Answer:
a. When identity is proven by presenting more than one item for proof of credentials -- e.g., something you know (user ID, password), and something you have (e.g., a tap of swipe of a card).
Explanation:
An access control can be defined as a security technique use for determining whether an individual has the minimum requirements or credentials to access or view resources on a computer by ensuring that they are who they claim to be.
Simply stated, access control is the process of verifying the identity of an individual or electronic device. Authentication work based on the principle (framework) of matching an incoming request from a user or electronic device to a set of uniquely defined credentials.
Basically, authentication and authorization is used in access control, to ensure a user is truly who he or she claims to be, as well as confirm that an electronic device is valid through the process of verification.
Generally, biometrics, smart cards, digital certificates, and picture passwords are used to perform an authentication.
Multi-Factor Authentication (MFA) is a security system process that requires a user to verify his or her identity by providing two categories of credentials. First of all, the user is required to provide his or her login credentials (username and password) and lastly, a unique PIN known as One Time Password (OTP) that was sent sequel to logging in.
This ultimately implies that, Multi-Factor Authentication (MFA) is when an end user's identity is proven by presenting more than one item for proof of credentials such as something the user know (user ID, password), and something he or she has (e.g a tap of swipe of a card).
FIN issues a $1000 par value bond that pays 7 precent annula interest and will mature in 14 years. The current market price for the bond is $950. Flotation costs will be 14 percent of market price. The company's marginal tax rate is 25%. What will be FIN's aafter tax cost of debt? g
Answer:
7.05 %
Explanation:
After tax cost of debt = interest x ( 1 - tax rate)
so, the initial step is to determine the interest rate :
The Bond Yield (i/yr) presents the market rate and this is what we want for our interest rate.
thus,
PV = - [$950 - ($950 x14%)] = - $817(remove floatation cost from market price)
FV = $1000
PMT = $1000 x 7 % = $70.00
P/YR = 1
N = 14
i/yr = ??
Using a financial calculator to input the values as above, the Bond Yield (i/yr) will be 9.40 %
therefore,
After tax cost of debt = 9.40 % x (1 - 0.25)
= 7.05 %
The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $56,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.
Year Cash Flow
1 $23,000
2 23,000
3 25,000
4 28,000
5 16,000
Required:
a. If the cost of capital is 10 percent, what is the net present value of selecting a new machine?
b. What is the internal rate of return?
Answer and Explanation:
The computation is shown below;
a. the net present value is
Year cash flow factor at 10% Discounted cash flows
0 -$56,000 1 $56,000
1 $23,000 0.9091 $20,909.09
2 $23,000 0.8264 $19,008.26
3 $25,000 0.7513 $18,782.87
4 $28,000 0.6830 $19,124.38
5 $16,000 0.6209 $9,934
Net present value $31,759.34
b. The internal rate of return is
Here we apply the formula
= IRR()
After this, the irr is 30.75%
According to the results of the 2019 expatriate survey, which of the following most accurately describes he current state of HRM efforts o staff international operations?
A. more women are accepting international assignments
B. people without family or kids are less successful in international assignments.
C. third-country nationals are quickly being replaced y localized expatriates.
Answer:
Option A is the accurate option.
Explanation:
Employers would be assigned to foreign employment, and therefore more women than ever are being sent overseas.The trend has always been rising throughout the Asia-Pacific region especially Northern America has been seeing substantial growth throughout this phenomenon or development.The other choices aren't related to the given scenario. So the above is the appropriate solution.
Brief Exercise 22-07 Sunland Company classifies its selling and administrative expense budget into variable and fixed components. Variable expenses are expected to be $26,020 in the first quarter, and $5,140 increments are expected in the remaining quarters of 2020. Fixed expenses are expected to be $41,120 in each quarter. Prepare the selling and administrative expense budget by quarters and in total for 2020.
Answer:
So whats the question???
Explanation:
Furniture Face Lift refinishes old wood furniture. Their process for refinishing chairs has 8 workers and 4 stations. Each chair starts at the Stripping station, then goes to Priming, then to Painting and finally to Inspection. Where there are multiple workers within a station, each worker works independently on his/her own chair. Assume inventory buffers are allowed between each station and each station has inventory to work on at the beginning of the day
Station Staffing Processing time (hours per chair per worker)
Stripping 3 2.5
Priming 2 1.5
Painting 3 1.75
Inspection 1 0.8
Suppose at the start of the day there is no inventory of chairs in the shop. That is, there are no chairs within any of the stations or between them in any buffer. A truck loaded with 10 chairs arrives. How many hours will it take them to complete these 10 chairs?
Answer:
13.19 hours
Explanation:
Station Staffing Processing time (Hours Capacity = Staffing /
per chair per worker) Processing time
Stripping 3 2.5 1.2
Priming 2 1.5 1.33
Painting 3 1.75 1.714
Inspection 1 0.8 1.25
Stripping has the lowest capacity, hence it will be having bottleneck, thus the process capacity is 1.2.
Total time to produce the 1st chair = 2.5 + 1.5 + 1.75 + 0.8
Total time to produce the 1st chair = 6.55 hours
Time to produce subsequent chair = 1/1.2
Time to produce subsequent chair = 0.83 hrs
Total time taken to produce 10 chairs = 6.55 hours + 0.83 hrs*8 Workers
Total time taken to produce 10 chairs = 6.55 hours + 6.64 hours
Total time taken to produce 10 chairs = 13.19 hours
The following data relate to the direct materials cost for the production of 2,200 automobile tires:
Actual: 51,700 lbs. at $1.70 $87,890
Standard: 50,700 lbs. at $1.75 $88,725
Required:
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance.
Direct Materials Price Variance __________ $
Direct Materials Quantity Variance __________ $
Total Direct Materials Cost Variance __________ $
b. The direct materials price variance should normally be reported to the __________ . When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the__________. When the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the__________.
Answer:
A) - $2585
$1750
-$835
B) Purchasing department , Purchasing supervisor , purchasing department
Explanation:
A) calculations for direct material price variance , quantity variance and total direct materials cost variance
Direct material price variance = 51,700 * ( 1.7 - 1.75 ) = -$2585.
Direct material Quantity variance = 1.75 ( 51700 - 50700 ) = $1750
Total direct materials Cost variance = 87890 - 88725 = - $835 a
B)
The direct materials price variance should normally be reported to the Purchasing department.
When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the production supervisor
When the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the Purchasing department
A 10-year, 10.00%, $5,000 bond that pays dividends quarterly can be purchased for $4,610.
This means that $4,610 is spent on the bond now. Every quarter, $125.00 is provided to the purchaser as the dividend. After 10 years, $5,000 is given to the purchaser.
If the bond is purchased and pays as scheduled, which of the following ranges of effective rate of return will the purchaser receive?
a. 11.00% - 12.00%
b. 10.00% - 10.50%
c. 12.01% - 14.01%
d. 10.50% - 10.75%
Answer: a. 11.00% - 12.00%
Explanation:
We can find the rate using Excel.
Payments are quarterly so we need to adjust the variables to quarterly figures:
Period = 10 years * 4 = 40 quarters
Present value = $4,610 (should be a negative number)
Future value = $5,000 at maturity
The effective rate will be 2.9% as shown in the attachment.
This is a quarterly figure so convert it to annual:
= 2.9 * 4
= 11.6%
It is between 11% and 12%
HELP URGENT PLEASE!!!!!!!!!!!!!
Answer:
Workman's compensation
Explanation:
OSHA stands for Occupational Health and Safety Administration, and it is an agency created during the administration of Richard Nixon, whose main purpose is to establish safety rules in the workplace, to make sure that workers are aware of those rule, and to compensate workers economically in case their health is affected by a violation of a regulation from the companies they are or were working for.
The controller of Norton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.
Month Total Maintenance Costs Total Machine Hours
January $2,700 300
February $3,000 350
March $3,600 500
April $4,500 690
May $3,200 500
June $5,500 700
1. Determine the variable cost components using the high-low method. (Round variable cost to 3 decimal places e.g. 12.250.)
Variable cost per machine hour $ _
2. Determine the fixed cost components using the high-low method. (Round answer to 0 decimal places e.g. 2,520.)
Total fixed costs $ _
Answer:
Results are below.
Explanation:
Giving the following information:
January $2,700 300
February $3,000 350
March $3,600 500
April $4,500 690
May $3,200 500
June $5,500 700
To calculate the variable and fixed costs, we need to use the following formulas:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (5,500 - 2,700) / (700 - 300)
Variable cost per unit= $7
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 5,500 - (7*700)
Fixed costs= $600
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 2,700 - (7*300)
Fixed costs= $600
Good Investments Company forecasts a $2.44 dividend for 2017, $2.62 dividend for 2018 and a $2.77 dividend for 2019 for Mountain Vacations Corporation. For all years after 2019, Good Investments Company forecasts that Mountain Vacations will pay a $2.94 dividend. Using the dividend discount valuation model determine the intrinsic value of Mountain Vacations Corporation, assuming the company's cost of equity capital is 7%. Select one:
a. $18.12
b. $24.48
c.$29.37
d. $27.91
Answer:
c.$29.37
Explanation:
First and foremost, it should be borne in mind that the intrinsic value of Mountain Vacations Corporation is the present value of its future dividends for the forecast period(2017-2019) plus the present value of dividend terminal value beyond the forecast period as shown thus:
Year 1 (2017) dividend $2.44
Year 2 (2018) dividend $2.62
Year 3 (2019) dividend $2.77
the terminal value of dividend=expected dividend per year after 2019/ cost of equity capital
expected dividend per year after 2019= $2.94
cost of equity capital =7%
terminal value=$2.94 /7%=$42.00
PV of future dividend=dividend/(1+cost of equity capital)^n
n is the year in which the future dividend is expected, it is 1 for 2017, 2 for 2018 , 3 for 2019 dividend and the terminal value(since the terminal value is already stated in 2019 terms)
intrinsic value of share=$2.44/(1+7%)^1+$2.62/(1+7%)^2+$2.77/(1+7%)^3+$42.00/(1+7%)^3
the intrinsic value of share=$41.11
It is obvious that the options are not correct
The question's inputs are wrong
2017 dividend should have been $1.74
2018 dividend should have been $1.87
2019 dividend should have been $1.98
dividend beyond 2019 should have been $2.10
terminal value=$2.10/7%=$30.00
intrinsic value of share=$1.74/(1+7%)^1+$1.87/(1+7%)^2+$1.98/(1+7%)^3+$30.00/(1+7%)^3
intrinsic value of share=$29.36(closest to c.$29.37)
At the end of 2003, Ritzcar Co. fails to accrue sales commissions earned during 2003, but paid in 2004. The error is not repeated in 2004. What was the effect of this error on 2003 ending working capital and on the 2004 ending retained earnings balance
Answer:
The effect of this error on 2003 ending working capital is that it overstated the ending 2003 working capital.
The error does not have effect on the 2004 ending retained earnings balance.
Explanation:
Let the amount of the commission expense be xxxx.
At the end of 2003, the journal entries should have been as follows:
Debit Commission expense for xxxx
Credie Commission payable for xxxx
Also, we have:
Working capital = Current assets – Current liabilities ………… (1)
From equation (1), current liabilities are understated because commission payable which was not recorded is an item under current liabilities. Since the current liabilities are understated, that indicates that the working capital in equation is overstated. Therefore, the effect of this error on 2003 ending working capital is that it overstated the ending 2003 working capital.
When the 2003 commission expense in the entries above was paid in 2004, it would have been recognized as an expense. This made the error to counterbalance. This implies that the 2004 ending retained earnings balance is still correct despite that there are errors in the earnings of the two years. Therefore, the error does not have effect on the 2004 ending retained earnings balance.
What is a downside of receiving a tax
refund?
Answer:
It's a free loan to the government.
Explanation:
you're essentially giving the government a free loan with no interest.
explain the EU's objectives on their economic actions?
Answer:
The objective is to ensure Europe's sustainable and steady development. It means balanced economic growth and stable prices. The European Union seeks to create a competitive market economy which takes into account people's wellbeing and social needs. An
In a large company, a small team of employees is tasked with conducting monthly tests of security controls. Each month, they select a small number of controls, attempt to exploit vulnerabilities, and report results to management. This is an example of:
Answer:
Vulnerability scanning
Explanation:
Vulnerability scanning is aimed at identifying and classifying system weaknesses that can be exploited in a computer network or a company system.
The vulnerabilities are reported to management and this will guide countermeasures to prevent future security breaches.
So in the scenario where a small team of employees is tasked with conducting monthly tests of security controls by selecting a small number of controls and attempting to exploit vulnerabilities, they are doing vulnerability scanning.
Answer:
The question is incomplete, the options are missing. The options are the following:
a) Vulnerability scanning.
b) Red team exercises.
c) Penetration testing.
d) Risk analysis.
And the correct answer is the option B: Red team exercises.
Explanation:
To begin with, in the area of cybersecurity and business management the term known as "Red Team" refers to method or technique used by the larges companies in the world whose main purpose is to complete exercises of cybersecurity breaches in where the "red team" has to attack the company in order to reach for the vulnerabilities of the organization's most important systems. In that situation, a blue team is the one in charge of defending the business' information. And it is all done with the purpose of getting feedback about what the real danger could be in a situation in the reality.
A "Narrow bank" is a bank that only holds cash for its depositors -- specifically, in our example from class, a narrow bank would take the 1000 deposits of $1,000 each and simply deposit $1,000,000 in its Federal Reserve account. 1. Would this kind of bank be immune to bank runs and financial crises? 2. Why or why not?
Answer:
Theoretically, the bank should be immune to bank runs and financial crises. A narrow bank just receivers deposits and manages them. It does not borrow money, so the deposits should be safe and available when required by the customers. The problem with this type of banks is that the only way they can make a profit is by charging depositors a fee instead of paying interest rates.
Explanation:
Andrew and Brianna are married and live in Texas, a community-property state. For their birthdays this year Andrew gave cash gifts of $20,900 to each of his two daughters, and Brianna gave $35,200 to her niece. What is the amount of Andrew's taxable gifts
Answer: $2,600
Explanation:
Because Andrew is married, the gift tax on him is split in half between him and his wife. This means that to each of his daughters, the gift tax will be on:
= 20,900 / 2
= $10,450
This amount is less than the gift exclusion limit of $15,000 so Andrew will not be charged taxes on the gifts to his daughters.
On the gift to Brianna's niece, Andrew's gift tax will be based on:
= 35,200 / 2
= $17,600
This is above the gift exclusion limit of $15,000 by:
= 17,600 - 15,000
= $2,600
The above would therefore be Andrew's taxable gift amount.
1. A location’s risks can make a difference in premium costs. Think about two houses, one built on a mesa (a high desert plateau) in Arizona and the other built on the Louisiana coast (below sea level). Which location is more likely to experience flooding? Which house would have lower premiums for flood insurance?
Answer:
House with lower premiums for flood insurance -- house built on Mesa in Arizona.
Location more likely to experience flooding --- Louisiana coast which is below sea level.
Explanation:
Insurances provides a protection in exchange for a amount of fee known as a premium. An insurance is a policy or an agreement where the person availing the policy gets a financial protection against the calamities or losses that occurs to the person as promised by the other party. But for that the person needs to a pay a fee called as the premium to the other party.
In the context, the house which is built on the mesa, which is a high desert plateau in Arizona is less prone to floods. Since the location of the house is in a high altitude place, it is less likely to experience floods as compared to the other place in Louisiana coast which is below sea level and is more likely to experience flooding because of its location near the coast and elevation.
Therefore, the house located in Arizona will have to pay lower premiums for flood as there will be less likely to occur flood in the region of the high elevation of the place.
And since house built on Louisiana coast is below sea level, it will more likely to experience floods.
Which option identifies the most likely basic requirement in the following scenario?
A developing country needs to shift from smallholding to modern state-of-the-art agribusiness-style farming, and wants to do this in a fully independent, self-sustainable manner.
A) access to advanced chemical supplements and pesticides
B) a substantial body of skilled, traditional subsistence farmers
C) an infrastructure providing educated workers and advanced machines
D) an infrastructure providing cheap, unskilled labor
Answer: C. an infrastructure providing educated workers and advanced machines
Explanation:
Since the developing country needs to shift from smallholding to a modern state-of-the-art agribusiness-style farming, it's vital for the country to have an infrastructure providing educated workers and advanced machines. The educated workers will help in handling the technical know-how of the.machines used for the modern agribusiness.
An infrastructure that's providing cheap
and unskilled laborr isn't ideal in this case. Also, traditional subsistence farming won't help since the country is moving to a modern style.
LCI Cable Company grants 2.0 million performance stock options to key executives at January 1, 2018. The options entitle executives to receive 2.0 million of LCI $1 par common shares, subject to the achievement of specific financial goals over the next four years. Attainment of these goals is considered probable initially and throughout the service period. The options have a current fair value of $16 per option.
Required:
a. Prepare the appropriate entry when the options are awarded on January 1, 2018.
b. Prepare the appropriate entries on December 31 of each year 2018.
c. Suppose at the beginning of 2019, LCI decided it is not probable that the performance objectives will be met. Prepare the appropriate entries on December 31 of 2019 and 2020.
Answer:
Data provided as per the question is given below:-
Option expected to vest = 2.4 million
Fair value = $13
No Journal entry is required until the end of the reporting period, but reimbursement must be calculated at the grant date.
Estimated total compensation = Option expected to vest × Fair value
= 2.4 million × $13
= $31.2 million
Explanation:
Burgundy, Inc., and Violet Gomez are equal partners in the calendar year BV LLC. Burgundy uses a fiscal year ending April 30, and Violet uses a calendar year. Burgundy receives an annual guaranteed payment of $100,000 for use of capital contributed by Burgundy. BV's taxable income (after deducting Burgundy's guaranteed payment) is $80,000 for 2021 and $90,000 for 2022.
a. How much income from BV must Burgundy report for its tax year ending April 30, 2015?
b. How much income from BV must Violet report for her tax year ending December 31, 2015?
Answer:
A. $140,000
B. $45,000
Explanation:
a. Calculation to determine How much income from BV must Burgundy report for its tax year ending April 30, 2015
Using this formula
Income from BV=Annual guaranteed payment+(BV's taxable income*50% Distributive share of the partnership)
Let plug in the formula
Income from BV=$100,000+($80,000*50%)
Income from BV=$100,000+$40,000
Income from BV=$140,000
Therefore The Amount of income from BV that Burgundy must report for its tax year ending April 30, 2015 is $140,000.
B. Calculation to determine How much income from BV must Violet report for her tax year ending December 31, 2015
Using this formula
Income from BV=(BV's taxable income*50% Distributive share of the partnership)
Let plug in the formula
Income from BV=($90,000*50%)
Income from BV=$45,000
Therefore The Amount of income from BV that Burgundy must report for its tax year ending December 31, 2015 is $45,000.
The senior vice presidents at Terra Firma Construction are each responsible for a specific function within the organization. One leads the human resources team, one the marketing team, another the finance team, and so on. Which of the following options for viewing organization charts would best assist you in reporting on the areas of specialization within Terra Firma Construction?
a. reviewing dotted line relationships
b. scanning the chart vertically
c. working from the entry-level positions upwards
d. studying the chart’s matrices
e. examining the chart from side to side
Answer:
b. scanning the chart vertically
Explanation:
Scanning the charts vertically is the best option for assisting when trying to report to the vice president on their various areas of specializations. In vertical organogram, it helps to represent the line or chain of commands in an organization starting from the least to the most important person in that given organization vertically.
The least would happen to be the new entrant in the organization while the most important would happen to be the CEO or President overseeing all the activities of the said organization.
The best option for viewing organization charts would best assist you in reporting on the areas of specialization within Terra Firma Construction is scanning the chart vertically.
Vertical scanning is often known as when a single IP is being tested on multiple ports.
Organizational chart are often classified into two types. they are
Vertical HorizontalIt is often based on the style of the layout. A vertical organizational chart often looks like a pyramid with the CEO or company president at the top.
It often have a single segment having series of middle management and the manager who have their own department.
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The risk-free rate is 3%. MCD currently prices at $25. The Delta of a 1-year at-the-money European call on MCD is 0.5. John has a portfolio made of the following: (1) One bond maturing in 1 year paying $1000. (2) Three 1-year at-the-money European MCD calls. (3) Two 1-year at-the-money European MCD puts. How many shares of MCD should John long (or short) to make his portfolio delta-neutral
Answer:
Short 1.5 shares
Explanation:
Given data :
Risk free rate = 3%
current price ( market price ) = $25
Delta of 1-year at money European call on MCD = 0.5
Determine how many shares of MCD John should either Long or short to achieve a delta-neutral
use the relation below
4 * 0.5 + 1 ( 0.5 - 1 ) + x = 0
x ( number of shares ) = - [ 4 * 0.5 + 1 ( 0.5 - 1 ) ]
= - 1.5 shares
negative ( - ) means MCD should short 1.5 shares
Weighted Average Method, Equivalent Units, Unit Cost, Multiple Departments
Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was $40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments.
The second department (Polishing) had the following physical flow schedule for December:
Units to account for:
Units, beginning work in process 4,000 (40% complete)
Units started ?
Total units to account for ?
Units accounted for:
Units, ending work in process 8,000 (50% complete)
Units completed ?
Units accounted for ?
Costs in beginning work in process for the Polishing Department were direct materials, $5,000; conversion costs, $6,000; and transferred in, $8,000. Costs added during the month: direct materials, $32,000; conversion costs, $50,000; and transferred in, $40,000.
Required:
1. Assuming the use of the weighted average method, prepare a schedule of equivalent units. Enter percentages as whole numbers.
Fordman Company
Schedule of Equivalent Units
For the month of December
Direct Materials Conversion Costs Transferred In
Units completed
Ending WIP:
x
%
x
%
Total equivalent units
2. Compute the unit cost for the month. If required, round your answer to the nearest cent.
$ per equivalent unit
Answer:
Fordman Company
1. Fordman Company
Schedule of Equivalent Units
For the month of December
Direct Materials Conversion Costs Transferred In
Units completed 16,000 16,000 20,000
Ending WIP: 4,000 4,000
(8,000 * 50%) (8,000 * 50%)
Total equivalent units 20,000 20,000 20,000
2. Cost per equivalent unit:
Direct Materials Conversion Costs Transferred In
Total costs of production $37,000 $56,000 $48,000
Total equivalent units 20,000 20,000 20,000
Cost per equivalent unit $1.85 $2.80 $2.40
Explanation:
a) Data and Calculations:
Transferred in units = 20,000
Cost of units transferred in = $40,000
Units to account for:
Units, beginning work in process 4,000 (40% complete)
Units started 20,000
Total units to account for 24,000
Units accounted for:
Units, ending work in process 8,000 (50% complete)
Units completed 16,000
Units accounted for 24,000
Materials Conversion Transferred in
Beginning work in process $5,000 $6,000 $8,000
Costs added during month 32,000 50,000 40,000
Total costs of production $37,000 $56,000 $48,000
Assets that are difficult to sell, take time to sell, or will lose value if some prematurely.
A. Non Liquid Asset
B. Liquid Asset
C. Asset
Answer:
Non Liquid Asset
Explanation:
The concept of economic profit is used for making a decision between your two _______ options. Earning zero economic profit is not bad. It means that your two best options make you equally well off so you are indifferent between the two. For example, I am indifferent between teaching microeconomics and macroeconomics because they make me equally well off (I get paid the same).
If economic profit is positive. you should choose the _______ option because it will make you _______ off. If economic profit is negative, you should choose the ________ option because it will make you better off.
Answer:
The concept of economic profit ....... alternative two options.
If economic profit is positive .......... Current option.
If economic profit is negative............ Other option
Explanation:
Economic Profit is the excess of revenue associated with an option, over its costs (explicit external & implicit opportunity costs).
Example : Revenue - Direct explicit cost of production - opportunity cost (like interest on money invested, salary of job left foregone).
The concept is used to make decision between two alternative options. Given, zero economic profits imply indifference.
Positive Economic Profit implies - one should choose Current option, as it will make Better off , having more benefit than other option
Negative Economic Profit implies - one should choose Other option, as it wil make better off, having more benefit than the former considered option.
Kelly Slater owns a parcel of land in Palm Springs and is considering two possible development options which both use his signature Kelly Slater Wave Pool technology.
Option A: Create a private surf club, in which case he would have to invest $10 million today (EOY 0). The club would then generate an annual free cash flow of $2 million in perpetuity starting EOY 1.
Option B: Create a surf resort and hotel open to the public, in which case he would have to invest $50 million today (EOY 0). The resort would then generate an annual free cash flow of $6.5 million in perpetuity starting EOY 1.
Assume Kelly's discount rate is 10% and that he can only invest in one of the two options. Kelly should: ________
a. Accept both options because they both have positive NPV
b. Choose Option A because it has a higher IRR
c. Reject both options because both have an IRR less than 10%
d. Choose Option B because it has a higher NPV
Answer:
d. Choose Option B because it has a higher NPV
Explanation:
The computation is shown below:
For Option A:
Investment = $10 million
Present Value of cash flows = Cash flow ÷ Discounting rate
= $2 ÷ 10%
= $20 million
Now
NPV = $20 - $10
= $10 million
We know that
IRR is the rate at which the NPV will be zero
So, 2 ÷ r - 10 = 0
r = 20%
For Option B:
Investment = $50 million
Present Value of cash flows = $6.5 ÷ 10% = $65 million
NPV = $65 - $50 = $15 million
we know that
IRR is the rate at which the NPV will be zero
So, 6.5÷ r -50 = 0
r = 13%
Based on NPV, Option B should be selected as it contains higher NPV as compared to option A.
However, Based on IRR, Option A should be chosen as it contains higher IRR and a higher IRR represent a higher profit percentage
What conditions must be added to Pure Competition to achieve Perfect Competition?
All of the following are criticisms of the payback period criterion EXCEPT Group of answer choices time value of money is not accounted for. it deals with accounting profits as opposed to cash flows. None of the above; they are all criticisms of the payback period criteria. cash flows occurring after the payback are ignored.
Answer:
I dont know
Explanation:
Dman
Hamby transfers a capital asset in exchange for a one-half interest in Hartsville LLC. The asset has an adjusted basis to Hamby of $20,000 and a fair market value of $55,000.
Hamby has a $_____________ realized gain on the exchange. Hamby's basis for his LLC interest is $______. The LLC's holding period for the capital asset carries over from Hamby . The LLC’s basis for the contributed property is $____________.
Answer: a. $35000
b. $20000
c. $20000
Explanation:
a. The realized gain will be:
= Fair market value - Adjusted basis
= $55000 - $20000
= $35000
b. The basis for LLC Interest will be will be thesame as the adjusted basis which will be $20000
c. The LLC basis for the contributed property will be $20000 as it's the cost of the adjusted basis .
=
he Glowing company could produce an operating cash flow of $56,200 a year for 5 years. The initial fixed asset investment in the project will be $238,900. The net aftertax salvage value is estimated at $67,000 and will be received during the last year of the project's life. What is the net present value of the project if the required rate of return is 15.2 percent
Answer:
-$18,375
Explanation:
The computation of the net present value is shown below;
In the case when the operating cash flow is $56,200 for 5 years and the rate of return is 15.2% so the present value is $187,502 by using the financial calculator
In the case when the net after tax salvage value is $67,000 for the 5 year and the rate of return is 15.2% so the present value is $33,023 by using the financial calculator
Now the net present value is
= $18,7502 + $33,023 - $238,900
= -$18,375