Answer:
Elasticity.
Explanation:
Successful advertising can increase demand across a wide spectrum of consumers, but it happens unevenly. Some consumers respond more dramatically than others to advertising. This explains the change in elasticity of the demand curve that occurs after an advertising campaign. Thus, the more responsive consumers are to an advert, the more elastic the consumer demand is for the successful advertising technique used by the firm.
Repudiation is a form of breach of contract which always entitles the innocent party to cancel the contract.a. Trueb. False
Answer: True
Explanation:
Repudiation of a contract means that one party is unwilling or has resigned not to perform their duties as expressed in the contract.
As this is the basis for which the contract was entered to, refusing to do it entitles the other party to cancel the contract as it no longer serves its purpose.
Exotech Computers manufactures computer components such as chips, circuit boards, motherboards, keyboards, LCD panels, and the like and sells them around the world. It wants to construct a new warehouse/distribution center in Asia to serve emerging Asian markets. It has identified sites in Shanghai, Hong Kong, and Singapore and has rated the important location factors for each site as follows:Location Factors Weight Scores (0 to 100) Shanghai Hong Kong SingaporePolitical Stability 0.25 50 80 90Economic Growth 0.18 90 80 75Port Facilities 0.15 60 95 90Container Support 0.10 50 80 90Land & Constr. Cost 0.08 90 50 30Transp/Distribution 0.08 50 80 70Duties & Tariffs 0.07 70 90 90Trade Regulations 0.05 70 95 95Airline Service 0.02 60 80 70Area Roads 0.02 60 70 80Recommend a site based on these location factors and ratings.
Answer:
Hong-Kong has the maximum weighted score. Hence, it will be selected for the best site for the construction of warehousing/distribution center.
Explanation:
SHANGHAI
Weight Shanghai Weighted Score(W*S)
Political Stability 0.25 50 12.5
Economic Growth 0.18 90 16.2
Port Facilities 0.15 60 9
Container support 0.1 50 5
Land & Construction 0.08 90 7.2
Trans/Distribution 0.08 50 4
Duties & Tariffs 0.07 70 4.9
Trade Regulations 0.05 70 3.5
Airline Service 0.02 60 1.2
Area Roads 0.02 60 1.2
TOTAL 64.7
HONG-KONG
Weight Hong-Kong Weighted Score(W*S)
Political Stability 0.25 80 20
Economic Growth 0.18 80 14.4
Port Facilities 0.15 95 14.25
Container support 0.1 80 8
Land & Construction 0.08 50 4
Trans/Distribution 0.08 80 6.4
Duties & Tariffs 0.07 90 6.3
Trade Regulations 0.05 95 4.75
Airline Service 0.02 80 1.6
Area Roads 0.02 70 1.4
TOTAL 81.1
SINGAPORE
Weight Singapore Weighted Score(W*S)
Political Stability 0.25 90 22.5
Economic Growth 0.18 75 13.5
Port Facilities 0.15 90 13.5
Container support 0.1 90 9
Land & Construction 0.08 30 2.4
Trans/Distribution 0.08 70 5.6
Duties & Tariffs 0.07 90 6.3
Trade Regulations 0.05 95 4.75
Airline Service 0.02 70 1.4
Area Roads 0.02 80 1.6
TOTAL 80.55
Sunland Company reported the following information for the current year: Sales (64000 units) $1280000, direct materials and direct labor $640000, other variable costs $64000, and fixed costs $360000. What is Sunland’s contribution margin ratio?
Answer:
45%
Explanation:
Given the following :
Sales unit = 64000
Sales revenue = $1,280,000
Direct materials and directly labor = $640,000
Other variable cost = $64,000
Fixed cost = $360,000
Contribution margin ratio:
(Sales revenue - variable expenses) / sales revenue
Total variable expenses = (Direct materials and directly labor + other variable expenses)
Total variable expenses = (640000 + 64000) = $704,000
Contribution margin ratio :
$(1,280,000 - 704,000) / $1,280,000
$576,000 / $1,280,000
= 0.45
0.45 * 100 = 45%
Each month, an airline sells 1,500 business-class tickets from London to Paris at $200 a ticket, and 6,000 economy-class tickets at $80 a ticket. Use this information to construct the demand curves of business travelers and tourists respectively, if it is given that the demand curves for both groups are linear and that the marginal cost of a ticket is constant at $50.
Answer:
For business travellers Qb = 3,500 - 10pb
P = 350 - .1Q
And ,for tourists it is Qt = 22,000 - 200 pt
P = 110-Q ÷ 200
Explanation:
Let us assume the demand curve be [tex]Q_i = a_i - b_i p_i[/tex]
Also at the equilibrium point, MR = MC
So
[tex]\frac{a_i - 2Q_i}{b_i } = 50[/tex]
Now solving these equations
[tex]a_i = \frac{Q_i (2p_i - 50)}{p_i - 50} \\\\ b _i = \frac{Q_i }{p_i - 50}[/tex]
Now putting these values
So,
For business travellers Qb = 3,500 - 10pb
P = 350 - .1Q
And ,for tourists it is Qt = 22,000 - 200 pt
P = 110-Q ÷ 200
Hence, these are the answers that are shown above
Consider the relative liquidity of the following assets: Assets 1. A share in a publicly traded company 2. A $10 bill| 3. The funds in a savings account 4. Your car Select the assets in order of their liquidity, from most liquid to least liquid. Asset Most Liquid Second-Most Liquid Third-Most Liquid Least Liquid
Answer:
A $10 bill|
The funds in a savings account
A share in a publicly traded company
Your car
Explanation:
Liquidity measures how fast an asset can be converted to cash.
A $10 bill is already cash so it is the most liquid.
The funds in a savings account can be easily withdrawn from the account when needed. it is the second most liquid
The process of converting a share to cash is a little longer.
To sell a car, one has to find a ready buyer and negotiate the price. It is the least liquid
If cost of goods sold under FIFO was $8,000 and was $10,000 under LIFO, assuming a tax rate of 40%, how much tax savings resulted from using LIFO
Answer:
$800
Explanation:
The computation of the tax saving from using LIFO is shown below:
= Cost of goods sold under LIFO × tax rate - Cost of goods sold under FIFO × tax rate
= $10,000 × 40% - $8,000 × 40%
= $4,000 - $3,200
= $800
By applying the above formula, the tax saving resulted from using the LIFO is $800 and the same is to be considered
provides its employees two weeks of paid vacation per year. As of December 31, 70 employees have earned two weeks of vacation time to be taken the following year. If the average weekly salary for these employees is $890, what is the required journal entry to accrue compensated absences?
Answer and Explanation:
The journal entry is shown below:
Salary and Wages Expense Dr. $124,600 (70 employees × 2 weeks × $890)
To Salaries and wages payable $124,600
(Being the compensation absences accrued)
For recording this we debited the salary and wages expense and credited the salaries and wages payable as it increased the expenses and liabilities.
Review the Globe to determine Baldwin's current strategy. How will they seek a competitive advantage
This question is incomplete, the complete question is;
Review the Inquirer to determine Baldwin's current strategy. How will they seek a competitive advantage?
From the following list, select the top five sources of competitive advantage that Baldwin would be most likely to pursue. Select: 5 Save Answer Add additional products Offer attractive credit terms Accept lower plant utilization and higher capacities to insure sufficient capacity is available to meet demand Reduce cost of goods through TQM initiatives Seek high plant utilization, even if it risks occasional small stock outs Increase demand through TQM initiatives Seek excellent product designs, high awareness, and high accessibility Seek high automation levels Seek the lowest price in their target market while maintaining a competitive contribution margin Reduce labor costs through training and recruitment.
Answer:
1) Reduce labor costs through training and recruitment
2) Seek the lowest price in their target market while maintaining a competitive contribution margin
3) Reduce cost of goods through TQM initiatives
4) Seek excellent product designs, high awareness, and high accessibility
5) Seek high plant utilization, even if it risks occasional small stock outs
Explanations
The top resources that will help Baldwin to attain competitive advantage are shown below
Reduce labor costs through training and recruitment- Lower labor costs would help Baldwin maintain higher profit levels, giving Baldwin an edge over its competitors. This would be an example of a Cost Leadership strategy.
Seek the lowest price in their target market while maintaining a competitive contribution margin- Baldwin can focus on target markets and offer its products/ services at the lowest prices with competitive. This would help Baldwin get a very good reach and hold on the target markets, and would get ahead of its customers in the process. This would be an example of a Focus strategy.
Reduce cost of goods through TQM initiatives- Lower cost of goods would mean higher profits for Baldwin, giving it a competitive edge. This would be an example of a Cost Leadership strategy.
Seek excellent product designs, high awareness, and high accessibility- With excellent product designs, high awareness and accessibility, Baldwin would be able to make its products stand out from its competitors' products. When customers see a product which is different from others, which offers good benefits and which is easily available, they definitely get interested in that product and may even pay a little more to buy the product. This is an example of a Differential strategy.
Seek high plant utilization, even if it risks occasional small stock outs- With high plant utilization, Baldwin can optimize its fixed costs, thereby lowering total costs which shall give it a competitive edge. This again would be an example of a Cost Leadership strategy. Losses due to occasional small stock outs would be compensated by high plant utilization.
A fully amortized loan has a 360 month payment schedule with principal and interest payments of $2588 each month. The amortization of this loan will pay off the loan in:
Answer:
30 years.
Explanation:
The firm has total fixed costs of $40 and a constant marginal cost of $2 per unit. We can conclude that
Here's the full question;
The firm has total fixed costs of $40 and a constant marginal cost of $2 per unit. We can conclude that
a. firms will exit this market.
b. firms will enter this market.
c. this firm is operating at its efficient scale.
d. this market is in long-run equilibrium
Answer:
d. this market is in long-run equilibrium
Explanation:
Long-run equilibrium occurs when a firm records a marginal revenue that is equal to its marginal costs.
In the firm above we noticed that the firm has total fixed costs of $40 and a constant marginal cost of $2 per unit, by multiplying the marginal cost of $2 by 20 units (20*2) as found in the attached image, we arrived at a value which equals the total fixed cost.
Assume that you manage a risky portfolio with an expected rate of return of 14% and a standard deviation of 38%. The T-bill rate is 5%. Your client chooses to invest 85% of a portfolio in your fund and 15% in a T-bill money market fund.
a. What is the expected return and standard deviation of your client's portfolio? (Round your answers to 2 decimal places.)
Expected return % per year
Standard deviation % per year
b. Suppose your risky portfolio includes the following investments in the given proportions:
Stock A 22%
Stock B 31%
Stock C 47%
What are the investment proportions of your clientâs overall portfolio, including the position in T-bills? (Round your answers to 2 decimal places.)
Security Investment
Proportions
T-Bills %
Stock A %
Stock B %
Stock C %
c. What is the reward-to-volatility ratio (S) of your risky portfolio and your client's overall portfolio? (Round your answers to 4 decimal places.)
Reward-to-Volatility Ratio
Risky portfolio
Clientâs overall portfolio
Answer and Explanation:
The computation is shown below:
a. The expected return and standard deviation is as follow
Expected Return is
= 85% × 14% + 15% × 5%
= 12.65% per year
Now
Standard Deviation is
= 85% × 38%
= 32.3% per year
b.
The investment proportions are as follows
T bills = 15%
Amount invested Stock A is
= 85% × 22%
= 18.70%
Amount invested Stock B is
= 85% × 31%
= 26.35%
Amount invested Stock C is
= 85% × 47%
= 39.95%
c.
As we know that
Reward-to-variability Ratio = (Return of Risky Portfolio - Return of T-Bills) ÷ Standard Deviation of Risky Portfolio
= (14% - 5%) ÷ 38%
= 0.2368
Client’s Reward-to-variability Ratio = (Client Portfolio return - Return of T-Bills) ÷ Client Portfolio Standard Deviation
= (12.65% - 5%) ÷ 32.3%
= 0.2368
Capital Budgeting Criteria: Mutually exclusive Projects
A firm with a WACC of 10% is considering the following mutually exclusive projects:
Project A Project B
1 - $400 - $600
2 $55 $300
3 $55 $300
4 $55 $50
5 $225 $50
6 $225 $49
Which project would you recommend? Explain.
Answer:
Project A would be chosen because the NPV is higher. It means that project A would be more profitable than project B.
Explanation:
To determine which project would be recommended, we have to determine the NPV of each project.
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
Cash flow in year 1 = $-400
Cash flow each year from year 2 to 4 = $55
Cash flow each year from year 5 to 6 = $225
I = 10%
NPV = $27.42
For project B
Cash flow in year 1 = $-600
Cash flow each year from year 2 to 3 = $300
Cash flow each year from year 4 to 5 = $50
Cash flow in year 6 = $49
I = 10%
NPV = $20.73
Project A would be chosen because the NPV is higher
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
When using the simple EOQ model to determine optimal order quantity, which of the following is true?
A. Order quantity increases as order cost per order decreases
B. Order quantity decreases as order cost per order increases
C. Order quantity increases as holding cost per unit per year decreases
D. Order quantity decreases as holding cost per unit per year decreases
Answer:
C. Order quantity increases as holding cost per unit per year decreases
Explanation:
the formula for calculating economic order quantity (EOQ) is:
EOQ = √(2SD/H)
S = cost per orderD = annual demandH = holding cost per unitIf holding cost per unit (H) decreases, the EOQ will increase. Whenever you are dividing, if the denominator decreases, the result will be larger.
The firm is currently an all-equity firm with assets worth $250 million and 100 million shares outstanding. The firm plans to borrow $100 million and use these funds to repurchase shares. The firm’s marginal corporate tax is 20%, and it plans to keep its outstanding debt equal to $100 million permanently. What is the lowest price per share the firm can offer and have shareholders tender their shares? A) $3.50 B) $1.50 C) $1.70 D) $2.50 E) $2.70
Answer:
C) $1.70
Explanation:
The value of the firm after the debt would be = 250 million + (20% * 100 million) = $270 million
Value of equity = Total value of firm - Value of debt
Value of equity = $270 million - $100 million
Value of equity = $170 million
The total number of share outstanding is 100 million shares
Hence, he should offer the shares at = $170 million / 100 million shares = $1.7 per share
"Preferred stock is issued with an "anti-dilutive" covenant. If the corporation declares a 5% stock dividend, which statements are TRUE?"
Answer: B. I and IV
Explanation:
Anti-Dilutive clauses are made to ensure that when new common shares are issued, they do not reduce the value of the shares already there because new shares being issued reduces the value of individual shares.
To do this, when new shares are issued or dividends declared, the conversion price is reduced and the conversion ratio is increased so that the preferred stocks can be diluted into more shares thus keeping their value intact.
The appropriate discount rate for the following cash flows is 9 percent compounded quarterly. Year Cash Flow 1 $700 2 700 3 0 4 1,100 What is the present value of the cash flows
Answer:
Total present value= $2,010.65
Explanation:
Giving the following information:
Cf1= 700
Cf2= 700
Cf3= 0
Cf4= 1,100
Discount rate= 9%
To calculate the present value, we need to use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf1= 700/1.09= 642.20
Cf2= 700/1.09^2= 589.18
Cf3= 0
Cf4= 1,100/1.09^4= 779.27
Total present value= $2,010.65
Write a 500-750-word analysis of the significance of the three Matrices regarding their relevance for strategic planning. Describe the key information for each of the three matrices and how information from each will influence recommendations for strategic plans to improve the position of the company. Without prematurely determining and formalizing strategic goals and objectives, begin thinking about possible strategies to capitalize and add value to the organization based on the analysis of this information.
Answer:
Strategic planning is important for any company as it helps the company to strategically position itself in the industry. S W O T analysis is a tool that helps the company to do this. S W O T analysis is an attempt to reflect upon the strengths, weaknesses, opportunities and threats that the company face in its short period as well as long period functioning.
The airline industry offers an air source of transport to passengers and freight. A strength in this business can be a possibility to earn high income through its operations. It is not a kind of business that anyone can undertake as it requires huge investment. If investment is made and the required logistics is applied, then there is a chance for making huge profits. This is a strength. Also the unique patterns of services, the facilities that the airliner provides etc can be viewed as it's strengths. On the other hand weaknesses can be lack of infrastructure facilities, inefficient work force, high spoilage rate which is the rate of passengers missing their flights and subsequently returned money, highly competitive market etc.
Opportunities mean that aspects that help the company to ensure a continued growth. The world is becoming a global village. This scenario demands modes of transport that cater to the needs of the people who travel around the world. Businesses are operating on a trans national mode. Tourism sector is evolving into newer versions. All these situations can be viewed as opportunities for the airline company. On the other end, a threat at the moment is the the pandemic, which has hit the tourism sector badly, rising fuel price, government intervention etc can be considered as threats.
BCG matrix is developed by Boston Consulting Group. It based it's analysis on the development of four categories based on industry attractiveness indicating the growth rate of that industry and competitive position or relative market share. Higher the market share, higher will be the cash returns.There are four quadrants into which firm brands are classified, namely dogs, cash cows, stars and question marks.
Companies that hold low market shares compared to their competitors are categorized into the first classification. Companies that operate in a slowly growing market are also included in this category. If an airliner is classified into a poor dog category, strategic choices would be retrenchment or liquidation. Cash cows are the profitable brands. As the name suggests they should be milked to provide as much cash as possible. Cash cows need investment not to induce growth but to maintain their current market share. Strategic choices would be product development or diversification.
Stars operate in high growth industries. Also companies that have high market share are also included in this category. A company should invest on these primary units as they have the potential to become cash cows. But if the company can not catch up with the technical innovations, star would turn into poor dog. Strategic choices would be vertical integration, horizontal integration or market penetration. Question marks are the brands that need closer attention. They are loss making companies in fast growing markets holding low market share and consuming large amount of cash. Here strategic choices would be product development or divestiture.
The internal external matrix is based on an analysis of factors relevant to internal and external situations. Graphically represented analysis suggest grow and build or hold and maintain or harvest or exit strategies.
Franklin Corporation just paid taxes of $152,000 on taxable income of $512,000. The marginal tax rate is 35% for the company. What is the average tax rate for the Franklin Corporation?
Answer:
29.69%
Explanation:
Franklin corporation just paid taxes of $152,000
The taxable income is $512,000
Therefore, the average tax rate can be calculated as follows.
= Amount of taxes paid/amount of taxable income
= $152,000/$512,000
= 0.2969×100
= 29.69%
Hence the average tax rate for Franklin's corporation is 29.69%
Which of the following is an advantage of pursuing an unrelated diversification strategy over a related diversification strategy?
a. There is greater coordination between business units.
b. Functional competencies would be useful in many different industries.
c. There are higher bureaucratic costs.
d. The company doesn't need coordination between business units.
Answer:
Correct Answer:
b. Functional competencies would be useful in many different industries.
Explanation:
This is because, the competencies of the organization could be useful leading to its application in many different industries. For example, a company into plastic manufacturing could diversify into electric bicycle manufacturing. Their competency in plastic manufacturing could come handy due to the parts of the bicycle being manufactured made up of plastics also.
The shift from mass marketing to targeted marketing, and the corresponding use of a larger, richer mix of communication channels and promotion tools ________.
Answer:
Poses a problem for marketers
Explanation:
When there is a shift from mass marketing to a more targeted approach, there will be a need for different promotional tools to reach each target audience.
For example use of social media to get to youths, use of magazines and newspapers to get to the more mature customers.
If the promotional tools become many with different messages, customers tend to get confused about what the product can offer them.
They will tend to move to other companies that communicate clearly the benefits of their products.
SFX Paintball Games, Inc., and Truck & Trailer Delivery Corporation sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is
Answer:
A liquidated damages clause.
Explanation:
The liquidated damage clause is the clause in which the party who has breach the contract or who has delay the completion of the contract has to pay the damages for the liquidation of the contract
here in the given situation, since the company has an agreement with the other party and if anyone party breach the contract then the price they paid would be $1,000 approx
Therefore this represents the liquidated damages clause
Chiller Company has credit sales of $5.60 million for year 2013. Chiller estimates that 1.32% of the credit sales will not be collected. Historically, 4% of outstanding accounts receivable is uncollectible. On December 31, 2013, the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $3,561. Chiller prepared a schedule of its December 31, 2013, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here:
Answer:
$59,045.80
Explanation:
The following information was missing:
Accounts Receivable total $1,565,170
Assuming the company uses the percent of accounts receivable method, what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry?
total uncollectible debt = $1,565,170 x 4% = $62,606.80
since the account balance of the allowance for doubtful accounts is $3,561 (credit), the adjusting entry should be:
December 31, 2013, bad debt expense
Dr Bad debt expense (= $62,606.80 - $3,561) 59,045.80
Cr Allowance for doubtful accounts 59,045.80
Sox Corporation purchased a 30% interest in Hack Corporation for $1,525,000 on January 1, 2021. On November 1, 2021, Hack declared and paid $1.1 million in dividends. On December 31, Hack reported a net loss of $4.0 million for the year. What amount of loss should Sox report on its income statement for 2021 relative to its investment in Hack
Answer:
$1,200,000
Explanation:
SOX Corporation purchased a 30% interest for $1,525,000
On November 1, 2021, Hack declared and paid $1,100,000 million in dividends
Hence, Carrying value = $1,525,000 - 30%($1,100,000)
Carrying value = $1,525,000 - $330,000
Carrying value = $1,195,000
Net loss given during the year reported by Hack is $4,000,000
Hence, Net Loss of SOX is $4,000,000 * 30%
Net Loss = $1,200,000
Therefore, the net loss to be recognized in the Income statement is $1,200,000
In 2014 Randall suffered bodily injury while at work. In 2016, Randall won a workers' compensation claim and prevailed in an injury lawsuit, both in connection with the 2014 injury. Randall received the following in 2016 as settlement:
Punitive damages $150,000
Workers' compensation 50,000
Reimbursement for medical expenses 25,000
Compensation for emotional distress 15,000
What amount of the settlement should be excluded from Randall's 2017 gross income?
a. $165,000.
b. $90,000.
c. $60,000.
d. $75,000.
Answer:
d. $75,000.
Explanation:
Calculation for the amount of the settlement that should be excluded from Randall's 2017 gross income.
The amount of the settlement excluded from Randall's 2017 gross income will be the addition of the following:
Workers' compensation $50,000
Compensation for emotional distress $15,000
Medical expenses of $10,000
=$75,000
Therefore the amount of $75,000 will be the amount of the settlement that should be excluded from Randall's 2017 gross income.
Consider the following cash flows of two projects for Fontana Rubber Parts Company. Assume the discount rate for Fontana Rubber Parts is 14%.
Year Dry Prepreg Solvent Prepreg.
0 -$30,000 -$90,000
1 10,000 28,000
2 10,000 28,000
3 10,000 28,000
4 10,000 28,000
5 10,000 28,000
a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project
b. Assuming the projects are independent, which one(s) would you recommend?
c. If the projects are mutually exclusive, which would you recommend?
Answer:
Year Dry Prepreg discounted cash flow
0 -$30,000 -$30,000
1 10,000 8,772
2 10,000 7,695
3 10,000 6,750
4 10,000 5,921
5 10,000 5,194
Year Solvent Prepreg. discounted cash flow
0 -$90,000 -$90,000
1 28,000 24,561
2 28,000 21,545
3 28,000 18,899
4 28,000 16,578
5 28,000 14,542
a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project
Dry Prepreg
NPV = $4,330
IRR = 19.86%
MIRR = 17.12%
payback = 3 years
discounted payback = 4.17 years
Solvent Prepreg
NPV = $6,130
IRR = 16.80%
MIRR = 15.51%
payback = 3.21 years
discounted payback = 4.58 years
b. Assuming the projects are independent, which one(s) would you recommend?
both projects, since their NPV is positivec. If the projects are mutually exclusive, which would you recommend?
Dry prepreg becuase its IRR, MIRR are higher, and its payback and discounted payback periods are shorter.
When the corporation declares a stock dividend, a stockholder's percentage ownership in the stock of the corporation:_______
A) will increase
B) can increase or decrease
C) will decrease
D) remains unchanged
You purchase a Treasury inflation-protected note with an original principal amount of $1,000,000 and a 2.8% annual coupon (paid semiannually). What will the first coupon payment be if the semiannual inflation over the first 6 months is 1.4%?
Answer:
$14,159.60
Explanation:
Inflation-adjusted principal = Principal * (1+inflation)
Inflation-adjusted principal = 1,000,000 * (1+1.14%)
Inflation-adjusted principal = 1,000,000 * 1.0114
Inflation-adjusted principal = $1,011,400
Now, the coupon rate is given as 2.8% or 1.4% semi annually.
Coupon Payment = Coupon rate * Inflation-Adjusted Principal
Coupon Payment = 1.4% * $1,011,400
Coupon Payment = $14,159.60
Therefore, the first coupon payment is $14,159.60
True or false: When considering the elimination of a segment, management should look at more than the segment's performance report.
Answer:Yes
Explanation:Yes
Prepare journal entries to record each of the following sales transactions of a merchandising company. The company uses a perpetual inventory system and the gross method
Apr. 1 Sold merchandise for $5,400, with credit terms n/30; invoice dated April 1. The cost of the merchandise is $3,240
Apr 4 The customer in the April 1 sale returned $620 of merchandise for full credit. The merchandise, which had cost $372, is returned to inventory.
Apr 8 Sold merchandise for $2,200, with credit terms of 1/10, n/30; invoice dated April 8. Cost of the merchandise is $1,540.
Apr. 11 Received payment for the amount due from the April 1 sale less the return on April 4.
Answer: please find the explanation column for answers
Explanation:
journal entry to record the sales transaction of a merchandising company:
Date Account Debit Credit
Apr 1 Account receivables $5,400
Sales $5,400
To record cost of goods sold
Apr 1 Cost of merchandise sold $3,240
Merchandise inventory $3,240
2. To record sales return of goods.
Date Account Debit Credit
Apr 4 Sales Return $620.00
Account Receivable $620.00
Cost of merchandised returned
Apr 4 Merchandise Inventory $372.00
Cost of Goods Sold $372.00
3.To Record Sales made from merchandise
Date Account Debit Credit
Apr 8 Account Receivable $2,200.00
Sales $2,200.00
To Record cost of merchandise Sold
Apr 8 Cost of Goods Sold $1,540.00
Merchandise Inventory $1,540.00
4.Journal to record payment received from sales of merchandise
Date Account Debit Credit
Apr 11 Cash $4,780.00
Account receivable $4,780.00
Calculation
Amount due from Apr 1 st sale less than return on April 4 =Account receivables - Sales Return= $5,400- $620=$4,780.00
Identify at least four factors that affect a bond’s yield. Briefly explain the effect that each factor has on the yield.
Answer:
Four factors that effect a bond yield are:
1. Interest rates
2. Inflation
3. The yield curve
4. economic growth
Explanation:
Four factors that affect a bond yield are:
1. Interest rates: higher interest rates by the bank often leads to rises in corporate bond yields.
2. Inflation: with high inflation level in the economy, in which prices of commodity increases, the credit risk also increases, this results in positive pressure on yields.
3. The yield curve: this gives or predicts the economic situation in terms of growth and output. Therefore, this leads to investors to put their capital in either short-term securities or long-term bonds which effects bonds in general.
4. economic growth: this leads to increased revenues and profits for companies, and in turn results in lower yields on bonds.