XYZ segmented last year's income statement into its ten product lines. The CEO is curious as to what effect dropping one product line at the beginning of last year would have had on overall company profit. What is the best number to look at to determine the effect of this elimination on the net operating income of the company as a whole?
A) the product line's sales dollars.
B) the product line's contribution margin.
C) the product line's segment margin.
D) the product line's segment margin minus an allocated portion of common fixed expenses.

Answers

Answer 1

Answer:

Option c: The product line's segment margin

Explanation:

Net Operating Income

This is often regarded as the

adjusted Effective Gross Income (EGI) adjusted for annual operating expense and capital expenditures of a firm/organization

Net Operating Income Equation

(sales - variable expenses) - fixed expenses

Segment margin

The product line segment margin is usually said to be obtainable through the act of deduction of the traceable fixed costs of a segment from the segment's contribution margin. It shows or entails the margin at hand after a segment has covered all of its own costs. Itis the best gauge of the long-run profitability of a segment as it includes only those costs that are caused by the segment.

Segment margin formula

Contribution Margin - Traceable fixed costs


Related Questions

Semtech Manufacturing purchased land and building for $5 million. In addition to the purchase price, Semtech made the following expenditures in connection with the purchase of the land and building:
Title insurance $ 24,000 Legal fees for drawing the contract 9,000 Pro-rated property taxes for the period after acquisition 44,000 State transfer fees 4,800
An independent appraisal estimated the fair values of the land and building, if purchased separately, at $4.2 and $1.8 million, respectively. Shortly after acquisition, Samtech spent $90,000 to construct a parking lot and $48,000 for landscaping.
1. Determine the initial valuation of each asset Semtech acquired in these transactions.
2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Semtech demolished the building. Demolition costs were $330,000 and the salvaged materials were sold for $5,000. In addition, Semtech spent $87,000 clearing and grading the land in preparation for the construction of a new building.

Answers

Answer:

Semtech Manufacturing

1. Initial valuation of each asset:

Land = $3,526,460

Building = $1,511,340

2. The initial valuation of land = $5,449,800

Explanation:

a) Data and Calculations:

Cost of purchased land and building = $5 million

Additional expenditures:

Title insurance $ 24,000

Legal fees for drawing the contract 9,000

Prorated property taxes for the period after acquisition 44,000

State transfer fees 4,800

Allowed additional costs:

Title insurance            $ 24,000

Legal fees for

drawing the contract      9,000

State transfer fees          4,800

Total additional costs $37,800

Total expenditure on the land and building = $5.037.8 million

Initial valuation of each asset:

Land = $3,526,460 ($5,037,800 * $4,200,000/$6,000,000)

Building = $1,511,340 ($5,037,800 * $1,800,000/$6,000,000)

Cost of land after the demolition of the building:

Initial purchase cost of land and building = $5 million

Additional cost = $37,800

Demolition costs = $330,000

Salvage of materials ($5,000)

Clearing and grading land = $87,000

Total cost of land = $5,449,800

William owns 1 share of Park stock. He purchased the stock three years ago for $17.50. The stock is currently trading for $40 per share. The stock has paid the following dividends over the past three years. o Year 1: $1.00. o Year 2: $2.00. o Year 3: $3.00. What is the compounded rate of return (IRR) that William has earned on this investment

Answers

Answer:

sim eu também preciso desta respota

Mr. Hopper expects to retire in 30 years, and he wishes to accumulate $1,000,000 in his retirement fund by that time. If the interest rate is 12% per year, how much should Mr. Hopper put into his retirement fund at the end of each year in order to achieve this goal

Answers

Answer:

Annual deposit = $4100

Explanation:

Annual deposit = $4100

Number of years for retirement = 30 years

Future value of money = $1000000

Interest rate = 12%

Now use the below formula to find the annuity amount.

Annual deposit = Future value (A/F, r, n)

Annual deposit = 1000000 (A/F, 12%, 30)

Annual deposit = 1000000(0.0041)

Annual deposit = $4100

The amount Mr Hopper should put in his retirement fund each year is $4143.66.

In order to determine the amount of money Mr. Hopper should deposit each year, this formula would be used:

Yearly payment = future value / annuity factor

Annuity factor = {[(1+r)^n] - 1} / r

Where:  

R = interest rate  

N = number of years  

Annuity factor = [(1.12)^30 - 1] / 0.12 = 241.332684

Yearly payment = $1,000,000 / 241.332684 = $4143.66

To learn more, please check: https://brainly.com/question/14640433

Differentiate between expansionary fiscal policy and contractional fiscal policy ​

Answers

Answer:

Expansionary fiscal policy includes tax cuts, transfer payments, rebates and increased government spending on projects such as infrastructure improvements. For example, it can increase discretionary government spending, infusing the economy with more money through government contracts. On the other hand, in Contractional Fiscal Policy, the government taxes more than it spends—either by increasing tax rates, decreasing spending, or both. This type of fiscal policy is best used during times of economic prosperity. Contractionary fiscal policy is the opposite of expansionary fiscal policy.

Explanation:

Assume that Jones Company made a payment on a mortgage. It included $100 of principal and $150 of interest. What would the journal entry be to record the payment?

Answers

Answer:

the journal entry be to record the payment

Debit : Interest expense $150

Debit  : Mortgage Payable $100

Credit : Cash $250

Explanation:

When a payment for mortgage is made, we recognize the interest expense that accrues and also derecognize the part of capital repayment made for the mortgage. That means Mortgage Payable decreases, Interest expense increases and Cash account decreases with the to total of interest and principle.

Princess Cruise Company (PCC) purchased a ship from Mitsubishi Heavy Industry. PCC owes Mitsubishi Heavy Industry 500 million yen in one year. The current spot rate is 124 yen per dollar and the one-year forward rate is 110 yen per dollar. The annual interest rate is 5% in Japan and 8% in the U.S. PCC can also buy a one-year call option on yen at the strike price of $.0081 per yen for a premium of .014 cents per yen.

Required:
a. Compute the future dollar costs of meeting this obligation using the money market and forward hedges.
b. Assuming that the forward exchange rate is the best predictor of the future spot rate, compute the expected future dollar cost of meeting this obligation when the option hedge is used.
c. At what future spot rate do you think PCC may be indifferent between the option and forward hedge?

Answers

Answer:

Explanation:

a)

In  the case of forwarding hedge:

The future dollar cost will be = FX receiveable ÷ Foward exchange rate

= 500 million yen ÷ 110 yen/dollar

= $4.55 million

For money market hedge:

Present value of yen payable = [tex]500 \ yen \div (1+ \dfrac{5}{100})[/tex]

[tex]= \dfrac{500 \ yen }{1.06}[/tex]

= 476.20 million yen

PCC would convert dollars to yens at the spot market rate and borrow yen such that it would get 500 million yen at maturity(i.e after one year)  for Mitsubishi to receive it.

Dollars needed to get these yen = 476.30 yen  ÷ 124 yen/dollar

= $3.84 million

Future Value of these dollars (for comparison with the foward market hedge) = $3.84 × (1 + 0.08)

= $4.15 million

Hence, the money market hedge is better as the dollar cost is lower than the forward market hedge to meet the obligation.

b)

On the maturity date, the spot rate is 110 yen/dollar  

Ad the strike price = 0.0081 /dollar

It is better for the company to go for the strike price due to the fact that it has a lower rate than the spot rate.

Now;

The premium amount = 500000000 yen × 0.014 dollar / yen

= 70000 dollars

However; the Future dollar-cost payable = 500000000 yen × 0.0081 dollar /yen

= 4050000 dollars

By applying option hedge, the total dollar cost required to meet the obligation = (4050000 + 70000) dollars

= 4120000 dollars

c)

The dollar cost needed from the option hedge required to matching the forward hedge is determined by subtracting it from the premium amount:

Thus;

for option hedge, dollar cost needed = (4550000 - 70000) dollars

= 4480000 dollars

The required future spot rate = 500000000/4480000

= 111.61 yen/dollar

As a result, at the future spot rate of 111.61 yen/dollar, PCC will be unconcerned about and indifferent about the option or forward hedge because the future dollar cost of meeting the obligation will be the same.

The prepaid insurance account had a balance of $9,400 at the beginning of the year. The account was debited for $10,400 for premiums on policies purchased during the year.

Journalize the adjusting entry required at the end of the year for each of the following situations:
a. The amount of unexpired insurance applicable to future periods is $3,730.
b. The amount of insurance expired during the year is $18,100.

Answers

Answer:

Following are the response to the given points:

Explanation:

[tex]\text{Insurance Expense} =\text{ Beginning Prepaid Insurance} + \text{Cash Premium Paid} -\text{Ending Prepaid Insurance}[/tex]

                             [tex]= \$9,400 + \$10,400 - \$3,730\\\\ = \$16,070[/tex]

[tex]Date \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ General \ Journal \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Dr. \ \ \ \ \ \ \ \ \ Cr. \\\\[/tex] [tex]March \ 31\ \ \ \ \ \ \ \ Insurance \ Expense \ \ \ \ \ 16,070 \ \ \ \ \ \ \ \ \ \ \ \ \ \\\\[/tex]

                       [tex]Prepaid\ Insurance \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 16,070\\\\[/tex]

For point b:

[tex]Date \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ General \ Journal \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Dr. \ \ \ \ \ \ \ \ \ Cr. \\\\[/tex] [tex]March \ 31\ \ \ \ \ \ \ \ Insurance \ Expense \ \ \ \ \ 18,100 \ \ \ \ \ \ \ \ \ \ \ \ \ \\\\[/tex]

                       [tex]Prepaid\ Insurance \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 18,100\\\\[/tex]

Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.): Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) 9.4 % Quarterly % 18.4 Monthly 14.4 Daily

Answers

Answer and Explanation:

The computation of the effective annual rate in each of the following cases is shown below;

a. For quarterly

Effective annual rate = (1+0.094 ÷ 4)^4 - 1

= 9.74%

b. For monthly

Effective annual rate = (1+0.184 ÷ 12)^12 - 1

= 20.03%

c. For daily

Effective annual rate = (1+0.144 ÷ 365)^365 - 1

= 15.49%

In this way it should be calculated and measured  

PART A. MULTIPLE CHOICE - 15 MARKS
1. Company orientation does not include which topic below?
Economic Factors
b. Fringe Benefits
C. Occupational Health and Safet
d. None of the above
what is the answer?​

Answers

Answer: a. Economic factors

Explanation:

Company orientation refers to training that is given to new employees to better prepare them to work in the company and be as efficient as possible.

It includes things like occupational health and safety so that the employee may know how best to behave so as not to cause accident or get injured by one. It also includes telling the employees of the various fringe benefits that might accrue to them.

It would not include economic factors as these as not specific to the company.

Câu 1 Bản chất của quản trị chiến lược là phác thảo hình ảnh tương lai của doanh nghiệp trong lĩnh vực hoạt động trên cơ sở khai thác các:
a Nguồn lực
b Năng lực cạnh tranh
c Thế mạnh
d Lợi thế cạnh tranh

Answers

Mình nghĩ là D đấyyyyyyyyyyyy

Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies decreases by 5%, the quantity of frizzles sold increases by 4% and the quantity of mookies sold decreases by 6%. Your job is to use the cross-price elasticity between guppy gummies and the other goods to determine which goods your marketing firm should advertise together.

Answers

Answer:

guppy gummies and frizzles are complementary goods and should be advertised together

Explanation:

Cross price elasticity of demand measures the responsiveness of quantity demanded of good A to changes in price of good B.

If cross price elasticity of demand is positive, it means that the goods are substitute goods.

Substitute goods are goods that can be used in place of another good.

When the price of gummies decreased, the demand for mookies decreased. these goods are substitutes and should not be advertised together

If the cross-price elasticity is negative, it means that the goods are complementary goods.

Complementary goods are goods that are consumed together

When the price of gummies decreased, the demand for frizzles increased. the cross price elasticity would be negative. thus they are complements and should be advertised together.

The financial statements of the Bramble Corp. report net sales of $473850 and accounts receivable of $56000 and $25000 at the beginning of the year and the end of the year, respectively. What is the accounts receivable turnover for Bramble?

Answers

Answer:

the accounts receivable turnover for Bramble is 5.85 times

Explanation:

The computation of the account receivable turnover ratio is shown below

the account receivable turnover ratio is

= Net sales ÷ (Beginning account receivable + ending account receivable) ÷ 2

= $473,850 ÷ ($56,000 + $25,000)

= 5.85 times

Hence, the accounts receivable turnover for Bramble is 5.85 times

Suppose that a price floor is set in the market for oranges, raising the price from $1.05 per pound to $1.10 per pound of oranges. The sum of which two areas represents the lost social surplus (deadweight loss) from this price floor?

Answers

Answer and Explanation:

To calculate deadweight loss, we need to know the initial price and quantity as well as the new price and quantity.

Assume at initial price $1.05, quantity is 300 oranges

At new price $1.10, quantity is 200 oranges

Deadweight loss = 0.5×(P2-P1)×(Q1-Q2)

= 0.5×(1.10-1.05)×(300-200)

Deadweight loss= 0.5×0.05×100

Deadweight loss= 2.5

In 2016, 59.7 percent of the adult population (253 million) was employed. If the employment rate increased to 62 percent,

Instructions: In part a, round your response to one decimal place. In part b, enter your response as a whole number.

a. How many more people would be working?
______ million
b. By how much would output increase if per worker GDP were $122,000?
$ _____ billion

Answers

Answer:

a. 5.819 million

b. $709918

Explanation:

Below is the calculation:

a. Total number of adult population = 253 million

Total employed adult = 253 x 59.7% = 151.041

Number of employed adult after increase in employment rate = 253 x 62% = 156.86

More people would be working = 156.86 - 151.041 = 5.819 million

b. GDP per capita is $122,000, so increase in GDP = 5.819 x 122000

    Increase in GDP = $709918

Houston Fashions is considering a new product line that would require an investment of $ 140,000 in fixtures and displays and $ 180,000 in working capital. Store managers expect the following pattern of net cash inflows from the new product line over the life of the investment.
Year Amount
1 ......... $70,000
2 ......... 78,000
3 ......... 72,000
4 ......... 56,000
5 ......... 50,000
6 ......... 48,000
7 ......... 44,000
a. Compute the payback period for the proposed new product line. Houston Fashions requires a four- year pre-tax payback period on its investments. (Round to one decimal point.) Should the company make this investment? Explain.
b. Should Houston Fashions use any other capital project evaluation method(s) before making an investment decision? Explain.

Answers

Answer:

4.88 years

other methods should be used because payback method does not account for the time value of money

Explanation:

企業が有利子負債を持っていると、()から資本コストが安くなる。
1. 配当成長効果
2. リスク低減効果
3. 課税効果
4. 節税効果
5. 割引抑制効果

Answers

Answer:

this word is not in english plz write in english

Bud Corp. had book income (net) of $1,000,000 this year. The corporation's federal income tax expense was $200,000. This year, the corporation purchased and placed in service a depreciable asset. The asset cost $60,000. For book purposes, depreciation this year was $20,000 (already included in the calculation of $1,000,000 book income). For tax purposes, the corporation elected bonus depreciation for the asset. What is the corporation's taxable income for this year?

Answers

Answer:

$960,000

Explanation:

Calculation to determine the corporation's taxable income for this year

Using this formula

Taxable income=Book income+Depreciation Expense-Asset

Let plug in the formula

Taxable income=$1,000,000+$20,000-$60,000

Taxable income=$960,000

Therefore the corporation's taxable income for this year is $960,000

how goal succession takes place? Explain the condition responsible for goal succession​

Answers

Answer:Goal succession refers to the situation where the new or modified goals are incorporated or substituted for the existing one in such a manner that they do not change the spirit of the existing goals. The new goals are such that individuals or the organisation are willing to state publicly.

Explanation:

Answer:

Goal succession refers to the situation where the new or modified goals are incorporated or substituted for the existing one in such a manner that they do not change the spirit of the existing goals. The new goals are such that individuals or the organisation are willing to state publicly.

What is the process of project appraisal?

Answers

The process of project appraisal consists of five steps and they are – initial assessment, defining problem and long-list, consulting and short-list, developing options, and comparing and selecting project. The process of appraisal generally starts from the initial phase of the project.

Answer:

Đánh giá sự cần thiết của dự án , Thẩm định kỹ thuật, Thẩm định khả năng vốn tài chính dự án

Explanation:

Project Management Practice ProblemBragg’s Bakery is building a new automated bakery downtown Sandusky. Here are the activities that need to be completed to get the new bakery built and the equipment installed.
ACTIVITYPREDECESSORNORMAL TIME (WEEK)CRASH TIME (WEEK)EXPEDITING COST/WEEKA-963000BA853500CA15104000DB,C532000EC1062500FD,E215000
Hint: I have directly provided the crashing cost per unit time.
a. What is the normal project length?
b. What is the critical path in this project?
c. Which activity will you choose to crash first to reduce the duration of the project by one week?
d. What is the project length if all activities are crashed to their minimum?
e. What is the slack for activity D?

Answers

Answer:

a. The normal project length is 36 weeks.

b. The critical path in this project is A-C-E-F.

c. The activity that you choose to crash first to reduce the duration of the project by one week is E because it has the least expediting cost/week amongst A, C, E, F.

d. The project length if all activities are crashed to their minimum is 23 weeks.

e. The slack for activity D is 5 weeks.

Explanation:

a) The normal length of the project = completion time of last activity = 36 weeks.

b) The criteria for critical activity:

[tex]LC_{i} = ES_{i} ,\\LC_{j} = ES_{j} ,\\[/tex]

[tex]ES_j - ES_i = LF_j - LF_{i} =[/tex] duration of the activity

where ES = Earliest start time, EF = Earliest finish time , LC = latest completion time, LF = latest finish time ,

The suffix- i refers to the preceding node, suffix-j refers to the succeeding node.

activities satisfying above all criteria are A, C, E, F

therefore critical path is A-C-E-F.

c) To reduce the project duration by 1 week. we should choose to crash among critical activities A, C, E, F. thus we choose to crash activity E because it has the least expediting cost/week amongst A, C, E, F.

d) if we crash all the activities to their minimum, then the project length = sum of crash time of all critical activities

= [6 + 10 + 6 + 1]

= 23 weeks.

e) The slack of activity d = LS - ES = 34 - 29

= 5 weeks

The critical path is given in the diagram,

Liquidating Partnerships—Deficiency Prior to liquidating their partnership, Wakefield and Barns had capital accounts of $105,000 and $55,000, respectively. The partnership assets were sold for $40,000. The partnership had no liabilities. Wakefield and Barns share income and losses equally. a. Determine the amount of Barns' deficiency. $fill in the blank 1 b. Determine the amount distributed to Wakefield, assuming Barns is unable to satisfy the deficiency. $fill in the blank 2

Answers

Answer:

Liquidating Partnerships

a. The amount of Barn's deficiency is:

= $5,000.

b. The amount distributed to Wakefield, assuming that Barns is unable to satisfy the deficiency is:

= $40,000.

Explanation:

a) Data and Calculations:

Sharing of profits and losses = 1:1

                                           Wakefield     Barns      Total

Capital account balances $105,000   $55,000 $160,000

Proceeds from partnership assets =                      40,000

Loss from sale of partnership assets =                120,000

Sharing of loss equally      -60,000     -60,000  -120,000

Capital account balances $45,000     ($5,000)

Distribution to Wakefield   40,000

Barn's capital account deficiency        $5,000          

b) When Barn is not able to satisfy his capital deficiency after the equal sharing of the loss from the sale of the partnership assets, the amount distributed to Wakefield is reduced by Barn's deficiency.  Therefore, Wakefield will be paid cash of $40,000 since there are no liabilities.

Distribution network is not required for
product.
O Standardised
O Durable
O Unstandardised
O Perishable

Answers

Answer:

O Perishable

Explanation:

In the case of the perishable goods, the distrubution network is not required because the perishable goods are those goods that are consumed instantly such as vegetables, fruits

But on the other hand, the goods that are durable, standardised and non-standardised required the distribution network

Therefore the last option should be relevant

Sarasota Company purchased a machine at a price of $103,200 by signing a note payable, which requires a single payment of $130,002 in 3 years. Click here to view factor tables Assuming annual compounding of interest, what rate of interest is being paid on the loan

Answers

Answer:

-7.407%

Explanation:

Let interest rate be x%

Present value of payment = $130,002 * PV of discounting factor (rate%, time period)

$103,200 = $130,002 * 1.0x^3

1.0x^3 = $103,200 / $130,002

1.0x = ($103,200 / $130,002)^(1/3)

1.0x = 0.793834^(1/3)

1.0x = 0.92592660981

x = (0.92592660981 - 1) * 100

x = -0.07407*100

x = -7.407%

Altuve Co. was incorporated on January 1, 2013, at which time 250,000 shares of $10 par value common stock were authorized, and 110,000 of these shares were issued for $17 per share. Net income for the year ended December 31, 2013, was $1,257,300. Altuve Co.’s board of directors declared dividends of $3 per share of common stock on December 31, 2013, payable on February 7, 2014.Use the horizontal model to show the effects of the following:a. The issuance of common stock on January 1, 2013b. The declaration of dividends on December 31, 2013.c. The payment of dividends on February 7, 2014.

Answers

Answer:

Altuve Co.

Horizontal Model and Transaction Effects:

Balance Sheet                                            

a. The issuance of common stock on January 1, 2013

Assets                    = Liabilities     +     Equity

Cash $1,870,000   =                            Common Stock $1,100,000

                                                            Additional Paid-in  770,000

b. The declaration of dividends on December 31, 2013.

Assets                    = Liabilities            +         Equity

Assets                    = Liabilities $330,000 +  Equity ($330,000)

c. The payment of dividends on February 7, 2014.

Assets ($330,000) = Liabilities ($330,000)  + Equity

Explanation:

a) Data and Analysis:

a. The issuance of common stock on January 1, 2013

Jan. 1, 2013: Cash $1,870,000 Common Stock $1,100,000 Additional Paid-in Capital $770,000

b. The declaration of dividends on December 31, 2013.

Dec. 31, 2013: Cash Dividend $330,000 Dividends Payable $330,000

c. The payment of dividends on February 7, 2014.

Feb. 7, 2014: Dividends Payable $330,000 Cash $330,000

Carlos, the HR Director of a large paper manufacturing company, is studying the company's turnover costs. He has accounted for most of the easily calculable costs, but he is concerned about the hidden costs of turnover. Given this information, which of the following is most likely a cause of concern for Carlos?

a. Missed project deadlines
b. Employee referral fees
c. Preemployment medical expenses
d. Accrued vacation expenditures

Answers

Answer:

Missed project deadlines

Explanation:

From the question, we are informed about Carlos, who is the HR Director of a large paper manufacturing company, is studying the company's turnover costs. He has accounted for most of the easily calculable costs, but he is concerned about the hidden costs of turnover. Given this information, the most likely a cause of concern for Carlos is Missed project deadlines.

Project deadlines can be regarded as

final time point which is needed for a given project to be done as well as the submission of handing over. It is been

characterized as desired time-frame set for a project as well as links initial time expectations for the project to be

produced in a timely manner.

Suppose the corrective tax policy and the number of pollution permits available do not change in spite of this demand shift. As a result of the technology change, the price of pollution will change under , and the quantity of pollution will change under

Answers

Answer:

As a result of the technology change, the price of pollution will be same as price of pollution with pollution permits.

The quantity of pollution with corrective tax will be lower than quantity of pollution with pollution permits.

Explanation:

The pollution permits are issued to reduce pollution by firms. The companies will reduce the pollution and will only be able to emit pollution up to certain limit. The price of pollution with corrective tax will be same as the price of pollution with pollution permits.

15.The following information is available for an economy. On the basis of information calculate:
1. Domestic income and 2.National income?

Page 3 of 3

Items crore
Wages 10,000
rent 5000
interest 400
dividend 3000
mixed income 400
undistributed profit 200
social security contribution 400
corporate profit tax 400
net factor income from abroad 1000

Answers

The rent is 5000 which makes the income .05

George Company has the opportunity to purchase an asset that costs $40,000. The asset is expected to increase net income by $10,000 per year. Depreciation expense will be $5,000 per year. Based on this information the payback period is:

Answers

Answer:

2 years 8 months.

Explanation:

The payback period is the length of time that it takes for the future cash flows to equal the amount of initial investment.

We use cashflows instead of net income in payback calculation. Therefore, add back the depreciation expense.

Yearly Cash flow will thus be $15,000 ($10,000 + $5,000)

Payback Period :

$40,000 = $15,000 (Year 1)  + $15,000 (Year 2 )+ $10,000/$15,000 x 12 (Year 3)

This gives a payback period of 2 years 8 months

Assume that you are a loan officer of a bank. A local church is seeking a $4 million, 20-year loan to construct a new classroom building. Church officers submit a comprehensive financial report that was audited by a reputable CPA firm. In summary form (the actual statement showed details), the church’s statement of revenues and expenditures indicated the following (in millions):

Revenues from dues and contributions .... $1.8
Revenues from other sources ....... 0.2
Total revenues ............. $2.0
Less: total expenditures .......... 2.0
Excess of revenues over expenditures .... $0.0

The church's balance sheet reported assets, mainly cash and investments (at market value), of $0.2 million. In addition, a note to the financial statements indicated that equipment is approximately $3 million. The church has no outstanding debt.

a. Is there any information in the financial statements that would make you reluctant to approve the loan? If so, indicate and explain.
b. Is there any other financial information of the type likely to be reported in a conventional annual report that you would like to review prior to making a loan decision? If so, indicate and explain.
c. Is there any other information, of any type, that you would like to review prior to making a loan decision? If so, indicate and explain.
d. Comment on the inherent limitations of the financial statements of this church, or any comparable not-for-profit organization, as a basis for making loan decisions.

Answers

Answer:

Explanation:

a.

There is little information on how funds are used or how much money is spent to manage the church. The financial statements have been prepared incorrectly.

Interpretation:

While drafting the financial accounts, the church committed many errors. The church's revenue is equivalent to its daily operations operating expenditures. They have approximately $3 million in funding assets that they do not owe any money on.  

It may be deduced that the church is attempting to preserve asymmetric information, and therefore it will be better to justify its sources of income and use of money in order to determine whether they can or they cannot pay the debt.

b.

The revenue from various channels must be detailed in the yearly report so that the loan officer may make an informed judgment.

Interpretation:

Since payments and contributions account for 90% of revenue and revenue from other sources accounts for 10%, it's surprising how the church earns money in other ways as stated on the income statement. As a result, it's important to understand what other potential revenue streams the church has before approving the loan.

c.

The officer in charge of the loan should check the church's book records to make sure and guarantee that there are no outstanding loans. This situation necessitates a thorough examination and assessment.

Interpretation:

The church has $3 million worth of equipment. The church's expenses, on the other hand, are equivalent to the church's income. As a result, it's unclear how the church acquired the equipment without taking out a loan. As a result, the church must be urged to produce a full breakdown of its expenses, which may be thoroughly and fully studied to see whether there are any financing charges that the church is attempting to hide in its yearly reports.

d.

There is no direct or primary source of income for the church. It solely makes money from charity donations.

Interpretation:

The church's only sources of income are fundraisers and charitable donations. It also doesn't possess any significant revenue streams. Because the church is attempting to conceal numerous possible pieces of information, this may be a case of micro-management by the proprietors, and so these issues should be considered by the officer in charge of the loan before accepting the loan.

Waggoner Company has a cash balance of $44,000 on April 1. The company is required to maintain a cash balance of $25,000. During April expected cash receipts are $174,000. Expected cash disbursements during the month total $200,800. During April the company will need to borrow:____.
a. $2,500.b. $3,500.c. $4,000.d. $6,000.

Answers

Answer: $7,800

Explanation:

The amount that the company needs to borrow can be found using the formula:

= Opening balance + Cash receipts - Cash to be maintained - Cash disbursement

= 44,000 + 174,000 - 25,000 - 200,800

= -$7,800

Amount to be borrowed is the shortfall of $7,800

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