Answer:
The solution of the given query is explained throughout the segment below.
Explanation:
The given values are:
Company issued amount,
= $6,500,000
Rate of interest,
= 6%
Time,
= 10 years
Now,
On bonds payable amortization, the discount will be:
= [tex]\frac{6,500,000 -5,614,000}{10}[/tex]
= [tex]\frac{886,000}{10}[/tex]
= [tex]88,600[/tex] ($)
Interest expenses will be:
= [tex](6,500,000\times 6 \ percent) + 88,600[/tex]
= [tex]390,000+88,600[/tex]
= [tex]478,600[/tex] ($)
An ordinary annuity was purchased 5 years ago. The annuity pays 8%compounded quarterly. The quarterly payments have been $500. What is the amount of interest earned on the annuity to date?
Answer:
"$8,175.72" is the right solution.
Explanation:
The given values are:
Periodic payments,
C = $500
Interest rate,
r = 8%
i.e.,
= [tex]\frac{8}{4}[/tex] = [tex]2[/tex]%
Number of periods,
n = 5 years,
i.e.,
= [tex]5\times 4[/tex] = [tex]20[/tex]
As we know,
The present value of annuities 5 years ago will be:
⇒ [tex]Present \ Value =C\times \frac{[1-(1+r)^{-n}]}{5}[/tex]
On substituting the given values, we get
⇒ [tex]=500\times \frac{[1-(1+0.02)^{-20}]}{0.02}[/tex]
⇒ [tex]=500\times \frac{1-0.6729713331}{0.02}[/tex]
⇒ [tex]=500\times 16.35143335[/tex]
⇒ [tex]=8,175.72[/tex] ($)
Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each of the last three years. Casey is considering a capital budgeting project that would require a $3,500,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company’s discount rate is 16%. The project would provide net operating income each year for five years as follows: Sales $ 3,400,000 Variable expenses 1,600,000 Contribution margin 1,800,000 Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs $ 700,000 Depreciation 700,000 Total fixed expenses 1,400,000 Net operating income $ 400,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What is the project’s net present value? 2. What is the project’s internal rate of return? 3. What is the project’s simple rate of return? 4-a. Would the company want Casey to pursue this investment opportunity? 4-b. Would Casey be inclined to pursue this investment opportunity?
Answer:
1. What is the project’s net present value?
NPV = $101,7232. What is the project’s internal rate of return?
IRR = 17.24%3. What is the project’s simple rate of return?
simple rate of return = 11.43%4-a. Would the company want Casey to pursue this investment opportunity?
Yes, since the NPV is positive4-b. Would Casey be inclined to pursue this investment opportunity?
No, since it will decrease the average ROIExplanation:
initial outlay = -$3,500,000
cash flow years 1-5 = $400,000 + $700,000 = $1,100,000
discount rate = 16%
using a financial calculator:
NPV = $101,723
IRR = 17.24%
simple rate of return = $400,000 / $3,500,000 = 11.43%
Smart Calendars is a new business. During its first year of operations, credit sales were $40,000, and collections of credit sales were $36,000. One account, $650, was written off. Using the aging-of-receivables method, management calculates $200 as its estimate of uncollectible amounts at year end. Prepare the journal entry to record bad debts expense.
Answer:
Credit Sales = $40,000
Collections = $36,000
Initial accounts receivable = $40,000 - $36,000 = $4,000
Amount written off = $650
Account receivable after write off = $4,000 - $650 = $3,350
Un-Collectible amount = $200
Final account receivable = Account receivable after write off - Uncollectible amount = $3,350 - $200 = $3,150
So, accounts receivable at the end of the first year is $3,150
Journal entry to record bad debts expense
S/n Account Titles and Explanation Debit Credit
1. Bad debt expenses $650
Accounts receivables $650
(To write off the account amount of $650)
2. Bad debt expenses $200
Allowances fo bad debt $200
(To create provision for bad debts)
Using the Dividend Discount Model, answer the following question: Aardvark, Inc. pays a constant annual dividend. At the end of trading on Wednesday, the price of its stock was $28. At the end of trading on the following day, the stock price was $27. As a result of the decline in the stock's price, the dividend yield _____ while the capital gains yield _____.
Answer:
Dividend Discount Model
As a result of the decline in the stock's price, the dividend yield __increased___ while the capital gains yield __decreased___.
Explanation:
The dividend yield will increase because with a constant annual dividend and a decreased stock price of $27, from the previous $28, the divisor has decreased, causing the yield rate to increase. For example, if the dividend per share remains at $5.00, the dividend yield, when the stock price was $28, will be equal to 17.9%. Now the yield will increase to 18.5%. On the other hand, the capital gains yield is based on the stock prices. Therefore, a reduction in the stock price will cause the yield to decrease and vice versa.
Oriole Corporation has 420,000 shares of common stock outstanding throughout 2021. In addition, the corporation has 5,000, 20-year, 10% bonds issued at par in 2019. Each $1,000 bond is convertible into 20 shares of common stock after 9/23/22. During the year 2021, the corporation earned $747,600 after deducting all expenses. The tax rate was 30%.
Instructions
Compute the proper earnings per share for 2018.
Answer:
Earnings per Share is $1.246 per share
Explanation:
Earnings per share (EPS) determines the company's earnings for the number of shares of its stocks. In the case where the EPS is high, then the investors would pay more for the shares of the company.
It is calculated by dividing the Net income after tax by the total number of outstanding common shares. In this question, we will first calculate Net income after tax, as we are provided Net Income before tax. Then we will calculate EPS.
ss
Net income after Tax = 747,600 x (1 - 0.3)
Net income after Tax = $523,320
Earnings per Share = Net Income after Tax / No. of outstanding common shares
Earnings per Share = 523,320 / 420,000
Earnings per Share = $1.246 per share
“It’s great to listen to the customer when you are designing your product, but it’s just not practical in pricing. All the customers have to say is that they want lower prices. If you want me to increase profits, I can’t very well listen to that!”
a. What should the marketing director make of this response?
Answer:
189038¥$
Explanatio
first play attention in class
The candidate hasn't fully understood the marketing strategy of the company
What is marketing?Marketing refers to the actions of a company in order to promote buying or selling of the company’s product, as well as creating a brand image of its product. Marketing has become a vital part of total’s world, where everything is connected via the internet and social media. New fields like Digital Marketing, Social Media Marketing have propped up for the marketing of the products.
The marketing director while appreciating this response should know the person responding hasn't been fully aware of the marketing strategy. He should make the candidate understand how much vital it is to take the opinion of the customers. Even, the company's main focus is on customers' responses and needs.
In today’s economy, a couple of viral videos against the company by genuine customers can ruin the whole image of the company. Also, customers might not necessarily want a lower-priced product in today’s age of show-offs. The customers might be wanting a product of distinction among his/her peers to stand out.
Learn more about Marketing here:
https://brainly.com/question/13414268
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During the month of March, Munster Company's employees earned wages of $64,000. Withholdings related to these wages were $4,896 for FICA, $7,500 for federal income tax, $3,100 for state income tax, and $400 for union dues. The company incurred no cost related to these earnings for federal unemployment tax but incurred $700 for state unemployment tax. Journalize payroll entries.
Answer:
A. Dr salaries and wages expense for 64,000
Cr to FICA taxes payable for 4,896
Cr Federal Income Tax Payable for 7,500
Cr State Income Tax Payable for 3,100
Cr Union Dues Payable for 400
Cr Salaries and Wages Payable for 48,104
B. Dr payroll tax expense for 5,596
Cr FICA tax payable for 4,896
Cr State Unemployment for 700
Explanation:
Preparation to Journalize the payroll entries
A. Dr salaries and wages expense for 64,000
Cr to FICA taxes payable for 4,896
Cr Federal Income Tax Payable for 7,500
Cr State Income Tax Payable for 3,100
Cr Union Dues Payable for 400
Cr Salaries and Wages Payable for 48,104
(64,000-4,896-7,500-3,100-400)
B. Dr payroll tax expense for 5,596
(4,896+700)
Cr FICA tax payable for 4,896
Cr State Unemployment for 700
Maui Resort Inc. determined that the balance in its deferred tax asset account on December 31, 2020, was $50,000. Management reviewed all available positive and negative evidence to estimate that 30% of the deferred tax asset was more likely than not to be realized. The valuation allowance for deferred tax assets has a December 31, 2020, unadjusted balance of $4,000 (credit). Record the entry to adjust the allowance on December 31, 2020.
Answer:
Maui Resort Inc.
Journal Entry:
December 31, 2020:
Debit Loss from Unrealizable DTA $31,000
Credit Allowance for Unrealizable DTA $31,000
To record the expected loss from unrealizable DTA and to increase the Allowance balance to $35,000.
Explanation:
a) Data and Calculations:
December 31, 2020 Deferred Tax Asset (DTA) = $50,000
Estimate of realizable DTA = 30% of $50,000 = $15,000
Allowance for unrealizable DTA for 2020 = 70% of $50,000 = $35,000
Loss from unrealizable DTA = $31,000 ($35,000 - $5,000)
b) We can liken the Allowance for Doubtful Accounts to the DTA Valuation Allowance, which is a contra-account to the Deferred Tax asset Account. In it, the amount of the deferred tax asset that has a more than 50% probability of being lost or unutilized in the future arising from non-availability of sufficient future taxable income is accounted for.
Corning Company has a decentralized organization with a divisional structure. Two of these divisions are the Appliance Division and the Manufactured Housing Division. Each divisional manager is evaluated on the basis of ROI. The Appliance Division produces a small automatic dishwasher that the Manufactured Housing Division can use in one of its models. Appliance can produce up to 20,000 of these dishwashers per year. The variable costs of manufacturing the dishwashers are $98. The Manufactured Housing Division inserts the dishwasher into the model house and then sells the manufactured house to outside customers for $73,000 each. The division's capacity is 4,000 units. The variable costs of the manufactured house (in addition to the cost of the dishwasher itself) are $42,600.
Required:
Assume that all of the dishwashers produced can be sold to external customers for $328 each. The Manufactured Housing Division wants to buy 5,400 dishwashers per year. What should the transfer price be?
Answer:
$328
Explanation:
The best transfer price is within the range of the Minimum and Maximum transfer price.
1. Minimum Transfer Price
Minimum Transfer Price is the price that is acceptable to the transferring division and out of a range of acceptable prices, it is that which would be the best for the company
Minimum Transfer Price = Variable Cost - Internal Savings + Opportunity Cost
thus,
given the following data on the Transferring Division - Appliance Division and Receiving Division,
Appliance Division :
Total Capacity = 20,000 dishwashers
Total Variable Costs = $98
Sale Price to External Market = $328
Manufactured Housing Division :
Demand = 5,400 dishwashers
House Sale Price = $73,000
Total Capacity = 4,000 houses
Variable Costs = $42,600
there will be an opportunity costs on the external market for 5,400 dishwashers supplied internal to Manufactured Housing Division
Opportunity costs = Contribution per unit
= $328 - $98
= $230
therefore,
Minimum Transfer Price = $98 + $230 = $328
2. Maximum Transfer Price
It is the maximum price that causes the receiving division to break even. The Maximum Transfer Price can never be more than what the receiving division can purchase externally and also can never be more than the selling price of transferring division
thus,
Maximum Transfer Price = $328
Conclusion :
The transfer price should be $328
Caldwell Corporation is considering an investment proposal that will require an initial outlay of $816,000 and would yield yearly cash inflows of $212,000 for nine years. The company uses a discount rate of 10%. What is the NPV of the investment?
Present value of an ordinary annuity of $1:
8%
9%
10%
1
0.926
0.917
0.909
2
1.783
1.759
1.736
3
2.577
2.531
2.487
4
3.312
3.24
3.17
5
3.993
3.89
3.791
6
4.623
4.486
4.355
7
5.206
5.033
4.868
8
5.747
5.535
5.335
9
6.247
5.995
5.759
A.
$251,667
B.
$371,000
C.
$408,000
D.
$404,908
Answer:
623
Explanation:
because I guessed and 816,000-212,000= 604,000
Suppose that you are the owner of a local sandwich shop. Your supplier of bread has increased its wholesale price by 10 percent, your supplier of condiments has raised prices by 10 percent, and your supplier of meats and vegetables has raised prices by 10 percent. Suppose these are your only supplies. Therefore, you decide to raise your sandwich prices accordingly.
If you wish to maintain the same level of profit given the increases in your supply prices, you should increase your sandwich prices by what percentage?
a. 5 percent
b. 30 percent
c. 100 percent
d. 20 percent
e. 10 percent
In general, you _________ add percentages as you would add cadinal numbers.
Answer:
Option E is correct
The price of the sandwich to maintain the same level of profit should be increased by 10%.
Explanation:
Let us assume the prices of condiments, meats and vegetables are all $100 each before the increment. After the the increment, each of them will cost:
100×(1+10%)= $110
The total cost of supplies before the inflation= 100×3= $300
The total of supplies after the increment = 110×3= $330
The rate of inflation = (330/300-1) × 100 =10%
The price of the sandwich to maintain the same level of profit should be increased by 10%
CP = 4500, Loss = 8 whole 1/3.
Please fast it is emergency
Answer:
Answer is just here take it
Explanation:
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The manager of a large apartment complex knows from experience that 120 units will be occupied if the rent is 342 dollars per month. A market survey suggests that, on the average, one additional unit will remain vacant for each 9 dollar increase in rent. Similarly, one additional unit will be occupied for each 9 dollar decrease in rent. What rent should the manager charge to maximize revenue
Answer:
The answer is "711"
Explanation:
Calculated equation:
[tex]R(x) =(120-x)(342+9x)\\\\R(x) =-9x^2+738x+41040[/tex]
For maximum revenue [tex]R'(x)=0[/tex]
[tex]\to R'(x) =-18x+738\\\\\to 18x=738\\\\\to x=\frac{738}{18}\\\\\to x=41\\\\[/tex]
So, maximum revenue:
[tex]\to 342+9\times 41\\\\\to 342+369\\\\\to 711[/tex]
A speculative bubble occurs when: A. Investors buy an asset that they believe the market is undervaluing. B. Investors are so afraid of taking risks that they buy only the safe assets. C. Investors bid up the price of an asset because they are overly optimistic that the price will continue rising. D. Investors ignore obvious risks because they are foolish. E. Buyers use credit to make purchases they cannot afford.
Answer:
c
Explanation:
A progressive tax is a tax that:
A. Requires you to pay less money in taxes when you have more income.
B. Requires everyone to pay the same tax rate.
c. Only applies to people who make more than $150,000 per year.
D. Requires people who make more money to pay a larger percentage of their income in taxes.
Answer:
I’m pretty sure it’s B.
Explanation:
^ I said pretty sure
James, Inc., has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of 6 years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $594,000. The sales price per pair of shoes is $87, while the variable cost is $37. Fixed costs of $295,000 per year are attributed to the machine. The corporate tax rate is 22 percent and the appropriate discount rate is 10 percent.
What is the financial break-even point?
Answer:
James, Inc.
The financial break-even point in:
Sales unit = 8,322
Sales dollars = $724,014
Explanation:
a) Data and Calculations:
Cost of machine purchased = $594,000
Estimated economic life = 6 years
Salvage value = $0
Sales price per pair of shoes = $87
Variable cost per pair of shoes = 37
Contribution margin per pair = $50
Discounted contribution = $50 * 0.909 = $45.45
After-tax contribution = $35.45 ($45.45 * 0.78)
After-tax contribution margin ratio = $35.45/$87 * 100 = 41%
Fixed cost per year = $295,000
Corporate tax rate = 22%
Discount rate = 10%
Break-even point = Fixed cost/After-tax contribution
= $295,000/$35.45
= 8,322 units
= $724,014 ($87 * 8,322)
Mann Co. is preparing an Excel spreadsheet for its 5-year, 6%, $400,000 installment notes. The notes were issued on January 1 for $421,236. Installment payments are payable each December 31. A portion of the spreadsheet appears as follows: A B C D E 1 Effective rate: 0.06 2 Cash payments: 100,000 3 Term to maturity in years: 5 4 5 Period Cash Payment Interest Expense Change in Balance Outstanding Balance 6 0 7 1 8 2 What formula should Mann use in cell E8 to calculate the outstanding balance (book value) of the notes after the second interest
Answer:
The correct formula that Mann should use in cell E8 is =E7-D8.
Explanation:
Note: The data in this question are merged together. They are therefore sorted before answering the question. See the attached excel file for the complete question with the sorted data.
The explanation of the answer is now given as follows:
The correct formula that Mann should use in cell E8 is =E7-D8. If this formula is used, it will calculate the outstanding balance (book value) of the notes after the second interest for period 2.
Additional Note:
Although this is not part of the requirement of the question, but it is provided for you to assist your further in your learning.
Note: See the below the attached excel file for the full answer and calculations of all the cells required for the amortization schedule.
For example, using the correct formula =E7-D8 in cell E8 gives $267,301 (in red color).
A property is leased for $24,000 per year although market rents are currently $27,500 per year and are expected to increase by 2% per year. The property is expected to be sold at the end of year 10 based on a 10% terminal cap rate applied to the eleventh year NOI. The current lease on the property will expire at the end of year 10 so the property can be leased in the eleventh year at market rates. What is the value of the leased fee estate based on an 11.5% discount rate
Answer:
the present vlaue of the ledased property = $251,298
Explanation:
the free market value in 10 years = ($27,500 x (1 + 2%)¹⁰) / 10% = $335,223
free cash flows year 1 - 9 = $24,000
free cash flow year 10 = $359,223
discoutn rate = 11.5%
using a financial calculator, the present value of the property = $251,298
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 62 students enrolled in those two courses. Data concerning the company’s cost formulas appear below: Fixed Cost per Month Cost per Course Cost per Student Instructor wages $ 2,960 Classroom supplies $ 270 Utilities $ 1,220 $ 75 Campus rent $ 4,800 Insurance $ 2,300 Administrative expenses $ 3,900 $ 44 $ 7 For example, administrative expenses should be $3,900 per month plus $44 per course plus $7 per student. The company’s sales should average $890 per student. The company planned to run four courses with a total of 62 students; however, it actually ran four courses with a total of only 56 students. The actual operating results for September appear below: Actual Revenue $ 52,280 Instructor wages $ 11,120 Classroom supplies $ 16,590 Utilities $ 1,930 Campus rent $ 4,800 Insurance $ 2,440 Administrative expenses $ 3,936 Required: 1. Prepare the company’s planning budget for September. 2. Prepare the company’s flexible budget for September. 3. Calculate the revenue and spending variances for September.
Answer:
The Gourmand Cooking School
1. Planning Budget for September:
Fixed Cost Cost per Cost per Planning
per Month Course Student Budget
Instructor wages $ 2,960 $11,840
Classroom supplies $ 270 16,740
Utilities $ 1,220 $ 75 1,520
Campus rent $ 4,800 4,800
Insurance $ 2,300 2,300
Administrative expenses $ 3,900 $ 44 $ 7 4,510
Total $41,710
2) Flexible Budget for September:
Fixed Cost Cost per Cost per Flexible
per Month Course Student Budget
Instructor wages $ 2,960 $11,840
Classroom supplies $ 270 15,120
Utilities $ 1,220 $ 75 1,520
Campus rent $ 4,800 4,800
Insurance $ 2,300 2,300
Administrative expenses $ 3,900 $ 44 $ 7 4,468
Total $40,048
3. The Revenue and Spending Variances for September (based on flexible budget):
Planning Flexible Actual Spending
Budget Budget Variance
Revenue $55,180 $46,280 $52,280 $6,000 F
Instructor wages $11,840 $11,840 $11,120 $720 F
Classroom supplies 16,740 15,120 16,590 1,470 U
Utilities 1,520 1,520 1,930 410 U
Campus rent 4,800 4,800 4,800 0 None
Insurance 2,300 2,300 2,440 140 U
Administrative expenses 4,510 4,468 3,936 532 F
Total $41,710 $40,048 $40,816 $768 U
Explanation:
a) Data and Calculations:
Sales price per student = $890
Planned number of courses = 4
Planned total number of students = 62
Actual number of courses ran = 4
Actual total number of students = 56
Data concerning the company’s cost formulas appear below:
Fixed Cost Cost per Cost per
per Month Course Student
Instructor wages $ 2,960
Classroom supplies $ 270
Utilities $ 1,220 $ 75
Campus rent $ 4,800
Insurance $ 2,300
Administrative expenses $ 3,900 $ 44 $ 7
Actual Results:
Actual Revenue $ 52,280
Instructor wages $ 11,120
Classroom supplies $ 16,590
Utilities $ 1,930
Campus rent $ 4,800
Insurance $ 2,440
Administrative expenses $ 3,936
The following options it gives me are
There would be a shortage of 2,000 bags of popcorn and consumers would be happy with the quality
There would be a shortage of 2,000 bags and consumers would be unhappy with the quality
There would be a surplus of 2,000 bags and consumers would be happy with the quality
There would be a shortage of 2,000 bags and producers would be happy with the law
There would be a surplus of 2,000 bags and producers would be happy with the law
Answer:
There would be a surplus of 2,000 bags, and producers would be happy with the law.
Explanation:
Unlike a price floor that prevents the price of movie theater popcorn from falling below the equilibrium price level of $15, a price ceiling of $5 prevents the price of movie theater popcorn from rising above $20. When a price ceiling is set above the equilibrium price, the quantity supplied exceeds the quantity demanded by 2,000 packets of popcorn, and there will be a surplus supply.
Kaelea, Inc., has no debt outstanding and a total market value of $81,000. Earnings before interest and taxes, EBIT, are projected to be $9,800 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 23 percent higher. If there is a recession, then EBIT will be 32 percent lower. The company is considering a $23,100 debt issue with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 5,400 shares outstanding. Assume Kaelea has a tax rate of 40 percent.
Required:
a. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued.
b. Calculate the percentage changes in EPS when the economy expands or enters a recession.
c. Calculate earnings per share, EPS, under each of the three economic scenarios after the recapitalization.
d. Calculate the percentage changes in EPS when the economy expands or enters a recession.
Answer:
a. We have:
EPS under normal = $1.09 per share
EPS under expansion = $1.34 per share
EPS under recession = $0.74 per share
b. We have:
Percentage changes in EPS when the economy expands = 23%
Percentage changes in EPS when the economy enters recession = –32%
c. We have:
EPS under normal after recapitalization = $1.24
EPS under expansion after recapitalization = $1.59 per share
EPS under recession after recapitalization = $0.75 per share
d. We have:
Percentage changes in EPS after recapitalization when the economy expands = 28.23%
Percentage changes in EPS when the economy enters recession = –39.52%
Explanation:
a. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued.
Shares outstanding = 5,400
Net income under normal = EBIT under normal - (EBIT under normal * Tax rate) = $9,800 - ($9,800 * 40%) = $5,880
EPS under normal = Net income under normal / Shares outstanding = $5,880 / 5,400 = $1.09 per share
Net income under expansion = (EBIT under normal * (100% + Percentage increase in EBIT)) - ((EBIT under normal * (100% + Percentage increase in EBIT)) * Tax rate) = ($9,800 * (100% + 23%)) – (($9,800 * (100% + 23%))* 40%) = $7,232.40
EPS under expansion = Net income under expansion / Shares outstanding = $7,232.40 / 5,400 = $1.34 per share
Net income under recession = (EBIT under normal * (100% - Percentage decrease in EBIT)) - ((EBIT under normal * (100% - Percentage decrease in EBIT)) * Tax rate) = ($9,800 * (100% - 32%)) – (($9,800 * (100% - 32%))* 40%) = $3,998.40
EPS under recession = Net income under recession / Shares outstanding = $3,998.40 / 5,400 = $0.74 per share
b. Calculate the percentage changes in EPS when the economy expands or enters a recession.
Percentage changes in EPS when the economy expands = ((EPS under expansion - EPS under normal) / EPS under normal) * 100 = (($1.34 - $1.09) / $1.09) * 100 = 23%
Percentage changes in EPS when the economy enters recession = ((EPS under recession - EPS under normal) / EPS under normal) * 100 = (($0.74 - $1.09) / $1.09) * 100 = –32%
c. Calculate earnings per share, EPS, under each of the three economic scenarios after the recapitalization.
Market price per share = Total market value / Shares outstanding before recapitalization = $81,000 / 5,400 = $15
Number of shares to repurchase = Debt amount / Market price per share = $23,100 / $15 = 1,540
Shares outstanding after recapitalization = Shares outstanding before recapitalization - Number of shares to repurchase = 5,400 – 1,540 = 3,860
Interest on debt = Debt amount * Interest rate = $23,100 * 8% = $1,848
Net income under normal after recapitalization = EBIT under normal – Interest on debt - ((EBIT under normal – Interest on debt) * Tax rate) = $9,800 - $1,848 - (($9,800 - $1,848) * 40%) = $4,771.20
EPS under normal after recapitalization = Net income under normal after recapitalization / Shares outstanding after recapitalization = $4,771.20 / 3,860 = $1.24
EBIT under expansion = EBIT under normal * (100% + Percentage increase in EBIT) = ($9,800 * (100% + 23%)) = $12,054
Net income under expansion after recapitalization = EBIT under expansion – Interest on debt – ((EBIT under expansion – Interest on debt) * Tax rate) = $12,054 - $1,848 - (($12,054 - $1,848) * 40%) = $6,123.60
EPS under expansion after recapitalization = Net income under expansion after recapitalization / Shares outstanding after recapitalization = $6,123.60 / 3,860 = $1.59 per share
EBIT under recession = EBIT under normal * (100% - Percentage decrease in EBIT) = ($9,800 * (100% - 32%)) = $6,664
Net income under recession after recapitalization = EBIT under recession – Interest on debt – ((EBIT under recession – Interest on debt) * Tax rate) = $6,664 - $1,848 - (($6,664 - $1,848) * 40%) = $2,889.60
EPS under recession after recapitalization = Net income under recession after recapitalization / Shares outstanding after recapitalization = $2,889.60 / 3,860 = $0.75 per share
d. Calculate the percentage changes in EPS when the economy expands or enters a recession.
Percentage changes in EPS after recapitalization when the economy expands = ((EPS under expansion after recapitalization - EPS under normal after recapitalization) / EPS under normal after recapitalization) * 100 = (($1.59 - $1.24) / $1.24) * 100 = 28.2%
Percentage changes in EPS when the economy enters recession = ((EPS under recession - EPS under normal) / EPS under expansion) * 100 = (($0.75 - $1.24) / $1.24) * 100 = –39.52%
Golden Eagle Company prepares monthly financial statements for its bank. The November 30 adjusted trial balance includes the following account information:
November 30 December
Debit Credit Debit Credit
Supplies $1,550 $3,050
Prepaid Insurance 6,200 $4,650
Salaries Payable $10,100 $15,100
Deferred Revenue 2,100 $1.050
The following information is known for the month of December:
A. Purchases of supplies during December total $3,600.
B. Supplies on hand at the end of December equal $3,050.
C. No insurance payments are made in December.
D. Insurance cost is $1,550 per month.
E. November salaries payable of $10,100 were paid to employees in December. Additional salaries for December owed at the end of the year are $15,100.
F. On November 1, a tenant paid Golden Eagle $3,150 in advance rent for the period November through January, and Deferred Revenue was credited for the entire amount.
Required:
Show the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and deferred revenue on December 31.
Answer:
December 31
Dr Supplies expense $2100
Cr Supplies $2100
December 31
Dr Insurance expense $1,550
Cr Prepaid insurance $1,550
December 31
Dr Salaries expense $15,100
Cr Salaries payable $15,100
December 31
Dr Deferred revenue $1,050
Cr Rent revenue $1,050
Explanation:
Preparation of the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and deferred revenue on December 31.
December 31
Dr Supplies expense $2100
Cr Supplies $2100
( $1,550+3,600-$3,050= $2100)
( To record supplies expense)
December 31
Dr Insurance expense $1,550
Cr Prepaid insurance $1,550
( To record insurance expense)
December 31
Dr Salaries expense $15,100
Cr Salaries payable $15,100
( To record salaries expense)
December 31
Dr Deferred revenue $1,050
Cr Rent revenue $1,050
($3,150 x 1/3= $1,050)
( To record rent revenue)
Engineers usually need at least what degree?
associate degree
master’s degree
bachelor’s degree
doctoral degree
Answer:
bachelors degree
Explanation:
Answer:
C. bachelor’s degree
Explanation:
The other person is right!
1. Have you experienced times when a leader's ethics have been questionable? How did it make you feel?
Answer:
Every bloody thing About Kim jung un, makes ya feel angry.
Explanation:
Ben, an accountant for AirLift, Inc., a ride service, learns of undisclosed company plans to distribute a new app. Ben buys 10,000 shares of AirLift stock. He reveals the company plans to Carly, who buys 5,000 shares. Carly tells Don, who tells Erwin, and each buys 1,000 shares. They know that Carly got her information from Ben. When AirLift publicly announces its new app, Ben, Carly, Don, and Erwin sell their stock for a profit. Refer to Fact Pattern 28-2. If Ben is liable under the Securities Exchange Act of 1934, it will be because the information on which he based his purchase of AirLift stock was
Answer:
not yet public
Explanation:
The Securities Exchange Act of 1934 was an act that helps preventing fraud investing and it stated that the investors should receive a truthful financial data. The Act was created to govern the securities transaction for the secondary market. It ensures accuracy and transparency in investing.
In the context, the Ben was liable for the fraud under Securities Exchange Act for leaking the information of the company to outsiders or investors as the information was not yet made public by the company.
The unadjusted and adjusted trial balances for American Leaf Company on October 31, 2018, follow:
American Leaf Company
Trial Balances
October 31, 2018
Debit Balances (Unadjusted) Credit Balances (Unadjusted) Debit Balances (Adjusted) Credit Balances(Adjusted)
Cash $16.00 $16.00
Accounts receivable 38.00 44.00
Supplies 10.00 7.00
Prepaid Insurance 22.00 10.00
Land 27.00 27.00
Equipment 41.00 41.00
Accumulated Depreciation-Equipment $7.00 $12.00
Accounts Payable 27.00 27.00
Wages Payable 0.00 2.00
Common Stock 22.00 22.00
Retained Earnings 74.00 74.00
Dividends 10.00 10.00
Fees Earned 70.00 76.00
Wages Expense 23.00 25.00
Rent Expense 6.00 6.00
Insurance Expense 0.00 12.00
Utilities Expense 3.00 3.00 20
Depreciation Expense 0.00 5.00
Supplies Expense 0.00 3.00
Miscellaneous Expense 4.00 4.00
$200.00 $200.00 $191.00 $191.00
Journalize the five entries that adjusted the accounts at October 31, 2018.
Answer:
1. Dr Accounts Receivable $6
Cr Fees Earned $6
2. Dr Supplies Expense $3
Cr Supplies $3
3. Dr Insurance Expense $12
Cr Prepaid Insurance $12
4. Dr Depreciation Expense $5
Cr Accumulated Depreciation—Equipment $5
5. Dr Wages Expense $2
Cr Wages Payable $2
Explanation:
Preparation of the five journal entries that adjusted the accounts at October 31, 2018.
1. Dr Accounts Receivable $6
Cr Fees Earned $6
($44-$38)
(To Accrued fees earned)
2. Dr Supplies Expense $3
Cr Supplies $3
($10-$7)
(To record Supplies used)
3. Dr Insurance Expense $12
Cr Prepaid Insurance $12
($22-$10)
(To record Insurance expired)
4. Dr Depreciation Expense $5
Cr Accumulated Depreciation—Equipment $5
($12-$7)
(To record Equipment depreciation)
5. Dr Wages Expense $2
Cr Wages Payable $2
($2-$0)
(To record Accrued wages)
Crypton Electronics has a capital structure consisting of percent common stock and percent debt. A debt issue of $ par value, percent bonds that mature in years and pay annual interest will sell for $. Common stock of the firm is currently selling for $ per share and the firm expects to pay a $ dividend next year. Dividends have grown at the rate of percent per year and are expected to continue to do so for the foreseeable future. What is Crypton's cost of capital where the firm's tax rate is percent?
Answer:
A. After-cost of debt 4.20%
B. Cost of common equity 12.15%
C. Cost of capital 7.02%
Explanation:.
A. Calculation to determine the After-cost of debt
After-cost of debt =RATE(15,5.8%*1000,-980,1000)*(1-30%)
After-cost of debt =4.20%
Therefore After-cost of debt is 4.20%
b) Calculation to determine cost of common equity
Cost of common equity=2.17/29.12+4.7%
Cost of common equity=12.15%
Therefore Cost of common equity is 12.15%
c) Calculation to determine cost of capital
Cost of capital=(4.20%*63%)+(12.15%*36%)
Cost of capital=7.02%
Therefore Cost of capital is 7.02%
What is the relationship between institutions, such as private property rights, and productive resources in terms of encouraging economic growth? Group of answer choices Private property rights mean that the government will produce no goods or services Private property rights allow resources to be used by those with the most political connections. Private property rights mean that everyone has the right to equal amounts of property. Private property rights encourage resources to be used in the most productive way.
Answer:
The relationship between institutions, such as private property rights, and productive resources in terms of encouraging economic growth is:
Private property rights encourage resources to be used in the most productive way.
Explanation:
Private property rights define the rights that individual persons have to possess, control, exclude others, derive income, or dispose of property. The main characteristics of private property rights are the rights of exclusivity, transferability, and enforceability. These rights are conferred and enforced by the law. They enable the property owner to exclude others from the costs and benefits that accrue to them from owning the property. They also enable the owner to be in a position to transfer the property from herself to others.
Financial information is presented below: Operating expenses $ 45000 Sales returns and allowances 3000 Sales discounts 7000 Sales revenue 160000 Cost of goods sold 96000 Gross Profit would be $64000. $54000. $61000. $67000.
Explanation:
160,000−3,000−96,000=61000
expenses are not taken into account because their not required to find the gross profit.
Financial information is presented below: Operating expenses $ 45000 Sales returns and allowances 3000 Sales discounts 7000 Sales revenue 160000 Cost of goods sold 96000 Gross Profit would be "$64000". The correct option is A.
To calculate the Gross Profit, we use the formula:
Gross Profit = Sales Revenue - Cost of Goods Sold
Given the financial information,
Sales Revenue = $160,000
Cost of Goods Sold = $96,000
Gross Profit = $160,000 - $96,000
Gross Profit = $64,000
Therefore, the correct option is A that is $64,000.
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On March 1, fixtures and equipment were purchased for $5,000 with a downpayment of $2,000 and a $3,000 note, payable in one year. Interest of 6.5% per year was due when the note was repaid. The estimated life of the fixtures and equipment is 10 years with no expected salvage value. [Note: Record the complete March 1 entry for the equipment purchase first, the complete March 31 depreciation adjusting entry second, and the complete March 31 interest adjusting entry third.]
Answer:
March 1: Entry for the equipment purchase
Cash -$2,000
Fixtures and equipment $5,000
Notes payable $3,000
March 31: Depreciation adjusting entry
Debit Credit
Fixtures and equipment -$42
(5000/10/12)
Retained earnings -$42
March 31: Interest adjusting entry
Debit Credit
Interest payable $16.25
(3000*6.5%/12)
Retained earnings -$16.25