The relationship between financial leverage and profitability   Pelican​ Paper, Inc., and Timberland​ Forest, Inc., are rivals in the manufacture of craft papers. Some financial statement values for each company follow .
Item Pelican Paper, Inc. Timberland Forest, Inc.
Total assets $10,900,000 $10,900,000
Total equity (all common) 9900000 5400000
Total debt 1000000 5500000
Annual interest 100000 550000
Total sales 23000000 23000000
EBIT 5750000 5750000
Earnings available for
common stockholders 3394800 3174000
Use them in a ratio analysis that compares the​ firms' financial leverage and profitability.
The debt ratio for Pelican is ​%.
(Round to one decimal​ place.)
The debt ratio for Timberland is ​%.
(Round to one decimal​ place.)
The times interest earned ratio for Pelican is.​
(Round to one decimal​ place.)
The times interest earned ratio for Timberland is.
​ (Round to one decimal​ place.)
Discuss their financial risk and ability to cover the costs in relation to each other. ​ (Select all the answers that​ apply.)
A. Pelican has a much higher degree of financial leverage than does Timberland. As a​ result, Pelican's earnings will be more​volatile, causing the common stock owners to face greater risk.
B. ​Pelican's earnings will be more volatile. This additional risk is supported by the significantly lower times interest earned ratio of Pelican. Timberland can face a very large reduction in net income and still be able to cover its interest expense.
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 more​volatile, causing the common stock owners to face greater risk.

Answers

Answer 1

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 more​volatile, 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.


Related Questions

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.)

Answers

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

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)

Answers

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

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?

Answers

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

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

Answers

Answer:

the correct answer should be A.

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

Answers

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 = $916,000

2. Which action should the firm undertake?

A. Consulting firm

The 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 = $1,302,000

expected 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 = $916,000

go to market now

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.

Answers

Answer:

i think the answer is B. Debit the Petty Cash account and credit the Cash account for $200.

Explanation:

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:

Answers

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

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​ ______.

Answers

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

Answers

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

Answers

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

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

Answers

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

Answers

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

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?

Answers

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

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.

Answers

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%

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

Answers

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

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) .

Answers

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 Supply, shift in, rise fallThen the demand, shift in, fall, fallAfter that supply, shift outfall, riseThen the demand, shift out the rising riseThen the demand shift in fall fallDemand and supply

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

Find out more information about Demand and supply here:

https://brainly.com/question/12252562

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.

Answers

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

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

Answers

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.

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___________________.

Answers

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.

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:

Answers

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

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

Answers

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

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

Answers

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

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

Answers

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.

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

Answers

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.

Learn more about an organization here:

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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

Answers

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.

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.

Answers

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:"

Answers

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.

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

Answers

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

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.

Answers

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

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

Answers

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

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