Answer:
d. 19.2
Explanation:
The missing question is "The company's times interest earned ratio is?"
Solution
Interest Earned Ratio = Income before Interest and taxes or EBIT / Interest Expenses
Net Income $126,000
Add: Income taxes $37,800
Add: Interest Expenses $9,000
EBIT $172,800
Hence, Interest Earned Ratio = EBIT / Interest Expenses
Interest Earned Ratio = $172,800 / $9,000
Interest Earned Ratio = 19.2
Even though money loses purchasing power during inflationary periods, people still choose to hold part of their wealth in the form of money because:
Answer:
Money is an asset with the characteristics of liquidity
Explanation:
people still choose to hold part of their wealth in the form of money because money has characteristics of liquidity, that is, as an asset money can easily be accessed. And during inflation when prices of commodities have skyrocketed, more money would be required for business transactions. Money can easily be exchanged while doing any form of transaction.
What trends have contributed to the changing nature of the leader-follower relationship in organizations
Answer:
The answer is below
Explanation:
These are some of the trends that have contributed to the changing nature of the leader-follower relationship in organizations
1. Decreased Resources: in recent times, there have been trends in the maximization of little resources to achieve greater output in the organization. This has led to various firms downsizing. their staff, thereby, there is fewer managers with more subordinates to exercise span of control, which in turn translates to many subordinates to take some functions conventionally performed by managers.
2. Power-Sharing Synergy: with greater influence towards remote work and little or no supervision strategy, many companies are trying to form a power-sharing strategy, which is a form.of decentralized authority in a firm.
3. The complexity of problems: Also, due to an increase in new problems being encountered by firms in recent time, that are more complex, needs more hands to be engaged to find solutions to these problems.
Which of the following budgets is prepared before the preparation of the production budget? a. Sales budget b. Cash budget c. Direct labor budget d. Capital expenditure budget
Answer:
a. Sales budget
Explanation:
Sales Budget is the starting point for the Budgetary process. The sales budget projects the number of units to be sold to meet the firms targets.
These units will then need to be used to populate the production required by the firm to meet its sales needs plus any inventory balances.
The weaknesses of a multi-country strategy are that
A. It is especially vulnerable to fluctuating exchange rates and it can usually be defeated by companies employing cross-market subsidization tactics.
B. Each country’s strategy is different from the strategies employed in other countries and it is harder to build multiple profit sanctuaries.
C. It presents a firm with greater exposure to increases in tariffs and restrictive trade barriers than does a global strategy.
D. It is less conducive to building competitive advantage by transferring company competencies and resources across country boundaries and it does not promote building a single, unified competitive advantage.
E. It is unsuitable for the markets of emerging countries and it can usually be defeated by companies using export strategies or global strategies.
Answer: D. It is less conducive to building competitive advantage by transferring company competencies and resources across country boundaries and it does not promote building a single, unified competitive advantage.
Explanation:
Multi-Country Strategy is a strategy whereby there is matching of each country market and the circumstances in the local market. Multicountry strategies differ in terms of mission achievement, brand presentation etc
One weakness of the strategy is that it is less conducive to building competitive advantage by transferring company competencies and resources across country boundaries and it does not promote building a single, unified competitive advantage.
your Christmas ski vacation was great, but it unfortunately ran a bit over budget. All is not lost, because you just received an offer in the mail to transfer your $14,000 balance from your current credit card, which charges an annual rate of 21.8 percent, to a new credit card charging a rate of 12.4 percent. a. How much faster could you pay the loan off by making your planned monthly payments of $325 with the new card
Answer:
If the interest rate decreases, you will be able to pay back the loan in only 58 months, which is 27 months less than with the higher interest rate.
Explanation:
I prepared an amortization schedule using the 21.8% rate, an it would take 85 months to pay of your debt completely. But if the interest rate decreases to 12.4%, it will take you only 58 months.
An aging of a company's accounts receivable indicates that estimate of the uncollectible accounts totals $4,731. If Allowance for Doubtful Accounts has a $810 credit balance, the adjustment to record the bad debt expense for the period will require a:________.
a. debit to Allowance for Doubtful Accounts for $3,921.
b. debit to Bad Debt Expense for $3,921.
c. credit to Allowance for Doubtful for $4,731.
d. debit to Allowance for Doubtful Accounts for $4,731
Answer:
b. debit to bad debt expense for $3,921
Explanation:
Bad debt are debts owed to a business and which cannot be collected. Theses debts occurs during the course of business transaction and are caused by fraud, a company avoiding its obligation to pay or trade disagreements.
With regards to the above, the adjustment to bad debts expense will be the difference between accounts receivable and doubtful accounts.
Bad debts expense = $4,731 - $810 = $3,921
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:Unit SalesApril 82,000May 90,000June 122,000July 96,000The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 15% of the following month's unit sales. The inventory at the end of March was 12,300 units.Required:Prepare a production budget by month and in total, for the second quarter.
Answer:
Results are below.
Explanation:
Giving the following information:
Sales:
April 82,000
May 90,000
June 122,000
July 96,000
Desired ending inventory= 15% of the following month's unit sales.
The inventory at the end of March was 12,300 units
To calculate the production required, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
April:
Sales= 82,000
Desired ending inventory= 90,000*0.15= 13,500
Beginning inventory= (12,300)
Total production= 83,200
May:
Sales= 90,000
Desired ending inventory= 122,000*0.15= 18,300
Beginning inventory= (13,500)
Total production= 94,800
June:
Sales= 122,000
Desired ending inventory= 96,000*0.15= 14,400
Beginning inventory= (18,300)
Total production= 118,100
Net sales, first month $13,000 Normal gross profit as a percentage of sales 45% Inventory, start of period $8,000 Net purchases, first month $7,000 Using the gross profit method of inventory estimation, the amount of normal gross profit would be
Answer: $5,850
Explanation:
The Normal Gross Profit under the gross profit method of inventory estimation is the growth profit percentage of sales multiplied by the sales figure.
= Net Sales * Gross Profit percentage
= 13,000 * 0.45
= $5,850
& Co. owns vast amounts of corporate bonds. Suppose buys of bonds at face value on January 2, . The bonds pay interest at the annual rate of % on June 30 and December 31 and mature on December 31, . intends to hold the investment until maturity. Read the requirementsLOADING.... Requirement 1. How would the bond investment be classified on December 31, , balance sheet? The bond investment will be classified as a ▼ as of December 31, .
Answer:
Bonds held to maturity are recorded at the net carrying value (after any premium or discount amortization is made), but since these bonds were purchased at face value, there is no premium or discount to be amortized. The bonds should be reported at face value as non-current assets since they mature in more than 1 year.
Explanation:
all the numbers are missing, so I looked for a similar question:
Otter Creek & Co. Owns vast amount of corporate bonds. Suppose Otter Creek buys $1,200,000 of RoastCo bonds at face value on January 2, 2016. The RoastCo bond spay interest at an annual rate of 3% on June 30 and December 31, and mature on December 31, 2020. Otter Creek intends to hold the investment until maturity.
How would the bond investment be classified on December 31, 2016, balance sheet?
Blazer Sports Store is preparing to pay its quarterly dividend of $7.75 a share this quarter. The stock closed at $105.64 a share today. What will the ex-dividend stock price be if the relevant tax rate is 19 percent and all else is held constant
Answer:
$99.3625
Explanation:
The computation of the ex-dividend stock price is shown below
= Stock closing price - {stock dividend × (1 - tax rate)}
= $105.64 - {($7.75 × (1 - 0.19)}
= $105.64 - $6.2775
= $99.3625
Hence, the ex-dividend stock price is $99.3625
We simply applied the above formula so that the ex-dividend stock price could come
An initial license is issued in October of 2015. When must the license be renewed in order to prevent expiration?
Answer: September 2017
Explanation:
From the question, we are informed that an initial license is issued in October of 2015. One thing that we need to understand is that the license will only be effective for two years.
So, before it expires it is logical to renew it. In this scenario, since the initial license is issued in October 2015, this means that it'll be renewed in 2 years which will be September 2017.
Team members on agile projects need strong direction from the sponsor and project manager.
A. True
B. False
Answer:
B. False
Explanation:
We should first try to define what defines a project as "agile": it is generally divided into several iterations (or small sections) that interact as part of a larger whole system. One of the most important characteristics of agile projects is that their iterations are continuously reviewed by the project's members and those reviews should help to improve or correct the projects.
Team members tend to work more independently focusing on developing and finishing their specific iteration or segment. They generally do not work under continuous guidance from the project manager.
Barga Co.'s net sales for Year 1 and Year 2 are $663,000 and $744,000, respectively. Its year-end balances of accounts receivable follow: Year 1, $64,000; and Year 2, $91,000. Complete the below table to calculate the days' sales uncollected at the end of each year.
Days' Sales Uncollected
Choose Denominator: / Choose Numerator: * Days = Days' Sales Uncollected
Year 1: days
Year 2: days
Answer:
Year 1 = 35.23 days
Year 2 = 44.64 days
Explanation:
Days' Sales Uncollected = Accounts receivable / Net Sales * Days
Year 1 = $64,000 / $663,000 * 365 days = 35.23 days
Year 2= $91,000 / $744,000 * 365 days = 44.64 days
Catherine wants to calculate the _____ to show the wealth created per employee. The formula for this calculation will involve subtracting the cost of capital from the net profit after taxes and then dividing this figure by the full-time head count. a. human economic value added (HEVA) b. human capital return on investment c. human capital value added (HCVA) d. working capital ratio
Answer:
A
Explanation:
Assume the following amounts: Total fixed costs Selling price per unit Variable costs per unit If sales revenue per unit increases to and units are sold, what is the operating income?
Answer:
The correct option is c. 129,000.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Assume the following amounts:
Total fixed costs. $15,000
selling price per unit. $19
variable costs per unit. $12
if sales revenue per unit increases to $21 and 16,000 units are sold what is the operating income?
a 159,000
b. 336,000
c. 129,000
d. 144,000
The explanation to the answer is now provided as follows:
Since sales revenue per unit increases to $21, we use it as the selling price and proceed as follows:
Computation of Operating Income
Particular Amount ($)
Sales revenue (16,000 * $21) 336,000
Variable cost (16,000 * $12) (195,000)
Contribution 144,000
Fixed cost (15,000)
Operating income 129,000
Therefore, the correct option is c. 129,000. That is, operatin income is $129,000.
Tim and Michelle have decided to form a partnership with a 60/40 partnership interest ratio. Tim contributes cash and merchandise inventory with a market value of . While journalizing this transaction ________.
Complete question:
Tim and Michelle have decided to form a partnership with a 60/40 partnership interest ratio. Tim contributes $7500 cash and merchandise inventory with a market value of $1500. While journalizing this transaction ________.
A) Tim, Capital will be debited for $9000
B) Tim, Capital will be credited for $9000
C) Tim, Capital will be credited for $6000 and Michelle, Capital will be credited for $4500
D) Tim, Capital will be debited for $6000 and Michelle, Capital will be debited for $4500
Answer: Tim, Capital will be credited for $9000
Explanation: Tim's total contribution towards the partnership will be recorded as his capital. Since he has contributed $7,500 worth of cash, and merchandise inventory with a market value of $1,500. The market value of the merchandise inventory and the cash contributed adds up towards his capital contribution. This is $7,500 + $1,500 which sums up to a total of $9,000.
Eurocurrency markets are a source of attractively priced working capital loans for multinational firms because
Answer:
it offers softer interest rates of borrowers and greater interest rates for lenders depending on the situation
Explanation:
Due to the lack of firm or strong regulatory provisions or controls, such as tax law, interest caps, etc. Eurocurrency markets are commonly selected as attractively priced working capital loans for multinational firms because when compared with domestic banks, it offers softer interest rates of borrowers and greater interest rates for lenders accordingly.
A stock has had the following year-end prices and dividends:Year Price Dividend1 $ 64.73 â 2 71.60 $ .68 3 77.40 .73 4 63.67 .79 5 73.91 .88 6 83.75 .95 What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)Arithmetic average return %Geometric average return %
Answer:
Arithmetic average return = 7.23%
Geometric average return=6.44%
Explanation:
Calculation for the Arithmetic average return
First step is to calculate the return for each year
Using this formula
Return=(Current year price amount-Previous price amount + Current year dividend)/ Previous year price amount ×100
Let plug in the formula
Year 1 Return= ($71.60-$64.73 + $.68) / $64.73
Year 1 Return=$7.55/$64.73
Year 1 Return= 11.66%
Year 2 Return= ($77.40-$71.60 + $.73) / $71.60
Year 2 Return=$6.53=$71.60
Year 2 Return = 9.12%
Year 3 Return= ($63.67-$77.40 +$ .79) / $77.40 Year 3 Return=$-12.94/$77.40
Year 3 Return=-16.72%
Year 4 Return= ($73.91-$63.67 +$ .88) / $63.67
Year 4 Return=$11.12/$63.67
Year 4 Return = 17.47%
Year 5 Return= ($83.75-$73.91 + $.95) / $73.91 Year 5 Return=$10.79/$73.91
Year 5 Return= 14.60%
The second step is to calculate the arithmetic average return
Using the formula
Arithmetic average return = (Addition of the each year return percentage /Numbers of years)
Let plug in the formula
Arithmetic average return (.1166 + .0912-.1672 + .1747 + .1460) / 5
Arithmetic average return =0.3613/5
Arithmetic average return = .0723 ×100
Arithmetic average return = 7.23%
Calculation for the geometric average return
Using this formula
Geometric average return=(1+Each year return percentage)^1/Numbers of years-1)
Let plug in the formula
Geometric average return== [(1 + .1166)×(1 + .0912)×(1-.1672)×(1 + .1747)×(1 + .1460)]^1/5-1
Geometric average return=[(1.1166)×(1.0912)(0.8328)×(1.1747)×(1.146)]^1/5-1
Geometric average return=(1.366011)^1/5-1
Geometric average return=1.0644
Geometric average return=1.0644-1
Geometric average return=0.0644
Geometric average return=0.0644 ×100
Geometric average return=6.44%
Therefore the Arithmetic average return is 7.23% while Geometric average return is 6.44%.
Olivia Village was recently incorporated and began financial operations on July 1, 20X2, the beginning of its fiscal year. The following transactions occurred during this first fiscal year, July 1, 20X2, to June 30, 20X3:
1. The village council adopted a budget for general operations for the fiscal year ending June 30, 20X3. Revenue was estimated at $400,000. Legal authorizations for budgeted expenditures totaled $394,000.
2. Property taxes of $390,000 were levied; 2 percent of this amount was estimated to be uncollectible. These taxes are available to finance current expenditures as of the date of levy.
3. During the year, a village resident donated marketable securities valued at $50,000 to the village under the terms of a trust agreement that stipulated that the principal amount be kept intact. The use of revenue generated by the securities is restricted to financing college scholarships for needy students. Revenue earned and received on these marketable securities amounted to $5,500 through June 30, 20X3.
4. A general fund transfer of $5,000 was made to establish an internal service fund to provide for a permanent investment in inventory.
5. The village decided to install lighting in the village park financed through an authorized special assessment project at a cost of $75,000. The city is obligated if the property owners default on their special assessments. The village issued special assessment bonds in the amount of $72,000 and levied the first year’s special assessment of $24,000 against the village’s property owners. The remaining $3,000 for the project will be contributed from the village’s general fund.
6. The special assessments for the lighting project are due over a three-year period, and the first year’s assessments of $24,000 were collected. The $3,000 transfer from the village’s general fund was received by the lighting capital projects fund.
7. A contract for $75,000 was let for the lighting installation. The capital projects fund was encumbered for the contract. On June 30, 20X3, the contract was completed, and the contractor was paid.
8. During the year, the internal service fund purchased various supplies at a cost of $1,900.
9. The general fund cash collections recorded during the year as follows:
Current property taxes $ 386,000
Licenses and permit fees 7,000
The allowance for estimated uncollectible taxes is adjusted to $4,000.
10. The village council decided to build a village hall at an estimated cost of $500,000 to replace space occupied in rented facilities. The village does not record project authorizations. The council decided to issue general obligation bonds bearing interest at 6 percent. On June 30, 20X3, the bonds were issued at face value of $500,000, payable in 20 years. No contracts have been signed for this project, no expenditures have been made, nor has an annual operating budget been prepared.
11. The voucher for purchasing a fire truck for $15,000 was approved and paid by the general fund. This expenditure previously had been encumbered for $15,000.
Required:
Prepare journal entries to record properly each of these transactions in the appropriate fund or funds of Olivia Village for the fiscal year ended June 30, 20X3. Do not prepare closing entries for any fund. (Select the appropriate fund for each situation when required. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Olivia Village
Journal Entries:
July 1, 20X2 to June 30, 20X3:
1. No journal entry required.
2. Debit Property Taxes Receivable $390,000
Credit Property Tax Revenue $390,000
To record the levying of property taxes
Debit Uncollectible taxes expense $7,800
Credit Uncollectible tax expense $7,800
To record the estimated uncollectible of 2%.
3. Debit Marketable Securities $50,000
Credit Restricted Trust Fund Donations $50,000
To record the donation of marketable securities.
Debit Restricted Trust Fund $5,500
Credit Marketable Securities Revenue $5,500
To record the revenue earned on marketable securities.
4. Debit Internal Service Fund $5,000
Credit General Fund $5,000
To record the transfer of funds.
5. Debit Special Assessment Fund $72,000
Credit Special Assessment Bonds $72,000
To record the issue of bonds for special assessment project.
Debit Special Assessment Receivable $24,000
Credit Special Assessment Levy $24,000
To record the special assessment levied
6. Special Assessment Fund $27,000
Credit Special Assessment Receivable $24,000
Credit General Fund $3,000
To record the collection of the first year's special assessment and transfer from General Fund.
7. Debit Capital Projects Fund $75,000
Credit Contractor Payable $75,000
To record the letting of the contract for lighting.
June 30, 20X3:
Debit Contractor Payable $75,000
Credit Capital Projects Fund $75,000
To record the payment of the contractor for the project.
8. Debit Supplies $1,900
Credit Internal Service Fund $1,900
To record the purchase of various supplies.
9. Debit General Fund $393,000
Credit Property taxes Receivable $386,000
Credit Licenses and permit fees $7,000
To record cash collections for general fund
Debit Allowance for Uncollectible taxes $3,800
Credit Uncollectible Expenses $3,800
To adjust the allowance for uncollectible taxes to $4,000 balance.
10. Debit General Fund $500,000
Credit Bonds Payable $500,000
To record the issue of 6%, 20-year bonds payable.
11. Debit Fire Truck $15,000
Credit General Fund $15,000
To record the payment for the purchase of a fire truck.
Explanation:
Olivia Village can use the general journal to initially record transactions that occur during the year. The journal shows the accounts to be debited and the accounts to be credited.
You are the CEO of Company A and you are using an industry leader (Leader Company) for benchmarking. Company A is much smaller than Company B in terms of total assets and total sales revenue. You should compare the:
Answer:
net income to net sales ratio of Company A to net income to net sales ratio of Leader Company
Explanation:
Benchmarking is defined as the practice of measuring a business's services, sales, and operations to another company's that is considered to be one of the best in the industry.
The purpose of benchmarking is to find out the reason for superior performance of top companies and using the knowledge to improve performance of one's own company.
In the given scenario company A is much smaller than company B so the benchmarking method must consider difference in scale of operations.
The best way will be to use ratio of net income to net sales of each is the companies.
Pensacola Inc. exchanged old equipment for new equipment in two exchange transactions. Each transaction has commercial substance.
Old Equipment
Book Value Fair Value Cash Received
Equipment A $74,000 $81,300 11,300
Equipment B $61,600 $54,800 10,300
For Equipment B, Pensacola would record a gain/(loss) of:__________
a. $5,300
b. $(6,800)
c. $(7,800)
d. none of these answer choices are correct
Answer:
b. $(6,800)
Explanation:
The computation of the gain or loss recorded for the equipment B is shown below:
Fair value of old equipment $54,800
Less: book value of old equipment $61,600
Pensacola would record a gain /(loss) (-$6,800)
Since the book value is more than the fair value so the Pensacola would received a loss of -$6,800
Hence, the correct option is B.
Bramble Corp. purchased a delivery truck for $38,800 on January 1, 2019. The truck has an expected salvage value of $1,800, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 14,700 in 2019 and 12,900 in 2020. (a1) Calculate depreciable cost per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.)
Answer:
Depreciable cost per mile= $0.37
Explanation:
Giving the following information:
Purchase price= $38,800
Salvage value= $1,800
Expected to be driven 100,000 miles over its estimated useful life.
To calculate the depreciable cost per mile, we need to use the following formula:
Depreciable cost per mile= (original cost - salvage value)/useful life of production in miles
Depreciable cost per mile= (38,800 - 1,800)/100,000
Depreciable cost per mile= $0.37
Problem 2.7 Service Station 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 percent. a. What is the optimal order quantity? EOQ = This is the lot size.
Answer:
179 units
Explanation:
The computation of the economic order quantity is shown below:
[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
where,
Annual demand = 1,200 cases
Ordering cost = $40
And, the annual carrying cost is $3 per case
Now placing these values to the above formula
So, the optimal order quantity is
[tex]= \sqrt{\frac{2\times \text{1,200}\times \text{\$40}}{\text{\$3}}}[/tex]
= 179 units
Hence, the optimal order quantity is 179 units
A perfectly competitive firm: A) will budget money to advertise its product. B) can adjust the price of the product so that it sells, in order to make more money.
Answer:
D) has output that is so small, relative to market supply, that it cannot influence the market price
Explanation:
The Perfect competition is that market condition in which it have various characteristics like
1. Large number of buyers and sellers
2. Same or similar products
3. Perfect knowledge
4. Free entry and exist
In this market competition, the output is very small also it is related to the market supply and the market supply does not affect the market price
Hence, the correct option is d.
"A customer calls a registered representative to sell 500 shares of an over-the-counter stock and tells the representative that he wants the trade done privately - not in the public market. This is:"
Answer:
Not allowed, FINRA prohibits private securities transactions. Trading must be done with the knowledge of your firm in the public securities markets
Explanation:
Since in the question it is mentioned that call of the customer registered the representative for selling off 500 shares over the counter stock and the transactions should be done in privately
here according to the FINRA, it prohibits the transactions in which the person deals in private securities also there should be knowledge in the firm for the securities market held in market
Mishoe Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (1,000 units) $ 50,000 Variable expenses 32,500 Contribution margin 17,500 Fixed expenses 12,250 Net operating income $ 5,250 The break-even point in unit sales is closest to:______ a) 0 units b) 895 units c) 700 units or 650
Answer:
700 units
Explanation:
Mishoe corporation has a sales of $50,000(1,000 unit)
Variable expense is $32,500
Contribution margin is 17,500
Fixed expenses is 12,250
Net operating income is $5,250
The first step is to calculate the contribution margin per unit
= $17,500/1000
= $17.5 per unit
Therefore, the break-even point in unit sales can be calculated as follows
= Fixed cost/contribution margin per unit
= $12,250/$17.5
= 700 units
Hence the break-even point in unit sales is closest to 700 units
A party's oral agreement to pay another's debt is never enforceable.
A. True
B. False
Answer: A. True
Explanation: The Statute of Frauds denies enforceability to certain contracts that do not comply with written requirements. Therefore, a party's oral agreement to pay another's debt is never enforceable as such agreements and contracts must be in writing in order to become enforceable. Any oral modification is likely not enforceable if it falls under Statute of Frauds which renders any contract that is not in writing as void.
Suppose a State of California bond will pay $1,000 eight years from now. If the going interest rate on these 8-year bonds is 5.5%, how much is the bond worth today
Answer:
the bond worth today is $651.60
Explanation:
The computation of the amount of bond worth today i.e. present value is to be shown below:
Present value = Amount ÷ (1 + interest rate)^number of years
where,
Amount = $1,000
Interest rate = 5.5%
And, the number of years is 8
Now placing these values to the above formula
So, the worth of the bond today is
= $1,000 ÷ (1 + 0.55)^8
= $651.60
hence, the bond worth today is $651.60
The price at which a monopolistically competitive firm sells its product:___________a. exceeds the marginal cost of production.b. produces economic profits in both the long run and the short run.c. equals the marginal cost of production.d. is less than the marginal cost of production.
Answer: b. produces economic profits in both the long run and the short run.
Explanation:
Monopolies sell at a price that results from the quantity where marginal revenue equals marginal costs as this maximises profits.
Monopolies have their marginal revenue lower than their demand curve so the point where the profit maximising quantity intersects with the demand curve will result in a price above the marginal cost of the good which means that they are able to make economic profits in the short run.
Monopolies are able to maintain this trend in the long run as well because there will be barriers to entry dissuading other competitors from coming in.
Outstanding debt of Home Depot trades with a yield to maturity of 5%. The tax rate of Home Depot is 35%. What is the effective cost of debt of Home Depot?
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 %