Answer: Internal rate of return
Explanation:
The Internal Rate of Return is a financial analysis measure that yields a net present value of zero for an investment. In so doing it can be used to determine the financial viability of a project.
It does this by telling the company which required rate of return will return a positive NPV because the logic is that if the Required Rate of Return for the project is lower than the IRR, it will yield an NPV greater than 0 which is what the IRR was able to yield because it would discount the cashflows less.
A U.S. citizen works for a U.S. company in Germany. The income earned by the citizen increases U.S. GDP.
A. True
B. False
What is the present value of a perpetuity of $100 per year if the appropriate discount rate is 7%? If interest rates in general were to double and the appropriate discount rate rose to 14%, what would happen to the present value of the perpetuity? Ehrhardt, Michael C.. Corporate Finance: A Focused Approach (p. 187). Cengage Learning. Kindle Edition.
Answer:
As the interest rate doubles, the present value is the half.
Explanation:
Giving the following information:
Cf= $100
i= 0.07
i= 0.14
To calculate the present value of a perpetuity, we need to use the following formula:
PV= Cf/i
PV= present value
Cf= cash flow
i= interest rate
First perpetuity:
PV= 100/0.07
PV= $1,428.57
Second perpetuity:
PV= 100/0.14
PV= $714.286
As the interest rate doubles, the present value is the half.
Rainbow Products is considering the purchase of a paint-making machine to reduce labor costs. The savings are expected to result in additional cash flows to Rainbow of $5000 per year. The machine costs $35,000 and is expected to last for 15 years. Rainbow has determined that the cost of capital for such an investment is 12%.
Instead of the service contract, Rainbow engineers have devised a different option to preserve and actually enhance the capability of the machine over time. By investing 20% of the annual cost savings back into new machine parts, the engineers can increase the cost savings at a 4% annual rate. For example, at the end of year one, 20% of the $5,000 cost savings is reinvested in the machine; the net cash flow is thus $4,000. Next year the cash flow from cost savings grows by 4% to $5,200 gross, or $4,160 net of the 20% investment. As long as the 20% reinvestment continues, the cash flows continue to grow at 4% in perpetuity. What should Rainbow do?
A. What is NPV?
B. What is IRR?
C. What is payback?
Answer:
In finance, the net present value or net present worth applies to a series of cash flows occurring at different times. The present value of a cash flow depends on the interval of time between now and the cash flow. It also depends on the discount rate. NPV accounts for the time value of money.
The internal rate of return is a measure of an investment’s expected future rate of return. As the IRR is an estimate of a future annual rate of return, IRR should not be confused with the actual achieved investment return of an historical investment.
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mark me as brainliesatSuppose you are about to buy a car and ask to see a vehicle history report to check previous accidents or problems reported for that car. When you are told that this information is not available, you decide not to buy the car.
A) Do ypu think this illustrates an adverse selection or moral hazard problem?
B) What is the connection between the lack of information and the probability that a transaction will occur?
Answer:
A) Do you think this illustrates an adverse selection or moral hazard problem?
This situation represents an adverse selection problem since the seller probably has access to more information about the car than you. Since the seller is hiding the information, it might mean that it is negative and would certainly affect your purchase decision. A moral hazard problem happens when someone takes unusually high risks because he/she has nothing to lose with the transaction.
B) What is the connection between the lack of information and the probability that a transaction will occur?
In perfect markets, information is perfect and therefore, the number of transactions maximizes. It is just common sense, imagine you want to buy a house, you will at least want to see the house and check all the documents. No one will buy a house just because a real estate agent tells them it is a nice house and it is located on a nice neighborhood.
A relational database can be defined as a self-describing collection of non-integrated relations.
a) true
b) false
Answer:
False
Explanation:
The definition above for a relational database is false. The relational database is majorly based on the relational model of data. The data item collected are organized and arranged in a set of tables with rows and columns.
This type of database provides access to data points which are related. The tables in which these data are arranged and organized can be knowm as "relations". They are divided into rows (records) and columns (fields).
Suppose you are the money manager of a $2 million investment fund. The fund consists of four stocks with the following investments and betas. Stock Investment Beta A $ 200 000 1.50 B $ 300 000 -0.50 C $ 500 000 1.25 D $1000 000 O.75
If the market required rate of returns is 28 and the risk-free is 12%:
Calculate:
i. Stock A required rate of return
ii. Stock B required rate of return
iii. Stock C required rate of return
iv. Stock D required rate of return
v. What is the Fund’s required rate of return?
Answer:
5 ms
Explanation:
Suppose that the election of a popular presidential candidate suddenly increases people’s confidence in the future. Use the model of aggregate demand and aggregate supply to analyze the effect on the economy
Answer:
The aggregate demand will increase.
Explanation:
The increase in people’s confidence that the future return will be good or higher then the people will increase their current spending. Thus, an increase in the current spending will result in the rise of aggregate demand. consequently, the aggregate demand curve will shift rightwards, and this forms a new equilibrium at a higher position. Resulting in increased price and increased quantity. Thus, in future, people will see faster economic growth.
Ethics is primarily concerned with what
Answer:
Ethics is based on or primarily concerned with ethical rules. Instead of being based on consequences, these rules are derived from logic, from reasoning, or from the nature of human being as such. ... The purpose of ethics is to develop the individual's moral/ethical character, or virtues.
Explanation:
Ethics is concerned with the moral values and rules.
What is Ethics?Ethics refers to the system of values being imparted by the family and teachers at the school level at the time of the young age. It is concerned what the discipline which decides what is wrong and what is right.
The term ethics is applied to the theory of moral values and principles. The rules are meant to be followed to sustain the life smoothly which is beneficial for the person living in the society.
Ethics is based on or is primarily concerned with ethical norms. In contrast to being based on outcomes, these laws are derived from logic, reasoning, or the character of mankind as a whole.
Therefore, it can be concluded that The moral principles and laws are what ethics is all about.
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TYR just announced yesterday that its fourth-quarter earnings will be 35% lower than last year's fourth quarter. You observe that TYR had an abnormal return of 3.7% yesterday. This suggests that
Answer: Investors expected the earnings increase to be smaller than what was actually announced.
Explanation:
Abnormal return on an asset such as stock refers to the difference between actual returns and expected returns. As such, if it is positive, that would mean that the actual returns are/ will be higher than the expected/anticipated returns.
TYR had an abnormal return of 3.7% which would mean that the the 35% lower fourth-quarter earnings was higher than investors expected from TYR.
A registered representative with a wealthy clientele has many clients that are officers of publicly held companies. The registered representative receives an order from the executive vice-president of ADAP Corp. to sell 4% of the outstanding shares. Prior to placing this order, the registered representative may, in his or her personal account,:__________.
Answer:
buy ADAP common stock
Explanation:
Prior to placing this order, the registered representative may, in his or her personal account, buy ADAP common stock. This is because the representative would be buying against ADAP Corp and therefore the market. The representative cannot Sell ADAP common stock because doing so after having received this information would be considered "Insider Trading" which is illegal since the 4% that the company is selling will most likely cause a dip in price of the shares in the market.
ABC reports net income and sales for the year of $65,000 and $1,300,000, respectively. Return on equity is 10%. What is ABC's average Stockholders' Equity for the year?
Answer:
ABC's average Stockholders' Equity for the year is $650,000
Explanation:
Return on Equity = Net income / Average Equity
Hence, average equity = 65,000 / 10%
= $650,000
Which of the following is true regarding the payback method: 18 8 01:02:53 a. When a company is 'cash poor', a project with a short payback period but a low rate of return may be preferable to a project with a long payback period and a high rate of return b. The computation of the payback period is the project's initial investment divided by the present value of its net cash flows. c. A payback period of 35 means a company will earn 35 times its initial investment, d. The payback period increases as the cost of capital increases
Answer:
b. The computation of the payback period is the project's initial investment divided by the present value of its net cash flows.
Explanation:
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = Amount invested / cash flow
Discounted payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative discounted cash flows
payback period decreases as cost of capital increases
A payback period of 35 means a company will recover the amount invested in a project in 35 years
"The current source format of a data file and the desired database file structure are specified to a utility, which then automatically reformats the data and stores it in the database." Which database utility performs the given function?
Answer:
Backup utility of the database
Explanation:
The backup utility of the database performs this function. A copy of data from a database that can be used to remake this data is what is referred to as a backup. It can be logical or physical. Using backup can help in the recovery of files and other documentations. Backup can be done on disk or offline on tape.
A_____is a course of study that prepares students for careers in specific trades and occupations that need skilled workers
Answer:
Skilled Trades Education
Explanation:
These skilled trades education equips students with highly demanded skills which the companies requires its job applicant to posses so that he least guided and more productive than an newly trained employee. The students are trained at school and college level to get skilled so that they get better jobs or pays in coming future. There are many industry specific skills that a student can learn that are associated with manufacturing, construction, telecommunication, transportation, automobile, etc.
Vicky Robb is considering purchasing the common stock of Hawaii Industries, a rapidly growing boat manufacturer. She finds that the firm’s most recent (2020) annual dividend payment was $2.50 per share. Vicky estimates that these dividends will increase at a 20% annual rate, g1, over the next 3 years (2021, 2022, and 2023) because of the introduction of a hot new boat. At the end of the 3 years (the end of 2023), she expects the firm’s mature product line to result in a slowing of the dividend growth rate to 8% per year, g2, for the foreseeable future. Vicky’s required return, rs, is 15%. Required: What is the current (end-of-2020) value of Hawaii’s common stock, P0 = P2020.
Answer:
P0 = $51.9956 rounded off to $52.00
Explanation:
The two stage growth model of DDM will be used to calculate the price of a stock whose dividends are expected to grow over time with two different growth rates. The DDM values a stock based on the present value of the expected future dividends from the stock.
The formula for price of the stock today under this model is,
P0 = D0 * (1+g1) / (1+r) + D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n + [ (D0 * (1+g1)^n * (1+g2) / (r - g2)) / (1+r)^n ]
Where,
D0 is the dividend today or most recently paid dividend g1 is the initial growth rate which is 20% g2 is the constant growth rate which is 8% r is the required rate of return
P0 = 2.5 * (1+0.2) / (1+0.15) + 2.5 * (1+0.2)^2 / (1+0.15)^2 +
2.5 * (1+0.2)^3 / (1+0.15)^3 +
[(2.5 * (1+0.2)^3 * (1+0.08) / (0.15 - 0.08) / (1+0.15)^3)
P0 = $51.9956 rounded off to $52.00
Based on the information given, the current value of the stock will be $52.00.
Based on the information given, the following can be denoted.
D0 = dividend today
g1 = initial growth rate = 0%
g2 = constant growth rate = 8%
r = required rate of return
P0 = [2.5 × (1+0.2) / (1+0.15) + 2.5 × (1+0.2)² / (1+0.15)² + 2.5 + (1+0.2)³] / (1+0.15)³ + (2.5 * (1+0.2)³ * (1+0.08) / (0.15 - 0.08) / (1+0.15)³]
P0 = $52.00
In conclusion, the price is $52.
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Onslow Co. purchases a used machine for $192,000 cash on January 2 and readies it for use the next day at an $6,000 cost. On January 3, it is installed on a required operating platform costing $1,200, and it is further readied for operations. The company predicts the machine will be used for six years and have a $23,040 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.
1.Prepare journal entries to record the machine's purchase and the costs to ready and install it. Cash is paid for all costs incurred.
Entry #1. Record the purchase of a used machine for $192,000 cash.
Entry #2. Record the costs of $6,000 cash incurred on the used machine.
Entry #3: Record the cost of $1,200 for an operating platform.
2. Prepare journal entries to record depreciation of the machine at December 31.
Entry #1Its first year in operations : Record the year-end adjusting entry for the depreciation expense of the used machine.
Entry#2 The year of its disposal : Record the year-end adjusting entry for the depreciation expense of the used machine.
3. Prepare journal entries to record the machine's disposal under each of the following separate assumptions:
Entry #1: Record the sale of the used machine for $23,000 cash.
Entry #2: Record the sale of the used machine for $92,000 cash.
Entry #3: Record the destruction of the used machine in a fire with $33,500 cash insurance settlement.
Answer:
Onslow Co.
1. Journal Entries:
Entry #1. Record the purchase of a used machine for $192,000 cash.
Jan 2:
Debit Plant $192,000
Credit Cash Account $192,000
To record the purchase of the used machine.
Entry #2. Record the costs of $6,000 cash incurred on the used machine.
Debit Plant $6,000
Credit Cash Account $6,000
To record the cost for readying it for use.
Entry #3: Record the cost of $1,200 for an operating platform.
Debit Plant Operating Platform $1,200
Credit Cash Account $1,200
2. Journal Entries for Depreciation:
Entry #1 Its first year in operations : Record the year-end adjusting entry for the depreciation expense of the used machine.
December 31, Year 1:
Debit Depreciation Expense $29,160
Credit Accumulated Depreciation $29,160
To record depreciation expense for the year.
Entry#2 The year of its disposal : Record the year-end adjusting entry for the depreciation expense of the used machine.
Year 5 December 31:
Debit Depreciation Expense $29,160
Credit Accumulated Depreciation $29,160
To record the depreciation expense for the year.
3. Journals Entries;
Entry #1: Record the sale of the used machine for $23,000 cash.
Debit Cash Account $23,000
Credit Plant Disposal $23,000
To record the cash receipt from the sale.
Debit Plant Disposal $198,000
Credit Plant $198,000
To record the transfer of machine sold.
Debit Accumulated Depreciation $145,800
Credit Plant Disposal $145,800
To record the transfer of balance to Sale of Machine.
Entry #2: Record the sale of the used machine for $92,000 cash.
Debit Cash Account $92,000
Credit Plant Disposal $92,000
To record the cash receipt from the sale.
Entry #3: Record the destruction of the used machine in a fire with $33,500 cash insurance settlement.
Debit Cash Account $33,500
Credit Plant Disposal $33,500
To record the cash receipt from insurance.
Explanation:
a) Data and Calculations:
Cost of machine = $192,000
Readying cost = 6,000
Total = $198,000
Useful life = 6 years
Salvage value = $23,040
Depreciable amount $174,960
Depreciation per year = $29,160 ($174,960/6)
Accumulated Depreciation after 5 years = $145,800 ($29,160 x 5)
Book value after 5 years = $52,200
Method of Depreciation = Straight-line
Presented below is a partial amortization schedule for Premium Foods:
Period Issue Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value
$ 85,959
1 $ 2,900 $ 2,586 $ 314 85,645
2 2,900 2,578 322 85,323
1. Record the bond issue assuming the face value of bonds payable is $76,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Record the first interest payment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Please Note the table for better understanding
Period Issue Cash Paid Interest Expense Decrease in Carrying
Date Carrying Value Value
$85,959
1 $2,900 $2,586 $314 $85,645
2 $2,900 $2,578 $322 $85,323
1) Journal Entry Debit Credit
Cash A/C $85,959
To Premium on Bonds payable $9,959
To Bonds Payable $76,000
2) Journal Entry Debit Credit
Interest Expense $2,586
Premium on Bonds Payable $314
To Cash $2,900
Dave says that most brands of eyeglasses are owned by the same company. This illustrates which type of competition?
Answer:
The correct approach will be "monopoly ".
Explanation:
Monopolistic competition seems to be a real economy discipline that organizes monopoly components as well as market mechanisms. In essence, a competitive monopoly market would be one with individual liberty of entering and exiting, but companies can promote their business. Even though they have artificially cheap curvature of capital investment as well as and then they can fix prices.The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.75 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. Investors require a return of 11 percent on the company's stock.
Required:
a. What is the current stock price?
b. What will the stock price be in 18 years?
Answer:
(A) $26
(B) $52.67
Explanation:
The Jackson Timberlake wardrobe corporation paid a dividend of $1.75 per share
The growth rate is 4%
= 4/100
= 0.04
The rate of return is 11%
= 11/100
= 0.11
(A) The current stock price can be calculated as follows
Current price= dividend ×(1+growth rate)/required return-growth rate
= $1.75×(1+0.04)/(0.11-0.04)
= 1.75× 1.04/0.07
= 1.82/0.07
= $26
(B) The amount of stock price in 18 years can be calculated as follows
= Current price × (1+growth rate)^18
= $26 × (1+0.04)^18
= $26 × 1.04^18
= $26 × 2.0258
= $52.67
Problem 16-17 Firm Value [LO2] Change Corporation expects an EBIT of $25,000 every year forever. The company currently has no debt, and its cost of equity is 12 percent. The corporate tax rate is 22 percent. a. What is the current value of the company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-1. Suppose the company can borrow at 6 percent. What will the value of the firm be if the company takes on debt equal to 50 percent of its unlevered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-2. Suppose the company can borrow at 6 percent. What will the value of the firm be if the company takes on debt equal to 100 percent of its unlevered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c-1. What will the value of the firm be if the company takes on debt equal to 50 percent of its levered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c-2. What will the value of the firm be if the company takes on debt equal to 100 percent of its levered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer and Explanation:
The computation is shown below:
a. The current value of the company is
As it is mentioned that the company has no debt that means it is unlevered firm that is equivalent to unlevered value of the company
Unlevered value of the firm = Vu
Vu = EBIT × (1 - tax rate ) ÷ unlevered Cost of Equity
= EBIT × (1 - tax rate ) ÷ R0
= $25,000 × (1 - 0.22 ) ÷ 12%
= $162,500
b-1.
The computation of the value of the firm in the case when the value of the firm is equivalent to 50% of unlevered value
VL = Vu + Borrowing × tax rate
where,
Debt = borrowing = 50% × unlevered value of company
Debt = borrowing = 50% x Vu
So,
VL = Vu + Borrowing x tax rate
VL = $162,500 + ($162,500 × 50%) × 22%
= $162,500 + $17,875
= $180,375
b-2.
The computation of the value of the firm in the case when the value of the firm is equivalent to 100% of unlevered value
Levered value of the firm VL
VL = Vu + Borrowing × tax rate
Debt = borrowing = 100% × unlevered value of company
Debt = borrowing = 100% × Vu
So,
VL = Vu + Borrowing x tax rate
= $162,500 + ($162,500 × 100%) × 22%
= $162,500 + 35,750
= $198,250
C.1.
The computation of the value of the firm in the case when the value of the firm is equivalent to 50% of the levered value
VL = Vu + Borrowing × tax rate
= Vu + (VL × 50%) × tax rate
VL = Vu + (VL × 50%) × 22%
VL = Vu + 0.11 VL
VL - 0.11 VL = 162,500
0.89 VL = 162,500
VL= 182,584.27
C.2.
The computation of the value of the firm in the case when the value of the firm is equivalent to 100% of the levered value
Levered value of the firm VL
VL = Vu + Borrowing x tax rate
VL = Vu + (VL × 100%) × tax rate
= Vu + (VL × 100%) × 22%
= Vu + 0.22 VL
VL - 0.22 VL = 162,500
0.78 VL = 162,500
VL= $208,333.33
Fifty percent of an HIM department’s staff have a nationally recognized credential. This is an example of what type of indicator: A. Structure B. Process C. Outcome D. Internal
Answer: A. Structure
Explanation:
Structure Indicators provide information about the ability and capacity of a Health care provider to be able to give health care services that are of high quality.
They focus on the processes the Health Care provider uses, the systems in place and their capacity to provide certain types of care.
Some indicators include; How many providers do they have versus the number of patients they have and the number of certified physicians that they have.
Having a HIM department with 50% of staff accredited is therefore a Structure indicator.
How does context influence your communication? Consider the language and culture people grew up with, and the role these play in communication styles.
Answer with Explanation:
The context of communication adds value in the communication as now the listener would be more engaged and attentive to what the person is conveying in his message. It also helps listener to interpret communication.
Something might be funny in one culture and not in another. This means if you are adding something that is culturally correct then it is more probable that the message conveyed was effective. Hence contexts must be according to the culture, norms, stories of people whom they know, etc. Hence cultural differences are of immense importance when we are setting up contexts for our communication.Level of Formality. The communication must be as per the occasion and level of formality of the occasion. In simple words, I would say that "When in Rome, do as the Romans do". If you are in a Formal occasion then your presentation must reflect use of formal language and when you aren't attending a formal occasions then you must be very relaxed and easy with the people (Usually friends) and of-course the dressing would be very casual.Jurvin Enterprises recorded the following transactions for the just completed month. The company had no beginning inventories. a. $94,000 in raw materials were purchased for cash.b. $89,000 in raw materials were requisitioned for use in production. Of this amount, $78,000 was for direct materials and the remainder was for indirect materials.c. Total labor wages of $132,000 were incurred and paid. Of this amount, $112,000 was for direct labor and the remainder was for indirect labor.d. Additional manufacturing overhead costs of $143,000 were incurred and paid.e. Manufacturing overhead costs of $152,000 were applied to jobs using the company’s predetermined overhead rate.f. All of the jobs in progress at the end of the month were completed and shipped to customers.g. Any underapplied or overapplied overhead for the period was closed out to Cost of Goods Sold.
Question Completion:
1. Post the above transactions to T-Accounts
2. Determine the adjusted costs of good sold for the period.
Answer:
Jurvin Enterprises
1. T- Accounts:
Date Description Debit Credit
Raw Materials Account
a. Cash $94,000
b. Work in Process Account $89,000
Balance 5,000
Cash Account
a. Raw Materials Account $94,000
c. Wages Account 132,000
d. Manufacturing Overhead Account 143,000
Work in Process Account
b. Raw Materials $89,000
c. Wages Account 132,000
e. Manufacturing Overhead 152,000
f. Cost of Goods Sold $373,000
Wages Account
c. Cash Account $132,000
c. Work in Process Account $132,000
Manufacturing Overhead Account
d. Cash Account $143,000
e. Work in Process Account $152,000
g. Cost of Goods Sold 11,000
Cost of Goods Sold Account
f. Work in Process Account $373,000
g. Overapplied Overhead $11,000
Explanation:
a) Data is as given in the question.
b) The Cost of Goods Sold totals $373,000 being the value of Work in Process that is transferred when all the jobs in progress at the end of the month were completed and shipped to customers.
c) The overapplied overhead arises from the difference between the overhead applied to work in process and the actual manufacturing overhead incurred.
Any put additional that holds securities, cash, or other commodities serves as a brokerage account. A day dealer's principal fund is commonly referred to as a trading account.
Assets stored in a trading account are kept distinct from all those maintained in a long-term purchase and hold plan.
The T-Account has been attached below.
b) The overall cost of goods sold equals $373,000, which shows the value of Work in Process that is transferred when all tasks in progress at the end of the month are finished and sent to customers.
c) The discrepancy between both the excess applied to work in progress and the actual manufacturing overhead incurred is the basis of the overapplied overhead.
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In which of the following statements are the terms "demand" and "quantity demanded" used correctly?
A) When the price of ice cream rose, the demand for both ice cream and ice cream toppings fell.
B) When the price of ice cream rose, the quantity demanded of ice cream fell and the demand for ice cream topping fell.
C) When the price of ice cream rose, the demand for ice cream fell and the quantity demanded of ice cream toppings fell.
D) None of these statements uses the terms correctly.
Answer:
B) When the price of ice cream rose, the quantity demanded of ice cream fell and the demand for ice cream topping fell.
Explanation:
A rise in the price of a good would lead to a fall in the quantity demanded of the good.
So, a rise in the price of ice-cream would lead to fall in the quantity demanded of ice cream.
A rise in the price of ice-cream would lead to a fall in the demand for ice cream toppings.
Gain is generally recognized in an asset distribution to a partner. True False
Answer:
False
Explanation:
Usually distributions reduce a partner's outside basis in a partnership, they are generally not considered income. Since most distributions are not considered income, they do not result in gains for the partner. Some distributions may result in gains, such as certain cash distributions or securities (bonds) distributions. It is uncommon for a gain to result from property being distributed.
Your client holds 1 listed XYZ August 50 call. A cash dividend of $2.50 per share is declared. On the ex-date, the terms of the call are: (A) Exercise Price: $47.50, Number of Underlying Shares per Contract of XYZ: 102 (B) Exercise Price:$50.00, Number of Underlying Shares per Contract of XYZ: 100 (C) Exercise Price: $52.50, Number of Underlying Shares per Contract of XYZ: 97 (D) Exercise Price: $52.50, Number of Underlying Shares per Contract of XYZ: 102
Answer:
(B) Exercise Price:$50.00, Number of Underlying Shares per Contract of XYZ: 100
Explanation:
The declaration of the dividends will not affect the exercise price of the call, it will still be $50 per stock. Also, the number of stocks included in the call will not change because a cash dividend is declared, they will still be 100 stocks included in the call contract. The cash dividend affects the market price of the stock, but not the call or put options.
The reality of consumer optimum means making choices in countless purchases in order to enjoy:______.
a. roughly the same utility per dollar spent.
b. the same level of satisfaction in each.
c. the same standard of living.
d. increasing degrees of satisfaction.
e. a balanced budget.
Answer:
a. roughly the same utility per dollar spent.
Explanation:
A consumer optimum can be defined as the combination of finished goods and services which typically maximizes satisfaction (utility) for the consumers of various goods and services at a specific income and product prices.
The reality of consumer optimum means making choices in countless purchases in order to enjoy roughly the same utility per dollar spent.
For example, a customer who wishes to obtain maximum satisfaction, utility or value for his or her money (dollar spent) may decide to buy a variety of goods such as milk, donuts, biscuits, chocolate, cheese etc
1. A Letter of Credit (or LC) is one of the major pillars on which International Trade stands. a) What is a Letter of Credit? b) With the aid of a diagram, explain the LC procedure. c) Explain to the CEO of Mbo Limited (a company in Ghana) which wants to buy large quantities of White Refined Granulated Sugar from Tiffany Anderson Group Ltd (a company in Brazil) why the LC is the most acceptable method to both the exporter and importer in a transaction such as he is about to undertake.
Answer:
A Letter of Credit (or LC)
There are various types of letter of credit (LC) that prevail in export/import trade transactions. These include Commercial, Export / Import, Transferable and Non-Transferable, Revocable and Irrevocable, Stand-by, Confirmed, and Unconfirmed, Revolving, Back to Back, Red Clause, Green Clause, Sight, Deferred Payment, and Direct Pay LC. We can explain it by using the following illustrated examples:
a) Mbo Limited's bank can issue a letter of credit to Tiffany Anderson Group Ltd.'s bank a credit guarantee by which Mbo's bank guarantees that Mbo Limited will settle Tiffany Anderson Group Ltd in full for the amount involved in their trade relationship. It is usually used by importers and exporters to settle trade credit. It is the most acceptable means of settling debts across national boundaries.
b) A diagram is attached to show how a letter of credit works. The procedures are detailed below:
A. A Sales Contract is established between the seller (exporter) and the buyer(importer).
B. The importer makes a request to its bank for issuance of letter of credit.
C. The importer’s bank issues a letter of credit to the exporter’s bank.
D. The exporter’s bank advises on the letter of credit to the exporter.
E. The exporter presents export documents (bill of lading and invoice) to its bank.
F. The exporter’s bank delivers the documents to the importer’s bank.
G. The importer’s bank debits the account of the importer for the stated amount after confirming that the documents are in order.
H. The importer’s bank pays the purchase price to the exporter’s bank.
I. The exporter’s bank credits the exporter’s bank to show payment. This ends the transaction.
c. The letter of credit guarantees both the Mbo Limited and Tiffany Anderson Group Ltd. It guarantees and ensures that payment for goods are not paid to Tiffany Anderson Group Ltd until there is evidence that the correct goods and quantity have been shipped by Tiffany Anderson Group Ltd (through the bill of lading). It also assures Tiffany Anderson Group Ltd of payment for shipped goods since the documents cannot be released to Mbo Limited unless Mbo Limited's account had been debited and the money transmitted to Tiffany Anderson Group Ltd through its bank.
Explanation:
As explained above.
Campbell Clothing produces men's ties. The following budgeted and actual amounts are for 2016:
Cost Budget at 5,000 Units Actual Amounts at 5,800 Units
Direct materials $60,000 $71,000
Direct labor 75,000 86,500
Equipment depreciation 5,000 5,000
Indirect labor 7,500 8,600
Indirect materials 9,000 9,600
Rent and insurance 12,000 13,000
Instructions:
Prepare a FLEXIBLE performance budget report for Campbell Clothing for the year.
Answer:
Campbell Clothing
Manufacturing Performance budget Report
For the year ended December 31, 2016
Budget Actual Difference
Direct materials $69,600 $71,000 $1,400 U
Direct labor $87,600 $86,500 $500 F
Equipment depreciation $5,000 $5,000 $0 Nil
Indirect labor $8,700 $8,600 $100 F
Indirect materials $10,440 $9,600 $840 F
Rent and insurance $12,000 $13,000 $1000 U
Total Costs $192,740 $193,700 $960 U
Workings
Planning budget
Direct materials 60,000 * $12 = $69,600
Direct labor 75,000 * $15,000 = $87,600
Equipment depreciation 5,000
Indirect labor 7,500 * $1.50 = $8,700
Indirect materials 9,000 * $1.80 = $10,440
Rent and insurance $12,000
Jackson company recorded the following cash transactions for the year:
Paid 135,000 for salaries
Paid $60,000 to purchase office equipment.
Paid $15,000 for utilities.
Paid $6,000 in dividends.
Collected $245,000 from customers.
What was Jackson’s net cash provided by operating activities?
Answer:
$95,000
Explanation:
Jackson's net cash provided by operating activities is calculated below;
Cash collected from customers
$245,000
Less : Salaries paid. ($135,000)
Less utilities ($15,000)
Net cash provided. $95,000