The main issue at Marvel Corporation is the unsatisfactory financial results, which have led to late supplier payments, deteriorating bank relations, and threats of credit cutoff.
To address these problems, Willey, as the assistant to the chairman, needs to analyze the company's financial statements and identify areas for improvement.
To assist Willey, you should begin by examining Marvel Corporation's balance sheets for 2020 and 2021. Look for significant changes in assets, liabilities, and equity.
For instance, you can observe that accounts payable and inventory have increased substantially, while long-term debt has also risen. This could indicate inefficient inventory management and increasing financial risks.
Next, analyze the 2021 income statement to assess the company's profitability. You can calculate important ratios like gross margin and net profit margin.
For example, the gross margin is (531,750 - 377,294) / 531,750 = 28.99%, while the net profit margin is 65,340 / 531,750 = 12.29%. Comparing these ratios to industry benchmarks will provide insights into Marvel's performance relative to its competitors.
By identifying areas where Marvel's financial performance falls short, you can help Willey develop a plan to improve the company's situation and address the concerns of its board of directors.
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Complete question:
Willey, a recent graduate of the University of Technology with four years of banking experience, was recently brought in as assistant to the chairman of the board of Marvel Industries, a manufacturer of electronic goods.
The company doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Marvel’s results were not satisfactory, to put it mildly. Its board of directors, which consisted of its president and vice-president plus its major stockholders (who were all local business people), was most upset when directors learned how the expansion was going.
Suppliers were being paid late and were unhappy, and the bank was complaining about the deteriorating situation and threatening to cut off credit. As a result, Sedrick, Marvel’s president, was informed that changes would have to be made, and quickly, or he would be fired.
Also, at the board’s insistence, Willey was brought in and given the job of assistant to Faisal, a retired banker who was Marvel’s chairman and largest stockholder.
Faisal agreed to give up a few of his surfing days and to help nurse the company back to health, with Willey’s help. Willey began by gathering financial statements and other data. Assume that you are Willey’s assistant, and you must help him answer the following questions for Marvel.
Some recent financial statements for Marvel Corporation follow.
MARVEL CORPORATION
2020 and 2021 Balance Sheets
Assets
2020
2021
Liabilities and Owners’ Equity
2020
2021
Current assets
Current liabilities
Cash
$ 32,653
$ 39,350
Accounts payable
$ 34,886
$ 44,285
Accounts receivable
16,911
28,877
Notes payable
18,058
16,848
Inventory
34,495
44,336
Other
18,871
25,619
Total
$ 84,059
$ 112,563
Total
$ 71,815
$ 86,752
Long-term debt
$ 110,000
$ 140,000
Owners’ equity
Common stock and paid-in surplus
$ 55,000
$ 55,000
Fixed assets
Accumulated retained earnings
288,343
333,683
Net plant and equipment
$ 441,099
$ 502,872
Total
$ 343,343
$ 388,683
Total assets
$ 525,158
$ 615,435
Total liabilities and owners’ equity
$ 525,158
$ 615,435
MARVEL CORPORATION
2021 Income Statement
Sales
$ 531,750
Cost of goods sold
377,294
Depreciation
46,686
Earnings before interest and taxes
$ 107,770
Interest paid
20,650
Taxable income
$ 87,120
Taxes (25%)
21,780
Net income
$ 65,340
Dividends
$ 20,000
Retained earnings
45,340
Suppose that last year, the nominal exchange rate between the Japanese yen and the British pound was 225.0 Yen per 1.0 Euro, one unit of Japanese output cost 2000 Yen , and one unit of British output cost 8.0 Euro.
a. What was the real exchange rate between the U.K. and Japan last year, expressed as the cost of British output (i.e. - the quantity of Japanese output that exchanges for 1 unity of British output)? In which country are goods more expensive last year?
b. Suppose that between last year and this year the British pound appreciate by 20% against the Japanese yen (a 20% increase in the number of yen required to buy 1 pound). if the price of goods in the U.K. and Japan are unchanged from last year, what is this year's new real exchange rate? In which country are goods more expensive this year?
c. Now suppose, instead, that between last year and this year, the pound appreciated by 20% against the yen and Japan experienced a 30% increase in its price level (a 30% increase in the number of yen required to purchase one unit of Japanese output). All else equal, what is this year's real exchange rate in that case? In which country are goods more expensive this year?
An exchange rate determines the price at which one currency will be exchanged for another & has an impact on international trade & money transfers.
a. To calculate the real exchange rate, we need to divide the nominal exchange rate by the ratio of the price levels of the two countries.
The price level of Japan is given as 2000 Yen per unit of output, & the price level of the UK is given as 8.0 Euro per unit of output. Since we need the cost of British output in terms of Japanese output, we need to convert the British price level into Yen. Using the given nominal exchange rate, we have:
8.0 Euro/unit * 225.0 Yen/Euro = 1800 Yen/unit of British output
Therefore, the ratio of the price levels is:
2000 Yen/unit of Japanese output / 1800 Yen/unit of British output = 1.111
The real exchange rate is then:
225.0 Yen/Euro / 1.111 = 202.5 Yen/unit of British output
Goods are more expensive in Japan last year, since it takes more Yen to buy one unit of Japanese output than it takes to buy one unit of British output.
b. If the British pound appreciated by 20%, then the new nominal exchange rate is:
225.0 Yen/Euro / (1 + 0.2) = 187.5 Yen/Euro
Using the same price levels as last year, the new real exchange rate is:
187.5 Yen/Euro / 1.111 = 168.75 Yen/unit of British output
Goods are more expensive in Japan this year, since it takes more Yen to buy one unit of Japanese output than it takes to buy one unit of British output.
c. If the pound appreciated by 20% & Japan experienced a 30% increase in its price level, then the new price level in Japan is:
2000 Yen/unit of Japanese output * (1 + 0.3) = 2600 Yen/unit of Japanese output
The new nominal exchange rate is the same as in part (b):
225.0 Yen/Euro / (1 + 0.2) = 187.5 Yen/Euro
The new real exchange rate is then:
187.5 Yen/Euro / (2600 Yen/unit of Japanese output / 1800 Yen/unit of British output) = 129.17 Yen/unit of British output
Goods are more expensive in Japan this year, since it takes more Yen to buy one unit of Japanese output than it takes to buy one unit of British output, & the increase in the price level of Japan makes Japanese goods even more expensive.
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a. Real exchange rate last year: 28.125. Goods more expensive in Japan.
b. New real exchange rate: 33.75. Goods more expensive in Japan.
c. New real exchange rate: 37.5. Goods more expensive in Japan.
a. In the previous year, the real exchange rate between the UK and Japan was 28.125 (225/8). A unit of British output cost 8.0 Euro, which is comparable to 7.14 pounds (8/1.12), but a unit of Japanese output cost 2000 yen, or 8.89 pounds (2000/225), making last year's prices in Japan higher.
b. The new real exchange rate for this year is 33.75 (225/6.67), which means that goods in Japan are now more expensive. One unit of Japanese output continues to cost 2000 yen, which is now equivalent to 29.85 pounds (2000/67), while one unit of British output now costs 150 euros (81.2), which is equivalent to 1000 yen (1506.67).
c. A unit of Japanese output now costs 2600 yen (20001.3), which is equivalent to 1040 pounds (2600/2.5), while a unit of British output continues to cost 150 euros (81.2), which is equivalent to 1000 yen (150*6.67). c. This year's new real exchange rate is 37.5 (225/6), meaning that goods in Japan are now more expensive this year.
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Should a life insurance policy be freely assignable? If so, why?
If not, can the objectives of an assignability clause still be
achieved in the absence of such a clause?
Yes, a life insurance policy should be freely assignable. This means that the policyholder can transfer ownership of the policy to another person or entity.
The reason for this is that it allows for greater flexibility and control over the policy. For example, if the policyholder no longer needs the coverage, they can sell or transfer the policy to someone else who does.
Additionally, if the policyholder becomes unable to pay the premiums, they can assign the policy to a third-party who can continue paying the premiums and receive the death benefit upon the policyholder's passing.
Without this option, policyholders may be stuck with a policy that no longer meets their needs or may lapse if they are unable to continue paying premiums.
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Q1. What is the mission of a central bank? [2.5 Marks] Q2. What are the policy tools that central banks have? [2.5 Marks] Q3. Explain how the Saudi Central Bank's response to Covid-19 helped the economy? [5 Marks]
Open market operations: Buying or selling government securities to control the money supply and interest rate.Discount rate: Setting the interest rate at which banks can borrow from the central bank Reserve requirements:Regulating the minimum amount of reserves banks must hold against deposits.
Forward guidance: Communicating future monetary policy intentions to influence market expectations. The Saudi Central Bank's response to Covid-19 helped the economy through various measures:
1. Lowering interest rates: This made borrowing cheaper for businesses and consumers, encouraging spending and investment.
2. Increasing liquidity: By injecting funds into the banking system, the central bank ensured that banks could continue lending to businesses and individuals.
3. Loan deferrals and restructuring: The central bank allowed banks to restructure loans, giving borrowers more time to repay, reducing financial stress.
4. Support for small and medium-sized enterprises (SMEs): The central bank provided funding and guarantees to banks to encourage lending to SMEs, supporting their growth and stability during the crisis.
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Lanie is a single mom who has 3 children, ages 1, 5 and 9. While
she is struggling a bit, she would like to pay for half of their
education at a public college. Her children will go to college at
age 18 and be in college for 4 years. The annual cost of education
is currently $15,000 and has been increasing at 6% and is expected
to continue. Her portfolio that was established for education has
$10,000 in it and earns an average rate of return of 9%. If she
would like to fund half of four years of college for each of the
children, how much must she save each year at the end of the year,
for the next nine years (round to the nearest $100)?
$6,800
$8,400.
$10,700.
$11,800.
Lanie needs to save $8,400 each year for the next nine years to fund half of four years of college education for each of her three children.
To calculate the total cost of education for each child, we can use the formula for the future value of an annuity with annual payments and a fixed interest rate:
FV = [tex]$PMT \times \frac{(1+r)^n-1}{r}$[/tex]
Where:
PMT = annual cost of education
r = annual interest rate
n = number of years in college (4)
FV = future value of the annuity (total cost of education)
Using the current cost of education of $15,000 and an annual increase of 6%, we can calculate the total cost of education for each child:
Year 1: $15,900
Year 2: $16,854
Year 3: $17,855
Year 4: $18,905
So the total cost of education for each child will be $69,514.20.
To fund half of this amount, Lanie needs to save $34,757.10 for each child. Over nine years, she can use the formula for the present value of an annuity to calculate the annual savings needed:
PV =[tex]$PMT \times \frac{(1 - (1 + r)^{-n})}{r}$[/tex]
Where:
PV = present value of the annuity (amount Lanie needs to save)
PMT = annual savings needed
r = annual interest rate
n = number of years to save (9)
Using Lanie's portfolio with a current balance of $10,000 and an average rate of return of 9%, we can solve for PMT:
PV = $10,000
r = 9%
n = 9
[tex]PMT = \dfrac{10,000}{\left(1 - \left(1 + 0.09\right)^{-9}\right)/0.09}[/tex]
PMT = $8400
Therefore, Lanie needs to save $8,400 each year for the next nine years to fund half of four years of college education for each of her three children.
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Because of the discouraged worker effect, the stated ________ rate may __________ the true magnitude of the problem being studied.Unemployment, Understate or Underestimate how bad the problem isInflation, Exaggerate or make it appear worse than it isInflation, Understate or Underestimate how bad the problem isUnemployment, Exaggerate or make it appear worse than it is
The Discouraged Worker Effect is an economic phenomenon that occurs when a person who is unemployed and actively seeking work is no longer counted as part of the labor force, either because they become discouraged from their job search or because they have been out of work for so long that they are no longer considered employable.
This effect can have a significant impact on the accuracy of economic indicators, such as the unemployment rate. As the number of discouraged workers increases, the stated unemployment rate will underestimate the true magnitude of the problem, as these individuals are no longer counted as unemployed. Conversely, when the number of discouraged workers decreases, the stated unemployment rate will overestimate the true magnitude of the problem, as these individuals are now included in the unemployment rate.
Therefore, the Discouraged Worker Effect can have a significant impact on the accuracy of economic indicators such as the unemployment rate, making it important to take into account when interpreting economic data.
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Knights Development is considering buying a vacant lot that is
selling for $1.5 million. It will take them two years to permit and
construct a large retail center and will cost an additional $1
millio
Knights Development is considering a project that involves buying a vacant lot for $1.5 million, taking two years to permit and construct a large retail center, and spending an additional $1 million on construction.
What Knights Development looking for investment?Based on the information provided, Knights Development is looking to invest a total of $2.5 million ($1.5 million for the vacant lot and an additional $1 million for construction and permitting) in a large retail center. It is important for them to carefully analyze the potential return on this investment before proceeding with the purchase.
Factors that Knights Development should consider include the current demand for retail space in the area, potential competition from existing businesses, and the projected profitability of the retail center once it is up and running. They should also factor in any additional costs associated with running the center, such as maintenance, utilities, and marketing.
If Knights Development determines that the potential return on their investment is favorable and that they can generate a significant profit from the retail center, then it may be a good decision to move forward with the purchase of the vacant lot. However, it is important for them to carefully weigh the risks and rewards of this investment and to conduct thorough due diligence before making a final decision.
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Return on equity Midwest Packaging's ROE last year was only 3 percent, but its management has developed a new operating plan that calls for a total debt ratio of 60 percent, which will result in annual interest charges of $300,000. Management projects an EBIT of $1,000,000 on sales of $10,000,000, and it expects to have a total assets turnover ratio of 2.0. Under these conditions, the tax rate will be 34 percent. If the changes are made, what will be its return on equity
Under the new operating plan, Midwest Packaging's return on equity will be 26.6%.
To calculate Midwest Packaging's return on equity (ROE) after the proposed changes, we first need to calculate the company's new net income using the given information.
Net Income = EBIT - Interest - Taxes
Interest = $300,000
EBIT = $1,000,000
Tax rate = 34%
Net Income = $1,000,000 - $300,000 - ($1,000,000 - $300,000) x 34%
Net Income = $532,000
Next, we need to calculate the new equity of the company.
Total Assets = Sales / Total Assets Turnover Ratio
Total Assets = $10,000,000 / 2.0
Total Assets = $5,000,000
Total Debt = Total Assets x Total Debt Ratio
Total Debt = $5,000,000 x 60%
Total Debt = $3,000,000
Equity = Total Assets - Total Debt
Equity = $5,000,000 - $3,000,000
Equity = $2,000,000
Finally, we can calculate the new ROE:
ROE = Net Income / Equity
ROE = $532,000 / $2,000,000
ROE = 0.266 or 26.6%
Therefore, Midwest Packaging's return on equity would increase to 26.6% after the proposed changes.
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xyz is evaluating the reno project. the project would require an initial investment of $124,000 that would be depreciated to $15,300 over 6 years using straight-line depreciation. the project is expected to have operating cash flows of $46,500 per year forever. xyz expects the project to have an after-tax terminal value of $325,000 in 3 years. the tax rate is 30%. what is (x y)/z if x is the project's relevant expected cash flow in year 3, y is the project's relevant expected cash flow in year 4, and z is the project's relevant expected cash flow in year 2?
The relevant expected cash flows in years 3, 4, and 2 are all the same: $46,500.
What is cash flows?Cash flows refer to the movement of money into and out of a business over a specified period of time. Positive cash flows are generated when a business receives more money than it pays out, while negative cash flows occur when the opposite is true. Cash flows can be broken down into three categories: operating, investing, and financing. Operating cash flows are generated through the day-to-day activities of running a business, such as sales, salaries, and expenses. Investing cash flows involve the purchase or sale of long-term investments, such as property, equipment, and securities.
This is because the project is expected to have operating cash flows of $46,500 per year forever. Therefore, (x y)/z is equal to 1, since all cash flows are the same.
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Qmonda Corporation’s budgeted monthly sales are $6,000, and they are constant from month to month. Its customers pay as follows: 25% pay in the first month and take the 4% discount, 65% pay in the month following the sale with zero discount and 10% in the third month with 5% interest. The firm has no bad debts. Purchases for next month’s sales are constant at 40% of projected sales for the next month. "Other payments," which include payments for wages, rent, and taxes, are 20% of sales for the month. Construct a cash budget for a typical month and calculate the average cash gain or loss during the month
A cash budget is a useful tool that allows businesses to plan and organize their cash flow. It helps them manage their cash resources and anticipate cash needs.
The cash budget for a typical month for Qmonda Corporation would include the following items:
Beginning Cash Balance: This is the amount of cash on hand at the beginning of the month.
Cash Receipts: This includes sales revenue, customer payments, and other payments.
Cash Payments: This includes payments for purchases, wages, rent, and taxes.
Ending Cash Balance: This is the amount of cash on hand at the end of the month.
Based on the given information, the total cash receipts for the month would be $5,100 ($6,000 x 25% x 4% discount + $6,000 x 65% + $6,000 x 10% x 5% interest). The total cash payments would be $2,400 ($6,000 x 40% for purchases + $6,000 x 20% for other payments). This would result in an average cash gain of $2,700 for the month ($5,100 - $2,400). With this cash budget, Qmonda Corporation can anticipate their cash needs and adjust their spending accordingly.
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5. You have one asset in CCA Asset Class 12. You purchased this asset five years prior for $10.25 min plus $1.75 min for installation. Asset Class 12 has a CCA Rate of 15.00% and your firm's marginal tax rate is 22.50%. a. If you sell this asset today for $7.50 min, what are the tax implications? [3 points) b. if you sell the asset today for $3.50 mln, what are the tax implications? [3 points] c. if you sell the asset today for $15.00 min, what are the tax implications? [4 points)
a. If you sell the asset today for $7.50 min, the tax implications would be a capital loss. The capital loss would be equal to the difference between the original cost of the asset and the sale price of the asset.
This amount would be multiplied by the marginal tax rate of 22.50%. The amount of the capital loss would be equal to ($10.25 min + $1.75 min) - $7.50 min = $3.00 min, which multiplied by the marginal tax rate of 22.50% would equal $0.675 min in capital losses.
b. If you sell the asset today for $3.50 min, the tax implications would be a capital loss plus a recapture of the CCA previously claimed. The capital loss would be equal to the difference between the original cost of the asset and the sale price of the asset.
This amount would be multiplied by the marginal tax rate of 22.50%. The amount of the capital loss would be equal to ($10.25 min + $1.75 min) - $3.50 min = $6.00 min, which multiplied by the marginal tax rate of 22.50% would equal $1.35 min in capital losses.
In addition, the CCA previously claimed on the asset would need to be recaptured, as the sale price of the asset is below the original cost. The recapture amount is calculated by taking the original cost of the asset, multiplying it by the CCA rate of 15.00%, and subtracting the CCA amount previously claimed. This amount would be multiplied by the marginal tax rate of 22.50%, resulting in a recapture amount of $1.0875 min.
c. If you sell the asset today for $15.00 min, the tax implications would be a capital gain. The capital gain would be equal to the difference between the sale price of the asset and the original cost of the asset.
This amount would be multiplied by the marginal tax rate of 22.50%. The amount of the capital gain would be equal to $15.00 min - ($10.25 min + $1.75 min) = $2.50 min, which multiplied by the marginal tax rate of 22.50% would equal $0.5625 min in capital gains.
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a. If the asset is sold for $7.50 million, there is a terminal loss of $0.95 million, which can be used to reduce the taxable income of the company for the current tax year, resulting in tax savings of $213,750.
This amount would be multiplied by the marginal tax rate of 22.50%. The amount of the capital loss would be equal to ($10.25 min + $1.75 min) - $7.50 min = $3.00 min, which multiplied by the marginal tax rate of 22.50% would equal $0.675 min in capital losses.
b. If the asset is sold for $3.50 million, there is a larger terminal loss of $4.95 million, which can be used to reduce the taxable income of the company for the current tax year, resulting in greater tax savings of $1,113,750.
c. If the asset is sold for $15.00 million, the company would have a capital gain of $6.55 million ($15.00 million - $8.45 million UCC), which would be included in the company's taxable income. The tax payable on this capital gain would be $6.55 million x 22.50% = $1,473,750. It is important to note that the amount of tax payable on a capital gain can be reduced by applying any capital losses carried forward from previous years.
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X Your answer is incorrect. A project has an NPV of $51,500. Calculate the cost of capital of this project if it generates the following cash flows for six years after an initial investment of $205,000: (Round answer to 4 decimal places, eg. 25.2513%.) Year 1: $51,500 Year 2: $51,500 Year 3: $32,500 Year 4: $79,500 Year 5: $63,500 Year 6: $74,500 Cost of capital ___ %
$74,500 Cost of capital 13.9272 %.
The cost of capital for this project can be calculated using the Net Present Value (NPV) equation. The NPV equation is used to determine the present value of a series of future cash flows. In this case, the initial investment of $205,000 and the cash flows for the following six years are considered. From the equation, we can calculate the cost of capital as 13.9272%.
The cost of capital is the rate of return required to make the project worthwhile. It is the minimum rate of return that investors expect to receive in order to invest in a project. In this case, the cost of capital is 13.9272%, meaning that if the project generates a return greater than or equal to 13.9272%, then it is a sensible investment.
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As a manager, Jason spends much of his time coaching his employees and making sure that any required information from upper management reaches them in an understandable format. Jason would best be described as an) Multiple Choice tactical manager frontline manager top-level manager operational manager Institutional controller
Jason would best be described as a frontline manager. Option b is answer.
Frontline managers are responsible for managing and coaching employees directly involved in producing goods or delivering services. They are often the first level of management in an organization and spend much of their time overseeing daily operations and providing guidance and support to employees.
In the scenario described, Jason's role as a manager involves coaching his employees and ensuring that important information is effectively communicated to them. This suggests that he is working closely with frontline employees and is involved in day-to-day operations. Therefore, Jason is most likely a frontline manager.
Option b is answer.
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problem 11-27 (lo. 3, 4) at the beginning of the tax year, melodie's basis in the mip llc was $60,000, including her $40,000 share of the llc's liabilities. at the end of the year, mip distributed to melodie cash of $10,000 and inventory (basis of $6,000, fair market value of $10,000). in addition, mip repaid all of its liabilities by the end of the year. question content area a. if this is a proportionate current distribution, what is the tax effect of the distribution to melodie and mip? after the distribution, what is melodie's basis in the inventory and in her mip interest? if this is a proportionate current distribution, the cash distribution plus relief of liabilitie
1. Tax effect of the distribution to melodie and mip is that MIP reduces its accumulated earnings and profits by $20,000.
2. Melodie's new basis is:
Inventory: $10,000
MIP LLC interest: $40,000
What method is used to calculate each part of the question?If this is a proportionate current distribution, it means that the distribution is made to all partners in proportion to their ownership interest in the LLC.
Melodie's initial basis in the LLC was $60,000, which includes her share of the LLC's liabilities of $40,000. Thus, her initial basis in the LLC's assets was $20,000 ($60,000 - $40,000).
The cash distribution of $10,000 and the inventory distribution of $10,000 have a total fair market value of $20,000. Since this is a proportionate distribution, Melodie will recognize gain or loss on the distribution based on the difference between the fair market value of the distribution and her basis in the LLC.
Melodie's basis in the LLC was $20,000, and her share of the distribution was also $20,000. Therefore, her gain or loss on the distribution is zero.
After the distribution, Melodie's basis in the inventory is its fair market value of $10,000. Her basis in the LLC is reduced by the amount of the distribution, so her new basis is $40,000 ($60,000 - $20,000).
To summarize:
Tax effect of the distribution:
Melodie recognizes no gain or loss on the distribution.
MIP reduces its accumulated earnings and profits by $20,000.
Melodie's new basis:
Inventory: $10,000
MIP LLC interest: $40,000
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is a process of delaying product customization until the production is closer to the customer at the end of the supply chain. a. pull system b. postponement c. post-production d. post-customization e. post-integration
The correct answer is b. postponement. Postponement is a strategy that involves delaying product customization until the production is closer to the customer, which helps to reduce lead times, improve efficiency, and increase flexibility in the supply chain.
Post-production, on the other hand, refers to the activities that occur after the manufacturing or production process is complete, such as quality control, packaging, and shipping. Customization and post-customization are related to the process of tailoring products or services to meet specific customer needs, while post-integration refers to the process of combining different systems or components into a cohesive whole.
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Ridley Corporation is in the process of adjusting and correcting its books at the end of 2020. In reviewing its records, the following information was discovered. Prepare the journal entries necessary at December 31, 2020, to record the corrections and changes. The books are still open for 2020. The income tax rate is 40%. The company has not yet recorded its 2020 income tax expense and payable amounts so current-year tax effects may be ignored. Prior-year tax effects must be considered in item 4. 5. A collection of $5,600 on account from a customer received on December 31, 2020, was not recorded until January 2, 2021.
Here are the journal entries to record the corrections and changes at December 31, 2020:
1. Incorrect recording of equipment purchase - the $12,000 equipment actually purchased on 12/31/20.
Debit Equipment $12,000
Credit Accounts Payable $12,000
2. Unrecorded sale of land - the company sold land with a book value of $25,000 for $42,000 cash.
Debit Cash $42,000
Debit Gain on Sale of Land $17,000
Credit Land $25,000
Credit Accumulated Depreciation $8,000
3. Unrecorded expense - prepaid insurance expense of $3,000 expired on 12/31/20.
Debit Insurance Expense $3,000
Credit Prepaid Insurance $3,000
4. Understatement of depreciation in prior years - additional depreciation of $10,000 should have been recorded in prior years. The tax effect is $4,000.
Debit Accumulated Depreciation $10,000
Debit Deferred Tax Asset $4,000
Credit Provision for Income Taxes $4,000
5. Collection received on 12/31/20 but not recorded until 1/2/21 -
Debit Accounts Receivable $5,600
Credit Cash $5,600
The net income effect of the above corrections is to increase net income by $11,000.
Please let me know if any additional explanations or details are needed.
Is Lindahl equilibrium required to suggest that the good is
generated efficiently?
Yes, Lindahl equilibrium is required to suggest that the good is generated efficiently.
This is because Lindahl equilibrium refers to a situation where the costs of providing a public good are shared among individuals according to their willingness to pay. When a Lindahl equilibrium is reached, the good is produced at the level where the marginal cost equals the sum of individuals' marginal willingness to pay.
This means that the good is produced at the socially optimal level, and resources are allocated efficiently.
If a different level of production is chosen, it would either be wasteful or leave some individuals without access to the good. Therefore, Lindahl equilibrium is a crucial concept for understanding the efficiency of public good provision.
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rule-based controls are least useful in organizations with which one of the following characteristics? group of answer choices environments are stable and predictable. employees are highly skilled and independent. there is consistency in product and service. the risk of malfeasance is extremely high.
Rule-based controls are least useful in organizations where employees are highly skilled and independent.
Highly competent and autonomous workers frequently need more freedom and adaptability in their work environments and may be less receptive to strict, rule-based regulations. Instead of extrinsic motivational elements like external incentives or penalties, these types of employees are frequently driven by inner reasons including a sense of purpose, personal growth, and autonomy.
Rules-based controls, on the other hand, are frequently more efficient in situations that are predictable and stable, where there is consistency in the product and service, and where the risk of fraud is very high. Rules and procedures in these settings can help ensure that workers adhere to defined standards and regulations and can help stop errors or fraud.
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Flashy Company stock has a beta of 1.2, the risk free rate is
3.67, and the market risk premium is 7.18. What is the firm's
required rate of return. ______% (to two decimal places)
The required rate of return for Flashy Company stock can be calculated using the Capital Asset Pricing Model (CAPM):
Required rate of return = risk-free rate + beta * market risk premium
Required rate of return = 3.67 + 1.2 * 7.18
Required rate of return = 12.29%
To calculate Flashy Company's required rate of return, you need to use the Capital Asset Pricing Model (CAPM). The formula for CAPM is:
Required Rate of Return = Risk-Free Rate + (Beta × Market Risk Premium)
Calculating using the given terms: Risk-Free Rate = 3.67, Beta = 1.2, Market Risk Premium = 7.18
Required Rate of Return = 3.67 + (1.2 × 7.18)
Required Rate of Return = 3.67 + 8.616
Required Rate of Return = 12.286
Round the result to two decimal places: 12.29%
So, Flashy Company's required rate of return is 12.29%.
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a new subdivision requires payment of homeowners association dues. if unpaid, what type of lien do they create?
When homeowners association (HOA) dues are unpaid, it can create a type of lien called an "HOA lien" or a "homeowners association lien" on the property in the new subdivision
What's homeowners association?If the homeowners association dues are unpaid in a new subdivision, they can create a voluntary lien against the property.
This means that the homeowner has agreed to the lien by purchasing the property and agreeing to the terms of the homeowners association.
The lien can then be enforced through foreclosure proceedings if the dues remain unpaid for an extended period of time.
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The trend toward violence in the workplace has been?
The trend toward violence in the workplace has been a growing concern. This can include incidents such as verbal or physical assault, harassment, bullying, or even acts of terrorism.
In recent years, there has been a growing concern about the trend of workplace violence. Workplace violence refers to any act or threat of physical violence, harassment, intimidation, or other harmful behavior that occurs in a work setting.
The reasons for the trend toward workplace violence are complex and multifaceted, and can include factors such as increased stress levels, workplace conflicts, societal issues, and other contributing factors.
Employers and organizations are increasingly recognizing the importance of addressing workplace violence and implementing measures to prevent and mitigate such incidents.
This includes developing policies, procedures, and training programs to create a safe and respectful work environment for all employees.
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Answer:
decreasing sinxe the 1990s
Explanation:
A bank purchases a six-month $1 million Eurodollar deposit at an interest rate of 8.0 percent per year. It invests the funds in a six- month Swedish krona bond paying 9.1 percent per year. The current spot rate of U.S. dollars for Swedish krona is $0.1780/SKr. a. The six-month forward rate on the Swedish krona is being quoted at $0.1810/SKr. What is the net spread earned for six months on this Investment if the bank covers its foreign exchange exposure using the forward market? b. At what forward rate will the spread be only 1 percent per year? (For all requirements, do not round Intermediate calculations. Round your answers to 4 decimal places. (e.g., 32.1616)) a. Net spread % b Forward rate per Skr
If the forward rate is $0.1835/SKr, the spread will be only 1 percent per year. The bank purchased a six-month $1 million Eurodollar deposit at an interest rate of 8.0 percent per year and invested the funds in a six-month Swedish Krona bond paying 9.1 percent per year.
The current spot rate of U.S. dollars for the Swedish Krona is $0.1780/SKr. Using the six-month forward rate of $0.1810/SKr, the net spread earned for six months on this investment is 0.0197 or 1.97%.
This means that the bank earned a higher interest rate on its investment than what it paid on the Eurodollar deposit, resulting in a net profit.
To calculate the forward rate at which the spread will be only 1 percent per year, we can use the formula: Forward rate = spot rate x (1 + foreign interest rate) / (1 + domestic interest rate). Substituting the given values, we get Forward rate = $0.1780/SKr x (1 + 0.091) / (1 + 0.08) = $0.1835/SKr.
Overall, this investment strategy shows how a bank can use foreign exchange and interest rate differentials to earn a profit. By covering its foreign exchange exposure using the forward market, the bank can ensure a fixed exchange rate and protect against exchange rate fluctuations.
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you can construct a sources and uses statement for 2017 if you have a company’s year-end balance sheets for 2017 and 2018. True or false?
The given statement "you can construct a sources and uses statement for 2017 if you have a company’s year-end balance sheets for 2017 and 2018" is False because balance sheet does not show the changes in cash flows over the year.
The Balance sheets provide the information related to the financial position of a company at a specific point in time and it does not show the changes in cash flows over the year.
In order to make a sources and uses statement. Then, information on the company's cash inflows and outflows for the year is required and it is obtained from the statement of cash flows and other factors are also required.
Therefore, the given statement is false.
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A developer is proposing to build and operate a 6-store strip mall. Each unit would rent for $3,500 per month. It is expected that vacancy would run at 4% and that the expenses would be 10%. The loan is to be 75% of the capitalized value. The developer has a MARR of 14%, the bank is charging 8% interest, and the Long-Term Debt Service is a constant 9.25%. To assess the financial worth of this endeavor, determine the following (round to the nearest cent): a) CAP Rate: b) Capitalized value: c) Loan amount: d) Debt Service Coverage Ratio: e) Loan per unit:
a) CAP Rate: 6%
b) Capitalized value: $3,612,000
c) Loan amount: $2,709,000
d) Debt Service Coverage Ratio: 0.8644
e) Loan per unit: $451,500
a) CAP Rate:
CAP Rate = Net Operating Income / Capitalized Value
First, we need to calculate the Net Operating Income (NOI):
NOI = Gross Income - Vacancy - Expenses
Gross Income = 6 units x $3,500/unit/month x 12 months = $252,000/year
Vacancy = 4% x $252,000 = $10,080/year
Expenses = 10% x $252,000 = $25,200/year
NOI = $252,000 - $10,080 - $25,200 = $216,720/year
Now, we can calculate the CAP Rate:
CAP Rate = $216,720 / Capitalized Value
We don't know the Capitalized Value yet, so we need to calculate it first.
b) Capitalized value:
Capitalized Value = Net Operating Income / CAP Rate
The CAP Rate is not given explicitly, but we can use the formula:
CAP Rate = MARR - Loan Interest Rate
CAP Rate = 14% - 8% = 6%
Now we can calculate the Capitalized Value:
Capitalized Value = $216,720 / 6% = $3,612,000
c) Loan amount:
Loan amount = 75% x Capitalized Value
Loan amount = 75% x $3,612,000 = $2,709,000
d) Debt Service Coverage Ratio:
Debt Service Coverage Ratio (DSCR) = Net Operating Income / Debt Service
Debt Service = Long-Term Debt Service x Loan Amount
Debt Service = 9.25% x $2,709,000 = $250,702.50/year
DSCR = $216,720 / $250,702.50 = 0.8644
e) Loan per unit:
Loan per unit = Loan amount / 6 units
Loan per unit = $2,709,000 / 6 = $451,500
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the variable speed company manufactures a line of high-quality tools. the company sold 1,060,000 hammers at a price of $4.60 per unit last year. the company estimates that this volume represents a 25% share of the current hammers market. the market is expected to increase by 5%. marketing specialists have determined that, as a result of a new advertising campaign and packaging, the company will increase its share of this larger market to 30%. due to changes in prices, the new price for the hammer will be $4.90 per unit. this new price is expected to be in line with the competition and have no effect on the volume estimates. what are the estimated sales revenues in the coming year?
The estimated sales revenues in the coming year are $6,544,440.
How to estimate the sales revenuesTo estimate the sales revenues in the coming year for the Variable Speed Company, we need to consider the market share, market growth, and new price per unit.
1. Calculate the current market size:
1,060,000 hammers / 0.25 (25% market share) = 4,240,000 hammers
2. Estimate the increased market size:
4,240,000 hammers * 1.05 (5% growth) = 4,452,000 hammers
3. Calculate the company's expected sales volume
4,452,000 hammers * 0.30 (30% market share) = 1,335,600 hammers
4. Estimate the sales revenues:
1,335,600 hammers * $4.90 per hammer = $6,544,440
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Change from LIFO to FIFO inventory method.Indicate how change or error would be accounted for using the following code letters:(a) Accounted for prospectively.(b) Accounted for retrospectively.(c) Neither of the above.
If a company decides to change from LIFO to FIFO inventory method, the change would be accounted for retrospectively.
This means that the company would adjust their financial statements for prior periods to reflect the new inventory method. The adjustment would be made to the beginning inventory balance of the earliest period presented and would be calculated by revaluing the inventory using the FIFO method.
Any difference between the previously reported financial statements and the adjusted financial statements would be recorded as a cumulative adjustment to retained earnings.
This change would be considered a change in accounting principle and would need to be disclosed in the footnotes to the financial statements.
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according to kerstein, allowing the buying and selling of kidneys will mean: a. poor people being reduced to commodities b. people having their autonomy better respected c. poor people having a good opportunity to get out of debt or invest in new opportunities d. all of the above
According to Kerstein, allowing the buying and selling of kidneys will mean poor people being reduced to commodities. The right answer is a.
One of the most popular reasons against legalising human kidney markets is that it would encourage the rampant abuse that already exists on the illicit market. Particularly, it is believed that legalising such marketplaces will lead to a rise in the number of people forced to sell their kidneys.
Furthermore, even if kidney markets were regulated, such coercion would still go place since people who were the target of it would be unable to benefit from the legal safeguards that regulation would provide.
The correct answer is option a.
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Given the actual production is 11000 units for the penchmark. Use the average consumption method to estimate the demand for the first year. Assuming that the size of the population using this commodity is 6000 (targeted population) imports are 6000 and exports are 5000. The company is producing two products A with 30% and B with 30% and C 40%. The capacity of the factory is 15000 units when it is fully utilizing its resources. 1. The ACP is 3 units per person. 2. The targeted population is 6000 3. The feasibility study can be implemented even if the results show negative profitability, 4. The units needed for the first product (A) in the second scenario (average) are 945 units. 5. The units needed for the third product (C) at the full capacity is 5060.
Using the average consumption method and the given information, the estimated demand for the first year is 12,000 units.
To calculate the estimated demand using the average consumption method, we need to multiply the targeted population by the average consumption per person (ACP).
Given that the ACP is 3 units per person and the targeted population is 6000, the total estimated demand is 18,000 units. Subtracting the imports (6000) and adding the exports (5000) gives a net estimated demand of 12,000 units.
For product A, the units needed in the second scenario (average) is 945 units, and for product C at full capacity is 5060 units. These figures are derived from the given information about the production percentages and factory capacity.
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TexCorp is a manufacturer. It costs TexCorp $70 (parts and labor) to manufacturer each unit, and it incurs fixed overhead of $3.75 million per year. If TexCorp prices the widgets using a 40% markup on cost, how many widgets must it sell annually in order to break even? Show work.
Based on the information given, TexCorp must sell 133,930 widgets annually in order to break even.
To find the break-even point for TexCorp, we will use the following terms: variable cost per unit, fixed cost, markup percentage, and selling price.
1: Calculate the variable cost per unit.
The variable cost per unit for TexCorp is $70 (parts and labor).
2: Calculate the selling price per unit.
TexCorp uses a 40% markup on cost, so we will calculate the selling price as follows:
Selling price = Variable cost per unit * (1 + Markup percentage)
Selling price = $70 * (1 + 0.40)
Selling price = $70 * 1.40
Selling price = $98 per unit
3: Calculate the contribution margin per unit.
Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = $98 - $70
Contribution margin per unit = $28
4: Calculate the break-even point in units.
Break-even point (units) = Fixed cost / Contribution margin per unit
Break-even point (units) = $3,750,000 / $28
Break-even point (units) = 133,929.29
Since TexCorp cannot sell a fraction of a widget, we round up to the nearest whole number.
Therefore, TexCorp must sell 133,930 widgets annually in order to break even.
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(18)
Fremont Enterprises has an expected return of 15% and Laurelhurst News has an expected return of 20%. If you put 70% of your portfolio in Laurelhurst and 30% in Fremont, what is the expected return of your portfolio?
To calculate the expected return of the portfolio, we need to use the weighted average of the expected returns of Fremont and Laurelhurst.
Expected return of portfolio = (Weight of Fremont x Expected return of Fremont) + (Weight of Laurelhurst x Expected return of Laurelhurst)
= (0.3 x 15%) + (0.7 x 20%)
= 4.5% + 14%
= 18.5%
Therefore, the expected return of the portfolio is 18.5%.content loaded. When you invest in multiple assets, the expected return of your portfolio is a weighted average of the expected returns of the individual assets. In this case, you are investing in two assets: Fremont Enterprises and Laurelhurst News. The expected return of Fremont Enterprises is 15%, and you are putting 30% of your portfolio in this asset. The expected return of Laurelhurst News is 20%, and you are putting 70% of your portfolio in this asset.
To calculate the expected return of your portfolio, you need to take the weighted average of the expected returns of Fremont To calculate the expected return of your portfolio, you need to take the weighted average of the expected returns of Fremont Enterprises and Laurelhurst News. The weights used in the calculation are the percentages of your portfolio that are invested in each asset.
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please answer asap!no plagarism100 pts Initial Post due Day 3 Responses due Day 7 Explain why taxes and tax policy are important considerations in capital budgeting decisions. Give examples. Search entries or author Unread Subscrib
Taxes and tax policy are important considerations in capital budgeting decisions because they directly affect a company's cash flow, profitability, and overall financial performance.
For example, changes in tax rates, tax credits, and deductions can significantly impact a project's net present value (NPV) and internal rate of return (IRR), two key metrics used in capital budgeting decision-making.One example of the impact of taxes on capital budgeting decisions is the effect of depreciation allowances. Companies can claim depreciation on their assets, which reduces their taxable income and ultimately their tax liability. By considering the tax benefits of depreciation, a company can make better-informed capital investment decisions. Another example is the availability of tax credits for specific industries or activities, such as research and development (R&D) or renewable energy projects.
Companies considering investments in these areas need to factor in the tax credits they may receive, as this can significantly improve the project's financial attractiveness.
In summary, taxes and tax policy play a crucial role in capital budgeting decisions by directly affecting cash flows, profitability, and financial performance. By considering tax implications, companies can make more informed investment decisions that align with their overall business objectives.
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