Answer:
Pelican Paper, Inc., and Timberland Forest, Inc.
Financial leverage and profitability ratios:
a) Debt Ratio = Total liabilities divided by Total assets x 100
Pelican = $1,000,000/$10,900,000 x 100
= 9.2%
Timberland = $5,500,000/$10,900,000 x 100
= 50%
Times Interest Earned Ratio = EBIT/Interest Expense
Pelican = $5,750,000/$100,000
= 57.5 times
Timberland = $5,750,000/$550,000
= 10.4 times
A discussion of their financial risk and ability to cover the costs in relation to each other:
C. Timberland's earnings will be more volatile. This additional risk is supported by the significantly lower times interest earned ratio of Timberland. Pelican can face a very large reduction in net income and still be able to cover its interest expense.
D. Timberland has a much higher degree of financial leverage than does Pelican. As a result, Timberland's earnings will be morevolatile, causing the common stock owners to face greater risk.
Explanation:
a) Data
Financial Statement Values:
Item Pelican Paper, Inc. Timberland Forest, Inc.
Total assets $10,900,000 $10,900,000
Total equity (all common) 9,900.000 5,400,000
Total debt 1,000,000 5,500,000
Annual interest 100,000 550,000
Total sales 23,000,000 23,000,000
EBIT 5,750,000 5,750,000
Earnings available for
common stockholders 3,394,800 3,174,000
b) Creditors provide half of the finances and effectively own 50% of Timberland. This contrasts with the debt ratio of Pelican, where creditors can lay claim to only 9.2% of the assets of the firm. Furthermore, Pelican can settle its debts with current earnings 57.5 times, compared to Timberland's interest coverage of 10.4 times.
Brief Exercise 8-5 Vaughn Company uses a periodic inventory system. For April, when the company sold 450 units, the following information is available. Units Unit Cost Total Cost April 1 inventory330$22$ 7,260 April 15 purchase380269,880 April 23 purchase 290 29 8,410 1,000 $25,550 Compute the April 30 inventory and the April cost of goods sold using the FIFO method. Ending inventory $ Cost of goods sold
Answer:
Results are below.
Explanation:
Giving the following information:
Units sold= 450 units
Units Unit Cost Total Cost
April 1 inventory= 330 units at $22
April 15 purchase= 380 units art $26
April 23 purchase= 290 units at $29
To calculate the ending inventory, first, we need to determine the number of units in ending inventory:
Ending inventory in units= 330 + 380 + 290 - 450= 550 units
Ending inventory FIFO= 290*29 + 260*26= $15,170
COGS= 330*22 + 120*26= $10,380
While walking along a beach, Daniel notices that several girls are wearing large, round plastic sunglasses and the boys are wearing metal sunglasses. Which concept most likely accounts for the similar fashion within a gender and the different fashions between genders? A. Consumerism B. Competition C. Individual behavior D. Peer pressure
Answer:
the correct answer should be A.
You are given three options. You may have the balance in an account that has been collecting 5 percent interest for 20 years, the balance in an account that has been collecting 10 percent interest for 10 years, or the balance in an account that has been collecting 20 percent interest for five years. Each account had the same original balance. Which account now has the lowest balance
Answer:
Third account has the lowest balance that is 2.49P.
Explanation:
First option,
Given interest rate = 5%
Time period = 20 years
Let the initial amount ( present value ) = P
First Account,
Given interest rate (n )= 5%
Time period (n ) = 20 years
Let the initial amount ( present value ) = P
Now find the Future value = PV(1+ r)^n
= P ( 1 + 5%)^20
= 2.65P
Second account:
Given interest rate (n ) = 10%
Time period (n ) = 100 years
Let the initial amount ( present value ) = P
Now find the Future value = PV(1+ r)^n
= P ( 1 + 10%)^10
= 2.59P
Thirs account:
Given interest rate (n ) = 20%
Time period (n ) = 5 years
Let the initial amount ( present value ) = P
Now find the Future value = PV(1+ r)^n
= P ( 1 + 20%)^5
= 2.49P
Suppose Ningbo Steel had sales revenue of $11,000 sales revenue, cost of goods sold of $5,000, operating expenses of $3000, interest expense of $1,000, a tax rate of 20%, and 1,000 shares of common stock outstanding. Based on this information, net profit after tax was:_________.
A. $1,600
B. $500
C. $1,000
D. $0
Answer:
A. $1,600
Explanation:
Ningbo Steel
Income Statement
Sales Revenue $11,000
Less Cost of goods sold $5,000
Gross Profit $6,000
Less Operating Expense $3,000
Earning Before Interest and Taxes $3,000
Less Interest Expense $1,000
Earning before Tax $2,000
Less Tax Expenses (2,000 *20%) $400
Net Profit after tax $1,600
4. Calculate the required rate of return for Manning Enterprises assuming that investors expect 3.5% rate of inflation in the future. The real risk-free rate is 2.5%, and the market risk premium is 6.5% Manning has a beta of 1.7, and its realized rate of return has averaged 13.5% over the past 5 years.
Answer: 17.05%
Explanation:
Given the variables available, the method to be used to calculate the required return is the Capital Asset Pricing Model with the formula;
Required Return = Nominal Risk-free rate + beta ( Market premium)
Nominal Risk-free rate = real risk-free rate + inflation
= 2.5% + 3.5%
= 6%
Required Return = 6% + 1.7 ( 6.5%)
Required Return = 6% + 11.05%
Required Return = 17.05%
Most economists believe that real economic variables and nominal economic variables behave independently of each other in the long run. For example, an increase in the money supply, a _____________ variable, will cause the price level, a __________ variable, to increase but will have no long-run effect on the quantity of goods and services the economy can produce, a _____________ variable. The notion that an increase in the quantity of money will impact the price level but not the output level is known as___________________.
Answer:
nominal; nominal; real; the classical dichotomy.
Explanation:
Most economists believe that real economic variables and nominal economic variables behave independently of each other in the long run. For example, an increase in the money supply, a nominal variable, will cause the price level, a nominal variable, to increase but will have no long-run effect on the quantity of goods and services the economy can produce, a real variable. The notion that an increase in the quantity of money will impact the price level but not the output level is known as the classical dichotomy.
A nominal variable is the monetary value of a security such as bonds or stocks, without considering any change in price caused by inflation. It is also referred to as the par value or face value.
A real variable measures goods and services taking into consideration any change in price or that has been adjusted for inflation so as to allow comparison of goods with respect to another goods or services.
Hence, if the money supply is increased, it will cause an increase in the price of goods and services but will have no effect on the gross domestic product (GDP), which is known as the classical dichotomy.
debit Product Warranty Expense; credit Cash b. debit Product Warranty Expense; credit Product Warranty Payable c. debit Product Warranty Payable; credit Cash d. debit Product Warranty Payable; credit Product Warranty Expense
Answer:
b. debit Product Warranty Expense; credit Product Warranty Payable
Explanation:
The journal entry for recording the estimated product warranty liability is shown below;
Product Warranty expense Dr XXXXX
To Product warranty payable XXXXX
(being the estimated product warranty liability is recorded)\
For recording this we debited the product warranty expense as it increased the expenses and credited the product warranty payable as it also increased the liabilities
Globus Autos sells a single product. 8 comma 3008,300 units were sold resulting in $ 84 comma 000$84,000 of sales revenue, $ 24 comma 000$24,000 of variable costs, and $ 18 comma 000$18,000 of fixed costs. If Globus reduces the selling price by $ 1.10$1.10 per unit, the new margin of safety is: (Round any intermedary calculations to the nearest cent.)
Answer:
$59,000
Explanation:
We will first determine the variable cost per unit
= $24,000/300
= $80
Contribution margin percentage =
$280 - ($80 - $1.10)/$280
= 0.72
= 72%
New break even point = $18,000/72%
= 25,000
Old break even point =
($280 - $80)/280
= 0.71
= 71%
= $18,000/71%
= $25,352
Margin of safety = $84,000 - $25,000
= $59,000
Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory.
Required:
What is the total amount to be budgeted for manufacturing overhead for the month?
Answer:
Budgeted overhead= $2,877.6
Explanation:
Giving the following information:
Direct labor required:
Production= 870 units
Direct labor hours= 870*0.25= 218 hours
Direct labor cost= $12 an hour
Manufacturing overhead is applied at a rate of 110% of direct labor costs.
To calculate the allocated overhead for the period, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Direct labor cost= 218*12= $2,616
Allocated MOH= 1.1*2,616= $2,877.6
Nathan works for a major automobile manufacturing company. His company is being sued by hundreds of customers who have been injured when the steering wheel airbags exploded upon a low-impact collision. The customers are demanding monetary damages. This lawsuit is based on
Answer:
Product liability, is the right answer.
Explanation:
The liability of a manufacturer or seller for handing over a defective commodity into the hands of the consumers is known as the product liability. The responsibility for handing over the defective product that causes injuries lies with the retailers of the product who are a part of the distribution chain. The law requires that the good sold to the consumer meets the ordinary expectations of the consumer. If the consumer's ordinary expectations aren't met due to an unexpected defect or danger, the consumer may ask for monetary damages.
You have a portfolio that is invested 16 percent in Stock A, 36 percent in Stock B, and 48 percent in Stock C. The betas of the stocks are .61, 1.16, and 1.45, respectively. What is the beta of the portfolio
Answer:
Beta= 1.2112
Explanation:
Giving the following information:
Stock A:
Proportion= 0.16
Beta= 0.61
Stock B:
Proportion= 0.36
Beta= 1.16
Stock C:
Proportion= 0.48
Beta= 1.45
To calculate the beta of the portfolio, we need to use the following formula:
Beta= (proportion of investment A*beta A) + (proportion of investment B*beta B) + (proportion of investment C*beta C)
Beta= (0.16*0.61) + (0.36*1.16) + (0.48*1.45)
Beta= 1.2112
Draw a curve that shows the relationship between the tax rate and the amount of tax revenue collected. The relationship between the tax rate and the amount of tax revenue collected is called the ______ curve. This curve shows that ______.
Answer:
Laffer curve.
Explanation:
Laffer Curve is developed by
Arthur Laffer. It is used to show the relationship between tax rates and the amount of tax revenue collected by governments of a particular country. Laffer curve is used to demonstrate Laffer’s argument that sometimes cutting tax rates can increase total tax revenue.
Laffer curve shows the relationship that occurs between the tax rate and the amount of tax revenue collected
The relationship between the tax rate and the amount of tax revenue collected is called the LAFFER CURVE curve. This curve shows that TAX CUT CAN INCREASE TAX REVENUE.
The drawing of a laffer curve has been attached
A firm sells 300,000 units per week. It charges $ 35 per unit, the average variable costs are $40, and the average costs are $55. In the long run, the firm should
firm sells 300,000 units per week. It charges $ 35 per unit, the average variable costs are $40, and the average costs are $55. In the long run, the firm should a. Shut-down as the firm is making a loss of $15 million per week b. Shut-down as the firm cannot cover the variable costs c. Shut down because the price is lower tha average cost d. None of the above
Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 70,000 units of RX5 follows.
Direct materials $ 4.00
Direct labor 8.00
Overhead 9.00
Total costs per unit 21.00
Direct materials and direct labor are 100% variable. Overhead is 80% fixed. An outside supplier has offered to supply the 70,000 units of RX5 for $20.00 per unit.
Required:
1. Calculate the incremental costs of making and buying component RX5.
Total incremental costs of: Making the units Buying the units
Total direct materials $ 244,000 $ 0
Total direct labor 488,000 0
Variable overhead costs 122,000 0
Cost to buy the units 1,159,000
Total costs $ 854,000 $ 1,159,000
Should the company continue to manufacture the part,
or should it buy the part from the outside supplier? Make the units
Answer:
1.Incremental cost of making and buying the RX5 is $434,000
2. Since the cost of buying is more than the cost of producing by $305,000, therefore, the company should continue to produce the component parts.
Explanation:
1.We need to first compute the cost of making the component part.
Cost of making are;
Direct material = 70,000 units × $4
= $280,000
Direct labor = $70,000 units × $8
= $560,000
Variable over head cost = 70,000 units × $9 × 20%
= $126,000
Therefore, total cost of making the components = direct material cost + direct labor cost + variable overhead cost
= $280,000 + $560,000 + $126,000
= $966,000
Also, total cost of buying the components
= Units × RX5 per unit
= 70,000 × $20
= $1,400,000
Therefore,
Incremental cost = Cost of making - Cost of buying
= $966,000 - $1,400,000
=$434,000
2. Total costs of making the units = Total direct material cost + Total direct labor costs + Variable overhead costs
= $244,000 + 488,000 + $122,000
= $854,000
Since total cost to buy is $1,159,000
Total incremental cost = Total cost of making the units - Total cost of buying the units
= $854,000 - $1,159,000
= $305,000
The petty cash fund has a current balance of $ 350, which is the established fund balance. Based on activity in the fund, it is determined that the balance needs to be changed to $ 550. Which journal entry is needed to make this change?
A. No journal entry is needed because this change only involves cash.
B. Debit the Petty Cash account and credit the Cash account for $200.
C. Debit the Cash account and credit the Petty Cash account for $200.
D. Debit the Petty Cash account and credit the Cash account for $550.
Answer:
i think the answer is B. Debit the Petty Cash account and credit the Cash account for $200.
Explanation:
All of the following are normally found in a corporation's stockholders' equity section, exceptAll of the following are normally found in a corporation's stockholders' equity section, except a. Paid-in-capital in excess of par b. Unearned Rent c. Retained Earnings d. Common Stock
Answer:
b. Unearned Rent
Explanation:
Shareholders Equity is the residual amount of Assets after deducting the Liabilities.
The Unearned Rent is a Liability and is not found in the Shareholders Equity Section.
Liabilities are Present obligations of an entity that arise as a result of past events, the settlement of which will result in out flow of economic benefits from the entity.
At first, it might seem that valuable commodities, such as cattle or lead bars, might be good forms of money. What makes paper money preferable to these alternatives
Answer:
This questions is incomplete, the options are missing. The options are the following:
a) It is less likely to be stolen.
b) It has more intrinsic value than cattle or lead bars.
c) It is divisible (unlike cattle) and easily portable (unlike lead bars).
And the correct answer is the option C: It is divisible (unlike cattle) and easily portable (unlike lead bars).
Explanation:
To begin with, the current paper money that is used nowadays has a lot of benefits in comparison with those other material valuable commodities due to the fact of all the characteristics that the paper money has. In addition, this currency is much more divisible than those other due to the fact that a one hundred dollar paper could turn into two fifty dollars papers. Besides, the paper money is much more portable than those others and the person could even carry more value in paper money than the same value but with those other commodities. And finally, the paper money is much more liquid than those other goods, so that indicates that is extremely easy to exchange for other thing, while the other options are not.
A. Suppose the wages of computer-factory workers rises. This will cause (the supply / the demand) of tablet computers to (shift in / shift out) , causing tablet computer price to (rise / fall) and quantity to (rise / fall) .
B. Suppose the price of notebook computers (a substitute for tablets) falls. This will cause (the supply / the demand) of tablet computers to (shift in / shift out) , causing price of tablet computers to (rise / fall) and quantity to (rise / fall) .
C. Suppose the number of tablet computer manufacturers rises. This will cause (the supply / the demand) the supply the demand of tablet computers to (shift in / shift out) , causing price to (rise / fall) and quantity to ( (rise / fall) .
D. Suppose an exciting new game is released that is only available on tablet computers. This will cause the supply / the demand the supply the demand for tablet computers to (shift in / shift out) , causing tablet computer price to (rise / fall) and quantity to (rise / fall) .
E. Suppose the prices for popular apps (complements to tablet computers) rise. This will cause (the supply / the demand) the supply the demand of tablet computers to (shift in / shift out) , causing tablet computer price to (rise / fall) and quantity to (rise / fall) .
Answer:
Supply, shift in , rise fall
the demand, shift in, fall ,fall
supply , shift out fall, rise
the demand , shift out rise rise
the demand shift in fall fall
Explanation:
If the wages of factory worker increases, it becomes more expensive to hire workers, the cost of production increases and the demand for labour would fall. as a result, production would fall and the supply of tablets would fall. a decrease in supply leads to an inward shift of the supply curve. as a result of the fall in supply, quantity would fall and there would be a rise in price.
Substitute goods are goods that can be used in place of another good. If the price of notebooks falls, it becomes cheaper to purchase notebooks, so the quantity demanded of notebooks would rise and the demand for tablets would fall since it is cheaper to buy a tablet. the demand curve for tablets would shift in as a result of the fall in demand. As a result, price and quantity of tablets would fall.
Increase in the number of manufactures would lead to an increase in supply. this would cause a rise in the supply of tablets. when there is a rise in supply, the supply curve shifts out, prices fall and quantity increases.
the new game would increase demand for tablets because people would be interested in playing the game. as a result of the rise in demand, the demand curve would shift out, the quantity would rise and prices would rise
A complement is a good that is consumed together with another good. if the price of apps rise, it would become more expensive to buy apps as result the demand for tablets would fall. the demand curve would shift in and price and quantity would fall
When the wages of factory worker increases, it becomes more expensive to hire workers, also the cost of production increases, and also the demand for labor would fall. as a result, when the production would fall also the supply of tablets would fall. when a decrease in supply leads to an inward shift of the supply curve. Although as a result of the fall in supply, the quantity would fall, and also there would be a price rise.
When Substitute goods are goods that can be used in place of another good. also If the price of notebooks falls, it becomes cheaper to purchase notebooks, so the quantity demanded of notebooks would rise, and also the demand for tablets would fall since it is cheaper to buy a tablet. the demand curve for tablets would shift in as a result of the fall in demand. So As a result, the price and also the number of tablets would fall.
When Increase in the number of manufacturers would lead to an increase in supply. this would cause a rise in the supply of tablets. when there are a rise in supply, the supply curve shifts out, prices fall, and also quantity increases.
When the new game would increase demand for tablets because people would be interested in playing the game. So as a result of the rise in demand, the demand curve would shift out, the quantity would rise and also prices would rise
Thus A complement is a good that is consumed together with another good. if the price of apps rises, it would become more expensive to buy apps as a result the demand for tablets would fall. Then the demand curve would shift in and price and also quantity would fall
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Mackinac purchased 10% of ABC stock for $100,000 on 1/1/17. For the Year Ended Market Value December 31, 2017 $109,000 December 31, 2018 89,000 December 31, 2019 106,000 The 12/31/19 balance of the Securities Fair Value Adjustment account is:
Answer:
$17,000 debit balance
Explanation:
Purchase price 1/1/17 $100,000
market price 12/31/17 $109,000
market price 12/31/18 $89,000
market price 12/31/19 $106,000
12/31/17
Dr Securities fair value adjustment (ABC stock) 9,000
Cr Unrealized gain/loss on ABC stock 9,000
12/31/18
Dr Unrealized gain/loss on ABC stock 20,000
Cr Securities fair value adjustment (ABC stock) 20,000
12/31/19
Dr Securities fair value adjustment (ABC stock) 17,000
Cr Unrealized gain/loss on ABC stock 17,000
Which of the following theories suggests that employee motivation is influenced by what other people contribute to and receive from the organization?
a. Expectancy theory
b. Equity theory
c. Needs-based theory
d. Need theory
e. Goal setting theory
Explanation:
good good morning everyone in the wind blows when Devon bless the wind blows the pic which snap on snap grip cycle Godfather lead in the cord few questions
The theory that suggests that employee motivation is influenced by what other people contribute to and receive from the organization is Equity theory. Thus option (b) is correct.
What is an organization?An organization is a group of individuals who work together in a structured and coordinated manner to achieve a common goal or objective.
It can be a formal entity, such as a corporation, or nonprofit organization, or an informal group, such as a sports team, community group, or social network.
They can operate in various industries and sectors, including finance, healthcare, education, manufacturing, and technology. The success of an organization depends on its ability to effectively manage its resources, achieve its goals, and adapt to changes in its environment.
The equity theory states that an employee gets motivation by what other people contribute to and receive from the organization is Equity theory.
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F Mining has $6 million in sales, its ROE is 20%, and its total assets turnover is 3.2x. The company has 40% equity financed (i.e., equity multiplier is 2.5). What is its net income? (DuPont analysis)
Answer:
$0.15 million
Explanation:
The formula for ROE can be used as a stepping stone to determining the value of net income:
ROE=Profit margin*Total asset turnover*Equity multiplier
ROE is 20%
total asset turnover is 3.2
equity multiplier is 2.5
20%=profit margin*3.2*2.5
20%=profit margin*8
profit margin=20%/8=2.5%
The formula for profit margin can now be used to determine net income.
profit margin=net income/sales
2.5%=net income/$6 million
net income=$6 million*2.5%
net income=$0.15 million
Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company has no preferred stock. The company sold 3,000 shares before the end of the year. There were no other stock transactions. The company's earnings per share is:
Answer:
EPS = $1.71 per unit
Explanation:
Earnings per share is the total earnings attributable to ordinary shareholders divided by the number of units of common stock .
It represents profit per unit of stock unit held by common stock holder investor. The higher the more profitable and the better.
Earnings per share = Earnings attributable to ordinary shareholders / units of common stock
Earnings attributable to ordinary shareholders= Net income after tax - preference dividend
Net income = 132,000
Preference dividend = Nil
Number of shares at the end of the year = Number of shares at the beginning - number of shares at the end
Number of shares at the end of the year = 80,000 - 3000 = 77,000 units
Earnings = = 132,000 - 0 = 132,000
Earnings per shares(EPS) = $132,000 / 77,000 units = $1.71 per unit
EPS = $1.71 per unit
A machine costing $57,000 with a six-year life and $54,000 depreciable cost was purchased January 1. Compute the yearly depreciation expense using straight-line depreciation.
Answer:
$9,000
Explanation:
The computation of the depreciation expense using the straight-line method is shown below;
= (Purchase value of machinery - residual value) ÷ (estimated useful life)
= $54,000 ÷ 6 years
= $9,000
The depreciation cost is the cost which is come after considering the salvage value and the same is to be considered
Hence, the depreciation expense is $9,000
Cooperton Mining just announced it will cut its dividend from $4.01 to $2.57 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 3.4% rate, and its share price was $50.07. With the planned expansion, Cooperton's dividends are expected to grow at a 4.7% rate. What share price would you expect after the announcement? (Assume that the new expansion does not change Cooperton's risk.) Is the expansion a good investment?
Answer:
$34.35
The price has fallen from $50.07 to $34.35 which means that Expansion will not be a good option.
Explanation:
Computation for the share price to expect after the announcement
Using this formula
Ke = [ D1 / P0 ] +g
Where,
D1 =$4.01
P0 = $50.07
g =3.4%
Let plug in the formula
Ke = [ D1 / P0 ] +g
Ke= [ $4.01 / $50.07] + 0.034
Ke= 0.0800+ 0.034
Ke= 0.1140
Second step is to find the Price after Expansion using this formula
P0 = D1 / [ Ke - g ]
Where,
D1=$2.57
Ke=0.1140
g=4.7%
Let plug in the formula
P0= $ 2.57 / [ 0.1140 - 0.047 ]
P0=$2.57/0.067
P0=$ 34.35
Based on this calculation, we can see that the price has fallen from $50.07 to $34.35 which means that Expansion will not be a good option.
Therefore the share price that you would expect after the announcement will be $34.35
On January 1, 1999, Luciano deposits 90 into an investment account. On April 1, 1999, when the amount in Luciano’s account is equal to X, a withdrawal of W is made. No further deposits or withdrawals are made to Luciano’s account for the remainder of the year. On December 31, 1999, the amount in Luciano’s account is 85. The dollar-weighted return over the 1-year period is 20%. The time-weighted return over the 1-year period is 16%. Calculate X.
Answer:
X = 107.63
Explanation:
From the given information:
The amount of interest earned on this account will be:
= 85 + W - 90
= W - 5
However; the dollar weight return rate is:
[tex]\dfrac{(W-5)}{(90 - \dfrac{3}{4*W})} = 0.2[/tex]
[tex]\dfrac{(W-5)}{(90 - 0.75W})} = 0.2[/tex]
W - 5 = 0.2(90 - 0.75W)
W - 5 = 18 - 0.15 W
W + 0.15 W = 18 + 5
1.15 W = 23
W = 23/1.15
W = 20
The time weighted return rate can be computed as:
[tex]0.16 = \dfrac{X}{90} \times \dfrac{85}{X-20} -1[/tex]
[tex]1+0.16 = \dfrac{X}{90} \times \dfrac{85}{X-20}[/tex]
[tex]1.16 = \dfrac{X}{90} \times \dfrac{85}{X-20}[/tex]
1.16×((90)(X-20)) = 85X
1.16 × (90X - 1800) = 85X
104.4X - 2088 = 85 X
104.4X - 85 X = 2088
19.4X = 2088
X = 2088/19.4
X = 107.628866
X = 107.63
The manager for a growing firm is considering the launch of a new product. If the product goes directly to market, there is a 40 percent chance of success. For $171,000, the manager can conduct a focus group that will increase the product's chance of success to 55 percent. Alternatively, the manager has the option to pay a consulting firm $386,000 to research the market and refine the product. The consulting firm successfully launches new products 70 percent of the time. If the firm successfully launches the product, the payoff will be $1.86 million. If the product is a failure, the NPV is zero.
1. Calculate the NPV for each option available for the project. (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g. 1,234,567.)
2. Which action should the firm undertake?
A. Consulting firm
B. Focus group
C. Go to market now
Answer:
1. Calculate the NPV for each option available for the project. (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g. 1,234,567.)
go to market now = $744,000focus group = $852,000consulting firm = $916,0002. Which action should the firm undertake?
A. Consulting firmThe NPV is higher than the rst of the options.
Explanation:
expected payoffs:
option 1 (go to market now) = (40% x $1.86 million) + 0 = $744,000option 2 (focus group) = (55% x $1.86 million) + 0 = $1,023,000option 3 (consulting firm) = (70% x $1.86 million) + 0 = $1,302,000expected NPVs:
option 1 (go to market now) = $744,000option 2 (focus group) = $1,023,000 - $171,000 = $852,000option 3 (consulting firm) = $1,302,000 - $386,000 = $916,000go to market now
Beatrice invests $1,320 in an account that pays 4 percent simple interest. How much more could she have earned over a 5-year period if the interest had been compounded annually
Answer:
How much more earned is $21.98
Explanation:
Calculation of the amount earned when investment in paying on simple interest
Interest = Amount * Interest rate * No of years
Interest = 1320 * 4% * 5
Interest = $264
Total amount = Interest + Amount invested
Total amount = $1320 + 264
Total amount = $1,584
Therefore, the total amount earned when earning on simple interest of 4% is $1,584
Calculation of the amount earned when investment interest in paying compounded annually
Pv= 1320
n= 5
i= 4%
Fv= ?
Fv= P(1+i)^-n
Fv= 1320(1+0.04)^5
Fv= 1320(1.04)^5
Fv= 1320(1.216652)
Fv= $1605.98
Therefore, the total amount earned when earning on interest compounded annually is $1,605.98
Calculation of how much more earned
Amount earned = Amount earned as per compounded interest - Amount earned as per simple interest
Amount earned = $1,605.98 - $1,584
Amount earned = $21.98
Therefore, how much more earned is $21.98
You have $256,000 to invest in a stock portfolio. Your choices are Stock H, with an expected return of 14.1 percent, and Stock L, with an expected return of 10.7 percent. If your goal is to create a portfolio with an expected return of 12.3 percent, how much money will you invest in Stock H and in Stock L
Answer: Investment in H = .4706($256,000)
Investment in H = $120,470.59
Investment in L = .5294($256,000)
Investment in L = $135,529.41
Explanation:
Investment in Stock H
Investment in Stock L
Here, the expected return of the portfolio and the expected return of the assets in the portfolio have been given and we're to calculate the dollar amount of each asset in the portfolio. So, we need to find the weight of each asset in the portfolio. Since the total weight of the assets in the portfolio must equal 1 (or 100%), we can find the weight of each asset as:
E[Rp] = .1230 = .141xH + .107(1 - xH)
xH = .4706
xL = 1 - xH
xL = 1 - .4706
xL = .5294
So, the dollar investment in each asset is the weight of the asset times the value of the portfolio, so the dollar investment in each asset must be:
Investment in H = .4706($256,000)
Investment in H = $120,470.59
Investment in L = .5294($256,000)
Investment in L = $135,529.41
Which of the following statements are true?
A. Different companies will use different charts of accounts based on individual company need.
B. The chart of accounts contains the balance of all the accounts in the ledger.
C. The general ledger contains all of the accounts that a company uses, along with detail of the balances in those accounts.
D. The general ledger and the chart of accounts can be ordered in any sequence because they are not formal financial systems.
Answer:
TRUE: A. Different companies will use different charts of accounts based on individual company need.
C. The general ledger contains all of the accounts that a company uses, along with detail of the balances in those accounts.
Explanation:
A. Different companies will use different charts of accounts based on individual company need.
A chart of accounts is the combination of all the accounts of an organization in an organized and structured model whose objective is to establish a codification so that there is a standardization of the company's financial information to assist the work of the accounting sector.
Therefore, each company will have a model chart of accounts referring to its activities and processes.
C. The general ledger contains all of the accounts that a company uses, along with detail of the balances in those accounts.
The general ledger can be defined as the set of all accounts held in the organization in detail.
Through the information in the accounts, the organization is able to correctly separate each one by type and carry out the organizational financial statement.
"An analysis of yield curves of U.S. Government and lower medium quality corporate bonds shows the yield spread to be widening over the last 4 months. This is an indication that investors expect the economy to:"
Explanation:
recession
Answer:
To be going into recessionary situation over the coming time period. The widening spread indicates that the yield on lower grade corporate bond are higher than normal relative to yield bonds issued by government. This situation is happening due to investors investing highly in government bonds leading to increase in yields.