Answer: C. interest payments on the debt stay fixed, leaving more income to be distributed over less shares.
Explanation:
When the Earnings Before Interest and Taxes (EBIT) is higher, it means that after the interest payment (which is a fixed amount) has been deducted, there will be more income going to shareholders.
It is important to note that when there is leverage, there will be less shares than in the case of no leverage because no leverage would require more shares for adequate financing. Leverage does not require as much shares so the income left after interest payment deductions will therefore go to less shares.
Consider a stock with current year dividend equal to $2.00 per share. You believe the dividend will grow 15% per year for 10 years and 4% per year thereafter.The required equity rate of return (and your hurdle rate) is 10%. What is the fair price of the stock? Assuming the market price of the stock is $70, what is the expected return?
Answer:
a. Fair price of the stock = $79.82
b. The expected return is 7.29%
Explanation:
a. What is the fair price of the stock?
Note: See the attached file for the calculation of present values (PV) of dividends for year 1 to 10.
From the attached excel file, we have:
Previous year dividend in year 1 = Current year dividend = $2
Total of dividends from year 1 to year 10 = $25.74793130208810
Year 10 dividend = $8.09111547141582
Therefore, we have:
Year 11 dividend = Year 10 dividend * (100% + Dividend growth rate in year 11) = $8.09111547141582 * (100% + 4%) = $8.41476009027245
Share price at year 10 = Year 11 dividend / (Required equity rate of return - Perpetual dividend growth rate) = $8.41476009027245 / (10% - 4%) = $140.246001504541
PV of share price at year 10 = Price at year 10 / (100% + required equity rate of return)^Number of years = $140.246001504541 / (100% + 10%)^10 = $54.0709047493998
Therefore, we have:
Fair price of the stock = Total of dividends from year 1 to year 10 + PV of share price at year 10 = $25.74793130208810 + $54.0709047493998 = $79.82
b. Assuming the market price of the stock is $70, what is the expected return?
This can be calculated using the dividend discount model formula as follows:
P = D1 / (r - g) ............................ (1)
Where,
P = Market price of the stock = $70
D1 = Next dividend = Current dividend * (100% + Dividend growth rate in perpetuity) = $2 * (100% + 4%) = $2.30
r = Expected return = ?
g = Dividend growth rate in perpetuity = 4%, or 0.04
Substituting the values into equation (1) and solve for r, we have:
70 = 2.30 / (r - 0.04)
70(r - 0.04) = 2.30
70r - 2.80 = 2.30
70r = 2.30 + 2.80
70r = 5.10
r = 5.10 / 70
r = 0.0729, or 7.29%
Therefore, the expected return is 7.29%.
Clara Inc. budgets to sell 10,400 units in April, 13,000 unit in May, and 16,100 units in June. The company maintains an ending finished goods inventory equal to 20% of budgeted sales in units for the next month. April 1 beginning inventory is projected to be 2,080 units. How many units will the company produce in May
Answer:
16,720 units
Explanation:
Production Budget = Budgeted Sales + Budgeted Closing inventory - Budgeted Opening inventory
= 16,100 + 3,220 - 2,600
= 16,720 units
the company produce in May 16,720 units
g granted options on January 1, 2021, that permit executives to purchase 23 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $20 per share. The fair value of the options, estimated by an appropriate option pricing model, is $6 per option. No forfeitures are anticipated. The options are exercised on April 2, 2024, when the market price is $23 per share. By what amount will VF's shareholder's equity be increased when the options are exercised
Answer:
$460
Explanation:
Calculation to determine what amount will VF's shareholder's equity be increased when the options are exercised
First step is to calculate the fair value of award using this formula
Fair value of award=Fair value per option×Options granted
Let plug in the formula
Fair value of award=$138
Based on the above calculation the amount of $138 million total compensation will be expensed equally over the vesting period of 3 years thereby increasing the balance in the PAID-IN CAPITAL-STOCK OPTIONS ACCOUNT
Dr Cash $460
($20 exercise price × 23 million shares)
Dr Paid-in capital - stock options (account balance)138
(6*23)
Cr Common stock 23
(23 million shares at $1 par per share)
Cr Paid-in capital—excess of par (remainder)575
Now let calculate the Increase in shareholder's equity
Increase in shareholder's equity=$575 + $23 - $138
Increase in shareholder's equity= $460
Therefore The amount that VF's shareholder's equity will increased when the options are exercised is $460
what are the name of the 7 contents
Answer:
Africa, Antartica, Dababy Land
Explanation:
If 10,000 pounds of direct materials are purchased for $9,300 on account and the standard cost is $.90 per pound, the journal entry to record the purchase is Raw Materials Inventory 9,300 Accounts Payable 9,000 Materials Price Variance 300 Raw Materials Inventory 9,000 Materials Price Variance 300 Accounts Payable 9,300 Work In Process Inventory 9,300 Accounts Payable 9,000 Materials Quantity Variance 300 Raw Materials Inventory 9,300 Accounts Payable 9,300
Answer:
Raw Materials Inventory 9,000 Materials Price Variance 300 Accounts Payable 9,300
Explanation:
Based on the information given journal entry to record the purchase is
Dr Raw Materials Inventory $9,000
(10,000 pounds*$.90 per pound)
Dr Materials Price Variance $300
($9,300-$9,000)
Cr Accounts Payable $9,300
(To record purchase)
Which of the following is likely to happen if employees think that their organization is
overly driven by politics?
Explanation:
If employees think their organization is overly driven by politics then
The employees are less committed to the organizationThe employees have lower job satisfaction and perform worse on the jobThe employees have higher levels of job anxietyThe employees also have a higher incidence of depressed mood.Question Help At the Wild Cat Group Company, the cost of the library and information center has always been charged to the various departments based upon number of employees. Recently, opinions gathered from the department managers indicate that the number of engineers within a department might be a better predictor of library and information center costs. Total library and information center costs are $213,000. Department A B C Number of employees 145 540 140 Number of engineers 0 85 40 If the number of employees is considered the cost driver, what amount of library and information center costs will be allocated to
Answer:
$37,436.36
Explanation:
The computation of the amount of library and information center costs will be allocated to department A is shown below;
= Total library and information center costs × department A employees ÷ total number of employees
= $213,000 × 145 ÷ (145 + 540 + 140)
= $213,000 × 145 ÷ 825
= $37,436.36
hence, the amount would be $37,436.36
The severalty owner of a parcel of land sells it to a buyer. The buyer insists that the owner's wife join in signing the deed. The purpose of obtaining the wife's signature is to
Answer:
waive any marital or homestead rights
Explanation:
In the case when the owner of the parcel of land sold to the buyer so the buyer insist to the wife of the owner to sign the deed. Here the motive to receiving the signature of the owner wife is to be waived off the rights of martial or homestead
So the above represent the answer
hence, the same would be relevant
Economies of scale exist whenever: a. average total costs are stationary as output increases. b. average total costs decline as output increases. c. average total costs increase as output increases and average variable costs are stationary as output increases. d. average total costs increase as output increases.
Answer:
b. average total costs decline as output increases.
Explanation:
Economies of scale refer to the cost advantage when it become reaped by the companies in the case when there is an efficient production
As the cost would be allocated to the larger number of goods. Here cost would be fixed as well as variables one. ALso, in this the size of the organization would matter a lot
So when the output would rise the average total cost would fall
Therefore the option b is correct
On October 1, Swifty's Painting Service borrows $101000 from National Bank on a 3-month, $101000, 4% note. The entry by Swifty's Painting Service to record payment of the note and accrued interest on January 1 is
Answer:
Dr notes payable $101,000
Dr interest payable $1010
Cr cash $102,010
Explanation:
The accrued interest to be recognized on 31 December after 3 months have passed since the borrowing took place is computed thus:
3-month accrued interest=principal borrowed*interest rate*3/12
principal borrowed=$101000
interest rate=4%
3-month accrued interest=$101,000*4%*3/12
3-month accrued interest=$1,010
Initially, when the borrowing was taken, the note payable account would have been credited with $101,000 while cash was debited since cash as an asset has increased.
On December 31, we would record interest of $1,010 as expense while interest payable is credited
Amount paid at maturity=principal+interest
Amount paid at maturity=$101,000+$1010
Amount paid at maturity=$102,010
All of the following are examples of retailers EXCEPT?
A. A famer sells his produce at a roadside stand.
B. A fisherman sells his fish at the dock to local residents
C. A woman sells cosmetics to consumers during a theme party.
D. A pipe producer sells pipes to plumbers to use in remodeling a home
Answer:
your answer is c.
Explanation:
it says they all sell their own products except c, which says they sell consmetics, not retailing their own
A woman who sells cosmetics to consumers during a theme party is not an example of a retailer because here there is no channel of distribution mentioned and even the purpose is not commercial.
Who is called a retailer?A retailer, or retailer, is a business that sells goods such as clothing, groceries, or cars directly to consumers through various distribution channels for the purpose of making a profit.
This merchant can work in real estate or online.
Thus, Option C is the correct choice.
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High Step Shoes had annual revenues of $202,000, expenses of $112,200, and dividends of $24,800 during the current year. The retained earnings account before closing had a balance of $314,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:
Answer and Explanation:
The journal entry required to close the income summary account is given below:
Income summary Dr ($202,000 - $112,200) $89,800
To retained earnings $89,800
(Being the closing of the income summary is recorded)
The above entry should be passed for closing out the income summary account
The same is to be considered
When the general level of prices rises, the economy is experiencing ____.
A project is chartered to determine new ways to extend the product life of one of the company's medium-producing products. The project manager comes from the engineering department, and the team comes from the product management and marketing departments. The project scope statement and project planning are completed when a stakeholder notifies the team that there is a better way to complete one of the work packages. The stakeholder supplies a technical review letter from his department proving that the new way to complete the work package will actually be faster than the old way. The project manager has had similar experiences with this department on other projects, and was expecting this to happen on this project. What is the first thing the project manager should do
Answer: A. Look for how this change will impact the cost to complete the work package and the quality of the product of the work package.
Explanation:
More efficiency in the company's operations is always welcome so if the stakeholder has an idea that can make things better, it should be considered.
It should however, only be considered if it meets certain criteria such as: having a cost that will not significantly impart the cost to complete the work package or at least if it did, its contributed to the quality of the work package should be such that it is significant enough to cover the increased costs.
n Corporation budgeted fixed manufacturing costs of $34,000 during 2020. Other information for 2020 includes: The budgeted denominator level is 2,000 units. Units produced total 1,800 units. Units sold total 1,200 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. The production−volume variance is ________. (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)
Answer:
The answer is "[tex]\$3,400[/tex]"
Explanation:
Using formula:
[tex]\text{Production Volume Variance = Budgeted O/H cost -Absorbed cost}[/tex]
[tex]\text{Budgeted O/H cost} = 34000\\\\\text{O/H Rate = Bdt OH/Bdt units}\\\\[/tex]
[tex]= \frac{34000}{2000}\\\\= \frac{34}{2} \\\\ = 17[/tex]
[tex]\text{Absorbed cost }= 1800\ units \times 17 \ = 30,600\\\\Variance = 34,000 -30,600 = 3,400[/tex]
If the MPC is 0.60 and disposable income decreases from $11,000 billion to $10,000 billion, savings will decrease by
Answer:
the decrease in the savings is $600 billion
Explanation:
The computation of the decrease in the savings is shown below;
The difference in the income is
= $11,000 billion - $10,000 billion
= $1,000 billion
Now the decrease in the savings is
= 0.60 × $1,000 billion
= $600 billion
Hence the decrease in the savings is $600 billion
The same is to be considered and relevant
What is a financial agreement to pay off cars and other household appliances?
Credit
Tax debt
Interest
Installment Agreement
Answer:
Installment Agreement
Explanation:
oetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment $ 30,000 Annual cash inflows $ 6,000 Salvage value of equipment $ 0 Life of the investment 15 years Required rate of return 10 % The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. Refer to Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The internal rate of return of the investment is closest to:
Answer:
10.25%
Explanation:
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
IRR can be calculated with a financial calculator
Cash flow = cash inflow - cash outflow
cash outflow = depreciation expense
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
$30,000 / 15 = $2000
Cash flow = $6000 - 2000 = $4000
Cash flow in year 0 = $-30,000
Cash flow in year 1 to 15 = 4,000
IRR = 10.24%
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
Sales revenue $440,000 Advertising expense 60,000 Interest expense 10,000 Salaries expense 55,000 Utilities expense 25,000 Income tax expense 45,000 Cost of goods sold 180,000 What is operating income
Answer:
Lake's operating income is $120000
Explanation:
Operating income is the income generated by the operations of company less its operating cost. Another name that is used for operating income is Earnings before interest and tax (EBIT). The charges or income relating to non operating or financing activities is not included in the operating income and nor is the tax deduction included.
The formula for operating income = Sales - Cost of Sales - operating expenses.
The operating expenses here, are = Advertising + Salaries + Utilities
Thus, operating expenses = 60000 + 55000 + 25000 = $140000
The Operating Income = 440000 - 180000 - 140000 = $120000
Operational income is calculated as follows: sales, cost of sales, and operational expenditures.
Here, the running costs are calculated as follows: marketing + salaries + utilities
Operating expenditures thus equal $60,000 plus $55,000 plus $25,000 for a total of $140000.
Operating Income: ($120000) = (440,000 - 188,000 - 148,000)
An accounting concept known as operational income assesses the amount of profit generated by a company's activities after operating costs like salaries, depreciation, and cost of goods sold (COGS) have been subtracted.
Operating income, also known as income from operations, is calculated by deducting all operating costs from a company's gross income, which is equal to total sales less COGS. Operating costs are those incurred by a business during regular business operations and include things like office supplies and electricity.
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Fast Auto Service provides a lubrication service for cars. It is known that the mean time taken for this
service is 15 minutes per car and the standard deviation is 2.4 minutes. Assume that the times taken for the service for all cars have a normal distribution If a service time is selected at random, find the
probability that the time is:
(i) more than 18 minutes
(ii) less than 10 minutes
(iii) between 12 and 16 minutes (10 marks)
please help me answer this question my people
Answer:
The answer is below
Explanation:
The z core is used to determine by how many standard deviations the raw score is above or below the mean. The z score is given by:
[tex]z=\frac{x-\mu}{\sigma}\\\\where\ \mu=mean,\sigma=standard\ deviation[/tex], x = raw score
Given that mean (μ) = 15 minutes per car, standard deviation (σ) = 2.4 minutes.
1) For x > 18:
[tex]z=\frac{x-\mu}{\sigma} =\frac{18-15}{2.4} =1.25[/tex]
From normal distribution table, P(x > 18) = P(z > 1.25) = 1 - P(z < 1.25) = 1 - 0.8944 = 0.1056
2) For x < 10:
[tex]z=\frac{x-\mu}{\sigma} =\frac{10-15}{2.4} =-2.08[/tex]
From normal distribution table, P(x < 10) = P(z < -2.08) = 0.0188
3) For x > 12:
[tex]z=\frac{x-\mu}{\sigma} =\frac{12-15}{2.4} =-1.25[/tex]
For x < 16:
[tex]z=\frac{x-\mu}{\sigma} =\frac{16-15}{2.4} =0.42[/tex]
From normal distribution table, P(12 < x < 16) = P(z < 0.42) - P(z < -1.25) = 0.6628 - 0.1056 = 0.5572
Larance Detailing's cost formula for its materials and supplies is $1,910 per month plus $10 per vehicle. For the month of November, the company planned for activity of 86 vehicles, but the actual level of activity was 51 vehicles. The actual materials and supplies for the month was $2,430. The materials and supplies in the flexible budget for November would be closest to:
Answer:
$2,420
Explanation:
Calculation to determine what The materials and supplies in the flexible budget for November would be closest to:
Using this formula
Cost = Fixed cost + (Variable cost per unit × q)
Let plug in the formula
Cost= $1,910 + $10 × 51
Cost= $2,420
Therefore The materials and supplies in the flexible budget for November would be closest to:$2,420
In its first month of operations, Cheyenne Corp. made three purchases of merchandise in the following sequence: (1) 185 units at $5, (2) 570 units at $6, and (3) 130 units at $7.Assuming there are 260 units on hand, compute the cost of the ending inventory under the (a) FIFO method and (b) LIFO method. Cheyenne uses a periodic inventory system.
Answer:
a. $1,375
b. $1,240
Explanation:
FIFO method
FIFO assumes that the inventory to arrive first will be sold first. Inventory values depend on earlier purchases
Inventory = 185 x $5 + 75 x $6
= $1,375
LIFO method
LIFO assumes that the inventory to arrive last will be sold first. Inventory values depend on recent purchases
Inventory = 130 x $7 + 55 x $6
= $1,240
Sales-Value-at-Split-off Method Alomar Company manufactures four products from a joint production process: barlon, selene, plicene, and corsol. The joint costs for one batch are as follows: Direct materials $67,900 Direct labor 34,000 Overhead 25,500 At the split-off point, a batch yields 1,400 barlon, 2,600 selene, 2,500 plicene, and 3,500 corsol. All products are sold at the split-off point: barlon sells for $15 per unit, selene sells for $20 per unit, plicene sells for $26 per unit, and corsol sells for $35 per unit.
Required:
Allocate the joint costs using the sales-value-at-split-off method. If required, round allocation rates to four decimal places and round the final allocations to the nearest dollar.
Allocated Joint Cost
Barlon $
Selene
Plicene
Corsol
Total $
Answer:
Alomar Company
Allocation of Joint Costs:
Barlon = $10,270
Selene = $25,431
Plicene = $31,789
Corsol = $59,910
Total = $127,400
Explanation:
a) Data and Calculations:
Joint costs:
Direct materials $67,900
Direct labor 34,000
Overhead 25,500
Total joint costs $127,400
Joint Products Barlon Selene Plicene Corsol Total
Batch output units 1,400 2,600 2,500 3,500 10,000
Selling price per unit $15 $20 $26 $35
Sales value $21,000 $52,000 $65,000 $122,500 $260,500
Allocation of Joint Costs:
Barlon = $10,270 ($21,000/$260,500* $127,400)
Selene = $25,431 ($52,000/$260,500* $127,400)
Plicene = $31,789 ($65,000/$260,500* $127,400)
Corsol = $59,910 ($122,500/$260,500* $127,400)
Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound. Robinson's marginal utility is 30 for the last pound of mangos purchased and 10 for the last pound of bananas. If Robinson maximizes his utility from consuming these goods, the price of bananas is
Answer:
$1 per pound
Explanation:
Marginal utility is defined as the additional satisfaction that a person gains from consumption of an additional unit of a product.
Since Robinson spends all of his money on mangoes and bananas his the marginal utility per price of each product will be equal.
This is called equi marginal utility (Gossens second law).
Marginal utility of mango ÷ price of mango = marginal utility of banana ÷ price of banana
30 ÷ 3 = 10 ÷ price of mango
10 = 10 ÷ price of mango
Cross multiply
Price of mango * 10 = 10
Price of mango = 10 ÷ 10 = $1 per pound
if the real exchange rate for coal is 1.5 the price of coal in the united states is 50 per ton and the price of coal in britian is 20 british pounds per ton what is the nominal exchange rate
Answer:
c. 3/5
Explanation:
Note: Options to this question is attached as picture below
Real exchange rate is given as: Nominal Exchange rate * Price of domestic good/Price of foreign good
1.5 = Nominal Exchange rate * 50/20
Nominal Exchange rate = 1.5 * 20/50
Nominal Exchange rate = 30/50
Nominal Exchange rate = 3/5
Find the time required for an investment of 5000 dollars to grow to 8400 dollars at an interest rate of 5.8 percent per year, compounded weekly.
Answer:
It will take 464 weeks.
Explanation:
Giving the following information:
Future value (FV)= $8,400
Present value (PV)= $5,000
Interest rate (i)= 0.058/52= 0.00112
To calculate the number of weeks required to reach the objective, we need to use the following formula:
n= ln(FV/PV) / ln(1+i)
n= ln(8,400/5,000) / ln(1.00112)
n= 463.47 = 646
Sheffield Corp. sold $134000 of goods and accepted the customer's $134000 9%, 1-year note receivable in exchange. Assuming 9% approximates the market rate of return, what would be the debit in this journal entry to record the sale
Answer:
Debit Notes Receivable for $134,000
Explanation:
Based on the information given what would be the debit in this journal entry to record the sale will be DEBIT NOTES RECEIVABLE FOR $134,000 as we were told that the amount of $134,000 9%, 1-year NOTE RECEIVABLE in exchange was accepted from the customer which therefore means that we are going to DEBIT NOTES RECEIVABLE FOR the amount of $134,000.
Top Line Electronics has a piece of machinery that costs $600,000 and is expected to have a useful life of 4 years. Residual value is expected to be $100,000. Using the double-declining-balance method, what is depreciation expense for the first year
Answer:
Annual depreciation= $250,000
Explanation:
Giving the following information:
Purchase price= $600,000
Salvage value= $100,000
Useful life= 4 years
To calculate the annual depreciation, we need to use the following formula:
Annual depreciation= 2*[(book value)/estimated life (years)]
Annual depreciation= 2*[(600,000 - 100,000) / 4]
Annual depreciation= $250,000
If reserves increase by $12 billion, what is the difference in the resulting change in checkable deposits when the required reserve ratio is 10 percent compared to when it is 8 percent
Answer:
$30 billion
Explanation:
Calculation to determine the difference in the resulting change in checkable deposit
Using this formula
Difference in checkable deposit=Increase in reserve/(1* Reserve ratio 8%)-Increase in reserve/(1* Reserve ratio 10%)
Let plug in the formula
Difference in checkable deposit=$12 billion/(1*8%)-$12 billion/(1*10%)
Difference in checkable deposit=$12 billion/0.08-$12 billion/0.10
Difference in checkable deposit=$150 billion-$120 billion
Difference in checkable deposit=$30 billion
Therefore the difference in the resulting change in checkable deposit is $30 billion
Use the financial statements (first tab) and other information (second tab) for Nutsy Inc. (Links to an external site.) to answer the following questions regarding the 2020 Statement of Cash Flows. What is the total amount of Cash Provided (Used) by Financing Activities
Answer: Hello your question is Open ended and lacks the link to an external site hence I will provide a general solution wherein you can plugin the values you have
answer : Net cash Flow = ∑ x + y
Explanation:
The total amount of cash provided by the Financing Activities can be determined using the proxy table shown below
Particulars Amount
Cash received from sales of assets x
Cash paid for purchase of assets y
Net cash flow provided by Financial activities ∑ x + y