Answer:
The entry reflects a debit to the Accounts Payable and a credit to the Merchandise Inventory and Cash, signifying full settlement of debt with merchandise $50 and cash $2,450.
Explanation:
When Accounts Payable is debited, it means that it is being paid. In this case, there are two stated ways for the settlement. The supplier was paid $50 in goods and $2,450 in cash. While, the supplier was being owed the sum of $2,500, he agreed to accept merchandise at cost of $50 and the remainder in cash of $2,450. This entry also satisfies the accounting equation, keeping the two sides in balance, as Liabilities are reduced by $2,500 and Assets are reduced by the same amount.
rojects A and B are mutually exclusive and have an initial cost of $78,000 each. Project A provides cash inflows of $32,000 a year for three years while Project B produces a cash inflow of $44,400 a year for two years. Which project(s) should be accepted if the discount rate is 10 percent
Answer:
Project A should be accepted.
Explanation:
The initial investment of project A = $78000
The initial investment of project B = $78000
The cash inflows of project A = $32000
The time period for project A = 3 years
The cash inflow of project B = $44400
The time period for project B = 2 years.
Interest rate (r ) = 10%
Now find the net present value of both project and then decide which one has to accept.
The net present value of project A:
[tex]=\frac{A(1-(1+r)^{-n})}{r} - \text{initial investment} \\= \frac{32000(1-(1+0.1)^{-3})}{0.1} - 78000 \\= 79579.26 – 78000 \\= $1579.26[/tex]
The net present value of project B:
[tex]=\frac{A(1-(1+r)^{-n})}{r} - \text{initial investment} \\= \frac{44400(1-(1+0.1)^{-2})}{0.1} - 78000 \\= - 942.14[/tex]
Project A should be accepted because project B has a negative net present value.
On April 29, Welllington Co. paid $1,760 to repair the transmission on one of its delivery vans. In addition, Welllington paid $52 to install a GPS system in its van.
Journalize the entries for the transmission and GPS system expenditures. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTSGarcia Associates Co.General Ledger
ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable
114 Interest Receivable
115 Notes Receivable
116 Merchandise Inventory
117 Supplies
119 Prepaid Insurance
120 Land
123 Delivery Van
124 Accumulated Depreciation-Delivery Van
125 Equipment
126 Accumulated Depreciation-Equipment
130 Mineral Rights
131 Accumulated Depletion
132 Goodwill
133 Patents
LIABILITIES
210 Accounts Payable
211 Salaries Payable
213 Sales Tax Payable
214 Interest Payable
215 Notes Payable
EQUITY
310 Owner, Capital
311 Owner, Drawing
312 Income Summary
REVENUE
410 Sales
610 Interest Revenue
620 Gain on Sale of Delivery Van
621 Gain on Sale of Equipment
EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Delivery Van
523 Delivery Expense
524 Repairs and Maintenance Expense
529 Selling Expenses
531 Rent Expense
532 Depreciation Expense-Equipment
533 Depletion Expense
534 Amortization Expense-Patents
535 Insurance Expense
536 Supplies Expense
539 Miscellaneous Expense
710 Interest Expense
720 Loss on Sale of Delivery Van
721 Loss on Sale of Equipment
Answer:
April 29,
DR Accumulated Depreciation - Delivery Van $1,760
CR Cash $1,760
(To record repair of van)
April 29,
DR Delivery Van $52
CR Cash $52
(To record installation of GPS system in Van)
Explanation:
The transmission being faulty in the Van is part of the depreciation of the van and so when it is fixed, it reduces the depreciation of the van. The amount needs to be debited to the Accumulated Depreciation Account to signal that it is a reduction.
Installing a new GPS in a Van is an additional benefit to the van that will last for a period of more than a year hence it should be capitalised and added to the cost of the Delivery Van.
Johnson Trucking Company wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs. Johnson Trucking Company has the following data available
Month Miles driven Total operating costs
January 16,200 22650
February 17000 23250
March 18400 25450
Apri 16500 22875
May 17400 23550
June 15300 21850
The variable cost per mile using the high-low method is:___________.
A. $1.16
B. $138
C. $1 66
D. $1.43
Answer:
Variable cost per unit= $1.16 per mile
Explanation:
Giving the following information:
January 16,200 $22,650
February 17000 $23,250
March 18400 $25,450
Apri 16500 $22,875
May 17400 $23,550
June 15300 $21,850
To calculate the variable cost per mile under the high-low method, we need to use the following formula:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (25,450 - 21,850) / (18,400 - 15,300)
Variable cost per unit= $1.16 per mile
Calculate the forecasted cost at completion if the total budgeted cost is $15,000, the cumulative actual cost is $10,000, and the cumulative earned value is $12,000.
Answer:
$13,000
Explanation:
The total budgeted cost is $15,000
The cumulative actual cost is $10,000
The cumulative earned value is $12,000
Therefore, the forecasted cost at completion can be calculated as follows
= Cumulative actual cost + ( Budgeted cost-Cumulative earned value)
= $10,000 + ($15,000-$12,000)
= $10,000 + $3,000
= $13,000
Hence the forecasted cost at completion is $13,000
If the marginal propensity to consume (mpc) is 0.9, the spending multiplier is _____, the tax multiplier is ______, and the balanced budget multiplier is _______, respectively.
Answer:
If the marginal propensity to consume (mpc) is 0.9, the spending multiplier is 10, the tax multiplier is -9, and the balanced budget multiplier is 1, respectively.
Explanation:
These can be calculated as follows:
a) Calculation of spending multiplier
To calculate this, we use the formula for calculating the spending multiplier as follows:
Spending multiplier = 1 / (1 - mpc)
Since mpc = 0.9, we have:
Spending multiplier = 1 / (1 - mpc) = 1 / (1 - 0.9) = 1 / 0.1 = 10
b) Calculation of tax multiplier
To calculate this, we use the formula for calculating the tax multiplier as follows:
Tax multiplier = -mpc / mps
Note that the tax multiplier as given above is negative because increase in tax by the government makes the multiplier to work in reverse since the money is leaving the circular flow.
Since what is not consumed is saved, we have:
mps = 1 - mpc = 1 - 0.9 = 0.1
Therefore,
Tax multiplier = -0.9 / 0.1 = -9
c) Calculation of balanced budget multiplier
To calculate this, we use the formula for calculating the balanced budget multiplier as follows:
Balanced budget multiplier = Spending multiplier + Tax multiplier = 10 + (-9) = 10 - 9 = 1
Note that balanced budget multiplier is always equal to 1 as obtained above.
Conclusion
Therefore, if the marginal propensity to consume (mpc) is 0.9, the spending multiplier is 10, the tax multiplier is -9, and the balanced budget multiplier is 1, respectively.
James is an agreeable and emotionally stable person. A _______ , he inspires his employees to believe in the changes he wants to make to the organization.
a) transformational leader
b) transactional leader
Answer:
transformational leader
Barbara Hastings has no children of her own, but she does have a beloved niece named Ellen Laughridge. Attentive to the future financial needs of Ellen, Barbara secures a $500,000 life insurance contract from Chameleon Insurance Company, listing Ellen as the sole beneficiary. Barbara has every intention to inform Ellen of her new life insurance policy, but "life gets in the way," and she neglects to do so. Hastings dies on January 15, 2005. As part of her estate distribution, Ellen receives a chest-of-drawers from her dear aunt. On August 29, 2007, while rearranging her clothing in the chest-of-drawers, Ellen comes upon a secret compartment. In the secret compartment is an original copy of the life insurance contract. Ellen is overjoyed to see her name listed as beneficiary, and she contacts Chameleon Insurance Company immediately. Upon review of the policy, Chameleon denies coverage. Chameleon’s claims representative points to Section 15(b) of the policy, which specifically requires notification of the insured’s death no later than one year after death. It has been over two years and seven months since Barbara Hastings died. 1. Will Ellen recover the $500,000 in insurance proceeds? 2. Is it ethical for an insurance company to deny a claim on the basis of a "technicality?"
Answer:
1. Ellen would only be able to recover the $500,000 insurance proceed if she should be able to find a technicality in the insurance company's rules and regulation. This is because, strictly following the rules, there is nothing she can do regarding to the claim.
2. It is not ethical for the insurance company to deny the claim of Ellen on the basis of technicality but when viewed from another perspective, they are strictly following the rules of the insurance organization and applying it to the later. It is now left for the claimant to find another technicality on why he or she must be paid the insurance claim.
Explanation:
Talk to a 55-year-old (or older) business professional nearing retirement. This person can be a family member, friend, or mentor. List and describe the savings, investments, and risk management strategies for this phase of life. Describe how financial planning has changed from the earlier phase of life.
Answer:
The financial planning will differ for the person according to their age. A person who is 50 years older would have money only from his savings. The 55 year old person is retired and would only have money available for living from the saving he had made while he was working. He will not have any other source of income.
Explanation:
The risk management officer should consider the investments by considering his available savings. He should also consider the money required for living as there is no other source of income. The risk appetite for such an old aged individual will be low. He must be risk averse in the situation of retirement. The financial planning strategies changes for the person over the different phases of life. When a person is young and starts the job at age of 25 he might take excessive risks for getting extra returns. He is young and energetic, has ability to work part time along with his routine job to earn extra money.
Activity-Based Costing: Factory Overhead Costs
The total factory overhead for Bardot Marine Company is budgeted for the year at $1,039,600, divided into four activity pools: fabrication,, $448,000; assembly, $180,000; setup, $222,600; and inspection, $189,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The activity-base usage quantities for each product by each activity are as follows:
Fabrication Assembly Setup Inspection
Speedboat 7,000 dlh 22,500 dlh 50 setups 88 inspections
Bass boat 21,000 7,500 370 612
28,000 dlh 30,000 dlh 420 setups 700 inspections
Each product is budgeted for 5,000 units of production for the year.
a. Determine the activity rates for each activity.
Fabrication $ per direct labor hour
Assembly $ per direct labor hour
Setup $ per setup
Inspection $ per inspection
b. Determine the activity-based factory overhead per unit for each product. Round to the nearest whole dollar.
Speedboat $ per unit
Bass boat $ per unit
Answer:
Instructions are below.
Explanation:
Giving the following information:
Estimated factory overhead:
fabrication, $448,000
assembly, $180,000
setup, $222,600
inspection, $189,000
Fabrication Assembly Setup Inspection
Speedboat 7,000 dlh 22,500 dlh 50 setups 88 inspections
Bass boat 21,000 7,500 370 612
28,000 dlh 30,000 dlh 420 setups 700 inspections
Each product is budgeted for 5,000 units of production for the year.
First, we need to calculate the predetermined overhead rate for each activity using the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
fabrication= 448,000/28,000= $16 per direct labor hour
assembly= 180,000/30,000= $6 per direct labor hour
setup= 222,600/420= $530 per setup
inspection= 189,000/700= $270 per inspection
Now, we can allocate overhead to each product line:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Speed boat:
Allocated MOH= 7,000*16 + 22,500*6 + 50*530 + 88*270= $297,260
Bass boat:
Allocated MOH= 21,000*16 + 7,500*6 + 370*530 + 612*270= $742,340
Finally, the unitary overhead cost:
Speed boat= 297,260/5,000= $59.45
Bass boat= 742,340/5,000= $148.47
Calculate the earnings of workers A, B and C under the Straight Piece
Rate System and Merrick’s Differential Piece Rate System from the
following particulars.
Normal rate per hour: Rs. 5.40
Standard time per unit: 1 minute
Output per day is as follows.
Worker A – 390 units
Worker B – 450 units
Worker C – 600 units.
Working hours per day are 8
Answer:
Earnings of Workers:
Rates Systems
Worker Straight Piece Merrick's Differential Piece
A $35.10 $28.08
B $40.50 $32.40
C $54.00 $64.80
Explanation:
a) Data:
Normal rate per hour: Rs. 5.40
Standard time per unit: 1 minute
Output per day is as follows.
Worker A – 390 units
Worker B – 450 units
Worker C – 600 units
Working hours per day are 8
b) Calculations:
i) Standard units per day = 8 x 60 minutes = 480 units
ii) Earnings per day is as follows.
Worker A – 390 units :
Straight piece Wages = 390 / 60 x $5.40 = $35.10
Merrick's Earnings = 390/60 x $5.40 x 0.8 = $28.08
Worker B – 450 units :
Straight piece Wages = 450 / 60 x $5.40 = $40.50
Merrick's Earnings = 450/60 x $5.40 x 0.8 = $32.40
Worker C – 600 units:
Straight piece Earnings = 600 / 60 x $5.40 = $54
Merrick's Earnings = 600/60 x $5.40 x 1.2 = $64.80
c) The factor for multiplying the rate is obtained by dividing the units produced by the number of minutes in an hour, in order to convert output to a rate based on the hour.
d) The standard output per day helps Merrick in calculating the weights to be assigned to each worker and differentiate the slow worker from the superior worker (hence, the name: Merrick's Differential Piece Rate). The slow workers (those who produce below the standard output) are paid a rate lower than the standard rate by adding a weight of 0.8 as a punishment while the superior worker is assigned a weight of 1.20 as a reward for good performance. Meanwhile, a standard performer who produced 480 units will be paid the normal rate or weighed as 1.0.
Fixed Overhead Spending and Volume Variances, Columnar and Formula Approaches
Branch Company provided the following information:
Standard fixed overhead rate
(SFOR) per direct labor hour $5.00
Actual fixed overhead $305,000
BFOH $300,000
Actual production in units 16,000
Standard hours allowed for
actual units produced (SH) 64,000
Required
Enter amounts as positive numbers and select Favorable (F) or Unfavorable(U).
Using the columnar approach, calculate the fixed overhead spending and volume variances.
1 2 3
Spending Volume
Answer:
Fixed Overheads Spending Variance = $5,000 Unfavorable(U).
Fixed Overheads Spending Variance = $20,000 Favorable (F).
Explanation:
Fixed Overheads Spending Variance = Actual Fixed Overheads - Budgeted Fixed Overheads
= $305,000 - $300,000
= $5,000 Unfavorable(U).
Fixed Overheads Spending Variance = Fixed Overheads at Actual Production - Budgeted Fixed Overheads
= ($5.00 × 64,000) - $300,000
= $320,000 - $300,000
= $20,000 Favorable (F)
Assume your required internal rate of return on similar investments is 11 percent. What is the net present value of this investment opportunity? What is the going-in internal rate of return on this investment? Should you make the investment?
Answer:
Hello some parts of your question is missing attached below are the missing parts
You are considering the purchase of a small income-producing property for $150000 that is expected to produce the following net cash flows
End of year cash flow
1 $50000
2 $50000
3 $50000
4 $50000
Answer : a) $5122.28 (b) 12.59% (c) You should make the investment
Explanation:
Internal rate of return = 11 %
initial cash flows = $150000
period = 4 years
Find the NPV (net present value )( using present value tables)
= preset value of cash flows - initial cash flows
= ∑ present cash flows for 4 years - $150000
= $155122.28 - $150000 = $5122.28
The going-in internal rate of return on investment
N (number of years ) = 4
pv ( present value ) = $150000
PMT = -$50000
Fv ( future value ) = 0
IRR = 12.59% ( making use of the cash flow list in our financial calculator )
SilverFinn makes high-end jewelry for women. This jewelry is manufactured and patented in Italy. Manufacturers in Argentina create counterfeit SilverFinn jewelry and sell it in local markets at nearly similar prices to the original SilverFinn jewelry sold in other countries. This lack of intellectual property protection is like to result in
Answer: a. reduction in export opportunities from Argentina to other countries.
Explanation:
SilverFinn jewellery probably has intellectual property protection in other countries so when Argentinian producers make those counterfeits, they will be unable to sell it outside Argentina where it would not be allowed to be sold. This will reduce the export opportunities from Argentina to other countries.
It may also reduce the export opportunities of other goods from Argentina because other countries might be slow to trust that what Argentina is sending are indeed genuine goods because they have been known to counterfeit SilverFinn jewelry.
A monopolist has four distinct groups of customers. Group A has an elasticity of demand of 0.2, B has an elasticity of demand of 0.8, C has an elasticity of demand of 1.0, and D has an elasticity of demand of 2.0. The group paying the highest price for the product will be
Answer: Group A
Explanation:
Price Elasticity of demand refers to the sensitivity of quantity demanded given a change in price. In other words, how much will quantity demanded change if price changes. Higher elastcities mean that when prices change, their quantity demanded changes more. For instance, an elasticity of demand of 2 means that when prices rise by 2%, demand will decrease by 4%.
The group that will be paying the most therefore will have to be the group that is least sensitive to paying that high price. That would be Group A. As they are not very sensitive to price changes with an elasticity of 0.2, the Monopoly can increase their price to a higher point than others knowing that they won't demand less goods.
If a country produces only two products, then by looking at the country's production possibilities curve (PPC), one can see that the opportunity cost of producing one of the products is the same as (equal to) the marginal cost of producing that product.
A. True
B. False
Answer:
A. True
Explanation:
Marginal cost is the cost of the good or service is the opportunity cost of producing one or one of the units of it. It's the cost of producing one r ore unit of good. Marginal cost includes the cost included the producing of every unit. Opportunity cost is the alternative cost incurred by not using the opportunity cost of the other product.Galaxy Corp. is considering opening a new division to make iToys that it expects to sell at a price of $15,250 each in the first year of the project. The company expects the cost of producing each iToy to be $6,700 in the first year; however, it expects the selling price and cost per iToy to increase by 3.00% each year.
Based on the preceding information and rounding dollar amounts to the nearest whole dollars, the company expects the selling price in the fourth year of the project to be_______ , and it expects the cost per unit in the fourth year of the project to be _______.
Answer:
Selling price= $17,164
Unitary variable cost= $7,541
Explanation:
Giving the following information:
Selling price in the first year= $15,250
Unitary variable cost on the first year= $6,700
Increase rate= 3%
To calculate the selling price and variable cost per unit in the fourth year, we need to use the following formula:
FV= PV*(1+i)^n
PV= current value
i= increase rate
n= number of years
Selling price= 15,250*(1.03^4)= $17,164
Unitary variable cost= 6,700*(1.03^4)= $7,541
The city of Oak Ridge is considering the construction of a four kilometer (km) greenway walking trail. It will cost $1 comma 000 per km to build the trail and $340 per km per year to maintain it over its 22-year life. If the city's MARR is 11% per year, what is the equivalent uniform annual cost of this project? Assume the trail has no residual value at the end of 22 years.
Answer:
equivalent uniform annual cost = $1,849.25
Explanation:
Initial cost $4,000
then 22 cash outflows of $1,360
discount rate 11%
using a financial calculator, we determine the NPV = -$15,119.01
EAC = (NPV x r) / [1 - (1 + r)⁻ⁿ]
EAC = (-$15,119.01 x 11%) / [1 - (1 + 11%)⁻²²] = -$1,663.09 / 0.89933 = -$1,849.25
A dry cleaner uses exponential smoothing to forecast equipment usage. The August forecast was 88% and the actual was 89.6%. Use a smoothing constant of 0.1.
A. Prepare a forecast for September.
B. Assuming actual September usuage of 92 %, prepare a forecast for October usage
Answer:
1. 88.16%
2. 88.54%
Explanation:
a. Prepare a forecast for September
Smoothing constant (a) is 0.1
Forecast for August (Ft) is 88%
Actual usage for August (At) is 89.6%
Forecast for September(Ft +1) will therefore be;
Using the formulae
= Ft+a (At-Ft)
= 88% + 0.1(89.6% - 88%)
= 88% + 0.16%
= 88.16%
b. Assuming actual September usage of 92% , prepare a forecast for October usage.
Since we have the following,
Smoothing constant(a) 0.1
Then forecast for September(Ft) is 88.16%
Also, actual usage for September (At) is 92%
Therefore, forecast for October (Ft + 1) will be,
Using the formula
= Ft+a(At - Ft)
= 88.16% + 0.1(92% - 88.16%)
= 88.16% + 0.384%
= 88.54%
"Mussatto Corporation produces snowboards. The following per unit cost information is available: direct materials $10, direct labor $4, variable manufacturing overhead $3, fixed manufacturing overhead $10, variable selling and administrative expenses $1, and fixed selling and administrative expenses $8. Using a 25% markup percentage on total per unit cost, compute the target selling price. (Round answer to 2 decimal places, e.g. 10.50.)"
Answer:
The target selling price =$45
Explanation:
The target selling price is the sum of the total unit cost plus 25% of the the unit cost
The target selling price = Total per unit cost + (25% × total unit cost)
The total unit cost is the sum of all the costs involved making the product available to the consumer.
The sum of direct material cost , labour cost variable manufacturing, fixed manufacturing overhead, variable selling and administrative expenses and fixed selling and administrative expenses.
Total unit cost = 10 + 4 + 3 + 10 + 1 + 8 = 36
The target selling price = 36 + (25% × 36) = $45
The target selling price =$45
Many Western European countries are giving monetary incentives to employees who have multiple children. Why would they do this? How would a baby boom change Japan's demographics?
Answer:
The incentive is to encourage more families to have more children.
A baby boom in Japan will ensure that there is enough workforce to maintain the growing economy in the future.
Explanation:
The western countries, especially Europe is battling with population decline, which is estimated to have an economic impact in the future, due to a potential decline in the labor force in the future. To counter this, many of these western nations have crated policies that encourages childbirth by providing incentive for families with multiple children, reducing tax for such families, and even as far as up to 12 to 16 months paid paternity and maternity leave, when a couple has a new baby. Couples are also given government paychecks when they go on childbirth leave.
Japan is one of the countries that has been experiencing a population decline in recent years. The number of death seem to be more than the number of births. The general effect is the fear of a dwindling work force of the future. This will lead to more people retiring later, and there would be a huge pressure on the pension schemes, and the economy as a whole due to this. A population boom will mean that a future workforce is guaranteed, and the retirement age lowered, and the call for dependency on automation due to a shrinking workforce can be reviewed.
Many of the western and developed nations are now giving incentives to those who produce more than one child or multiple children.
As their economy is getting old and is aging hence in order to company the problem of the aging of population monetary incentives are given. The baby boom is a condition related to the growth of babies. Japan is a greying nation that has a negatively declining trend of population. Due to the larger medical aid population is getting older and the birth rate is low. A baby boom may lead to an increase in youth and the young population. More children and more people.Learn more about the Western European countries that are giving monetary incentives.
brainly.com/question/20414870.
For a stock to be in equilibrium, that is, for there to be no long-term pressure for its price to depart from its current level, then a.the expected future return must be less than the most recent past realized return. b.the past realized return must be equal to the expected return during the same period. c.the expected future returns must be equal to the required return. d.the required return must equal the realized return in all periods. e.the expected return must be equal to both the required future return and the past realized return.
Answer:
c.the expected future returns must be equal to the required return.
Explanation:
When the stock is at equilibrium than the intrinsic value of the stock is equivalent to the market price of the stock that depicts that the expected returns which held in the future should be equivalent to the required return
Therefore the option c is correct
And, the other options that are mentioned in the question are incorrect
For a stock to be in equilibrium, the expected future returns must be equal to the required return.
The correct answer to this question is answer option c. At the equilibrium position there is a balance between the expected returns and the required returns.
At this point the intrinsic value is the same thing as the market value. Telling us that the rate the investor is expecting is the same as the actual required rate of return.
Read more on https://brainly.com/question/17136657
eal per capita GDP in Singapore in 1961 was about $450, but it doubled to about $900.00 by 1978. a. What was the average annual economic growth rate in Singapore over the 17.00 years from 1961 to 1978
Answer:
The answer is 4.16%
Explanation:
Per capita GDP is the average income earned per person in a given country during a given period of time usually a year.
Per capita GDP in Singapore in 1961 equals $450
Per capita GDP in Singapore in 1978 equals $900
Difference between 1978 and 1961 is 17 years.
The formula for economic growth rate is;
[(End value/beginning value)^1)/17] - 1
[($900/$450)^1/17] - 1
1.041613 - 1
0.0416
Expressed as a percentage:
4.16%
Consider the corporate valuation model, if the WACC increases what happens to the present value of the firm. Group of answer choices It is indeterminant the present value will stay the the present value will decrease The corporate valuation model doesn't depend the WACC The present value will increase
Answer:
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Alpaca Corporation had revenues of $260,000 in its first year of operations. The company has not collected on $19,300 of its sales and still owes $26,300 on $90,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,000 in salaries. Owners invested $10,000 in the business and $10,000 was borrowed on a five-year note. The company paid $4,900 in interest that was the amount owed for the year, and paid $6,000 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. Compute net income for the first year for Alpaca Corporation.
Answer:
$89,460
Explanation:
The computation of the net income is shown below:
Sales $260,000
Less: Cost of goods sold -$90,000
Gross margin $170,000
Less:
Salaries -$13,000
Insurance payment -$3,000 ($6,000 ÷ 2 years)
Interest -$4,900
profit before tax $149,100
Less: tax expense -$59,640
Net income $89,460
We simply deducted all expenses from the revenues so that the net income could arrive and the same is to be considered
Suppose that you take $50 in currency out of your pocket and deposit it in your checking account. If the required reserve ratio is 8%, what is the largest amount (in dollars) by which the money supply can increase as a result of your action?
Answer:
The largest amount (in dollars) by which the money supply can increase as a result of the action is $625.
Explanation:
This is an example of money multiplier.
Money multiplier refers to the maximum amount of money that commercial bank can create or generate with each dollar of reserves.
Reserves or required reserves refer to the amount of money or portion of deposit that the central bank such as the Federal Reserve requires banks to hold and not lend.
In order to determine the largest amount (in dollars) by which the money supply can increase as a result of $50 deposit, money multiplier is used to multiply the $50 deposit.
The formula for the money multiplier is given as follows:
Money multiplier = 1/r
Where;
r = required reserve ratio = 8%, or 0.08.
Therefore, we have:
Money multiplier = 1 / 0.08 = 12.50
Largest amount of increase = Amount of deposit * Money multiplier = $50 * 12.50 = $625.
Therefore, the largest amount (in dollars) by which the money supply can increase as a result of the action is $625.
Wagner Enterprises and Stone Services both disposed of an old asset. When completing the journal entry, Wagner Enterprises included a debit to Cash, but Stone Services did not. Why would the companies have this difference in the journal entry
Answer:
Wagner Enterprises and Stone Services
Disposal of old asset:
It could be that Stone Services exchanged its old asset with a new one with a company. In that situation, the debit goes to New Equipment, while the credit is to the old Equipment. Another reason could be that Stone Services sold the old asset on account. In this situation, the debit goes to the Accounts Receivable account, while the old asset is credited accordingly.
Explanation:
When a company disposes of an old asset, it credits the asset account and transfers the amount to the Sale of Asset account. The same is done for the accumulated depreciation, in reverse. When cash is realized from the disposal, the Sale of Asset account is credited, while Cash account is debited. Then, the difference in the Sale of Asset account will be a gain or a loss, depending on the net book value and the cash realized from the sale.
a friend wants to borrow money from you. He states that he will pay you $3000 every 6 months for 12 years with the first payment exactly 3 years and six months from today. The interest rate is an APR of 5.3 percent with semiannual compounding. What is the value of the payments today?
Answer:
$45,111.41
Explanation:
For calculation of value of the payments today first we need to find out the value at 3 years which is shown below:-
Value at 3 years = PMT × (1 - (1 ÷ (1 + r^n))) ÷ r
= $3,000 × (1 - (1 ÷ (1.0265 ^24))) ÷ 0.0265
= $52,776.45
Now, The value of the payment today = Value at 3 year ÷ (1 + r^n)
= $52,776.45 ÷ (1.0265^6)
= $45,111.41
Therefore we have applied the above formula.
App Holdings is expected to pay dividends of $1.50 every six months for the next three years. If the current price of App Holdings stock is $22.60, and App Holdings' equity cost of capital is 18%, what price would you expect App Holdings' stock to sell for at the end of three years
Answer:
The answer is $34.36
Explanation:
FV = PV x (1 + R x ((1 + r))^T = $22.6 x (1 + {($1.5 / $22.60) x [1 + (18% / 2)]}^6 = $34.36
The Grondas, who owned a party store along with land, fixtures, equipment, and a liquor license, entered into a contract to sell their liquor license and fixtures to Harbor Park Market in an agreement that was expressly conditioned on approval by the Grondas' attorney. The Grondas submitted the contract to their attorney but before the attorney had approved it, they received a second, better offer and submitted that contract to the attorney as well. The attorney reviewed both agreements and approved the second one. Harbor Park Market sued the Grondas for breach of contract. Will their suit succeed?
Answer:
No the suit will not succeed as their is no agreement
Explanation:
The contract was conditional contract. As the condition explicitly said that, the right to agree on terms and conditions is explicitly attorney's right. When the attorney has not agreed on the terms and conditions of Harbor Park, the company hasn't formed any contract. Furthermore, there is no limitation on Grondas to consider other available options and attorney is also not obliged to agree to Harbor's offer.
Thus the suit that says Grondas has breached the contract is meaningless and will not succeed in the court.
Cammie received 100 NQOs (each option provides a right to purchase 10 shares of MNL stock for $10 per share) at the time she started working for MNL Corporation (5/1/Y1) four years ago when MNL’s stock price was $8 per share. Now that MNL’s stock price is $40 per share (8/15/Y5), she intends to exercise all of her options. After acquiring the 1,000 MNL shares with her options, she held the shares for over one year (10/1/Y6) and sold them at $60 per share.
b. What are MNL Corporation’s tax savings on the grant date (5/1/Y1), exercise date (8/15/Y5), and sale date (10/1/Y6)?
Answer:
b. What are MNL Corporation’s tax savings on the grant date (5/1/Y1), exercise date (8/15/Y5), and sale date (10/1/Y6)?
MNL Corporation will have no tax effects on the grant date and (5/1/Y1) and the date that Cammie sold the stocks (10/1/Y6).
The only tax effect results from the exercise date (8/15/Y5). Tax savings = (total amount of stocks exercised x market price at the time) x marginal tax rate = (1,000 stocks x $40) x tax rate = $40,000 x tax rate
Since no marginal tax rate is given in the question, we can calculate it for different options:
if tax rate = 21%, then tax savings = $40,000 x 21% = $8,400if tax rate = 35%, then tax savings = $40,000 x 35% = $14,000