Answer:
a. What is the expected value of his investment?
$10,900b. Should he invest the $10,000 in the stock market if he is risk neutral?
If the investor is risk neutral, then he pays little attention to market risk, therefore, he/she should invest because the expected value is higher than the investment.c. Is the decision clear-cut if he is risk averse?
If the investor is risk averse, it means that he/she is afraid of market risk and likes to make decisions that involve the least possible risk. In this case, the possibility of losing money is not that large (in my opinion) and the expected value is relatively high, but a risk averse investor would probably prefer an investment that yields a lower rate but is more secure, e.g. US securities.Explanation:
total investment $10,000
if economy improves = 0.30 x $15,000 = $4,500if economy remains the same = 0.40 x $10,000 = $4,000if economy deteriorates = 0.30 x $8,000 = $2,400total expected value = $10,900
Identify each of the following items as either a capital expenditure (C), an immediate expense (E), or neither (N):
1. Paid property taxes of $75,000 for the first year the new building is occupied.
2. Paid interest on construction note for new plant building, $550,000
3. Repaired plumbing in main plant, paying $270,000 cash.
4. Purchased equipment for new manufacturing plant, $6,000,000; financed with long-term nc
5. Paid dividends of $40,000.
6. Purchased a computer and peripheral equipment for $29,000 cash.
7. Paved a parking lot on leased property for $300,000.
8. Paid $90,000 in cash for installation of equipment in (4).
9. Paid $148,000 to tear down old building on new plant site.
10. Paid $31 ,000 maintenance on equipment in (4) during its first year of use.
Answer:
Options 2, 4, 6, 7, 8, and 9 are capital expenditure.
Options 1, 3, and 10 are the immediate expenses.
Option 5 is Neither.
Explanation:
Capital expenditure is those expenditures that are incurred to maintain the fixed assets. Thus Options 2, 4, 6, 7, 8, and 9 are capital expenditure. While the expenses that are compulsory and immediate in nature are called the immediate expenses. This means if the equipment requires repairing then it will fall in the category of immediate expense because without repairing it won't work. Therefore, a property tax of $75000, repair of the main plant, and maintenance for equipment are immediate expenses.
In the month of November, Carla Vista Co. Inc. wrote checks in the amount of $9,565. In December, checks in the amount of $11,465 were written. In November, $8,825 of these checks were presented to the bank for payment, and $10,285 in December. What is the amount of outstanding checks at the end of November? At the end of December?
Checks written in November $9,750
Less: Checks paid by bank in November $8,800
Checks outstanding at the end of November $950
Add: Checks written in December $11,762
Less: Checks paid by bank in December 10,889
Checks outstanding at the end of December $1,823
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- a random freshman
The Cell Inc., a microbiology research laboratory headquartered in the United States, has been losing money. The CEO decides to outsource some production to companies in developing countries. This decision to shift functions or processes to less developed countries is most likely due to their
Answer:
ghjkgg 9ycutzts5a64sts64d6ix74s
The decision of the Ceo of Cell Inc. microbilogy research laboratory to outsource some production in developing countries so that maximum output and fast deliveries can be expected to customers and also by the company can focus on various other factors affecting the business.
What is a research laboratory?The scientific lab where the experiments or products research are made so that new products can be made or existing can be replaced in chemical biological or physical aspects.
What is outsourcing?The practice which is done by an individual or an organization by using third party to carry their business activities like performing tasks giving services to customers etc.
What is third party?The company or an individual which comes in between two aspects and try to manage or solve the issue or give solutions
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On December 31, 2021, Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $66,000 and $900, respectively. During 2022, Larry's wrote off $2,275 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,500 at December 31, 2022. Bad debt expense for 2022 would be:
Answer:Bad debts expense = $6,875
Explanation:
A bad debt expense is recognized when a customer cannot pay its financial obligations therefore the account receivable will no longer be collectible
Beginning uncollectible accounts= $900
Ending allowance for uncollectible accounts = $5,500
Amounts written off = $2,275
Ending allowance for uncollectible accounts =Begining uncollectible accounts + current bad debts expense - amounts written off in 2022
$5,500= $900 + bad debts expense - $2,275
current bad debts expense for 2022= $5,500 - $900 + $2,275 = $6,875
Can also be illustrated as
ACCOUNTS
Begining uncollectible accounts $900
Amounts written off (less) - $2,275
Bad debts expense(add) + $6,875
Ending allowance for uncollectible accounts $5,500
Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $6.10 dividend every year, in perpetuity. If this issue currently sells for $80.65 per share, what is the required return?
Answer:
7.56%
Explanation:
Calculation for the required return for Smiling Elephant
Using this formula
Required return =D/P0
Where,
D=$6.10
P0=$80.65
Let plug in the formula
Required return =$6.10/$80.65
Required return =0.0756×100
Required return =7.56%
Therefore the Required return for Smiling Elephant Inc will be 7.56%
Q3) At an output level of 45,000 units, you calculate that the degree of operating leverage is 2.79. If output rises to 48,000 units, what will the percentage change in operating cash flow be
Answer: 18.6%
Explanation:
Degree of operating leverage = % change in Operating cash flow / % change in output
% change in Output
= [tex]\frac{48,000 - 45,000}{45,000}[/tex]
= 6.7%
Degree of operating leverage = % change in Operating cash flow / % change in output
2.79 = % change in Operating cash flow/ 6.7%
% change in Operating cash flow = 2.79 * 6.7%
% change in Operating cash flow = 18.6%
You are thinking of building a new machine that will save you $ 4 comma 000$4,000 in the first year. The machine will then begin to wear out so that the savings decline at a rate of 1 %1% per year forever. What is the present value of the savings if the interest rate is 9 %9% per year?
Answer:
The present value of the savings=$37,064.22
Explanation:
The present value of the savings is the amount that it worths today, this would be done in two stages;
The first stage is to determined the present of the first cash savings as follows:
PV of the first payment = 4,000 × (1.09)^(-1)=3,669.72
Second step is to determine the present value of the declining perpetuity
PV of declining perpetuity. A perpetuity is the series of cash flow occurring for the foreseeable future of years.
A- 4,000, g-negative growth rate = 1%,
interest rate = 9%
PV in year 1 = 4,000× (1-0.09)/(0.09+0.01)
= 36,400
PV in year 0 = 36,400 × (1.09)^(-1) = 33,394.49
The present value of the savings = 33,394.49 + 3,669.72= 37,064.22
The present value of the savings=$37,064.22
Consider Figure 9.2 on page 205 of our textbook. Suppose P0 is $10 and P1 is $11. Suppose a new firm with the same LRAC curve as the incumbent tries to break into the market by selling 4,000 units of output. Estimate from the graph what the new firm's average cost of producing output would be. If the incumbent continues to produce 6,000 units, how much output would be supplied to the market by the two firms? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn ?
Answer:
The 10,000 units of output that will be supplied by the two firms to the market.
Profit that each firm would earn will be higher than previous.
Explanation:
The firm selling 4,000 units at the price of $10 per unit. If the output is increased to 6,000 units the price will increase to $11 per unit. If the new 6,000 units are produced along with the previous 4,000 units then the total output supplied by the two firms will be 10,000 units (6,000 + 4,000). The supply of goods in the market will increase so price will fall and the revenue for the firms will decline but they can benefit with sales volume and their profit can increase.
The 10,000 units of output will be supplied by the two firms to the market.
The profit that each firm would earn will be higher than the previous.
Calculation of the number of units and profits:Here the firm sells 4,000 units at the price of $10 per unit. And, in the case when the output is increased to 6,000 units the price will increase to $11 per unit.
And, In the case when the new 6,000 units are produced along with the previous 4,000 units so the total output supplied by the two firms will be 10,000 units.
The supply of goods in the market should increase due to which the price will fall and the revenue for the firms will decline however they can benefit with sales volume and their profit can increase.
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All of the following items should be considered when setting an export price
except
A. The tariff rate and value-added tax.
B. Transportation costs.
C. Prices of substitutes in foreign markets.
D. Repatriation restrictions
Answer:
D. Repatriation restrictions should not affect the prices of commoditiesExplanation:
Repatriation has to do with the conversion of foreign currency to home based currency. this is done in a bid to carry out international transaction effectively
while these items affects the prices of export
A. The tariff rate and value-added tax.
B. Transportation costs.
C. Prices of substitutes in foreign markets.
A copy machine acquired on July 1 with a cost of $1,450 has an estimated useful life of four years. Assuming that it will have a residual value of $250, determine the depreciation for the first year by the double-declining-balance method.
Answer:
Annual depreciation= $300
Explanation:
Giving the following information:
Purchasing price= $1,450
Salvage value= $250
Useful life= 4 years
First, we need to determine the annual depreciation for the whole year using the following formula:
Annual depreciation= 2*[(book value)/estimated life (years)]
Annual depreciation= 2*[(1,450 - 250) / 4]
Annual depreciation= $600
Now, for 6 months:
Annual depreciation= (600/12)*6= $300
g A constraint to complicated macroeconomic models has been: Group of answer choices that firms do not maximize profits. that agents are not rational. that economists have run out of ideas. a lack of computing power. an insufficient understanding of statistics.
Answer:
a lack of computing power.
Explanation:
If actual overhead incurred during a period exceeds applied overhead, the difference will be a credit balance in the Factory Overhead account at the end of the period.
True or False
Answer:
faslee
Explanation:
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Massena Corporation reported the following data for the month of February:
Inventories: Beginning Ending
Raw materials (Direct and Indirect) $40000 $24000
Work in process $23000 $17000
Finished goods $50000 $72000
Additional information:
Raw materials purchases $63000
Direct labor cost $73700
Manufacturing overhead $55000
cost actually incurred
Raw materials included in
manufacturing overhead costs
incurred as indirect materials $5000
Manufacturing overhead cost
applied to Work in Process $48000
The adjusted cost of goods sold that appears on the income statement for February is:____
$=
Answer:
$186,700
Explanation:
The computation of adjusted cost of goods sold is shown below:-
Before that we need to do the following calculations
Raw material consumed = Beginning raw material + Raw material purchases - Ending raw materials - Raw materials included in manufacturing overhead costs as indirect materials
= $40,000 + $63,000 - $24,000 - $5,000
= $74,000
Total manufacturing cost = Beginning work in progress + Raw material consumed + Direct labor cost + Manufacturing overhead cost - Ending work in progress
= $23,000 + $74,000 + $73,700 + $48,000 - $17,000
= $201,700
Unadjusted Cost of goods sold = Raw materials + Total manufacturing cost - Ending finished goods
= $50,000 + $201,700 - $72,000
= $179,700
Adjusted COGS = Unadjusted Cost of goods sold + Underapplied overhead
= $179,700 + ($55,000 - $48,000)
= $179,700 + $7,000
= $186,700
Gaines Corporation invested $126,000 to acquire 26 comma 000 shares of Owens Technologies, Inc. on March 1, 2018. On July 2, 2019, Owens pays a cash dividend of $ 3.25 per share. The investment is classified as equity securities with no significant influence. Which of the following is the correct journal entry to record the transaction on July 2, 2019?
a. Cash 78,000
Equity Investments 78,000
b. Cash 78,000
Retained Equipment 78,000
c. Equity Investments 78,000
Cash 78,000
d. Cash 78,000
Dividend Revune 78,000
Answer:
Cash Dr, $84,500
Dividend revenue $84,500
Explanation:
The Journal entry is shown below:-
Cash Dr, $84,500 (26,000 × $3.25)
To Dividend revenue $84,500
(Being dividend is recorded)
To record the dividend, we debited the cash as it increased the assets and we credited the dividend revenue as it also increased the revenue
Therefore the above entry is the right and the same is not given in the option.
During the last five years, average daily occupancy at Autumn Acres nursing home has slid from 125 to 95 even though Autumn Acres has cut its daily rate from $125 to $115. Do these data suggest that occupancy would have been higher if Autumn Acres had raised its rates? What changes in nonprice demand factors might explain this change? (The supply, or the number of nursing home beds in the area, has not changed during this period.)
Answer:
no
Decline in the number of aged people in the population
The quality of care offered might have declined
Preference to be cared for at home instead of at care home
increase in death rate among the elderly
Explanation:
Even though, there seem to be a positive correlation between the price of daily rates and occupancy. it doesn't imply that increasing the rates would increase occupancy rates. there might be other factors explaining the decline.
some of these factors include :
1. decline in the number of the aged in the population : if the proportion of the aged in the population has reduced, the nursing home would experience a decline in residents
2. if the quality of care received by patients has also reduced, the aged might prefer other nursing homes.
3. there might be a shift in reference. the aged might prefer to be cared for at home by family and friends instead of staying in a nursing home.
Increase in death rate among the elderly : if there is an increase in mortality rate, the care home would experience a decline in occupancy
Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows.
Sales 80,000 units x 45 per unit $3,600,000
Cost of goods sold
- Beginning inventory $__________0
- Cost of goods manufactured (100,000 units x $25 per unit) $2,500,000
- Cost of good available for sale $2,500,000
Ending inventory (20,000 x 25) $500,000
Cost of goods sold $2,000,000
Gross margin $1,600,000
Selling and administrative expenses $580,000
Net income %1,020,000
a. Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2.25 per unit in variable selling and administrative expenses.
b. The company's product cost of $25 per unit is computed as follows:
Direct materials $4 per unit
Direct labor $11 per unit
Variable overhead $4 per unit
Fixed overhead ($600,000/ $100,000 units) $6 per unit
Required:
Prepare an income statement for the company under variable costing.
Answer:
Income statement for the company under variable costing
Sales (80,000 units x $45) $3,600,000
Less Cost of Sales
Beginning inventory $0
Cost of goods manufactured (100,000 units x $19) $1,900,000
Cost of good available for sale $1,900,000
Less Ending inventory (20,000 x $19) ($380,000) ($1,520,000)
Contribution $2,080,000
Less Period Costs
Fixed Manufacturing Overhead ($600,000)
Selling and administrative expenses - Fixed ($400,000)
Selling and administrative expenses - Variable ($180,000)
Net Income / (loss) $900,000
Explanation:
Under Variable Costing.
1.Product cost = Variable Manufacturing Costs Only
Therefore, Product cost = $4 + $11 + $ 4
= $19
2.Period Cost = Fixed Manufacturing Overheads + Non - Manufacturing Costs
The Oriole Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $100 a night. Operating costs are as follows:
Salaries $7,500 per month
Utilities $1,500 per month
Depreciation $1,300 per month
Maintenance $1,760 per month
Maid service $24 per room
Other costs $46 per room
Determine the inn’s break-even point in number of rented rooms per month.
Answer:
Break-even point in units= 402 rooms a month
Explanation:
Giving the following information:
The inn has 50 rooms that it rents at $100 a night. Operating costs are as follows:
Salaries $7,500 per month
Utilities $1,500 per month
Depreciation $1,300 per month
Maintenance $1,760 per month
Maid service $24 per room
Other costs $46 per room
First, we need to calculate the total fixed costs and the unitary variable cost.
Total fixed costs= salaries + utilities + depreciation + maintenance
Total fixed costs= $12,060
Unitary variable cost= 24 + 46= $70
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 12,060/ (100 - 70)
Break-even point in units= 402 rooms a month
With an increase in product advertising of $50 million you expect to increase sales by 10,000 units. If unit grow margin is $4,800, will the additional advertising increase product contribution?
Answer:
Income will decrease by $2,000,000.
Explanation:
Giving the following information:
Advertising increase= $50,000,000
Units increase= 10,000 units
Unit contribution margin= $4,800
To calculate the total effect on income, we need to use the following formula:
Effect on income= total contribution margin - increase in fixed costs
Effect on income= 10,000*4,800 - 50,000,000
Effect on income= $2,000,000 decrease
Income will decrease by $2,000,000.
The country of Morson has decided to privatize the state-owned cable television company. How can the country help this newly privatized industry succeed
Answer:
Government Support
Explanation:
Privatization is better for a country. It minimizes the monopoly and encourages healthy competition. Increased competition in the business world is good. There can be variety of services available to the consumers. Government should support privatization by introducing schemes of interest free loan for investors. There will be large number of firms that might want to enter business world but the money is not available to them for startup.
__________________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products.
Answer: Nontariff barriers
Explanation:
Nontariff barriers are trade barriers that are used whereby the import and export of goods and services are restricted. It should be noted that the restriction is not by tariffs but can include include embargoeds, quotas, sanctions, and levies.
The main reason for trade barriers are to generate revenue for the government and also to protect the local industries.
From past records it is known that 10% of items from a production line are defective. If two items are selected at random, what is the probability that only one is defective?
Answer:
0.2
Explanation:
The Probability distribution is the function which describes the likelihood of possible values assuming a random variable. The 10% of the items from the production line are assumed to be defective. There is a sample selection of 2 items. The probability that one of the item among the selected sample of two items is found defective is 0.2 (2 items sample *10%)
Bee Inc. is working on its cash budget for March. The budgeted beginning cash balance is $55,000. Budgeted cash receipts total $139,000 and budgeted cash disbursements total $134,000. The desired ending cash balance is $80,000. To attain its desired ending cash balance for March, the company needs to borrow:
Answer:
$20,000
Explanation:
The computation of the borrowed amount is shown below:
As we know that
Ending cash balance = beginning cash balance + cash receipts - cash disbursements + cash borrowings
$80,000 = $55,000 + $139,000 - $134,000 +cash borrowings
$80,000 = $194,000 - $134,000 + cash borrowings
So, the borrowing is $20,000
The common stock of Auto Deliveries currently sells for $28.99 a share. The stock is expected to pay an annual dividend of $1.34 per share next year. The firm has established a pattern of increasing its dividends by 4 percent annually and expects to continue doing so. The estimated market rate of return on this stock is _______ percent.
Answer:
8.62%
Explanation:
The common stock of Auto deliveries currently sells for $28.99 per share
The stock is expected to pay a dividend of $1.34
The growth rate is 4%
= 4/100
= 0.04
Therefore, the market rate of return on the stock can be calculated as follows
Market rate= dividend/stock price + growth rate
= $1.34/$28.99 + 0.04
= 0.04622+0.04
= 0.0862×100
= 8.62%
Hence the estimated market rate of return on the stock is 8.62%
"Which of the following statements are TRUE regarding the rights agent? I The rights agent usually handles the mechanics of a rights offering II The rights agent is usually the existing transfer agent of the issuer III The rights agent issues the additional shares upon presentation of the rights certificates with payment"
Answer:
I, II, and III
I The rights agent usually handles the mechanics of a rights offering
II The rights agent is usually the existing transfer agent of the issuer
III The rights agent issues the additional shares upon presentation of the rights certificates with payment
Explanation:
Aright is defined as an offering to existing shareholders to purchase more shares. Usually there is a proportion of original shares the shareholder can now purchase. For example 1 to 5 shares means the shareholder can buy one share for every 5 old shares owned.
A rights agent is a person or entity that is responsible for maintaining records on behalf of rights holders.
When rights are issued, a rights agent is handles sales to shareholders, he is usually the initial transfer agent for the issuing company, and he issues the additional shares when payment and rights certificates are presented.
he financial manager at Starbuck Industries is considering an investment that requires an initial outlay of $24,000 and is expected to produce cash inflows of $1,000 at the end of year 1, $5,000 at the end of years 2 and 3, $14,000 at the end of year 4, $9,000 at the end of year 5, and $7,000 at the end of year 6. a. Select the time line option that represents the cash flows associated with Starbuck Industries' proposed investment. b. Which of the approaches—future value or present value—do financial managers rely on most often for decision making? Why?
Answer:
Please check the attached image for the timeline image.
present value. this is because in making the decision of whether to carry out a project, the decision is made at the beginning of of the project and not in the future. so it is important to determine the present value to know if the project is profitable and should be carried out.
Explanation:
Timeline is arranges a series of events in chronological order. cash inflows are recorded as positive while cash outflows have a negative sign in front of the amount.
present value is the sum of discounted cash flows
Classify each of the following based on the macroeconomic definitions of saving and investment.
a. Saving Investment Kate purchases stock in Pherk, a pharmaceutical company.
b. Hubert purchases a new condominium in Houston.
c. Clancy purchases a certificate of deposit at his bank.
d. Eileen borrows money to build a new lab for her engineering firm.
Answer:
a. Savings
b. Investment
c. Savings
d. Investment
Explanation:
Remember,
In macroeconomics, we often see Investments as purchases made with the aim of producing more goods or more wealth in the future. The examples are;
- Kate purchases stock in Pherk, a pharmaceutical company.
-Hubert purchases a new condominium in Houston.
While, Savings refers to the extra money a households have left after paying all their other expenses. Examples here are:
- Clancy purchases a certificate of deposit at his bank.
- Eileen borrows money to build a new lab for her engineering firm.
International trade promotes economic growth when it allows any two countries to grow (in their combined production) beyond (above) their pre-trade production possibilities curve (PPC).
a. True
b. False
Answer: True
Explanation:
The Production Possibilities Curve (PPC) is meant to illustrate how a country produces goods and services given the limited resources it has. The curve represents the various amounts that have to be traded off of 2 goods to produce more or less of one good.
The Curve shows that it is best that a country produces those goods that is good at producing so that it can produce more of it and then trade with the rest of the world for the goods it isn't too efficient at producing. If both countries involved in the trade are able to grow beyond (above) their pre-trade production possibilities curve then the trade would have promoted economic growth.
Consider a service company that provides carpet cleaning and uses straight-line depreciation. Classify the cost of the depreciation on the carpet cleaning machines.
a. Fixed
b. Indirect
Answer:
Both :
a. Fixed and,
b. Indirect
Explanation:
The depreciation expense on production machinery form part of the product or service cost.
The cost however, can not be traced to the product or service that is why it is an Indirect cost as opposed to the direct costs which can be traced directly on the product or service.
Straight line method charges a fixed amount of depreciation thus the depreciation is a fixed charge.
A company's flexible budget for 13,200 units of production showed sales, $54,120; variable costs, $21,120; and fixed costs, $18,000. The operating income expected if the company produces and sells 19,600 units is:
Answer:
Net income= $31,000
Explanation:
Giving the following information:
Production= 13,200
Sales= 54,120
Variable costs= $21,120
Fixed costs= $18,000
First, we need to calculate the unitary contribution margin:
Unitary contribution margin= total contribution margin/number of units
Unitary contribution margin= (54,120 - 21,120) / 13,200
Unitary contribution margin= $2.5
Now, for 19,600 units:
Total contribution margin= 2.5*19,600= 49,000
Fixed costs= (18,000)
Net income= 31,000
Two investment advisers are comparing performance. One averaged a 21% rate of return and the other a 18% rate of return. However, the beta of the first investor was 1.4, whereas that of the second investor was 1. a. Can you tell which investor was a better selector of individual stocks (aside from the issue of general movements in the market)? First investor Second investor Cannot determine b. If the T-bill rate was 7% and the market return during the period was 13%, which investor would be considered the superior stock selector? Second investor First investor Cannot determine c. What if the T-bill rate was 4% and the market return was 17%? First investor Second investor Cannot determine