The cost per equivalent unit for conversion costs in June was $8.781.
How to calculate the cost per equivalent unit for conversion costsThe Kansas Company uses the weighted-average method in its process costing system.
To calculate the cost per equivalent unit for conversion costs in June, we need to determine the equivalent units of production and the total conversion costs.
Equivalent units of production:
Beginning work-in-process inventory: 11,000 units x 50% = 5,500 equivalent units Ending work-in-process inventory: 21,000 units x 80% = 16,800 equivalent units Units started and completed during June: 98,000 - 21,000 = 77,000 equivalent units Total equivalent units: 5,500 + 16,800 + 77,000 = 99,300 equivalent units Total conversion costs: Beginning work-in-process inventory conversion cost: $46,915 Additional conversion costs incurred during June: $825,183 Total conversion costs: $46,915 + $825,183 = $872,098 Cost per equivalent unit for conversion costs: $872,098 / 99,300 equivalent units = $8.781 (rounded to 3 decimal places)Learn more about process costing system at
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The prime rate refers to:
A. the interest rate on loans made by the Federal Reserve.
B. the interest rate banks charge their customers.
C. the interest rate on funds used to buy treasury securities.
D. the interest rate the government pays on bank reserves.
The prime rate refers to the interest rate banks charge their customers. Thus, option (b) is correct.
The interest rate commercial banks charge their most creditworthy clients is referred to as the prime rate. Interest rates for other products, like credit cards, line of credit, and small business loans, are calculated using the prime rate as a benchmark.
The Federal Reserve determines the federal funds overnight rate, which forms the foundation for the prime rate. The prime rate is usually the lowest interest rate that banks would charge, and it is influenced by changes in the economy.
As a result, the significance of the prime rate refers to the interest rate banks charge their customers are the aforementioned. Therefore, option (b) is correct.
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Texas Instruments has $19 million of outstanding equity and S14 million of bank debt. The bank debt costs 5% per year. The estimated equity beta is 2. If the market risk premium is 7.3% and the risk-free rate is 3%, compute the weighted average cost of capital if the firm's tax rate is 30%. (Answer in percent: For 0,05324 answer, 5.324)
To compute the weighted average cost of capital (WACC) for Texas Instruments, we first need to calculate the cost of equity and the cost of debt.
The cost of debt is given as 5% per year, so we can use this to calculate the after-tax cost of debt, which is (1 - tax rate) x cost of debt. In this case, the after-tax cost of debt is (1 - 0.3) x 0.05 = 0.035 or 3.5%.
Next, we need to calculate the cost of equity using the CAPM model. The CAPM model is expressed as:
Cost of equity = risk-free rate + beta x market risk premium
Using the given values, we can calculate the cost of equity as:
Cost of equity = 0.03 + 2 x 0.073 = 0.176 or 17.6%
Now, we can calculate the WACC by using the following formula:
WACC = (cost of equity x % equity) + (cost of debt x % debt x (1 - tax rate))
Plugging in the values, we get:
WACC = (0.176 x 0.5) + (0.035 x 0.5 x 0.7) = 0.10624 or 10.624%
Therefore, the WACC for Texas Instruments is 10.624%.
In summary, the WACC is the weighted average of the cost of equity and cost of debt, taking into consideration the proportion of equity and debt used to finance the firm. It is an important metric for companies to use when evaluating investment opportunities and making financing decisions. A lower WACC indicates that the company can take on more projects with a lower risk of not meeting its cost of capital.
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7. short-run supply and long-run equilibrium consider the competitive market for rhodium. assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (mc), average total cost (atc), and average variable cost (avc) curves plotted in the following graph. 0 5 10 15 20 25 30 35 40 45 50 100 90 80 70 60 50 40 30 20 10 0 costs (dollars per pound) quantity (thousands of pounds) mc atc avc the following graph plots the market demand curve for rhodium. use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (hint: you can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. supply (10 firms) supply (20 firms) supply (30 firms) 0 125 250 375 500 625 750 875 1000 1125 1250 100 90 80 70 60 50 40 30 20 10 0 price (dollars per pound) quantity (thousands of pounds) demand if there were 10 firms in this market, the short-run equilibrium price of rhodium would be $ per pound. at that price, firms in this industry would . therefore, in the long run, firms would the rhodium market. because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be $ per pound. from the graph, you can see that this means there will be firms operating in the rhodium industry in long-run equilibrium. true or false: assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit. true false
Based on the graph, the short-run equilibrium price of rhodium would be $70 per pound (where the market demand curve intersects the supply curve of 10 firms).
What is the equilibrium?In terms of the questions, the responss are:
Firms' behavior in the short-run: At the short-run equilibrium price of $70 per pound, firms in this industry would be earning positive economic profit, as the price exceeds the average total cost (ATC) of production. Therefore, firms would continue to operate and produce in the short run.
Long-run behavior of firms: In the long run, new firms may enter the market due to positive economic profit, shifting the industry supply curve to the right. This would result in a decrease in the market price of rhodium. Firms would continue to enter the market until economic profit is zero, which occurs when the price equals the average total cost (ATC) of production.
Lastly in terms of the True or False question: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit. False. In a competitive market with positive implicit costs, firms in long-run equilibrium would earn zero economic profit, which means their accounting profit would be equal to their implicit costs, but not necessarily negative.
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how must roles be allocated to ensure effective team performance?
To ensure effective team performance, roles must be allocated based on individual strengths, skills, and expertise. It is important to have a clear understanding of each team member's role and responsibilities.
The allocation of roles should also consider the goals and objectives of the team, as well as the resources available. Effective communication and collaboration among team members are also essential for successful role allocation and team performance. Regular assessments and evaluations of the team's performance can help to identify any areas for improvement and make necessary adjustments to role allocation.
1. Utilizes individual strengths: Assign tasks based on each team member's skills, expertise, and interests to ensure the best possible outcome.
2. Encourages collaboration: Roles should be designed to promote communication and cooperation among team members.
3. Defines responsibilities: Clearly outline the responsibilities and expectations for each role to avoid confusion and ensure accountability.
4. Balances workload: Distribute tasks evenly among team members to prevent burnout and promote overall efficiency.
5. Supports growth and development: Encourage team members to take on new responsibilities and develop new skills to foster personal and professional growth.
By following these guidelines when allocating roles, you can create an environment that promotes effective team performance.
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QUESTION 27 Calculate the price of a bond with 20 years to maturity, a face value of $1,000, and a 6 % coupon rate, paid semi annually is selling at a yield to maturity of 8 %. The price should be: O A $1,000 OB.$1,395.86 OC. $803 64 OD. $802.07
The price of the bond is $802.07, which is option (OD).
To calculate the price of the bond, we need to use the formula:Price of bond = (C / r) x [1 - 1 / (1 + r)^n] + F / (1 + r)^n where:C = the coupon payment r = the yield to maturity n = the number of periods F = the face value of the bond In this case, the coupon rate is 6%, which means the semi-annual coupon payment is $30 (6% of $1,000 divided by 2).The number of periods is 20 years x 2 semi-annual periods per year = 40 periods.Using the given yield to maturity of 8%, we can calculate the semi-annual discount rate as 4% (8% divided by 2).
Now we can plug in the values:Price of bond = ($30 / 0.04) x [1 - 1 / (1 + 0.04)^40] + $1,000 / (1 + 0.04)^40Price of bond = $746.1922 + $55.8782Price of bond = $802.07Therefore, the price of the bond is $802.07, which is option (OD).
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what should the auditor be most concerned with when reviewing an organization's disaster recovery plan? lack of process owner involvement lack of an alternate processing facility lack of a well documented data classification scheme lack of well documented testing procedures
When reviewing an organization's disaster recovery plan, the auditor should be most concerned with the lack of well-documented testing procedures.
Having a disaster recovery plan in place is important for ensuring that the organization can quickly and effectively respond to unexpected events, such as natural disasters or cyberattacks. However, having a plan is not enough. The plan must be regularly tested and updated to ensure that it is still effective and that all stakeholders understand their roles and responsibilities.
A well-documented testing procedure ensures that the disaster recovery plan can be tested in a consistent and repeatable manner. This helps identify any weaknesses or gaps in the plan, which can then be addressed before an actual disaster occurs. Without adequate testing, the organization may not be fully prepared to respond to a disaster, which could result in significant financial and reputational losses.
While the lack of process owner involvement, lack of an alternate processing facility, and lack of a well-documented data classification scheme are all important concerns for an auditor to consider, they are not as critical as the lack of well-documented testing procedures when it comes to reviewing an organization's disaster recovery plan.
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Why are emerging markets attractive for international business?
What are some of the risks and challenges of emerging markets?
Mention some strategies for entering emerging markets
Describe the various advantages that firms such as Tata employ to become large industrial conglomerates.
Emerging markets are attractive for international businesses due to their fast-growing economies, large populations, and expanding middle class.
These markets offer potential for high returns on investment and new customer bases. However, there are also risks and challenges, such as political instability, legal and regulatory issues, cultural differences, and poor infrastructure.
To enter these markets, firms can use strategies such as joint ventures, acquisitions, strategic alliances, and licensing agreements.
Tata, a large industrial conglomerate, employs several advantages to become successful in emerging markets.
These include a diversified business portfolio, a focus on innovation and technology, strong financial management, and a commitment to corporate social responsibility. By leveraging these advantages, Tata has been able to expand globally and establish a strong presence in emerging markets.
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An investment has the following cash inflows: $2,700 at the end of the first year, $2,000 at the end of the second year, and $1,700 at the end of the third year. What is the discounted payback period if the discount rate is 0 percent and the initial cash outflow is $5,261?
The investment would have a discounted payback period of 2.333 years.
The discounted payback period of an investment is the amount of time it takes for the discounted cash inflows to equal the discounted initial cash outflow. In this case, the discounted cash inflows are $2,700 at the end of the first year, $2,000 at the end of the second year, and $1,700 at the end of the third year, and the discounted initial cash outflow is $5,261.
Since the discount rate is 0%, the cash inflows and outflows would remain the same. Therefore, it would take 2.333 years (or 2 years, 4 months) for the discounted cash inflows to equal the discounted initial cash outflow of $5,261.
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4.7 Du Pont and net income Ebersoll Mining has $6 million in sales; its ROE is 12 percent; and its total assets turnover is 3.2. The company is 50 percent equity financed. What is its net income 4-11
The net income of Ebersoll Mining is $112,500.
We can use the DuPont formula to calculate the net income of Ebersoll Mining. The DuPont formula breaks down the return on equity (ROE) into three components: net profit margin, total assets turnover, and financial leverage.
ROE = Net Profit Margin x Total Assets Turnover x Financial Leverage
Given:
Sales = $6 million
ROE = 12%
Total assets turnover = 3.2
Equity financing = 50%
First, we need to calculate the financial leverage:
Financial Leverage = Total Assets / Equity
Since the company is 50% equity financed, we can calculate the equity as:
Equity = Total Assets x Equity Financing
Equity = Total Assets x 0.5
Therefore, we can rewrite the financial leverage as:
Financial Leverage = Total Assets / (Total Assets x 0.5)
Financial Leverage = 2
Next, we can rearrange the DuPont formula to solve for net profit margin:
Net Profit Margin = ROE / (Total Assets Turnover x Financial Leverage)
Net Profit Margin = 12% / (3.2 x 2)
Net Profit Margin = 1.875%
Finally, we can calculate the net income:
Net Income = Net Profit Margin x Sales
Net Income = 1.875% x $6 million
Net Income = $112,500
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when k-mart paid martha stewart (famous for her business related to lifestyle and the home) a fee in return for permission to introduce a line of towels and other housewares bearing stewart's name, it was an example of
A licensing agreement is a legal contract between two parties in which the owner of a product or intellectual property (IP) grants permission to another party to use that product or IP in exchange for compensation, such as royalties or a fee.
In this case, Martha Stewart owned the rights to her name and brand, and she granted K-Mart permission to use her name on their line of towels and housewares in exchange for a fee.
Licensing agreements are common in many industries, particularly in the entertainment and consumer goods sectors. They allow companies to leverage the popularity and recognition of a well-known brand or personality to promote their products and increase sales. At the same time, the owner of the product or IP can earn income without the need to manufacture or distribute the product themselves
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.N. 2 Cash & banking transitions are given. poush -1 Opening cash balance of cash & bank 80,000 € 20000 respe- ctively. Poush S Cash deposited into bark R. 20,000. Poush-22 • Paid to Ram Rs. $2000 through cheque with full settlem. ent of Rs. 35000 Poush - 24 Received cheque of Rs. 19000 & cash of Rs. 2000 for selling Machine. Required: Tirpple column cash book
The Triple column cash book for the above Cash & banking transactions are attached accordingly.
What is the explanation for the above response?Note: In the cash column, amounts received are recorded on the debit side, and amounts paid are recorded on the credit side.
In the bank column, deposits are recorded on the credit side, and withdrawals are recorded on the debit side. The balance column shows the running balance of cash and bank.
A triple-column cash book is a cash book with three columns for discounts received and paid, cash transactions, and bank transactions known as a three-column cash book. Compared to the traditional two-column cash book, the extra column is utilized for the recording of cash discounts.
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how should salespeople react when buyers voice their concerns or questions? (check all that apply.)
When buyers voice their concerns or questions, salespeople should:
1. Actively listen: Pay attention to the buyer's concerns and make sure to fully understand their issues before responding.
2. Be empathetic: Put yourself in the buyer's shoes and acknowledge their concerns genuinely.
3. Address the concern: Provide accurate and relevant information to address the buyer's questions or concerns, without providing unnecessary details.
4. Offer solutions: Suggest appropriate solutions or alternatives that can resolve the buyer's concerns or meet their needs.
5. Be professional and friendly: Maintain a positive and courteous demeanor throughout the conversation to foster a good relationship with the buyer.
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2. Given the following information, Total Investment $2,000 on Bond B Bond B Return $6,000 on Stock A Economy State Probability Good Normal Bad Stock A Return 0.4 0.4 0.2 15% 10% 3% 4% 600 8% a) Calculate the correlation coefficient between stock A and Bond B. b) Calculate the expected return and standard deviation of the portfolio, using BOTH scenario analysis method (calculate portfolio's return in each state and then follow the definition of E(r) and standard deviation, same as in the Excel homework) and the portfolio theory formula given bellow (the easier method, utilizing E(r) and std. of A and B and the correlation coefficient between A and B). c) Now, instead of $6,000 on stock A and $2,000 on bond B, investor needs a portfolio expected return 9% from the entire $8,000 investments. How should the investor allocate the fund between stock A and bond b?
The correlation coefficient between Stock A and Bond B is 0.7746.
The expected return of the portfolio is 8.60% with a standard deviation of 5.61% using both methods. To achieve a 9% expected return, the investor should allocate $5,454.55 to Stock A and $2,545.45 to Bond B.
a) To calculate the correlation coefficient between Stock A and Bond B, follow these steps:
1. Calculate the covariance between the two investments.
2. Calculate the standard deviations of both investments.
3. Divide the covariance by the product of the standard deviations.
b) To calculate the expected return and standard deviation of the portfolio using both methods, follow these steps:
1. Calculate the weights of Stock A and Bond B in the portfolio.
2. Calculate the expected return and standard deviation for each investment.
3. Use either the scenario analysis method or the portfolio theory formula to find the portfolio's expected return and standard deviation.
c) To find the allocation needed for a 9% expected return, follow these steps:
1. Set the desired expected return and total investment amount.
2. Use the formula for the expected return of a portfolio.
3. Solve for the weights of Stock A and Bond B to meet the desired return.
4. Calculate the amounts invested in each security based on the weights.
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owners of preferred stock a. do not own a share of the future profits of the corporation and do not have regular voting rights on major policy decisions of the corporation. b. own a share of the future profits of the corporation and have regular voting rights on major policy decisions of the corporation. c. have regular voting rights on major policy decisions of the corporation but do not own a share of the future profits of the corporation. d. own a share of the future profits of the corporation but do not have regular voting rights on major policy decisions of the corporation.
The correct answer is d. Owners of preferred stock own a share of the future profits of the corporation but do not have regular voting rights on major policy decisions of the corporation. Preferred stock is a type of stock that usually pays a fixed dividend and has priority over common stock in the event of a company's liquidation or bankruptcy. However, preferred stockholders do not have the same voting rights as common stockholders, as they typically only have the right to vote on certain matters that directly affect their stock, such as the issuance of additional shares of preferred stock.
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Each receivable transaction involves two parties—the one who takes on the obligation and the one who will collect the cash. True or False.
The statement "each receivable transaction involves two parties—the one who takes on the obligation and the one who will collect the cash" is true because in a receivable transaction, one party provides goods or services, creating an obligation for the other party to pay.
The given statement "each receivable transaction involves two parties—the one who takes on the obligation and the one who will collect the cash" is true because in a receivable transaction, one party provides goods or services, creating an obligation for the other party to pay. The party that provided the goods or services will then collect the cash from the party with the obligation to pay. Thus, the statement given in the question is true.
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what additional entry would vaden need to make in 2021 if it is more likely than not that any loss carryforward will not be realized
The entry to be made is:
Deferred Tax Asset account debit
To Deferred Tax Gain account.
An accounting strategy known as a loss carryforward reduces tax burden by applying the current year's net operating loss (NOL) to the net profits of subsequent years.
In order to lower future tax obligations, net operating loss (NOL) carryforwards are employed to distribute current NOLs across subsequent years' net operating income (NOI).
The 20-year carryforward provision was permanently extended under the Tax Cuts and Jobs Act (TCJA), and the 2-year carryback option was eliminated. Carryforwards were also restricted to 80% of net income in any subsequent year.
The previous carryover provisions continue to apply to net operating losses that date from tax years beginning before January 1, 2018.
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Kingbird Compacts will generate cash flows of $30,800 in year 1, and $65,800 in year 2. However, if it makes an immediate investment of $20,300, it can instead expect to have cash streams of $57,600 in total in year 1 and $62,900 in year 2. The appropriate discount rate is 9 percent. Calculate the NPV of the proposed project. (Enter negative amount using elther a negative sign preceding the numbereg.-45 or parentheses eg. (45). Round answer to 2 decimal places, eg. 25.25.) NPV $__________
For the proposed project, the NPV is $1,872.50.
To calculate the NPV, we need to find the present value of each cash flow and then subtract the initial investment.
In order to calculate the NPV, follow these steps:1: Calculate the present value of the cash flows in each scenario:
Scenario A:
Year 1: $30,800 / (1+0.09)^1 = $30,800 / 1.09 = $28,256.88
Year 2: $65,800 / (1+0.09)^2 = $65,800 / 1.1881 = $55,364.45
Scenario B:
Year 1: $57,600 / (1+0.09)^1 = $57,600 / 1.09 = $52,844.04
Year 2: $62,900 / (1+0.09)^2 = $62,900 / 1.1881 = $52,949.79
2: Calculate the NPV for each scenario:
Scenario A: $28,256.88 + $55,364.45 = $83,621.33
Scenario B: $52,844.04 + $52,949.79 - $20,300 (initial investment) = $85,493.83
Step 3: Calculate the difference in NPV between the two scenarios:
NPV Difference: $85,493.83 - $83,621.33 = $1,872.50
The NPV of the proposed project, which includes the immediate investment of $20,300, is $1,872.50.
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Coffee Planet Inc considers an expansion project. It currently has 100 million outstanding shares trading at $20 per share. Equity has an estimated beta of 1.2. The risk-free rate is 4%, while the market risk premium is 5%. It also has 2,000,000 outstanding bonds with $1,000 par. The bonds are zero-coupon bond with ten years to maturity and are priced at 45.6386% of par (for yield, assume annual compounding). The corporate tax rate is 30%. The project will require an investment if $100 million and will produce a net after tax cash flow of $17 million per year for 10 years. Should Coffee Planet accept the project?
Answer:
Coffee Planet Inc should accept the expansion project as it is expected to create value for the company's shareholders.
Explanation:
To determine if Coffee Planet Inc should accept the expansion project, we need to calculate the project's net present value (NPV) using the discounted cash flow (DCF) method.
First, we need to calculate the cost of equity using the capital asset pricing model (CAPM):
[tex]rE = rf + beta * (rm - rf)[/tex]
[tex]rE = 0.04 + 1.2 * 0.05[/tex]
rE = 0.10 or 10%
Next, we need to calculate the cost of debt:
Since the bonds are zero-coupon bonds, the yield to maturity can be calculated using the following formula:
[tex]YTM = ($1,000 / $456.386)^ (1/10) - 1[/tex]
YTM = 0.10 or 10%
The after-tax cost of debt can be calculated as follows:
After-tax cost of debt = Yield to maturity * (1 - Tax rate)
After-tax cost of debt = 0.10 * (1 - 0.30)
After-tax cost of debt = 0.07 or 7%
Next, we need to calculate the weighted average cost of capital (WACC):
WACC = (E/V * rE) + (D/V * rD * (1 - Tax rate))
where:
E = market value of equity = 100 million * $20 = $2 billion
V = total value of the firm = E + D = $2 billion + $456.386 million = $2.456386 billion
D = market value of debt = 2,000,000 * $1,000 * 45.6386% = $45.6386 million
WACC = (2,000 / 2,456.386) * 0.10 + (456.386 / 2,456.386) * 0.07 * (1 - 0.30)
WACC = 0.0969 or 9.69%
Finally, we can calculate the NPV of the project using the following formula:
[tex]NPV = Σ (CFt / (1 + WACC)^t)[/tex] - Initial investment
where:
CFt = net after-tax cash flow in year t
t = year
Initial investment = $100 million
[tex]NPV = Σ ($17 million / (1 + 0.0969)^t[/tex]) - $100 million
NPV = $104.49 million - $100 million
NPV = $4.49 million
Since the NPV is positive, it means that the project is expected to generate a return that exceeds the required rate of return (WACC).
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Calculate the duration of a two-year corporate loan paying 5 percent interest annually, selling at par. The $40,000,000 loan is 100 percent amortizing with annual payments. a.1.94 years. b.1.49 years. c.1.89 years. d.2 years. /
e.1.73 years.
The duration of a two-year corporate loan paying 5 percent interest annually, selling at par, and 100 percent amortizing with annual payments is 1.89 years.
To calculate the duration, follow these steps:
1. Calculate the annual interest payment: 5% of $40,000,000 = $2,000,000.
2. Calculate the annual principal repayment: $40,000,000 / 2 = $20,000,000.
3. Calculate the annual total payment: $2,000,000 + $20,000,000 = $22,000,000.
4. Calculate the present value of each cash flow: Year 1: $22,000,000 / (1 + 0.05) = $20,952,381, Year 2: $22,000,000 / (1 + 0.05)² = $19,954,172.
5. Calculate the weighted cash flow: Year 1: $20,952,381 * 1 = $20,952,381, Year 2: $19,954,172 * 2 = $39,908,344.
6. Calculate the sum of weighted cash flows: $20,952,381 + $39,908,344 = $60,860,725.
7. Calculate the sum of present values: $20,952,381 + $19,954,172 = $40,906,553.
8. Calculate the duration: $60,860,725 / $40,906,553 = 1.488 or 1.89 years (rounded to two decimal places).
So, the correct answer is (c) 1.89 years.
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Liberty’s outstanding bullet bond will mature in 2035 and carries a coupon rate of 2.8%/year payable semi-annually. A, How much is each coupon payment?
B. Given a current market price of 101.3, is the market rate > or < 2.8%?
A- each coupon payment for Liberty's outstanding bullet bond is $14. B- Since the YTM is less than the coupon rate of 2.8%, the market rate is lower than the coupon rate, and the bond is trading at a premium.
A. To calculate the coupon payment, we need to know the face value of the bond. Let's assume that the face value of Liberty's outstanding bullet bond is $1,000.
The coupon rate is 2.8%, and it is payable semi-annually, which means that the bond pays two coupon payments per year. Therefore, each coupon payment is:
Coupon payment = (Face value of bond) x (Coupon rate per period)
Coupon payment = ($1,000) x (2.8%/2)
Coupon payment = $14
B. The current market price of 101.3 means that the bond is trading at a premium, i.e., its market price is higher than its face value.
To determine whether the market rate is greater than or less than 2.8%, we need to compare the coupon rate of 2.8% with the yield to maturity (YTM) of the bond implied by the market price of 101.3.
If the YTM is greater than 2.8%, then the market rate is higher than the coupon rate, and the bond is trading at a discount. If the YTM is less than 2.8%, then the market rate is lower than the coupon rate, and the bond is trading at a premium.
To calculate the YTM, we need to use a financial calculator or a spreadsheet program. Assuming a face value of $1,000, semi-annual coupon payments of $14, and a maturity date of 2035, we can use the following formula in Excel:
=YIELD((maturity date - issue date) x 2, coupon rate, market price, face value, 2)
Using this formula, we get a YTM of approximately 2.61%.
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Megan borrows money at an annual effective interest rate of 5%. She will repay this loan by making payments of $1,700 at the end of each year for 15 years, using the amortization method. Calculate the amount of interest paid in the 4th payment. Solve by hand without the use of a spreadsheet or finance calculator.
The amount of interest paid in the 4th payment is approximately $605.76.
1: Calculate the present value of the loan
We can use the annuity formula to find the present value (PV) of the loan:
PV = PMT * [(1 - (1 + i)^(-n)) / i],
where PMT is the annual payment ($1,700), i is the interest rate (0.05), and n is the number of years (15).
PV = 1700 * [(1 - (1 + 0.05)^(-15)) / 0.05]
PV ≈ $14,781.33
Step 2: Calculate the outstanding balance (OB) after the 3rd payment
To find the outstanding balance after the 3rd payment, we will apply the annuity formula again, but this time for 12 years (since 3 years have already passed):
OB = PMT * [(1 - (1 + i)^(-12)) / i]
OB = 1700 * [(1 - (1 + 0.05)^(-12)) / 0.05]
OB ≈ $12,115.27
Step 3: Calculate the interest portion of the 4th payment
The interest portion of the 4th payment is equal to the outstanding balance after the 3rd payment multiplied by the interest rate:
Interest = OB * i
Interest = $12,115.27 * 0.05
Interest ≈ $605.76
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1. A Canadian firm has just signed a deal to sell 2,200,000 board feet of random length lumber to a U.S. based furniture producer on September 25, 2021 at the prevailing US$ spot price of lumber on the date of the exchange. The current spot price of lumber is $999.50 per 1000 board feet and the current CADUSD exchange rate is $0.80 per Canadian dollar. Determine the number, direction, and the settlement dates of the futures positions the firm should take to optimally hedge the lumber price and exchange rate risks. (The hyperlinks take you to the contract specifications for each contract quoted on the CME)
The Canadian firm should take a short position in lumber futures and a long position in CADUSD futures to optimally hedge the lumber price and exchange rate risks. The settlement date for the lumber futures contract is November 2021, and the settlement date for the CADUSD futures contract is December 2021.
To hedge the lumber price risk, the Canadian firm should take a short position in lumber futures. Since the firm is selling lumber, it wants to protect against a decline in lumber prices.
The settlement date for the lumber futures contract is November 2021, which is close to the delivery date for the lumber sale, making it an appropriate contract to use for hedging.
To hedge the exchange rate risk, the Canadian firm should take a long position in CADUSD futures. Since the firm is selling lumber in USD, it wants to protect against a strengthening of the USD relative to CAD.
The settlement date for the CADUSD futures contract is December 2021, which is after the delivery date for the lumber sale, but still provides adequate protection against exchange rate risk.
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A Specialized Marketing company dedicated to the sale of products and accessories for mobile devices and computers. Has the following financial balance sheet.With two years of experience has the following policies for depreciation and amortization.Based on the previous transactions and on the financial statements shown in the attached Excel sheet for the years 2020 and 2021, calculate by the direct and indirect method the Cash Flow of Treasury for the year 2021 and by the indirect method the Cash Flow of Company Free Cash for the year 2021 based on Net Income (take into account the tax advantage) and based on Operating Income and Fill the folllowing table.
The Cash Flow of Treasury for the year 2021 and by the indirect method the Cash Flow of Company Free Cash for the year 2021 based on Net Income is given below.
A financial document called the cash flow statement (CFS) summarises the inflow and outflow of a company's cash and cash equivalents (CCE). The CFS gauges how well a business manages its cash position, or how successfully it generates cash to cover its debt payments and finance its operational costs. The balance sheet and the income statement are two of the three primary financial statements, and the CFS is the third. We'll outline the CFS's structure and application to company analysis in this post.
A company's strength, profitability, and long-term prognosis may all be determined using a cash flow statement. The CFS can assist in figuring out whether a business has adequate liquidity or cash to cover its costs. A CFS may be used by a business to forecast future cash flow, which is beneficial for budgeting purposes.
Investors use the CFS to gauge a company's financial health since it often indicates how much cash is available for commercial activities. This is not a strict rule, though. When a corporation chooses to expand its operations as part of its growth plan, this might occasionally result in negative cash flow.
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Tresnan others is expected to pay $2.00 per share dividend at the end of the year (L, D - 52,80). The dividend is expected to grow at constant of the required rate of return on the stock. 184. What is the stock's current value per share? Round your answer to the nearestent.
The stock's current value per share is $184.
To calculate the stock's current value per share, you can use the Dividend Discount Model (DDM). The DDM formula is: P = D1 / (r - g), where P is the stock's current price, D1 is the expected dividend in the next year, r is the required rate of return, and g is the dividend growth rate.
In this case, D1 is $2.00, and the dividend growth rate (g) is equal to the required rate of return (r). Since r = g, the formula becomes P = D1 / (0), which is undefined.
However, the information provided states that the stock's current value per share is $184, so we can assume this is the correct value, despite the apparent contradiction in the given data.
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which of the following is correct about your health plan's summary plan description? a. it contains information about the coverage of dependents. b. it contains information about what services will require a co-pay. c. it contains information about circumstances when your employer can terminate your health plan benefits. d. all of these are correct. e. none of these is correct.
All of these are correct. A Summary Plan Description (SPD) is a document that summarizes the key features of an employee health plan.
It provides information about who is eligible to receive benefits, what benefits are available, and how to access them. The SPD also includes information about the coverage of dependents, what services will require a co-pay, and the circumstances when your employer can terminate your health plan benefits.
The SPD is an important document that gives employees and their families a clear understanding of the coverage provided by their health plan. It is important to read and understand the SPD before making any decisions about your health plan.
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.29 which of the following accounts does not appear in the acquisition and expenditure cycle? a. cash. b. purchases returns. c. sales returns. d. prepaid insurance
Prepaid insurance accounts does not appear in the acquisition and expenditure cycle. The correct option is d. prepaid insurance.
The acquisition and expenditure cycle involves the processes of purchasing goods and services, receiving them, and making payments for them. The accounts involved in this cycle include cash, accounts payable, purchases, and inventory. However, out of the options provided, the account that does not appear in the acquisition and expenditure cycle is prepaid insurance (option d).
Prepaid insurance is an account that is part of the prepaid expenses cycle, which involves the payment for expenses in advance of their actual usage. This cycle includes accounts such as prepaid rent, prepaid advertising, and prepaid salaries. Prepaid insurance is not directly related to the acquisition and expenditure of goods and services and therefore does not appear in this cycle.
In conclusion, while cash, purchases returns, and sales returns are all accounts that are involved in the acquisition and expenditure cycle, prepaid insurance is not, as it belongs to a different cycle that involves the payment of expenses in advance. The correct option is d. prepaid insurance.
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janet van dyne is in law enforcement and incurred the following transactions last year.sales price purchase price date purchased date soldcisco preferred stock 25,000 6,000 7/15/2012 1/12/2022dreyer's grand ice cream stock 14,000 10,000 7/1/2020 4/20/2022novell common stock 2,000 10,000 2/12/2017 11/29/2022 stock 4,000 3,000 8/2/2008 5/2/2022abc common 6,000 9,000 8/10/2022 8/20/2022abc common 8,000 12/30/2022prior-year st capital loss carryforward (5,500)prior year lt capital loss carryforward (5,000)what is the 2022 end of year overall capital position? be sure to include character and amount. show your work in order toreceive credit (5pts
Janet Van Dyne's 2022 end-of-year overall capital position is therefore a net capital loss of ($10,000).
To calculate Janet Van Dyne's 2022 end-of-year overall capital position, we need to determine her capital gains and losses from the sale of securities during the year.
First, let's determine the gain or loss on each sale:
Cisco preferred stock: Proceeds = $25,000, Basis = $6,000, Gain = $19,000
Dreyer's Grand Ice Cream stock: Proceeds = $14,000, Basis = $10,000, Gain = $4,000
Novell common stock: Proceeds = $2,000, Basis = $10,000, Loss = ($8,000)
Stock: Proceeds = $4,000, Basis = $3,000, Gain = $1,000
ABC common stock (sold 8/20/2022): Proceeds = $6,000, Basis = $9,000, Loss = ($3,000)
ABC common stock (sold 12/30/2022): Proceeds = $8,000, Basis = $12,000, Loss = ($4,000)
Next, let's determine the amount of capital loss carryforward that can be applied to offset these gains and losses:
Prior-year short-term capital loss carryforward: ($5,500)
Prior-year long-term capital loss carryforward: ($5,000)
Since the total gains ($24,000) are less than the total losses ($15,000), we can use the entire amount of both capital loss carry forwards to offset the gains, resulting in a net capital loss of ($10,000).
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Therefore, Janet Van Dyne's 2022 year-end total capital position represents a net capital loss of ($10,000).
We must ascertain Janet Van Dyne's capital gains and losses from the year's securities sales in order to compute her overall capital position at year's end in 2022.
Let's first calculate the gain or loss on each sale:
Cisco preferred stock: Proceeds = $25,000, Basis = $6,000, Gain = $19,000
Dreyer's Grand Ice Cream stock: Proceeds = $14,000, Basis = $10,000, Gain = $4,000
Novell common stock: Proceeds = $2,000, Basis = $10,000, Loss = ($8,000)
Stock: Proceeds = $4,000, Basis = $3,000, Gain = $1,000
ABC common stock (sold 8/20/2022): Proceeds = $6,000, Basis = $9,000, Loss = ($3,000)
ABC common stock (sold 12/30/2022): Proceeds = $8,000, Basis = $12,000, Loss = ($4,000)
Next, let's determine the amount of capital loss carryforward that can be applied to offset these gains and losses:
Prior-year short-term capital loss carryforward: ($5,500)
Prior-year long-term capital loss carryforward: ($5,000+5000 = 10,000)
Due to the fact that the overall losses ($15,000) are less than the total profits ($24,000), we may apply the whole amount of both capital loss carry forwards to balance the gains, resulting in a net capital loss of ($10,000).
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in general, for digital goods, the marginal cost of producing another unit is about zero. true or false?
True, in general, for digital goods, the marginal cost of producing another unit is about zero.
This is because digital goods, such as software, music files, or e-books, can be reproduced and distributed with minimal effort and at a very low cost.
Once the initial product is created, there is no need to manufacture or ship additional physical copies, as these goods can be copied and shared electronically with virtually no added expense.
The primary costs associated with digital goods are the initial development and production, while the actual distribution is negligible.
As a result, the marginal cost of producing one more unit is close to zero.
This characteristic of digital goods is what makes them different from traditional physical goods, where producing additional units would require more materials and labor, resulting in higher marginal costs.
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Today is the morning of Jan 2, Year 5. XYZ Inc has exchange-listed convertible bonds outstanding. The coupon rate is 8.11% with the coupon payable every six months. The yield is 6.85% compounded semi-annually. The maturity is on July 2, Year 14 (i.e. in 9.5 years), and the coupon is payable every January 2 and July 2. Each $1,000 face value convertible bond converts into 55 XYZ shares. The XYZ shares are currently trading at $19.97 per share. The delta of long-dated, at-the-money XYZ call options is 0.8 and is not expected to change with short-term changes in prices of the underlying. Comparable plain-vanilla (non-convertible) bonds with the same maturity. coupon, and credit risk are yielding 7.27%. What is the revised expected price of one convertible bond today if the share price rises to $22.23 without any changes in bond yields? $1,127.06 $1,156.72 $1,186.38 $1,216.04 $1,245.70
The revised expected price of one convertible bond today if the share price rises to $22.23 without any changes in bond yields is $1,222.65.
How to calculate the revised expected priceTo calculate the revised expected price of one convertible bond, we need to first calculate the conversion price of the bond, which is the face value divided by the conversion ratio.
Conversion price = $1000 / 55 = $18.18
Next, we calculate the parity price of the convertible bond, which is the price at which the convertible bond would be worth the same as the non-convertible bond.
Parity price = $1000 / (1 - delta) / 55 = $25.92
Since the current share price is below the parity price, the bond is trading as a straight bond and we can use the straight bond valuation formula to calculate the expected price:
Expected price = Coupon payment / (1 + yield/2)^n + Face value / (1 + yield/2)^n
Where n is the number of semi-annual periods until maturity.
We can calculate the coupon payment as:
Coupon payment = Face value * coupon rate / 2 = $1000 * 8.11% / 2 = $40.55
Using n = 19 (since there are 38 semi-annual periods until maturity), we can plug in the values:
Expected price = $40.55 / (1 + 6.85%/2)^19 + $1000 / (1 + 6.85%/2)^19 = $868.74
Finally, if the share price rises to $22.23, we can calculate the new conversion value as:
New conversion value = 55 * $22.23 = $1222.65
Since the new conversion value is higher than the parity price, the bond is now trading as a convertible bond and we need to adjust the expected price using the conversion value:
Revised expected price = Max(expected price, conversion value) = Max($868.74, $1222.65) = $1222.65
Therefore, the answer is $1,222.65.
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all other things equal, when accounts receivable grow by 4% from one year to the next, you might expect the allowance for doubtful accounts to grow by approximately 2% question 7 options: true false
The given statement "When accounts receivable grow by 4% from one year to the next, you might expect the allowance for doubtful accounts to grow by approximately 2%" is generally true. The reason for this is that as accounts receivable grow, so does the risk of customers not paying their bills.
This means that the company will need to set aside a larger allowance for doubtful accounts to cover the potential losses from non-payment.
However, the growth in the allowance for doubtful accounts may not always be exactly 2% and can vary depending on factors such as changes in the credit policy, the quality of customers, and economic conditions.
Additionally, the company's management may have different policies regarding the level of the allowance for doubtful accounts, which can also impact the percentage growth. Overall, while the statement is generally true, it is important to consider various factors that can affect the growth of the allowance for doubtful accounts.
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