Koczela Inc. has provided the following data for the month of May:
Inventories:
Beginning Ending
Work in process $ 25,000 $ 20,000
Finished goods $ 54,000 $ 58,000
Additional information:
Direct materials $ 65,000
Direct labor cost $ 95,000
Manufacturing overhead cost incurred $ 71,000
Manufacturing overhead cost applied to Work in Process $ 69,000
Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold.
The cost of goods manufactured for May is:___________
$229,000
$234,000
$231,000
$236,000

Answers

Answer 1

Answer:

$234,000

Explanation:

cost of goods manufactured = beginning work in process + direct materials + direct labor + manufacturing overhead cost applied - ending work in process

cost of goods manufactured = $25,000 + $65,000 + $95,000 + $69,000 - $20,000 = $234,000

cost of goods sold = beginning finished inventory + cost of goods manufactured - ending finished inventory + underapplied overhead  

cost of goods sold = $54,000 + $234,000 - $58,000 + $2,000 = $232,000


Related Questions

At the beginning of year 1, Looby Corp. purchases equipment for $100,000. The equipment has a residual value of $20,000 and an expected useful life of 10 years. What is accumulated depreciation at the end of year 2 using straight-line depreciation

Answers

Answer:

Accumulated Depreciation at the end of year  =  $16,000

Explanation:

Under the straight line method of depreciation, the cost of an asset less the salvage value is spread equally over the expected useful life.

An equal amount is charged as annual depreciation over the life of the asset. The annual depreciation is calculated as follows:

Annual depreciation:

= (cost of assets - salvage value)/ Estimated useful life

Cost - 100,000

Residual value = 20,000

Estimated useful life = 10 years

Annual depreciation = (100,000- 20,000)/10 =8,000

Annual depreciation = 8,000

Accumulated Depreciation for 2 years = Annual depreciation× number of years

                            = 8,000× 2 = 16,000

Accumulated Depreciation for 2 years =  $16,000

Port Allen Chemical Company processes raw material D into joint products E and F. Raw material D costs $4 per liter. It costs $100 to convert 100 liters of D into 60 liters of E and 40 liters of F. Product F can be sold immediately for $4 per liter or processed further into Product G at an additional cost of $3 per liter. Product G can then be sold for $9 per liter.
a. Determine whether Product F should be sold or processed further into Product G.
b. Calculate the net advantage (disadvantage) of further processing.
c. Use a negative sign with your answer to indicate a net disadvantage (if applicable).

Answers

Answer:

a) Product G should be produced and sold

b) Net financial advantage      $80

Explanation:

A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.  

Also note that all cost incurred up to the split-off point are irrelevant to the decision to process further .  

                                                                                            $

Revenue after split-off point  

($9×  40 litres)                                                                 360

Revenue at the slit of point  

($4 ×   40)                                                                         (160)

Additional income from further processing                  200

Further processing cost ($3× 40)                                  (120)

Incremental income from further processing                 80

Incremental income from further processing = $80

a) The product F should be processed further and sold as product G. Doing so would increase the net income by $80.

b) Net advantage                                               $80

"An economy is based on three sectorsdashagriculture​, ​manufacturing, and services. For each unit of​ output, agriculture requires inputs of 0.20 unit from​ agriculture, 0.40 unit from​ manufacturing, and 0.20 unit from services. For each unit of​ output, manufacturing requires inputs of 0.30 unit from​ agriculture, 0.20 unit from​ manufacturing, and 0.20 unit from services. For each unit of​ output, services requires 0.20 unit from​ agriculture, 0.30 unit from​ manufacturing, and 0.30 unit from services. Determine the production levels needed to satisfy a final demand of 0 units for​ agriculture, 40 units for​ manufacturing, and 0 units for services. The production level needed from the agricultural sector is 40.00 units."

Answers

Answer:

Required Production to fullfil a Demand for 40 industry units

Agriculture 54.4

Industry 83.2

Services 51.2

Explanation:

Input Agricuilture Industrial Service

Agriculture 0.2           0.3 0.2

Industrial 0.4           0.2 0.3

Service         0.2           0.2 0.3

We require X input to generate a demand of 0 agriculture 40 industry and 0 services

The previous matrix will be the input we solve for the output

Output Agricuilture Industrial Service

Agriculture 0.8            -0.7 -0.8

Industrial -0.6             0.8 -0.7

Service        -0.8            -0.8 0.7

We now reverse the matrix using excel:

Output Agricuilture Industrial Service

Agriculture 2           1.36 0.96

Industrial 1           2.08       0.88

Service         1           1.28 2.08

Now we multiply this by our desired outcome of

0

40

0

Agriculture 54.4

Industry 83.2

Services 51.2

Crane Company has gathered the following information.
Units in beginning work in process 0
Units started into production37,300
Units in ending work in process8,200
Percent complete in ending work in process:
Conversion costs40%
Materials100%
Costs incurred:
Direct materials$78,330
Direct labor$66,500
Overhead$105,114
1. Compute equivalent units of production for materials and for conversion costs.
Materials
Conversion Costs
The equivalent units of production
2. Determine the unit costs of production. (Round unit costs to 2 decimal places, e.g. 2.25.)
Materials
Conversion Costs
Unit costs
$
$
3. Show the assignment of costs to units transferred out and in process.
Units transferred out $
Units in ending work in process

Answers

Answer:

1. Compute equivalent units of production for materials and for conversion costs

Equivalent units of Materials: (Units in Beginning Work in process + Units started into production - Units in ending work in process) + Units in ending work in process

= (0 + 37,300 - 8,200) + 8,200

= 37,300

Equivalent units of conversion costs : (Units in Beginning Work in process + Units started into production - Units in ending work in process) + (Units in ending work in process * 40%)

= (0 + 37,300 - 8,200) + (8,200 * 40%)

=29,100 + 3,280

= 32,380

2. Determine the unit costs of production

Unit costs of materials = Direct materials / Equivalent units of Materials

= $78,330 / 37,300

= $2.1

Unit costs of conversion costs = (Direct labor + Overhead) / Equivalent units of conversion costs

= ($66,500 + $105,114) / 32,380

= $171,614 / 32,380

= $5.3

3. Show the assignment of costs to units transferred out and in process

Units ending work in process = Materials + Conversion costs

where, Materials = 8,200 * $2.1 = $8,202

Conversion costs = 3,281 * $5.3 = $17,389

( 8,200 * 40%)

Units ending work in process = $8,202 + $17,389

= $25,591

A large open economy has desired national saving of Sd = 1200 + 1000rw, and desired national investment of Id = 1000 - 500rw. The foreign economy has desired national saving of = 1300 + 1000rw, and desired national investment of = 1800 - 500rw. The equilibrium world real interest rate equal to:________.

Answers

Answer: 10%

Explanation:

The Equilibrium real interest rate would be the interest rate that equates the Desired savings to the desired investment for both the National and foreign economy.

Desired national saving + Foreign desired national saving = Desired national investment + Foreign desired national investment

1,200 + 1,000rw + 1,300 + 1,000rw = (1,000 - 500rw) + (1,800 - 500rw)

2,500 + 2,000rw = 2,800 - 1,000rw

2,000rw + 1,000rw = 2,800 - 2,500

3,000rw = 300

rw = 0.1

rw = 10%

Indus Corporation pays $100,000 for the trademark rights to a line of soda equipment. After several years, sales for this line of soda equipment are disappointing, and the company estimates the total future cash flows from sales will be only $110,000. The estimated fair value of the trademark is now $60,000. What is the amount of the impairment loss to be recorded

Answers

Answer:

impairment loss = $40,000

Explanation:

In accounting, impairment loss refers to the decrease of an asset's carrying value. In order to calculate the impairment loss, you need to subtract the current market value of the asset from its original carrying value.

impairment loss = carrying value - current market value = $100,000 - $60,000 = $40,000

Activity-based costing for a service company
Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs:

Activity Activity Rate
Room and meals $240 per day
Radiology $215 per image
Pharmacy $50 per physician order
Chemistry lab $80 per test
Operating room $1,000 per operating room hour
The activity usage information associated with the two patients is as follows:
Patient Putin Patient Umit
Number of days 6 days 4 days
Number of images 4 images 3 images
Number of physician orders 6 orders 2 orders
Number of tests 5 tests 4 tests
Number of operating room hours8 hours 4 hours
Complete the Activity Table:
A. Determine the activity rate for each activity. Enter these rates in the Activity Rate columns.
B. Use the activity rates in (A) to determine the total and per-unit activity costs associated with patient.

Answers

Answer:

A.

Room and meals=  $240 per day

Radiology =  $215 per image

Pharmacy =  $50 per physician order

Chemistry lab = $80 per test

Operating room = $1,000 per operating room hour

B.

Patient Putin

Unit  = $1,585

Total = $10,640

Patient Umit

Unit  = $1,585

Total = $6,025

Explanation:

Activity rate = Total Overhead Cost / Total Activity

Room and meals=  $240 per day

Radiology =  $215 per image

Pharmacy =  $50 per physician order

Chemistry lab = $80 per test

Operating room = $1,000 per operating room hour

Patient Putin

                               Unit       Total

Room and meals   $240      $1,440

Radiology               $215        $860

Pharmacy                 $50       $300

Chemistry lab          $80          $40

Operating room  $1,000    $8,000

Total                     $1,585   $10,640

Patient Umit

                               Unit       Total

Room and meals   $240       $960

Radiology               $215       $645

Pharmacy                 $50       $100

Chemistry lab          $80       $320

Operating room  $1,000    $4,000

Total                     $1,585   $6,025

Break-even point Currently, the unit selling price of a product is $160, the unit variable cost is $120, and the total fixed costs are $725,000. A proposal is being evaluated to increase the unit selling price to $170.
A. Compute the current break-even sales (units).
B. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant.

Answers

Answer:

A. 18,125 units

B. 14,500 units

Explanation:

Break -even is the level of activity where a firm neither makes a profit nor a loss.

Break-even sales (units) = Fixed Cost ÷ Contribution per unit

                                        =  $725,000 ÷ ( $160 - $120)

                                        =  18,125 units

New Break-even sales (units) = Fixed Cost ÷ Contribution per unit

                                                 =  $725,000 ÷ ( $170- $120)

                                                 =  14,500 units

When a standalone organization is created and owned by two or more parent companies together, the strategic alliance is referred to as a(n) _____.

Answers

Answer:

Joint venture

Explanation:

A joint venture is one where two or more parties agree to pool their resources together to accomplish a particular goal.

Each participant shares in the profit, loss, and cost associated with the business.

However the venture an entity that is independent of the participant's other business interest.

So when a standalone organization is created and owned by two or more parent companies together, it is called a joint venture

Wolverine Company financial statements included the effects of these errors: Reported Net Income for Year 1 was $20,000. Reported Net Income for Year 2 was $18,000. Indicate the error in 12/31/2 Retained Earnings:

Answers

Answer:

Net income year 2 = $21,300

Explanation:

I looked for the missing information and found this:

Year            Depreciation overstated         Prepaid expense omitted

1                              $2,500                                $2,000

2                             $4,000                                $2,700

If your question doesn't include the same values, just adjust the answer.

Year 2's net income = net income (year 2) + overstated depreciation (year 2) + omitted prepaid expenses (year 1) - omitted prepaid expenses (year 2) = $18,000 + $4,000 + $2,000 - $2,700 = $21,300

. Identify each of the following as (i) part of an expansionary fiscal policy, (ii) part of a contractionary fiscal policy, or (iii) not part of fiscal policy. a. The personal income tax rate is lowered. b. Congress cuts spending on defense. c. College students are allowed to deduct tuition costs from their federal income taxes. d. The corporate income tax rate is lowered. e. The state of Nevada builds a new tollway in an attempt to expand employment and ease traffic in Las Vegas.

Answers

Answer:

Option, A , D, E = expansionary fiscal policy.

Option B = Contractionary fiscal policy

Option C = not a part of fiscal policy

Explanation:

The expansionary fiscal policy occurred when there is a decrease in taxes and an increase in government expenditure (spendings). While contractionary fiscal policy occurs when taxes are increased by the government and there is a fall or decrease in government spendings. Therefore, Option A, Option D, and Option E are part of the expansionary fiscal policy.

Option B is a contractionary fiscal policy. While option C is not a part of fiscal policy

The potential benefits lost by taking a specific action when two or more alternative choices are available is known as a(n):

Answers

Answer:

Opportunity costs

Explanation:

The potential benefits lost by taking a specific action when two or more alternative choices are available is known as opportunity costs.

Opportunity cost has to do with losing other alternatives by chosing to go with one alternative. Hence it is also called foregone alternative. It has to do with making a decision or choice to give up something in order to get something else which may be of more value.

Suppose that the quantity of apples sold increases by 30 percent after the price of pears increases by 15 percent. What is the coefficient of cross elasticity of demand

Answers

45, should be the right answer

A machine costs $600000 and is expected to yield an after tax net income of $23000 each year. Managment predicts this machine has a 10 year service life and a $120000 salvage value, and it uses straight line depreciation. Compute this machine's accounting rate of return

Answers

Answer:

6.39%

Explanation:

The cost of the machine is $600,000

The net income is $23,000

The management predict a that it has a 10 years service life

The salvage value is $120,000

The first step is to calculate the average investment

Average investment= (Cost of machine+Salvage value)/2

= $600,000+$120,000/2

= $720,000/2

= $360,000

Therefore, the accounting rate of return can be calculated as follows

= Annual net income/Average investment

= $23,000/$360,000

= 0.0639×100

= 6.39%

Hence the accounting rate of return is 6.39%

Department Y started 675 units during the accounting period. They had a beginning balance in goods in process inventory of 225 units and an ending balance of 150 units. _____ units were completed and transferred out.
a. 750
b. 620
c. 650
d. None of above

Answers

Answer:

a. 750

Explanation:

units completed and transferred out = beginning work in process + units started - ending work in progress = 225 units + 675 units - 150 units = 750 units

The number of units completed and transferred out refer to the total number of finished units during a certain period and their cost is referred to as cost of goods manufactured.

In terms of the global value system, when Kodak shifted manufacturing to China, what position did China then take in the system, relative to the U.S.

Answers

Answer: b. Upstream

Explanation:

The Upstream part of a company's value chain is the part closest to the suppliers and the raw materials they supply to the firm while the downstream relates to how the goods are distributed and sold after produced.

As such, the firm's manufacturing plants are closer to its Upstream value chain portion. When Kodak therefore shifted manufacturing to China, it made China more upstream than the United States as China now dealt more with Kodak suppliers and inputs than the US, who were now more downstream as the consumers.

Sarah, the controller of a large beverage supplier, supervises two employees. Her boss, Vladimir, instructs her to increase the company's inventory balance for an amount that is material to the financial statements by crediting several small "miscellaneous" expense accounts. She does not understand why he wants her to make these entries but immediately directs one of her staff to make them because she has been instructed to do so. Which of the following statements best describes Sarah's actions?

Answers

Answer:

Sarah failed to evaluate a potential ethical issue

Explanation:

According to the given scenario, Ethical concerns occur as workers face pressure from their employers to inflate profits or expenditures that include manipulating financial statements. Workers should be morally responsible and not participate in any dishonest behavior that modify the financial statements.

So, the correct answer is Sarah failed to evaluate a potential ethical issue .

Gullett Corporation had $26,000 of raw materials on hand on November 1. During the month, the Corporation purchased an additional $75,000 of raw materials. The journal entry to record the purchase of raw materials would include a:

Answers

Answer:

debit to Raw Materials of $75,000

Explanation:

In this scenario, the journal entry to record the purchase of raw materials would include a debit to Raw Materials of $75,000. A debit is an entry recording a sum owed, listed on the left-hand side or column of an account. Therefore in accounting, since Gullet Corporation's purchase was for an "additional" $75,000 worth of raw material, they owe that money to the company and must make it up through sales that those materials should generate in the future. That is why it is recorded as a debit.

The marketing department of a reputable firm wants to improve strategic decision making, track the actions of other players in the market, and provide early warning of opportunities and threats. Which of the following would help the firm achieve its objectives?
A) Data warehousing
B) strategic planning competitive marketing intelligence
D) customer relationship management
E) ethnographic research

Answers

Answer:

The answer is C. competitive marketing intelligence

Explanation:

Competitive marketing intelligence may be a powerful research-based method employed by a company to collect, analyze, and use information collected on competitors, economic conditions, customers etc to a achieve business's competitive advantage.

The information-gathering analysis process can help a corporation develop its strategy or identify competitive gaps. It identifies threats and opportunities within the business

Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow:
Mercon Wurcon
Direct materials cost per unit $ 9.00 $ 7.00
Direct labor cost per unit $15.00 $ 17.00
Direct labor-hours per unit 0.40 4.80
Number of units produced 4,000 8,000
These products are customized to some degree for specific customers.
Required:
1. The company's manufacturing overhead costs for the year are expected to be $1,600,000. Using the company's conventional costing system, compute the unit product costs for the two products.
2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year:
Mercon Wurcon Total
Engineering design time (in hours) 8,000 8,000 16,000
Compute the unit product costs for the two products using the proposed ABC system.

Answers

Answer:

Instructions are below.

Explanation:

Giving the following information:

Mercon Wurcon

Direct materials cost per unit $ 9.00 $ 7.00

Direct labor cost per unit $15.00 $ 17.00

Direct labor-hours per unit 0.40 4.80

Number of units produced 4,000 8,000

A. First, we need to calculate the predetermined overhead rate:

Total direct labor hours= 0.4*4,000 + 4.8*8,000= 40,000

Overhead= 1,600,000

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 1,600,000/40,000

Predetermined manufacturing overhead rate= $40 per direct labor hour

Now, we can determine the unitary product cost.

Mercon= 9 + 15 + 40*0.4= $37

Wurcon= 7 + 17 + 4.8*40= $216

B.

Mercon Wurcon Total

Engineering design time (in hours) 8,000 8,000 16,000

Now, we have two different allocation rates:

Direct-labor hours= 800,000/40,000= $20 per direct labor hour

Engineer desing= 800,000/16,000= $50 per engineer desing hour

Finally, we can determine the unitary product cost:

Engineer design per unit:

Mercon= 8,000/4,000= 2

Wurcon= 8,000/8,000= 1

Mercon= 9 + 15 + (20*0.4 + 50*2) = $132

Wurcon= 7 + 17 + (20*4.8 + 50*1)= $170

The _____ was established by Congress to encourage American firms to focus on quality improvement in order to improve their global competitiveness.

Answers

Answer:

The correct answer is: Baldridge Performance Excellence Program.

Explanation:

To begin with, the "Baldridge Performance Excellence Program" is the name given to the program that was established by the United States of America in order to encourage the companies of the country to improve their performance regarding the economy and the globalization that was happening at the time the program was created. It receives its name from the ex secretary of commerce Malcom Baldridge and the award gives to the company selected the recognition of having performance excellence in the its field  

All of the following are assumptions facing opposing forces of reducing costs and adapting to local markets that international business people should be aware of except? Homogenous customer needs worldwide People around the world are willing to sacrifice preferences for lower prices and higher quality Economies of scale can be obtained in production and marketing through supplying worldwide Lowering international synergy and cost via the value chain matrix

Answers

Answer: Lowering international synergy and cost via the value chain matrix

Explanation:

Theodore Levitt came up with some assumptions facing opposing forces of reducing costs and adapting to local markets that international business people should be aware of which include;

On a global scale, customer needs are beginning to become homogeneous.People are willing to sacrifice their preferences for better quality products at a cheaper quality which gives Multinational Companies a chance to offer them better products than local producers due to their large sizes and Economies of scale.Having to supply the world can lead to Economies of scale in production and marketing due to the larger market.

Lowering international synergy and cost via the value chain matrix is not one of the assumptions espoused by Theodore Levitt and so is the correct answer.

a. Equipment with a book value of $79500 and an original cost of $169000 was sold at a loss of $33000.
b. Paid $106000 cash for a new truck.
c. Sold land costing $310000 for $420000 cash yielding a gainof $11000.
d. Long term investments in stock were sold for $95600 cash yielding a gain of $17000.

Required:
Use the above information to determine this company's cash flows from investing activities.

Answers

Answer:

Cash flow from Investing activities refers to cash transactions related to Fixed Assets as well as transactions related to the ownership of other company securities.

Cash-flow from Investing Activities

Sale of equipment (79,500 - 33,000).......................... $46,500

Purchase of New Truck ................................................... ($106,000)

Sale of Land.........................................................................$420,000

Sale of Long-term investments.......................................$95,600

Net cash provided by investing activities ...................$456,100

Take It All Away has a cost of equity of 10.81 percent, a pretax cost of debt of 5.45 percent, and a tax rate of 35 percent. The company's capital structure consists of 77 percent debt on a book value basis, but debt is 37 percent of the company's value on a market value basis. What is the company's WACC

Answers

Answer:

8.12%

Explanation:

The computation of the weighted average cost of capital is shown below:

= Cost of equity × weight of equity + pretax cost of debt × (1 - tax rate) × weight of debt

= 10.81% × 0.63 + 5.45% × (1 - 0.35) × 0.37

= 6.81% + 1.31%

= 8.12%

We simply applied the above formula by considerin the capital structure with its weight so that the correct percentage could come

Cooley Company's stock has a beta of 1.40, the risk-free rate is 25%, and the market risk premium is 5.50%. What is the firm's required rate of return

Answers

Answer: 12.2%

Explanation:

Given the variables available, the required rate of return can be computed using the Capital Asset Pricing Model with the formula;

Required Return = Risk-free rate + beta ( Market risk premium)

Required return = 4.25% + 1.4 * 5.5%

Required return = 4.25% + 7.7%

Required return = 12.2%

Note; The actual question says the Risk-free rate is 4.25%.

Baseball Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $19,100. Budgeted cash receipts total $188,500 and budgeted cash disbursements total $190,200. The desired ending cash balance is $31,100. To attain its desired ending cash balance for January, the company should borro

Answers

Answer: $13,700

Explanation:

From the question, we are informed that Baseball Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $19,100. Budgeted cash receipts total $188,500 and budgeted cash disbursements total $190,200. The desired ending cash balance is $31,100.

To attain its desired ending cash balance for January, the company should borrow $13,700.

The solution has been attached.

Abburi Company's manufacturing overhead is 55% of its total conversion costs. If direct labor is $45,900 and if direct materials are $27,200, the manufacturing overhead is:

Answers

Answer:

Manufacturing Overheads = $56100

Explanation:

The conversion cost defined simply is the cost involved in turning the raw material or direct material into the finished products. Conversion cost is calculated by adding the direct labor cost and the manufacturing overhead cost.

Conversion cost = Direct labor + Manufacturing overheads

As we know that the manufacturing overhead is 55% of conversion cost, then the direct labor cost is 45% of conversion cost.

If 45% of conversion cost is $45900, then the total conversion cost will be,

Conversion cost = 45900 * 100/45   = $102000

Manufacturing Overheads = 102000 - 45900  = $56100

you have just deposited $11000 in to an account that promises to pay you an annual interest rate of 6.5 percent each year for the next 6 years. You will leave the money invested in the account and 10 years from today. you need to have $26300 in the account. What annual interest rate must you earn over the last 4 years to accomplish this goal

Answers

Answer:

Over the last 4 years to accomplish this goal the annual interest rate must be 13.14 %.

Explanation:

First find the Future value (FV) of $11,000 at the end of the 6th year as follows :

PV = -$11,000

r = 6.50%

p/yr = 1

n = 6

Pmt = $0

FV = ?

Using a financial calculator, the Future Value (FV) is $16,050.57

Therefore, the amount invested will amount to $16,050.57 in 6 year.

Next we then calculate the interest rate that will give us $26300 in the next four years (remainder of the 10 years)

PV = -$16,050.57

FV = $26,300

P/yr = 1

n = 4

Pmt = $0

r = ?

Using a financial calculator, the Interest rate (r) is 13.14 %

Conclusion :

Over the last 4 years to accomplish this goal the annual interest rate must be 13.14 %.

ohnson, LLC’s bonds have exhibited a substantial trading volume in the past few years. Its bonds would be referred to a

Answers

Answer:

Seasonal issue

Explanation:

The seasoned issue or seasonal issue is that issue which is made for extra securities held from the company i.e established and it considered those securities who are already traded in the secondary market. The bond which are outstanding and traded in the secondary markets is known as seasoned issued

Since in the question it is mentioned that there is a substantial trading volume in the past few years so this represents the seasoned issue  

Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $70,000 or $200,000 with equal probabilities of .5. The alternative risk-free investment in T-bills pays 6% per year. a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio?

Answers

Answer:

$118,421

Explanation:

first we must calculate the expected value of the risky portfolio = ($70,000 x 0.5) + ($200,000 x 0.5) = $135,000

since your risk premium is 8% and the risk free rate is 6%m then you should discount the expected value by 8% + 6% = 14% to determine its current market price

= $135,000 / (1 + 14%) = $118,421

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