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
The amortization of flotation costs reduces taxes and thus provides an annual cash flow. What will the net increase or decrease in the annual flotation cost tax savings be if refunding takes place
New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 11.67% in today's market. A call premium of 14% would be required to retire the old bonds, and flotation costs on the new issue would amount to $3 million. NYW's marginal tax rate is 40%. The new bonds would be issued when the old bonds are called.The amortization of flotation costs reduces taxes and thus provides an annual cash flow.
a) What will the net increase or decrease in the annual flotation cost tax savings be if refunding takes place?
a. $6,480 b. $7,200 c. $8,000 d. $8,800 e. $9,680
Answer:
C. $8,000
Explanation:
Given the following parameters
Amount: $50,000,000,
Call premium %: 14%
Old rate: 14.00%
Tax rate: 40%
Original life: 30
New rate: 11.67%
Years ago issued: 5
New life: 25
Original flotation cost: $3,000,000
New flotation cost: $3,000,000
Years remaining on old bond: 25
Then we solve for old new annual amortization tax effects:
Flotation costs benefit, new: ($3,000,000/25)(0.4) = $48,000
Flotation costs lost, old: ($3,000,000/30)(0.4) = $40,000
Net annual amortization tax effects = New flotation cost - Old floatation cost
=> $48,000 - $40,000 = $8,000
Hence, the right answer is $8,000
When an ice cream shop was founded, it made 31 different flavors of ice cream. If you had a choice of having a single flavor of ice cream in a cone, a cup, or a sundae, how many different desserts could you have?
A person could have 93 different desserts from the ice-cream shop that have 31 different flavors of ice cream. It is calculated by multiplying the total number of ice-cream flavors with the choices of containers available.
What is a dessert?A meal's final course is usually dessert. The course comprises of sweet treats like candies and perhaps a drink like dessert wine or liqueur. There isn't a customary dessert dish to end a dinner in various parts of the world, including most of China, much of West Africa, and much of Greece.
Let's suppose, each ice cream (I) is formed by 1 ice-cream flavor, and 1 container.
There are:
31 flavors (f)3 kind of containers (c): cone, cup or sundaeWe can find all the possible combinations using the following expression.
I = f × c
I = 31 × 3
I =93
Therefore, there can be 93 possible ice cream combinations.
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Consider the following information:Portfolio Expected Return Standard DeviationRisk-free 6.0% 0%Market 10.2 21A 8.2 10a. Calculate the sharpe ratios for the market portfolio and portfolio A. (Round your answers to 2 decimal places.)Sharpe RatioMarket portfolio Portfolio A b.If the simple CAPM is valid, state whether the above situation is possible?YesNo
Answer:
Explanation:
Given the following :
Portfolio - - - - - - Expected return - - - Std
Risk-free - - - - - - - - 6.0% - - - - - - - - - - 0%
Market - - - - - - - - - 10.2 - - - - - - - - - - - - 21
A - - - - - - - - - - - - - 8.2 - - - - - - - - - - - - 10
Calculate the sharpe ratios for the market portfolio and portfolio A.
Sharpe Ratio = (Expected portfolio return - Risk-free rate of return) / standard deviation of portfolio return
Sharpe ratio of market portfolio:
(10.2 - 6) / 21
4.2 / 21 = 0.20
Sharpe ratio of portfolio A:
(8.2 - 6) / 10
2.2 / 10 = 0.22
B) NO
If simple CAPM is valid, the above situation is Not possible, BECAUSE, according to the simple Capital Asset Pricing Model, the market portfolio is the most efficient, however with a Sharpe ratio of 0.20, which is lower than the sharpe ratio obtained for portfolio A, 0.22 then, portfolio A is more efficient.
The shareholders' equity of Green Corporation includes $320,000 of $1 par common stock and $510,000 par of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $61,000 in 2021 after paying $31,000 cash dividends in each of 2020 and 2019. What is the amount of dividends common shareholders will receive in 2021
Answer:
$25,300
Explanation:
The computation of the common shareholders received the dividend for the year 2021 is shown below:
Since in the year 2021, the dividend i.e. declared is $61,000
Now the preference shareholders dividend is
= $510,000 × 0.07
= $35,700
So for common shareholders, the dividend would be
= $61,000 - $35,700
= $25,300
In the Schedule of Cost of Goods Manufactured, Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory − Ending work in process inventory.
A. True
B. False
Answer:
A. True
Explanation:
The formula to compute the cost of goods manufactured is shown below:
Cost of goods manufactured = Opening work in process + Manufacturing cost - ending work in process
here the manufacturing cost refers to the direct material cost, direct labor cost and the manufacturing overhead cost i.e. indirect cost that is required to manufacturing a product
hence, the given statement is true
The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $55,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow 1 $ 28,000 2 26,000 3 26,000 4 31,000 5 12,000 a. If the cost of capital is 15 percent, what is the net present value of selecting a new machine
Answer:
NPV = $29,794.60
Explanation:
Year Cash Flow
0 -$55,000
1 $28,000
2 $26,000
3 $26,000
4 $31,000
5 $12,000
NPV = -$55,000 + ($28,000 x 0.8696) + ($26,000 x 0.7561) + ($26,000 x 0.6575) + ($31,000 x 0.5718) + ($12,000 x 0.4972) = -$55,000 + $24,348.80 + $19,658.60 + $17,095 + $17,725.80 + $5,966.40 = -$55,000 + $84,794.60 = $29,794.60
Pepper Company reports a $120,000 increase in inventory and a $40,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $1,200,000. The cash payments made to suppliers were:
Answer:
The cash payments made to suppliers were $1,280,000
Explanation:
Cash Payment made to the supplier can be calculated using the following formula
Cash Payment made to suppliers = Cost of Goods Sold + Increase in Inventory - Increase in account payable
By Placing values in the formula
Cash Payment made to suppliers = $1,200,000 + $120,000 - $40,000
ash Payment made to suppliers = $1,280,000
Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials $8,400 Direct labor 11,200 Variable overhead 12,600 Fixed overhead 16,200 An outside supplier has offered to sell Clemente 10,000 units of the subcomponent for $2.85 a unit. If Clemente could avoid $3,000 of fixed overhead by accepting the offer, net income would increase (decrease) by
Answer:
$6700
Explanation:
Direct materials $8,400 + Direct labor 11,200 + Variable overhead 12,600 + Fixed overhead 16,200
= 48400 total
2.85 x 10000= 28500
Fixed overhead 16,200 - $3,000
= 13200
28500 + 13200 = 41700
Change in net income = 48400 - 41700
= 6700
The net income of the company would increase by $6700
Suppose that the marginal cost of mining gold is constant at $300 per ounce and the demand schedule is as follows:
PRICE (per oz.) QUANTITY (per oz.)
$1000 1000
$900 2000
$800 3000
$700 4000
$600 5000
$500 6000
$400 7000
$300 8000
A) If the number of supplies is large, what would be the price and quantity?
B) If there is only one supplier, what would be the price and quantity?
C) If there are only two suppliers and they form a cartel, what would be the price and quantity?
D) Suppose that one of the two cartel memebers in part (c) decides to increase its production by 1,000 ounces while the other member keeps its production constant. What will happen to the revenues of both firms?
Answer:
a) The price would be $300 and quantity would be 8000 oz
b) The price would be $700 and quantity would be 4000 oz
c) The price would be $700 and quantity would be 2000 oz each
d) The revenues of both firm would : increase ( for the firm that increase production ) and decrease ( for the firm that doesn't increase production)
Explanation:
marginal cost = $300
calculate the value of TR ( total revenue for each price and quantity given )
TR = price * quantity
also calculate the MR ( marginal revenue for each )
MR = [tex]\frac{change in TR }{change in quantity}[/tex]
For the first value : TR = $1000000 , MR = nil
For the second value : TR = $1800000 , MR = $800
For the third value : TR = $2400000. MR = $600
For the fourth value : TR = $2800000 , MR = $400
For the fifth value: TR = $3000000 , MR = $200
For the sixth value : TR = $3000000, MR = $0
For the seventh value : TR = $2800000, MR = -$200
For the eighth value : TR = $2400000, MR = -$400
a)The price would be $300 and quantity would be 8000 oz because from the table above that is the point with highest quantity supplied
b) The price would be $700 and quantity would be 4000 oz because the single supplier would put the price and quantity to be supplied at the point where marginal cost is closest to the marginal revenue
d) The revenues of both firm would : increase ( for the firm that increase production ) and decrease ( for the firm that doesn't increase production) this is because increase in production is directly proportional to increase in revenue .
"A customer buys 100 shares of ABC at $90, depositing the Regulation T requirement. She holds the position for two months, during which $100 of interest is charged on the debit balance. What is the adjusted debit balance at the end of the two month period?"
Answer:
$4,600
Explanation:
Calculation for the adjusted debit balance at the end of the two month period
Using this formula
Adjusted debit balance = (Number of shares × Shares amount ÷ Numbers of months) + Interest amount
Let plug in the formula
Adjusted debit balance= (100 shares ×$90÷2 months) +$100
Adjusted debit balance = ($9,000÷ 2 months) +$100
Adjusted debit balance=$4,500+$100
Adjusted debit balance=$4,600
Therefore the adjusted debit balance at the end of the two month period will be $4,600
. In competitive markets, price is equal to marginal cost in the long run. Explain why this statement is not true for monopolistic competition.
Answer:
A Monopolistic Market may consist of many firms providing the same goods and services but these goods and services will be differentiated from one another in such a way that the goods will be perceived differently.
This has the effect of giving firms in such a market a downward sloping demand curve. The firm will maximise output at the point where Marginal Revenue equals marginal cost. This point will be lower than the demand curve so the firm will charge a price that is higher than the marginal cost at that point.
Refer to graph attached and notice how the price P is above the Long run marginal cost curve.
When a decrease in credit card availability increases the cash people hold, the money-demand curve shifts to the right. As a result, there is an increase in the interest rates. What should the Federal Reserve do to restore the interest rate level back to the original interest rate?
Answer:
The FED must decrease the price of money (or interest rates), and to do that it will buy US securities. By purchasing securities, the FED will decrease the money supply, lower the interest rates and halt inflation. This is called a contractionary monetary policy.
It can also increase the banking system's required reserve ratio, but besides lowering the interest rates, it will also decrease the supply of credit cards even further, so one action could offset the other. That is why this policy might be inefficient in this specific case.
The following data relate to labor cost for production of 3,600 cellular telephones: Actual: 2,430 hrs. at $14.5 Standard: 2,390 hrs. at $14.8 a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Answer and Explanation:
The computation is shown below:
For Direct labor rate variance, it is
= (Actual rate - Standard rate) × Actual hour
= ($14.5 - $14.8) × 2,430 hours
= $729 favorable
For Time variance, it is
= (Actual hours - standard hours) × standard rate
= (2,430 hours - 2,390 hours) × $14.80
= $592 unfavorable
So, the Total labour cost variance is
= $729 favorable + $592 unfavorable
= $137 favorable
Which of the following charts would be best to draw out the movement of people or material?
a) Activity chart
b) Operations chart
c) Flow diagram
d) Process chart
Answer:
c) Flow diagram.
Explanation:
Flow diagram also known as a flowchart can be defined as a visual representation or an activity diagram which is typically used to illustrate or demonstrate the simple sequence of actions or movements within a complex process and workflow. A Flow diagram would be best to draw out the movement of people or material.
Generally, a flowchart or flow diagram makes use of symbols such as rectangle, oval, diamond, arrow to represent the steps, flow or sequence of a complex system.
When preparing an advertisement, an investment adviser whose principal business is rendering advice to customers about securities, is prohibited from:
Complete Question:
When preparing an advertisement, an investment adviser whose principal business is rendering advice to customers about securities, is prohibited from:
Group of answer choices
A. showing past performance
B. using a paid testimonial
C. using illustrative performance charts
D. using the term "investment counsel"
Answer:
B. using a paid testimonial.
Explanation:
When preparing an advertisement, an investment adviser whose principal business is rendering advice to customers about securities, is prohibited from using a paid testimonial by the Securities and Exchange Commission Act.
A paid testimonial can be defined as a written or verbal statement made by an individual for the affirmation of good quality, performance and value of a product such as a stock.
Generally, a paid testimonial endorses an investment adviser but may not be a true reflection of his or her performance in stocks trading and that would negatively impact the customers.
Sparks Corporation has a cash balance of $5,480 on April 1. The company must maintain a minimum cash balance of $5,000. During April, expected cash receipts are $56,200. Cash disbursements during the month are expected to total $60,600. Ignoring interest payments, during April the company will need to borrow:___________
a) $5,000
b) $4,400
c) $1,080
d) $3,920
Answer:
d) $3,920
Explanation:
The computation of the borrowed amount is shown below:
= Beginning cash balance + expected cash receipts - expected cash disbursements - minimum monthly cash balance
= $5,480 + $56,200 - $60,600 - $5,000
= $3,920
We easily add to the starting cash balance the estimated cash receipts and deducted the expected cash disbursements and the minimum monthly cash balance, in order to get the correct value
as a marketing manager you reach out to the director of marketing to let her knoiw about problems you are having with communications with the sales team and explain how these issues are preventing you from achieveing your sales goals
Answer:
One of the problems I am having with the sales team is lack of communication.
There is a lot of sales and marketing activities going on the company, yet we don't have a system in place to ensure that I receive accurate feedback from all the relevant sections. For instance, there is no way to accurately know what feedback regarding our products and services that the sales team are collecting.I am not getting real-time results as they are happening. Sometimes it takes 6 weeks to get information about something that happened. By that time, if it's a negative occurrence, we are way out of course before we can make corrections. If it's a great occurrence, we lose out on the moment and the timing to capitalise on it for more results.This lack of data/poorly collected information is also affecting my working relationship with my superiors as I am unable to provide my superiors with market intelligence.Solutions
In order to mitigate these problems, I suggest we hold an emergency training for every member of the sales and marketing team on communications and how it can significantly improve our bottom line as well as everyone's take home.
For instance, if there is a new entrant into the market, the sales team usually are the first to know. If this is not communicated immediately, we lose out on the right timing to react with precision and speed.
I would also suggest that we provide the sales team with a simple app on their mobile phones which enables them to give feedback in realtime and at the end of each days work. We would need to work with the IT team on this.
Thank you.
Sperazza Corporation produces large commercial doors for warehouses and other facilities. In the most recent month, the company budgeted production of 6,200 doors. Actual production was 6,600 doors. According to standards, each door requires 6.4 machine-hours. The actual machine-hours for the month were 43,490 machine-hours. The standard supplies cost is $2.20 per machine-hour. The actual supplies cost for the month was $87,415. Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies cost is:
Answer:
Variable overhead efficiency variance= $2,310 unfavorable
Explanation:
Giving the following information:
Actual production was 6,600 doors.
According to standards, each door requires 6.4 machine-hours.
The actual machine-hours for the month were 43,490 machine-hours.
The standard supplies cost is $2.20 per machine-hour.
To calculate the variable overhead efficiency variance, we need to use the following formula:
Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Standard quantity= 6.4*6,600= 42,440
Variable overhead efficiency variance= (42,440 - 43,490)*2.2
Variable overhead efficiency variance= $2,310 unfavorable
Mondo Snow Removal's cost formula for its vehicle operating cost is $1,980 per month plus $696 per snow-day. For the month of January, the company planned for activity of 13 snow-days, but the actual level of activity was 17 snow-days. The actual vehicle operating cost for the month was $13,430. The activity variance for vehicle operating cost in January would be closest to:
Answer:
The activity variance for vehicle operating cost for the month of January is $2,784 U
Explanation:
Activity Variance = Actual Activity - Standard Activity * Standard Rate
Activity Variance = Actual snow days - Standard snow days * Standard Rate
Activity Variance = (17 - 13) * $696
Activity Variance = 4 * $696
Activity Variance = $2,784 Unfavorable
Universal Travel Inc. borrowed $501,000 on November 1, 2021, and signed a 12-month note bearing interest at 7%. Interest is payable in full at maturity on October 31, 2022. In connection with this note, Universal Travel Inc. should report interest payable at December 31, 2021, in the amount of: (Round your final answers to the nearest whole dollar.)
Answer:
Interest = $5,834.67
Explanation:
In November 1, the note bears 12 month = 7%
From November 1 to December 31 = 2 month
Hence for 2 month Interest = 2 * 7/12(%) = 1.1667%
Thus, interest = $500,100 * 1.1667%
Interest = 5834.6667
Interest = $5,834.67 approximately.
One common problem with the current ratio is that it is susceptible to "window dressing." If prior to the end of the accounting period Saxon Company has a current ratio of 1.5 and management wishes to boost its current ratio it may decide to:___________
a. purchase short-term investments with cash.
b. purchase more inventory with cash.
c. pay off accounts payable prior to year-end.
d. purchase more inventory on account.
Answer:
c. pay off accounts payable prior to year-end.
Explanation:
The current ratio refers to the relationship between the current assets and the current liabilities
The formula to compute is as follows
Current ratio = Current assets ÷ current liabilities
It is a liquidity ratio that represents the liquidity of the company
Now for improving the current ratio first the company pay off the account payable before the year ending as it automatically reduced the balance of account payable
Hence, the correct option is c.
Negative factors that are internal would be which of the following?
Weakness
Opportunity
Threat
Strength
Answer:
Weakness
Explanation:
The most highlighted negative internal factor is weakness. Inner strength stands to be the positive internal factor. When financial, physical, and human resources fall short or decrease there arises a complexity in any business organization that later becomes the reason for weakness. Weaknesses prove to provide an adverse effect on the firms and business organizations. They pull the productivity and hampers the processes.
Answer:
Weakness
Explanation:
The only other thing that's negative is a threat, but threats happen in the real world, while weakness is something someone feels on the inside.
Andrews Corp. ended the year carrying $153,576,000 worth of inventory. Had they sold their entire inventory at their current prices, how much more revenue would it have brought to Andrews Corp.?
Answer: $153,576,000
Explanation:
At year end, all the costs of inventory have been accounted for and incurred by the company. The inventory left therefore has no costs attached to it.
If Andrews Corp had been able to sell the inventory they had at year end, they would therefore not have incurred any new costs for doing so. The revenue they would have gotten would be equal to the worth of the inventory as is which was $153,576,000.
Given a stock index with a value of $1,500, an anticipated dividend of $62 and a risk-free rate of 5.75%, what should be the value of one futures contract on the index?
Answer:
$1,356.44
Explanation:
Computation for the value of one futures contract on the index
Using this formula
Futures contract =(Stock index value/(1+Risk-free rate)-Anticipated dividend
Let plug in the formula
Futures contract=$1,500/(1+0.0575) - $62
Futures contract=$1,500/(1.0575) - $62
Futures contract=$1,418.44 - $62
Futures contract=$1,356.44.
Therefore the value of one futures contract on the index will be $1,356.44.
As a central bank has greater independence from the government, the economy's inflation rate tends to
Answer:
The economy's inflation rate tends to stable and low
Explanation:
As a central bank has greater independence from the government, the economy inflation rate tends to be stable and low Because when central banks are independent from the government, they tend to make better monetary policy decisions as they do not work for votes, so they take suitable measure without thinking about politics. Thus, they have better credibility in the country.
The independence granted to the central bank tend to let the bank utilizes its full fiscal knowledge at its disposal with the help of past record, knowledge of accountant, economist, financial analyst and other expert working under the independent and head bank. This leads to stability in the economy, and inflation expectation are low.
Where is a gain or loss from discontinued operations reported in the financial statements?
a. In the report on internal control
b. Immediately following income from continuing operations on the income statement
c. Immediately following retained earnings on the balance sheet
d. Immediately following income tax expense on the income statement
Answer:
b. Immediately following income from continuing operations on the income statement
Explanation:
Gains are losses from discontinued operations must be reported in the company's income statement. Discontinued operations are not reported in the balance sheet.
The net of tax gain or loss from discontinued operations should be reported immediately after the operating income (loss).
A company's interest expense is $20,000. Its income before interest expense and income taxes is $140,000. Its net income is $58,800. The company's times interest earned ratio equals:_________ a) 0.42 b) 700 c) 2.38 d) 0.143 e) 0.34
Answer:
7
Explanation:
The company's times interest ratio is calculated as;
= Its income before interest expense and any income taxes ÷ Interest expense
= $140,000 ÷ $20,000
= 7
In the context of a bond portfolio, price risk and reinvestment rate risk exactly cancel out at a time horizon equal to _____
Answer: duration of the portfolio
Explanation:
An investment time horizon which is also referred to as the investment horizon is total time that an investor is expected to hold a particular security.
In the context of a bond portfolio, price risk and reinvestment rate risk exactly cancel out at a time horizon equal to duration of the portfolio.
The economy is generally better off when monopolies are broken up. Why is it hard for governments to do this
Answer:
• Monopolies often have laws to protect them.
• Monopolists have a lot of money to fend off antitrust lawsuits.
• Sometimes keeping it intact is the best option.
Explanation:
A monopolist is an individual or a company that controls every market for a certain product or service. It should be noted that a monopolist has a great power, enjoy economies of scale and influences price.
It is hard for government to break up monopoly because they have a huge amount of money and some are protected by the law.
6. If negative float appears on a partial path (until certain activity), the most likely explanation is: a. One or more activities on that path is running late. b. The project is not meeting its expected completion date. c. The project is meeting its expected completion date but a certain activity/ event on that path is not meeting its expected completion date. d. It must be a software glitch.
Answer:
Negative Float on a Partial Path:
c. The project is meeting its expected completion date but a certain activity/ event on that path is not meeting its expected completion date.
Explanation:
Float is the quantification of delays in a project. Negative float means that there is a delay exceeding the intended or allowed float by an ascertainable time. This means that float is about the time when an activity takes longer than originally planned. Some projects have inbuilt standard float which had been computed based on past experience of similar projects, with some allowances made for different expected scenarios.