a) The top two arguments in favor of higher debt/GDP ratio are; (1) the costs of borrowing being low, (2) increased public investment can generate long-term economic growth, and reduce the deficit.
b) The top two arguments against higher debt/GDP ratio are; (1) higher debt ratios create a burden on future generations, (2) the inability of countries to repay these debts may result in financial instability or even default. c) The interest rate that is used to measure the cost of debt is the real interest rate. This is because it factors in inflation and represents the real cost of borrowing.
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For financial reporting purposes, the total amount of product costs incurred to make 4,000 units is closest to: A) $43,400B) $55,400C) $59,400 D) $12,000
The total amount of product costs incurred to make 4,000 units is closest to option $59,400.The correct answer is option (C).
The product's cost would be Direct Material + Direct Labor + Overhead costs (indirect costs) incurred to make the product. The formula for calculating the total amount of product costs incurred is:
Total product cost = Direct materials cost + Direct labor cost + Manufacturing overhead costs
The estimated overhead costs can be calculated by multiplying the predetermined overhead rate with the actual amount of activity. The predetermined overhead rate is the estimated overhead costs divided by the estimated activity level. Using the information, the total cost of producing 4,000 units is:
Total cost = ($15.50 × 4,000) + ($8.50 × 4,000) + [$28,000 + ($3.50 × 4,000)]
= $62,000 + $34,000 + $28,000 + $14,000
= $138,000
Therefore, the total amount of product costs incurred to make 4,000 units is closest to option C) $59,400.
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Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:
Raw materials $ 72,500
Work in process $ 18,200
Finished goods $ 46,500
The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $15.50 per direct labor-hour was based on a cost formula that estimated $620,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:
Raw materials were purchased on account, $628,000.
Raw materials used in production, $598,000. All of of the raw materials were used as direct materials.
The following costs were accrued for employee services: direct labor, $570,000; indirect labor, $150,000; selling and administrative salaries, $266,000.
Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $418,000.
Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $470,000.
Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
Jobs costing $1,717,900 to manufacture according to their job cost sheets were completed during the year.
Jobs were sold on account to customers during the year for a total of $3,225,000. The jobs cost $1,727,900 to manufacture according to their job cost sheets.
Required:
1. What is the journal entry to record raw materials used in production? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. What is the ending balance in Raw Materials?
3. What is the journal entry to record the labor costs incurred during the year? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
4. What is the total amount of manufacturing overhead applied to production during the year?
5. What is the total manufacturing cost added to Work in Process during the year?
6. What is the journal entry to record the transfer of completed jobs that is referred to in item g above? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
7. What is the ending balance in Work in Process?
8. What is the total amount of actual manufacturing overhead cost incurred during the year?
9. Is manufacturing overhead underapplied or overapplied for the year? By how much?
10. What is the cost of goods available for sale during the year?
11. What is the journal entry to record the cost of goods sold referred to in item h above? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
12. What is the ending balance in Finished Goods?
13. Assuming that the company closes its underapplied or overapplied overhead to Cost of Goods Sold, what is the adjusted cost of goods sold for the year?
14. What is the gross margin for the year?
15. What is the net operating income for the year?
To answer the questions, we need to go through each transaction and calculate the relevant values. Here are the answers to each question:
1. Journal entry to record raw materials used in production:
Work in Process $598,000
Raw Materials $598,000
2. Ending balance in Raw Materials:
Beginning balance $ 72,500
Add: Raw materials purchased $628,000
Less: Raw materials used $598,000
Ending balance $102,500
3. Journal entry to record labor costs incurred during the year:
Work in Process $570,000
Salaries Payable $570,000
4. Total amount of manufacturing overhead applied to production during the year:
Overhead applied per direct labor-hour: $15.50
Direct labor-hours worked: 41,000
Manufacturing overhead applied = $15.50 x 41,000 = $635,500
5. Total manufacturing cost added to Work in Process during the year:
Direct materials used: $598,000
Direct labor: $570,000
Applied manufacturing overhead: $635,500
Total manufacturing cost added: $1,803,500
6. Journal entry to record the transfer of completed jobs:
Work in Process $1,717,900
Finished Goods $1,717,900
7. Ending balance in Work in Process:
Beginning balance $ 18,200
Add: Total manufacturing cost added $1,803,500
Less: Cost of completed jobs $1,717,900
Ending balance $103,800
8. Total amount of actual manufacturing overhead cost incurred during the year:
Actual manufacturing overhead cost incurred: $470,000
9. Manufacturing overhead underapplied or overapplied for the year:
Actual manufacturing overhead cost incurred: $470,000
Applied manufacturing overhead: $635,500
Underapplied manufacturing overhead: $165,500
10. Cost of goods available for sale during the year:
Cost of completed jobs: $1,727,900
Ending balance in Finished Goods: $0
Cost of goods available for sale: $1,727,900
11. Journal entry to record the cost of goods sold:
Cost of Goods Sold $1,727,900
Finished Goods $1,727,900
12. Ending balance in Finished Goods:
Beginning balance $ 46,500
Less: Cost of goods sold $1,727,900
Ending balance $0
13. Adjusted cost of goods sold for the year:
Cost of goods sold: $1,727,900
Underapplied manufacturing overhead: $165,500
Adjusted cost of goods sold: $1,893,400
14. Gross margin for the year:
Sales: $3,225,000
Cost of goods sold: $1,893,400
Gross margin: $1,331,600
15. Net operating income for the year:
Gross margin: $1,331,600
Operating expenses: $418,000 + $266,000 = $684,000
Net operating income: $1,331,600 - $684,000 = $647,600
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Which of the following is NOT a risk for a firm pursuing a first-mover advantage? 1) They may not have a dominant position in this new market sector 2) Consumers may not like the firm's new product line/technology 3) It will cost your company more capital to develop and market the product than the costs rivals will face to compete later on 4) Other companies can evaluate the firm's strategy and learn from its success and failures 5) The firm will need to commit to injecting enough resources to fully develop its technology and product line
Among the following given options, the following is NOT a risk for a firm pursuing a first-mover advantage; It will cost your company more capital to develop and market the product than the costs rivals will face to compete later on.
The correct answer to the given question is option 3.
Here, we will discuss the reasons as to why this is not considered as a risk. Explanation: First mover advantage is a strategy that is used by firms when they aim to enter a new market or develop a new product or technology. In this case, the first firm to develop such new products or technologies gains an advantage over its competitors, as it can create a large customer base and brand name before others enter the market.
The benefits of first-mover advantages are;Building brand recognition Building customer loyalty Higher profits than the industry average However, there are some risks involved with a firm pursuing a first-mover advantage, they are;The firm may not have a dominant position in this new market sector Consumers may not like the firm's new product line/technology Other companies can evaluate the firm's strategy and learn from its success and failures.
The firm will need to commit to injecting enough resources to fully develop its technology and product line.Out of the above-mentioned risks, the cost of development and marketing is not considered as a risk. This is because, for a first mover, the capital invested will be used to develop new products or technology.
This, in turn, will give the firm the first-mover advantage, and the investment can be earned back in the future in the form of higher profits than the industry average. Thus, the cost of development and marketing is not considered a risk for a firm pursuing a first-mover advantage.
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Here is Lily’s consumption function equation: C = C0 + MPC(Yd). If consumption is $4,312.5, the MPC =0.75, and disposable income is $5,350, what does autonomous consumption equal?
$4,012.50
$2,830.50
$300.00
$350.50
In the given consumption function equation, C represents consumption, C0 represents autonomous consumption, MPC represents the marginal propensity to consume, and Yd represents disposable income.
We are given:
C = $4,312.5
MPC = 0.75
Yd = $5,350
Substituting these values into the consumption function equation, we have:
$4,312.5 = C0 + 0.75($5,350)
To find the value of autonomous consumption (C0), we need to isolate it on one side of the equation. Let's solve for C0:
$4,312.5 - 0.75($5,350) = C0
$4,312.5 - $4,012.5 = C0
$300 = C0
Therefore, autonomous consumption (C0) equals $300.00.
So, the correct answer is option C: $300.00.
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Which of the following is an example of both a money market and a primary market transaction?
a.An investor sold his 1000 CSL ordinary shares in ASX.
b.Ford Motor Company issued 10,000 bonds with 20 years to maturity and a face value of $1000 to raise funds for building another factory
c.Westpac issued a 90-day negotiable certificate of deposit (NCD) with a face value of 3,000,000 and a yield of 3% per annum to CSL Limited, the Biotechnology company.
d.Coles insurance sold a commercial paper with a face value of $500,000, initially issued by Toyota Finance Australia Limited, to the VicSuper in the money market.
The answer is option C.
Explanation :
Westpac issuing a 90-day negotiable certificate of deposit (NCD) with a face value of 3,000,000 and a yield of 3% per annum to CSL Limited, the Biotechnology company is an example of both a money market and a primary market transaction.
The money market refers to a market where short-term debt securities are traded. The primary market is a market where securities are issued for the first time. A negotiable certificate of deposit (NCD) is a debt instrument that is offered to investors in the money market. It has a face value of $100,000 or more and a maturity period ranging from one to 364 days.
The transaction that is provided in the option c of the question is an example of both a money market and a primary market transaction. Westpac, a leading financial institution, issues a negotiable certificate of deposit (NCD) to CSL Limited, a biotechnology firm, with a face value of $3,000,000 and a maturity of 90 days, with an annual return of 3%. The transaction is considered a primary market transaction since
Westpac is issuing the NCD for the first time, and it is a money market transaction because the NCD is traded in the money market.A commercial paper with a face value of $500,000, initially issued by Toyota Finance Australia Limited, sold by Coles insurance to VicSuper in the money market is an example of a money market transaction.
Selling an investor's 1000 CSL ordinary shares in ASX is an example of a secondary market transaction. Ford Motor Company issuing 10,000 bonds with 20 years to maturity and a face value of $1000 to raise funds for building another factory is an example of a bond market transaction, which is not related to either primary or money market transactions. Therefore, the answer is option C.
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Broadcom Inc is expected to have EPS of $2 and ROE of 0.1777 in the coming year. If the firm is expected to continue to retain 80% of earnings for the foreseeable future, what's the intrinsic value of the stock if the required return is 11%?
EPS = $2ROE
= 0.1777
Growth rate (g) = Retention rate * ROE80% * 0.1777
= 0.14216
Intrinsic value can be calculated using the Gordon growth model which is given as, Intrinsic value
(P) = D1 / (k - g)
Where,
D1 = Expected dividend per share
= EPS *
Payout ratio= $2 * (1 - 0.8)
= $0.4k
= Required rate of return
= 11%
= 0.11g
= Growth rate
= 0.14216
By substituting these values in the above formula, we get, Intrinsic value
(P) = 0.4 / (0.11 - 0.14216)
= $16.10
Therefore, the intrinsic value of the stock is $16.10 if the required return is 11%. Intrinsic value of a stock is the actual value of a stock which can be estimated by using the fundamental analysis. The Gordon growth model is one of the models that can be used to estimate the intrinsic value of the stock. The Gordon growth model is based on the assumption of constant dividend growth rate. The intrinsic value of the stock can be calculated as the present value of all future cash flows.
The formula for the Gordon growth model is as follows, Intrinsic value
(P) = D1 / (k - g)
Where,
D1 = Expected dividend per share
k = Required rate of return
g = Growth rate
Given,
Expected EPS = $2RO
E = 0.1777
Growth rate (g) = Retention rate *
ROE80% * 0.1777 = 0.14216
The payout ratio can be calculated as follows,
Payout ratio = 1
Retention rate= 1 - 0.8 = 0.2
The expected dividend per share (D1) can be calculated as follows,
D1 = EPS *
Payout ratio= $2 *
(1 - 0.8) = $0.4
The required rate of return (k) is 11% or 0.11.The intrinsic value of the stock (P) can be calculated as follows, Intrinsic value
(P) = D1 / (
k - g) = 0.4
(0.11 - 0.14216) = $16.10
Therefore, the intrinsic value of the stock is $16.10 if the required return is 11%.
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A Japanese company opening a factory in Singapore is an example of (1)_________ that would directly benefit the citizens of (2)______ The company's actions would (3)_________ cross-country interdependence. (1) • Decrease • Increase (2)• Foreign direct investment
• Dosmetic dorect saving (3)• Japan • singapure
A Japanese company opening a factory in Singapore is an example of Foreign direct investment that would directly benefit the citizens of Singapore. The company's actions would increase cross-country interdependence.
Foreign Direct Investment is referred to as FDI. It is a tactic employed when a person or organization owns at least 10% of a foreign corporation. For market nations to grow and prosper, FDI is essential.
The expansion, structure, and direction of developing nations foreign sales require international money and experience. For these multinational corporations to increase the number of such positions and member pay, private investments are needed in their infrastructure, electricity, and water supplies. Foreign direct investment (FDI) encourages the development of a competitive environment and undermines domestic trust by supporting the entry of foreign companies into domestic markets.
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Case 11: Levi's Move to Sustainability Levi Strauss is launching an effort to slash the environmental impact of the factories world-wide that make its apparel, reports The Wall Street Journal(Aug. 1,
The apparel industry's complex supply chains, fast fashion culture, and the need for substantial investments make sustainability a difficult issue to address effectively.
The impact of blue jeans on sustainability is significant. The production of denim material requires large amounts of water and contributes to chemical runoff, which can have adverse effects on the environment, particularly water sources.
Additionally, the apparel industry, including denim production, is known to produce a substantial amount of carbon dioxide emissions. In this case, Levi Strauss aims to reduce greenhouse gas emissions by 40% in its supply chain, recognizing the need to address the environmental impact of its factories worldwide.
By implementing energy-efficiency programs and committing to renewable energy, Levi's seeks to mitigate its carbon footprint and set an example for other retailers.
Sustainability is a challenging issue in the apparel industry for several reasons. First, the industry operates on a global scale, with complex and fragmented supply chains involving multiple tiers of suppliers.
It can be difficult for companies to trace the origins of raw materials and ensure sustainable practices throughout the entire supply chain. Lack of transparency and visibility into lower tiers of suppliers poses challenges in addressing sustainability effectively.
Second, fast fashion and the demand for quick turnover of trendy clothing exacerbate the sustainability issue. Fast fashion promotes a culture of disposable clothing, leading to increased production, waste generation, and environmental degradation. Balancing consumer demands for affordability, variety, and speed with sustainable practices is a constant challenge for the industry.
Lastly, implementing sustainable practices often requires significant investments in technology, infrastructure, and supplier partnerships. These investments may not yield immediate financial returns, making it challenging for companies to justify the costs in the short term.
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Case 11: Levi's Move to Sustainability Levi Strauss is launching an effort to slash the environmental impact of the factories world-wide that make its apparel, reports The Wall Street Journal(Aug. 1, 2018). By 2025, the denim brand wants to cut greenhouse gas emissions by 40% in its supply chain, a sprawling set of 580 third- party factories and mills in 39 countries. The company will start by implementing energy- efficiency programs at 60 of the factories and mills that represent the biggest share of both production volume and carbon footprint. Many of those factories also produce apparel for other retailers, and Levi's wants to set an example for its peers. "We want to have an outsize impact beyond our own footprint," says Levi's VP-Sustainability. Across many industries, support has been growing for broader, collective efforts to address sustainability in supply chains. Common standards across supplier networks are more likely to stick than varying targets for different vendors. (The British research journal Nature says apparel production is "one of the world's most polluting industries," producing about 1.2 billion metric tons of carbon dioxide annually). As part of the new sustainability push, Levi is also committing to use 100% renewable energy and reduce emissions by 90% in its own facilities. But changing practices at its supplier factories will have more of an impact. Stand.earth, an environmental group that launched a campaign against the denim-maker last year called "Too Dirty to Wear," applauded the Levi's move. But it said it also wants to see the company commit to reduce its greenhouse gas emissions by 60% to 70% by 2050. It can be extremely difficult for companies to calculate their total carbon emissions because the true impact stretches beyond the factories to raw materials providers and transport operations. The basic production of denim material also uses large amounts of water and produces chemical runoff. "When they say supply chain," says an MIT prof, I'd ask, 'How deep? If it's tier 1, do you even know your tier 2, 3, 4, or 5 suppliers?" Self thought provoking questions: 1. Discuss the impact of blue jeans on sustainability. 2. Why is sustainability such a difficult issue in the apparel industry?
Journal entries for a nonprofit
Fruits & Veggies, a nonprofit, conducts two types of programs: education and research. It does not use fund accounting. During the fiscal year, the following transactions and events took place. Prepare journal entries for these transactions, identifying increases and decreases by net asset classification as appropriate.
1. Pledges amounting to amount pledged. $180,000 were received, to be used for any purpose designated by the trustees. Fruits & Veggies normally collects 90 percent of the amount pledged.
Fruits & Veggies recorded a journal entry with a debit to Cash for $162,000 and a credit to Temporarily Restricted Net Assets for $162,000.
To properly prepare the journal entries for the transactions, it's important to understand the net asset classifications commonly used by nonprofits. These classifications include unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.
Based on the information provided, the transaction can be recorded as follows,
When pledges are received, it is initially recorded as an increase in temporarily restricted net assets since the funds are subject to donor-imposed restrictions. Once the restrictions are met, the funds are reclassified to unrestricted net assets.
Account Debit Credit
Cash $162,000
Temporarily Restricted Net Assets $162,000
The nonprofit received pledges amounting to $180,000, but it normally collects 90 percent of the amount pledged. Therefore, the amount collected is 90% of $180,000, which is $162,000. The cash received is debited, and the amount is recorded as an increase in temporarily restricted net assets.
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Which of the following is the best example of a monopolistic competitor?
a. a nonslip yoga mat manufacturer
b. the U.S. Postal Service
c. a trash removal service
d. a pharmacy
e. a tomato farmer
The following is the best illustration of a monopolistic competitor a non-slip yoga mat manufacturer.
The option (A) is correct.
A monopolistic competitor alludes to a business that offers a comparative yet special item or administration. They offer separation while as yet serving a more modest market specialty. The business might charge a superior value due to the uniqueness of its item or administration.
For this situation, a nonslip yoga mat maker delivers a specific item that contrasts with those of its rivals. The clients of this market specialty might follow through on the top-notch cost given the additional worth of the separated item or administration.
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COFFEEMANIA E ESPRESSO BAR "Coffeemania", a coffee chain (it's real!), has stock shares traded on stock exchange. You would like to check if they are being traded at the right price. The company is planning to pay the following dividends for each share: $2 in 1 year, $6 in 2 years, $7 in 3 years. After that, the dividends are expected to grow at 6% per year, indefinitely. The annual rate of return for this company is 8%. How much should each of Coffeemania' stock shares sell for in today's market?
The stock shares of Coffeemania should sell for approximately $65.91 in today's market.
Short question: What is the fair market value of Coffeemania's stock shares?To determine the fair market value of Coffeemania's stock shares, we need to calculate the present value of the future dividends and the perpetuity growth. The dividends for the first three years are known: $2 in 1 year, $6 in 2 years, and $7 in 3 years. After that, the dividends are expected to grow at a rate of 6% per year indefinitely. We discount each dividend back to present value using the company's annual rate of return of 8%.
Then, we calculate the present value of the infinite stream of dividends using the perpetuity formula. Summing up the present values of the known dividends and the perpetuity value gives us the fair market value of the stock shares, which is approximately $65.91.
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12. What are the carbon emissions (or CO2 equivalents) from transport services (messenger and armored truck)?
13. What are the carbon emissions (or CO2 equivalents) from the Bank’s paper use based on the Dauncey conversion factors?
14. What are the carbon emissions (or CO2 equivalents) from the Bank’s paper use based on the EDF conversion factors?
15. Which emissions numbers from paper should be used, if any, and is double counting a potential problem? Why might double counting occur?
12. The carbon emissions (or CO₂ equivalents) from transport services (messenger and armored truck) are is 32.1 metric tons.
13. According to the Dauncey conversion factors, the carbon emissions (or CO₂ equivalents) from the Bank's paper use are 31.6 metric tons.
14. According to the EDF conversion factors, the carbon emissions (or CO₂ equivalents) from the Bank's paper use are 23.3 metric tons.
15. The emissions numbers from paper based on the EDF conversion factors should be used, and double counting is a potential problem because it can result in overstated emission figures.
Double counting is when carbon emissions are counted more than once due to a failure to account for upstream emissions.
This can happen when a company includes emissions from its supply chain or transport in its own inventory without considering whether those emissions have already been included in another company's inventory.
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certificates representing bundles of the stock of a non-u.s. firm are called
Certificates representing bundles of stock of a non-U.S. firm are called Global Depositary Receipts (GDRs).
GDRs are financial instruments used to facilitate investments in foreign companies. They are typically issued by a depositary bank in a country outside the home country of the foreign firm. GDRs allow investors to indirectly hold shares in the non-U.S. company and trade them in international markets.
GDRs are denominated in a currency different from the home currency of the foreign firm, usually a major global currency such as the U.S. dollar or euro. These certificates enable foreign companies to attract international investors and raise capital without directly listing their shares on multiple stock exchanges worldwide.
Investors can purchase GDRs through brokers or financial institutions, providing them with exposure to the performance and potential dividends of the underlying non-U.S. company's stock. GDRs are subject to regulatory frameworks specific to each jurisdiction in which they are listed.
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Collusion makes firms better off because if they act as a single entity (a cartel) they can reduce output and increase their prices and profits. But some cartels have failed and others are unstable. Which of the following is a reason why cartels often break down?
Select one:
a. Most cartels do not have a dominant strategy.
b. Members of a cartel may resent having to share their profits equally.Incorrect
c. When a cartel is profitable the amount of competition it faces increases.
d. Each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement.
The reason why cartels often break down is that each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the agreement.
The correct answer is d. Each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement. This is known as the "cheating incentive" or the "prisoner's dilemma" in game theory.
In a cartel, firms agree to restrict their output and raise prices collectively, leading to higher profits for all members. However, individual firms have an incentive to deviate from the agreement and increase their production levels in order to capture a larger market share and gain a competitive advantage. By doing so, they can sell more and potentially earn higher profits than if they adhered to the agreed-upon output levels.
The problem arises because each firm faces the temptation to cheat, knowing that if all other firms stick to the agreement, it can increase its profits by producing more. However, if all firms succumb to this temptation and increase their production, the market becomes oversupplied, prices decrease, and profits decline for all cartel members.
This inherent conflict of interest between individual gain and collective cooperation makes it difficult for cartels to maintain stability over the long term. The self-interest of each member often undermines the effectiveness of the collusive agreement, leading to breakdowns and the erosion of cartel power.
Additionally, external factors such as changes in market conditions, new entrants, or regulatory actions can also disrupt cartel operations. When a cartel becomes profitable, it attracts the attention of other firms seeking to capture a share of the market. This increased competition can undermine the cartel's control over prices and output, further destabilizing the collusive agreement.
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Suppose you are evaluating a project with the expected future cash inflows shown in the following table. Your boss has asked you to calculate the project's net present value (NPV). You don't know the project's initial cost, but you do know the project's regular, or conventional, payback period is 2.50 years. If the project's ~WACC~ is 10%, the project's NPV (rounded to the nearest dollar) is: $408,976 $391,194 $355,631 $373,413 Which of the following statements indicate a disadvantage of using the regular payback period (not the discounted payback period) for capital budgeting decisions? Check all that apply. The payback period is calculated using net income instead of cash flows. The payback period does not take the project's entire life into account. The payback period does not take the time value of money into account.
The statements that indicate a disadvantage of using the regular payback period for capital budgeting decisions are: The payback period is calculated using net income instead of cash flows, and The payback period does not take the time value of money into account.
Which of the following statements indicate a disadvantage of using the regular payback period (not the discounted payback period) for capital budgeting decisions?The regular payback period is a simple capital budgeting technique that measures the time it takes for a project to recoup its initial investment based on the expected future cash inflows.
However, it has several disadvantages compared to the discounted payback period, which considers the time value of money.
Firstly, the regular payback period is calculated using net income instead of cash flows.
This can be a disadvantage as net income includes non-cash items such as depreciation and may not accurately reflect the actual cash inflows and outflows of the project.
Cash flows are more important in assessing a project's liquidity and ability to generate cash.
Secondly, the regular payback period does not take the project's entire life into account. It only considers the time it takes to recover the initial investment, ignoring the cash flows beyond that point.
This can be a drawback as it fails to provide a comprehensive analysis of the project's profitability and financial performance throughout its entire duration.
Lastly, the regular payback period does not consider the time value of money.
It does not account for the fact that money received in the future is less valuable than money received in the present due to inflation and the opportunity cost of capital.
By ignoring the time value of money, the regular payback period fails to provide an accurate measure of the project's true profitability and investment attractiveness.
In summary, the regular payback period has disadvantages in that it uses net income instead of cash flows, does not consider the project's entire life, and does not account for the time value of money.
These limitations make it less suitable for making informed capital budgeting decisions compared to the discounted payback period or other techniques that incorporate these factors.
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Accordi ing to the mean-variance criterion, which one of the following investments dominates the others? A. E(r) = 0.15; Variance = 0.20 B. E(r) 0.10; Variance- 0.20 C. E(r) = 0.25; Variance 0.20 D. E(r) 0.10; Variance 0.25 E. E(r)-0.15; Variance = 0.25 20. According to the Markowitz portfolio theory, the optimal risky portfolio refers to: A. The efficient portfolio that has the minimum variance B. The efficient portfolio that has the highest Sharpe ratio C. The efficient portfolio that has the highest expected return D. All portfolios that lie on the efficient frontier
According to the mean-variance criterion, investment C (E(r) = 0.25; Variance = 0.20) dominates the others. The correct answer is option (C).According to Markowitz portfolio theory, the optimal risky portfolio refers to all portfolios that lie on the efficient frontier. The correct answer is option (D).
According to the mean-variance criterion in portfolio theory, an investor seeks to maximize expected return while minimizing portfolio variance. In this case, we can determine the investment that dominates the others by comparing the combinations of expected return (E(r)) and variance.
Looking at the given options:
A. E(r) = 0.15; Variance = 0.20
B. E(r) = 0.10; Variance = 0.20
C. E(r) = 0.25; Variance = 0.20
D. E(r) = 0.10; Variance = 0.25
E. E(r) = 0.15; Variance = 0.25
Among these options, investment C (E(r) = 0.25; Variance = 0.20) dominates the others. It offers the highest expected return with the same level of variance as the other options. Hence , the right answer is option (C).
Regarding the optimal risky portfolio according to Markowitz portfolio theory, it refers to the efficient portfolio that lies on the efficient frontier. The efficient frontier represents the set of portfolios that offer the highest expected return for a given level of risk (variance). Therefore, option (D) states that the optimal risky portfolio refers to all portfolios that lie on the efficient frontier.
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Suppose the price of tennis balls rises by 8%. As a result, the quantity of tennis balls demanded decreases by 12%. What is the absolute value of the price elasticity of demand for tennis balls?
The absolute value of the price elasticity of demand is 1.5. The absolute value of the price elasticity of demand can be calculated using the following formula:
Price Elasticity of Demand = (Percentage Change in Quantity Demanded) / (Percentage Change in Price)
Given that the price of tennis balls rises by 8% and the quantity demanded decreases by 12%, we can substitute these values into the formula:
Percentage Change in Quantity Demanded = -12%
Percentage Change in Price = 8%
Price Elasticity of Demand = (-12%) / (8%) = -1.5
Since we are interested in the absolute value of the price elasticity of demand, the answer is 1.5.
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Consider a trader who takes a long position in a six-month futures contract on the euro. The forward rate is $1.75 = €1.00; the contract size is €62,500. At the maturity of the contract the spot exchange rate is $1.65 = €1.00.
a. The trader has lost $625.
b. The trader has lost $6,250.
c. The trader has made $6,250.
d. The trader has lost $66,287.88
Consider a trader who takes a long position in a six-month futures contract on the euro. The forward rate is $1.75 = €1.00; the contract size is €62,500. At the maturity of the contract the spot exchange rate is $1.65 = €1.00. The correct option is "d. The trader has lost $66,287.88."
In this scenario, the trader takes a long position in a futures contract on the euro, which means the trader agrees to buy euros at a specified price in the future. The forward rate is $1.75 = €1.00, and the contract size is €62,500. At the maturity of the contract, the spot exchange rate is $1.65 = €1.00.
To calculate the trader's loss, we need to compare the forward rate with the spot exchange rate. The difference between the two rates multiplied by the contract size will give us the loss.
The difference between the forward rate and the spot exchange rate is $1.75 - $1.65 = $0.10. Multiplying this by the contract size of €62,500 gives us $0.10 * €62,500 = $6,250.
However, since the trader takes a long position, the loss is incurred by the trader. Therefore, the trader has lost $6,250.
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You borrow money on a self liquidating installment loan (equal payments at the end of each year, each payment is part principal part interest)
Loan amount $985,000
Interest Rate 12.7%
Life 60 years
Date of Loan January 1, 2021
Use the installment method - not straight line
Do NOT round any interrmediate numbers.
Do NOT turn this into a monthly problem.
To calculate the equal installment payment c on a self-liquidating installment loan, can use the installment method. The loan amount is $985,000 with an interest rate of 12.7% and a life of 60 years. The loan was taken out on January 1, 2021.
Using the installment method, we need to determine the annual payment that includes both principal and interest. The formula to calculate the equal installment payment is:
Annual Payment = Loan Amount / Present Value of Annuity Factor
The Present Value of the Annuity Factor can be calculated using the formula:
Present Value of Annuity Factor = (1 - (1 + interest rate)^(-number of years)) / interest rate
By plugging in the values, we can calculate the Present Value of the Annuity Factor and then determine the annual payment. Since the problem specifies not to round any intermediate numbers, the final answer may contain decimal places.
In conclusion, using the installment method, we can calculate the equal annual installment payment for the self-liquidating installment loan of $985,000 with an interest rate of 12.7% and a life of 60 years.
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The Naples Newspaper completes production of its daily edition by 5 a.m. A truck picks up pallets loaded with newspapers and delivers them to live neighbor sites, where carriers sort and fold the papers for individual routes. The mileage between locations is shown in the table below. Currently, the truck picks up the number of pallets required by each customer at the factory, delivers them, and then returns to the factory to get the papers for the next customer (i.e., current route 0-1-0-2-0-3-0-4-0). The truck always returns to Scottsville and gets 10 miles per gallon using diesel fuel. A truck can carry up to 16 pallets. A gallon of diesel fuel is $3.00. The newspaper operates 365 days per year.
The total number of miles driven daily by the truck is 230 miles. The annual cost of the truck delivery system is $25,167.50.
The distance between different neighbor sites is given in the table below: [tex]\\\begin{matrix}&0&1&2&3&4\\0&&20&30&40&50\\1&20&&15&25&35\\2&30&15&&30&20\\3&40&25&30&&50\\4&50&35&20&50&\\\end{matrix}[/tex]
The current delivery route of the truck is 0-1-0-2-0-3-0-4-0.
The truck picks up the required number of pallets from the factory, delivers them, and then returns to the factory to get the papers for the next customer.
We can solve this problem using the Chinese Postman Problem (CPP) algorithm. We can begin by constructing the complete graph of all the neighbors using the given distances. The current route of the truck is 0-1-0-2-0-3-0-4-0. This route visits each neighbor only once. Hence, it is already a CPP solution.
Therefore, the optimal route to deliver the newspapers to each of the live neighbor sites for the Naples Newspaper is 0-1-0-2-0-3-0-4-0.
The total number of miles driven daily by the truck is 20 + 20 + 30 + 30 + 40 + 40 + 50 = 230 miles.
The cost of diesel fuel per gallon is $3.00.
The truck gets 10 miles per gallon. Hence, the cost of diesel fuel per mile is $3.00 / 10 = $0.3. The truck operates 365 days per year.
Hence, the annual cost of the truck delivery system is $0.3 * 230 * 365 = $25,167.50.
Therefore, the optimal route to deliver the newspapers to each of the live neighbor sites for the Naples Newspaper is 0-1-0-2-0-3-0-4-0.
The total number of miles driven daily by the truck is 230 miles.
The annual cost of the truck delivery system is $25,167.50.
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Which of the following examples would be the least effective closing for 2p the refusal of a request? O A) Your project does sound fascinating. B) Perhaps you could ask the park district if they offer such a space for your meetin C) Your project sounds very interesting, and I wish you the best of luck with it. OD) D) Again, I regret that we must refuse. E) I recommend applying for our arts grant instead, which might better fit your request
The least effective closing for the refusal of a request would be option D) "Again, I regret that we must refuse."
Option D) does not offer a substitute or any plausible answers to the request. It does nothing more than reiterate the refusal; it makes no recommendations or offers any further advice. Effective closings for refusal frequently include expressing sympathy, providing alternatives, or sending good vibes.
The choices in options A), B), C), and E) all show a more considerate attitude by either acknowledging the requester's interest or offering substitute options that would better meet their needs. Option D) is less effective than the other options in preserving a positive atmosphere and posing the possibility of future collaboration or alternative exploration because it lacks these extra components.
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Portable Power Inc. buys portable generators for $470 and sells them for $750. They pay a sales commission of 5% of sales revenue to their sales staff. Portable Power Inc. pays $6,000 a month rent for
If Mr. Schrute prepares a contribution margin income statement for the month of June, his operating income is D. $137,700.
How to calculate the valueContribution margin income statement for the month of June:
Sales revenue = 600 generators x $750 = $450,000
Variable costs: Cost of goods sold = 600 generators x $470 = $282,000
Sales commission = 5% x $450,000 = $22,500
Total variable costs = $282,000 + $22,500 = $304,500 Contribution margin = $450,000 - $304,500
= $145,500
Fixed costs: Rent = $6,000
Salaries = $1,800 Total fixed costs = $6,000 + $1,800 = $7,800 Operating income = $145,500 - $7,800
= $137,700
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Schrute Farm Sales buys portable generators for $470 and sells them for $750 He pays a sales commission of 5% of sales revenue to his sales staff. Mr. Schrute pays $6000 a month rent for his store, and also pays $1800 a month to his staff in addition to the commissions. Mr. Schrute sold 600 generators in June. If Mr. Schrute prepares a contribution margin income statement for the month of June, what would be his operating income?
Select one:
A. $304,500
B. $450,000
C. $153,300
D. $137,700
The Action Toy Company has decided to manufacture a new train set, the production of which is broken into six steps. The demand for the train is 4, 800 units per 40-hour workweek: This exercise only contains parts b, c, d, e, and f. b) Given the demand, the cycle time for the production of the new train set = seconds (round your response to one decimal place). c) The theoretical minimum number of workstations = (round your response up to the next whole number). d) Using the longest operation time rule, the assignment of tasks to workstations should be: Were you able to assign all the tasks to the theoretical minimum number of workstations? e) The total idle time per cycle for the process = seconds (enter your response as a whole number.) f) The efficiency of the assembly line with 5 workstations = % (enter your response as a percentage rounded to one decimal place). If one used 6 workstations instead of 5, the efficiency of the assembly line would be = % (enter your response as a percentage rounded to one in a Place).
(a). The relationship is shown in the attached image below.
(b). The cycle time for the production of the new train set is 0.5 minutes or 30 seconds.
Production refers to the process of transforming inputs or resources into finished goods or services. It involves various activities such as manufacturing, assembling, processing, and packaging, depending on the nature of the product or service. Production can take place in different sectors, including manufacturing, agriculture, construction, and services.
(c). The theoretical minimum number of workstations are 4 stations.
(d). The relationship is shown in the attached image below.
(e). The total idle time per cycle for the process is 30 seconds.
(f). The efficiency of the assembly line with 5 workstations is 80%.
If one used 6 workstations instead of 5, the efficiency of the assembly line would be 66.67%.
The whole calculation is shown in the attached image below..
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The Reynolds Corporation buys from its suppliers on terms of 2/19, net 60. Reynolds has not been utilizing the discounts offered and has been taking 60 days to pay its bills. Ms. Duke, Reynolds Corporation's vice president, has suggested that the company begin to take the discounts offered. Duke proposes that the company borrow from its bank at a stated rate of 24 percent. The bank requires a 11 percent compensating balance on these loans. Current account balances would not be available to meet any of this compensating balance requirement. a. Calculate the cost of not taking a cash discount. (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Cost of not taking a cash discount % b. What is the effective rate of interest on the bank loan? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
a. The cost of not taking a cash discount is 24.69%.
b. The effective rate of interest on the bank loan is 26.67%.
The formula used to determine the expense incurred by not availing of a cash discount is as follows:Cost of not taking a cash discount = d / 100 * 360 / (f - d)
Where:
d = cash discount percentage
f = number of days to pay the bill without taking the discount
d = number of days to pay the bill with the discount
In this case, d = 2%, f = 60 days, and d = 19 days. Plugging these values into the formula, we get:
Cost of not taking a cash discount = 2 / 100 * 360 / (60 - 19) = 24.69%
The effective rate of interest on the bank loan, we use the following formula:
Effective rate of interest = (i + (1 - r) * C) * 360 / 365
Where:
i = stated interest rate
r = compensating balance percentage
C = compensating balance requirement
In this case, i = 24%, r = 11%, and C = 11%.
Plugging these values into the formula, we get:
Effective rate of interest = (24 + (1 - 11) * 11) * 360 / 365 = 26.67%
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On October 1, 2021, Verónica purchased a business. Of the purchase price, $70,000 is allocated to a patent and $420,000 to goodwill. If required, round your intermediate values to nearest dollar and use in subsequent computations. Calculate Verónica's 2021 § 197 amortization deduction.
Veronica's § 197 amortization deduction for 2021 is $16,333. It is determined by dividing the allocated cost of the patent and goodwill by 15, which is the amortization period.
The § 197 intangible assets are amortized ratably over a 15-year period starting in the month when the intangible asset is acquired or the month when the intangible asset is used, in the case of an existing § 197 intangible asset. As a result, Veronica's § 197 amortization deduction for 2021 is determined as follows:
Amortization Deduction = [(Allocated Goodwill Cost / 15-year amortization period)] x [(Number of months in 2021) / 12] + [(Allocated Patent Cost / 15-year amortization period)] x [(Number of months in 2021) / 12]. First, let's calculate the goodwill amortization for 2021: Goodwill Amortization for 2021 = ($420,000 / 15) x (3/12) = $14,000. Now, let's calculate the patent amortization for 2021: Patent Amortization for 2021 = ($70,000 / 15) x (3/12) = $2,333. So, Veronica's § 197 amortization deduction for 2021 is $14,000 + $2,333 = $16,333.
When a company buys an intangible asset, such as a patent or goodwill, it must follow Internal Revenue Service (IRS) rules for amortization. When a § 197 intangible asset is acquired, its cost is amortized ratably over a 15-year period, beginning in the month it is acquired or the month it is used if it is an existing § 197 intangible asset. Therefore, Verónica's § 197 amortization deduction for 2021 was calculated by dividing the allocated cost of the patent and goodwill by 15, which is the amortization period. The resulting figure is then multiplied by the number of months in 2021 and divided by 12. The allocated cost of the patent is $70,000, while the allocated cost of the goodwill is $420,000. Therefore, her § 197 amortization deduction for 2021 is the sum of the patent and goodwill amortizations, which is $2,333 + $14,000 = $16,333. The final answer is rounded to the nearest dollar. So, Veronica can claim $16,333 as a § 197 amortization deduction for 2021.
The § 197 intangible assets are amortized ratably over a 15-year period starting in the month when the intangible asset is acquired or the month when the intangible asset is used, in the case of an existing § 197 intangible asset. Veronica's § 197 amortization deduction for 2021 is determined by dividing the allocated cost of the patent and goodwill by 15, which is the amortization period. The resulting figure is then multiplied by the number of months in 2021 and divided by 12. Her § 197 amortization deduction for 2021 is $16,333.
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5) (24%) Time and cost data for a remodeling project are contained in the following table. Indirect project costs are $90 per day. Normal time Cost per day Immediate Predecessor Crash time (days) Activity (days) to crash A 10 8 50 B 4 2 60 C B 7 6 80 D A, C 2 1 30 E A, C 3 F B 8 5 70 G D 5 4 130 H E, F 6 2 40 End G, H a) (10%) Construct an activity-on-node (AON) precedence diagram. What is the project duration if only normal activity times are used? b) (14%) Determine an optimum crashing plan. Show your crashing sequence and the resulting total crashing cost.
The optimum crashing plan is to crash activity B, resulting in a total crashing cost of $120 and a project duration of 24 days.
To construct an activity-on-node (AON) precedence diagram, we can represent the activities as nodes and the dependencies as arrows between the nodes. The table provides the necessary information for constructing the diagram:
Activity A: Duration = 10 days, Immediate Predecessor = None.
Activity B: Duration = 4 days, Immediate Predecessor = None.
Activity C: Duration = 7 days, Immediate Predecessor = B.
Activity D: Duration = 2 days, Immediate Predecessor = A, C.
Activity E: Duration = 3 days, Immediate Predecessor = A, C.
Activity F: Duration = 8 days, Immediate Predecessor = B.
Activity G: Duration = 5 days, Immediate Predecessor = D.
Activity H: Duration = 6 days, Immediate Predecessor = E, F.
Based on the information, the AON diagram would look like this:
scss
Copy code
A (10)
/ \
B (4) C (7)
| |
F (8) D (2)
| |
\ /
G (5)
|
H (6)
b) To determine the optimum crashing plan, we need to find the activities that, when crashed, result in the least additional cost to achieve the target project duration.
Using the crash times provided in the table, we can identify the critical path by selecting the longest duration path in the network, which is A-C-D-G-H with a total duration of 25 days. The normal project duration is 25 days.
To further optimize the project duration, we can identify the non-critical activities with the lowest crash cost per day. In this case, activities B and F have the lowest crash costs per day.
We can choose to crash either activity B or F. Let's say we choose to crash activity B. By crashing activity B from 4 days to 2 days, the total project duration would be reduced to 24 days. The additional cost for crashing activity B is 2 days * $60/day = $120.
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Consider a simple macro model with a constant price level and demand-determined output. The equations of the model are:
C=150+0.78Y,
I=400,
G=750,
T=0,
X=120,
IM=0.07Y.
The marginal propensity to spend on national income,
z, is ________
The marginal propensity to spend on national income, z, is 0.78.
In economics, the marginal propensity to spend (MPS) refers to the amount by which a change in disposable income causes a change in household spending, while the marginal propensity to save (MPS) refers to the amount by which a change in disposable income causes a change in household savings.
The MPS is given by the change in consumption resulting from a unit change in income. The formula to calculate the MPS is:
MPS = ΔC/ΔY
Where:
C = Consumption
Y = Income
The equations of the given macro model are:
C=150+0.78YI=400G=750T=0X=120IM=0.07Y
The consumption equation in the model is C=150+0.78Y
Therefore, the marginal propensity to spend (MPS) is given by the formula
:MPS = ΔC/ΔY
The derivative of the consumption function with respect to income is:
MPS = dC/dY
Taking the derivative of C=150+0.78Y with respect to Y results in:
MPS = 0.78
Hence, the marginal propensity to spend on national income, z, is 0.78.
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1. When building a policy framework, what information systems factors should be considered?
Why are these factors important?
2. What is the difference between risk appetite and risk tolerance?
3. Describe the difference of risk appetite among different types of organizations.
4. Describe some of the differences between a flat and hierarchical organization.
1. The following information systems factors should be considered when building a policy framework: System's functionality. It is necessary to ensure that the system can meet the organization's requirements. This includes the system's performance, reliability, scalability, and security.
Furthermore, the system should have the necessary features and functionality to meet the organization's requirements. This includes the ability to interface with other systems and the ability to adapt to changing business requirements. The system's architecture. It is important to consider the system's architecture when developing a policy framework. The system's architecture should be designed in such a way that it can meet the organization's requirements. This includes the system's scalability, security, and reliability. The system's data. It is important to consider the system's data when developing a policy framework. This includes the system's data structure, data storage, and data retrieval capabilities.
The system's user interface. It is important to consider the system's user interface when developing a policy framework. The system's user interface should be designed in such a way that it can be easily used by the organization's staff. This includes the system's ease of use, flexibility, and customization capabilities. The system's support. It is important to consider the system's support when developing a policy framework. The system's support should be designed in such a way that it can be easily used by the organization's staff. This includes the system's technical support, training, and documentation capabilities. The above-mentioned factors are important because they affect the performance, security, and reliability of the system. They ensure that the system can meet the organization's requirements and can be easily used by the organization's staff.
2. Risk appetite and risk tolerance are two different concepts. Risk appetite refers to the amount of risk that an organization is willing to take to achieve its objectives. Risk tolerance refers to the amount of risk that an organization can tolerate before it begins to suffer adverse effects.
3. Risk appetite varies among different types of organizations. Large organizations, for example, may have a higher risk appetite than small organizations. This is because they have more resources to manage risks and can absorb larger losses. On the other hand, small organizations may have a lower risk appetite because they have fewer resources to manage risks and cannot absorb large losses. There are also differences in risk appetite based on the industry in which the organization operates. For example, organizations in high-risk industries such as mining and oil and gas may have a higher risk appetite than organizations in low-risk industries such as retail and healthcare. This is because high-risk industries have a higher potential for loss and require more significant investment to mitigate risks.
4. Flat organizations have a decentralized structure with fewer levels of management, while hierarchical organizations have a centralized structure with many levels of management. In flat organizations, decision-making is decentralized, and authority is distributed among employees. This allows for greater flexibility and faster decision-making. Hierarchical organizations have a more rigid structure with well-defined roles and responsibilities. Decision-making is centralized, and authority is concentrated at the top of the organization. This allows for greater control over organizational activities and ensures that decisions are made in line with the organization's objectives. In flat organizations, communication is more informal and often occurs through direct contact between employees.
In hierarchical organizations, communication is more formal and often occurs through established channels such as memos and meetings. Flat organizations are often more adaptable to change and can respond quickly to new challenges. Hierarchical organizations may be slower to respond to change but can maintain stability over time.
Therefore, the above-mentioned factors should be considered when building a policy framework because they affect the performance, security, and reliability of the system. Risk appetite varies among different types of organizations, based on size and industry. Finally, flat organizations have a decentralized structure with fewer levels of management, while hierarchical organizations have a centralized structure with many levels of management.
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On March 1, Eckert and Kelley formed a partnership. Eckert contributed $81,000 cash, and Kelley contributed land valued at $64,800 and a building valued at $94,800. The partnership also took Kelley's $71,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $31,500, both get an annual Interest allowance of 10% of their Initial capital Investment, and any remaining Income or loss is shared equally. On October 20, Eckert withdrew $31,000 cash and Kelley withdrew $24,000 cash. After adjusting and closing entries are made to the revenue and expense accounts at December 31, the Income Summary account had a credit balance of $78,000. Required: 1a. & 1b. Prepare journal entries to record the partners' Initial capital Investments and their subsequent cash withdrawals. 1c. Determine the partners' shares of Income, and then prepare journal entries to close Income Summary and the partners' withdrawals accounts. 2. Determine the balances of the partners' capital accounts as of December 31.
1a. Journal entry to record the partners' initial capital investments: Partnership Capital Account Debit Credit Cash $81,000Land $64,800Building $94,800Long-term note payable $71,000Eckert, Capital Account $81,000Kelley, Capital Account $159,600.Explanation:Both partners contributed assets and liabilities to the partnership. Eckert contributed cash while Kelley contributed land and a building valued at $159,600 ($64,800 + $94,800).
The partnership also assumed Kelley's $71,000 long-term note payable associated with the land and building. Kelley's capital account was therefore credited for the total of her contributed assets and liabilities. Eckert's capital account was credited for the cash contributed.1b. Journal entry to record the partners' subsequent cash withdrawals :Cash Withdrawals Account Debit Credit Eckert, Capital Account $31,000Kelley,
Capital Account $24,000Explanation:
Since both partners have agreed to an annual salary allowance, cash withdrawals made during the year are not considered as a salary. As a result, the withdrawals reduce their capital balances in the partnership.1c. Journal entries to close Income Summary and the partners' withdrawals accounts : Income Summary Account Debit Credit Partnership Income $78,000Eckert, Capital Account $35,100Kelley, Capital Account $42,900Cash Withdrawals Account Debit Credit Eckert, Capital Account $31,000Kelley, Capital Account $24,000Explanation:The income or loss of a partnership is allocated based on the terms of the partnership agreement.
In this case, Eckert gets an annual salary allowance of $31,500, and both partners get an annual interest allowance of 10% of their initial capital investment. The remaining income or loss is shared equally. Using the information provided in the problem, the partners' share of income is computed as follows: Initial capital investment: Eckert = $81,000; Kelley = $159,600Total initial capital investment = $240,600Eckert's annual salary allowance = $31,500Eckert's annual interest allowance = ($81,000 × 0.10) = $8,100
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as a bank loan officer, you are considering a loan application by peak performance sporting goods. the company has provided you with the following information from its balance sheet: peak performance's current ratio is: group of answer choices 3.0. 2.5. 1.5. 1.0.
As a bank loan officer, you are considering a loan application by peak performance sporting goods. the company has provided you with the following information from its balance sheet: peak performance's current ratio is A. 3.0
Current Ratio is one of the essential financial ratios used by banks and investors to assess the liquidity of the business. It is an indication of a company's ability to pay its current obligations or liabilities using its current assets. Current Ratio is calculated by dividing the total current assets by the total current liabilities. The Current Ratio of 3.0 means that the company has three times more current assets than its current liabilities. As a bank loan officer, a higher Current Ratio of 3.0 is an indication that the business is capable of paying back its short-term liabilities.
The company has enough current assets to cover its current liabilities, including accounts payable, short-term loans, and taxes payable.The bank loan officer should be able to use this ratio in making the decision of approving the loan. A ratio of 3.0 shows a high degree of liquidity, which means that the company can easily turn its assets into cash to pay its bills. If a company has a low Current Ratio, it implies that it might face difficulty paying off its short-term obligations, and this could make it difficult for it to access additional credit. So therefore the company has provided you with the following information from its balance sheet: peak performance's current ratio is A. 3.0.
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