Answer:
B. Focus group
Explanation:
Use series of elimination on this one.
Test subjects- No
Market Research Audience- Those are people that watch the tests that you will conduct with your focus group.
Survey takers- Too simple.
Hope that I could help you!
Small groups of consumers that interact with products or services and give their feedback based on their experiences are known as Focus group. Option (b) is correct.
What do you mean by Product?Any good or service you offer to satisfy a customer's need or desire is a product. There are both real and virtual ones. Durable things (such as automobiles, furniture, and computers) and nondurable items are examples of physical products (like food and beverages).
A focus group is a market research technique that involves gathering 6–10 individuals in a space to offer input on a certain commodity, concept, or marketing campaign.
Therefore, Option (b) is correct. Small groups of consumers that interact with products or services and give their feedback based on their experiences are known as Focus group.
Learn more about Product, here;
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what is the annual percentage yield(APY) for money at an annual rate of (a)4.57% monthly (b)4.58% compunded quartelty
Answer:
a)Annual rate of return = 4.67%
(b)Annual rate of return = 4.66%
Explanation:
Annul rate of return where compounding is done more frequenting could be worked out as follows:
Annual rate of return = (1+r)^n - 1
r - rate of return per period
n- number of periods in a year
a) Monthly rate of 4.57%
r- monthly rate = 4.57%/12 = 0.38% per month
n- 12 months
Annual rate of return = (1+ 0.003808)^12 - 1 × 100 = 4.67%
Annual rate of return = 4.67%
b) 4.58% compounded quarterly
r- quarterly rate = 4.58%/4 = 1.145 %
n- 4 quarters in a year
Annual rate of return = (1+0.01145)^4 - 1 × 100= 4.66%
a)4.57% monthly
Annual rate of return = 4.67%
(b)4.58% compounded quarterly
Annual rate of return = 4.66%
Choose three distinct but related business functions (e.g., inventory control, purchasing, payroll, accounting, etc.). Write a short paper describing how interfacing the information systems of these three functions can improve an organization’s performance.
Answer:
The three functions can be described as follows:
i) Inventory control
ii) Procurement
iii) Sales
Explanation:
Following are the description of the given points:
In point (i):
It is also the center of the operational activities, in which it would be accountable to always get rid of a perfect product inventory and thus not have an untouched inventory in the storage facility.
In point (ii):
This is the first step for just a brand until it hits the end user. It is sourcing, which most appropriate and progressed necessity for both the manufacturing of the company.
In point (iii):
For the business, it primarily provides, a large number of alternative considerations. However, certain expenses it control, including the expense of keeping as well as the wastefulness in raw resources, all will be determined from selling price.
A company budgets 10,000 units of sales based on a projected selling price of $13.00. The actual units sold were 15,000 at a price of $10. What is the flexible budget for sales?
Answer:
The flexible budget for sales = $195,000
Explanation:
A flexible budget is that which is prepared for actual level of activity achieved. It is used for control purpose to determine how where the a business is doing in terms of performance .
The flexible budgeted is usually prepared at the end of the period to which it relates. In other words, it is prepared in retrospect. And it uses the assumptions of the fixed budget.
The flexible budget for sales = actual sales in units × Standard selling price
= 15,000× $13.00 = $195,000
The flexible budget for sales = $195,000
Messaging systems range from semi-public systems such as standard text messaging on mobile phones, to private systems that are closed to anyone outside of invited members.
A. True
B. False
Answer:
True.
Explanation:
Messaging systems range from semi-public systems such as standard text messaging on mobile phones, to private systems that are closed to anyone outside of invited members.
A messaging system can be defined as an electronic device which enables users to send text messages to one or more users depending on the configuration and it ranges from semi-public systems to private systems.
In a semi-public messaging system, messages can be sent between users with little or no restriction to who can send or receive these messages. An example is sending short standard text on mobile phones.
On the other hand, a private messaging system is a type of system that denies access to individuals outside of the group, only invited members are able to send and receive messages.
A bridge on a prominent public roadway in the city of Springfield, Ohio, was deteriorating and in need of repair. The city posted notices seeking proposals for an artistic bridge design and reconstruction. Bridges by Madison LLC, owned and managed by Madison Mason and his wife, May Mason, decided to submit a bid for a decorative concrete project that incorporated artistic metalwork. They contacted Pablo Hand, a local sculptor who specialized in large-scale metal designs, to help them design the bridge. The city selected their bridge design and awarded them the contract for a commission of $184,000. Bridges by Madison and Hand then entered into an agreement to work together on the bridge project. Bridges by Madison agreed to install and pay for concrete and structural work, and Hand agreed to install the metalwork at his expense. They agreed that overall profits would be split, with 25 percent to Hand and 75 percent going to Bridges by Madison. Hand designed numerous metal pig sculptures that were incorporated into colorful decorative concrete forms designed by May Mason, while Madison Mason performed the structural engineering. The group worked together successfully until the completion of the project. Suppose Hand had entered into an agreement to rent space in a warehouse that was close to the bridge so that he could work on his sculptures near the location at which they would eventually be installed. He entered into the contract without the knowledge or consent of Bridges by Madison. In this situation, would a court be likely to hold that Bridges by Madison was bound by the contract that Hand entered? Help please here is the multiple choices
Answer:
Bridges by Madison and Hand
Agreement by Hand for a Warehouse:
1. Yes - when they agreed to work together, this implied that they would agree to be liable for each other's contracts.
Explanation:
This is especially as far as this joint project is concerned. Since the purpose of the warehouse was to further and fulfill the project, the agreement entered into by hand for a warehouse affects Bridges by Madison.
In a joint venture, every aspect of the project's lifetime is shared: shared profits, shared losses, shared rewards, shared risks, shared obligations and responsibilities, shared rights and privileges until the end of the project, which also ends the joint venture, unless there is a binding agreement to the contrary. In such a case, Hand would not have been a joint-venturer but a sub-contractor.
The liquidity trap _____. rev: 06_20_2018 Multiple Choice makes expansionary monetary policy less effective makes contractionary monetary policy less effective makes expansionary fiscal policy less effective makes contractionary fiscal policy less effective
Answer:
Makes expansionary monetary policy less effective
Explanation:
A liquidity trap occurs when interest rates are already so low, that most of the public prefer to hold money as cash, instead of investing in bonds and other interest-bearing securities.
In a situation like this, expansionary monetary policy becomes less effective, because the central bank cannot boost the economy anymore by lowering interest rates (interest rates are lowered by increasing the money supply) because most of the public prefers to hold money as cash, and the interest rate is very low already.
Analysis reveals that a company had a net increase in cash of $21,430 for the current year. Net cash provided by operating activities was $19,300; net cash used in investing activities was $10,650 and net cash provided by financing activities was $12,780. If the year-end cash balance is $25,950, the beginning cash balance was:
Answer:
i thinktheanswer would be 87 or 98 few dw
Explanation:
Computing and Recording Proceeds from the Sale of PPE The following information was provided in the 2018 10-K of Hilton Worldwide Holdings, Inc.
2018 2017
Property and equipment, gross $678 $642
Accumulated depreciation (385) (360)
Property and equipment, net 293 282
Note 7 also revealed that depreciation expense on property and equipment totaled $43 million in 2018. The cash flow statement reported that expenditures for property and equipment totaled $58 million in 2018 and that there was no gain or loss on the sale of property and equipment during the year.
Required:
Using the information provided, prepare a journal entry to record the sale of property and equipment in 2018.
Answer:
Cash $4
Accumulated Depreciation $18
To Property & equipment $22
(Being the sale of the property and equipment is recorded)
Explanation:
The journal entry is shown below:
Cash $4
Accumulated Depreciation $18
To Property & equipment $22
(Being the sale of the property and equipment is recorded)
For recording this we debited the cash and accumulated depreciation as it increased the assets and reduced the accumulated depreciation balance and credited the property & equipment as it decreased the assets
The workings are as follows
For PPE
PPE Beginning Balance Beginning $642
Add: Purchases during the year $58
Less: PPE Ending Balance Ending ($678)
Cost of the sold equipment $22
For Accumulated depreciation
Beginning Accumulated Depreciation $360
Add: Depreciation expense 2018 $43
Less: Ending Accumulated Depreciation ($385)
Accumulated Depreciation left $18
Here, we need to first compute the amount of the Property and equipment and the Accumulated depreciation to allow us prepare the journal entry to record the sale of property and equipment in 2018.
For the Property and equipment computation
Particulars Amount
PPE Beginning Balance Beginning $642
Add: Purchases during the year $58
Less: PPE Ending Balance Ending ($678)
Cost of the sold equipment $22
For the Accumulated depreciation computation
Particulars Amount
Beginning Accumulated Depreciation $360
Add: Depreciation expense 2018 $43
Less: Ending Accumulated Depreciation ($385)
Accumulated Depreciation balance $18
Date Account titles and Explanation Debit Credit
Cash $4
Accumulated Depreciation $18
To Property & equipment $22
(Being the sale of the property and equipment is recorded)
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Suppose you have $1,500 and plan to purchase a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the CD matures
Answer:
$ 1,781.53
Explanation:
The future value of the 5-year CD can be determined by using the future value formula stated below:
FV=PV*(1+r)^n
FV is the future value which is expected future amount after 5 years
PV is the initial amount used in purchasing the CD i.e $1500
r is the rate of return on the CD on an annual basis which is 3.5%
n is the number of years the investment would last which is 5 years
FV=$1500*(1+3.5%)^5
FV=$1500*1.187686306
FV=$ 1,781.53
g Exodus Limousine Company has $1,000 par value bonds outstanding at 15 percent interest. The bonds will mature in 30 years. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Compute the current price of the bonds if the percent yield to maturity is
Question:
Exodus Limousine Company has $1,000 par value bonds outstanding at 15 percent interest. The bonds will mature in 30 years. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Compute the current price of the bonds if the percent yield to maturity is 10%
Note the tutor added 10% as the yield
Answer:
Price of bond= $1,471.35
Explanation:
The value of the bond is the present value (PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV) discounted at the yield rate
Value of Bond = PV of interest + PV of RV
The value of bond Exodus Limousine Company can be worked out as follows:
Step 1
PV of interest payments
PV = A × (1+r)^(-n)/r
A-annul interest payment:
= 15% × 1,000 = 150
r-Annual yield = 10%
n-Maturity period = 30
PV of interest payment:
=150× (1- (1+0.1)^(-30)/0.1= 1,414.037
Step 2
PV of Redemption Value
= 1000 × (1.1)^(-30) = 57.308
Step 3
Price of bond
=1,414.037 + 57.308 = 1,471.345
Price of bond= $1,471.345
On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $54,480. Calvin Co. has one recorded asset, a specialized production machine with a book value of $10,000 and no liabilities. The fair value of the machine is $78,000, and the remaining useful life is estimated to be 10 years. Any remaining excess fair value is attributable to an unrecorded process trade secret with an estimated future life of 4 years. Calvin’s total acquisition date fair value is $90,800.
At the end of the year, Calvin reports the following in its financial statements:
Revenues 65,550 Machine 13,590 Common stock 10,000
Expenses 29,250 Other assets 27,710 Retained earnings 31,300
Net income 36,300 Total assets 41,300 Total equity 41,300
Dividends paid 5,000
Required:
Determine the amounts that Beckman should report in its year-end consolidated financial statements for noncontrolling interest in subsidiary income, noncontrolling interest, Calvin’s machine (net of accumulated depreciation), and the process trade secret.
Answer:
Beckman noncontrolling interest in subsidiary income $10,520
Calvin Machine (net of accumulated depreciation) $71,200
Explanation:
To calculate noncontrolling interest in subsidiary's income;
Revenue $65,550
Expenses $39,250 (29,250 + $6,800 + $3,200)
Net Income $26,300
Noncontrolling percentage = 40%
NonControlling Income = $10,520
Depreciation of Machine = [tex]\frac{Fair value of Machine - Book value}{estimated useful life}[/tex]
[tex]\frac{78,000 - 10,000}{10 years}[/tex] = 6,800 per annum
Amortization of trade secrets = [tex]\frac{Fair Value Total - Machine value}{Useful life}[/tex]
Amortization of trade secrets = [tex]\frac{90,800 - 78,000}{4 years}[/tex]
= 3,200
Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 45,000 for January, 55,000 for February, and 50,000 for March. Cost of goods sold is $14 per unit. Other expense information for the first quarter follows.
Commissions....8% of sales
Rent....$14,000 per month
Advertising....15% of sales
Office salaries....$75,000 per month
Depreciation....$40,000 per month
Interest....15% annually on a $250,000 note payable
tax rate....30%
Prepare a budgeted income statement for this first quarter.
Answer:
Fortune, Inc.
Budgeted Income Statement
For the first quarter, 202x
January February March Total
Sales revenue $1,125,000 $1,375,000 $1,250,000 $3,750,000
Cost of goods sold $630,000 $770,000 $700,000 $2,100,000
Gross profit $495,000 $605,000 $550,000 $1,650,000
S&A expenses:
Rent $14,000 $14,000 $14,000 $42,000Office salaries $75,000 $75,000 $75,000 $225,000Sales comm. $90,000 $110,000 $100,000 $300,000Advertising $168,750 $206,250 $187,500 $562,500Depreciation $40,000 $40,000 $40,000 $120,000EBIT $107,250 $159,750 $133,500 $400,500
Income taxes $32,175 $47,925 $40,050 $120,150
Net income $75,075 $111,825 $93,450 $280,350
The following cost behavior patterns describe anticipated manufacturing costs for 2013: raw material, $8.20/unit; direct labor, $11.20/unit; and manufacturing overhead, $386,400 + $9.20/unit. Required: If anticipated production for 2013 is 42,000 units, calculate the u
Answer:
Note: The missing part of the question is "using variable costing and absorption costing. Explain the difference"
Solution
According to variable costing, the unit cost based was
= $8.20 + $11.20 + $9.20
= $28.6
According to absorption costing,
Total Manufacturing costs= Direct material + Direct labor + Overhead
= $8.20 + $11.20 + ($386,400/42,000 units) + $9.20
= $8.20 + $11.20 + $9.2 + $9.2
= $37.8
The difference between the variable costing and the absorption cost is because the product costing using variable costing method only includes variable costs.
This question explores the calculation of the unemployment rate. You will be provided some imperfect employment data for four different countries and asked to identify the unemployment rate. Task 1: The population of Asartaland is 95. Of these 95 individuals, 75 are in the labor force and 65 are employed. What is the unemployment rate in Asartaland
Answer:
Unemployment rate= 0.13= 13%
Explanation:
Giving the following information:
Of these 95 individuals, 75 are in the labor force and 65 are employed.
To calculate the unemployment rate, we need to use the following formula:
Unemployment rate= unmeployed population / labor force
Unemployment rate= 10/75
Unemployment rate= 0.13
[The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2017. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2017 Sales (11,300 units at $175 each) $ 1,977,500 Variable costs (11,300 units at $140 each) 1,582,000 Contribution margin $ 395,500 Fixed costs 315,000 Pretax income $ 80,500 Assume the company is considering investing in a new machine that will increase its fixed costs by $37,000 per year and decrease its variable costs by $8 per unit. Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine.
Answer:
Pretax income= $133,900
Explanation:
Giving the following information:
Selling price= $175
New unitary variable cost= $132
New fixed costs= 315,000 + 37,000= 352,000
Now, we can determine the new operating income:
Sales= 11,300*175= 1,977,500
Total variable cost= 11,300*132= (1,491,600)
Total contribution margin= 485,900
Fixed costs= (352,000)
Pretax income= 133,900
Presented here are the comparative balance sheets of Hames Inc. at December 31, 2020 and 2019. Sales for the year ended December 31, 2020, totaled $580,000.
HAMES INC.
Balance Sheets
December 31, 2020 and 2019
2020 2019
Assets
Cash $ 24,000 $ 21,000
Accounts receivable 78,000 72,000
Merchandise inventory 103,000 99,000
Total current assets $ 205,000 $ 192,000
Land 50,000 40,000
Plant and equipment 125,000 110,000
Less: Accumulated depreciation (65,000) (60,000)
Total assets $ 315,000 $ 282,000
Liabilities
Short-term debt $ 18,000 $ 17,000
Accounts payable 66,000 76,000
Other accrued liabilities 20,000 18,000
Total current liabilities $ 104,000 $ 111,000
Long-term debt 22,000 30,000
Total liabilities $ 126,000 $ 141,000
Stockholders’ Equity
Common stock, no par, 100,000 shares authorized
40,000 and 25,000 shares issued, respectively $ 74,000 $ 59,000
Retained earnings:
Beginning balance $ 82,000 $ 85,000
Net income for the year 53,000 2,000
Dividends for the year (20,000) (5,000)
Ending balance $ 115,000 $ 82,000
Total stockholders’ equity $ 189,000 $ 141,000
Total liabilities and stockholders’ equity $ 315,000 $ 282,000
Required:
1. Calculate ROI for 2020. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
2. Calculate ROE for 2020. (Round your answer to 1 decimal place.)
3. Calculate working capital at December 31, 2020.
4. Calculate the current ratio at December 31, 2020. (Round your answer to 2 decimal places.)
5. Calculate the acid-test ratio at December 31, 2020. (Round your answer to 2 decimal places.)
Answer:
1. 16.83%
2. 28.04%
3. $101,000
4. 1.97
5. 0.98
Explanation:
Return On Investment (ROI) = Net Profit After Tax / Total Assets × 100
= $53,000 / $ 315,000 × 100
= 16.825 or 16.83%
Return On Equity (ROE) =Net Profit After Tax / Total Shareholders Funds × 100
= $53,000 / $ 189,000 × 100
= 28.0423 or 28.04 %
Working Capital = Current Assets - Current Liabilities
= $ 205,000 - $ 104,000
= $101,000
Current Ratio = Current Assets / Current Liabilities
= $ 205,000 / $ 104,000
= 1.9712 or 1.97
Acid Test Ratio = (Current Assets - Inventory) / Current Liabilities
= ($ 205,000 - $ 103,000) / $ 104,000
= 0.98077 or 0.98
WACC and Cost of Common Equity
Kahn Inc. has a target capital structure of 45% common equity and 55% debt to fund its $10 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 12%, a before-tax cost of debt of 10%, and a tax rate of 25%. The company's retained earnings are adequate to provide the common equity portion of its capital budget. Its expected dividend next year (D1) is $3, and the current stock price is $34.
A. What is the company's expected growth rate?
B. If the firm's net income is expected to be $1.6 billion, what portion of its net income is the firm expected to pay out as dividends?
Answer:
A. What is the company's expected growth rate?
current stock price = expected dividend / (required rate of return - growth rate)
$34 = $3 / (12% - g)
12% - g = $3 / $34 = 8.82%
growth rate = 12% - 8.82% = 3.18%
B. If the firm's net income is expected to be $1.6 billion, what portion of its net income is the firm expected to pay out as dividends?
WACC = (equity x Re) + [debt x cost of debt x (1 - tax rate)]
12% = (45% x Re) + (55% x 10% x 0.75) = 0.45Re + 4.125%
0.45Re = 12% - 4.125% = 7.875%
Re = 7.875% / .45 = 17.5%
growth rate = (net income / equity) x (1 - dividend payout ratio)
3.18% = ($1.6 billion / $4.5 billion) x (1 - dividend payout ratio)
3.18% = 0.3556 x (1 - dividend payout ratio)
1 - dividend payout ratio = 3.18 / 0.3556 = 0.089
dividend payout ratio = 1 - 0.089 = 0.911
this means that the company distribute 91.1% of its net income to its stockholders
To prepare a budgeted balance sheet as of December 31, 2020, data is needed from the ______ December 31, 2019. income statement for the year ended
Answer and Explanation:
For preparing the budgeted balance sheet as of December 31,2020 we need to refer the data of balance sheet as of December 31,2019 so that the firm could get an idea.
Also by referring the income statement, statement of owner equity, profit and loss account we can get an idea so that it becomes easy for the company to prepare the budgeted balance sheet
Answer:
data is needed from the balanceh sheet as of
Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years or 30,000 hours. Using straight-line depreciation, calculate depreciation expense for the second year.
Answer:
$30,000
Explanation:
The computation of the depreciation expense for the second year using the straight line method is shown below:
As we know that
= (Original cost - residual value) ÷ (useful life)
= ($90,000) ÷ (3 years)
= $30,000
In this method, the depreciation is the same for all the remaining useful life
Hence, the second year depreciation expense is $30,000
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
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
What represents a difference in the process by which a monopolistic competitor and a monopolist make their respective decisions about quantity and price?
Answer:
There is no need for the monopolists to have the fear for entry
Explanation:
So, this particular problem or question is what is the part of economics known as the microeconomics. So, let us take the definitions of some important terms in the question which is going to assist us in solving this particular problem or question.
=> MONOPOLISTIC COMPETITOR: the term monopolistic competitor will also mean to say imperfect competitor. That is to say the kind of competition in which sellers or competitors compete in order for them to get some kind of advantage over the prices of goods and services in the market. The demand curve thus now has a download slope.
=> MONOPOLIST: Monopolists have advantage over the price of products or services in the market.
Statfeld Company's income statement for the current month shows that the company sold 300,000 units of its product and earned a net operating income of $450,000, Management is very pleased with the result and believes the company's financial position is strong because sales would have to go down by 40% from the current level before losses would occur. Management further believes that if the company runs a new TV commercial at a cost of $50,000 per month, sales volume next month could grow by 20% from the current sales level without the need to lower the sales price. If this action is taken, what will be the increase decrease in the next month's net operating income from the current month?
a. Increase of $175,000
b. Increase of $40,000
c. Increase of $225,000
d. Decrease by $50,000
e. None of the above.
Answer:
b. Increase of $40,000
Explanation:
Incremental Analysis of the Operating Profit arising from new TV commercial
Hint : Consider Incremental amounts Only
Operating Income ( $450,000 × 20 %) $90,000
Less Cost of new TV commercial ($50,000)
Incremental Income / (loss) $40,000
Conclusion :
There will be an increase in next month's net operating income from the current month of $40,000 .
1. A small-scale businessman deposits money at the beginning of each year into his savings account, depending on the level of the business’ returns. He deposits $1000 in the first year, $3000 in the second year, $5000 in the third and $7000 in the fourth year and annual interest rate of 7%. What is the value of the investment at the time of his first deposit?
Answer:
The value of the investment at the time of his first deposit is $13,855.
Explanation:
The Value of the Investment at the time of his first deposit is its Net Present Value.
Calculation of the Net Present Value of this Investment is as follows ;
Hint : Find the Present Value of individual deposits and sum them up
PV = FV / (1 + r) ^n
Year 0 = $1000 / (1.07)^0
= $1,000
Year 1 = $3000 / (1.07)^1
= $2,804
Year 2 = $5000 / (1.07)^2
= $4,367
Year 2 = $7000 / (1.07)^3
= $5,714
Net Present Value = $1,000 + $2,804 + $4,367 + $5,714
= $13,855
Fortune Enterprises is an all-equity firm that is considering issuing $13.5 million of perpetual debt. The interest rate is 10%. The firm will use the proceeds of the bond sale to repurchase equity. Fortune distributes all earnings available to stockholders immediately as dividends. The firm will generate $3 million of earnings before interest and taxes (EBIT) every year into perpetuity. Fortune is subject to a corporate tax rate of 40%. Suppose the personal tax rate on interest income is 55%, and the personal tax rate on equity income is 20%.
What is the annual after-tax cash flow to debt holders under each plan?
a. Debt holders get $0 mil. under the unlevered plan vs. 1.2 mil. under the levered plan
b. Debt holders get $1.2 mil. under the unlevered plan vs. 0.66 mil. under the levered plan
c. Debt holders get $0 mil. under the unlevered plan vs. 0.66 mil. under the levered plan
d. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan
Answer:
d. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan
Explanation:
interests paid to debt holders = $13,500,000 x 10% = $1,350,000
generally, interest revenue is taxed as ordinary revenue = corporate income tax rate (if debt holder is a business) or personal income tax (if debt holder is an individual).
under the first plan, debt holders get nothing because there is no outstanding debt since the company is an all equity firm.
under the second plan, if the personal tax rate on interest income is 55%, which is really high, the debt holders will earn $1,350,000 x (1 - 55%) = $607,500
A parent company exchanges 5,000 shares of its $2 par value common stock, with a market value of $10/share, for all of the shares owned by the subsidiary's shareholders, resulting in a $50,000 total purchase price. On the acquisition date, the subsidiary reported a book value of Stockholders' Equity of $37,500, comprised of $15,000 of Common Stock and $22,500 of Retained Earnings. An examination of the subsidiary's balance sheet revealed that book values were equal to fair values for all assets except for PPE (net), which has a book value of $20,000 and a fair value of $32,500.
a. Prepare the entry that the parent makes to record the investment.
b. Prepare the [E] and [A] consolidation entries.
Answer:
a. The entry that the parent makes to record the investment
Investment in Subsidiary $50,000 (debit)
Common Stocks $50,000 (credit)
b. Consolidation Entries
Common Stock (Subsidiary) $15,000 (debit)
Retained Earnings (Subsidiary) $35,000 (debit)
Investment in Subsidiary $50,000 (credit)
Explanation:
The entry that the parent makes to record the investment
Investment in Subsidiary $50,000 (debit)
Common Stocks $50,000 (credit)
Recognize the Investment in Subsidiary and recognize the Equity element : Common Stocks
Consolidation Entries
Common Stock (Subsidiary) $15,000 (debit)
Retained Earnings (Subsidiary) $35,000 (debit)
Investment in Subsidiary $50,000 (credit)
Eliminate Common Items and recognize Goodwill or Gain on Bargain Purchase if any.
Mary buys an annuity that promises to pay her $1,500 at the end of each of the next 20 years. The appropriate interest rate is 7.5%. What is the value of this 20-year annuity today?
Answer:
PV= $15,291.74
Explanation:
Giving the following information:
Annual cash flow= $1,5000
Number of years= 20
Interest rate= 7.5%
To calculate the present value, first, we need to determine the future value using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual cash flow
FV= {1,500*[(1.075^20) - 1]} / 0.075
FV= $64,957.02
Now, we can calculate the present value:
PV= FV/(1+i)^n
PV= 64,957.02/(1.075^20)
PV= $15,291.74
Maria, the landlord, refuses to fix a small leak in the roof that was there prior to the current tenant. Juan, the current tenant, has just discovered the leak after a heavy rain. The consequence is that black mold has been forming in the attic for quite some time. Juan still has significant time remaining on his lease. Juan has notified Maria in writing of the mold and leak issue but has received no response. He is concerned about the premises becoming unsafe to live in. It has been 14 days since he emailed her his notification. What are all of Juan’s options if Maria declines to do the repairs? Please discuss all remedies Juan may seek. Please remember to reference the contract and text to support your analysis.
Answer:
Please see answers below
Explanation:
Joan may as well put a call through to Maria in addition to his previous mail. Several remedial options are available to Juan and each has its own merits and demerits. It is proper for the tenant to consider each options carefully and seek legal opinion where necessary. However, if Maria declines to do the repairs, Juan may seek the following remedies
• Repair and deduct remedy . In this type of remedy, a tenant may deduct money that is equivalent of a month's rent to cover the cost of the repair or defect. Rental unit 156 covers a condition whether faulty or substandard rented unit could affect the tenant's health and safety. Since the landlord has refused to do the repair, she is guilty of implied warranty of habitability which includes leak in the roof, gas leak, no running water etc. Also, the tenant may not have to file a lawsuit against the landlord since this type of remedy has legal aid. Other conditions attached in addition to the above are ; the repairs cannot cost more than a month's rent, the tenant cannot use the repair and deduct remedy more that twice in any 12 month period, tenant must have informed the landlord in writing and through calls of the faulty area that requires repair. His family or pets must not be the cause of the faulty area that needed to be repaired etc.
• The abandonment remedy . Here, the tenant could move out of the faulty unit or defective rental unit due to its substandard condition which could affect his health and safety. Where the tenant uses the abandonment remedy judiciously, he is not liable to pay any other rent once he has abandoned or moved out of the defective rental unit. The conditions attached are that; the defects must be serious and directly related to the tenant's health and safety, the tenant or his family must not be the cause of the faulty space that requires repair. Moreover, the tenant must have informed the landlord whether in writing or orally telephone calls of the defects that requires repair.
• The rent withholding remedy. Legally, a tenant could withhold house rent if the landlord fails to take care of serious defects that negates the implied warranty of habitability. Conditions attached to this type of remedy are; the defects to be repaired must have threatened the tenant's safety and wellbeing. Again, the faulty or defective unit must be such that it becomes uninhabitable for the tenant . The tenant, his family or pets must not be the cause of the defects that requires repairs. The tenant must have also notified the landlord either through phone calls on in writing, amongst others.
• The tenant could also file a lawsuit against the landlord to recover the cost expended to fixing the faulty repairs where the landlord was not willing to do so. Conditions that must be met before this option could stand in the court of law are; the rental unit has serious defect that is not safe for living. A housing inspector has inspected the house and found to be short of minimum requirements for habitable place etc. A tenant may seek this type of redress where the option for out of court settlement has failed with the landlord.
Advika is a resident of India who exports hand-dyed fabrics to other nations. Since India has an exchange control system, what does this mean for Advika
Answer: The Reserve Bank of India keeps all of Advika’s foreign currency for her.
Explanation:
When a country uses exchange controls, it limits the amount of foreign currency that can come into a country. This is usually done to ensure stability in the money market of the country as well as to improve the balance of payments for the country.
One way of implementing exchange control is for all foreign currency to go through the Central bank of the country. Should a citizen need access to foreign currency, they would need to apply to the central bank to access it. With India having an exchange control system, the Reserve Bank of India keeps all foreign currency and Advika would have to apply for it should she need it.
Stanley Systems completed the following stock issuancetransactions:
May 19 Issued 1,200 shares of $2 par value common stock for cash of $12.00 per share.
Jun. 3 Isssued 500 shares of $8, no-par preferred stock for $25,000 cash.11 Received equipment with a market value of $70,000 in exchange for 4,000 shares of the $2 par value common stock
Requirements
1. Journalize the transactions. Explanations are not required.
2. How much paid-in capital did these transactions generate for
StanleyStanley
Systems?
Date
Accounts
Debit
Credit
May 19
Cash
Common Stock—$2 Par Value
Paid-In Capital in Excess of Par—Common
And if possible please help me with,
Pioneer Amusements Corporation had the following stockholders' equity on November 30:
Stockholders' Equity
Paid-In Capital:
Common Stock—$5 Par Value; 1,300 shares
authorized, 150 shares issued and outstanding $
750
Paid-In Capital in Excess of Par—Common 2,250
Total Paid-In Capital 3,000
Retained Earnings 56,000
Total Stockholders' Equity $
59,000
(Click the icon to view the stockholders' equity.) On December 30,Pioneer purchased 100 shares of treasury stock at $ 14 per share.
Read the requirements
1. Journalize the purchase of the treasury stock.
2. Prepare the stockholders' equity section of the balance sheet at December 31,
20182018.
Assume the balance in retained earnings is unchanged from
NovemberNovember
3030.
3. How many shares of common stock are outstanding after the purchase of treasury stock?
Date
Accounts and Explanation
Debit
Credit
Dec. 30
Treasury Stock—Common
1000
Cash
1000
Purchased treasury stock.
Answer:
cash 14,400 debit
common stock 2,400 credit
additional paid-in CS 12,000 credit
--to record May 19th transactions--
cash 12,500 debit
preferred stock 4,000 credit
additional paid-in PS 8,500 credit
--to record June 3th transactions--
Equipment 70,000 debit
common stock 8,000 credit
additional paid-in CS 62,000 credit
--to record third transactions--
Total paid-in afterl these three transactions:
12,000 + 8,500 + 62,000 = 82,500
Explanation:
1,200 shares x $12 each = $14,400 cash received
1,200 shares x $ 2 each = $ 2,400 common stock
Additional paid-in $ 12,000
500 shares x $25 = $12,500 cash received
500 shares x $ 8 = $ 4,000 preferred stock
addtional paid-in $ 8,500
70,000 equipment
common stock 4,000 shares x $2 = 8,000
additional paid-in 70,000 - 8,000 = 62,000
Following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2018:
Penske Stanza
Revenues 700,000 400,000
Cost of goods sold 250,000 100,000
Depreciation expense 150,000 200,000
Investment income Not given __
Dividend declared 80,000 60,000
Retained earnings 600,000 200,000
Current assets 400,000 500,000
Copyrights 900,000 400,000
Royal agreements 600,000 1,00,0000
Investment in stanza ---- -------
Liabilities 500,000 13,80,000
Common stock 600,000 200,000
Additional paid capital 150,000 80,000
On January 1, 2018, Penske acquired all of Stanza's outstanding stock for $680,000 fair value in cash and common stock. Penske also paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $440,000 book value but a fair value of $560,000.
a. As of December 31, 2018, what is the consolidated copyrights balance?
b. For the year ending December 31, 2018, what is consolidated net income?
c. As of December 31, 2018, what is the consolidated retained earnings balance?
d. As of December 31, 2018, what is the consolidated balance to be reported for goodwill?
Answer:
a. Consolidated Copyright
Penske (Book value) $900,000
Stanza (Book value) $400,000
Allocation $120,000
Less: Excess Amortization ($20,000)
Total $1,400,000
b. Consolidated Net Income 2019
Revenues $1,100,000
Expenses:
Cost of goods sold $350,000
Depreciation Expenses $350,000
$700,000
Excess amortization $20,000 $720,000
Consolidated Net Income $380,000
Workings
Cost of goods sold = 250,000 + 100,000 = 350,000
Depreciation Expenses = 150,000 + 200,000 = 350,000
3. Consolidated Retainer earnings on December 31,2018
Retained Earnings 1/1/28 $600,000
Net Income 2018 $380,000
Less: Dividend Declared 2018 (Penske) ($80,000)
Total $900,000
d. Consolidated Balance to be reported for goodwill
Stanza acquisition fair value $680,000
(10,000 in stock issue costs reduced
additional paid in capital)
Book value of subsidiary $480,000
(1/1/18 Stockholder equity balance)
Fair value in excess of book value $200,000
Less: Excess fair value allocated $120,000
to copy right based on fair value
Goodwill $80,000
Workings
Stockholder equity balance 1/1/18
Common stock 200,000
Additional paid-in capital 80,000
Retained earnings 200,000
Stockholder equity 480,000
Excess fair value
Copyright fair value 560,000
Less Copyright book value 440,000
Excess fair value allocated 120,000
Copyright year 6 years
Annual Excess Amortization $20,000