Answer:
a.
2016 = $45,570
2017 = $45,570
b.
2016 = $102,080
2017 = $68,014
Explanation:
Straight line method
Straight line method charges a fixed amount of depreciation
Depreciation Charge = (Cost - Salvage Value) ÷ Estimated useful life
2016
Depreciation Charge = $45,570
2017
Depreciation Charge = $45,570
Double declining method
Double declining method charges a higher amount of depreciation at the early years and less in the later years
Depreciation Charge = 2 x SLDP x BVSLDP
2016
Depreciation Charge = 2 x 16.67 % x $306,180 = $102,080
2017
Depreciation Charge = 2 x 16.67 % x ($306,180 - $102,080) = $68,014
A male worker meets and regularly exceeds the work standards in the coding unit while the female workers in the unit usually, but not always, meet basic work standards. Based upon this information, the supervisor did not recommend a merit increase for the male worker since this increase would result in him receiving a higher wage than the female workers in the same unit. Given the scenario, determine which (if any) federal regulatory requirement has been violated
Answer:
The Federal regulatory requirement here which has been breached is Title VII of the Civil Rights Act of 1964.
Explanation:
Acording to SEC. 2000e-2. [Section 703]
"(a) Employer practices
It shall be an unlawful employment practice for an employer -
(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin; or
(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin."
The supervisor might have been attempting to create equality. However, the results of the work stand out. By refusing to reward the male worker, the supervisor has discriminated against him on the basis of his gender. His work deserves merit. The work of the female worker does not.
Hence the supervisor is in violation of the statue refered above.
Cheers
During a(n) _____ interview, all applicants will be asked the exact same questions.
structured
open
inquiry
behavioral
Answer:
structured is the correct answer.
Explanation:
on edge.
Jeff, a 52% owner of an S corporation, has a stock basis of zero at the beginning of the year. Jeff's basis in a $10,000 loan made to the corporation and evidenced by a corporate note has been reduced to zero by pass-through losses. During the year, his net share of the corporate taxable income is $11,000. At the end of the year, Jeff receives a $15,000 cash distribution.
Discuss the tax effects of the distribution.
Answer:
See below
Explanation:
In order to restore any reduction in loan basis, only the net increase is applied in line with section 1367(b)(Adjustment to basis of stocks of shareholders).
What this means is that there is no net increase regarding the information given above I.e ($11,000 - $15,000).
We can safely conclude that there is $11,000 tax free income since the stock basis has been increased by $11,000. There is also a $4,000 capital gain.
Why do governments usually support and regulate natural monopolies?
A two or more firms are cost-prohibitive
B competition makes prices lower in a natural monopoly
C owners of natural monopolies do not know how to manage them efficiently
D itis difficult to keep up with advancing technology
Answer:
c
Explanation:
A monopoly is when there is only one firm operating in an industry. there are usually high barriers to entry of firms. the demand curve is downward sloping. it sets the price for its goods and services.
An example of a monopoly is a utility company
A natural monopoly occurs due to the high start-up costs or a large economies of scale.
Natural monopolies are usually the only company providing a service in a particular region. there is no competition in a natural monopoly so prices tend to be high. government intervenes in a monopoly to ensure that customers are treated fairly
Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 474,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 500 of these units each year. The cost of the unit is $13.26. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,369, and the cost of producing the units would be $10.00 a unit. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should (buy/Make) the fitting. Incremental cost / (savings) will be ____________$
Answer:
Particulars Make Buy Incremental cost
Manufacturing cost $474,000 $474,000
Purchase $393,420 ($393,420)
(474,000*$0.83)
Fixed Cost $94,800 ($94,800)
(474,000*$0.20)
Total relevant cost $474,000 $488,220 ($14,220)
Conclusion: The company should make the fitting and the incremental savings will be $14,220
"What are the results of a contractionary monetary policy, which intends to slow down the economy, and what are not? You are currently in a sorting module. Turn off browse mode or quick nav, Tab to items, Space or Enter to pick up, Tab to move, Space or Enter to drop. Is a result of a contractionary monetary policy (tight money policy) Is not a result of contractionary monetary policy (tight money policy)"
Answer:
Contractionary monetary policy usually results in:
lower money supplyhigher interest rateslower inflation rateslower investment rateslower nominal gross domestic producthigher unemploymentdecrease in consumer spendingaggregate demand curve shifts to the left
Answer: It can decrease inflation.
Explanation:
Stahl Company was incorporated as a new business on January 1, 2019. The company is authorized to issue 600,000 shares of $2 par value common stock and 80,000 shares of 6%, $20 par value, cumulative preferred stock. On January 1, 2019, the company issued 75,000 shares of common stock for $15 per share and 5,000 shares of preferred stock for $25 per share. Net income for the year ended December 31, 2019, was $500,000.
Required:
Prepare the stockholders’ equity section of the balance sheet for Stahl Company.
Answer:
Stahl Company
Stockholders' Equity section of the balance sheet
As of December 31, 2019
Authorized shares:
Common Stock, 600,000 at $2 par value
6%, Preferred Stock, 80,000 at $20 par value
Issued shares:
Common stock, 75,000 at $2 par value $150,000
6% Preferred stock, 5,000 at $20 par value 100,000
Additional Paid-in Capital, Common stock 975,000
Additional Paid-in Capital, 6% Preferred stock 25,000
Retained earnings, December 31, 2019 500,000
Total equity $1,750,000
Explanation:
a) Data and Calculations:
Authorized shares:
Common Stock, 600,000 at $2 par value
6%, Preferred Stock, 80,000 at $20 par value
Issued shares:
Cash $1,125,000 Common stock $150,000 Additional Paid-in Capital, Common stock (75,000 * $13) $975,000
Cash $125,000 6% Preferred stock, $100,000 Additional Paid-in Capital, 6% Preferred stock $25,000 ($5 * 5,000)
Retained earnings, December 31, 2019 = $500,000
Suppose we want to estimate the effects of alcohol consumption (alcohol) on college grade point average (cGPA). In addition to collecting information on grade point averages and alcohol usage, we also obtain attendance information (say, percentage of lectures attended, called attend). A standardized test score (say, SAT) and high school GPA (hsGPA) are also available
(i) Should we include attend along with alcohol as explanatory variables in a multiple regression model? (Think about how you would interpret beta-alcohol.)
(ii) Should SAT and hsGPA be included as explanatory variables? Explain.
Answer: See explanation
Explanation:
(i) Should we include attend along with alcohol as explanatory variables in a multiple regression model? (Think about how you would interpret beta-alcohol.)
No. We should not include attend along with alcohol as explanatory variables in a multiple regression model. This is due to the fact that a high degree of negative correlation exists between attend along with alcohol and including both of them will bring about multi collinearity.
(ii) Should SAT and hsGPA be included as explanatory variables? Explain.
Yes. SAT and hsGPA should be included as explanatory variables. This is important to overcome bias of the model.
(i) So according to me, my answer will be No. We should not include Attend along with alcohol as explanatory variables in multiple factors of the regression model. This is due to the fact that is a high degree of negative correlation exists between the attend also, along with alcohol, and including both of them will bring about multicollinearity.
(ii) When the variables of SAT AND hsGPA my answer will be Yes. SAT and HSDPA should be included as explanatory variables. This is most important to overcome the bias of the model.
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An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
Required:
a. How much profit will the airline earn if it sets the price of each ticket at $600?
b. How much additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $600 per ticket?
Answer: it would be 100 business travlers who will pay 600$ for a ticket
Explanation: well if you do the math 600×100=60,00 and that would pay for the airline expenses and extra the other option wouldnt be enough because it would only add up to 15,000 300×50=15,00 so it would be enough
advantages and disadvantages of proxemics
Answer:
Advantages of non-verbal communication are a compliment, substitute, attraction, express, helps physically challenged
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
Standard Quantity or Hours Standard Price or Rate Standard Cost
Direct materials 7.90 pounds $2.10 per pound $16.59
Direct labor 0.50 hours $5.00 per hour $2.50
During the most recent month, the following activity was recorded:
a. 14,850.00 pounds of material were purchased at a cost of $2.00 per pound.
b. All of the material purchased was used to produce 1,500 units of Zoom.
c. 600 hours of direct labor time were recorded at a total labor cost of $4,200.
Required:
1. Compute the materials price and quantity variances for the month.
2. Compute the labor rate and efficiency variances for the month.
Answer:
Results are below.
Explanation:
To calculate the direct material price and quantity variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (2.1 - 2)*14,850
Direct material price variance= $1,485 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (7.9*1,500 - 14,850)*2.1
Direct material quantity variance= $6,300 unfavorable
To calculate the direct labor efficiency and rate variance, we need to use the following formulas:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (1,500*0.5 - 600)*5
Direct labor time (efficiency) variance= $750 favorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (5 - 7)*600
Direct labor rate variance= $1,200 unfavorable
Actual rate= 4,200/600= $7
Assume that Jones Co. will need to purchase 100,000 Singapore dollars (S$) in 180 days. Today's spot rate of the S$ is $.50, and the 180-day forward rate is $.53. A call option on S$ exists, with an exercise price of $.52, a premium of $.02, and a 180-day expiration date. A put option on S$ exists, with an exercise price of $.51, a premium of $.02, and a 180-day expiration date. Jones has developed the following probability distribution for the spot rate in 180 days: The probability that the forward hedge will result in a higher payment than the options hedge is ____ (include the amount paid for the premium when estimating the U.S. dollars required for the options hedge).
Answer:
10%
Explanation:
Based on the information given The PROBABILITY that the FORWARD HEDGE will tend to result in a higher payment than the OPTIONS HEDGE is 10% which indicate or means that Jones will pay the amount of $48,000 calculated as ( $.48 *$100,000) which is lower or lesser than the amount of $58,000 calculated as ( $.53 *$100,000) that was been paid with the forward hedge.
HH Auto Repair reports the following information for the coming year.
Labor rate, including fringe benefits $ 45 per labor hour
Annual labor hours 10,900 hours
Annual materials (parts) purchases $2,090,000
Annual overhead costs:
Materials purchasing, handling, and storage $ 355,300
Other overhead (depreciation, insurance, taxes, rent) 185,300
Target profit margin (on both labor and materials) $ 33 %
1. Compute the price (rate) per hour of direct labor. (Round your answer to 2 decimal places.)
2. Compute the materials markup (in %).
3. What price should the company quote for a job requiring five labor hours and $670 in parts? (Round your answer to 2 decimal places.)
Answer: See explanation
Explanation:
1. Compute the price (rate) per hour of direct labor.
This will be:
= [45 + (185,300 / 10,900)]× 1.33
= (45 + 17) × 1.33
= 62 × 1.33
= $82.46
2. Compute the materials markup.
This will be:
= =(355,300 / 2090,000) + 33%
= 0.17 + 33%
= 17% + 33%
= 50%
3. What price should the company quote for a job requiring five labor hours and $670 in parts?
This will be:
= (670 × 1.5) + (82.46 × 5)
= 1005 + 412.3
= $1417.30
Swifty Company manufactures and sells three products. Relevant per unit data concerning each product are given below. Product A B C Selling price $9 $14 $18 Variable costs and expenses $6 $12 $15 Machine hours to produce 2 1 2 Compute the contribution margin per unit of limited resource (machine hours) for each product. (Round contribution margin per unit to 2 decimal places, e.g. 1.50.) Product A Product B Product C Contribution margin per unit of limited resource $ $ $ Assuming 3,000 additional machine hours are available, which product should be manufactured
Answer:
Product A = 1.50
Product B = 2
Product C = 1.50
Explanation:
Contribution margin = (price - variable cost) / total number of hours
Product A = ($9 - $6) / 2 = 1.50
Product B = ($14 - $12) / 1 = 2
Product C = ($18 - $15) / 2 = 1.50
Product B would be produced because its contribution margin is the highest
The company owns 9,000 acres of timberland purchased two years ago at a cost of $1,400 per acre. At the time of purchase, the land without the timber was valued at $400 per acre. In the current year, the company built fire lanes and roads, with a life of 30 years, at a cost of $84,000. Every year, the company sprays to prevent disease at a cost of $3,000 per year and spends $7,000 to maintain the fire lanes and roads. During the current year, the company selectively logged and sold 700,000 board feet of timber, of the estimated 3,500,000 board feet. Next year, the company will plant new seedlings to replace the trees cut at a cost of $100,000. What is the cost of timber sold related to depletion during the current year
Answer:
See below
Explanation:
First, we will calculate the depreciation expenses
Depreciation expense = Cost / life = $84,000 / 30 = $2,800 per year
Penetration pricing doesn't work if ________.
Answer: the price isnt low enough
Explanation:Penetration pricing is a marketing strategy used by businesses to attract customers to a new product or service by offering a lower price during its initial offering. The lower price helps a new product or service penetrate the market and attract customers away from competitors.
what is contract theory
Answer:
the study of how people and organizations construct and develop legal agreements. It analyzes how parties with conflicting interests build formal and informal contracts, even tenancy.
Answer:
Contract theory is the study of how people and organizations construct and develop legal agreements. ... Contract theory draws upon principles of financial and economic behavior as different parties have different incentives to perform or not perform particular actions
Explanation:
Social contract theory, nearly as old as philosophy itself, is the view that persons' moral and/or political obligations are dependent upon a contract or agreement among them to form the society in which they live
You got asked to analyze a 5 year project for your firm. The project produces an annual revenue of $28,500, but requires an annual labor and materials cost of $5,000. To initiate the project your firm must invest $20,000. The salvage value of the project is $5,000 and has a 5 year useful life.
Use straight line depreciation and a 40% income tax rate to compute the after tax cash flows and the IRR for the ATCF of this project.
Answer:
15,300
72.70%
Explanation:
After tax cash flow = (revenue - cost - depreciation) (1 - tax rate) + depreciation
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($20,000 - $5,000) / 5 = $3,000
($28,500 - $5,000 - $3000) x (1 - 0.4) + $3000 = $15,300
Terminal year cash flow = after tax cash flow + salvage value
$15,300 + $5,000 = $20,300
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
IRR can be calculated with a financial calculator
Cash flow in year 0 = $20,000.
Cash flow in year 1 - 4= $15,300
Cash flow in year 5 = $20,300
IRR = 72.70%
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
Coronado Industries reported revenue of $1650000 in its accrual basis income statement for the year ended June 30, 2021. Additional information was as follows: Accounts receivable June 30, 2020 $405000 Accounts receivable June 30, 2021 521000 Uncollectible accounts written off during the fiscal year 16000 Under the cash basis, Coronado should report revenue of
Answer:
$1,518,000
Explanation:
Prepare a Total Accounts Receivable T Account to determine the revenue received in cash, which is the revenue to be reported under the Cash Basis.
Total Accounts Receivable T Account
Debit :
Beginning Balance $405000
Revenue $1650000
Total $2,055,000
Credit :
Cash (Balancing figure) $1,518,000
Uncollectible accounts written off $16000
Ending Balance $521000
Total $2,055,000
In a two-player, one-shot simultaneous-move game each player can choose strategy A or strategy B. If both players choose strategy A, each earns a payoff of $400. If both players choose strategy B, each earns a payoff of $200. If player 1 chooses strategy A and player 2 chooses strategy B, then player 1 earns $100 and player 2 earns $600. If player 1 chooses strategy B and player 2 chooses strategy A, then player 1 earns $600 and player 2 earns $100.
Required:
a. Write the above game in normal form.
b. Find each player’s dominant strategy, if it exists.
c. Find the Nash equilibrium (or equilibria) of this game.
d. Rank strategy pairs by aggregate payoff (highest to lowest).
e. Can the outcome with the highest aggregate payoff be sustained in equilibrium? Why or why not?
Answer:
a) attached below
b) Player 1 dominant strategy = when he chooses strategy B
Player 2 dominant strategy = when he chooses strategy B
c) Strategy A is the Nash equilibrium
d) AA = $800
AB , BA = $700
BB = $400
e) Yes
Explanation:
A) The Game written in Normal form
attached below
B) Determine each player dominant strategy
Player 1 dominant strategy = when he chooses strategy B
Player 2 dominant strategy = when he chooses strategy B
C) The Nash Equilibrium of the game is when Both players choose strategy A because when they both choose Strategy they both earn $400 each
D) Ranking strategy pairs from Highest to lowest
AA = $800
AB , BA = $700
BB = $400
E) The outcome can be sustained
because The Nash equilibrium is the same as the highest ranking strategy pair ( i.e. AA = $800 )
A review of current distribution procedures reveals that the Valley Voice employs 100 truck drivers to drop off bundles of newspapers to 1,300 teenagers who deliver papers to individual homes. The drivers are paid an hourly wage while the teenagers receive 4 cents for each paper they deliver.
Turkey is considering an alternative method of distributing the papers, which he says has worked in other cities the size of Flower Mound (where the Valley Voice is published). Under the new system, the newspaper would retain 20 truck drivers to transport papers to five distribution centers around the city. The distribution centers are operated by independent contractors who would be responsible for making their own arrangements to deliver papers to subscribers’ homes. The 20 drivers retained by the Valley Voice would receive the same hourly rate as they currently earn, and the independent contractors would receive 20 cents for each paper delivered.
Required:
1. What payroll information does Turkey need in order to make a decision about adopting the alternative distribution method?
2. Assume the following information:
a. The average driver earns $42,000 per year.
b. Average employee income tax withholding is 15 percent.
c. The social security tax is 6.2 percent of the first $122,700 of earnings.
d. The Medicare tax is 1.45 percent of all earnings.
e. The state unemployment tax is 5 percent, and the federal unemployment tax is 0.6 percent of the first $7,000 of earnings.
f. Workers’ compensation insurance is 70 cents per $100 of wages.
g. The paper pays $300 per month for health insurance for each driver and contributes $250 per month to each driver’s pension plan.
h. The paper has liability insurance coverage for all teenage carriers that costs $100,000 per year.
3. Prepare a schedule showing the costs of distributing the newspapers under the current system and the proposed new system. Based on your analysis, which system would you recommend to Turkey?
4. What other factors, monetary and nonmonetary, might influence your decision?
Question Completion:
The Valley Voice is a local newspaper that is published Monday through Friday. It sells 90,000 coples dally. The paper is currently in a profit squeeze, and the publisher, Tom Turkey, Is looking for ways to reduce expenses.
Answer:
Valley Voice
1. It needs to know the total costs incurred under the old system and the new system.
2. See schedules below showing the costs under the two distribution systems.
3. The old system wins under economic considerations, especially given the fact that the publisher is currently experiencing profit squeeze.
4. If the amount paid per paper to the independent contractors can be renegotiated downwards, this may change the decision. With the new arrangement, will more papers be sold each day? Labor practices and laws do not favor the use of teenagers as workers. Will the company face some penalties or sanctions as a result? What about the bad publicity that the paper will face as a backlash following the use of teenagers? There are other considerations.
Explanation:
a) Data and Calculations:
Number of copies daily = 90,000
Number of copies yearly = 32,850,000 (90,000 * 365 days)
Average annual salary of a driver = $42,000
Total annual salary of drivers = $4,200,000
Average employee income tax withholding = 15%
Social security tax = 6.2% of the first $122,700 of earners
Medicare tax = 1.45% all earnings
State Unemployment tax = 5%
Federal Unemployment tax = 0.6% of the first $7,000 of earnings
Workers' compensation insurance = 0.7% ($0.70 per $100 of wages)
Health insurance for each driver = $3,600 ($300 * 12)
Pension Plan = $3,000 ($250 * 12)
Liability insurance coverage for all teenage carriers = $100,000 per year
Total cost under the old system:
Total annual salary of drivers ($42,000 * 100) $4,200,000
Social security tax = 6.2% of the first $122,700 = 7,607
Medicare tax = 1.45% all earnings = 60,900
State Unemployment tax = 5% 105,000 (1/2)
Federal Unemployment tax = 0.6% of the first
$7,000 of earnings ($700,000 * 0.6%) 4,200
Workers' compensation insurance = 0.7%
($0.70 per $100 of wages) ($4,200,000 * 0.7%) 29,400
Health insurance for each driver = $3,600 * 100
($300 * 12) 360,000
Pension Plan = $3,000 ($250 * 12) $3,000 * 100 300,000
Liability insurance coverage
for all teenage carriers = $100,000 per year 100,000
Payment to teenage carriers ($0.04 * 32,850,000) 1,314,000
Total payroll cost $6,481,100
Total cost under the new arrangement:
Total annual salary of drivers ($42,000 * 20) $840,000
Social security tax = 6.2% of the first $122,700 = 7,607
Medicare tax = 1.45% all earnings = 12,180
State Unemployment tax = 5% 21,000 (1/2)
Federal Unemployment tax = 0.6% of the first
$7,000 of earnings ($700,000 * 0.6%) 4,200
Workers' compensation insurance = 0.7%
($0.70 per $100 of wages) ($840,000 * 0.7%) 5,880
Health insurance for each driver = $3,600 * 20
($300 * 12) 72,000
Pension Plan = $3,000 ($250 * 12) $3,000 * 20 60,000
Payment to contractors ($0.20 * 32,850,000) 6,570,000
Total payroll cost $7,592,867
Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a qualified trade or business. During the current year, ABC has net income of $325,000 after deducting Robert’s $100,000 salary. In addition to his compensation, ABC pays Robert dividends of $250,000. What is Robert’s qualified business income? Would your answer to part (a) change if you determined that reasonable compensation for someone with Robert’s experience and responsibilities is $200,000? Why or why not
Answer and Explanation:
a. The calculation of the robert qualified business income is shown below:
Since robert is the sole shareholder and CEO of the ABC Inc and earned the income of $325,000 after subtracting the deduction of $100,000 salary
Also their is a dividend of $250,000
But the qualified business income should be equivalent to the net income i.e. $325,000
b. In the case when there is $200,000 so the net income would be decreased by $100,000
Now the qualified business income is
= $325,000 - $100,000
= $225,000
Communication starts with
sender
is answer..
........
Locomotive Corporation is planning to repurchase part of its common stock by issuing corporate debt. As a result, the firm’s debt–equity ratio is expected to rise from 30 percent to 50 percent. The firm currently has $3.3 million worth of debt outstanding. The cost of this debt is 9 percent per year. Locomotive expects to have an EBIT of $1.32 million per year in perpetuity. Locomotive pays no taxes.
a. What is the market value of Locomotive Corporation before and after the repurchase announcement?
b. What is the expected return on the firm’s equity before the announcement of the stock repurchase plan?
c. What is the expected return on the equity of an otherwise identical all-equity firm?
d. What is the expected return on the firm’s equity after the announcement of the stock repurchase plan?
Answer: See explanation
Explanation:
a. What is the market value of Locomotive Corporation before and after the repurchase announcement?
Equity value = Debt value / Debt to equity ratio
= 3,300,000/0.3
= 11,000,000
Market value = Debt value + Equity value
= $3,300,000 + $11,000,000
= $14,300,000
b. What is the expected return on the firm’s equity before the announcement of the stock repurchase plan?
To solve this, we need to know the interest payment first which will be:
= $3,300,000 × 9%
= $3,300,000 × 0.09
= $297000
Return on equity will now be:
= (EBIT - interest) / Equity
= (1320000 - 297000) / 11000000
= 9.30%
c. What is the expected return on the equity of an otherwise identical all-equity firm?
This will be:
= Earnings before Interest / Unlevered firm value
= 1320000 / 14300000
= 9.23%
d. What is the expected return on the firm’s equity after the announcement of the stock repurchase plan?
This will be:
= 9.23% + 50% × (9.23% - 9%)
= 9.35%
The information in the table is from the statement of cash flows for a company at four different points in time (M, N, O, and P). Negative values are presented in parentheses.
For each point in time, state whether the company is most likely in the introductory phase, growth phase, maturity phase, or decline phase.
Point in Time
M N O P
Net cash provided by
operating activities $(60,000) $30,000 $120,000 $(10,000)
Cash provided by
investing activities (100,000) 25,000 30,000 (40,000)
Cash provided by
financing activities 70,000 (90,000) (50,000) 120,000
Net income (38,000) 10,000 100,000 (5,000)
Answer: m-introductory phase
n-decline phase
o-maturity phase
p-growth phase
Explanation:
For M, based on the values given, the company is in the introductory phase. This is the product's cycle first stage where a particular product is being launched into the market.
For N, based on the values given, the company is in the decline phase. This is the phase where there's reduction in sales and profits stop.
For O, based on the values given, the company is in the maturity phase. This is the stage of whereby the growth of the sales has started to reduce.
For P, based on the values given, the company is in the growth phase. This is the stage whereby the product gains acceptance among the consumers, and the public as a whole. There'll also be an increase in the sales and revenue.
EllaJane Corporation was organized several years ago and was authorized to issue 4,000,000 shares of $50 par value 4% preferred stock. It is also authorized to issue 1,750,000 shares of $1 par value common stock. In its fifth year, the corporation has the following transactions: Mar. 1 Purchased 2,500 shares of its own common stock at $14 per share.
Apr. 10 Reissued 1,250 shares of its common stock held in the treasury for $18 per share.
Jun. 12 Reissued 1,250 shares of common stock at $12 per share.
Journalize the transactions.
Answer:
Ellajane Corporation - Journal Entries
Date Particulars Debit Credit
1-Mar Treasury Stock $35,000
To Cash $35,000
(Being 2500 shares of treasury stock purchased at $14 per share)
10-Apr Cash A/c (1250*$18) $22,500
To Treasury Stock (1250*14) $17,500
To Additional Paid in Capital $5,000
(Being 1250 shares of treasury stock sold at $18 per share)
12-Jun Cash A/c (1250*12) $15,000
Additional Paid in Capital A/c $2,500
To Treasury Stock (1250*14) $17,500
(Being 1250 shares of treasury stock sold at $12 per share)
Time Warner Inc. is a leading media and entertainment company with businesses in television networks, filmed entertainment, and publishing. The company's recent annual report contained the following information (dollars in millions):
Net loss $(13,402 )
Depreciation, amortization, and impairments 34,790
Decrease in receivables 1,245
Increase in inventories 5,766
Decrease in accounts payable 445
Additions to equipment 4,377
Required:
a. Based on this information, compute cash flow from operating activities using the indirect method.
b. What were the major reasons that Time Warner was able to report a net loss but positive cash flow from operations? Why are the reasons for the difference between cash flow from operations and net income important to financial analysts?
Answer and Explanation:
a. The cash flow from operating activities using the indirect method is
Net loss $(13,402 )
Add: Depreciation, amortization, and impairments $34,790
Add: Decrease in receivables $1,245
Less: Increase in inventories -$5,766
Less: Decrease in accounts payable -$445
Net cash flow from operating activities $16,442
b. The reasons for net loss but positive cash flow from operations are
Change in current assets, liabilities, depreciation
ANd, the reasons for having a difference is that the operating activities records the cash payment & cash receipt related to operating activities and the rest of things would be ignored
The stockholders’ equity section of Velcro World is presented here.
VELCRO WORLD
Balance Sheet (partial)
($ and shares in thousands)
Stockholders' equity:
Preferred stock, $1 par value $ 5,800
Common stock, $1 par value 28,000
Additional paid-in capital 1,028,600
Total paid-in capital 1,062,400
Retained earnings 286,000
Treasury stock, 12,000
Common shares (360,000)
Total stockholders' equity $ 988,400
Based on the stockholders' equity section of Velcro World, answer the following questions. Remember that all amounts are presented in thousands.
1. How many shares of preferred stock have been issued? (Enter you answer in total number of shares, not in thousands.)
2. How many shares of common stock have been issued? (Enter you answer in total number of shares, not in thousands.)
3. If the common shares were issued at $30 per share, at what average price per share were the preferred shares issued?
4. If retained earnings at the beginning of the period was $250 million and $30 million was paid in dividends during the year, what was the net income for the year? (Enter your answer in million (i.e., 5,000,000 should be entered as 5).)
5. What was the average cost per share of the treasury stock acquired?
Answer:
Velcro World
1. Prefered stock issued = 5,800,000
2. Common stock issued = 28,000,000
3. Average price of preferred stock = $38
4. Net income for the year = $66
5. Average cost per share of the treasury stock acquired = $30
Explanation:
a) Data and Calculations:
VELCRO WORLD
Balance Sheet (partial)
($ and shares in thousands)
Stockholders' equity:
Preferred stock, $1 par value $ 5,800
Common stock, $1 par value 28,000
Additional paid-in capital 1,028,600
Total paid-in capital 1,062,400
Retained earnings 286,000
Treasury stock, 12,000 (360,000)
Total stockholders' equity $ 988,400
1. Prefered stock issued = 5,800,000
2. Common stock issued = 28,000,000
3. Additional paid in capital = 1,028,600,000
less common stock (part) 812,000,000 ($29 * 28,000,000)
Preferred stock (part) 216,600,000
add Preferred stock 5,800,000
Total preferred stock value 222,400,000
Average price = 222,400,000/5,800,000 = $38
4. Retained earnings at the end = $286,000,000
add dividends paid during the year 30,000,000
Retained earnings at the beginning = $250,000,000
Net income for the year = $66,000,000
$66
5. Average cost per share of the treasury stock acquired = $360,000,000/12,000,000 = $30
_____ Web sites are dedicated to employment opportunities with a given city, state, or country.
Education
Industry
Government
Corporate
Answer:
the answer is government
Lunar coast Incorporated issued BBB bonds two years ago that provided a yield to maturity of 12.5
percent. Long-term risk-free government bonds were yielding 8.5 percent at that time. The current
risk premium on BBB bonds versus government bonds is half of what it was two years ago. If the riskfree long-term government bonds are currently yielding 7.8 percent, then at what rate should Lunar
coast expect to issue new bonds
Answer:
"9.80%" is the appropriate solution.
Explanation:
The given values are:
Yield to maturity,
= 12.5%
Risk free gov. bond,
= 8.5%
Long terms gov. bond,
= 7.8%
Now,
The current speed between bonds such as BBB as well as government will be:
= [tex]\frac{12.5-8.5}{2}[/tex]
= [tex]\frac{4}{2}[/tex]
= [tex]2.00 \ percent[/tex]
hence,
The expected rate will be:
= [tex]7.8+2.00[/tex]
= [tex]9.80 \ percent[/tex]