Answer: b. We should expect less inflation but more unemployment
Explanation:
A high supply of money leads to higher inflation. This is because the citizens will have more money to spend on goods and services and so will demand more of them. As a result, the increased demand pulls prices upward. Reducing the money supply therefore will have the effect of reducing the amount of money that people have on hand. This will reduce their demand for goods and services which will then see their prices decrease as a result.
High money supply in the market however means that loans are easier to get because there is more money to give. This means that companies can embark on more projects. With a lower money supply, companies as well as individuals will reduce their borrowing. This will mean less capital projects which create employment. Lowering the money supply will therefore lead to higher unemployment.
Financial leverage: Group of answer choices is the ratio of a firm's revenues to its fixed expenses. is equal to the market value of a firm divided by the firm's book value. increases the potential return to the stockholders. is inversely related to the level of debt. increases as the net working capital increases.
Answer: Increases the potential return to the stockholders.
Explanation:
Financial Leverage is the use of more debt to fund company assets. This can lead to higher potential returns to the Stockholders if the interest rate attached to the debt is less than the Company's required rate of return. That way, the difference between the rates will bring about a positive return for shareholders.
Also, having more debt provides a sort of tax shield to the earnings of the Stockholders because Debt is Tax Deductible. This will therefore increase the earnings going to the Stockholders.
Summary: With 250,000 employees in 19 countries, Aramark wanted to motivate its employees who clean airplanes for Delta and Southwest Airlines. Turnover of the low-paid, largely immigrant staff was high while morale was low. Wallets and other valuables left on planes disappeared. After 5 years of efforts to increase motivation, revenue rose from $5 million to $14 million. 1. What motivation theories apply to the workers at Aramark? 2. If you were the manager of these employees, what would you do to motivate them? Be honest regarding your personal management style and beliefs rather than trying to be like Roy Pelaez. 3. What are some possible barriers to the effectiveness of your motivation ideas? What could you do to overcome them?
Answer:
Explanation:
(A)
What motivation theory applies to the workers at Aramark?
The workers should be motivated with payments for the return of valuables forgotten in the aircraft.
(B)
To motivate them, offer them a salary increase
(C)
Some possible barriers to the effectiveness of these motivation ideas are gluttony (depending on individual worker), a period of stiff or falling profit (which will hinder the smooth running of the new benefit policies), change of management.
(D)
What could you do, to overcome them?
To ensure that workers do not still steal forgotten valuables, place a check or supervision on them.
To ensure the profit level is maintained or increased, make sure the workers do not relent in their duties. Sometimes, more benefits make workers relax more.
"Pine Street Inc. makes unfinished bookcases that it sells for $57.10. Production costs are $37.94 variable and $10.50 fixed. Because it has unused capacity, Pine Street is considering finishing the bookcases and selling them for $72.02. Variable finishing costs are expected to be $7.14 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases. (Round answers to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)"
Answer and Explanation:
The Preparation of analysis on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases is prepared below:-
Particulars Sell unfinished Process further Net income
(loss)
Sales per unit $57.10 $72.02 $14.92
Cost per unit
Variable $37.94 $45.08 -$7.14
($37.94 + 7.14)
Fixed $10.5 $10.5
Total $48.4 $55.58 $7.78
Net income per
unit $8.66 $16.44 $7.78
From the above calculation The bookcases to be sold and process further.
Goodwin Technologies, a relatively young company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin is likely to pay its first dividend three years from now. She expects Goodwin to pay a $2.75000 dividend at that time (D₃ = $2.75000) and believes that the dividend will grow by 14.30000% for the following two years (D₄ and D₅). However, after the fifth year, she expects Goodwin’s dividend to grow at a constant rate of 3.72000% per year.
Goodwin’s required return is 12.40000%. Fill in the following chart to determine Goodwin’s horizon value at the horizon date (when constant growth begins) and the current intrinsic value.
To increase the accuracy of your calculations, do not round your intermediate calculations, but round all final answers to two decimal places.
Term Value
Horizon value $42.93
Current intrinsic value $29.84
1. If investors expect a total return of 13.40%, what will be Goodwin's expected dividend and capital gains yield in two years-that is, the year before the firm begins paying dividends?
2. Is this statement a possible explanation for why the firm hasn't paid a dividend yet?
A. Yes
B. NO
Answer:
horizon value at year 5 = Div₆ / (Re - g)
Div₆ = ($2.75 x 1.143²) x 1.0372 = $3.726384483Re = 12.4%g = 3.72%horizon value at year 5 = $3.726384483 / (12.4% - 3.72%) = $42.93
current value P₀ = $2.75/1.124³ + $3.14325/1.124⁴ + $46.52273/1.124⁵ = $1.937 + $1.969 + $25.932 = $29.838 ≈ $29.84
1) dividend yield = 0/$29.84 = 0%
capital gains yield = (P₁ - P₀) / P₀
P₁ = $2.75/1.124 + $3.14325/1.124² + $46.52273/1.124³ = $2.447 + $2.488 + $32.762 = $37.697 ≈ $37.70
capital gains yield = ($37.70 - $29.84) / $29.84 = 26.34%
2) Goodwin has yet to record a profit (positive net income). Is this statement a possible explanation for why the firm hasn't paid a dividend yet?
A. Yes
Since dividends must be paid out from net profits or retained earnings.
1. Dividend yield is = 26.34%
2. Goodwin has yet to record a profit (positive net income) Yes it is a correct statement.
Calculate Dividend Growth Rate
The horizon value at year 5 is = Div₆ / (Re - g)
Then, Div₆ is = ($2.75 x 1.143²) x 1.0372 = $3.726384483
After that, Re = 12.4%
Then, g = 3.72%
Now, When The horizon value at year 5 is = $3.726384483 / (12.4% - 3.72%) = $42.93
The current value P₀ is = $2.75/1.124³ + $3.14325/1.124⁴ + $46.52273/1.124⁵ is = $1.937 + $1.969 + $25.932 = $29.838 ≈ $29.84
1) dividend yield is = 0/$29.84 = 0%
After that, capital gains yield = (P₁ - P₀) / P₀
Hence, P₁ = $2.75/1.124 + $3.14325/1.124² + $46.52273/1.124³ = $2.447 + $2.488 + $32.762 = $37.697 ≈ $37.70
Therefore, capital gains yield = ($37.70 - $29.84) / $29.84 = 26.34%
2) Goodwin has yet to document a profit (positive net income). So, The correct option is = A. Yes
Since When The dividends must be paid out from net profits or retained earnings.
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Where can Costco improve? Should it offer more products or advertise more? Why or why not?
Answer:
Costco should advertise more.
Explanation:
Costco is following traditional ways to advertise its products. Most of the organizations prefer to spend huge sums of money on advertising its products. Costco should advertise its products and reach out to its customers and potential customers through marketing. It spends no budget on advertising. It only sends targeted emails to its existing customers. This strategy will not enhance its customer portfolio and new customers might not reach out the company.
Answer:
where can Costco improve
xplanation:
On July 23 of the current year, Dakota Mining Co. pays $6,110,400 for land estimated to contain 8,040,000 tons of recoverable ore. It installs machinery costing $723,600 that has a 10-year life and no salvage value and is capable of mining the ore deposit in eight years. The machinery is paid for on July 25, seven days before mining operations begin. The company removes and sells 414,250 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined.
Required:
Prepare entries to record:
a. the purchase of the land
b. the cost and installation of machinery
c. the first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.
d. the first five months' depreciation on the machinery.
Answer:
a.Purchase of Land
Land $6,110,400 (debit)
Cash $6,110,400 (credit)
b.Machinery Costs
Land $723,600 (debit)
Accounts Payable $723,600 (credit)
c. $314,830
d. $37,282.50
Explanation:
Purchase of Land
Land $6,110,400 (debit)
Cash $6,110,400 (credit)
Machinery Costs
Land $723,600 (debit)
Accounts Payable $723,600 (credit)
Depletion Expense = Cost of Asset / Expected Total Contents in Units × Number of Units taken in the Period.
= $6,110,400 / 8,040,000 tons × 414,250 tons
= $314,830
Depreciation Expense = Cost of Asset / Expected Total Contents in Units × Number of Units taken in the Period.
= $723,600 / 8,040,000 tons × 414,250 tons
= $37,282.50
Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $200,000 and semiannual interest payments.
Semiannual Period-End Unamortized Discount Carrying Value
(0) January 1, issuance $13,466 $ 186,534
(1) June 30, first payment 11,782 188,218
(2) December 31, second payment 10,098 189,902
Answer: Incomplete question.
the complete queston is
Use the above straight-line bond amortization table and prepare journal entries for the following.
(a) The issuance of bonds on December 31, 2020.
b) The first interest payment on June 30, 2021.
(c) The second interest payment on December 31, 2021.
find answer in explanation column.
Explanation:
Semiannual Period-End Unamortized Discount Carrying Value
(0) January 1, issuance $13,466 $ 186,534
(1) June 30, first payment 11,782 188,218
(2) December 31, second payment 10,098 189,902
1. to record issue of bonds payable
Date Account Debit Credit
Dec 31,2020 Cash(carrying value) $ 186,534
Discount on bonds payable $13,466
Bonds payable $200,000
2. To record first interest payment
Date Account Debit Credit
june 30, 2021 Interest expense $7,684
discount on bonds payable $1, 684
Cash $6,000
Calculation =
Cash paid towards interest every semi annual period = $200,000 X 6% X1/2 =$6,000.
interest expense = cash paid + discount on bonds payable written off.
= $6000 + $1, 684 = $7,684
discount on bonds payable = unamortised discount on 31 dec - unamortised discount on 30th june) ($13,466 -11,782 ==$1,684)
3.To record second interest payment on december 31,2021.
Date Account Debit Credit
Dec. 31 ,2021 Interest expense $7,684
discount on bonds payable $1.684
Cash $6,000
Calculation
discount on bonds payable = unamortised discount on 30th june - unamortised discount on 31st december 2021 =11,782-10,098 = $1.684
The beta of an all equity firm is 2.3. If the firm changes its capital structure to 50% debt and 50% equity using 8% debt financing, what will be the equity beta of the levered firm
The beta of an all equity firm is 2.3. If the firm changes its capital structure to 50% debt and 50% equity using 8% debt financing, what will be the equity beta of the levered firm? The beta of debt is 0.2. (Assume no taxes.) Provide your answer with 2 digits after the comma.
Answer:
4.40
Explanation:
Equity beta, is a term in business or economics, which is.oftemr referred to as Levered beta, which measures the risk of a firm in respect to debt and equity in its capital structure to the volatility of the stock market.
Therefore, Formula for equity beta is giving as = βE = equity firm + (debt/equity)(equity firm - beta of debt)
Given that, equity firm = 2.3
Capital structure to debt = 50% = 0.5
Capital structure to equity = 50% = 0.5
Beta of debt = 0.2
βE = 2.3 + (0.5/0.5)(2.3 - 0.2) =
2.3 + (0.5/0.5)(2.3 - 02) =
= 2.3 + (1)(2.1)=
2.3 + 2.1= 4.40
Hence, the final is 4.40
On September 11, 2016, Home Store sells a mower for $450 with a one-year warranty that covers parts. Warranty expense is estimated at 9% of sales. On July 24, 2017, the mower is brought in for repairs covered under the warranty requiring $32 in materials taken from the Repair Parts Inventory.
Prepare the September 11, 2016, entry to record the mower sale, and the July 24, 2017, entry to record the warranty repairs.
Answer:
Date Accounts Titles and Explanations Debit Credit
Sept, 11 Cash $450
2016 Sales $450
(To record the Cash Sales)
Sept, 11 Warranty Expenses $40.50
2016 ($450 x 9%)
Estimated Warranty Payable $40.50
(To record the Warranty Expenses)
July, 24 Estimated Warranty Payable $32
2017 Repairs Parts Inventory $32
(To record the material taken from Inventory)
When generating a globalized marketing plan, a Japanese company called Trusco decided to implement a localization strategy when introducing its work and tool products into the Swiss and Canadian markets. In order to reach the new markets, Trusco needed to translate its product packaging, consider the political and economic environments, identify its competitors, and consider other areas of the marketing mix that require additional localization efforts. Which of the following statements matches best with Trusco's experience in generating its marketing plan?
a. Generating worldwide marketing plans requires most companies to communicate one identical message to all global markets.
b. Creating a global marketing plan is a task that can be accomplished with very little effort.
c. Creating a global marketing plan is a complex task.
Answer:
c. Creating a global marketing plan is a complex task.
Explanation:
It is correct to say that creating a global marketing plan is a complex task.
There are several barriers that can spell failure if the international company's strategy is poorly planned.
Therefore, the ideal is to research in depth about the new market to which the organization intends to enter.
In addition to legally adapting to local legislation, the company must analyze and plan to generate local interest in its products and services.
This requires market research that seeks to identify your target audience, what are their particularities, preferences, characteristics and needs.
The set of variables in the marketing mix: price, product, place and promotion, should also be adapted to the location where the company is located, the key to success is adaptation and the strategy aligned with the location.
The Closed Fund is a closed-end investment company with a portfolio currently worth $200 million. It has liabilities of $3 million and 5 million shares outstanding. a. What is the NAV of the fund?
Answer:
$39.40
Explanation:
According to the situation, the solution is as follows
The Net asset value of the fund is
= (Current worth of portfolio - liabilities) ÷ (outstanding shares)
= ($200 million - $3 million) ÷ (5 million shares)
= $39.40
Basically we applied the above formula in order to determine the net asset value of the fund.
Johnson Industries manufactures a popular interactive stuffed animal for children that requires four computer chips inside each toy. The company pays $ 3 for each computer chip. To help to guard against stockouts of the computer chip, Johnson Industries has a policy that states that the ending inventory of computer chips should be at least 25% of the following month's production needs. The production schedule for the first four months of the year is as follows:
Stuffed animals to be produced
January 6,000
February 4,600
March 4,600
April 4,200
Requirement:
1. Prepare a direct meterials budget for the first quarter that shows both the number of computer chips needed and the dollar amount of the purchases in the budget.
2. Prepare the direct materials budget by first calculating the total quartile needed, than complete the budget.
Answer:
January February March
Budgeted Materials Purchase (units) 28,600 18,400 18,000
Budgeted Materials Purchase $85,800 $55,200 $54,000
Explanation:
Direct materials budget for the first quarter
January February March
Budgeted Production 6,000 4,600 4,600
Budgeted Material 24,000 18,400 18,400
Add Budgeted Closing Inventory 4,600 4,600 4,200
Materials Needed 28,600 23,000 22,600
Less Budgeted Opening Inventory 0 (4,600) (4,600)
Budgeted Materials Purchase 28,600 18,400 18,000
Cost of computer chip $3 $3 $3
Budgeted Materials Purchase $85,800 $55,200 $54,000
A company had the following cash flows for the year: (a) Purchased inventory, $60,000 (b) Sold goods to customers, $90,000 (c) Received loan from a local bank, $150,000 (d) Purchased land, $180,000 (e) Purchased treasury stock, $40,000 (f) Paid dividends, $10,000 (g) Sold delivery truck, $30,000 What amount would be reported for net investing cash flows on the Statement of Cash Flows
Answer:
($150000)
Explanation:
The computation of the net investing cash flows is shown below;
Purchase of land ($180,000)
Sale of delivery truck $30,000
Net Cash used in Investing activities ($150000)
The purchase of land is an outflow of cash and the sale of delivery truck is a inflow of cash so it would be shown in a negative and positive amount
Thus all other values would be ignored
Cheetah Copy purchased a new copy machine. The new machine cost $140,000 including installation. The company estimates the equipment will have a residual value of $35,000. Cheetah Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Year Hours Used 1 3,000 2 2,000 3 2,000 4 2,000 Required: 1. Prepare a depreciation schedule for four years using the straight-line method. (Do not round your intermediate calculations.)
Answer:
Depreciation expense in year 1 = $26,250
Depreciation expense in year 2 = $26,250
Depreciation expense in year 3 = $26,250
Depreciation expense in year 4 = $26,250
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($140,000 - $35,000) / 4 = $26,250
Computing and analyzing acid-test and current ratios LO A1
Case X Case Y Case Z
Cash $ 2,000 $ 110 $ 1,000
Short-term investments 50 0 580
Current receivables 350 470 700
Inventory 2,600 2,420 4,230
Prepaid expenses 200 500 900
Total current assets $ 5,200 $ 3,500 $ 7,410
Current liabilities $ 2,000 $ 1,000 $ 3,800
Compute the current ratio and acid-test ratio for each of the above separate cases.
Current Ratio
Choose Numerator: Choose Denominaa Current Ratio
/ = Current ratio
Case X / = to 1
Case Y / = to 1
Case Z / = to 1
Acid-Test Ratio
Choose Numerator: Choose Denominator: Choose cid-Test Ratio
/ = Acid-test ratio
Case X / = to 1
Case Y / = to 1
Case Z / = to 1
Answer:
Current ratio
Case X 2.60
Case Y 3.50
Case Z 1.95
Acid -test ratio
Case X 1.20
Case Y 0.58
Case Z 0.60
Explanation:
Computation of the current ratio and acid-test ratio
CURRENT RATIO
Particulars Choose Numerator / Choose denominator = Current Ratio
Formula Current Assets / Current Liabilities = Current Ratio
Case X $5,200.00 / $2,000.00 = 2.60 to 1
Case Y $3,500.00 / $1,000.00 = 3.50 to 1
Case Z $7,410.00 / $3,800.00 = 1.95 to 1
ACID - TEST RATIO
Particulars Choose Numerator / Choose denominator = Acid Test Ratio
Formula Quick Assets / Current Liabilities = Acid Test Ratio
Case X $2,400.00 / $2,000.00 = 1.20 to 1
Case Y $580.00 / $1,000.00 = 0.58 to 1
Case Z $2,280.00 / $3,800.00 = 0.60 to 1
Note:
Quick Asset
Case X
Cash $ 2,000
Short-term investments 50
Current receivables 350
=$2,400
Case Y
Cash $ 110 $
Short-term investments 0
Current receivables 470
=$580
Case Z
Cash $ 1,000
Short-term investments 580
Current receivables 700
=$2,280
Therefore:
Current ratio will be:
Case X 2.60
Case Y 3.50
Case Z 1.95
Acid -test ratio will be:
Case X 1.20
Case Y 0.58
Case Z 0.60
The profit leverage effect (ratio) is calculated by A. dividing 1.0 by the profit margin. B. dividing pretax earnings by the cost of goods sold. C. dividing sales by the cost of goods sold. D. none of the above
Answer:
D. none of the above
Explanation:
The profit leverage effect shows that in order to increase net profits, it is better and more efficient to reduce operating expenses rather than increasing total net sales revenue. I.e. a $1 decrease in costs increases operating profits by $1, which is much more than the increase resulting from increasing sales by $1.
How can you filter the for review tab to see all the transactions quickbooks online thinks it has found a good match for?
Answer:
Click on the Recognized tab
Explanation:
If you want to filter the for review tab to find the good match all you have to do is:
Step 1: Go at "For Review" Tab
Step 2: Above the transactions their will be Recognized Tab. Click on it which would filter all the transactions that provides a good match.
nterest rates on 2-year Treasury securities are currently 6.0%, while 6-year Treasury securities yield 6.5%. If the pure expectations theory is correct, what does the market believe that 4-year securities will be yielding 2 years from now
Answer:
The market believes that 4-years from now, the 4-year securities will be 6.75%
Explanation:
We proceed as follows using the pure expectations theory .
The theory states that the future rates are exclusively represented by the forward rate.
Mathematically;
(1 + .065)^6 = (1 + .^206)2 * (1 + x)^4
1.4591 = 1.1236 * (1 + x)^4
Divide both sides by 1.1236
1.2986 = (1 + x)^4
Take both sides to the 1/4 power to get rid of the power of 4
1.0675= 1 + x
x = .0675 or 6.75%
Classify the following costs incurred by a manufacturer of golf clubs as product costs or period costs. Also classify the product costs as direct materials or conversion costs.
a. Depreciation on computer in president's office
b. Salaries of legal staff
c. Graphite shafts
d. Plant security department
e. Electricity for the corporate office
f. Rubber grips
g. Golf club heads
h. Wages paid assembly line maintenance workers
i. Salary of corporate controller
j. Subsidy of plant cafeteria
k. Wages paid assembly line production workers
l. National sales meeting in Orlando
m. Overtime premium paid assembly line workers
n. Advertising on national television
o. Depreciation on assembly line
Answer:
a. Period Cost
b. Period Cost
c. Product Costs : conversion costs
d. Product Costs : conversion costs
e. Period Cost
f. Product Costs : direct materials
g. Product Costs : direct materials
h. Product Costs : conversion costs
i. Period Cost
j. Product Costs : conversion costs
k. Product Costs : conversion costs
l. Period Cost
m.Product Costs : conversion costs
n. Period Cost
o. Product Costs : conversion costs
Explanation:
Product Cost
Product Costs are included in Inventory/Product Valuation. All Manufacturing Costs are Product costs.
Direct Materials
The Costs of Materials that can be directly traced to the Cost Object (golf clubs)
Conversion Cost
Cost of Direct labor and Overheads cost incurred during the production of the cost object.
Period Cost
Period Costs are not included in Inventory or Product valuation. All non-manufacturing costs are period costs. These are expensed inthe period they are incurred.
A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8.90 per stone for quantities of 600 stones or more, $9.30 per stone for orders of 400 to 599 stones, and $9.80 per stone for lesser quantities. The jewelry firm operates 108 days per year. Usage rate is 26 stones per day, and ordering costs are $46.
a. If carrying costs are $2 per year for each stone, find the order quantity that will minimize total annual cost.
b. If annual carrying costs are 20 percent of unit cost, what is the optimal order size?
c. If lead time is 5 working days, at what point should the company reorder?
Answer:
MOST LIKELY it's B
Explanation:
if not I'm really sorry I tried
A 5-year corporate bond yields 7.0%. A 5-year municipal bond (tax exempt bond) of equal risk yields 5.0%. Assume that the state tax rate is zero. At what federal tax rate are you indifferent between the two bonds?
Answer:
The tax rate is approximately(rounded to a whole) 29%
Explanation:
The federal tax that would make an investor indifferent between the 5-year corporate bond and the 5-year municipal bond can be derived by equating the return on the former to the taxable return of the latter as below:
5%=7%*(1-t)
where the t is the unknown tax rate
Note that the return on 5-year corporate bond is taxable while the return on the municipal bond is tax-free
5%=7%*(1-t)
5%/7%=1-t
0.7143 =1-t
t=1-0.7143
t=29%
Coolibah Holdings is expected to pay dividends of $ 1.00 every six months for the next three years. If the current price of Coolibah stock is $ 21.90, and Coolibah's equity cost of capital is 14%, what price would you expect Coolibah's stock to sell for at the end of three years?
Answer: The price that would be expected for Coolibah's stock to sell for at the end of three years is $28.87
Explanation: It should be noted that to calculate a price that would be expected in Coolibah's stock to sell for at the end of three years can be calculated using financial calculator:
A) Using a financial calculator, PV = -$22.60 , PMT = $1.20, n = 6, I = 18% / 2;
calculate FV = $28.87 .
Managers are important members of the organization. Within an organization, there are managers at four levels: top, middle, first-line, and team leaders.
a. True
b. False
Answer:
The correct answer is the option B: False.
Explanation:
To begin with, the managers are one of the most important parts of the organization due to the fact that they have the task to plan, organize, direct and control the operations of the company. There are at least three levels in which the managers can go and have their work done, like the management area(high), the department areas(middle) and the operations area(low): However, that will depend on the organization and its size due to that an organization can only have managers at one level.
Stocks are shares of ownership in a company. A stock certificate represents stock ownership. It specifies the name of the company, the number of shares owned, and the type of stock it represents. Today, stock is generally held electronically; that is, the owners don't get a paper certificate unless they specifically want to hold the certificates themselves.
Please evaluate the following statements from the standpoint of the issuing company and the place each statement in the category of Advantages or Disadvantages Disadvantage
Advantages Dividends
1. Repaid
2. Shareholders
3. Future Buy Back
4. Net Profit After Taxes
5. One Vote Per Share
Answer:
Advantages
Dividends
These are payments to shareholders as a way to share the profits the company has accumulated.
This is an advantage to the issuing company because they are usually not under any obligation to pay Dividends with respect to common Equity. As a result profits can be plowed back into the company to increase profitability.
Repaid
This refers to the fact that shareholders do not have to be repaid for their investment like debt holders are. Stock Holders bought a piece of the company instead of loaning money to the company so they do not have to be paid back. This is an advantage because it frees up Cashflow for the company as well as allowing it to maintain a better credit rating due to lower debts.
Future Buy-Back
This is a clause inherent in most shares. It means that the Issuing company can choose to buy back the stock at a given time in future.
This is an Advantage because it allows the Issuing company to regain control of the company at a future date.
Disadvantages.
Shareholders
Shareholders are people or entities who buy shares in the Issuing company. As such, they are owners in the company and have voting rights on decisions that the company makes. This is a disadvantage because it means loss of Independence for the company who now legally have to take the opinions of shareholders into account.
Net Profit After Tax
This is money that the company has after paying off interests and then taxes. This is the money that the company retains. Having shareholders means that a company may have to pay shareholders from this amount instead of retaining all of it thereby making it at a disadvantage to the Issuing company.
One Vote per Share
This means that every shareholder has a vote for every share they hold in the company. This means that Shareholders therefore have a say in the affairs of the company. This is a disadvantage to the Issuing company because it means a loss of Independence for them when decisions need to be made.
Twelve months ago, you purchased 10-year Treasury notes with a face value of $1,000. The interest rate is 2.45 percent. What is the dollar amount of interest you will receive each year for each note? (Round your answer to 2 decimal places.)
Answer:
$24.50
Explanation:
Relevant data provided
Face value = $1,000
Interest rate = 3.45%
Based on the above information
The computation of the dollar amount of interest is shown below:-
Interest per year = Face value × Interest rate
= $1,000 × 2.45%
= $24.50
Therefore for computing the interest per year we simply applied the above formula.
The common stock of Sweet Treats is selling for $50.15 per share. The company is expected to have an annual dividend increase of 3.6 percent indefinitely and pay a dividend of $3.80 in one year. What is the total return on this stock?
Answer:
11.2%
Explanation:
Here, we want to calculate the total return on the stock.
From the question, Price = $50.15
Mathematically;
P = D1/Ke-g
D1 = $3.80
g = 3.60%
So let’s calculate Ke-g
50.15 = 3.8/ke-g
Ke-g = 3.8/50.15
Ke-g = 7.6%
but g = 3.6%
Total return Ke = 3.6% + g = 3.6% + 7.6% = 11.2%
On January 1, 2020, Piper Corp. purchased 40% of the voting common stock for of Betz, Inc. for $2,000,000 and appropriately accounts for its investment by the equity method. During 2020, Betz reported earnings of $720,000 and paid dividends of $240,000. Ignore the dividend-received deduction. Piper's current enacted income tax rate is 21%. The increase in Piper's deferred income tax liability for this temporary difference is
Answer:
$57,600
Explanation:
The computation of the increase in Piper's deferred income tax liability for this temporary difference is shown below:-
Purchase of voting Common stock of Betz inc. by Piper Corp.= ( Betz's reported earnings - Betz Paid Dividends ) × (Percentage of the voting Common stock of Betz inc.)
= ($720,000 - $240,000) × 40%
= $480,000 × 40%
= $192,000
Now, the rise in Piper's deferred income tax liability for this temporary difference is
Purchase of voting Common stock of Betz inc. by Piper Corp. × enacted tax rate
= $192,000 × 30%
= $57,600
A company's product sells at $12 per unit and has a $5 per unit variable cost. The company's total fixed costs are $98,000. The contribution margin per unit is:
Answer:
The contribution margin per unit is $7
Explanation:
The contribution margin per unit can be defined as the difference between the selling price per unit and the variable cost per unit.
Contribution margin per unit = Selling price - Variable cost
Contribution margin per unit = $12 - $5
Contribution margin per unit = $7
The contribution margin per unit is $7
Consider a mutual fund with $200 million in assets at the start of the year and 10 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of $2 million. The stocks included in the fund's portfolio increase in price by 8%, but no securities are sold and there are no capital gains distributions. The fund charges 12b-1 fees of 1%, which are deducted from portfolio assets at year-end. a. What is the fund's net asset value at the start and end of the year?
Answer:
At start = $20/share
At end = $21.384
Explanation:
DATA
ASSets at the start = $200m
Outstanding shares = 10m
Dividend income at the end = $2m
Gain in price = 8%
12b-1 fees = 1%
A.
Net assets at the start can be calculated by dividing assets at the start by outstanding shares
Net Assets value at start = Assets at start/Outstanding shares
Net Assets value at start = $200m/10m
Net Assets value at start = $20/share
Net Assets value at the end can be calculated by multiplying gain price with 12b-1 fees
Net assets value at the end = Gain Price x (1-12b-1 fees)
Net Assets value at the end = ($20x$1.08) x (1 - 0.01)
Net Assets value at the end = $21.6 x 0.99
Net Assets value at the end = $21.384
. Find the accumulated present value of a continuous income stream that earns 4.2% interest annually, when $4000 is deposited per year for 30 years in the account.
Answer:
The accumulated present value is $67,518.99.
Explanation:
Investment opportunities that require a series of payments of a fixed amount for a specific number of periods are known as annuities.
The Present Value of this annuity can be calculated as :
Fv = $0
n = 30
r = 4.2 %
Pmt = - $4,000
P/ yr = 1
Pv = ?
Using a financial calculator, the Present Value (PV) of the annuity is $67,518.9948 or $67,518.99.