Answer:
Windhoek Mines, Ltd., of Namibia
a. The net present value (NPV) of the proposed mining project is:
= -$117,258
b. No. The project should be rejected. It has a negative NPV.
Explanation:
a) Data and Calculations:
Cost of new equipment and timbers = $370,000
Working capital required = $115,000
Cost to construct new roads in year three = $43,000
Annual net cash receipts = $130,000
Salvage value of equipment in four years = $68,000
Company's required rate of return = 18%
Mining duration = 4 years
Annuity factor for 4 years at 18% = 2.1690
Relevant discount factors at 18%:
Year 3 = 0.712
Year 4 = 0.636
Present values of Cash Flows:
Transaction Cash Flows PV Factor PV Amount
Cost of new equipment and timbers $370,000 1.000 -$370,000
Working capital required 115,000 1.000 -115,000
Cost to construct new roads in year three 43,000 0.712 -30,616
Annual net cash receipts 130,000 2.169 281,970
Salvage value of equipment in four years 68,000 0.636 43,248
Working capital released 115,000 0.636 73,140
Net present value -$117,258
Indicate whether the following instruments are examples of money market or capital market securities.
a. U.S. Treasury bills
b. Long-term corporate bonds
c. Common stocks
d. Preferred stocks
e. Dealer commercial paper
Answer and Explanation:
In the Money Market Securities, it is treated as the short-term securities that means they are traded for short-term period i.e. less than one year. It has the less risk also the return is also very less but the liquidity is very rich. Examples - treasury bills, commercial papers etc
While on the other hand, the capital market securties are traded for the long term i.e. more than one year. It contains the high risk also the return is very high. Examples - stocks, bonds, debentures
So based on the above explanation, the classification is as follows
a. Money market securities
b. capital market securities
c. capital market securities
d. capital market securities
e. money market securities
The total factory overhead for Big Light Company is budgeted for the year at $403,750. Big Light manufactures two different products - night lights and desk lamps. Night lights is budgeted for 30,000 units. Each night light requires 1/2 hour of direct labor. Desk lamps is budgeted for 40,000 units. Each desk lamp requires 2 hours of direct labor.
a. Determine the total number of budgeted direct labor hours for the year.
_________ direct labor hours
b. Determine the single plantwide factory overhead rate using direct labor hours as the allocation base. Round your answers to two decimal places, if necessary.
________$ per direct labor hour
c. Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate calculated in (b). Round your answers to two decimal places, if necessary.
Night Lights _______$ per unit
Desk Lamps _______$ per unit
Answer:
a. Total number of budgeted direct labor hours for the year = Direct labor hours for night lights + Direct labor hours for desk lamps
= 30,000*1/2 + 40,000*2
= 15,000 + 80,000
= 95,000 hours
b. Single plant-wide factory overhead rate using direct labor hours = Budgeted factory overhead / Budgeted factory hours
= $403,750 / 95,000 hours
= $4.25 per hour
c. Per unit factory overhead = Number of hours required to complete one unit * Factory overhead rate per hour
Night light
Per unit factory overhead = 0.5 * 4.25
Per unit factory overhead = $2.125 per unit
Desk lamp
Per unit factory overhead = 2 * 4.25
Per unit factory overhead = $8.50 per unit
The Federal Reserve mandates banks and thrifts to deposit in their regional Federal Reserve Bank a fraction of their checkable deposits as:
Answer:
Required Reserves
Explanation:
Fractional banking is a banking system where a portion of customer's deposits is kept as reserves while remaining portion is lent out. The amount kept as reserves is determined by the required reserve ratio set by the Central bank.
Reserves is the total amount of a bank's deposit that is not given out as loans
Reserves = Deposits - outstanding loans
$100,000 - $70,000 = $30,000
there are 2 types of reserves
1. Required reserves is the percentage of deposits required of banks to keep as reserves by the central bank
Required reserves = reserve requirement x deposits
0.2 x $100,000 = $20,000
2. Excess reserves is the difference between reserves and required reserves
$30,000 - $20,000 = $10,000
Sweet Treats common stock is currently priced at $17.15 a share. The company just paid $1.22 per share as its annual dividend. The dividends have been increasing by 2.4 percent annually and are expected to continue doing the same. What is this firm's cost of equity
Answer:
9.68 percent
Explanation:
Calculation to determine the firm's cost of equity
Using this formula
Cost of equity=[(Annual dividend×Increase in dividends×/Current price of common stock]+Dividends
Let plug in the formula
Cost of equity=[($1.22 × 1.024)/$17.15] + 0.024
Cost of equity=($1.24928/$17.15)+0.024
Cost of equity=0.0728+0.024
Cost of equity=0.0968*100
Cost of equity=9.68 percent
Therefore the firm's cost of equity is 9.68 percent
Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 70:30 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $5,500. At the date the partnership ceases operations, the balance sheet is as follows:
Cash $48,000 Liabilities $36,000
Noncash assets 135,000 Alex, capital 94,500
Bess, capital 52,500
Total assets 183,000 Total liabilities and capital $ 183,000
Part A: Prepare journal entries for the following transactions:
Distributed safe cash payments to the partners.
Paid $21,600 of the partnership's liabilities.
Sold noncash assets for $147,000.
Distributed safe cash payments to the partners.
Paid remaining partnership liabilities of $14,400.
Paid $4,100 in liquidation expenses; no further expenses will be incurred.
Distributed remaining cash held by the business to the partners.
Part B: Prepare a final statement of partnership liquidation.
Answer:
Alex and Bess Partnership
Part A: Step-by-step Distribution:
Cash Noncash assets Liabilities Alex Bess
December 31 $48,000 $135,000 $36,000 $94,500 $52,500
Safe cash
distribution (26,400) 0 0 (18,480) (7,920)
1st Liabilities (21,600) 0 (21,600) 0 0
Sale of noncash 147,000 (135,000) 8,400 3,600
Safe cash distrib. (100,000) (70,000) (30,000)
Final liabilities (14,400) 0 (14,400) 0 0
Liquidation expense (4,100) 0 (2,870) (1,230)
Final distribution (28,500) 0 (11,550) (16,950)
Part B: Final Statement of Partnership Liquidation:
Cash Noncash assets Liabilities Alex Bess
December 31 $48,000 $135,000 $36,000 $94,500 $52,500
Sale of noncash 147,000 (135,000) 8,400 3,600
Payment of liabilities (36,000) (36,000)
Liquidation expenses (4,100) 0 (2,870) (1,230)
Distribution (154,900) 0 0 (100,030) (54,870)
Explanation:
a) Data and Calculations:
Profits and losses sharing ratio = 70:30
Estimated liquidation expenses = $5,500
Balance Sheet at Liquidation Date:
Cash $48,000 Liabilities $36,000
Noncash assets 135,000 Alex, capital 94,500
Bess, capital 52,500
Total assets 183,000 Total liabilities and capital $ 183,000
You invested 50% of the wealth in stock A and the remaining 50% in stock B. The expected rates of returns on A and B are given below: Year Expected return on A Expected return on B 2000 14% 16% 2001 15% 17% 2002 16% 18%2003 17% 19%Find the standard deviation of the portfolio. A. 0.955%.B. 1.291%.C. 1.697%.D. 2.124%.E. 2.890%.
Answer:
B. 1.291%
Explanation:
The computation of the standard deviation is shown below;
= 2000 + 2001 + 2002 + 2003
= 0.5 × 14% + 0.5 × 16% + 0.5 × 15% + 0.5 × 17% + 0.5 × 16% + 0.5 × 18% + 0.5 × 17% + 0.5 × 19%
= 15% + 16% + 17% + 18%
= stdev( 15% + 16% + 17% + 18%)
= 1.291%
Hence, the correct option is b.
Brandy’s Restaurant estimates that its total cost of providing Q meals per month is given by TC = 6,000 + 2 Q. If Brandy charges $4 per meal, what is its break-even level of output?
Answer: 3,000 meals
Explanation:
The 6,000 in this total cost formula represents the fixed costs of providing the Q meals per month.
The 2 represents the variable cost.
If a meal is $4, that means that the Contribution margin is:
= 4 - 2
= $2 per meal
The break-even level of output is:
= Fixed cost / Contribution margin per meal
= 6,000 / 2
= 3,000 meals
Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 12 percent, and the company just paid a dividend of $2.35, what is the current share price
Answer:
53.98
Explanation:
current share price is the present value of dividends
Year 1 = 2.35 x 1.22 = 2.867
Year 2 = 2.867 x 1.22 = 3.50
Year 3 = 3.50 x 1.22 = 4.27
+ 4.27 x 1.05 / (0.12 - 0.05) = 64
I - 12%
PV = 53.98
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Selected account balances before adjustment for Atlantic Coast Realty at July 31, the end of the current year, are as follows: Debits CreditsAccounts Receivable $ 79,500 Equipment 342,700 Accumulated Depreciation—Equipment $102,700Prepaid Rent 9,300 Supplies 3,180 Wages Payable –Unearned Fees 14,100Fees Earned 670,200Wages Expense 329,600 Rent Expense – Depreciation Expense – Supplies Expense – Data needed for year-end adjustments are as follows:• Unbilled fees at July 31, $10,250.• Supplies on hand at July 31, $930.• Rent expired, $5,800.• Depreciation of equipment during year, $8,750.• Unearned fees at July 31, $2,100.• Wages accrued but not paid at July 31, $4,900. Required:1. Journalize the six adjusting entries required at July 31, based on the data presented. Refer to the Chart of Accounts for exact wording of account titles.2. What would be the effect on the income statement if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?3. What would be the effect on the balance sheet if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?4. What would be the effect on the "Net increase or decrease in cash" on the statement of cash flows if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?Chart of AccountsCHART OF ACCOUNTSAlantic Coast RealtyGeneral Ledger ASSETS11 Cash12 Accounts Receivable13 Supplies14 Prepaid Rent15 Land16 Equipment17 Accumulated Depreciation-Equipment LIABILITIES21 Accounts Payable22 Unearned Fees23 Wages Payable24 Taxes Payable EQUITY31 Owner’s Equity32 Withdrawals REVENUE41 Fees Earned42 Rent Revenue EXPENSES51 Advertising Expense52 Insurance Expense53 Rent Expense54 Wages Expense55 Supplies Expense56 Utilities Expense57 Depreciation Expense59 Miscellaneous ExpenseJournal1. Journalize the six adjusting entries required at July 31, based on the data presented. Refer to the Chart of Accounts for exact wording of account titles.PAGE 10JOURNALACCOUNTING EQUATIONDATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY1 Adjusting Entries2345678910111213Final Questions2. What would be the effect on the income statement if the adjustments for unbilled fees and accrued wages were omitted at the end of the year? Over/Understated AmountFees earned Wages expense Net income 3. What would be the effect on the balance sheet if the adjustments for unbilled fees and accrued wages were omitted at the end of the year? Over/Understated AmountAccounts receivable Total assets Wages payable Total liabilities Owner’s equity Total liabilities and owner’s equity 4. What would be the effect on the "Net increase or decrease in cash" on the statement of cash flows if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?
Answer:
Atlantic Coast Realty
1. Adjusting Journal Entries:
Debit 12 Accounts Receivable $10,250
Credit 41 Fees Earned $10,250
To record the unbilled fees at July 31.
Debit 55 Supplies Expense $2,250
Credit 13 Supplies $2,250
To record supplies used during the period.
Debit 53 Rent Expense $5,800
Credit 14 Prepaid Rent $5,800
To record expired rent.
Debit 57 Depreciation Expense $8,750
Credit 17 Accumulated Depreciation-Equipment $8,750
To record depreciation expense for the year.
Debit 41 Fees Earned $2,100
Credit 22 Unearned Fees $2,100
To record unearned fees.
Debit 54 Wages Expense $4,900
Credit 23 Wages Payable $4,900
To record accrued wages.
2. The effect on the income statement if the adjustments for unbilled fees and accrued wages were omitted at the end of the year:
Income will be understated by $10,250.
Income will be overstated by $4,900.
3. The effect on the income statement if the adjustments for unbilled fees and accrued wages were omitted at the end of the year:
Income will be understated by $10,250.
Income will be overstated by $4,900.
4. The effect on the "Net increase or decrease in cash" on the statement of cash flows if the adjustments for unbilled fees and accrued wages were omitted at the end of the year:
a. Net increase in cash will be less by $4,900 (if the indirect method is used).
b. Net decrease in cash will be more by $10,250 (if the indirect method is used).
Explanation:
a) Data and Calculations:
Unadjusted account balances at July 31:
Debits Credits
Accounts Receivable $ 79,500
Prepaid Rent 9,300
Supplies 3,180
Equipment 342,700
Accumulated Depreciation—Equipment $102,700
Wages Payable –Unearned Fees 14,100
Fees Earned 670,200
Wages Expense 329,600
Rent Expense –
Depreciation Expense –
Supplies Expense –
Analysis of Adjustments:
12 Accounts Receivable $10,250 41 Fees Earned $10,250
55 Supplies Expense $930 13 Supplies $2,250
53 Rent Expense $5,800 14 Prepaid Rent $5,800
57 Depreciation Expense $8,750 17 Accumulated Depreciation-Equipment $8,750
41 Fees Earned $2,100 22 Unearned Fees $2,100
54 Wages Expense $4,900 23 Wages Payable $4,900
CHART OF ACCOUNTS
Atlantic Coast Realty
General Ledger
ASSETS
11 Cash
12 Accounts Receivable
13 Supplies
14 Prepaid Rent
15 Land
16 Equipment
17 Accumulated Depreciation-Equipment
LIABILITIES
21 Accounts Payable
22 Unearned Fees
23 Wages Payable
24 Taxes Payable
EQUITY
31 Owner’s Equity
32 Withdrawals
REVENUE
41 Fees Earned
42 Rent Revenue
EXPENSES
51 Advertising Expense
52 Insurance Expense
53 Rent Expense
54 Wages Expense
55 Supplies Expense
56 Utilities Expense
57 Depreciation Expense
59 Miscellaneous Expense
Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $57,000, and the sales mix is 70% bats and 30% gloves. The unit selling price and the unit variable cost for each product are as follows:
Products Unit Selling Price Unit Variable Cost
Bats $50 $50
Gloves 100 80
a. Compute the break-even sales (units) for both products combined.
b. How many units of each product, baseball bats and baseball gloves, would be sold at break even point?
Answer and Explanation:
The computation is shown below:
Contribution Margin for Bat
= $50 - $50
= $0
Contribution Margin for Gloves = $100 - $80
= $20
Now
Overall Contribution Margin = (0 ×70%) + ($20 × 30%)
= $0 + $6
= $6
Now
A. Break even sales = Fixed cost ÷ contribution margin
= $57,000 ÷ $6
= 9,500
B.Baseball bats = 9,500 × 70% =6,650
Baseball Gloves = 9,500 × 30% = 2,850
Shockglass Company had a beginning inventory of $15,000. During the year, the company recorded inventory purchases of $45,000 and cost of goods sold of $50,000. The ending inventory must equal: A. $10,000. B. $25,000. C. $26,000. D. $27,000.
Answer:
A. $10,000
Explanation:
We know that :
cost of goods sold = opening inventory + purchases - ending inventory
hence,
Ending Inventory = opening inventory + purchases - cost of goods sold
therefore,
Ending Inventory = $15,000 + $45,000 - $50,000
= $10,000
The ending inventory must equal: $10,000
n a make or buy decision, management should consider: (Check all that apply.) Multiple select question. Employee morale product quality Available capacity Sunk costs Incremental costs Existing sales
Answer:
Sunk cost
Explanation:
Sunk cost is the cost that are already spent and now it is not recovered. We can called as the past cost also. Moreover it is not relevant for the decision making purpose. It includes the expenses like depreciation, rent, etc
So as per the given situation all cost are considered for making or purchasing decision but not the sunk cost
Answer:
Employee morale
Product quality
Workload
Incremental costs
Explanation:
Buying goods or services from an external supplier is called outsourcing. The decisions to make or buy depends on the cost of each alternative.
The following account balances are taken from the December 31, 2018, financial statements of ABZ Advertising Company. The company uses accrual basis accounting.
Advertising Revenue $46,982
Cash 41,516
Accounts Receivable 7,296
Interest Expense 2,299
Accounts Payable 5,000
Operating Expenses 37,460
Deferred Revenue 1178
Equipment 18,648
Income Tax Expense 2,326
The following activities occurred in 2019:
1. Performed advertising services on account, $55,000.
2. Received cash payments from customers on account, $10,400.
3. Received deposits from customers for advertising services to be performed in 2020, $2,500.
4. Made payments to suppliers on account, $7,000.
5. Incurred $45,000 of operating expenses; $39,000 was paid in cash and $6,000 was on account and unpaid as of the end of the year.
Required:
What is the amount of revenue that will be reported on the income statement for the year ended December 31, 2019?
Answer:
the amount of the revenue that should be recorded is $51,896
Explanation:
The computation of the amount of the revenue that should be recorded is shown below:
= Opening balance of account receivable + service revenue balance on the account - cash payment
= $7,296 + $55,000 - $10,400
= $51,896
Hence, the amount of the revenue that should be recorded is $51,896
Two alternate plans are available for increasing the capacity of existing water transmission lines between an unlimited source and a reservoir. The unlimited source is at a higher elevation then the reservoir. Plan A calls for the construction of a parallel pipeline and flow by gravity. Plan B specifies construction of a booster pumping station. Estimated cost for the two plans are as follows: Hint: Use Present Worth- (do not guess show all your work) i=10%
Plan A : Cost $700,000, Life 40 Years, Annual Operation and Repair $1,000/Year
Plan B: Cost $200,000, Life 40 Years Structure and 20 years equipment, Equipment replacement at the end of 20 years $75,000, Annual Operation and Repairs 52,000/year
a. Plan A $709,779.00
b. Plan A $740,000
c. Plan B $710,165.50
d. Plan B $326,000
Answer:
plan a
Explanation:
present worth of plan A= 700000+1000(p/a,10%,40)
= 700000+1000*9.779
= 700000+9779
= 709779 dollars
present worth of plan b = 200000+75000(p/f,10%,20)+52000/year(p/a,10%,40)
= 200000+75000*0.1486+52000*9.779
= 719653 dollars.
we compare the pw of both a and b, from the solutions above, the present worth of plan a is smaller than that of plan b, so the best option is plan a, $709,779.00
When a customer is venting their anger, they will be easier to deal with if you _____.
a. acknowledge their anger and let them share some of it with you
b. encourage them to continue venting
c. suggest an immediate solution to their problem
d. immediately advise management of the problem
Answer:
A resposta correta é A. reconheça a raiva deles e deixe-os compartilhar um pouco com você.
The existence of banks: makes the money supply equal to the amount of currency in circulation. results in the money supply being larger than the amount of currency in circulation. inhibits the creation of money. results in the money supply being less than the amount of currency in circulation.
Answer:
results in the money supply being larger than the amount of currency in circulation.
Explanation:
The banks existence could be resulted in more money supply as compared to the currency amount i.e. monetary base and also the currency amount could be in the circulation base
So as per the given situation, the above should be the answer
And, the rest of the options seems incorrect
When a market is monopolistically competitive, the typical firm in the market is likely to experience a a. positive or negative profit in the short run and a zero profit in the long run. b. positive profit in the short run and in the long run. c. zero profit in the short run and in the long run. d. zero profit in the short run and a positive or negative profit in the long run
Answer:
a
Explanation:
What advice would you offer to entrepreneurs on a limited advertising budget?
Buy the biggest magazine ad you can, even if it means you can only run it once.
Run smaller, less visible ads more frequently in the best medium for your target audience.
Focus on television advertising.
Focus on radio advertising.
Answer:
Run smaller, less visible ads more frequently in the best medium for your target audience.
Explanation:
An entrepreneur refers to an individual who sees a need or discovers a problem in a society and innovatively proffers a solution using brilliant ideas or entrepreneurial thinking.
The following are five (5) characteristics of an entrepreneur;
1. Innovative: it can be defined as a quality possessed by an individual or group of people such as an entrepreneur and typically involves the process of improving on an existing product or ideas.
2. Passionate: believing in a course and one's ability to achieve much more at a business.
3. Risk-Taker: he or she is confident enough to venture into risky businesses with the hope of an expected success.
4. Self-confident: he or she is bold and believes in his or her abilities to excel.
5. Well-rounded leader: it involves being compassionate, fun, organized and intelligent as a successful entrepreneur.
Advertisement refers to the promotional multimedia messages designed and developed to make the products or services of a company known to its customers and potential customers.
Basically, the advice I would offer to entrepreneurs on a limited advertising budget is to run smaller, less visible adverts (ads) more frequently in the best medium for their target audience because they wouldn't have to pay more to put their goods out there.
PH produces many electronics products for the USA, Europe, and the UK. The plugs required for each of these geographical areas are different, so originally PH had produced three different versions of each product. Recently, they decided to create one version, and then ship these with three different plugs (i.e., of which two are redundant for the customer). The demands for a particular item for each market are normally distributed with the following parameters: USA – average of 10,000 with a standard deviation of 1,000, Europe – average of 5,000 with a standard deviation of 1,000, and the UK – average of 5,000 with a standard deviation of 500. If PH wants a 90% service level, then how much should their safety stock be according to the new system with one version?
A: Approximately 1,900
B: Approximately 2,500
C: Approximately 3,200
D: Approximately 5,750
Answer:
safety stock=1900
Explanation:
Formula used:
Safety stock= Normsinv(service level) x standard deviation of demand
Solution:
On calculating standard deviation of combined demand using high school maths
standard deviation =[tex]\sqrt{1000^2+1000^2+500^2}[/tex]
Here on calculating the safety stock
Safety stock = Normsinv(0.90)x [tex]\sqrt{1000^2+1000^2+500^2}[/tex]
On simplifying,
Safety stock = 1922
Therefore,
The answer is 1900 units
Option is the correct answer
A. approximately 1900
The difference in the answer may be due to the rounding of standard normal deviation
Which of the following statements from a hypothetical job advertisement is intended to develop interest in a job?
A) "You’ll thrive on challenging work."
B) "Ideal candidates will possess a four-year degree."
C) "Familiarity with various software applications is required."
D) "Responsibilities include event planning and relationship management."
Answer:
A) "You’ll thrive on challenging work."
Explanation:
Of the above options, the one that is most intended for an individual to develop interest in a job advertisement is the one that states that the candidate will have the opportunity to thrive in a challenging job.
Generally a potential candidate for a job is looking for a personal development opportunity through a job that will enable them to develop their skills and increase their knowledge, so when the ad makes it clear that the job is challenging but it will give the candidate opportunities prosper, this sounds like the ad that draws the most attention to a job opportunity that will add to the individual's life.
A student is deciding whether to take an additional class or work extra hours. Which amounts are relevant to this decision
Answer:
a. Out-of-pocket costs
c. opportunity costs
Explanation:
Out of pocket costs are those that have to be incurred by the student for having to take the additional classes if there are any. This needs to be considered as they are a cost that the student will need to pay for to take the classes and therefore might need budgeting.
Opportunity costs are the returns offered by the next best alternative to the current decision being taken. In other words, the student needs to consider what will happen if they pick additional class over work and vice versa.
Answer:
pocket and opportunity
Explanation:
In the following MRP planning schedule for Item J, indicate the correct net requirements, planned order receipts, and planned order releases to meet the gross requirements. Lead time is one week.
WEEK NUMBER
ITEM J 0 1 2 3 4 5
Gross requirements 67 43 63
On-hand 46
Net requirements
Planned order receipt
Planned order release
Answer:
Planned order receipts
Item 3 - 55
Item 4 - 74
Planned order releases
Item 2 - 55
Item 3 - 74
Explanation:
Planned order receipts are the requirement for each item based on demand. Planned order releases is the finished goods processing time. When finished goods are ready, they are placed at warehouse for order dispatch.
A 15-year semi-annual coupon bond pays a coupon rate of 7%. The par value of the bond is $1,000. If similar bonds are currently yielding 6%, what is the market value of the bond
Answer:
Bond Price= $1,098.01
Explanation:
Giving the following information:
Coupon= (0.07/2)*1,000= $35
YTM= 0.06/2= 0.03
n= 15*2= 30
Face value= $1,000
To calculate the price of the bond, we need to use the following formula:
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond Price= 35*{[1 - (1.03^-30)] / 0.03} + (1,000 / (1.03^30)]
Bond Price= 686.02 + 411.99
Bond Price= $1,098.01
Howard Inc. had prepaid rent of $79,000 and $88,000 at the end of Year 1 and Year 2, respectively. During Year 2, Howard recorded $244,000 in rent expense in its income statement. Cash outflows for rent in Year 2 were:
Answer:
the Cash outflows for rent in Year 2 is $253,000
Explanation:
The computation of the Cash outflows for rent in Year 2 is shown below:
Prepaid rent at year 2 $88,000
Add: rent expense $244,000
Less: prepaid rent in year 1 -$79,000
Cash outflows for rent in year 2 $253,000
Hence, the Cash outflows for rent in Year 2 is $253,000
Retained earnings, December 31, 2012 $ 306,800 Cost of equipment purchased during 2013 29,000 Net loss for the year ended December 31, 2013 4,000 Dividends declared and paid in 2013 14,300 Decrease in cash balance from January 1, 2013, to December 31, 2013 11,100 Decrease in long-term debt in 2013 14,000 Required: From the above data, calculate the retained earnings balance as of December 31, 2013. (Negative amounts should be indicated by a minus sign.)
Answer:
$288,500
Explanation:
Particulars Amount
Retained Earnings Dec 31, 2012 $306,800
Less: Net Loss for the Year $4,000
Less: Dividend declared and paid in 2013 $14,300
Retained Earnings Dec 31, 2013 $288,500
A standard cost _____ indicates the amount of direct labor, direct materials and overhead for one unit of product. Multiple choice question. card variance rate report
Answer:
card
Explanation:
A standard cost card can be regarded as card that encompass all the itemization or list of overhead, labor and standard amounts of materials, which is required in creating one unit of a product. This card can multiplies quantities that is been required to get to the total standard cost of a product and standard cost of each of the items.
It should be noted that standard cost
card indicates the amount of direct labor, direct materials and overhead for one unit of product.
Knowledge Check 01 Which of the following is a correct statement regarding control of over-the-counter cash receipts: multiple choiceThe clerk with access to cash should also have access to the cash account in the general ledger.The cashier should have access to the accounting records.The supervisor should compare the register transactions with the cash receipts report to make sure that both are correct.The clerk and the cashier should work closely together when handling the cash and recording the amount in the accounting records.
Answer: The supervisor should compare the register transactions with the cash receipts report to make sure that both are correct.
Explanation:
The cash register shows the actual amount of money that is collected by the business during the day and the cash receipts journal records the cash collected.
There is therefore a need to ensure that these two tally up as a control method. The supervisors should therefore check for this and if they find that these two are not the same, it means that there is an error somewhere that needs to be rectified.
A computer manufacturer is producing a one-of-a-kind innovation called Innovel, a cloud computing software that helps navigate Internet content. While making the channel decision and finalizing the distribution arrangement, the manufacturer is keen on limiting the distribution of Innovel and gives only Techaven Inc. the rights to sell Innovel in that region. Techaven is known for its unique facilities and specialized inventories. In this case, the manufacturer is using the ________ arrangement of distribution.
Answer: exclusive
Explanation:
Exclusive distribution occurs when a manufacturer authorizes only one distributor to sells its product within a particular region. It should be noted that this distribution arrangement is typically used for premium and exclusive products.
Since the manufacturer is keen on limiting the distribution of Innovel and gives only Techaven Inc. the rights to sell Innovel in that region, the this is an exclusive arrangement of distribution.
Pencils sell for 10 cents and pens sell for 50 cents. Suppose Jae, whose preferences satisfy all of the basic assumptions, is currently spending all his income on both goods. The marginal rate of substitution for pens to pencils is 5. In order to achieve optimum, what should he do
Answer:
Jae should do nothing and continue purchasing the same amount of pens and pencils.
Explanation:
The current rate of substitution that maximizes Jae's utility is Px / Py = 0.50 / 0.10 = 5. That means that Jae will purchase 5 pencils for every pen that he buys, and that is exactly what he is doing right now.
Filer Manufacturing has 8,136,353 shares of common stock outstanding. The current share price is $26.75, and the book value per share is $5.85. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $48,480,532, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $66,060,894, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $1.97 and the dividend growth rate is 0.04. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 0.26. What is Filer's aftertax cost of debt? Enter the answer with 4 decimals (e.g. 0.2345)
Answer:
Filer Manufacturing
Filer's after-tax cost of debt is:
= 4.1440%.
Explanation:
a) Data and Calculations:
Outstanding common stock shares = 8,136,353
Current share price = $26.75
Book value per share = $5.85
Tax rate = 0.26
Most recent dividend paid = $1.97 per share
Dividend growth rate = 0.04
Outstanding bond issues:
First Bond Second Bond Total
Face value of issue $48,480,532 $66,060,894 $114,541,426
Selling price 83% of par 92% of par
Sales price $40,238,842 $60,776,022 $101,014,864
Relative sizes 40% 60%
Coupon rate of first bond 0.05 0.06
Weighted average cost of bonds 0.02 0.036
Before-tax cost of bonds = 0.056
After-tax cost of bonds = 0.056 * (1 - 0.26) = 0.04144 = 4.1440%
Maturity period 10 years 20 years