Answer:
The correct answer is B.
Explanation:
Giving the following information:
The current price of a market basket of goods is $2,500 and the base year price of the same market basket is $2,000.
To calculate the price index we need to make a simple division:
Price index= P1/P0
PI= 2,500/2,000= 1.25*100= 125%
The current price index, calculated using the formula (Current Cost / Base Period Cost) × 100, with given values equates to 125, making the right choice B. 125.
The question involves calculating the current price index given the current and base year prices of a market basket of goods. The formula to compute the price index is (Current Cost of the Market Basket / Base Period Cost of the Market Basket) × 100. Using the provided numbers, the calculation is (\(\frac{2500}{2000}\) × 100), which equals 125. Therefore, the correct answer is B. 125.
Firms HD and LD are identical except for their level of debt and the interest rates they pay on debt. HD has more debt and pays a higher interest rate on that debt. Based on the data given below, what is the difference between the two firms' ROEs?Applicable to Both Firms Firm HD Firm LDAssets $200: EBIT $40: Debt Ratio: 50% 30%Interest Rate: 12% 10%Tax Rate 35%:
Answer:
Firms HD has higher ROE than firm LD.
In details, LD's ROE = 15.79%; HD's ROE = 18.20%. So the difference between LD's ROE and HD's ROE is (2.41%) with LD has lower ratio.
Explanation:
*For firm HD:
Value of debt = 200 * 50% = 100; Value of equity = 200 - 100 = 100.
Interest expenses = 100 * 12% = $12 => EBT = 40 -12 = $28
Net income = EBT*(1 - tax rate) = 28 * (1-35%) = $18.2
ROE = net income / equity = 18.2 / 100 = 18.2% .
*For firm LD:
Value of debt = 200 * 30% = 60; Value of equity = 200 - 60 = 140.
Interest expenses = 60 * 10% = $6 => EBT = 40 -6 = $34
Net income = EBT*(1 - tax rate) = 34 * (1-35%) = $22.1
ROE = net income / equity = 22.1 / 140 = 15.79%
The difference between Firm HD's and Firm LD's ROE is 2.41%, which is calculated by first determining each firm's net income, then their equity, and finally, their ROE based on the given levels of debt and interest expense.
Explanation:The student's question is related to the calculation of the Return on Equity (ROE) for two firms with different debt structures and interest rates. To determine the difference between the two firms' ROE, one must first calculate the net income for each firm and then divide it by the firm's equity. Given the EBIT is $40, the tax rate is 35%, and the debt ratio and interest rates differ (HD: 50% at 12%, LD: 30% at 10%), we can find the interest expense for each firm and subsequently calculate the net income after taxes. Then, equity is determined as the total assets minus total debt. Finally, ROE is computed and the difference between the two firms' ROE can be determined.
Step 1: Calculate Interest Expense and Net IncomeThe difference in ROE between Firm HD and Firm LD is 18.2% - 15.79% = 2.41%.
With regard to the OIP,Multiple Choice
the composition of the optimal international portfolio is identical for all investors, regardless of home country.
the OIP has more return and less risk for all investors, regardless of home country.
the composition of the optimal international portfolio is identical for all investors of a particular country, whether or not they hedge their risk with currency futures contracts.
none of the options
Answer:
D: None of the options
Explanation:
All the three options are not true with regards to OIP
A manager wants to determine the number of containers to use for incoming parts for a kanban system to be installed next month. The process will have a usage rate of 70 pieces per hour. Because the process is new, the manager has assigned an inefficiency factor of .15. Each container holds 40 pieces and it takes an average of 45 minutes to complete a cycle.
a-1. How many containers should be used? (Round up your answer to the next whole number.) Number of containers __________a-2. As the system improves, will more or fewer containers be required?*Fewer*More
Final answer:
The manager should use 2 containers for the kanban system based on the increased usage rate due to inefficiency. As the process improves and becomes more efficient, fewer containers will be needed.
Explanation:
To calculate the number of containers needed for the kanban system, we first need to determine the demand during each cycle. The usage rate is 70 pieces per hour, but with an inefficiency factor of 0.15, this increases the usage rate to 70× (1 + 0.15) = 80.5 pieces per hour. Since each cycle takes 45 minutes, we need to find the number of pieces used per cycle, which is (80.5 pieces/hour) * (45/60 hour) = 60.375 pieces per cycle. Given that each container holds 40 pieces, we divide the total pieces per cycle by the container capacity: 60.375 pieces / 40 pieces/container = 1.509. Since we cannot have a fraction of a container, we round up to the next whole number, which gives us 2 containers required.
As the system improves, we can anticipate that the inefficiency factor will decrease, meaning fewer pieces will be needed to account for inefficiencies, and consequently, fewer containers may be required in the future.
If firms in a monopolistically competitive industry are earning economic profits, then in the long run:
a. these firms can continue earning economic profits because entry into the industry is blocked.
b. new firms producing close substitutes will continue to enter the market until economic profit is zero.
c. new firms producing the exact same product will enter the industry and this entry will continue until economic profit is zero.
d. the government will most likely regulate firms in this industry to reduce the economic profits.
Answer:
The correct answer is (C)
Explanation:
If a firm in a monopolistic market is earning an economic profit, it allows other new firms producing the same product to enter the market. So, in long-run new firms will enter the market and create a competitive environment. The firms will keep on entering until every firm achieves normal profits, and till the economic profit is zero.
High school football is arguably more popular in West Texas than in any other region of the country. During football season, small towns seem to shut down on Friday nights as local high school teams take to the field, and for the following week the results of the games are the talk of each town.
Taking into consideration that many of these towns are one hundred or more miles away from any medium-sized or large cities, what might be an economic explanation for the extreme popularity of high school football in these small West Texastowns?
A.Opportunity costs are relatively low.
B.Only a small share of household budgets are expended on the games.
C.Few entertainment substitutes are available.
D.All of the above are plausible.
E.A and B only.
Answer:
The answer is D. All of the above are plausible
Explanation:
A. Opportunity costs are relatively low is reasonable because as football game is taking place, most of the local people will go to the field to enjoy the field rather than spending their time at local shops/restaurants. Moreover, there are not many people from other towns visiting these facilities because of far distance.
B. is reasonable because it is high school football not professional football so the expenses spent on watching the game is low.
C. is is plausible because these towns are quite remote so watching their young neighbors/relatives playing may be one of the few entertainment choices available to them in weekend.
=> So, the answer is D.
Final answer:
High school football's popularity in small West Texas towns can be attributed to low opportunity costs, minimal impact on household budgets, and a lack of entertainment substitutes.
Explanation:
The extreme popularity of high school football in small West Texas towns can be economically explained by considering a few key factors. First, the opportunity costs for attending these games are relatively low since there are fewer entertainment options available, making football games a primary social event. Also, attending these games typically represents only a small share of household budgets, particularly in these smaller towns where there may be fewer demands on discretionary spending and where entertainment options are limited. Moreover, the lack of entertainment substitutes plays a significant role. With limited access to the broader entertainment amenities found in larger cities, local high school football games become a focal point for the community, providing entertainment as well as a sense of local pride and community identity. Thus, one could argue that all the factors mentioned contribute to the high school football's popularity, making 'D. All of the above are plausible' the most comprehensive answer.
Almora, a developing open economy, is experiencing an economic boom since it discovered oil reserves off its coast two years ago. Bill Hudson, an economist with the Finance Ministry of Almora, said in an interview that the oil boom has improved the average standard of living in the economy. Robin Peters is an industry analyst who does not agree with Hudson's view. In one of his recent articles in the country's leading business daily, Robin claimed that the high rate of inflation following the boom has actually weakened the expansionary impact on the economy.Which of the following, if true, will support Robin's argument?A.Employment in the country's oil industry reported an annual growth of 15 percent this year.B.The construction sector has expanded by 20 percent in the last two years.C.Almora reduced its petroleum imports this year.D.Almora's agriculture and manufacturing sectors have become less competitive in the world market.E.The government of Almora is expected to have a budget surplus of $2 billion in the current financial year.
Answer:D. Almora agriculture and manufacturing sectors have become less competitive in the world market.
Explanation:
In increased standard of living means the populace can afford more essential commodities, an expansionary economy means more investment which has lead to more employment. An inflation is the continuous rise in price of goods and services which is as a result of large volume of money in circulation used in exchange for the few available goods and services.
In the above scenario the huge revenue from the oil boom as surpassed the agriculture and manufacturing outputs and this has lead to increase in price and hitherto a fall in demand and which have made them less competitive.
The increase in employment in the oil industry and expansion of the construction industry are positive development. The surplus budget means goverments expected revenue is greater than is expenditures, this will invariably increase savings and threafter investment.
What is the difference between a callable bond and a convertible bond?
Explanation:Convertible bonds. Are corporate bonds that can be converted by the holder into the common stock of the issuing company.
Callable bonds. Called provision option held by the company to repurchase the bond at specific price. Is also called redeemable bonds, jump up etc. While most callable bonds are coupon bonds.
There are no big differences between the two, convertible bonds are often callable, eg corporate bonds can be convertible/callable or the both.
A callable bond is a bond that can be called back in by the issuer prior to maturity. For example, a 10 year bond issued today could be called back in 8 years.
A convertible bond is a bond that converts into the equity of the underlying company. For example, the bond of XYZ company can be converted into the stock of XYZ company under certain conditions.
A convertible bond has the advantage in that there is upside when the owner converts into stock.
Managers can monitor __________ to track progress toward goal achievement.a.action plans and their implementationb.proximal and distal goalsc.one-way and two-way evaluative techniquesd.framing and non-framing goalse.open-ended and close-ended techniques
Answer: (B) Proximal and distal goals
Explanation:
According to the given question, the proximal and the distal goals are basically monitor by the manager for the purpose of tracking the overall progress in terms of goal achievement.
The main objective of the proximal goal is that it is the short term goal with some specific and the detailed information. It motivate for increase in the productivity and receiving the feedback.
On the other hand, the distal goals is refers as the long term goals and it takes longer time for attain its specific tasks. The main benefit of the distal goals is that it helps in boost the self confidence.
Therefore, Option (B) is correct.
Select the best statement about the use of Technical Reviews in the current acquisition environment. [Relate the different types of program unique specifications to their appropriate configuration baselines and technical review requirements.]
a. Technical Reviews should be tailored to assess development maturity and risk and to determine readiness to proceed to the next phase.
b. Technical Reviews waste valuable Government and contractor time and should be eliminated to allow more focus on program execution.
c. The same standard set of Technical Reviews should always be conducted on every program to ensure the PM has complete data to support decisions.
d. Technical Reviews are essential since they are vehicles for program problem solving and training new people on the details of the program.
Option A , Technical Reviews should be tailored to assess development maturity and risk and to determine readiness to proceed to the next phase.
Explanation:
By funding from the United States EPS has planned and executed the regional collaborative effort with CA Trade Agreement (CAFTA-DR) clients for Central America and the Dominican Republic to create environmental impact evaluation rules for three fields identified as priorities of our regional allies: energy, mining, and hospitality.
EPA has also coordinated the regional collaborative project. Agency for Global health.
Volume 1 provides guidance which follows globally understand elements of environmental impact assessment through the use of a glossary and references. Each EIA Technical Review Guideline consists of these components.
For various types of mining, energy and/or tourism projects for the use by t, Volume 1, Part 2 includes examples of Terms of Reference linked to Volumes 1 and 2.
Technical Reviews in the acquisition environment should be tailored to assess development maturity and risk and are essential for ensuring technical accuracy and proceeding to the next phase. They are not a waste of valuable time but rather a necessary component for quality control and informed decision-making in product development.
The use of Technical Reviews in the current acquisition environment is critical for assessing development maturity and risk, and determining readiness to proceed to the next phase. Technical Reviews should be considered as a crucial tool for quality control and validation that ensures the use of appropriate technology, and aids in effective project and requirements management. These reviews should be tailored to match the characteristics of the specific project, such as its complexity, length, and cost, rather than following a one-size-fits-all approach or being disregarded as a waste of time. They play a pivotal role not only in solving program problems but also in validating technical solutions and contributing to the knowledge base of stakeholders involved in product development.
Considering the rapid pace of product development, specifications may not always keep up, which makes subject matter experts' reviews even more important. These experts can review working models or prototypes and provide critical feedback to ensure technical accuracy and completeness. Moreover, by involving technical writers and experts in product meetings, live demonstrations, and feasibility testing, a comprehensive understanding is fostered, allowing for informed decision-making. Therefore, it is clear that the evaluations of Technical Reviews should be thoughtfully planned and executed to be both useful and practical, aligning with the unique demands of each project.
On January 1, you sold one February maturity S&P 500 Index futures contract at a futures price of 2,422. If the futures price is 2,505 at contract maturity, what is your profit? The contract multiplier is $50. (Input the amount as positive value.)
Answer:
The loss will be $4,150.
Explanation:
As the investor sold S&P 500 futures contract, the investor has taken a short position in S&P 500 indexes.
At time of maturity, because the S&P index is higher than the future price ( 2,505 >2,422), the Investor has made a loss from the future contract.
The loss from the future contract is calculated as:
( S&P index at future maturity - S&P future price ) x contract multiplier = ( 2,422 - 2,505) x 50 = $(4,150)
Thus, the loss is $4,150.
Lexington Company sells product 1976NLC for $50 per unit. The cost of one unit of 1976NLC is $45, and the replacement cost is $43. The estimated cost to dispose of a unit is $10, and the normal profit is 40%.
At what amount per unit should product 1976NLC be reported, applying lower-of-cost-or-market?
a. $20.
b. $40.
c. $43.
d. $45.
Answer:
b. $40.
Explanation:
We select the lower of each of the following for reporting purposes.
Cost = $45
Replacement cost = $43
Neat realizable value = Selling price - disposal and completion costs
NRV = 50 - 10 = $40
We use lower of the values to take into account obsolete inventory or deterioration of inventory and as such the lowest of NRV is used for recording purposes.
Hope that helps.
Craig bought a new boat. He made a 18% down payment. He financed the rest through his bank for 4 years. His bank charged 4% per year compounded monthly and his monthly payments were $500. What was the original price of the boat?
Answer:
$27,005.62
Explanation:
Data provided in the question:
Down payment made = 18%
Monthly payment = $500
Interest rate, i = 4% per year compounded monthly
Time = 4 years
Now,
Present value of annuity = Monthly payment × [tex]\left[ \frac{1-(1+i)^{-n}}{i} \right][/tex]
n = number of periods
Here,
number of periods , n = 4 × 12 = 48 months
Interest rate per period, i = 0.04 ÷ 12 = 0.003333
on substituting the values
Present value of annuity = $500 × [tex]\left[ \frac{1-(1+0.003333)^{-48}}{ 0.003333 } \right][/tex]
or
Present value of annuity = $500 × [tex]\left[ \frac{1 - 1.003333^{-48}}{ 0.003333} \right] [/tex]
or
Present value of annuity = $500 × [tex]\left[ \frac{1 - 0.852384}{ 0.003333} \right][/tex]
or
Present value of annuity = $500 × 44.289229
or
Present value of annuity = $22,144.61
also,
Present value of annuity is (100% - Down payment) i.e (100% - 18%) 82% of the original price
Therefore,
Original price of the boat = $22,144.61 ÷ 82%
= $22,144.61 ÷ 0.82
= $27,005.62
The original price of Craig's boat is approximately $26,065.21.
Explanation:Craig's problem can be solved using the formula for an amortizing loan, which is expressed as:
PV = PMT / [(1 - (1 + r)^-n) / r]
, where PV is the loan amount, PMT is the monthly payment, r is the monthly interest rate, and n is the number of payments. Since Craig's monthly payment was $500 and the interest rate was 4% compounded monthly (hence, r=4/12/100=0.00333) for 4 years, or 48 months (hence, n=48). Substituting these values into the formula, we get the loan amount for the boat that Craig financed:
PV = $500 / [(1 - (1 + 0.00333)^-48) / 0.00333]
= $21,375.67. Remember, Craig made an 18% down payment, so the original price of the boat is the loan amount divided by 82% (100% - 18%) = $21,375.67 / 0.82 = $26,065.21.
Learn more about Original price of boat here:https://brainly.com/question/242501
#SPJ11
Bonita Cosmetics acquired 10% of the 218,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2017. On June 30, Martinez declared and paid $71,300 cash dividend to all stockholders. On December 31, Martinez reported net income of $118,000 for the year. At December 31, the market price of Martinez Fashion was $14 per share. Situation 2 Windsor, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 32,300 outstanding shares of common stock at a total cost of $8 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $35,200. On December 31, Seles reported a net income of $82,000 for the year.
Answer:
See explanation section
Explanation:
Req. A: Situation 1
Mar 18 Available for sale of stocks of MF Debit $283,400
Cash Credit $283,400
Note: As Bonita acquired 10% of Martinez shares at $13, total cash has to be paid to Martinez Fashion = (218,000*10%) × $13 = 21,800 shares × $13 = $283,400.
Jun 30 Cash Debit $7,130
Dividend Revenue Credit $7,130
Note: As Martinez declared $71,300 to all stockholders, Bonita will receive 10% of those dividends as they acquired 10% of the total stocks. The cash received from the MF is = $71,300 × 10% = $7,130.
Securities Fair Value
Dec 31 Adjustment Debit $21,800
Unrealized holding gain (loss)- Equity Credit $21,800
Note: As the market price of the share increased to $14-$13 = $1, Bonita would gain from the increased market price. Total gain = $1 × (218,000 shares × 10%) = $21,800.
Req. B Situation 2
Investment in Seles
Jan 1 Common stock of Seles Corp. Debit $77,520
Cash Credit $77,520
Note: As Windsor, Inc. obtained 30% of Martinez shares at $8, total cash has to be paid to Martinez Fashion = (32,300*30%) × $8 = 9,690 shares × $8 = $77,520.
Jun 15 Cash Debit $10,560
Dividend Revenue Credit $10,560
Note: As Seles declared $32,300 to all stockholders, Windsor, Inc. will receive 30% of those dividends as they acquired 30% of the total stocks. The cash received from the MF is = $32,300 × 30% = $10,560.
Investment in Seles
Dec 31 Cash Debit $24,600
Revenue Credit $24,600
Note: As Seles reported a net income of $82,000, due to acquiring 30% of Seles stock, Windsor, Inc. will receive 30% of its net income. The revenue is = $82,000 × 30% = $24,600.
Lindsey Hunter Corporation is authorized to issue 50,000 shares of $5 par value common stock. During 2020, Lindsey Hunter took part in the following selected transactions.
1. Issued 5,000 shares of stock at $45 per share, less costs related to the issuance of the stock totaling $7,000.
2. Issued 1,000 shares of stock for land appraised at $50,000. The stock was actively traded on a national stock exchange at approximately $46 per share on the date of issuance.
3. Purchased 500 shares of treasury stock at $43 per share. The treasury shares purchased were issued in 2016 at $40 per share. .
Instructions
(a) Prepare the journal entry to record item 1.
(b) Prepare the journal entry to record item 2.
Answer:
(a).
Dr Cash 218,000
Cr Common Stock 25,000
Cr Paid-in capital - Common stock 193,000
( to record the issuance of 5,000 share at $45 with cost of $7,000)
(b)
Dr Land appraised expenses 46,000
Cr Common stock 5,000
Cr Paid-in capital - Common stock 41,000
( to record the issuance of shares in exchange for land appraisal services at market value of shares issuance)
Explanation:
(a)
Cash receipt is 5,000 x 45 - 7,000 = $218,000; Common stock increase by Par value x stock issuance = 5 x 5,000 = $25,000; Paid-in capital increase by (45-5) x 5,000 - 7,000 = $193,000.
(b)
Common stock increase by par value x stock issuance = 1,000 x 5 = $5,000; Appraisal Expenses is increased at the market value of the shares issuance = 1,000 x 46 = $46,000; Paid-in capital account increase by the amount calculated as ( Share price - Par value) x share issuance = (46-5) x 1,000 = $41,000.
In item 1, the journal entry to record the issuance of 5,000 shares of stock at $45 per share would include a debit to Cash and a credit to both Common Stock and Additional Paid-in Capital. In item 2, the journal entry to record the issuance of 1,000 shares of stock for land appraised at $50,000 would include a debit to Land and a credit to both Common Stock and Additional Paid-in Capital.
Explanation:(a) Prepare the journal entry to record item 1:
Issued 5,000 shares of stock at $45 per share, less costs related to the issuance of the stock totaling $7,000.
DR Cash $220,000 ($45 x 5,000)
CR Common Stock $25,000 ($5 x 5,000)
CR Additional Paid-in Capital $198,000 ([$45 - $5] x 5,000 - $7,000)
(b) Prepare the journal entry to record item 2:
Issued 1,000 shares of stock for land appraised at $50,000.
DR Land $50,000
CR Common Stock $5,000
CR Additional Paid-in Capital $45,000
A classified balance sheet:____________.A. Measures a company's ability to pay its bills on time. B. Organizes assets and liabilities into important subgroups that provide more information. C. Broadly groups items into assets, liabilities and equity. D. Reports operating, investing, and financing activities. E. Reports the effect of profit and dividends on retained earnings.
Answer:
The correct answer is B
Explanation:
Classified balance sheet is the one which provides or presents the information regarding the assets, shareholder's equity and the liabilities of the entity which is further segregated or classified into the sub- categories of the accounts.
The most common is the Long-term investments and Current Assets.
So, it organizes the assets and the liabilities into vital sub- groups which provide more information.
An article in the New Yorker magazine states, "the main burden of trade-related job losses and wage declines has fallen on middle- and lower-income Americans. But...the very people who suffer most from free trade are often, paradoxically, among its biggest beneficiaries." Explain how it is possible that middle- and lower-income Americans are both the biggest losers and at the same time the biggest winners from free trade. Source: James Surowiecki, "The Free-Trade Paradox," New Yorker, May 26, 2008. It would be possible for middle- and lower-income Americans to be both the biggest losers and at the same time the biggest winners from free trade if they are the ones most likely to O A. work in industries that do not have an absolute advantage and purchase those goods in O B. work in industries that have a comparative advantage and purchase those goods in which O C. work in industries that produce at higher total cost than do other countries and purchase 0 D. work in industries that do not have a comparative advantage and purchase those goods in O E. work in industries that produce at higher opportunity cost than in other countries and which other countries have an absolute advantage. other countries have a comparative advantage. those goods that can be produced at lower total cost in the United States. which the United States has a comparative advantage. purchase those goods that can be produced at lower opportunity cost in other countries.
Answer:
Option E.
Explanation:
In free trade, a country with a comparative advantage in a good produces that good in the long-term. Therefore, if these people are working in an industry in which it has a higher opportunity cost i.e. it does not have a comparative advantage; they will eventually see job loss or fall in income or both. On other hand, when they purchase goods which has lower opportunity costs in foreign, they get access to these at a lower price and can purchase a higher quantity. So, these people are both harmed and benefitted by free trade.
James Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year: Cost Retail Beginning inventory$ 30,000$ 45,000 Purchases175,000240,000 Freight-in2,500- Net markups-9,500 Net markdowns-10,000 Sales revenue-205,000 If the ending inventory is to be valued at the lower-of-cost-or-market, what is the cost-to-retail ratio?
a. $207,500 ÷ $285,000
b. $207,500 ÷ $293,500
c. $207,500 ÷ $295,000
d. $207,500 ÷ $294,500
e. 205,000 ÷ $293,500
Answer:
Option (D) is correct.
Explanation:
Given that,
Cost = Beginning inventory + Purchases + Freight in
= 30,000 + 175,000 + 2,500
= $207,500
Retail = Beginning inventory + Purchases + Net markups
= 45,000 + 240,000 + 9,500
= $294,500
Cost to retail ratio:
= $207,500 ÷ $294,500
= 0.7046
Therefore, the cost to retail ratio is 0.7046.
The Montauk Company has a dividend reinvestment plan in which shareholders owning 27% of its common stock participate. Last year the firm's EPS was $4.20, and its payout ratio was 60%. There are 2 million shares of common stock outstanding. How much new capital did Montauk raise through the reinvestment program?
Answer:
Total capital gain will be $1360800
Explanation:
We have given EPS = $4.20
Total number of shares = 2000000
So total Net Income = EPS x No. of shares = $4.20 x 2000000 = $8,400,000
Dividend = 60% x 8,400,000 = $5040000
25% shareholder participated in dividend reinvestment
So Capital raised = 27% x $5040000 = $1360800
So total capital gain will be $1360800
Being undecided on what to do with $100,000 just received on F's policy, decides to leave the proceeds on deposit with the insurer at interest. The rate being paid is 5%. In one year, what amount will be taxable?
Answer:
$5,000
Explanation:
If these are death benefit funds then it must be noted that tax is not applicable on the lump sum amount of death benefit but the interests paid on the amount left on deposit with the insurer is taxable. In simple terms, if dividends are left on deposit to earn interest then this interest is taxable!
Interest rate= 5%
Amount= $100,000
Tax= 0.05x100,000
Tax= $5,000
Your boss leaves you a note, asking you to determine the present value of a $1,200,000 payment to be made in six years assuming a discount rate of 18%. However, you misread her handwriting, and mistakenly thought the discount rate you were supposed to use was 8%. What is the dollar value of the mistake in your answer because you used the wrong discount rate?
Answer:
so value of the mistake is $311685.71
Explanation:
given data
present value = $1,200,000
time = 6 year
discount rate = 18%
discount rate = 8%
to find out
What is the dollar value of the mistake
solution
we get here present value that is express as for both rate that is
present value = [tex]\frac{FV}{(1+r)^t}[/tex]
put here value
present value = [tex]\frac{1200000}{(1+0.18)^6}[/tex]
present value 1 = $444517.85
and
present value = [tex]\frac{1200000}{(1+0.08)^6}[/tex]
present value 2 = $756203.55
so
difference is $756203.55 - $444517.85
difference is = $311685.71
so value of the mistake is $311685.71
In 2017, Coronado Industries, issued for $103 per share, 95000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Coronado's $20 par value common stock at the option of the preferred stockholder. In August 2018, all of the preferred stock was converted into common stock. The market value of the common stock at the date of the conversion was $25 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock?
Answer:
$4,085,000
Explanation:
Given that,
Coronado Industries, issued for $103 per share, 95000 shares of $100 par value convertible preferred stock.
1 share of preferred stock = 3 shares of common stock ($20 par value)
Additional paid in capital:
= Preferred stock - Common stock
= [95,000 shares × $103] - [(95,000 shares × 3 shares) × $20]
= $9,785,000 - (285,000 shares × $20)
= $9,785,000 - $5,700,000
= $4,085,000
All of the following are characteristics of long-run equilibrium for firms in a monopolistically competitive market except:
A. price equals marginal cost.
B. price equals average total cost.
C. price exceeds the minimum of average total cost.
D. marginal cost equals marginal revenue.
Answer:
C. price exceeds the minimum of average total cost.
Explanation:
In a monopolistic competitive market, the firm makes profit when MC (Marginal Cost) equals MR (Marginal Revenue). Price also equal average total cost.
IE 11-1 ... AS/AD Model – Assume this economy has now moved from Year 3 back to Year 2 as a result of too much "monetary contraction" by the FED. With the Price Level having fallen to $1.90 and employment down to _______ million, the Nominal Production GDP will be only $3800 billion. In the PPF Model the economy will be at Point _________ ..
Answer:
110 million. Point U.
Explanation:
This economic system is referred to as a depression and it is a downturn that has occurred over a long period of time. It is a sustained downturn that is more worse than a recession. This normally affects the economic activities. In the economic system above, the employment decreased to 10 million while the economic system is at Point U.
Apply the appropriate label to each market situation. 1. Two countries agree to lower import tariffs on selected goods. (international trade) 2. A country loosens its restrictions on foreign-based land ownership. (flow of funds across national borders) 3. A nation permits private firms to compete with the state-owned mail service. (competitive markets)
Answer: 1 Bilateral trade agreement, 2. Foreign direct investment , 3. Deregulation
Explanation:
Bilateral trade agreement : This can be defined as the agreement between two countries to give each other a free access to each other market. This kind of agreement create a level playing field for the citizens of both countries to compete favourably in each other market without any form of discrimination or restriction whatsoever. The agreement is reached in order to eliminate tariff on goods coming from each other countries or to lower the tariff on goods coming from each other countries.
Foreign direct investment : This is the free movement of money from one country to another for the purpose of investment in business ventures or in properties in that country. It is the ownership of business or investment in one country by an individual or corporate body based in another country. For instance when a foreigner owns an asset such as land or building in another country or business venture.
Deregulation : This is the economic policy by which a government of a nation decides to remove the existing control or any form of regulation in the market with a view to further promote competition in the market. It applies to when a government allows a privately own business to compete in the same market with the government owned business. In this case each company's will compete favourably for its own share of the market which are previously reserved only for the government owned business to operate.
When multiple performance obligations exists in a contract, they should be accounted for as a single performance obligation when
the product is distinct within the contract.
determination cannot be made.
each service is interdependent and interrelated.
both performance obligations are distinct but interdependent.
Answer: each service is interdependent and interrelated.
Explanation:
An interdependent and interrelated service means the service cannot be separated, one cannot be said to have been concluded without concluding the other, invariably they will be accounted for as a single performance obligation.
The product cannot be distinct for a distinct product means the performance can be separated and it must be determinable for this an obligatory attribute of a contract.
A distinct performance obligation means it's not a multiple performance obligation.
Griffin and Rhodes formed a partnership on January 1, 2009. Griffin contributed cash of $120,000 and Rhodes contributed land with a fair value of $160,000. The partnership assumed the mortgage on the land which amounted to $40,000 on January 1. Rhodes originally paid $90,000 for the land. On July 31, 2009, the partnership sold the land for $190,000. Assuming Griffin and Rhodes share profits and losses equally, how much of the gain from sale of land should be credited to Griffin for financial accounting purposes?
A. $0
B. $15,000
C. $35,000
D. $45,000
Answer:
correct option is B. $15,000
Explanation:
given data
contributed cash = $120,000
Fair Value of land = $160,000
originally paid = $90,000
Sale value of land = $190,000
to find out
how much of the gain from sale of land should be credited to Griffin for financial accounting purposes
solution
gain on sale is here as
gain on sale = Sale value of land - Fair Value of land -
Gain on sale of land = $190,000 - $160,000
Gain on sale of land = $30000
split the $30000 between the equal partners for a total gain credited to Griffin
total gain credited to Griffin = $15000
so correct option is B. $15,000
Situation 1 Bridgeport Cosmetics acquired 10% of the 184,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2020. On June 30, Martinez declared and paid $69,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $113,000 for the year. At December 31, the market price of Martinez Fashion was $14 per share.
Situation 2 Indigo, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 31,400 outstanding shares of common stock at a total cost of $9 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $39,100 to all stockholders. On December 31, Seles reported a net income of $85,000 for the year.
Required:
1. Prepare all necessary journal entries in 2020 for both situations.
Answer:
Please see find the answer in the explanation!
Explanation:
Situation 1:
First entry:
Bridgeport acquired 10% of shares of Martinez Fashion, the double entry would reduce the cash of Bridgeport and increase the asset, see as follows:
Shares Dr $239200 (18400× $13)
Cash Cr $239200
On June 30, Martinez declared and paid $69400 cash to all stockholders, Bridgeport will be entitled to 10% of the declared and paid dividend, therefore, dividend income will have to be recorded as follows:
Cash/bank Dr $6940
Dividend Income Cr $6940
Situation 2:
Indigo Inc obtained significant influence over Seles corporation (making her an Associate). In a group situation, an associate is equity accounted and is recorded as an investment in the statement of financial position and is also entitled to the profits with the proportion of their ownership. First entry would be to record the associate as an investment, see as follows:
Investment in Associate Dr $84780
Bank/Cash Cr $84780
On june 15 Seles declared and paid cash dividend, Indigo Inc will be entitled to 30% of the dividend, see as follows:
Dividend income= $39100× 30%
Dividend income= $11730
Entry:
Cash/Bank Dr $11730
Dividend income Cr $11730
Unlike Bridgeport Corporation, Indigo Inc will be entitled to 30% of the reported net income as well. The entry is as follows;
Cash/Bank Dr $ 25500 ($85000× 30%)
Income Cr $ 25500
1. The Cozy Company manufactures slippers and sells them at $ 10 a pair. Variable manufacturing cost is $ 5.75 a pair, and allocated fixed manufacturing cost is $ 1.75 a pair. It has enough idle capacity available to accept a one-time-only special order of 25,000 pairs of slippers at $ 7.50 a pair. Cozy will not incur any marketing costs as a result of the special order.
What would the effect on operating income be if the special order could be accepted without affecting normal sales:
(a) $0,
(b) $ 43,750 increase,
(c) $ 143,750 increase, or
(d) $ 187,500 increase?
Show your calculations.
The effect on operating income be if the special order could be accepted without affecting normal sales:(b) $ 43,750 increase.
Effect on operating incomeSales $187,500
(25,000×$ 7.50)
Less Variable manufacturing ($143,750)
(25,000× $ 5.75)
Net Income/(loss) $43,750
($187,500-$143,750)
Inconclusion the effect on operating income be if the special order could be accepted without affecting normal sales:(b) $ 43,750 increase.
Learn more about effect on operating income here:https://brainly.com/question/25895372
Upon accepting a special order of 25,000 pairs of slippers at $7.50 per pair, The Cozy Company would see an increase in operating income of $43,750. This is calculated by subtracting the additional variable costs from the special order revenue and noting that fixed costs and marketing costs do not change.
The question from The Cozy Company relates to evaluating the impact of accepting a special order on operating income. The company sells slippers for $10 per pair with variable manufacturing costs of $5.75 per pair and allocated fixed manufacturing costs of $1.75 per pair. For a special order of 25,000 pairs at $7.50 a pair, we need to compare the additional revenue from the special order against the additional variable costs of producing the slippers, since fixed costs remain unchanged and no marketing costs are incurred.
Special Order Revenue: 25,000 pairs x $7.50/pair = $187,500
Additional Variable Costs: 25,000 pairs x $5.75/pair = $143,750
Additional Operating Income: $187,500 - $143,750 = $43,750
Therefore, the effect on operating income if the special order is accepted would be an increase of $43,750.
Stockholders' equity is generally classified into two major categories:
a. contributed capital and appropriated capital.
b. appropriated capital and retained earnings.
c. retained earnings and unappropriated capital.
d. earned capital and contributed capital.
Answer:
d. earned capital and contributed capital.
Explanation:
The statement of stockholder's equity comprises common stock, preferred stock , and retained earnings.
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
And, the ending balance of the common stock = Beginning balance of common stock + issued shares
The contributed capital comprises of common stock and the preferred stock whereas the earned capital includes retained earnings
Stockholders' equity is classified into two major categories: contributed capital and retained earnings, corresponding to the money from share investments and reinvested profits, respectively.
Explanation:Stockholders' equity is typically divided into two major categories: contributed capital and retained earnings. Therefore, the correct answer is letter d: earned capital and contributed capital. Contributed capital represents the money that shareholders invest directly in the company by purchasing shares of stock, which can be described as a firm's claim on partial ownership divided into individual portions. Retained earnings, on the other hand, are the cumulative profits that a corporation has earned and reinvested in the business rather than paid out as dividends to shareholders. Retained earnings can be accumulated through several means, including early-stage investors, reinvesting profits, borrowing through banks or bonds, and selling stock in the form of an initial public offering (IPO).
Learn more about Stockholders' Equity here:https://brainly.com/question/13278063
#SPJ6
Convertible preferred stock Valerian Corp. convertible preferred stock has a fixed conversion ratio of 5 common shares per 1 share of preferred stock. The preferred stock pays a dividend of $10.00 per share per year. The common stock currently sells for $20 per share and pays a dividend of $1.00 per share per year.
a. On the basis of the conversion ratio and the price of the common shares, what is the current conversion value of each preferred share? b. If the preferred shares are selling at $9696 each, should an investor convert the preferred shares to common shares?
c. What factors might cause an investor not to convert from preferred to common stock?
Answer:
Explanation:
a. On the basis of the conversion ratio and the price of the common shares, what is the current conversion value of each preferred share?
Conversion Value = No of Common Shares × Market Price Per Share
= 5 × $20
= $100
b. If the preferred shares are selling at $9696 each, should an investor convert the preferred shares to common shares?
Total Value of preferred Share = Share Price + Dividend Payment Per Share
= $9696 + $10
= $ 9706
Total Value of 5 Common Stock = ((Market Price of 1 Share + Dividend per Share) × 5)
= ((20 + 1) × 5)
= $ 105
No. The investor should not convert the preferred shares to common shares. This is because, the value of one preferred share exceeds the value of the converted common shares by $9601. Thus, based on the value of the converted and non-converted preferred share, the non-converted preferred share is more valuable than the converted one. Thus, the investor should not convert the preferred shares.
c. What factors might cause an investor not to convert from preferred to common stock?
If the value of the converted shares is lower than that of the original preferred share, it makes the conversion devalue an investor's overall investment value.
Additionally, if the investor is unwilling to have residual claim on profits. This is because common stockholders receive their dividends after debt and preference shareholders get their claims. Therefore, the preferred shareholder could see it best to retain their holdings as Preferred and not Common.
Final answer:
This answer explains the calculation of current conversion value, advises on whether to convert preferred shares, and discusses factors affecting an investor's decision not to convert.
Explanation:
a. Current Conversion Value: The current conversion value of each preferred share can be calculated by multiplying the price of the common shares by the conversion ratio. In this case, $20 (price of common shares) x 5 (conversion ratio) = $100.
b. Convert or Not: If the preferred shares are selling at $96.96 each and the conversion value is $100, the investor should not convert as they would lose $3.04 per share.
c. Reasons against Conversion: Factors that might deter an investor from converting from preferred to common stock include potential loss due to conversion price being higher than the current price, unfavorable market conditions, or preference for stable dividend income.