Consider two bonds, a 3-year bond paying an annual coupon of 3%, and a 20-year bond, also with an annual coupon of 3%. Both bonds currently sell at par value. Now suppose that interest rates rise and the yield to maturity of the two bonds increases to 6%. a. What is the new price of the 3-year bond?
Answers
Answer:
New price = $919.81
Explanation:
Computation of the given data are as follows:
Let Face value (FV) = $1,000
YTM (Rate ) = 6%
Time period (Nper) = 3 years
Coupon rate = 3%
Coupon payment = 3% × $1,000 = $30
So, we can calculate the new price by using financial calculator.
The attachment is attached below:
New price = $919.81
Related Questions
If a firm applies its overall cost of capital to all its proposed projects, then the divisions within the firm will tend to ______. Group of answer choices receive less funding if they represent the riskiest operations of the firm avoid risky projects so that they will receive more funding become less risky over time based on the projects that are accepted have equal probabilities of receiving funding for their projects propose higher risk projects than if separate discount rates were applied to each project
Answers
Answer:
receive less funding if they represent the riskiest operations of the firm
Explanation:
In simple words, the cost of capital is represented as weighted average and its represents the level or return expected by the investors and represents the level of risk of the firm on average. Therefore, managers tends to lift up or down this return depending upon the risk of the potential project to be taken.
Thus, if the average return will be applied for all projects then high risk projects will get less funding and low risk project will get excess funding.
Tej Dhakar's company wants to establish kanbans to feed a newly established work cell. The following data have been provided. Note: This is a level production system. Daily demand 150 units Production lead time 3.00 days Safety stock 1.50 days Kanban size 50 units How many kanbans are needed? nothing kanbans (round your response to the nearest whole number).
Answers
Answer:
13.5
Explanation:
The calculation of Number of kanbans needed is shown below:-
Demand during lead time = Daily demand × Production lead time
= 150 × 3.00
= 450
Safety stock = Safety stock × Daily demand
= 1.50 × 150
= 225
Number of kanbans needed = (Demand during lead time + safety stock) ÷ Kanban size
= (450 + 225) ÷ 50
= 675 ÷ 50
= 13.5
So, for calculating the number of Kanbans needed we simply applied the above formula.
Assume the following data for Jones Company for the current fiscal year: Beginning Inventory 10 units at $ 7 each March 18 purchase 15 units at $ 9 each June 10 purchase 20 units at $10 each October 30 purchase 12 units at $11 each On December 31, a physical count reveals 18 units in ending inventory. Under the weighted average method, the cost of ending inventory as reported on the balance sheet would be (rounded answer to the nearest dollar): Select one: a. $170 b. $167 c. $192 d. $142 e. $179
Answers
Answer:
a. $170
Explanation:
For computing the ending inventory first we have to determine the average cost per unit which is shown below:
= (Beginning inventory units × price per unit + purchase inventory units × price per unit + purchase inventory units × price per unit + purchase inventory units × price per unit) ÷ (Beginning inventory units + purchase inventory units + purchase inventory units + purchase inventory units)
= (10 units × $7 + 15 units × $9 + 20 units × $10 + 12 units × $11) ÷ (10 units + 15 units + 20 units + 12 units)
= ($70 + $135 + $200 + $132) ÷ (57 units)
= ($537) ÷ (57 units)
= $9.42 per unit
Now the ending inventory is
= $9.42 × 18 units
= $169.56 i.e $170
MC Qu. 54 Maxim manufactures a hamster food product... Maxim manufactures a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $2.20 and total fixed costs are $10,000. The hamster food can be sold as it is for $9.45 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,400 cost. The additional processing will yield 10,000 bags of Premium Green and 3,400 bags of Green Deluxe, which can be sold for $8.45 and $6.45 per bag, respectively. The net advantage (incremental income) of processing Green Health further into Premium Green and Green Deluxe would be:
Answers
Answer:
$14,030
Explanation:
The computation of the net advantage of processing is shown below:
In this question we have to compare the sales revenue between two cases
In the first case
Sales revenue is
10,000 bags × $8.45 = $84,500
3,400 bags × $6.45 = $21,930
Total sales = $106,430
Less: additional cost -$2,400
Net sales revenue $104,030
In the second case
The sales revenue is
10,000 bags × $9 = $90,000
Therefore, the incremental income is
= $104,030 - $90,000
= $14,030
Why should a time allotment for each topic be included on an agenda? a.Setting time allotments ensures that meeting participants can take a break after dealing with each agenda item. b.Restricting the time spent on each issue will prevent participants from getting sidetracked. c.Limiting the amount of time for each topic will result in all topics being covered within the meeting's timeframe.
Answers
Answer:
Limiting the amount of time for each topic will result in all topics being covered within the meeting's timeframe.
Explanation:
Time allocation when undertaking a project or a program is one of they key preliminary steps when preparing for an undertaking.
Proper time allocation ensures project success by ensuring all activities are carried out in a timely manner and within the scheduled project time.
In this scenario proper time allocation will result in all topics being covered within the meeting's timeframe.
This saves time used to cover all relevant topics, and also frees up time for the meeting participants to implement resolutions made from the meeting.
Your Economics instructor assigns your class to investigate factors associated with the gross domestic product (GDP) of nations. Each student examines a different factor (such as life expectancy, literacy rate, etc.) for a few countries and reports to the class. Apparently some of your classmates do not understand Statistics very well because you know several of their conclusions are incorrect. Explain the mistakes in their statements below: a) "My correlation of -0.772 shows that there is almost no association between GDP and infant mortality rate." b) "There was a correlation of 0.44 between GDP and continent." c) "There was a very strong correlation of 1.22 between life expectancy and GDP." d) "The correlation between literacy rate and GDP was 0.83. This shows that countries wanting to increase their standard of living should invest heavily in education." e) "The correlation of 0.90 means that as GDP goes up, imports drop by 90%."
Answers
Several correlations were misinterpreted, either by associating non-numerical categories, ascribing proportions using correlation, extending correlations outside their range, misjudging the strength of correlation, or incorrectly attributing a cause-and-effect relationship.
Explanation:Each of these statements incorrectly applies correlation in a few ways:
Statement a) is incorrect since correlation value from -1 to -0.7 usually signifies a strong negative relationship, or in this case, as GDP increases, infant mortality decreases. Statement b) is incorrect because correlation cannot be applied on categorical variable. A GDP cannot be accurately correlated with a continent because continents are not numerical entities.Statement c) is incorrect as a correlation coefficient can only have values within the range of -1 to +1. Thus, a correlation of 1.22 is invalid.Statement d) though there's a strong correlation, directly implying this is causation and policy prescription may be misleading. Correlation doesn't imply causation.Statement e) is incorrect because correlation only signifies a relationship between two sets of data; it does not signify a proportionate causative effect. A correlation of 0.90 does not mean a 90% decrease in imports with an increase in GDP.Learn more about Correlation Misinterpretation here:
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with practical illustrations, discuss how managers can leverage on organizational behaviour components to maximize business success
Answers
Answer:
Through personality, leadership, Communication and culture.
Also, politics and power.
Explanation:
The concept or the behaviour that is known as or refer to as or called " organizational behaviour" can simply be defined as the way of people or workers in a particular company or organization. That is to say the way people behave in a particular organization or company.
Managers can leverage on organizational behaviour components to maximize business success through;
(1). LEADERSHIP: leadership style should go in line with the organization objectives. Leadership styles are different, it might be a style in which the leaders have to coach the workers and build relationships with workers will likely be able to get new ideas or it might be a situation in which the leader gives the directives and the workers just have to obey.
(2). COMMUNICATION: the various ways in which leaders and workers communicate in organizations is also different which include the use of technology in Communication e.g e-mails and the rest which can be used in discussion of matters in the organization. Good Communication in the company leads to more leads.
(3). CULTURE: Organizations culture are the things in which all workers must follow in their day to day interactions. Good organization cultures lead to efficiency.
Under the gross method of accounting for purchases:
a. The purchase of inventory is recorded for its full amount.
b. The amount paid for inventory during the discount period is the full amount of the purchase minus the discount.
c. The amount paid for inventory after the discount period is the full amount of the purchase.
Answers
Answer:
all the options are correct:
a. The purchase of inventory is recorded for its full amount. b. The amount paid for inventory during the discount period is the full amount of the purchase minus the discount. c. The amount paid for inventory after the discount period is the full amount of the purchase.Explanation:
A typical journal entry to record the purchase of merchandise would be:
January 2, 2020, merchandise purchased on credit, terms 2/10, n/30.
Dr Merchandise inventory 10,000
Cr Accounts payable 10,000
if the invoice is paid within the discount period:
January 8, 2020, invoice is paid
Dr Accounts payable 10,000
Cr Cash 9,800
Cr Purchase discounts 200
if the invoice is not paid within the discount period:
January 18, 2020, invoice is paid
Dr Accounts payable 10,000
Cr Cash 10,000
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports-the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 60 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost Cost Cost per per per Month Course Student $2,900 $280 $1,220 $ 75 $5,000 $2,200 $3,900 $ 44 $ 5 For example, administrative expenses should be $3,900 per month plus $44 per course plus $5 per student. The company's sales should average $900 per student. The company planned to run four courses with a total of 60 students; however, it actually ran four courses with a total of only 54 students. The actual operating results for September appear below: Actual Revenue $51,100 Instructor wages $10,880 Classroom supplies $16,650 Utilities $ 1,930 Campus rent $ 5,000 Insurance $ 2,340 Administrative $ 3,802 expenses
Required:
Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Gourmand Cooking School Flexible Budget Performance Report For the Month Ended September 30 Actual Flexible Results Budget 4 54| Planning Budget Courses Students $ 51,100 | Revenue Expenses: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense Net operating income 10,880 16,650 1,930 5,000 2,340 3,802 40,602 10,498 $
Answers
The flexible budget performance report for Gourmand Cooking School shows an unfavorable revenue variance of $2,900, an unfavorable spending variance of $13,806, and an unfavorable activity variance of $2,046.
Explanation:Gourmand Cooking School Flexible Budget Performance ReportThe creation of the performance report comprises calculating expected expenses and revenue based on actual number of courses and enrolled students. Given the cost formulas, the calculated expenses would be:
Instructor wages: $2,900 + ($280 x 4) + ($1,220 x 54) = $10,780Classroom supplies: $75 x 54 = $4,050Utilities: ($5,000 / 60) x 54 = $4,500Campus rent: $2,200 Insurance: $3,900 + ($44 x 4) + ($5 x 54) = $4,266Total expenses predicted: $26,796. Planned revenue was $900 x 60 = $54,000. But actual revenue is $51,100.
Consequently, the variances are:
Revenue Variance: $54,000 - $51,100 = $2,900 (U)Spending variance: $40,602 - $26,796 = $13,806 (U)Activity Variance: $26,796 - $24,750 = $2,046 (U)Learn more about Budget Performance Report here:https://brainly.com/question/31503288
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While working at a busy law firm, Bruce is using Skype to meet with a client in another state. Although Bruce is trying to concentrate, he is also replying to an important text on his phone and is handed an incoming fax by his assistant. Bruce takes notes on the meeting, but he notices later that several important details are missing. Bruce probably missed those details as a result of __________________ during his client meeting.
Answers
Final answer:
Bruce likely experienced absentmindedness because he was multitasking during the client meeting, causing him to miss important details.
Explanation:
Bruce probably missed those details as a result of absentmindedness during his client meeting. Absentmindedness is a lapse in memory caused by breaks in attention or when our focus is directed elsewhere. This can occur when someone is attempting to do multiple tasks at once and does not give their undivided attention to a single important task, such as during a client meeting when important information is being discussed.
In such situations, being always-plugged-in and trying to multitask, like replying to texts or dealing with incoming faxes while also engaging in a Sky.pe call, can cause one to miss critical details or be inattentionally blind to important aspects of their environment.
Myles Manufacturing Company's accounting records reflect the following inventories: Dec. 31, 2014 Dec. 31, 2013 Raw materials inventory $620,000 $820,000 Work in process inventory 300,000 220,000 Finished goods inventory 380,000 100,000 During 2014, $900,000 of raw materials were purchased, direct labor costs amounted to $1,000,000, indirect labor costs amounted to $300,000, and manufacturing overhead was $960,000. Based upon the above information, cost of goods sold for the year is: Select one: a. $2,400,000. b. $2,380,000. c. $2,480,000. d. $2,700,000. e. $2,100,000.
Answers
Answer:
Myles Manufacturing Company
Cost of Goods Sold = $2,700,000
Explanation:
Cost of Goods Sold:
Beginning Inventory of Raw Materials = $820,000
Purchase of Materials = $900,000
Less closing inventory of Raw Materials = $620,000
Cost of Raw Materials used in production = $1,100,000
Opening WIP = $220,000
Cost of Raw Materials used in production = $1,100,000
Direct Labour = $1,000,000
Manufacturing Overhead = $960,000
Less Closing WIP = $300,000
Cost of Goods Manufactured = $2,980,000
Opening Finished Goods = $100,000
Cost of Goods Manufactured = $2,980,000
Less closing Finished Goods = $380,000
Cost of Goods Sold = $2,700,000
Suppose that you are considering taking out an adjustable-rate mortgage with the following terms: Amount borrowed: $350,000 Index rate: Prime Rate (Currently 2.25%) Margin: 200 basis points. Periodic cap: 1.5 percentage points Lifetime cap: 5 percentage points Amortization: 30 years If the interest rate changes at the end of every year and the prime rate increases to 2.60% during the first year, what will your monthly payment be in year 2? Assume that the lender will use monthly compounding.
Answers
Answer:
Monthly payment for year 2 is $1,782.64
Explanation:
According to the given data we have the following:
Mortgage amount .initial balance.(P) =$350,000
Initial interest rate=Prime rate + 200 basis points or 2%
2.25%+2%= 4.25%
Monthly rate 4.25%/12=0.003541666667
no of months (n)=30*12=360
To calculate the monthly payment be in year 2 we would have to use first the monthly payment formula as follows:
Monthly payment = P*i/(1-((1+i)^-n))
=350000*0.00354166667/(1-((1+0.00354166667)^-360))
=$1721.78962
Peroidic cap is 1.5%. it means rate cannot exceed 1.5% by previous adjusted rate
Interest rate for 2nd year =2.60%+2%=4.60%
increase in rate compared to previous year is not more than 1.5%. so interest rate=4.60%
Monthly rate 4.6%/12= 0.003833333333
no of months remaining (n)=29*12=348
First find closing balance at year 1
Unpaid balance at year 1 formula (P)=monthly payment *(1-((1+i)^-n))/i
1721.79*(1-((1+0.003541666667)^-288))/0.003541666667
310532.1673
Therefore, monthly payment in year 2= 310532.1673*0.0038333333/(1-((1+0.00383333333)^-288))
=1782.643774
Monthly payment for year 2 is $1,782.64
Steady As She Goes Inc. will pay a year-end dividend of $3.40 per share. Investors expect the dividend to grow at a rate of 5% indefinitely.
a. If the stock currently sells for $34.00 per share, what is the expected rate of return on the stock?
b. If the expected rate of return on the stock is 16.5%, what is the stock price?
Answers
Answer:
a.
15%
b.
29.57
Explanation:
The price of a stock whose dividends are expected to grow at a constant rate forever can be calculated using the constant growth model of the dividend discount model approach. The DDM values the stock based on the preset value of the expected future dividends from the stock. The price of the stock today under this model is,
P0 = D1 / r - g
Where
P0 = Price of stock
D1 = Future Dividend
r = Expected rate of return
g = Growth rate
a.
As we have the price of the price of the stock, we need to calculate the expected rate of return by extracting the formula.
r = (D1 / P0) + g
As per given data
P0 = Price of stock = $34
D1 = Future Dividend = $3.40
g = Growth rate = 5% = 0.05
Placing Values in the formula
r = ( $3.4 / 34 ) + 0.05
r = 0.15 = 15%
b.
As per given data
D1 = Future Dividend = $3.40
g = Growth rate = 5% = 0.05
r = Expected rate of return = 16.5%
Placing Values in the formula
P0 = D1 / r - g
P0 = $3.40 / (16.5% - 5%)
P0 = $29.57
Beaver Valley Oil Refinery produces various grades of petroleum products at its refinery operations. All of the following may be considered an initiative undertaken as a part of the company's CSR efforts except a.donating heating fuel to the local community center so that it can host more community events and expand its outreach to the rural populations outside the city limits b.investing funds in equipment to conserve water at all refinery operations c.installing equipment to reduce greenhouse gas emissions at its refinery operations d.providing training to the accounting staff so they better understand FASB requirements for applying accounting standards for financial reporting
Answers
Final answer:
Corporate Social Responsibility involves initiatives that benefit society, typically focusing on environmental sustainability and social responsibility.
Explanation:
Corporate Social Responsibility (CSR) is a business model that aims to benefit society through various initiatives. In the context of Beaver Valley Oil Refinery, initiatives such as donating heating fuel to the local community center and providing training to the accounting staff for financial reporting standards would not typically align with traditional CSR efforts, as these activities are not directly related to environmental sustainability or social responsibility.
A properly implemented CSR effort can lead to increase in sales, higher profit margins, increase in productivity, an excellent brand image, stronger customer relationship, increased operational cost saving.
You have $14,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14 percent and Stock Y with an expected return of 8 percent. Assume your goal is to create a portfolio with an expected return of 11.35 percent. How much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Answers
Answer:
Investment in stock x = $7816.67
Investment in stock y = $6183.33
Explanation:
The computation of invest in Stock X and Stock Y is shown below:-
Let the weight be x
x × 14% + (1 - x) ×8%
= 11.35%
0.14x + 0.08 - 0.08x
= 0.1135
0.14x - 0.08x
= 0.1135 - 0.08
0.06x = 0.335
x = 0.335 ÷ 0.06
x = 55.83%
Investment in stock x = x × Stock portfolio
= 55.83% × $14,000
= $7816.67
Investment in stock y = 1 - 0.5583 × $14,000
= $6183.33
Final answer:
To achieve an 11.35% expected return on a $14,000 portfolio, invest $9,945.00 in Stock X (14% return) and $4,055.00 in Stock Y (8% return).
Explanation:
To create a portfolio with an expected return of 11.35 percent using Stock X with a 14 percent return and Stock Y with an 8 percent return, you can use the following allocation method:
Let the amount of money invested in Stock X be $X and in Stock Y be $Y.
We know that X + Y = $14,000 because that is the total investment available.
We want the portfolio's expected return to be 11.35%, so the equation for this is 0.14X + 0.08Y = 0.1135($14,000).
We can then use these two equations to solve for X and Y.
Substituting the total investment into the expected return equation gives us: 0.14X + 0.08(14,000 - X) = 1,591.
Simplify to solve for X: X = ($1,591 - 0.08($14,000)) / (0.14 - 0.08).
Calculate X to find the amount to invest in Stock X: X = $9,945.00 (rounded to two decimal places).
Subtract X from the total investment to find Y: Y = $14,000 - $9,945 = $4,055.00 (rounded to two decimal places).
You would invest $9,945.00 in Stock X and $4,055.00 in Stock Y.
The records of Norton, Inc. show the following for July. Standard labor-hours allowed per unit of output 1.2 Standard variable overhead rate per standard direct labor-hour $ 45 Good units produced 60,000 Actual direct labor-hours worked 73,600 Actual total direct labor $ 2,370,000 Direct labor efficiency variance $ 48,000 U Actual variable overhead $ 3,072,000 Required: Compute the direct labor and variable overhead price and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
Answers
Answer:
Direct labor rate variance = $162,000 U
Direct labor efficiency variance = $48,000 U
Variable overhead rate variance = $240,000 F
Variable overhead efficiency variance = $72,000 U
Explanation:
As per the data given in the question,
Direct labor efficiency variance = (Standard hour - Actual hour) × Standard rate
-$48,000 = (60,000 * 1.2 - 73,600) × Standard rate
Standard rate = -$48,000 ÷ -1,600
= 30
Direct labor rate variance = (Standard rate × Actual hour - Direct labor)
= (30 × 73,600 - $2,370,000)
= -$162,000
= $162,000 U
Direct labor efficiency variance = $48,000 U
Variable overhead rate variance = (Direct labor hour × Actual hour - actual variable overhead)
= ($45 × 73,600 -$3,072,000)
= $240,000 F
Variable overhead efficiency variance = (72,000 - 73,600) × $45
= $72,000 U
Mondo Snow Removal's cost formula for its vehicle operating cost is $1,060 per month plus $429 per snow-day. For the month of January, the company planned for activity of 11 snow-days, but the actual level of activity was 13 snow-days. The actual vehicle operating cost for the month was $6,310. The activity variance for vehicle operating cost in January would be closest to:
Answers
Answer:
Activity variance = $858 unfavorable
Explanation:
The activity variance occurs as result of the difference between the actual level of work (activity) done and the budgeted level of work as planned.
$
Planned budget (1060 + (429× 11)) = 5,779
Flexible budget (1060 + (429 ×13) = 6,637
Activity variance 858 unfavorable
Unavoidable fixed costs areA.relevant to the decision of whether to discontinue the department.B.irrelevant to the decision of whether to discontinue a product line because they will not differ between alternatives.C.irrelevant to the decision of whether to discontinue a product line because they will differ between alternatives.D.none of the above.
Answers
Answer:
Irrelevant to the decision of whether to discontinue the product line because they will not differ between alternatives.
Explanation:
Fixed costs can be defined as expenses that remain constant during a particular period of time, these costs does not change with an increase or reduction in the volume of production. Fixed costs tends to remain the same even when the organisation experiences a massive sale of their products in the market. Example of fixed costs include rent, loan.
Unavoidable fixed costs can be described as the costs incurred by a company during the introduction of the product into the market. This type of cost does not have the tendency to fluctuate when the production process is discontinued.
Differential Analysis for a Lease or Buy Decision Sloan Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $125,500. The freight and installation costs for the equipment are $1,600. If purchased, annual repairs and maintenance are estimated to be $2,500 per year over the five-year useful life of the equipment. Alternatively, Sloan can lease the equipment from a domestic supplier for $30,000 per year for five years, with no additional costs. Prepare a differential analysis dated December 3 to determine whether Sloan should lease (Alternative 1) or purchase (Alternative 2) the equipment. Hint: This is a "lease or buy" decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner. If an amount is zero, enter "0". Use a minus sign to indicate a loss.
Answers
Answer:
Alternative 2 (purchase equipment) should be selected because it reduces costs by $10,400.
Explanation:
Alternative 1 (lease):
less price per year $30,000 x 5 years = $150,000
Alternative 2 (purchase):
initial investment = $125,500 + $1,600 = $127,100
maintenance cost per year = $2,500 x 5 years = $12,500
Differential Analysisalternative 1 alternative 2 differential
lease purchase effect
Revenues $0 $0 $0
Costs:
Purchase price $0 -$125,500 -$125,000
Freight and installation $0 -$1,600 -$1,600
Repair and maintenance $0 -$12,500 -$12,500
(5 years)
Lease -$150,000 $0 $150,000
(5 years)
Income / loss -$150,000 -$139,600 $10,400
Alternative 2 (purchase equipment) should be selected because it reduces costs by $10,400.
Which one of the following is true? A. Most of the U.S. currency in existence circulates outside U.S. borders. B. Traveler's checks are not considered to be money because they are not valid unless signed. C. Balances in money market deposit accounts are counted in M1 but are not included in M2. D. Transaction deposits are counted in M2 but are not included in M1.
Answers
Answer:
A) Most of the U.S. currency in existence circulates outside U.S. borders.
Explanation:
Both the Secretary of the Treasury and the Federal Reserve estimate that around 60% of all US dollar bills are held in foreign countries.
The US dollar is considered the strongest and most stable currency in the world. That is the reason why so many governments use the US dollar as a reserve of value. Some foreign countries even adopted the US dollar as their own currency, e.g. El Salvador, Ecuador, Guam, Zimbabwe, etc.
It is true is that most of the U.S. currency in existence circulates outside U.S. borders.
In international trade, the United States dollars is the currency which forms the basis of trade for majority of country in the entire continent.
The US Dollars is used in international tarde because of the integrity and stability its offers in the foreign market
The Secretary of the Treasury and the Federal Reserve estimated that more then 60% of US dollar bills are circulating outside its borders.
Therefore, the Option A is correct because It is true is that most of the U.S. currency in existence circulates outside U.S. borders.
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An American-style option with six months to maturity has a strike price of $42. The underlying stock now sells for $50. The call premium is $14.
a. If the company unexpectedly announces it will pay its first-ever dividend four months from today, you would expect that:
1. the call price would increase.
2. the call price would decrease.
3. the call/put price would not change.
4. the put price would decrease?
b. What is the intrinsic value of the call?
c. What is the time value of the call?
Answers
Answer:
(a) The call price would decrease (b) $8 per share (c) $6 per share
Explanation:
Solution:
The Call option is the right to sell a specified security at a specified price on a future date.
(a) The value of call option/ price will decrease
Since after payment of dividend, the market price of share will decrease
Hence, value of call option will decrease
(b)The Intrinsic Value = Market Price - Strike price
= $50 - $42
= $8 per share
(c)The time Value = Option Premium - Intrinsic Value
= 14-8
= $6 per share
Final answer:
The call price is expected to decrease with the announcement of a dividend, while the put price might increase. The call's intrinsic value is $8, and its time value is $6.
Explanation:
The unexpected announcement of a dividend payment by the company can have several effects on option prices:
The call price would likely decrease due to the expected drop in the underlying stock price when the dividend is paid out.The put price might increase as the underlying stock price is expected to drop by the dividend amount on the ex-dividend date.The intrinsic value of the call can be calculated as the current stock price minus the strike price:
Intrinsic Value = Current Stock Price - Strike Price
Intrinsic Value = $50 - $42 = $8
The time value of the call is the difference between the total option premium and the intrinsic value:
Time Value = Call Premium - Intrinsic Value
Time Value = $14 - $8 = $6
Paragon comma Inc.'s trial balance shows $ 255 comma 000 face value of bonds with a discount balance of $ 1 comma 200. The bonds mature in 10 years. How will the bonds be presented on the balance sheet? A. Bonds payable $ 255 comma 000 will be listed as a long-term liability. B. Bonds payable $ 255 comma 000 will be listed as a long-term liability. A $ 1 comma 200 discount on bonds payable will be listed as a contra current liability. C. Bonds payable $ 253 comma 800 (net of $ 1 comma 200 discount) will be listed as a long-term liability. D. Bonds payable $ 255 comma 000 will be listed as a long-term liability. A $ 1 comma 200 discount on bonds payable will be listed as a current liability.
Answers
Answer:
The correct option is C,Bonds payable $ 253 comma 800 (net of $ 1 comma 200 discount) will be listed as a long-term liability.
Explanation:
Upon issuance of the bonds,bonds payable would be credited with $255,000,the face value of the bond while discounts on bonds payable is debited with $1,200,with cash proceeds of $253,800($255,000-$1200) debited to cash accounts.
The $1,200 debited is a contra liability,the same way accumulated depreciation is a contra asset going against the non-current asset account in the balance.
By being contra liability,it effectively reduces bonds payable balance to $253,800,as a result the bonds is shown as a long term liability in the balance sheet
Sheridan Company borrows $43,400 on July 1 from the bank by signing a $43,400, 8%, one-year note payable. (a) Prepare the journal entry to record the proceeds of the note. (b) Prepare the journal entry to record accrued interest at December 31, assuming adjusting entries are made only at the end of the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Answers
Answer:
Sheridan Company
Journal Entries
Sr. No Particulars Debit Credit
1 Cash $ 43,400
Notes Payable $ 43,400
Sheridan Company borrows $43,400 on July 1 from the bank by signing a $43,400, 8%, one-year note payable.
2 Interest Expense $ 1736
Interest Payable $ 1736
Recorded Interest Accrued for 6 months
Explanation:
Calculation of Interest Payable
$ 43,400 * 8%= 3472
For 6 months = $ 3472/2= $ 1736
Notes Payable is a liability and interest Payable is also a liability .The Notes Payable will be due in one years time that is on 30 th June of the next year. From July to December there are 6 months so interest is calculated for 6 months.
Sheridan records a debit of $43,400 to Cash and a credit of $43,400 to Notes Payable when the note is issued. At the end of the year, Sheridan must also recognize $1,736 of accrued interest with a debit Interest Expense and a credit credit-to-interest payable.
Explanation:The subject deals with the concept of note payable and interest accrual in the field of Accounting. Let's calculate the interest and prepare the journal entries.
Proceeds of the note: When Sheridan borrows money, it will receive cash from the bank and have a note payable (liability). The journal entry to record this transaction will be:Debit: Cash $43,400
Credit: Notes Payable $43,400
Debit: Interest Expense $1,736
Credit: Interest Payable $1,736
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During the month of March, Harley's Computer Services made purchases on account totaling $46,700. Also during the month of March, Harley was paid $12,800 by a customer for services to be provided in the future and paid $38,500 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $78,900, what is the balance in accounts payable at the end of March?
Answers
Answer:
$87,100
Explanation:
The calculation of balance in accounts payable is shown below:-
Balance in accounts payable = Beginning accounts payable + Purchases - Payments of accounts payable
= $78,900 + $46,700 - $38,500
= $125,600 - $38,500
= $87,100
So, for computing the balance in accounts payable we simply applied the above formula and here we will not consider the $12,800 as it is the nature of advance.
Final answer:
The balance in accounts payable at the end of March is $87,100, after accounting for the beginning balance, purchases made on account, and payments made.
Explanation:
To calculate the balance in accounts payable at the end of March for Harley's Computer Services, we need to take into account the beginning balance, the purchases made on account, and the payments made on the accounts payable balance. At the beginning of March, the balance was $78,900. During March, purchases on account added $46,700 to this balance, and payments of $38,500 reduced it.
Here's the calculation:
Beginning balance: $78,900
Purchases on account: +$46,700
Payments on accounts payable: -$38,500
Using these figures, the ending balance can be calculated as follows: Accounts payable at end of March: $78,900 + $46,700 - $38,500 = $87,100.
If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will: Question 6 options: tend to look for another job or withdraw from the labor market. accept the job because a wage below the reservation utility is very attractive. seek a larger fringe benefit package. use the job as the basis for a career, assuming that wages will increase beyond the marginal revenue product over time.
Answers
Answer:
If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will use the job as the basis for a career.
Explanation:
Reservation Utility or wage for an employee is the minimum level of utility guaranteed by his/her contract of employment before endorsement.
If a prospective employee is not offered his/her reservation utility or reservation wage, it could be because, He/she is an intern.
A skilled skilled professional with years of experience would scarcely experience this issue.
Therefore if an entry level prospective employee or intern is faced with this scenario, he/she could spin it to their advantage by using the job as the basis for a career.
Final answer:
A prospective employee who isn't offered a reservation wage will likely continue the job search or exit the labor market. The reservation wage is the minimum wage a worker will accept, including factors beyond pay. This baseline determines whether a job offer is acceptable or if the search for employment should continue.
Explanation:
If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will tend to look for another job or withdraw from the labor market. A reservation wage is the lowest wage that an unemployed worker would accept for a job, encompassing not just financial compensation but also other job characteristics such as working conditions and opportunities for advancement. The concept is that a potential employee will continue their job search until the offered wage meets or exceeds their reservation wage. This job search process can also be depicted using a reservation wage curve, displaying a negative relationship between the reservation wage and the duration of a person's job search, indicating that as time goes on, the individual might adjust their expectations in accordance with market conditions and personal financial pressures.
Conversely, accepting a job with a wage below one's reservation wage is unlikely as it would mean the worker is settling for less than the minimum they had determined acceptable. The reservation wage becomes a baseline for job acceptance decisions, and a worker is likely to keep looking for better opportunities if offers fall below this threshold.
Purple, Inc, a domestic corporation, owns 80% of Blue, Ltd., a foreign corporation and Yellow, Inc, a domestic corporation. Purple also owns 50% of Green, Inc, a domestic corporation. Purple receives no distributions from any of these corporations. Which of these entities' net income are included in Purple's Federal tax return for the current year assuming Purple elects to include all eligible entities in its consolidated Federal income tax return?
a. Purple, Blue, Yellow, and Green.
b. Purple, Blue, and Yellow.
c. Purple, Blue, and Green.
d. Purple and Yellow.
Answers
Richman Co. purchased some equipment 3 years ago. The company's required rate of return is 12%, and the net present value of the project was $(900). Annual cost savings were: $10,000 for year 1; $8,000 for year 2; and $6,000 for year 3.
The amount of the initial investment was
a.
$18,316.
b.
$20,116.
c.
$20,478.
d.
$18,678.
Answers
Answer:
The correct answer is option (C) $20,478
Explanation:
Solution
Given that:
The Net present value is defined as:
Net present value
= Present value of all flow of cash discounted at the rate required of return - Initial investment
Thus,
$ - 900 = 10000/1.12 + 8000/ (1.12)^2 + 6000/(1.12)^3 - The initial investment
So,
Initial Investment = $ 19,578 + $ 900
= $ 20,478
Therefore the amount of initial investment was $20,478
The initial investment amount can be calculated by finding the present value of the cash flows and subtracting it from the net present value (NPV).
Explanation:The initial investment amount can be calculated by finding the present value of the cash flows and subtracting it from the net present value (NPV). In this case, the cost savings for each year need to be discounted back to the present value. The formula to calculate the present value of cash flows is:
PV = CF / (1 + r)^n
Where:
PV is the present valueCF is the cash flowr is the required rate of returnn is the number of yearsUsing this formula, the initial investment amount is $20,116 (option b).
On June 30, 2021, Mabry Corporation issued $5 million of its 8% bonds for $4.6 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2021. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the 6 months ended December 31, 2021?
Answers
Final answer:
The bond discount should be reduced by $30,000 for the six months ending December 31, 2021, when using the effective interest method of amortization.
Explanation:
To determine how much the bond discount should be reduced by for the six months ending December 31, 2021, we need to apply the effective interest method of amortization. Under this method, the amount of discount amortized in each period is the difference between the interest expense based on the market rate at issuance (the yield) and the actual cash interest paid. First, we calculate the interest expense for the period, which is the carrying amount of the bonds times the yield divided by 2 (because of semiannual interest). Then we subtract the actual interest paid, which is face value times the stated rate divided by 2. The difference reduces the bond discount.
Interest expense: $4.6 million x 10% x ½ = $230,000
Actual interest paid: $5 million x 8% x ½ = $200,000
Discount amortized: $230,000 - $200,000 = $30,000
The bond discount should be reduced by $30,000 for the period.
Sleep Tight, Inc., manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $37,000, $30,000, and $25,000, respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $45,000, $35,000, and $19,000, respectively. Direct materials purchases were $560,000, direct labor was $232,000 for the year, and factory overhead was $147,000. Prepare a cost of goods sold budget for Sleep Tight, Inc.
Answers
Answer:
COGS= $932,000
Explanation:
Giving the following information:
Beginning inventory:
Finished goods= $37,000
Work in process= $30,000
Direct materials= $25,000
Ending inventory:
Finished goods= $45,000
Work in process= $35,000
Direct materials= $19,000
Direct materials purchases were $560,000
direct labor was $232,000
factory overhead was $147,000.
First, we need to calculate the cost of goods manufactured:
cost of goods manufactured= beginning WIP + direct materials used + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 30,000 + (25,000 + 560,000 - 19,000) + 232,000 + 147,000 - 35,000
cost of goods manufactured= $940,000
Now, we can calculate the cost of goods sold:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 37,000 + 940,000 - 45,000
COGS= 932,000
The cost of goods sold budget for Sleep Tight, Inc. is calculated by adding the direct materials used, direct labor, and factory overhead to determine the cost of goods manufactured, then adjusting for changes in work in process and finished goods inventories. The COGS for the year is $932,000.
The cost of goods sold (COGS) budget for Sleep Tight, Inc. can be prepared by combining both the costs incurred throughout the year and the changes in inventory levels. To calculate the total COGS, we start with the beginning inventory for each category, add the purchases and production costs, and then subtract the ending inventory.
Cost of Goods Manufactured (COGM)
Direct Materials Used:
Beginning Materials Inventory: $25,000
+ Direct Materials Purchases: $560,000
- Ending Materials Inventory: $19,000
= Direct Materials Used: $566,000
Direct Labor: $232,000
Factory Overhead: $147,000
Total Manufacturing Costs: Direct Materials Used ($566,000) + Direct Labor ($232,000) + Factory Overhead ($147,000) = $945,000
Work in Process:
Beginning WIP Inventory: $30,000
+ Total Manufacturing Costs: $945,000
- Ending WIP Inventory: $35,000
= Total Work in Process: $940,000
Calculated COGS
Beginning Finished Goods Inventory: $37,000
+ Cost of Goods Manufactured: $940,000
- Ending Finished Goods Inventory: $45,000
= Cost of Goods Sold: $932,000
Ron, the manager of a shipping company, introduces a set of communications, activities, and facilities designed to change health-related behaviors in ways that reduce health risks and subsequent medical costs. The program aims at specific health risks, such as high blood pressure, high cholesterol levels, smoking, and obesity. Based on these offerings, Ron has introduced a(n) _____.
Answers
Answer:
Employee wellness program
Explanation:
Employee welfare program insurance is a facility that most employers provide for their employee. This program is offered by employers to protect employees from health risks such as downgrade or smoking and drinking. as given in question, Ron is trying to reduce the health risks of his employees through communication. Therefore, we can conclude that Ron has introduced an employee welfare program.