All of these
Hope it will helps you!
Old Quartz Gold Mining Company is expected to pay a dividend of $8 in the coming year. Dividends are expected to decline at the rate of 2% per year. The risk-free rate of return is 6%, and the expected return on the market portfolio is 14%. The stock of Old Quartz Gold Mining Company has a beta of -0.25. The intrinsic value of the stock is
Answer:
$133.33
Explanation:
Cost of equity (Ke) = Rf + beta*(Rm-Rf)
Cost of equity (Ke) = 6% - 0.25*(14%-6%)
Cost of equity (Ke) = 4%
Cost of equity (Ke) = 0.04
According to the dividend distribution model Ke = D1/ P0 + g. P0 = D1/(ke-g, where D1 = 8, g = -0.02 and Ke = 0.04
P0 (Intrinsic price) = 8/(0.04+0.02)
P0 (Intrinsic price) = 8/0.06
P0 (Intrinsic price) = $133.33
Therefore, he intrinsic value of the stock is $133.33.
A company is considering the purchase of new equipment for $51,000. The projected annual net cash flows are $21,200. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 10% return on investment. The present value of an annuity of $1 for various periods follows: Period Present value of an annuity of $1 at 10% 1 0.9091 2 1.7355 3 2.4869 What is the net present value of this machine assuming all cash flows occur at year-end
Answer:
$1721.26
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = -$51,000
Cash flow in year 1 to 3 = $21,200
I = 10%
NPV = $1721.26
To find the NPV 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 NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Ocean Company estimated that April sales would be 150,000 units with an average selling price of $6.00. Actual sales for April were 149,000 units, and average selling price was $6.12. The sales revenue flexible budget variance was: A. $6,120 favorable. B. $17,880 favorable. C. $6,000 unfavorable. D. $17,880 unfavorable.
Answer:
B. $17,880 favorable.
Explanation:
Sales revenue flexible budget variance = (149,000 units × $6.12 per unit) − (149,000 units × $6.00 per unit)
Sales revenue flexible budget variance = $911,880 − $894,000 = $17,880 favorable
Since actual sales were greater than the flexible budget amount, the variance is favorable.
Select the true statement about interest rate risk. It stems from the fact that bond prices and market interest rates are inversely correlated. It is the risk that a bond's coupon payment will fall if market interest rates fall. Interest rate risk is particularly problematic for investors who do not wish to sell their bonds. Shorter-term bonds are more sensitive to interest rate risk than longer-term bonds.
Answer:
The correct answer is the first option: It stems from the fact that bond prices and market interest rates are inversely correlated.
Explanation:
To begin with, the term known as "Interest Rate Risk" refers to the number that specifically shows the relation that exists between an investment that is planning to take place and another investment that is already having place, meaning that it focus on the potential for investment losses that result from a change in interest rates. Therefore that, in the field of microeconomics, it is understood that it will reflex the fact that when the interest goes up the price of actual investments like bond will go down and that is why it stems from the fact that bond prices and market interest rates are inversely correlated.
Tamarisk, Inc. is authorized to issue 2,250,000 shares of $1 par value common stock. During 2020, the company has the following stock transactions.
Jan. 15 Issued 880,000 shares of stock at $7 per share.
Sept. 5 Purchased 28,000 shares of common stock for the treasury at $8 per share.
Dec. 6 Declared a $0.50 per share dividend to stockholders of record on December 20, payable January 3, 2021.
Journalize the transactions for Tamarisk, Inc.
Answer:
Date Account Titles and Explanation Debit$ Credit$
Jan.15 Cash (880,000*$7) 6,160,000
Common Stock , $1 Par value 880,000
Paid in capital in excess of par value 5,280,000
Sept.5 Treasury Stock 224,000
Cash (28,000*8) 224,000
Dec.6 Retained earnings 440,000
Cash Dividend Payable 440,000
(880,000*0.50)
The Walking Dead Co. provides services on-account and in exchange for cash. All general ledger accounts are adjusted monthly. For September, the following information is available: Accounts Receivable on September 1st is $22,400 (debit) Allowance for Doubtful Accounts on September 1st is $4,400 (credit) Services provided during September for cash $20,000 Services provided during September on-account $45,000 During the month collections on account were $34,400 and accounts written off as uncollectible were $2,000. The Walking Dead estimates bad debts at 8% of accounts receivable. After adjusting journal entries are recorded, what is the September 30th balance in Allowance for Doubtful Accounts
Answer:
See below
Explanation:
Given that,
Accounts receivables :
Beginning balance 1 September = $22,400
Services on account = $45,000
Cash collected = $34,400
Written off accounts = $2,000
Allowance for doubtful accounts:
Beginning balance 1 September = $4,400
Adjusted balance for Allowance for doubtful accounts on 30th September
= Beginning balance 1 September - Written off accounts + Bad debt expense
= $4,400 + $2,000 + ($45,000 × 8%)
= $4,400 + $2,000 + $3,600
= $6,000
For the year ended December 31, 2021, Norstar Industries reported net income of $960,000. At January 1, 2021, the company had 1,050,000 common shares outstanding. The following changes in the number of shares occurred during 2021:
Apr. 30 Sold 80,000 shares in a public offering.
May 24 Declared and distributed a 5% stock dividend.
June 1 Issued 90,000 shares as part of the consideration for the purchase of assets from a subsidiary.
Required:
Compute Norstar's earnings per share for the year ended December 31, 2021. (Enter your answers in thousands. Round "EPS" answer to 2 decimal places. Do not round intermediate calculations.)
Answer:
Earning per share for the year ended December 31, 2021 on Norstar's earnings = $0.79 per share
Explanation:
Earning per share is calculated as
Net income reported / Weighted number of outstanding shares
where,
Net income reported is $960,000
And, the weighted number of outstanding share is
For Jan.1
Jan 1 2021 shares × stock dividend
Dividend = 100 + rate = 100 + 0.05 = 1.05
1,050,000 x 1.05=$1, 102,500
For April
April 30 shares × stock dividend× number of months / total number of months in a year
80,000 x 1.0 5 x 8/12(April 30 to December 31 = 8 months)=56,000
For June
June 1 shares × number of months/ total number of months in a year
90,000 x 7/12=56,000
Total weighted number of outstanding shares =$1,102,500+56,000+52,500= $1,211,000
So, the earning per share is
= 960,000 / $1,211,000 shares
= $0.79 per share
The rate established at the beginning of a period that uses estimated overhead and an allocation factor such as estimated direct labor, and that is used to assign overhead cost to jobs, is the: Multiple Choice Predetermined overhead rate. Overhead variance rate. Estimated labor cost rate. Chargeable overhead rate. Miscellaneous overhead rate.
Answer:
Predetermined overhead rate
Explanation:
The predetermined overhead rate is the rate that is computed by taking the estimated manufacturing overhead and the same would be divided by allocation factor that could be estimated direct labor, estimated direct hours, etc in order to assign the overhead cost
So according to the given situation, the first option is correct i.e. predetermined overhead rate
Rodney (a fictional person) was self-employed, running a successful business, seemingly healthy, and never thought he would have financial problems. Being self-employed, he lacked health insurance. One day on the job, Rodney suffered a heart attack and was hospitalized for a week. As a result, he owed more than $100,000 in hospital and medical bills to the hospital. After the heart attack, Rodney could not work in his physically demanding line of work, and his business suffered dramatically. The bills and mortgage payments kept piling up, and Rodney was sinking fast. On top of the medical bills and mortgage, he owed thousands of dollars to multiple companies and creditors. Rodney considered selling his house to get out of the financial crisis he was in, but the value of the house had dropped significantly. After much consideration, Rodney decided to file, bankruptcy. In the end, he decided he would rather have a bankruptcy on his record instead of dealing with a mountain of debt.
1. Bankruptcy, ___________occurs when a debtor turns over all assets to a trustee, an individual who takes over administration of the debtor's estate.
a. An order of relief
b. An automatic stay
c. Relief
d. Liquidation
e. Bankruptcy
2. Who is defined as a debtor for liquidation purposes? Can Rodney file for bankruptcy?
a. Banks; Rodney cannot file.
b. Individuals; Rodney can file.
c. Health Maintenance Organizations; Rodney cannot file.
d. Partnerships: Rodney cannot file
e. Corporations; Rodney cannot file
3. Suppose that Rodney did not intend to file for voluntary liquidation. Could he be forced into bankruptcy?
a. No, he must file the bankruptcy himself.
b. Yes, because he has more than 12 creditors.
c. Yes, because he has a single creditor with a claim of more than $12,300 in debt.
d. No, because people who are self-employed cannot be forced into filing.
4. Rodney has a lot of creditors that are trying to sue him for the debt he owes. One benefit of filing is that once a petition is filed, the code provides for a(n) _______________for almost all creditor litigation against the debtor.
a. Liquidation
b. Order of relief
c. Creditor’s meeting
d. Preferential payment
e. Automatic stay
5. If the filing of Rodney's voluntary petition is proper, the petition automatically becomes a(n):_____.
a. Fraudulent transfer
b. Creditor’s meeting
c. Preferential payment
d. Discharged debt
e. Order of relief.
6. Suppose Rodney fails to show up at his creditors' meeting with his creditors because he is scared to meet with the hospital representatives. What is a possible consequence of his failure to show?
a. His creditors will be allowed to sue him for failure to show.
b. The court may refuse to grant the bankruptcy
c. Rodney will be charged with a criminal offense.
d. There is no penalty for missing a creditor’s meeting.
e. His appointed trustee will be penalized, but Rodney will not.
Answer:
1. Bankruptcy, ___________occurs when a debtor turns over all assets to a trustee, an individual who takes over administration of the debtor's estate.
b. An automatic stay
2. The person defined as a debtor for liquidation purposes is
b. Individuals; Rodney can file.
3. If Rodney did not intend to file for voluntary liquidation, he could not be forced into bankruptcy. a. No, he must file the bankruptcy himself.
4. One benefit of filing is that once a petition is filed, the code provides for a(n) _______________for almost all creditor litigation against the debtor.
e. Automatic stay
5. If the filing of Rodney's voluntary petition is proper, the petition automatically becomes a(n):_____.
e. Order of relief.
6. A possible consequence of Rodney's failure to show up at a creditors meeting is:
b. The court may refuse to grant the bankruptcy
Explanation:
In bankruptcy practices, an order for relief invokes the automatic stay. It is a block on Rodney's debts which brings down the iron curtain, thus, separating Rodney's pre-bankruptcy from his post-bankruptcy. It automatically creates a bankruptcy estate, which prohibits all unauthorized transfers of the Rodney's property.
Use the following information regarding the Newcastle Corporation to prepare a statement of cash flows using the indirect method:
Accounts payable decrease $9,100
Accounts receivable increase 12,740
Wages payable decrease 5,460
Amortization expense 29,120
Cash balance, January 1 54,600
Cash balance, December 31 12,740
Cash paid as dividends 10,920
Cash paid to purchase land 182,000
Cash paid to retire bonds payable at par 136,500
Cash received from issuance of common stock 81,900
Cash received from sale of equipment 21,840
Depreciation expense 70,980
Gain on sale of equipment 25,480
Inventory increase 23,660
Net income 174,720
Prepaid expenses increase 14,560
Answer and Explanation:
The preparation of the cash flow statement is presented below;
Cash Flows from Operating activities
Net income $174,720
Adjustments made
Less: Accounts payable decrease ($9,100)
Less Accounts receivable increase ($12,740)
Less: Wages payable decrease ($5,460)
Add: Amortization expense $29,120
Add: Depreciation expense $70,980
Less: Gain on sale of equipment ($25,480)
Less: Inventory increase ($23,660)
Less; Prepaid expenses increase ($14,560)
Net Cash Flows from Operating activities $183,820
Cash Flows from Investing activities
Cash paid to purchase land ($182,000)
Add: Cash received from the sale of equipment $21,840
Net Cash flows from Investing activities ($160,160)
Cash Flows from Financing Activities
Cash paid as dividends ($10,920)
Less; Cash paid to retire bonds payable at par ($136,500)
Add: Cash received from the issuance of common stock $81,900
Net Cash Flows from Financing activities ($65,520)
Net Increase (Decrease) in Cash ($41,860)
Add: Cash balance, January 1 $54,600
Cash balance, December 31 $12,740
You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new common stock. Quigley's WACC is closest to: 8.15% 8.48% 8.82% 9.17% 9.54%
Answer:
8.15 %
Explanation:
Weighted Average Cost of Capital (WACC) is the business Cost of permanent sources of finance pooled together. It shows the risk of the business and is used to evaluate projects.
WACC = Cost of Equity x Weight of Equity + Cost of Preferred Stock x Weight of Preferred Stock + Cost of Debt x Weight of Debt
Remember to use the After tax cost of debt :
After tax cost of debt = Interest x ( 1 - tax rate)
= 6.50% x (1 - 0.40)
= 3.90 %
therefore,
WACC = 11.25% x 55% + 6.00% x 10% + 3.90 % x 35%
= 8.15 %
Thus,
Quigley's WACC is closest to 8.15 %.
Intermediate targets are Group of answer choices financial variables, such as interest rates or monetary aggregates, the Fed believes will help it to achieve policy goals. interim goals set on the way to fully achieving policy goals. targets the Fed hopes to achieve by June of each year. targets for policy goals that are of secondary importance.
Answer:
financial variables, such as interest rates or monetary aggregates, the Fed believes will help it to achieve policy goals.
Explanation:
The Federal Reserve System ( popularly referred to as the 'Fed') was created by the Federal Reserve Act, passed by the U.S Congress on the 23rd of December, 1913. The Fed began operations in 1914 and just like all central banks, the Federal Reserve is a United States government agency.
Generally, it comprises of twelve (12) Federal Reserve Bank regionally across the United States of America.
Like all central banks, the Federal Reserve is a government agency that is saddled with the following responsibilities;
I. The Fed controls the issuance of currency in United States of America: it promotes public goals such as economic growth, low inflation, and the smooth operation of financial markets.
II. It provides banking services to all the commercial banks in the country because the Federal Reserve is the "lender of last resort."
III. It regulates banking activities in the United States of America: it has the power to supervise and regulate banks.
Intermediate targets can be defined as financial and economic variables which aren't directly under the control of the Federal Reserve (central bank) but they try to use them to influence policy actions or goals within a specific period of time.
Hence, intermediate targets are financial or economic variables, such as interest rates or monetary aggregates, the Fed believes will help it to achieve policy goals.
Hershberger's Farms plans to mix two types of food to make a mix of low cost feed for the animals in his farm. A bag of food costs $10 and contains 40 units of protein, 20 units of minerals and 10 units of vitamins. A bag of food B costs $12 and contains 30 units of proteins, 20 units of minerals and 30 units of vitamins. Daily minimum requirements consist of 150 units of proteins, 90 units of minerals and 60 units of vitamins.
a. Based on the lowest possible cost, how many bags of food A and food B should be consumed by the animals each day?
b. What is the overall cost? $46.50
c. Was there any unused resources?
Answer:
Following are the responses to the given choices:
Explanation:
For point a:
It is possible to say that as the material unit in either bag are same, the minimum bag number is 90 /20 = 4.5
rounded off=Minimum 5 bags
They will try to use all of these bags as the cost of bag A is poor.
When we have five bags of protein A, therefore the vitamin requirements were n’t fulfilled.
Currently, using 4 bags of A and 1 B bag, protein, vitamin and mineral obligations are fulfilled. They all are met.
Therefore, 4 food bags A and 1 food bag B need to be consumed due to the lowest cost.
For point b:
Cost total:
[tex]=( 4 \times 10 ) + ( 1 \times 12)\\\\=40 +12\\\\= \$52[/tex]
For point c:
The following are unused resources:
[tex]\text{Protein = Bag A + Bag B - Consumption}\\\\= 160 + 30 - 150\\\\=190-150\\\\= 40\\\\Minerals = 10 \\\\vitamins = 10[/tex]
The I-75 Carpet discount store has annual demand of 85,700 yards for Super Resistant carpet. The annual carrying cost for a yard of this carpet is $2.25 per yard and the ordering cost is $350. The store is open 52 weeks per year. Assume that the expected value of daily demand is 200, that the standard deviation for daily demand is 4 and that the lead time to fill an order is 11 days. Assume that the EOQ is 5164 yards. What would be the reorder point for a 95% service level?
Answer:
2,421.89
Explanation:
Reorder point = Daily demand*Lead time + Z*STANDARD DEVIATION *√(Lead time)
Reorder point = 300*8 + 1.65*4*√11
Reorder point = 2,400 + 21.8897
Reorder point = 2,421.8897
Reorder point = 2,421.89
So, the reorder point for a 95% service level is 2,421.89.
As a result of recent downsizing at his firm, Dominic lost his job as an IT manager for a large telecommunications company. A true, self-confirmed computer nerd, Dominic knew that several of his past contacts often outsourced their computer problems. He decided it was a good time to test the waters and see if he could secure enough computer clients to be in business for himself. His success demonstrated that
Answer:
The responses to the given question can be defined as follows:
Explanation:
Dominic quit his position as an IT manager for the largest telecommunication company despite a brief downsizing in her corporation. A genuine, self-confirmed nerd of a machine, Dominic realized that several of his past connections often subcontracted problems. He decided to try out all the water to find out whether he could secure and/or computer clients to be in the company. His performance has shown that effective major firms also generate lucrative support for young businesses. He could consider outsourcing jobs from large companies. It shows that big companies are supplying the small company with jobs, that's why the correct choice is "successful big businesses often create profitable opportunities for small businesses".
what are types of government
A factory worker makes $17.50 per hour. Next month, she will receive a 1.5% increase in her hourly rate. What will her new hourly rate be?
Answer:
$19.00
Explanation:
The roles of money
Alex just graduated from college and is now in the market for a new car. He has saved up $4,000 for a down payment. He's deciding between a Super and a Duper. The Super is priced at $23,599, and the Duper is priced at $18,999. After agonizing over the decision, he decides to buy the Duper. He writes the dealership a check for $4,000 and takes out a loan for the remainder of the purchase price. Identify what role money plays in each of the following parts of the story. (Medium of exchange, unit of account, or store of value)
A. Sean writes a check for $4,000.
B. Sean can easily determine that the price of the Super is more than the price of the Duper.
C. Sean has saved $4,000 in his checking account.
Answer:
Medium of exchange
unit of account
store of value
Explanation:
Money is anything that is generally accepted as a means of payment for goods and services and for repayment of debt.
Functions of money
1. Medium of exchange : money can be used to exchange for goods and services. For example, by writing the check, he is exchanging money for a car
2. Unit of account : money can be used to value goods and services, For example, price was used to determine which was more expensive between the super and the duper
3. Store of value : money can retain its value over the long term, this it can be used as a store of value.
Carr Company is considering two capital investment proposals. Estimates regarding each project are provided below:
Project Soup Project Nuts
Initial investment $400,000 $600,000
Annual net income 30,000 46,000
Net annual cash inflow 110,000 146,000
Estimated useful life 5 years 6 years
Salvage value -0- -0-
The company requires a 10% rate of return on all new investments.
Present Value of an Annuity of 1
Periods 9% 10% 11% 12%
5 3.890 3.791 3.696 3.605
6 4.486 4.355 4.231 4.111
The net present value for Project Nuts is
QUESTION 2:
Benet Division of United Refinery Company's operating results include: controllable margin, $200,000; sales $2,200,000; and operating assets, $800,000. The Benet Division's ROI is 25%. Management is considering a project with sales of $100,000, variable expenses of $60,000, fixed costs of $40,000; and an asset investment of $150,000. Should management accept this new project?
A) Yes, since ROI will increase.
B) No, since ROI will be lowered.
C) Yes, since additional sales always mean more customers.
D) No, since loss will be incurred.
QUESTION 3:
The standard number of hours that should have been worked for the output attained is 10,000 direct labor hours and the actual number of direct labor hours worked was 10,500. If the direct labor price variance was $10,500 unfavorable, and the standard rate of pay was $12 per direct labor hour, what was the actual rate of pay for direct labor?
QUESTION 4:
A company's planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs:
Variable
Fixed
Indirect materials $120,000 Depreciation $50,000
Indirect labor 160,000 Taxes 10,000
Factory supplies 20,000 Supervision 40,000
A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of:__________
QUESTION 5:
Cleaners, Inc. is considering purchasing equipment costing $60,000 with a 6-year useful life. The equipment will provide cost savings of $14,600 and will be depreciated straight-line over its useful life with no salvage value. Cleaners requires a 10% rate of return.
Present Value of an Annuity of 1
Period 8% 9% 10% 11% 12% 15%
6 4.623 4.486 4.355 4.231 4.111 3.784
What is the approximate profitability index associated with this equipment?
Answer:
1. $35,830
2. B) No, since ROI will be lowered.
3. $13 per DL
Explanation:
1. Present value of inflows = $146,000*Present value of annuity factor (10%,6)
Present value of inflows = $146,000 * 4.355
Present value of inflows = $635,830
Net present value = Present value of inflows - Present value of outflows
Net present value = ($635,830 - $600,000)
Net present value = $35,830.
So, the net present value for Project Nuts is $35,830.
2. ROI = Net income / Investment
ROI = (100000-60000-40000) / 150000
ROI = 0%
The ROI required is 25%. Hence, the new project should not be accepted as ROI will be lowered.
3. Direct labor price Variance = Actual hours (AR - SR)
$10,500 = 10,500 (AR - $12)
$10,500 = 10,500 AR - $126,000
AR = $10,500 + $126,000 /10,500
AR = $13 per direct labor hour.
So, the actual rate of pay for direct labor is $13 per DLH.
the wacc approach to valuation is not as useful as the apv approach in leveraged buyouts because: the capital structure is changing. there is no tax shield with the wacc. the value of the levered and unlevered firms are equal. the unlevered and levered cash flows are separated which cannot be used with the wacc approach. there is greater risk with a lbo.
Answer:
the capital structure is changing
Explanation:
As we know that wacc approach used to determined the cost of capital by taking the cost and weightage of the capital structure i.e. debt, equity and the preferred stock The same would not be useful for the valuation purpose as the apv approach in the leveraged buyouts because the capital structure i.e. debt, equity and the preferred stock keeps changing
It does not remian constant
Therefore the same would be considered
5. A neighborhood sportswear store sells a pair of Nike sneakers for $40. Due to the recent fitness craze, these shoes are in high demand: 50 pairs of shoes are sold per week. The ordering cost is $20/order, and the annual holding cost is 20 percent of selling price. If the store operates 52 weeks a year, what can you say about the current lot size of 235
Answer: Too large
Explanation:
Thw following information can be gotten from the question:
d = 50 pairs per week
S = ordering cost = $20 per order
H = holding cost = 20% × $40 = $8
n = 52 weeks
D = Annual demand = 50 × 52 = 2600
We'll then calculate the economic order quantity which will be:
= ✓2DS/H
= ✓2×2600×20/8
= ✓13000
= 114 units
Therefore, the current lot size of 235 is too large
Consider the following $1000 par value zero-coupon Treasury bonds: Bond Years to Maturity Yield to Maturity A 1 4.00% B 2 4.50% C 3 5.11% D 4 5.86% E 5 6.25% The expected 2-year interest rate three years from now should be __________. Enter your answer in percent to the nearest hundredth, for example if your answer is .25432, enter 25.43.
Answer: 7.98%
Explanation:
This deals with spot rates and forward rates. The 2 year interest rate three years from now is the 2 year forward rate, 3 years from now.
It can be calculated through the relationship below:
(1 + 5 year spot rate)⁵ = (1 + third year spot rate)³ * (1 + 2 year forward rate)²
(1 + 6.25%)⁵ = (1 + 5.11%)³ * (1 + 2 year forward rate)²
1.35408 = 1.161267 * (1 + 2 year forward rate)²
(1 + 2 year forward rate)² = 1.35408 / 1.161267
1 + 2 year forward rate = √1.16603675
2 year forward rate = √1.16603675 - 1
= 7.98%
Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 11% as long as it finances at its target capital structure, which calls for 45% debt and 55% common equity. Its last dividend (D0) was $1.85, its expected constant growth rate is 3%, and its common stock sells for $22. EEC's tax rate is 25%. Two projects are available: Project A has a rate of return of 13%, and Project B's return is 10%. These two projects are equally risky and about as risky as the firm's existing assets. What is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % What is the WACC? Do not round intermediate calculations. Round your answer to two decimal places. % Which projects should Empire accept? -Select-
Answer:
11.66
7.6475
project A
Explanation:
A low-cost noncontact temperature measuring tool may be able to identify railroad car wheels that are in need of repair long before a costly structural failure occurs. If the BNF railroad saves $63,723 in year 1, and starting year 2, the amounts increasing by $14,768 each year for 5 years, what is the present worth of the savings in year 0 at an interest rate of 10% per year
Answer:
$420,546.12
Explanation:
Present worth is the sum of discounted cash flows
Present worth can be calculated using a financial calculator
Cash flow in year 1 =
Cash flow in year 2 = 78491
Cash flow in year 3 =93259
Cash flow in year 4 =108027
Cash flow in year 5=122795
Cash flow in year 6 =137563
I = 10%
PW = $420,546.12
To find the PW 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 NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Budgeted sales commissions would appear on the: A. sales budget and pro forma balance sheet. B. sales budget and pro forma income statement. C. selling, general, and administrative budget and pro forma balance sheet. D. selling, general, and administrative budget and pro forma income statement.
Answer:
Option d: Selling, general and administrative budget and the pro forma income statement
Explanation:
Budgeting
This is simply defined as the showing forth the plans for a business in financial terms. It is said to be a plan to help you an individual to monitor and manage money wisely ans can it one to achieve short term, intermediate, and long term goals in a timely manner.
The notable arrangements of most master budgets are prepared in is sales, purchases, cash and income statement. Budgeted sales commissions is said to visibly shown on the selling, general and administrative budget and the pro forma income statement.
Consider how you might use visual aids to explain each of the following:
a. How to stretch before and after exercise.
b. The proportion of the electorate that votes in major national elections in the United States, France, Germany, England, and Japan, respectively.
c. Where to obtain information about student loans.
d. The wing patterns of various species of butterflies.
e. The decrease in the amount of money spent by public schools on arts education since 2005.
f. How to play the ukulele.
g. The basic equipment and techniques of rock climbing.
Answer:
There are various kinds of visual aids. Namely:
PowerPoint PresentationWhiteboardsHandoutsVideo clipsPostersProduct, objects or artifactsExplanation:
a. How to stretch before and after excercise is best exemplified using video clips. The activity involves motion. Whiteboards or PowerPoint presentations or the others may attempt to describe how to bend over, however, a video tutorial showing what should be done needs little nor no explanation;
b. The proportion of the electorate that votes in major national elections in the United States, France, Germany, England, and Japan, respectively.
When it comes to comparing proportions, figures, numbers, statistics, PowerPoint presentations do more justice than any other visual aid listed above. It is equipped with a plethora of tools that help to express relationships between different kinds of data in a very clear and easy-to-understand manner.
c. Student Loans and where one can get them can be advertised using Handouts, and Posters as these are intended to reach more audiences by their very nature. Video clips work as well and even much more depending on where it is being published.
d. the wing patterns of various species of butterflies: Pictures arranged in sequence can be edited on to PowerPoint, WhiteBoard animation works excellently well too as it combines visuals with audio narrations in an animated format to explain what is being shown
e. Just in B, a decrease in the amount of money spent by public universities on arts since 2005 is an expression of the various relationships between factors and figures. The best visual aid for this is PowerPoint and Animated WhiteBoard
f. When it comes to demonstrating to a live audience how to do something complicated, video clips is the best visual aid that can be used
g. answer for f above applies to g as well.
Cheers
A project has a discount rate of 14 percent, an initial cost of $99,200, an inflow of $56,400 in year 1 and an inflow of $75,900 in year 2. Your boss requires that every project return a minimum of $1.10 for every $1 invested. Based on this information, what is your recommendation on this project?
Answer:
I would recommend the project because the return is greater than 10%
Explanation:
We are to determine the internal rate of return of the project
rate of return the boss requires = (1.1 /1) - 1 = 10%
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 in year 0 = -99200
cash flow in year 1 and 2 = 75900
IRR = 33.7%
A corporation that transfers restricted stock to an employee as compensation may deduct the stock’s fair market value in the year of transfer even if the employee doesn’t recognize the value as gross income in the year of transfer.
A. True
B. False
Data for 2021 were as follows: PBO, January 1, $246,000 and December 31, $276,000; pension plan assets (fair value) January 1, $190,000, and December 31, $239,000. The projected benefit obligation was underfunded at the end of 2021 by:
Answer: $37000
Explanation:
The projected benefit obligation was underfunded at the end of 2021 by:
PBO December 31 = $276,000
Less: Pension plan assets (fair value) December 31 = $239,000.
Then, the projected benefit obligation was underfunded at the end of 2021 by ($276000 - $239000) = $37000
Balance Sheet
The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.9 million and net plant and equipment equals $2.6 million. It has notes payable of $145,000, long-term debt of $750,000, and total common equity of $1.55 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet. Write out your answers completely. For example, 25 million should be entered as 25,000,000.
a. What is the company's total debt?
b. What is the amount of total liabilities and equity that appears on the firm's balance sheet?
c. What is the balance of current assets on the firm's balance sheet?
d. What is the balance of current liabilities on the firm's balance sheet?
e. What is the amount of accounts payable and accruals on its balance sheet?
f. What is the firm's net operating working capital?
g. What is the firm's net working capital?
h. What is the monetary difference between your answers to part fand g?
What does this difference indicate?
Solution :
a). Total debt = notes payable + long term debt
= 145,000 + 750,000
= $ 895,000
b). Total liabilities and equity = total assets
= 2,900,000
c). Current assets = total assets - net plant and equipment
= 2,900,000 - 2,600,000
=$ 300,000
d). Total current liabilities = total liabilities and equity - total common equity - long term debt
= 2,900,000 - 1,550,000 - 750,000
= $ 600,000
e). Accounts payable and accruals = total current liabilities - notes payable
= 600,000 - 145,000
= 455,000
f). Net working capital = current asset - current liabilities
= 300,000 - 600,000
= - $300,000
g). Net operating working capital = current assets - accounts payable and accruals
= 300,000 - 455,000
= - $ 155,000
h). The difference between f) and g). represents the balance of notes payable.