficult to leverage into additional businesses.
D. The investor should search for a firm that has competitive advantages based on tangible resources.
Answer:
B.
Explanation:
The investor should consider that they may find that the restaurant's financial statements undervalue the true value of its resources. If this were to be the case then the investor would have made a lot of money since they would have paid face value for the restaurant when in actuality it was massively undervalued and is worth a lot more, meaning he would make a large profit on his investment from the beginning.