Answer:
Part 1
Absorption Costing Net Income = $760,700
Part 2
Income under absorption costing will be: Lower than income using variable costing
Explanation:
The difference in net income under absorption costing and variable costing is because of fixed costs that are in closing inventory.
If we are given net income under one method we can find the net income under the other method by performing a reconciliation as follows :
Reconciliation of Variable Costing Income to Absorption Costing Income
Variable Costing Net Income $767, 200
Add fixed cost in closing stock (4, 700 × $2.50) $11,750
Less fixed costs in opening stock (7, 300 × $2.50) ($18,250)
Absorption Costing Net Income $760,700
An import restriction (tariff or quota) creates a net loss in welfare for the importing nation because:___________
a. Domestic production rises in the importing country
b. Income is transferred from consumers in the importing nation to domestic producers
c. Income is transferred from consumers in the importing nation to their government
d. All of the above
e. None of the above
Answer:
Explanation:
An import restriction as the term implies is done to limit the amount of a certain good that is imported into the country. Usually this is done to protect the domestic producers of the good in question who are not be as efficient as the country being imported from and so charge higher prices.
The people in the economy will experience a net loss in welfare because they will now be paying higher prices and as well will be transferring some of their income to their government because import restrictions like tariffs will see their costs passed on to the consumer.
The manager of the customer service department told one of her subordinates that, unless he agrees to see her outside of the office, she will block his promotion. The manager is guilty of:______
Answer:
Extortion
Explanation:
Time is money.
Based on the information just given, what will be Robert’s forecast of PAMC’s growth rate? 7.75% 0.02% 4.50% 3.00%
Answer:
the growth rate is 3%
Explanation:
The computation of the PAMC growth rate is shown below:
Price of the stock = Current year dividend ÷ (required rate of return - growth rate)
$16.25 = $0.78 ÷ (0.078 - growth rate)
0.078 - growth rate = 0.048
So, the growth rate is 3%
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Average Accounting Return. Concerning AAR:a. Describe how the average accounting return is usually calculated and describe the information this measure provides about a sequence of cash flows. What is the AAR criterion decision rule?b. What are the problems associated with using the AAR as a means of evaluating a project’s cash flows? What underlying feature of AAR is most troubling to you from a financial perspective? Does the AAR have any redeeming qualities?
Answer:
a. Describe how the average accounting return is usually calculated and describe the information this measure provides about a sequence of cash flows. What is the AAR criterion decision rule?
Average accounting return = average net income / average investment
The problem with AAR is that net cash flows are not equal to net income since depreciation expense and changes in net working capital are not accounted for by AAR.
The criterion decision rule is that projects with an AAR above a certain measure.
b. What are the problems associated with using the AAR as a means of evaluating a project’s cash flows? What underlying feature of AAR is most troubling to you from a financial perspective? Does the AAR have any redeeming qualities?
it doesn't consider net cash flows, nor time value of money. Personally, accounting is an extremely important tool but it only reflects a partial perspective of a business. E.g. a business might have a huge net income but if it doesn't have enough cash to function, it will go bankrupt. In finance, cash is king.
Personally, my biggest problem with AAR is that it doesn't consider net cash flows. I've been on situations where the company I worked for was apparently doing great, but our accounts receivables were huge and we couldn't collect money fast enough. My job was basically go to different banks and convince them of loaning us cash. The worst part was that even without being able to collect cash, we still had to pay taxes and that was another huge problem.
I believe that AAR is still used because of its simplicity. Also, taxes are paid based on accounting profits and many firms base they compensation plans on them.
Joe just completed his engineering degree and started to work for an engineering firm. Joe wants to retire early after 30 years working. He plans to invest $5,000 at the end of every year for a 30-year career. If Joe needs $3,954,750 in savings at retirement, what interest rate must the investment earn?A. 10%B. 12.16%C. 18%D. 20%
Answer:
Joe will need to save at an interest rate of:
C. 18%
Explanation:
a) Data and Calculations:
Working life = 30 years
Annual investment = $5,000
Future expected savings = $3,954,750
Joe will need an annual return rate of 18.000% to reach the future value of $3,954,750.00.
FV (Future Value) $3,954,752.25
PV (Present Value) $27,584.01
N (Number of Periods) 30.000
I/Y (Interest Rate) 18.000%
PMT (Periodic Payment) $5,000.00
Starting Investment $0.00
Total Principal $150,000.00
Total Interest $3,804,752.25
A stock has the following returns over three consecutive years: 85%, 58%, and 128%. What is the arithmetic average?
Answer:
The stock's arithmetic average is:
90.33%.
Explanation:
a) Data and Calculations:
Returns over three consecutive years:
Year 1 = 85%
Year 2 = 58%
Year 3 = 128%
Total returns = 271%
Average = Total returns divided by number of years
= 271/3
= 90.333
=90.33%
b) The arithmetic average is the total returns divided by the number of years involved. This implies that we find the average or the mean by adding up some pieces of data together and dividing by the number of the pieces of data.
According to the basic DCF stock valuation model, the value an investor should assign to a share of stock is dependent on the length of time he or she plans to hold the stock.A. True B. False
Answer:
According to the basic DCF stock valuation model, the value an investor should assign to a share of stock is dependent on the length of time he or she plans to hold the stock.
A. True
Explanation:
The DCF (Discounted Cash Flow) method of stock valuation is based on the assumption of the time-value of money. This approach considers that the cash flow that is received today is much more than the same amount of cash flow received any other time in the future. And the time of the future receipt or payment affects the amount of the cash flow, with decreasing consequences based on increasing time into the future.
You own a movie theater. The theater generates $100,000 per year in net income. This is expected to grow at 2% per year. Someone offers to buy the theater from you. How much should you charge as the selling price of the theater?
Answer: $1275000
Explanation:
From the question, we are informed that a theater generates $100,000 per year in net income and it is expected to grow at 2% per year.
The selling price of the theater if someone offers to buy will be:
= net income × (1+g) / (r-g)
= $100,000 × (1 + 2%) / (10% - 2%)
= $100,000 × (1.02) / (0.08)
= $1275000
The amount of money which the theater owner should charge as the selling price of the theater is:
$1275000
According to the given question, we are asked to calculate the selling price of a movie theater, when we factor in the net income, expected growth, etc.
As a result of this, we can see that to make the necessary calculations, we have to take note of some important things such as:
Net income
Expected growth rate
The net income is $100, 000 per year
The expected growth rate is 2% per year
With this in mind, the owner can calculate the selling price as net income × (1+g) / (r-g) which would give us $100,000 x 91.02)/ (0.08)
= $1275000
Therefore, the correct answer is $1275000
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A company expects to sell 15,000 units in the first quarter, 18,000 units in the second quarter, and 20,000 units in the third quarter. The company desires to maintain an inventory at the end of each quarter equal to 10% of next quarter expected sales. How many units does the company plan to produce in the second quarter?
Answer:
the number of units produced in the second quarter is 18,200 units
Explanation:
The computation of the number of units that have to plan for producing in the second quarter is shown below:
= Sales units - opening inventory units + closing inventory units
= 18,000 units - (18,000 units × 10%) + (20,000 units × 10%)
= 18,000 units - 1,800 units + 2,000 units
= 18,200 units
hence, the number of units produced in the second quarter is 18,200 units
The efficient frontier of risky assets is
A. the portion of the investment opportunity set that lies above the global minimum variance portfolio.
B. the portion of the investment opportunity set that represents the highest standard deviations.
C. the portion of the investment opportunity set that includes the portfolios with the lowest standard deviation.
D. the set of portfolios that have zero standard deviation
Answer:
A. the portion of the investment opportunity set that lies above the global minimum variance portfolio.
Explanation:
The Efficient frontier refers to the portfolios set that involves that expected return whose return is high at the level of minimum risk so the asset that contains the high risk profile that investment opportunity set portion should be above the variance portfolio i.e. minimum globally
Therefore the correct option is a.
If you decide to take a break and go for a hike in order to focus less consciously on the creative process, which stage is the creative process are you experiencing?
Answer: Incubation
Explanation: In the incubation stage the person moves away from the problem and gives space to the mind to search for a solution. An example is going for a walk to relax your mind a bit and ideas flow better.
Draw a correctly labeled loanable funds graph that shows what happens to real interest rates for each of the following situations: (You will have 3 graphs)
The government borrows money to fund a war.
Private investors become more optimistic about the economy.
The government raises personal income taxes (do not consider the change in consumer saving).
In the text box provided, enter the time and date you sent your graphs to your instructor. Please specify if you e-mailed or faxed the graph. Make sure your name and the assignment number are on your paper and that each graph is clearly marked with an a, b, or c. (30 points)
Answer:
1. a) War increases demand for loanable funds, demand curve shifts RIGHT. (Increase in real interest rate)
b) Private investors are optimistic about the economy (i.e. investment opportunities). Demand for loanable funds increases, demand curve shifts RIGHT. (Increase in real interest rate)
c) Tax increase means a decrease in the supply about loanable funds. Supply curve shifts LEFT. (Increase in real interest rate)
2. would most likely increase the supply of loanable funds. If Americans are saving more, then they are spending less money and investing more of it. Remember--saving does not mean "not using it". It means investing it instead of consuming.
3. The interest rate will fall. There is a surplus of loanable funds and the real interest rate will reflect this surplus by falling.
4. decrease in the demand for loanable funds. When output decreases, the return on investment for new projects decreases and investors are less in need of money to fund their ventures.
5. decrease the supply for loanable funds. If they are consuming more, they are saving less.
6. Increase / Decrease. When interest rates increase, growth is reduced because funding economic ventures is now more costly. Sometimes the fed will increase interest rates when it anticipates inflation to increase in order to mitigate economic growth.
Hope this was helpful!
Explanation:
On October 1, Sam's Painting Service borrows $164000 from National Bank on a 3-month, $164000, 4% note. What entry must Sam's Painting Service make on December 31 before financial statements are prepared?A. Interest Expense 500 Interest Payable 500B. Interest Payable 500 Interest Expense 500C. Interest Expense 2,000 Interest Payable 2,000D. Interest Expense 500 Notes Payable 500
Answer:
{Debit] Interest expense $1,640
[Credit] Interest payable $1,640
Explanation:
Annual 12 month interest = $164,000 * 4% = $6,560
No of months from 1 Oct to 31 Dec = 3 months
Interest expense to be recorded as ‘payable’ for 3 months = $6,560 * 3 months/12 months = $6,560 * 0.25 = $1,640
Entry will include:
{Debit] Interest expense $1,640
[Credit] Interest payable $1,640
Marigold Corp. gathered the following reconciling information in preparing its April bank reconciliation: Cash balance per books, 4/30 $13700 Deposits in transit 1900 Notes receivable and interest collected by bank 4620 Bank charge for check printing 160 Outstanding checks 9400 NSF check 870 The adjusted cash balance per books on April 30 is:______.
Answer:
Marigold Corp. gathered the following reconciling information in preparing its April bank reconciliation: Cash balance per books, 4/30 $13700 Deposits in transit 1900 Notes receivable and interest collected by bank 4620 Bank charge for check printing 160 Outstanding checks 9400 NSF check 870.
The adjusted cash balance per books on April 30 is:__$17,290.
Explanation:
a) Data and Calculations:
Cash balance per books, 4/30 = $13,700
Deposits in transit 1,900
Notes receivable and interest collected by bank 4,620
Bank charge for check printing 160
Outstanding checks 9,400
NSF check 870
b) Cash balance per books, 4/30 $13,700
Notes receivable and interest collected by bank 4,620
Bank charge for check printing -160
NSF check -870
Adjusted cash balance as per books on April 30 $17,290
c) The adjusted cash balance of $17,290 will be equal to the balance on the bank statement on the same date, unless there is another accounting error that is not listed above.
The International Monetary Fund (IMF): ___________.A. aids countries with balance of payment and exchange rate problems. B. in recent years has provided large loans to Russia, South Korea, and Brazil. C. was created as a result of the Bretton Woods Agreement. D. is all of the above.
Answer:
D. is all of the above.
Explanation:
The International Monetary Fund is a an international organisation that works to promote monetary cooperation between member countries, reduce poverty, and encourage economic growth around the world
It's member nations are 190 in number.
The IMF mainly aids countries with balance of payment and exchange rate problems.
Also IMF has helped Russia, South Korea, and Brazil by giving them loans in recent years.
The IMF was created as a result of Bretton Woods agreement.
After World war 2 in 1944 the central banks of allied nations agreed to fix the exchange rate of their currencies and the dollar. Members also agreed to not go into trade wars
The business cycle measures: Group of answer choices fluctuations in the profit of businesses. fluctuations in the long-run trend growth rate of GDP. short-run fluctuations in economic activity. fluctuations in the average tax rate paid by businesses. fluctuations in consumption. g
Answer:
short-run fluctuations in economic activity.
Explanation:
The business cycle measures short-run fluctuations in economic activity.
A delivery tactic for outsourced projects is known as ______, ______, _______, and ________. Multiple Choice build, own, operate, transfer buy, test, retest, accommodate customer unit test, regression test, system test, customer test, transfer create, deliver, receive feedback, redeliver create, deliver, customer test, get paid
Explanation:
A delivery tactic for outsourced projects is known as and (A) build, own, operate, transfer B) buy, test, retest, accommodate customer C unit test, regression test, system test, customer test, transfer create, deliver, receive feedback, redeliver E) create, deliver, customer test, get paid
Gabriella, a single taxpayer, has wage income of $160,000. In addition, she has $7,000 in long-term capital losses, $1,000 in long-term capital gains, $3,000 in short-term capital gains, and $1,000 in short-term losses. What is Gabriella's AGI for 2017?a. $157,000.
b. $160,000.
c. $156,000.
d. $161,000.
Answer:
c. $156,000
Explanation:
Adjusted gross income = Wage income + Long-term capital gains + Short-term capital gains - Long-term capital losses - Short-term losses
Adjusted gross income = $160,000 + $1,000 + $3,000 - $7,000 - $1,000
Adjusted gross income = $156,000
Thus, Gabriella's AGI for 2017 is $156,000
Novak Corporation amended its pension plan on January 1, 2020, and granted $152,280 of prior service costs to its employees. The employees are expected to provide 1,880 service years in the future, with 330 service years in 2020. Compute prior service cost amortization for 2020. Prior service cost amortization for 2020
Answer:
26762.74
Explanation:
Prior service cost amortization for 2020 can be calculated by first calculating the average time until the employee's retirement. After calculating the average time until retirement we will divide the service cost at that time
Workings
average time until retirment = 1880/330
average time until retirment = 5.69 years
prior service cost amortization for 2020 = $152,280/5.69
prior service cost amortization for 2020 = $26762.74
The business judgment rule protects corporate officers and directors when: _________
a. they have a financial self-interest in the disputed transaction.
b. they are unaware of some of the material aspects of a decision.
c. they set up a committee to establish a decision-making procedure that serves the best interests of the corporation.
d. the liability stemmed from a breach of duty.
The business judgment rule protects corporate officers and directors when option c. they set up a committee to establish a decision-making procedure.
What is the business judgment rule:It is considered as the legal principle that protected the board of directors from breach of the liability of fiduciary duty since the directors should be acted in good faith of the shareholders and assure the logical and well-informed decision-making process
So based on this, we can say that the option c is correct.
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The following trial balance was extracted from the books of Kalekeno, a sole trader, at 31st Dec2018:
Dr Cr
Stock DEC 31st 2017 23,680
Carriage outward 2,000
Carriage inwards 3,100
Returns 2050 3,220
Purchases and sales 118,740 186,000
Salaries and wages 38,620
Rent 3040
Insurance 780
Motor expenses 6,640
Office expenses 2160
Lighting and heating expenses 1,660
General expenses 3140
Premises 50,000
Motor vehicles 18,000
Fixtures and fittings 3,500
Debtors and creditors 38,960 17,310
Cash at bank 4820
Drawings 12,000
Capital 126,360
332,890 332,890
Additional information
i) Closing stock was valued at ksh 29,460 as at 30th June 2018
ii) Mr kalekeno took part of the stock amounting to ksh 3000 for personal use
iii) Salaries and wages amounting to ksh 8,000 were pre-paid and ksh 360 of motor expenses accrued
iv) Bad debts written off amounted to 860
v) Depreciation is to be provided for as follows:
Premises at 20%
Fixtures and fittings at 15%
Motor vehicles at 25%
All of a above asset were depreciated at cost
a) The income statement for the year ended 30 th June 2018 ( 5marks)
b) The statement of financial position (5 Marks)
Answer:
Stock DEC 31st 2017 23,680
Carriage outward 2,000
Carriage inwards 3,100
Returns 2050 3,220
Purchases and sales 118,740 186,000
Salaries and wages 38,620
Rent 3040
Insurance 780
Motor expenses 6,640
Office expenses 2160
Lighting and heating expenses 1,660
General expenses 3140
Premises 50,000
Motor vehicles 18,000
Fixtures and fittings 3,500
Debtors and creditors 38,960 17,310
Cash at bank 4820
Drawings 12,000
Capital 126,360
332,890 332,890
Additional information
i) Closing stock was valued at ksh 29,460 as at 30th June 2018
ii) Mr kalekeno took part of the stock amounting to ksh 3000 for personal use
iii) Salaries and wages amounting to ksh 8,000 were pre-paid and ksh 360 of motor expenses accrued
iv) Bad debts written off amounted to 860
v) Depreciation is to be provided for as follows:
Premises at 20%
Fixtures and fittings at 15%
Motor vehicles at 25%
All of a above asset were depreciated at cost
a) The income statement for the year ended 30 th June 2018 ( 5marks)
b) The statement of financial position (5 Marks)
Explanation:
Outstanding debt of Home Depot trades with a yield to maturity of 5%. The tax rate of Home Depot is 40%. What is the effective cost of debt of Home Depot
Answer:
3.00%
Explanation:
The effective cost of debt of Home Depot = 5%*(1 - 0.40)
The effective cost of debt of Home Depot = 0.05*0.60
The effective cost of debt of Home Depot = 0.03
The effective cost of debt of Home Depot = 3.00%
OCF from Several Approaches [L01] A proposed new project has projected sales of $125,000, costs of $59,000, and depreciation of $12,800. The tax rate is 35 percent. Calculate operating cash flow using the four different approaches described in the chapter and verify that the answer is the same in each case.
Answer:
Please see below
Explanation:
In order to calculate the operating cash flow, we will get the value of net income. The income statement is calculated as;
Sales
$125,000
Less :
Costs
($59,000)
Depreciation
($12,800)
EBIT
$53,200
Less tax 35%
($18,620)
Net income
$34,580
1. Using the tax shield method
OCF = (Sales - Costs)(1 - Tax) + Tax(Depreciation)
OCF = ($125,000 - $59,000)(1 - 35%) + 35%($12,800)
OCF = ($66,000)(0.65) + $4,480
OCF = $42,900 + $4,480
OCF = 47,380
2. Using the financial calculation
OCF = EBIT + Depreciation - Taxes
OCF = $53,200 + $12,800 - $18,620
OCF = $47,380
3. Using the top down approach
OCF = Sales - Costs - Taxes
OCF = $125,000 - $59,000 - $18,620
OCF = $47,380
4. Using the bottom up approach
OCF = Net income + Depreciation
OCF = $34,580 + $12,800
OCF = $47,380
a firm has a market value of equity of 30,000. it borrows 7500 at 8%. if the unlevered cost of equity is 16%, what is the firms cost of equity capital
Answer:
18%
Explanation:
Ke = Kul +[Kul+Kd] [D/E]
Unlevered cost of Equity(Kul)= 16%, Cost of Debt(kd) = 8%, Debt = $7500 & Equity = $30,000
ke= 0.16+(0.16-0.08)(7,500/30,000)
ke= 0.16+(0.08)(0.25)
ke= 0.16 + 0.02
ke= 0.18
Ke = 18%
Thus, the firms cost of equity capital is 18%
Match the word to the correct definition. 1. alignment the horizontal placement of text on the page 2. shortcut a special combination of keys that tells the computer to perform a command 3. columns using your mouse to drag across text; this causes the text and background to change color and become selected 4. highlight vertical sections of text separated by blank space
Answer:
1432 is the order
Explanation:
hope this helps
Answer: 1432 is the order.
Hope this helps you! :^}
At the beginning of its fiscal year, Lakeside Inc. leased office space to LTT Corporation under a ten-year operating lease agreement. The contract calls for quarterly rent payments of $28,000 each. The office building was acquired by Lakeside at a cost of $2.3 million and was expected to have a useful life of 25 years with no residual value.
What will be the effect of the lease on Lakeside's earnings for the first year (ignore taxes)?
Lakeside increases its earnings by $__________
Answer: $20,000
Explanation:
The effect of the lease on Lakeside's earnings will be the difference between the earnings from the lease and the cost of the building which will be depreciation.
Depreciation = 2,300,000/25
= $92,000 per year
Earnings per year;
= 28,000 * 4
= $112,000
Increase in earnings = 112,000 - 92,000
= $20,000
1. You have a portfolio that is invested 21% in Stock A, 34% in Stock B, and 45% in Stock C. The betas of the stocks are .66, 1.21, and 1.50, respectively. What is the beta of the portfolio? a. 1.17.b. 1.12.c. 1.38.d. 1.00.e. 1.23.2. The risk-free rate is 3.7% and the market expected return is 11.6%. What is the expected return of a stock that has a beta of 1.22?
Answer:
1.
Portfolio Beta = 1.225 rounded off to 1.23
Option e is the correct answer.
2.
r = 0.13338 or 13.338% rounded off to 13.34%
Explanation:
1.
The portfolio beta is a function of the weighted average of the individual stocks' betas that form up the portfolio. To calculate the beta of a portfolio, we use the following formula,
Portfolio Beta = wA * Beta of A + wB * Beta of B + ... + wN * Beta of N
Where,
w is the weight of each stock
Portfolio Beta = 0.21 * 0.66 + 0.34 * 1.21 + 0.45 * 1.5
Portfolio Beta = 1.225 rounded off to 1.23
2.
Using the CAPM, we can calculate the required rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.
The formula for required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate
rM is the market return
r = 0.037 + 1.22 * (0.116 - 0.037)
r = 0.13338 or 13.338% rounded off to 13.34%
Equipment which cost $446,000 and had accumulated depreciation of $248,000 was sold for $222,000. This transaction should be shown on the statement of cash flows (indirect method) as a(n):_________
Answer and Explanation:
The computation is shown below:
For profit or loss on the sale of an equipment
Cost $446,000
Less: accumulate depreciation -$248,000
Book value $198,000
Less: sold value -$222,000
Loss on sale of an equipment -$24,000
This amount would be added to the net income
And, the sale value i.e. $222,000 should be shown in the investing activity in a positive amount
Compare the flow (in the most recent year) and stock of FDI from your country in China versus the flow and stock of FDI from China in your country. Which is bigger?
Answer:
Foreign Direct Investment refers to investments that citizens or businesses of a country make in another country by either investing or acquiring businesses in the other country.
In 2019, FDI from China to the USA was estimated to be $37.7 billion.
In the same year, FDI from the USA to China was estimated to be $116.2 billion.
FDI from the US to China is therefore bigger than FDI from China to the US.
Beatrice Company estimates that unit sales of its lawn chairs will be 8,000 in October; 8,700 in November; and 9,650 in December.
Required:
Compute Beatrice’s sales budget for the fourth quarter assuming each unit sells for $27.50.
Answer:
Following are the solution to this question:
Explanation:
Oct Nov Dec 4th Quarter
Unit of budget sales [tex]7,200 \ \ \ \ \ \ \ \ \ \ \ \ 7,400 \ \ \ \ \ \ \ \ \ \ \ \ 7,100 \ \ \ \ \ \ \ \ \ \ \ \ 21,700[/tex]
Cost for sale [tex]27.5 \ \ \ \ \ \ \ \ \ \ \ \ \ \ 27.5 \ \ \ \ \ \ \ \ \ \ \ \ \ \ 27.5\ \ \ \ \ \ \ \ \ \ \ \ \ \ 27.5[/tex]
[tex]\text{Complete selling Budgeted}[/tex] [tex]\$ \ 198,000 \ \ \ \ \ \ \$ \ 203,500 \ \ \ \ \ \ \$\ 195,250 \ \ \ \ \ \ \$ \ 596,750[/tex]