Content pillars will help you get clarity on your niche, while also building trust and helping your audience grow faster. There's another huge benefit: By creating content your target audience wants, they will spend longer on your site's pages and engage with your posts.
Vijay Company reports the following information regarding its production costs. Direct materials $ 10 per unit Direct labor $ 20 per unit Overhead costs for the year Variable overhead $ 10 per unit Fixed overhead $ 160,000 Units produced 20,000 units
Compute its product cost per unit under absorption costing.
Production cost per unit
Answer:
$48 per unit
Explanation:
Given the above data, we need to find the value of unitary fixed overhead.
Unitary fixed overhead = $160,000 / 20,000 = $8
Now, we can then calculate unitary cost of production
Unitary cost = Direct material + Direct labor + Total overhead
Unitary cost = $10 + $20 + $10 + $8
Unitary cost = $48 per unit
The following data pertain to an investment proposal (Ignore income taxes.): Cost of the investment $ 56,000 Annual cost savings $ 16,000 Estimated salvage value $ 6,000 Life of the project 5 years Discount rate 10 % Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the proposed investment is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.) Multiple Choice $34,000 $4,656 $3,726 $8,382
Answer: $8,382
Explanation:
First find the present value of the cash benefits which are the cost savings and the salvage value:
= (Cost savings * Present value interest factor of annuity, 5 years, 10%) + Salvage value / ( 1 + rate) ^ no of periods
= (16,000 * 3.7908) + 6,000 / ( 1 + 10%)⁵
= $64,378
Net Present value = Present value of benefits - Cost of investment
= 64,378 - 56,000
= $8,378
= $8,382 from options. Difference due to rounding errors.
Tamarisk, Inc. gathered the following reconciling information in preparing its April bank reconciliation:
Cash balance per books, 4/30 $18300
Deposits in transit 2500
Notes receivable and interest collected by bank 6160
Bank charge for check printing 210
Outstanding checks 12500
NSF check 1160
The adjusted cash balance per books on April 30 is:_________.
a. $24460.
b. $23090.
c. $25410.
d. $25590.
Answer:
hiiiiiiiiii berrryyryr.commmddm
On January 1, 2018, Ann Stine loaned $37,565 to Joe Grant. A zero-interest-bearing note (face amount, $50,000) was exchanged solely for cash. The note is to be repaid on December 31, 2020. The prevailing rate of interest for a loan of this type is 10%. The present value of $50,000 at 10% for three years is $37,565. What amount of the Discounts on Notes Payable should Mr. Grant credit in 2018?
Answer: $3,756.50
Explanation:
The Discount on Note Payable is used to record the interest charge on a note that is already included in the maturity value of the note. It is based on the present value of the loan and the prevailing interest rate.
= Present value of the loan for three years * Prevailing interest rate
= 37,565 * 10%
= $3,756.50
a teammate tells you that you tend to take over shared projects. you've gotten this feedback from other too. what should you say? A I wish you would have mentioned this during projects. please be sure to do so on the next one. B I'm sorry you're feeling left out, I'll be sure to give you more to do on the next one. C I'm sorry maybe we can work together to divide our responsibility on the next one. D I've gotten this feedback before, I just like things done a certain way. E I'm used to leading projects, so I usually just take over without even realizing it
Answer:
C
Explanation:
even if it's unintentional we should apologize professionally
Ron Santana is interested in buying the stock of First National Bank. While the bank's management expects no growth in the near future, Ron is attracted by the dividend income. Last year the bank paid a dividend of $5.65. If Ron requires a return of 14 percent on such stocks, what is the maximum price he should be willing to pay for a share of the bank's stock?
Answer:
the maximum price that willing to pay is $40.36
Explanation:
The computation of the maximum price that willing to pay is shown below:
= Annual dividend ÷ required rate of return
= $5.65 ÷ 14%
= $40.36
Hence, the maximum price that willing to pay is $40.36
we simply applied the above formula so that the correct price could come
After the U.S. film Django Unchained was recut and released in China, it performed poorly, partly because Chinese filmgoers had already seen the unedited film on DVD. What disadvantage of competing globally does this situation reflect?
The situation of Django Unchained's release in China after a month tuning out to be a poor-performing one, mainly because of the fact disadvantage of global access when competing globally.
What is the significance of global competition?Global competition can be referred to or considered as a situation wherein a firm or an organization has a direct competition with the other players in the industry on a global scale. Liberalization leads to be an advantage for global competition, but not in all cases.
One of the main disadvantages that liberalization that global competition brings is the one of eased global access. This also led to failure of the film Django Unchained in China, which released a month in the country a month after its global release.
Therefore, the significance of global competition has been aforementioned.
Learn more about global competition here:
https://brainly.com/question/14746948
#SPJ2
WHAT IS OPERANT CONDITIONG
Answer:
Operant conditioning is a type of associative learning process through which the strength of a behavior is modified by reinforcement or punishment. It is also a procedure that is used to bring about such learning.
Operant conditioning refers to the conditioning of behaviours and responses that are under the control of animals and human beings and are emitted voluntarily by them. The behaviour is learned, maintained or changed through its consequences called reinforcers.
Hazel Company allocates overhead based on direct labor hours. It allocates overhead costs of $16,200 to two different jobs as follows:
Job 1: (12 hours) = $8,100; Job 2: (12 hours) = $8,100
The production process for Job 2 was then automated. Now Job 2 requires only 3 hours of direct labor but 5 hours of mechanical processing. As a result, total overhead increases to $21,000. Select the incorrect statement from the following.
A. While the actual processing of Job 1 was not affected by automation, it received an increase of $9,900 in its overhead allocation.
B. The use of machine hours as the allocation base would significantly improve the overhead cost allocations.
C. The increased overhead costs associated with automation should be allocated to both jobs.
D. Automation and the costing system used by the company cause the cost of Job 1 to be significantly overstated.
Answer:
Hazel Company
The incorrect statement is:
A. While the actual processing of Job 1 was not affected by automation, it received an increase of $9,900 in its overhead allocation.
Explanation:
Option A is the correct answer because Job 1's overhead cannot increase by $9,900. Therefore, this purported increase cannot be verified as correct. Most likely the overhead allocation of Job 1 will decrease since Job 2 has another basis for allocating overhead to it, which Job 1 does not incur. Overhead allocation using ABC system is more efficient than the traditional method of using a predetermined rate because overhead is now allocated based on consumption rather than using some arbitrary basis.
Determine if the statement is true or false.
A design must appeal to people outside of the target audience to be considered successful.
True
False
Answer:
It is false don't be confused I took the Exam and it resulted false.
Explanation:
Most consumers and investors today want the firms they do business with to look beyond just the profit motive. In fact, they want firms that behave legally and ethically while also giving back to their communities via philanthropic activities. The framework that attempts to reconcile these wants is known as
Answer:
corporate social responsibility.
Explanation:
In Business management, social responsibility can be defined as an organization's obligation to act in a manner that benefits and adds significant value to the society, usually it has its business operations.
Hence, in addition to making profits and maximizing shareholders, organizations are required to lessen negative environmental impact or degradation and provide social amenities such as pipe-borne water, electricity, roads etc. It is also referred to as corporate social responsibility (CSR).
Generally, most consumers and investors today want the firms they do business with to look beyond just the profit motive. In fact, they want firms that behave legally and ethically while also giving back to their communities via philanthropic activities. Thus, the framework that attempts to reconcile these wants is known as corporate social responsibility.
2.1.3. Briefly explain the term Gross Domestic Product.
Answer:
it is the total value of goods produced and services provided in a country during one year.
Explanation:
The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $20 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 25%. The CFO has estimated next year's EBIT for three possible states of the world: $5.5 million with a 0.2 probability, $2.6 million with a 0.5 probability, and $600,000 with a 0.3 probability.
Required:
Calculate Neal's expected ROE, standard deviation, and coefficient of variation.
Answer:
Neal's expected ROE = 4.62%
Neal's standard deviation = 2.46%
Neal's coefficient of variation = 0.53
Explanation:
Note: See the attached excel file for the calculations of Neal's Expected ROE and Deviation.
From the attached excel, we can have:
Neal's expected ROE = Total expected ROE = 0.0462, or 4.62%
Neal's standard deviation = (Total Deviation)^0.5 = 0.00060736^0.5 = 0.0246, or 2.46%
Neal's coefficient of variation = Neal's standard deviation / Neal's expected ROE = 2.46% / 4.62% = 0.53
The national lottery in the country of San Dayana is advertising on billboards in the poverty stricken, inner-cities of the country. "Buy your way out of here to America" Buy the 5 for 1 lottery tickets every Friday." Would you consider this an ethical marketing strategy? Why/Why not?
The correct answer to this open question is the following.
Would you consider this an ethical marketing strategy?
No. Of course not. It is not ethical. However, it is not illegal.
It cannot be considered ethical because this piece of advertisement is playing with the lack and necessity of the poor people of San Dayana.
The lottery advertisement is trying to be lucrative and benefit from the ignorance and poverty of the people of this poor country.
Once said that people are the ones who had the last word on the decision to buy or not to buy the lottery tickets. They know that the probabilities are minimum to win the big prize.
So instead of work, save and invest, or do other legal things to prosper, they prefer to spend their hard-earn money to get the "miracle" and become rich.
Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
Year 1
A. Sold $1,353,000 of merchandise (that had cost $979,100) on credit, terms n/30.
B. Wrote off $20,900 of uncollectible accounts receivable.
C. Received $669,200 cash in payment of accounts receivable.
D. In adjusting the accounts on December 31, the company estimated that 1.90% of accounts receivable would be uncollectible.
Year 2
E. Sold $1,544,700 of merchandise (that had cost $1,318,300) on credit, terms n/30.
F. Wrote off $27,000 of uncollectible accounts receivable.
G. Received $1,194,200 cash in payment of accounts receivable.
H. In adjusting the accounts on December 31, the company estimated that 1.90% of accounts receivable would be uncollectible.
Required:
Prepare journal entries to record Liang's 2016 and 2017 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts).
Answer:
2016
a. Dr Account receivable $1,353,000
Cr Sales revenue $1,353,000
Dr Cost of goods sold $979,100
Cr Inventory $979,100
b Dr Allowance for doubtful accounts $20,900
Cr Account receivable $20,900
c Dr Cash $669,200
Cr Account receivable $669,200
d Dr Bad debt expense $33,495
Cr Allowance for doubtful accounts $33,495
2017
e Dr Account receivable $1,544,700
Cr Sales revenue $1,544,700
Dr Cost of goods sold $1,318,300
Cr Inventory $1,318,300
f Dr Allowance for doubtful accounts $27,000
Cr Account receivable $27,000
Dr Cash $1,194,200
Cr Account receivable $1,194,200
h Dr Bad debt expense $33,147
Cr Allowance for doubtful accounts $33,147
Explanation:
Preparation of the journal entries to record Liang's 2016 and 2017 summarized transactions and its year-end adjustments to record bad debts expense
2016
a. Dr Account receivable $1,353,000
Cr Sales revenue $1,353,000
Dr Cost of goods sold $979,100
Cr Inventory $979,100
b Dr Allowance for doubtful accounts $20,900
Cr Account receivable $20,900
c Dr Cash $669,200
Cr Account receivable $669,200
d Dr Bad debt expense $33,495
Cr Allowance for doubtful accounts $33,495
($1,353,000-$669,200-$20,900=$662,900)
($662,900*1.90%+$20,900)
($12,595+$20,900=$33,495)
2017
e Dr Account receivable $1,544,700
Cr Sales revenue $1,544,700
Dr Cost of goods sold $1,318,300
Cr Inventory $1,318,300
f Dr Allowance for doubtful accounts $27,000
Cr Account receivable $27,000
Dr Cash $1,194,200
Cr Account receivable $1,194,200
h Dr Bad debt expense $33,147
Cr Allowance for doubtful accounts $33,147
($1,544,700+$662,900-$1,194,200-$27,000=$986,400)
($986,400*1.90%=$18,742)
($18,742+$27,000-$12,595=$33,147)
capital city of Morocco
Answer:Rabat
Explanation:
Answer:
Rabat is the capital city of Morocco.
Mrs. Jonas believes strongly that it is important that workers' rights be respected, and that one of the more important ways of doing this is to ensure that all workers be properly documented. She is supervising a contracting company that is building a new warehouse for her company. While doing this she discovers that many of the workers employed by the contractor are undocumented aliens working for well below minimum wage. In this situation Mrs. Jonas has a(n) ________ that is in conflict with a(n) ________.
Answer: behavior; attitude
Explanation:
From the situation given in the question, we can infer that Mrs. Jonas has a behavior that is in conflict with an attitude.
This can be seen in the information given that Mrs. Jonas believes strongly about the importance of workers' rights be respected, which can be done through proper documentation but then while supervising a contracting company, she then discovers that many of the workers employed by the contractor are undocumented aliens that were working for well below minimum wage.
Shipping cost at Junk Food Imports is a mixed cost with variable and fixed components. Past records indicate total shipping cost was $18,000 for 16,000 pounds shipped and $22,500 for 22,000 pounds shipped. Assuming that this activity is within the relevant range, if the company plans to ship 18,000 pounds next month, the expected shipping cost is:
Answer:
$18,500
Explanation:
Calculation to determine what the expected shipping cost is:
First step is to calculate the Variable using this formula
Variable =Change in total cost /change in units
Let plug in the formula
Variable=(22,500-18,000)/(22,000-16,000)
Variable=$0.75 per pound
Now let calculate the expected shipping cost
Expected shipping cost=$0.75 per pound *18,000 pound
Expected shipping cost=$18,500
Therefore The Expected shipping cost is $18,500
Graham, Inc.'s April bank statement shows an April 30 balance of $5,120. Prior to reconciliation, its books show a cash balance of $5,510. ThIs information pertains to Graham, Inc.: Deposits in transit $800; Checks outstanding $465; Bank service charge $10; Error in Graham's records understating cash disbursement $180; Check of another company charged erroneously against Graham's bank account $115; Bank statement shows bank collected a note receivable and interest income for Graham $250. The reconciled cash balance at April 30 on the bank reconciliation should be:
Answer:
$5,570
Explanation:
The purpose of a bank reconciliation statement is to reconcile the difference between Cash Book balance and Bank Statement balance. Also it is used to check accuracy of Cash Book and the accuracy of Bank Statement.
Graham, Inc.'s April bank reconciliation statement is prepared as :
Graham, Inc.
Bank reconciliation statement as at April 30
Balance as per Bank Statement $5,120
Add outstanding lodgments $800
Add back error at the bank $115
Less unpresented checks ($465)
Balance as per Cash Book $5,570
therefore,
The reconciled cash balance at April 30 on the bank reconciliation should be $5,570.
The income statement of Pharoah Company is shown below.
PHAROAH COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue $7,410,000
Cost of goods sold Beginning inventory $1,880,000
Purchases 4,360,000
Goods available for sale 6,240,000
Ending inventory 1,500,000
Cost of goods sold 4,740,000
Gross profit 2,670,000
Operating expenses
Selling expenses 460,000
Administrative expenses 630,000 1,090,000
Net income $1,580,000
Additional information:
1. Accounts receivable decreased $313,770 during the year.
2. Prepaid expenses increased $167,640 during the year.
3. Accounts payable to suppliers of merchandise decreased $279,000 during the year.
4. Accrued expenses payable decreased $124,020 during the year.
5. Administrative expenses include depreciation expense of $58,970.
Required:
Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2020, for Vince Gill Company, using the indirect method.
Answer and Explanation:
The preparation of the operating activities section of the statement of cash flows for the year ended December 31, 2020 is presented below;
Cash flow from operating activities
Net income $1,580,000
Add: depreciation expense $58,970
Add: decrease in account receivable $313,770
Less: Increase in prepaid expense -$167,640
Less: Decrease in account payable -$279,000
Less: decrease in accrued expense payable -$124,020
Add: Decrease in inventory $380,000 ($1,880,000 - $1,500,000)
Cash flow provided by operating activities $1,762,080
Please help me with this question
You're considering a project with an initial cost of $6400, what is the payback period for this project if the cash inflows are $900, $1350,$2800, $1350 & $500 a year over the next five years
Bramble Corporation purchased machinery on January 1, 2022, at a cost of $300,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $35,000. The company is considering different depreciation methods that could be used for financial reporting purposes.
Required:
Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate.
Answer:
Straight-line method
Year Depreciation Book value
1 $66,250 $233,750
2 $66,250 $167,500
3 $66,250 $101,250
4 $66,250 $35,000
Declining-balance method
Year Depreciation Book value
1 $150,000 $150,000
2 $75,000 $75,000
3 $37,500 $37,500
4 $2,500 $35,000
Your money is tied up and you need to borrow $10,000. The following two alternatives are being offered by the lender: (1) pay $3,288.91 at the end of each year for 5 years, starting at the end of the first year (5 payments total at 18 percent nominal per year compounded quarterly which equates to 19.25% effective); or (2) pay $X at the end of each quarter for 6 years, starting at the end of the first quarter (24 payments total at 18 percent nominal per year compounded quarterly). Determine the value of $X that will make Alternative 2 equally desirable to Alternative 1 if
a. your TVOM is 8% nominal per year compounded.
b. your TVOM is 22% nominal per year compounded quarterly.
The Herfindahl-Hirschman index is a measure of concentration found by: squaring the percentage market share of each firm in the industry. squaring the sums of the concentration ratios found in an industry survey of the largest four and largest eight firms. squaring the percentage market share of each firm in the industry and then summing the squared market shares. summing the percentage market shares of each firm in the industry.
Answer:
squaring the percentage market share of each firm in the industry and then summing the squared market shares.
Explanation:
Financial accounting is an accounting technique used for analyzing, summarizing and reporting of financial transactions like sales costs, purchase costs, account payables and receivables of an organization using standard financial guidelines such as Generally Accepted Accounting Principles (GAAP) and financial accounting standards board (FASB).
Thus, it involves specific processes such as recording, summarizing, analysis and reporting of financial transactions with respect to business operations over a specific period of time.
Herfindahl-Hirschman index can be defined as a measure of the market concentration of a particular business firm or industry. Thus, it's typically used to measure the size of a particular business firm with respect to the industry it's operating in.
The Herfindahl-Hirschman index is a measure of concentration found by squaring the percentage market share of each firm in the industry and then summing the squared market shares.
Certify Completion Icon Tries remaining:3 Suppose that you and a friend are playing cards and you decide to make a friendly wager. The bet is that you will draw two cards without replacement from a standard deck. If both cards are diamonds, your friend will pay you $296. Otherwise, you have to pay your friend $17. Step 1 of 2 : What is the expected value of your bet? Round your answer to two decimal places. Losses must be expressed as negative values.
Answer:
The expected value of the bet is –$0.95.
Explanation:
Number of cards in a standard deck = 52
Number of diamonds in a standard deck = 13
The probability (P) that the two cards that will be drawn without replacement will be diamonds is therefore as follows:
P = (13 / 52) * (12 / 51) = 0.0588
The probability (P) that the two cards that will be drawn without replacement will NOT be diamonds is also as follows:
1 – P = 1 – 0.0588
1 – P = 0.9412
Amount your friend will pay you if both cards are diamonds = $296
Amount you will pay your friend if both cards are NOT diamonds = -$17 (Note that this is negative since it is a loss)
Expected value of the bet = (P * $296) + ((1 – P) * ($-17)) = (0.0588 * $256) – (0.9412 * 17) = –$0.95
Exercise 9-11 Working Backwards from Labor Variances [LO9-5] The auto repair shop of Quality Motor Company uses standards to control the labor time and labor cost in the shop. The standard labor cost for a motor tune-up is given below: Standard Hours Standard Rate Standard Cost Motor tune-up 2.50 $34.00 $85.00 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 54 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups: Labor rate variance $ 350 F Labor spending variance $ 500 U Required: 1. Determine the number of actual labor-hours spent on tune-ups during the week. 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.)
Answer and Explanation:
The computation is shown below;
a. The number of actual hours spent on tune-ups is
as we know that
Total Labor Variance = Labor Rate Variance + Labor Efficiency Variance
$500U = $350F + Labor Efficiency Variance
$500 = -$350 + Labor Efficiency Variance
Labor Efficiency Variance = $850
Now
Efficiency Variance = Standard Rate × (Actual Hours - Standard Hours )
$850 = 34 × (Actual hours - 2.5 × 54)
$850 = 34Actual Hours - $4,590
$5,440 = 34 actual hours
Actual Hour = 160 Hours
b. The actual hourly rate is
Labor Rate Variance = Actual hours × (Actual rate - Standard rate)
-350 = 160 × (Actual rate - $34)
-350 = 169 Actual rate - $5,440
$5,090 = 169 Actual rate
Actual rate = $30.12
"Ayres Services acquired an asset for $80 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions) 2021 2022 2023 2024 Pretax accounting income $ 330 $ 350 $ 365 $ 400 Depreciation on the income statement 20 20 20 20 Depreciation on the tax return (25 ) (33 ) (15 ) (7 ) Taxable income $ 325 $ 337 $ 370 $ 413 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)"
a. The cumulative temporary book-tax difference for the depreciable asset are as follows:
December 31, 2021 = $60 million
December 31, 2022 = $40 million
December 31, 2023 = $20 million
December 31, 2024 = $0
b. The balance to be reported in the deferred tax liability account are as follows.
December 31, 2021 = $15 million
December 31, 2022 = $10 million
December 31, 2023 = $5 million
December 31, 2024 = $0
Explanation:
Note: See the attached excel file for the calculation of cumulative temporary book-tax difference for the depreciable asset and the balance to be reported in the deferred tax liability account for December 31 of years 2021, 2022, 2023 and 2024 in bold red color.
In the attached excel file, the following formula are used:
Cumulative Temporary differences at December 31 of the current year = Cumulative Temporary differences at December 31 of the previous year + (Depreciation on the tax return at December 31 of the current year - Depreciation on the income statement at December 31 of the current year)
Balance to be reported in deferred tax liability account at December 31 of the current year = Cumulative Temporary differences at December 31 of the current year * Tax rate
Eagle Company used the following data to evaluate its current operating system. - sells items for $24 each - used a budgeted selling price of $24 per unit. Actual Budgeted Units sold 177,000 units 184,000 units Variable costs $1,090,000 $1,290,000 Fixed costs $804,000 $780,000 What is the static-budget variance of operating income
Answer:
$100,000 unfavorable
Explanation:
Given the above information,
Sales = Selling price per unit × unit sold
Actual sales = $24 × 177,000 units = $4,248,000
Budgeted sales = $24 × 184,000 units = $4,416,000
Operating income = Actual sales - Variable income - Fixed income
Actual operating income = $4,248,000 - $1,090,000 - $804,000 = $2,354,000
Budgeted operating income = $4,416,000 - $1,290,000 - $780,000 = $2,364,000
Therefore,
Static budget variance of operating income = Actual operating income - Budgeted operating income
= $2,354,000 - $2,364,000
= $100,000 unfavorable
Suppose that you wish to hedge the exchange rate risk on a foreign receivable of 1,240,000 euros. You decide to do this with a long option whose underlying asset is the euro (I won't tell you whether it's a put or a call). If this option has a strike of $1.15/euro, a multiple of 10,000 euros, and a per-contract (i.e. per 10k euros) premium of $175, then what is the least number of dollars you could possibly expect to net from this hedged receivable
Answer: $1404300
Explanation:
The least number of dollars that one could possibly expect to net from this hedged receivable will be calculated thus:
Amount receivable = 1,240,000 euros
Contract size for put option = 10000
Therefore, the number of contract that can be purchased will be:
= 1240000 / 10000
= 124
The total cost of option will be:
= $175 × 124
= $21700
We then calculate the minimum dollars available which will be:
= 1240000 × 1.15
= $1426000
We then deduct the total cost of option to get the net dollar proceed which will be:
= $1426000 - $21700
= $1404300
Therefore, the the least number of dollars that is expected to net from this hedged receivable is $1404300.