A stock will pay dividends of $3, $6, and $10 over the next three years, and then increase dividends at a rate of 4% afterwards. its required rate of return is 19%. The value of the stock is $50.74.
A stock, also known as equity, represents a portion of ownership in a corporation. Dividends, capital gains, or both can provide a return on stocks. The company's assets, earnings, and future growth prospects all contribute to the price of the stock. A stock will pay dividends of $3, $6, and $10 over the next three years, and then increase dividends at a rate of 4% afterwards. Its required rate of return is 19%.
The value of the stock: Dividend payments in Year 1, Year 2, and Year 3 will be $3, $6, and $10, respectively. After the third year, the dividend payment will increase at a rate of 4 percent.19% is the required rate of return. We must calculate the value of the stock.
Valuation of stock by the constant growth model: D1 = D0 (1 + g)
D0 = Dividend payment this year; G = Rate of growth in dividends; r = Required rate of return
Gordon Growth Model: V0 = (D1 / r - g) + P0
where, V0 is the current value of the stock; D1 is the expected dividend payment next year; r is the required rate of return; P0 is the current market price of the stock.
$3.00(1+0.04) / 0.15 - 0.04 = $28.63
$6.00[tex](1+0.04)^{2}[/tex] / 0.15 - (0.04*1.04) / (0.15 - 0.04) = $35.60
$10.00 [tex](1+0.04)^{3}[/tex]/ 0.15 - (0.04*[tex](1.04)^{2}[/tex]+[tex]0.04^{2}[/tex]) / (0.15 - 0.04) = $50.74
Therefore, the value of the stock is $50.74.
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a life insurer is about to issue a 30-year deferred annuity-due with annual payments of $20 000 to a select life aged 35. the policy has a single premium which is refunded without interest at the end of the year of death if death occurs during the deferred period. (a) calculate the single premium for this annuity. (b)the insurer offers an option that if the policyholder dies before the total annuity payments exceed the single premium, then the balance will be paid as a death benefit, at the end of the year of death. calculate the revised premium.
A) The single premium for this annuity-due is $346,230.68.
B) The revised premium is $365,344.37.
A) This is calculated by using the present value of an annuity-due formula PV=nPVIF(i,n)+C. Here, n=30, PVIF(i,n)=71.362, C=20,000, and i=5%.
B) This is calculated by subtracting the present value of the annuity payments until the year of death (calculated using the present value of an annuity-due formula) from the single premium of $346,230.68. The present value of the annuity payments until the year of death is $19,113.69.
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a seller offers a promotion to customers which provides one free box of golf balls (valued at $20) if the customer purchases three boxes of golf balls at the regular price of $20 each. in order to receive the free box of golf balls, the customer must fill out a request form and mail it to the seller within three weeks of the date of purchase of the golf balls. the seller estimates that approximately 45% of customers will complete the request form necessary to take advantage of the promotion. in addition, the seller provides three free golf tees (valued at $.15) with every purchase. what amount of revenue would the seller record upon a cash sale of three boxes of golf balls (plus the three free golf tees) to a customer? select one:
In sales, commerce, and economics, a customer is a recipient of a good, service, product, or idea - obtained from a seller. Thus, option B is appropriate.
Total number of Box of Golf Balls Given by the seller to the Customer = 4
So, a Discount is Given to the Customer [tex]= 20/4 =5$[/tex]per box of a Golf ball
So, what amount of revenue would the seller record upon a cash sale of three boxes of golf balls [tex]= ($20 * 3) -(5$ *3)=$60 - $15=$52[/tex]
A customer is someone who purchases goods, services, products, or ideas from a seller, supplier, or vendor in exchange for money or another useful consideration. Sales, business, as well as economics, are all covered by this term.
A customer is a person who purchases something from a vendor, provider, or seller in exchange for money or another item of value in the fields of sales, business, and economics. These terms can also be used to refer to this person.
Thus, option B is correct.
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A seller offers a promotion to customers which provides one free box of golf balls (valued at $20) if the customer purchases three boxes of golf balls at the regular price of $20 each. To receive the free box of golf balls, the customer must fill out a request form and mail it to the seller within three weeks of the date of purchase of the golf balls. The seller estimates that approximately 45% of customers will complete the request form necessary to take advantage of the promotion. In addition, the seller provides three free golf tees (valued at $.15) with every purchase. What amount of revenue would the seller record upon a cash sale of three boxes of golf balls (plus the three free golf tees) to a customer?
Select one:
A. $50.70
B. $52.17
C. $45
D. $52.19
night, inc., a domestic corporation, earned $300,000 from offshore manufacturing activities on which it paid $36,000 of foreign income taxes. night's foreign sales income is taxed at a 50% income tax rate. assume a 21% u.s. tax rate. round your answer to the nearest dollar. what amount of foreign sales income can night earn without generating any excess ftcs for the current year?
The amount of foreign sales income Night can earn without generating any excess FTCs for the current year is $1,080,000.
Night, Inc., earned $300,000 from offshore manufacturing activities, on which it paid $36,000 in foreign income taxes. Its foreign sales income is taxed at a 50% income tax rate. It is necessary to determine the amount of foreign sales income that Night can earn without generating any excess FTCs for the current year. To solve this problem, we need to follow the steps below;
Step 1: Determine foreign taxable income Foreign sales income = $300,000
Foreign income taxes paid = $36,000
Taxable foreign income = $300,000 – $36,000= $264,000
Step 2: Compute the maximum allowable FTCs
Let’s calculate the maximum allowable FTCs. The excess amount is taxable at 50%, which is Night's foreign income tax rate. The maximum amount of foreign income tax credits is as follows; $264,000 * 50% = $132,000
Step 3: Compute the amount of foreign sales income Night should earn a maximum amount of foreign sales income that generates foreign income tax of $132,000. To achieve this goal, we can use the formula below; Maximum allowable foreign sales income = (Foreign income taxes paid/Foreign sales income) * Total foreign sales income + Taxable foreign income
Let’s use the values in the formula;(36000/Maximum allowable foreign sales income) * Total foreign sales income + $264,000 = $132,000(36000/Maximum allowable foreign sales income) * Total foreign sales income = $132,000 - $264,000(36000/Maximum allowable foreign sales income) * Total foreign sales income = -$132,000Total foreign sales income = -$132,000 * Maximum allowable foreign sales income / 36000Total foreign sales income = -$132,000 / 36000 = -3.67Maximum allowable foreign sales income = $300,000 * (50% + 21%) / 50%Maximum allowable foreign sales income = $540,000 / 50% = $1,080,000.
Therefore, the amount of foreign sales income Night can earn without generating any excess FTCs for the current year is $1,080,000.
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For several years, Baytown Rehabilita- tive Camp for Disabled Children (hereafter referred to as the camp) has ap- for an operating grant from the Baytown Area United Way. As the finance adviser for the local United Way allocation panel, it is your responsibility to financial the request for forthcoming year its audited statements. The camp's most recent comparative statement of finan- cial position and statement of activities are presented below. BAYTOWN REHABILITATIVE CAMP FOR DISABLED CHILDREN Statement of Financial Position December 31, 2017, and 2016 2017 2016 Assets Current assets Cash 36,802 12,248 Contributions receivable 28,728 16,372 Prepaid expenses 15,559 17,748 Total current assets 81,089 46,368
The Baytown Rehabilitative Camp for Disabled Children's statement of financial position shows an increase in total current assets from $46,368 in 2016 to $81,089 in 2017.
This increase is primarily due to an increase in cash and contributions receivable. The camp has also decreased its prepaid expenses from $17,748 in 2016 to $15,559 in 2017. Overall, the increase in current assets indicates a positive financial position for the camp.
However, it is important to note that without a full analysis of the camp's revenue and expenses, it is difficult to determine the sustainability of this financial position. The United Way allocation panel should consider requesting additional financial information before making a decision on the grant request.
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Question 1: Workplace accidents can be very costly to an
employer. Explain any two (2) incidents or tragedies either locally
or globally that had contributed to the importance of workplace
safety. (50
Local incidents or tragedies or global are:
Incident 1: Rana Plaza Collapse in Bangladesh (2013).Incident 2: Deepwater Horizon Oil Spill (2010).The analysis of incidents or tragedies are:
Incident 1: Rana Plaza Collapse in Bangladesh (2013)
The Rana Plaza tragedy in Bangladesh is one of the deadliest industrial accidents in history. The eight-story building, which housed several clothing factories, collapsed, killing over 1,100 people and injuring over 2,500. The building was poorly constructed, and the factories were operating without proper safety measures. The incident drew global attention to the need for better workplace safety standards, particularly in the garment industry.
As a result of the tragedy, many global fashion brands and retailers have adopted stricter safety standards and codes of conduct for their suppliers. The Bangladesh Accord on Fire and Building Safety was also established to improve workplace safety in the garment industry.
Incident 2: Deepwater Horizon Oil Spill (2010)
The Deepwater Horizon oil spill in the Gulf of Mexico was one of the worst environmental disasters in history. The explosion and subsequent spill killed 11 workers and caused extensive damage to marine life and coastal habitats. The incident highlighted the importance of workplace safety in the oil and gas industry.
The accident led to increased scrutiny of offshore drilling practices and the development of new regulations to improve safety. The oil and gas industry also implemented new safety standards and protocols to prevent future accidents.
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Edwina Industrial Products (EIP) manufactures cleaning products. The Grant Street Plant produces a single product in three departments: Mixing. Refining, and Packaging. Additional materials are added in the Refining Process when units are 40 percent complete with respect to conversion. Information for operations in September in the Refining process appear as follows. Work in process on September 1 consisted of 28,600 units with the following costs: During September, 293,000 units were transferred in from Mixing at a cost of$166,097. The following costs were added in Refining in September. Refining finished 278,000 units in September and transferred them to Packaging. At the end of September, there were 43,600 units in work-in-process inventory. The units were 20 percent complete with respect to conversion costs. The Refining Department uses the weighted-average method of process costing. The Mixing Department at the Grant Street Plant uses the FIFO method of process costing. If the Mixing Department at the plant had used the weighted-average method, the amount of costs transferred in from Mixing would have been$188,400for the amount transferred in this month. Required: Prepare a production cost report for September for the Refining Department. Note: Round "Cost per equivalent unit" to 2 decimal places. Round your final answers to nearest whole number. EDWINA INDUSTRIAL PRODUCTS Refining Department Production Cost Report-Weighted-Average
Step 1: Calculate the equivalent units of production Equivalent units of production = Units completed and transferred out + Equivalent units in ending work in process inventory Units completed and transferred out:
= 278,000 unit.
What is an equivalent ?Equivalent in the context of process costing refers to a unit of production that combines both the completed units and the partially completed units in the production process. Equivalent units are used to express the total amount of production in terms of completed units, even if there are partially completed units in the production process that still need additional work to become finished goods. In other words, equivalent units take into account the stage of completion of partially completed units and express it in terms of completed units. This is important in process costing because it enables us to accurately calculate the cost per unit of production.
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Refer to Chapter 2. Would you consider Rolls-Royce’s digital
twins and Intelligent Engine to be strategic systems to the
manufacturer? Why or why not? Support your answer.
Yes, Rolls-Royce's digital twins and Intelligent Engine are strategic systems for the manufacturer.
These systems enable Rolls-Royce to collect and analyze vast amounts of data from its engines, allowing the company to optimize engine performance and reduce maintenance costs for its customers.
The digital twin system creates a virtual replica of the physical engine, enabling Rolls-Royce to monitor and simulate its performance in real-time. This technology provides valuable insights into the engine's performance, which can be used to improve design, predict maintenance needs, and reduce downtime.
Additionally, the Intelligent Engine system integrates data from multiple sources, including sensors, weather data, and flight data, to provide a comprehensive view of the engine's performance. The insights gained from these systems provide Rolls-Royce with a competitive advantage in the aerospace industry.
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What is the World Economic Forum? Who is the founder?
The World Economic Forum (WEF) is an international organization that aims to promote public-private cooperation to solve global issues. The founder of WEF is Klaus Schwab, a German engineer and economist.
What is the World Economic Forum?The World Economic Forum (WEF) is a non-profit international organization that provides a forum for public-private cooperation in order to improve the state of the world. It is an organization that brings together leaders from different sectors of society, including government, business, academia, and civil society. They aim to discuss and find solutions to pressing global issues such as climate change, poverty, inequality, and other related issues.
The WEF organizes an annual meeting in Davos, Switzerland, which brings together some of the world's most influential people. This meeting is known as the World Economic Forum Annual Meeting or simply the Davos Forum. It provides an opportunity for leaders to engage in dialogue and brainstorm solutions to the world's most pressing problems. The organization also publishes research papers, reports, and books on various global issues.
Who is the founder?Klaus Schwab, a German engineer and economist, is the founder of the World Economic Forum. He established the WEF in 1971 as a not-for-profit foundation. Schwab had the vision of creating an organization that would bring together leaders from different sectors to collaborate on global challenges. Today, the WEF has become one of the world's leading platforms for public-private cooperation.
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What Elon Musk says about China?
Elon Musk has made various comments about China over the years, both positive and negative. Here are some notable remarks:
Positive comments:In May 2021, Musk tweeted, "China rocks in my opinion. The energy in China is great. People there – gosh, there’s like a lot of smart, hard working people. And they’re really – they’re not entitled, they’re not complacent."Musk has praised China's progress in electric vehicles and renewable energy. In 2019, he said, "China is becoming a global leader in advanced energy, especially electric cars. It is remarkable to see."Negative comments:In 2020, Musk criticized China's handling of the COVID-19 pandemic, tweeting, "The panic is ." He later added, "Brutal lockdowns just won’t work and do immense harm to people."In 2019, Musk criticized China's trade policies, saying, "We're not allowed to own anything over there. I think that's pretty uncool." He also expressed concern about intellectual property theft in China.Overall, Musk's comments about China have been mixed, reflecting both admiration for its technological advancements and criticism of certain policies and actions.
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Of the following, which would be LEAST appropriate to use as an allocation base for calculating factory overhead rates? Question 4 options: - direct labor hours
- direct labor dollars - machine hours - total units produced
Direct labor dollars would be the least appropriate allocation base for calculating factory overhead rates because it does not necessarily correspond to the amount of overhead resources used.
For example, if two different products require the same amount of direct labor, but one uses significantly more overhead resources than the other, allocating overhead based on direct labor dollars would not accurately reflect the true costs of producing each product. Therefore, direct labor dollars would not provide an appropriate basis for allocating overhead costs.
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The Sanding Department of Jo Furniture Company has the following production and manufacturing cost data for March 2017, the first month of operation.
Production: 11,000 units finished and transferred 100% complete as to materials and 25% complete as to conversion costs
Manufacturing costs: Materials $48,000; labor $42,000; and overhead out; 4,000 units started that are $36,000.
Prepare a production cost report based on this data
The 75% completion factor for conversion costs means that 3,000 units are considered completed for conversion costs, while 1,000 units are still in process.
To prepare a production cost report, we need to calculate the total cost incurred during the month and allocate it to the units produced. Here are the steps to prepare the report:
Step 1: Calculate the equivalent units of production (EUP) for materials and conversion costs.
Materials: All units were finished and transferred, so the EUP for materials is the same as the units produced, which is 11,000.
Conversion costs: Only 25% of conversion costs were incurred for the units produced, so we need to calculate the EUP for conversion costs as follows:
EUP = Units completed and transferred + (Ending WIP x % complete)
EUP = 11,000 + (4,000 x 25%)
EUP = 12,000
Step 2: Calculate the cost per equivalent unit (CPEU) for materials and conversion costs.
Materials: CPEU = Total material costs / EUP for materials = $48,000 / 11,000 = $4.36 per unit
Conversion costs: CPEU = Total conversion costs / EUP for conversion costs = ($42,000 + $36,000) / 12,000 = $6.50 per unit
Step 3: Allocate the total cost to the units produced.
Materials cost: Total materials cost = CPEU for materials x EUP for materials = $4.36 x 11,000 = $47,960
Conversion costs: Total conversion costs = CPEU for conversion costs x EUP for conversion costs = $6.50 x 12,000 = $78,000
Total cost: Total cost incurred during the month = Total materials cost + Total conversion costs + Overhead cost = $47,960 + $78,000 + $4,000 = $129,960
Cost per unit: Cost per unit produced = Total cost / Units produced = $129,960 / 11,000 = $11.81 per unit
Step 4: Prepare the production cost report.
Jo Furniture Company
Production Cost Report - March 2017
Units Produced:
Finished and transferred: 11,000 units
Ending WIP: 4,000 units (75% complete as to conversion costs)
Costs Incurred:
Materials: $48,000
Labor: $42,000
Overhead: $4,000
Equivalent Units of Production:
Materials: 11,000 units
Conversion costs: 12,000 units
Cost per Equivalent Unit:
Materials: $4.36 per unit
Conversion costs: $6.50 per unit
Costs Allocated to Production:
Materials: $47,960
Conversion costs: $78,000
Total Cost Incurred: $129,960
Cost per Unit Produced: $11.81 per unit
Note: The ending WIP is included in the report to show the units that are partially completed and their corresponding costs. The 75% completion factor for conversion costs means that 3,000 units are considered completed for conversion costs, while 1,000 units are still in process.
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Examine the two figures below. Which of these figures will experience a higher long-run growth rate, assuming their ratio of consumer goods to capital goods produced remains constant over time?
Economy B, because it produces more capital goods relative to consumer goods.
Societies that invest a relatively larger percentage of their production into capital goods, which are a type of investment in future production, experience higher growth rates in the long run. So, the ratio of capital to consumer goods produced is higher in economy B, and consequently economy B's long-run growth rate will be higher.
Examining the two figures below, it can be seen that Economy B will experience a higher long-run growth rate, assuming their ratio of consumer goods to capital goods produced remains constant over time.
This is because societies that invest a relatively larger percentage of their production into capital goods, which are a type of investment in future production, experience higher growth rates in the long run.
The ratio of capital to consumer goods produced is higher in Economy B, and thus its long-run growth rate will be higher.
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Using examples from the case study, discuss the three inferred
flaws that the multinationals are making currently and what is the
impact of these flaws?
According to the case study, the three inferred flaws that multinationals often make are:
Lack of Cultural Sensitivity:Neglecting Local Regulations:What are the inferred flaws?Lack of Cultural Sensitivity: Multinationals may fail to understand the cultural nuances of the regions they operate in, leading to insensitive marketing campaigns, misunderstandings with local partners, and potential reputational damage.
Neglecting Local Regulations: Ignoring or failing to adhere to local regulations can result in hefty fines and legal repercussions, as well as harm the company's image and relationships with local authorities.
Poor Corporate Social Responsibility: Companies may prioritize profits over social responsibility, leading to unethical practices such as exploitation of labor, environmental damage, and human rights violations, which can lead to consumer boycotts and negative publicity.
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Return on Investment and Investment Decisions
Leslie Blandings, division manager of Audiotech Inc., was debating the merits of a new product—a weather radio that would put out a warning if the county in which the listener lived were under a severe thunderstorm or tornado alert.
The budgeted income of the division was $775,000 with operating assets of $5,125,000. The proposed investment would add income of $640,000 and would require an additional investment in equipment of $4,000,000. The minimum required return on investment for the company is 15%.
Required:
1. Compute the ROI of the following (round to the nearest whole percent):
a. The division if the radio project is not undertaken. fill in the blank 1 %
b. The radio project alone. fill in the blank 2 %
c. The division if the radio project is undertaken. fill in the blank 3 %
2. Compute the residual income of the following:
a. The division if the radio project is not undertaken. $fill in the blank 4
b. The radio project alone. $fill in the blank 5
c. The division if the radio project is undertaken. $fill in the blank 6
3. This depends on whether Leslie’s division is evaluated on the basis of ROI or on the basis of residual income. Overall division ROI wills
decreaseincrease
; so if ROI is the basis for evaluation, she will
acceptdecline
the investment. On the other hand, residual income for the project is
positivenegative
and will
raisereduce
overall residual income. If the division is evaluated on the basis of residual income, the project will be
accepteddeclined
It is important to understand Return on Investment (ROI). ROI is the percentage of profit made from an investment relative to the amount of money invested.
It is calculated by subtracting the investment cost from the income and then dividing by the investment cost.
Explanation:
1. Compute the ROI of the following (round to the nearest whole percent):
a. The division if the radio project is not undertaken.
c. The division if the radio project is undertaken.
3. This depends on whether Leslie’s division is evaluated on the basis of ROI or on the basis of residual income. Overall division ROI will decrease; so if ROI is the basis for evaluation, she will decline the investment. On the other hand, residual income for the project is positive and will raise overall residual income. If the division is evaluated on the basis of residual income, the project will be accepted.
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Is the process of human resource manganment much wider than simply the design of personnel programme
Yes, it can be argued that the Human resources management process is much broader than just designing a personnel system.
Human resources management focuses on maintaining all executive and mortal coffers systems, while mortal coffers operation takes a more strategic approach, anticipating the requirements of the association and constantly covering and conforming all systems.
Human resource management ( HRM), also known as labor force operation, includes all conditioning of the company aimed at icing the effective use of workers to achieve individual, collaborative, and organizational pretensions. The association's HRM function focuses on the mortal side of the operation.
One of the main parallels between human resource operation is that both consider placing the right people in the right jobs as one of the overall pretensions of people operating in the plant.
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A. $33,500 paid at the end of 4 years. The discount rate is 7 percent.
b. $4,650 paid at the end of 3 years and $9,750 paid at the end of 5 years. The discount rate is 9 percent.
c. $10,600 paid annually at the end of each of the next 4 years. The discount rate is 7 percent.
d. $2,040 paid annually at the end of each of the next 4 years and $4,080 paid at the end of the fifth year. The discount rate is 6 percent.
Fill the follwoing table:
a. Net present value
b. Net present value
c. Net present value
d. Net present value
The net present values are a.) -$9,366.26 b.) -$4,502.47 c.) -$7,858.61 d.) $939.53.
To calculate the net present value of $33,500 paid at the end of 4 years at a discount rate of 7 percent, we need to find the present value of each payment and add them up. Using the formula for the present value of a single amount:
Present value = Future value / (1 + discount rate) ^ number of periods
The present value of $33,500 paid at the end of 4 years is:
$33,500 / (1 + 0.07) ^ 4 = $24,133.74
Therefore, the net present value is:
Net present value = Present value of cash inflows - Present value of cash outflows
Net present value = $24,133.74 - $33,500
Net present value = -$9,366.26
To calculate the net present value of $4,650 paid at the end of 3 years and $9,750 paid at the end of 5 years at a discount rate of 9 percent, we can use the same formula as above to find the present value of each payment and add them up. The present value of each payment is:
$4,650 / (1 + 0.09) ^ 3 = $3,329.06
$9,750 / (1 + 0.09) ^ 5 = $6,568.47
Therefore, the net present value is:
Net present value = Present value of cash inflows - Present value of cash outflows
Net present value = $3,329.06 + $6,568.47 - $14,400
Net present value = -$4,502.47
To calculate the net present value of $10,600 paid annually at the end of each of the next 4 years at a discount rate of 7 percent, we can use the formula for the present value of an annuity:
Present value = Annual payment x [1 - (1 + discount rate) ^ -number of periods] / discount rate
The present value of the annuity is:
$10,600 x [1 - (1 + 0.07) ^ -4] / 0.07 = $34,541.39
Therefore, the net present value is:
Net present value = Present value of cash inflows - Present value of cash outflows
Net present value = $34,541.39 - $42,400
Net present value = -$7,858.61
To calculate the net present value of $2,040 paid annually at the end of each of the next 4 years and $4,080 paid at the end of the fifth year at a discount rate of 6 percent, we can use the same formula as above to find the present value of each payment and add them up. The present value of each payment is:
$2,040 x [1 - (1 + 0.06) ^ -4] / 0.06 = $7,178.55
$4,080 / (1 + 0.06) ^ 5 = $2,760.98
Therefore, the net present value is:
Net present value = Present value of cash inflows - Present value of cash outflows
Net present value = $7,178.55 + $2,760.98 - $10,000
Net present value = $939.53
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On January 1, 2018, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 8 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 7. 25 percent, so the total proceeds from the bond issue were $101,959. Methodical uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2-5. Prepare the required journal entries to record the bond issue, interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020, at a price of 102
(1). The bond amortization schedule is given below:
Year Beginning Interest Amortization Ending
Balance Expense Balance
2018 $101,959.00 $7,375.33 $1,086.05 $94,597.62
2019 $94,597.62 $6,833.41 $1,627.96 $88,803.65
2020 $88,803.65 $5,104.41 $5,357.05 $0.00
(2). Journal Entry to record bond issue:
Cash dr. $101,959.00
To Discount on Bonds Payable $1,959.00
To Bonds Payable $100,000.00
(3). Journal Entry to record interest payment on December 31, 2018:
Interest Expense dr. $7,375.33
Discount on Bonds Payable dr. $459.28
To Cash $7,934.61
(4). Journal Entry to record interest payment on December 31, 2019:
Interest Expense dr. $6,833.41
Discount on Bonds Payable dr. $795.53
To Cash $7,628.94
(5). Journal Entry to record interest and face value payment on December 31, 2020:
Interest Expense dr. $5,104.41
Discount on Bonds Payable dr. $141.31
Bonds Payable dr. $100,000.00
To Cash $105,963.70
(6). Journal Entry to record bond retirement on January 1, 2020:
Bonds Payable dr. $100,000.00
Loss on Bond Retirement dr. $2,000.00
Discount on Bonds Payable dr. $3,040.00
To Cash $105,040.00
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On December 31, Year 1, JM Co. exchanged a used machine for a new machine from DP Inc. The used machine had a book value of $100,000 ($120,000 cost minus $20,000 accumulated depreciation) and a fair value of $90,000. The new machine had a list price of $150,000, and DP gave JM a trade-in allowance of $ 105,000, with the difference paid in cash. The exchange has commercial substance. Question How much should JM record as the cost of the new machine in Year 1? How much should JM record as a gain (loss), if any, in Year 1? ear 1?
The cost of the new machine recorded in Year 1 is $45,000. JM record a loss of $10,000 on the trade.
The cost of the new machine to JM Co. should be computed as follows:
New machine list price = $150,000
Less trade-in allowance = $105,000
Cash payment = $45,000 (calculated as $150,000 – $105,000)
Therefore, the cost of the new machine is $45,000.
When an exchange has commercial substance and no cash is involved, a gain or loss should be recognized. In this instance, a gain is recognized when the fair value of the asset received is more than the carrying value of the asset given up. A loss, on the other hand, is recognized when the fair value of the asset received is less than the carrying value of the asset given up.
Since the exchange has commercial substance, JM Co. must first determine whether it has a gain or loss on the trade. Gain on the trade is calculated as follows:
Fair value of the old machine given up = $90,000
Less book value of old machine given up = $100,000
Loss on trade = $10,000
Since the fair value of the old machine is less than its book value, a loss of $10,000 should be recorded. Thus, JM Co. should record a loss of $10,000 on the trade.
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robin plans to open a bar in a high-crime area. she had difficulty obtaining insurance for the business. she found an insurer willing to write the coverage, but only if robin agreed to have a security alarm system in operation at all times when the business is closed. robin's promise to have a security alarm system operational as a condition of having the insurance coverage in force is a
Robin's promise to have a security alarm system operational as a condition of having the insurance coverage in force is a contingency. A contingency is a provision that is included in a contract or agreement to protect a party against possible losses or other adverse occurrences.
A contingency is a possibility or occurrence that is not expected or planned for but could happen. A contingency is a clause in a contract or agreement that specifies that the agreement will be carried out only if certain conditions are met.
For example, a home purchase agreement might include a contingency stating that the sale is contingent on the buyer obtaining financing. Robin's promise to have a security alarm system operational as a condition of having the insurance coverage in force is a contingency because the insurance company requires it as a condition for coverage.
The contingency specifies that if Robin fails to have the security alarm system operational at all times when the business is closed, the insurance coverage may be voided.
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Mark is a single father applying for a loan to buy a house of his own. Which of these items is a liability on a residential loan application?
a. motorcycle
b. savings account
c. cash
d. child support
Mark, a father who is unmarried, has applied for a loan to purchase a home. On a residential loan application, child support is listed as a liability.
What is a residential loan application?The mortgage industry uses a standardized loan application called the Universal Home Loan Application. Before a loan may be made between a lender and a borrower, this form, known as a 1003 form, requires that borrowers fill out all required information. Nearly all mortgage lenders in the US employ the Universal Residential Loan Application, often known as the 1003 mortgage application, as their standard form. When making an application for a mortgage loan, borrowers must complete this fundamental form or its counterpart, Form 65.You might need to complete an universal residential loan application when you apply for a mortgage to buy a house (URLA). To establish your qualification for a mortgage, the majority of lenders use this application.To learn more about residential loan application, refer to:
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A liability on a residential loan application is an item that can negatively impact an applicant's ability to repay the loan. In the case of Mark, the correct answer would be d. child support.
This is because child support is a monthly expense that Mark must pay, which can reduce his ability to repay the loan. Therefore, it is considered a liability on his loan application.
A liability is something that can negatively impact an applicant's ability to repay a loan. In the case of Mark, child support is a monthly expense that he must pay, which can reduce his ability to repay the loan.
Therefore, it is considered a liability on his loan application.
The other items listed, a motorcycle, savings account, and cash, are not considered liabilities because they do not have a negative impact on Mark's ability to repay the loan.
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Sunbeam recorded vendor rebates in the wrong account and in thewrong period. a. How would either of these affect net income?Please explain.
The incorrect recording of vendor rebates would have a direct effect on net income.
If the vendor rebates were recorded in the wrong account, then it would cause an inaccurate representation of assets and liabilities, which would in turn cause an incorrect calculation of net income.
Additionally, if the vendor rebates were recorded in the wrong period, it would create an inaccurate reflection of the expenses that are associated with the current period. This would lead to an inaccurate net income calculation as well.
In summary, incorrect recording of vendor rebates in either the wrong account or the wrong period would cause an incorrect calculation of net income.
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How do firms maximize profits? A manufacturer of consumer electronics anticipates that due to a temporary spike in production cost, it will operate at a slight loss for three quarters (nine months) before returning to profitability. Nonetheless, the firm plans to keep production levels at the point where MR MC. Why? Click or tap a choice to answer the question Shifts in policy are possible only during periods of profitability. The same policy that maximizes profits will minimize losses. Decisions are based on profit or loss in the long run, not the short run. A different production level would involve the same variable costs
The correct answer is "The same policy that maximizes profits will minimize losses."
The firm plans to keep production levels at the point where MR=MC because maximizing profits is the goal of any business. Despite the expected losses in the short-term, they are willing to accept it because they know that the same policy that maximizes profits will minimize losses in the long run.
Therefore, decisions are based on the potential profit or loss in the long run, not just in the short run. Shifts in policy are possible only during periods of profitability. The firm plans to keep production levels at the point where MR=MC, due to the fact that the same policy that maximizes profits will minimize losses.
It is the best choice that they can make to minimize the loss that they are expected to incur in the next 3 quarters. Therefore, a firm maximizes profits by keeping production levels where MR (Marginal Revenue) = MC (Marginal Cost). When MR is equal to MC, it means that the firm is producing the optimal quantity of goods that will maximize profits.
They should produce more goods when MR is greater than MC, and they should produce fewer goods when MC is greater than MR.
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_____ are defined as a cushion of extra resources that can be used with options-based planning to adapt to unanticipated changes, problems, or opportunities.Slack resourcesStrategic groupsSecondary firmsStanding plans
Slack resources are defined as a cushion of extra resources that can be used with options-based planning to adapt to unanticipated changes, problems, or opportunities.
Slack resources refer to resources that are available to a company in case of emergencies or unexpected situations, such as changes in the market, workforce or economy. The concept of Slack resources is particularly useful in options-based planning, where organizations analyze their available resources and prepare a contingency plan. It is an essential aspect of corporate strategy, particularly for businesses that operate in dynamic and uncertain environments.
Examples of slack resources include extra labor, additional raw materials, excess manufacturing capacity, or extra cash reserves. By having slack resources available, businesses can adapt to unexpected situations more easily and are less likely to experience catastrophic failures if unforeseen events occur.
In summary, slack resources are defined as a cushion of extra resources that can be used with options-based planning to adapt to unanticipated changes, problems, or opportunities. These resources can include excess labor, additional raw materials, extra cash reserves, and other surplus assets that can be deployed in case of emergencies or unexpected changes.
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In February 2023, Rosenbluth shifted its business strategy, resulting in the August 2023 sale of a component of the company considered a separate major line of business. The sale produced a gain on disposal of $199,620. The operations of the component, prior to the sale in December, produced an income of $21,460. How would I add this to an income statement?
In the operating income section of the income statement, the income earned from operations before the sale is recorded. The gain on disposal, which is not included in operating income, is recorded.
To add the given information to an income statement, you need to recognize the two different items involved. A business that changes its business strategy can sell or dispose of a division, asset, or liability. The income or loss derived from the sale or disposal of an asset, which is usually uncommon, is known as a gain or loss on disposal. A gain on disposal occurs when the price received exceeds the net book value of the asset, while a loss on disposal occurs when the price received is less than the net book value of the asset.
The effect of the sale on the income statement can be determined as follows:
Operating income (before sale)$21,460
Gain on disposal$199,620
Total income$221,080
When the sale is recorded in the accounts, the gain on disposal will be posted to the income statement. For accounting purposes, the sale and gain are recorded separately. In the operating income section of the income statement, the income earned from operations before the sale is recorded.
After that, the gain on disposal, which is not included in operating income, is recorded. As a result, the income statement will include all income received from the sale, as well as income earned from operations before the sale, in accordance with the above calculations.
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which of the following statement is correct? question 17 options: accrual accounting provides a better picture of the economic status cash accounting is complicated but efficient accrual accounting can mimic tax statement cash accounting is required by gaap g
The correct statement is -: Accrual accounting provides a better picture of the economic status.
What is Accrual accounting?Accrual accounting is an accounting method in which revenue and expenses are recorded when they are incurred, regardless of whether the money has been received or paid out yet. Accrual accounting is the standard accounting method for most businesses, especially those with more complex financial structures.
Accrual accounting provides a better picture of the economic status because it reflects the current state of a company's financial position. Even if a company has not received or paid money for goods and services, it records these transactions in its accounting records when they occur.
Accrual accounting provides a more accurate picture of the company's financial status because it reflects the economic impact of transactions when they occur. This method is considered more informative and reliable than the cash method of accounting, which only records transactions when money is exchanged.
In summary, the correct statement among the given options is: Accrual accounting provides a better picture of the economic status.
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Cedar Rapids Intl has current and expected FCFFs of $15mn, $18mn, $22mn, and $26mn over the Year 0-3. Then from Year 4 on, the FCFF is expected to stabilize and grow at 2.5% annually. The company has debt of $100mn and 30mn shares outstanding. (Hint: This is a two-stage DCF problem, so you should first estimate the terminal value as of Year 3.)
What is the value of each share if the WACC was 10%? Enter the numeric portion of your answer going into two decimal places without the dollar sign.
Without doing any calculation, can you tell whether the estimated share value will increase or decrease compared to your answer in Part (a)? Note by what percentage your estimate of share value changes when WACC changes from 8% to 10%.
Value of each share= (318.53-100)/30= $6.85. The estimated share value will decrease by 9.25% when the WACC changes from 8% to 10%.
Using the formula for the terminal value of FCFF.TV = (FCFFn(1+g))/(r-g) where, n=3FCFF3=$26mn, g=2.5%, r=10% TV= (26(1+.025))/(.10-.025)= 357.50. Now, let us calculate the PV of FCFF0-3 using the formula for the present value of FCFF. PV of [tex]FCFF=FCFF0/((1+r)^0)+FCFF1/((1+r)^1)+FCFF2/((1+r)^2)+FCFF3/((1+r)^3)PV.[/tex]
[tex]PV of TV=TV/((1+r)^n)PV of TV=357.50/(1+.10)^3=250.55[/tex] Now, let us calculate the total firm value (V) as the sum of the PV of FCFF0-3 and the PV of TV.V=PV of FCFF+PV of TV=67.98+250.55=318.53. Finally, let us calculate the value of each share using the formula for the value of each share.
Value of each share= (V-Debt)/Number of shares outstanding. Value of each share= (318.53-100)/30= $6.85. Thus, the value of each share if the WACC was 10% is $6.85.The estimated share value will, the required rate of return on the investment increases.
The percentage change in the estimated share value when WACC changes from 8% to 10% can be calculated using the following formula. Percentage change in share value= (New share value-Old share value)/ Old share value x 100. Percentage change in share value= (8.44-9.30)/9.30 x 100= -9.25%
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Following are selected balance sheet accounts of Del Conte Corp. at December 31, 2021 and 2020, and the increases or decreases in each account from 2020 to 2021. Also presented is selected income statement information for the year ended December 31, 2021, and additional information.
Selected Balance Sheet Accounts 2021 2020 Increase (Decrease)
Assets Accounts receivable $ 48,000 $ 31,000 $ 17,000 Property, plant, and equipment 291,000 254,000 37,000 Accumulated depreciation (192,000) (174,000) 18,000 Liabilities and Stockholders’ Equity Bonds payable 70,000 60,000 10,000 Dividends payable 11,500 7,800 3,700 Common stock, $1 par 36,000 26,000 10,000 Additional paid-in capital 12,500 5,800 6,700 Retained earnings 118,000 98,000 20,000 Selected Income Statement Information for the Year Ended December 31, 2021 Sales revenue $ 169,000 Depreciation 47,000 Gain on sale of equipment 16,500 Net income 42,000 Additional information:
Accounts receivable relate to sales of merchandise.
During 2021, equipment costing $54,000 was sold for cash.
During 2021, bonds payable with a face value of $34,000 were issued in exchange for property, plant, and equipment. There was no amortization of bond discount or premium.
Required:
Items 1 through 5 represent activities that will be reported in Del Conte's statement of cash flows for the year ended December 31, 2021. The following two responses are required for each item:
Determine the amount that should be reported in Del Conte's 2021 statement of cash flows.
Select the category (i.e., O - Operating activity, I - Investing activity and F - Financing activity) in which the amount should be reported in the statement of cash flows
Following are selected balance sheet accounts of Del Conte Corp. at December 31, 2021 and 2020, and the increases or decreases in each account from 2020 to 2021. Also presented is selected income statement information for the year ended December 31, 2021, and additional information.
Selected Balance Sheet Accounts 2021 2020 Increase (Decrease)
Assets Accounts receivable $ 48,000 $ 31,000 $ 17,000 Property, plant, and equipment 291,000 254,000 37,000 Accumulated depreciation (192,000) (174,000) 18,000 Liabilities and Stockholders’ Equity Bonds payable 70,000 60,000 10,000 Dividends payable 11,500 7,800 3,700 Common stock, $1 par 36,000 26,000 10,000 Additional paid-in capital 12,500 5,800 6,700 Retained earnings 118,000 98,000 20,000 Selected Income Statement Information for the Year Ended December 31, 2021 Sales revenue $ 169,000 Depreciation 47,000 Gain on sale of equipment 16,500 Net income 42,000 Additional information:
Accounts receivable relate to sales of merchandise.
During 2021, equipment costing $54,000 was sold for cash.
During 2021, bonds payable with a face value of $34,000 were issued in exchange for property, plant, and equipment. There was no amortization of bond discount or premium.
Required:
Items 1 through 5 represent activities that will be reported in Del Conte's statement of cash flows for the year ended December 31, 2021. The following two responses are required for each item:
1. Determine the amount that should be reported in Del Conte's 2021 statement of cash flows.
2. Select the category (i.e., O - Operating activity, I - Investing activity and F - Financing activity) in which the amount should be reported in the statement of cash flows.
1. Increase in Accounts Receivable: $17,000,Category: O - Operating Activity2. Increase in Property, Plant, and Equipment: $37,000Category: I - Investing Activity.
What is Property ?Property is an intangible asset that is owned by an individual or entity. It can be tangible, such as land, cars, and buildings, or it can be intangible, such as stocks, copyrights, trademarks, or patents. Property ownership gives the owner the right to use, possess, and enjoy the benefits of the asset.
3. Increase in Bonds Payable: $10,000, Category: F - Financing Activity
4. Sale of Equipment for Cash: $54,000Category: I - Investing Activity
5. Issuance of Bonds Payable: $34,000Category: F - Financing Activity.
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If the team charges $10 per dream bag and sells all 100 bags how much revenue will they collect?
If the team sells all 100 bags how much profit will they make
(hint revenue - total cost = profit)
The team will make a profit of $400 if they sell all 100 bags for $10 each and spend $600 overall.
How are variable costs defined?Variable expenses will be costs that fluctuate in relation to the volume of labor and products that a business produces. To put it another way, these are costs that fluctuate based on the amount of activity. The costs go up when there are more activities, but they go down when there are fewer activities.
Assuming the group charges $10 per dream pack and sells each of the 100 sacks, their income will be:
If the team sells all 100 bags, they will make $1000 in revenue, which is calculated as follows: revenue = price per bag x number of bags sold x revenue = $10 x 100 revenue = $1000.
We need to know the total cost of making and selling the dream bags in order to figure out the profit. Let's say the total expense is $600.
Profit = Revenue - Total Profit
= $1000 - $600
Profit = $400
If the team sells all 100 bags for $10 each and has a total cost of $600, they will make a profit of $400.
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Discuss the implications of cost budgeting in project cost
management.
Examine the differences between strategic and tactical
investments
Cost budgeting is an important part of project cost management. It is a process that involves the planning, estimation, and allocation of project costs to ensure that the project is completed within the budget.
The implications of cost budgeting in project cost management are as follows:
Helps to estimate project costs accurately:
Cost budgeting helps in the estimation of the costs of the project, both direct and indirect costs, as well as the various components that are involved in the project.
Enables better planning:
Cost budgeting helps in the planning process by providing an estimate of the costs involved in the project. This allows project managers to plan the project more effectively and to allocate resources accordingly.
Manages project costs:
Cost budgeting helps in managing project costs by providing a basis for monitoring the costs and adjusting the project plan as required.
This helps in ensuring that the project is completed within the budget. Minimizes cost overruns: Cost budgeting helps in minimizing cost overruns by providing a framework for managing costs and identifying potential problems before they occur.
Examines the differences between strategic and tactical investments: Strategic investments:
These are long-term investments that are aimed at achieving the goals of the organization.
They are usually large-scale investments that involve a high degree of risk. These investments are usually made with the aim of increasing the value of the organization or achieving a competitive advantage. Tactical investments: These are short-term investments that are aimed at achieving immediate goals.
These investments are usually made to address a specific problem or to take advantage of an opportunity that arises.
Tactical investments are usually made with the aim of generating a quick return on investment (ROI).
In conclusion, cost budgeting plays a crucial role in project cost management. It helps in estimating project costs accurately, enables better planning, manages project costs, and minimizes cost overruns.
Strategic investments are long-term investments that are aimed at achieving the goals of the organization, while tactical investments are short-term investments that are aimed at achieving immediate goals.
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Assuming that 1990 is the base year, Real GDP in 2012 is:
a. $51
b. $86
c. $92
d. $49
Goods 1990 Quantities 1990 Prices 2012 Quantities 2012 Prices
Papayas 10 $1. 00 20 $0. 50
Fish 15 $0. 60 20 $0. 80
Skirts 8 $4. 00 15 $4. 00
The correct answer is $92. By assessing the changes in the real GDP, economists may determine a country's economic growth. The effects of price changes like inflation are taken into account while calculating the real GDP.
The real GDP will be determined using the formula below:
Real GDP=QXyear∗PBase year
Where,
QXyear = Amount produced in a given year.
PBase year = Cost from the base year
Real GDP in 2012=(20∗$1)+(20∗$0.60)+(15∗$4)
Real GDP in 2012=$20+$12+$60
Real GDP in 2012=$92
Keep in mind that we must consider the output of every good generated within the economy in 2012 using the pricing of the base year (1990). As a result, we need to consider skirts, fish, and papayas. You may see the calculations below.
Thus, $92 is the right response.
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