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
The Fed’s monetary policy tools directly impact the supply of money in a major way through their ______________.
Answer:
open market operation
Explanation:
Open market operation is the mechanism of Fed to alter money supply. To increase the money supply, Fed will buy financial securities such as Treasury bills from large banks or security dealers so there is more money deposit in the account of those who buy securities from Fed. Thus, there is more money available for loan hold by the banks resulting in an increase in the money supply. Fed does otherwise to reduce the money supply.
Heels, a shoe manufacturer, is evaluating the costs and benefits of new equipment that would custom fit each pair of athletic shoes. The customer would have his or her foot scanned by digital computer equipment; this information would be used to cut the raw materials to provide the customer a perfect fit. The new equipment costs $117,000 and is expected to generate an additional $45,000 in cash flows for five years. A bank will make a $117,000 loan to the company at a 12% interest rate for this equipment’s purchase. Compute the recovery time for both the payback period and break-even time. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Answer:
* Payback period: 2.6 years;
* Break-even time: 3.3 years.
Explanation:
Please find the below for detailed explanation and calculation:
* Payback period calculation:
Payback period = Initial investment outlay/ annual additional cash flow = 117,000/45,000 = 2.6 yeas;
* Break-even time calculation:
We have the net present value of the project after 3 years is:
-117,000 + (45,000/12%) x ( 1 + 1.12^-3) = $(8,917.6)
Present value of year 4 additional cash flow = 45,000 / 1.12^4 = 28,598
=> Break even time ( years) = 3 + (8,917.6/28,598) = 3.3 years.
Final answer:
The payback period is approximately 2.6 years based on simple division of cost by annual cash flow, without accounting for the time value of money. The break-even time would require calculating the present value of the cash inflows at a 12% discount rate, which cannot be accurately done without the PVA table values.
Explanation:
To compute the recovery time for both the payback period and break-even time, we first need to understand the costs and additional cash flows associated with the new equipment by Heels shoe manufacturer. The equipment costs $117,000 and will generate an additional $45,000 in cash flows each year for five years. Given that the interest rate for the loan to purchase this equipment is 12%, this will impact the calculations related to the present value of future cash flows.
The payback period is the time required for the cash inflows from an investment to repay the initial capital outlay. In this case, without factoring in interest, the payback period would be the equipment cost divided by the annual cash flow (i.e., $117,000 / $45,000), which is approximately 2.6 years. However, the payback period does not consider the value of money over time.
On the other hand, the break-even time would be calculated using the present value of the cash inflows to find when the equipment generates enough cash to cover the $117,000 at a 12% discount rate. This would involve using the present value annuity (PVA) factor from the tables provided. Unfortunately, without the actual PVA table values, we cannot provide a precise figure for the break-even time in this answer.
Martinez Corporation commenced operations in early 2020. The corporation incurred $48,500 of costs such as fees to underwriters, legal fees, state fees, and promotional expenditures during its formation. Prepare journal entries to record the $48,500 expenditure and 2020 amortization, if any.
The journal entry to record the $48,500 expenditure for Martinez Corporation's formation costs would be:
Formation Costs Expense $48,500
Cash/Bank $48,500
No amortization expense is recorded for formation costs in 2020 as they are typically expensed when incurred.
Explanation:In accounting, formation costs incurred during the initial setup of a corporation are expensed as incurred and are not usually amortized over time. Hence, the $48,500 expenditure for fees to underwriters, legal fees, state fees, and promotional expenditures incurred during Martinez Corporation's formation is expensed immediately upon occurrence. This is reflected in the journal entry by debiting the Formation Costs Expense account and crediting the Cash/Bank account for $48,500 each, representing the expenditure made and the corresponding reduction in the company's cash/bank balance.
Unlike certain other intangible assets or costs, such as goodwill or patents, formation costs are not typically amortized because they are considered to have no determinable useful life. Therefore, no amortization expense is recorded for the formation costs in 2020. Instead, they are expensed in the period they are incurred, aligning with the principle of matching expenses to the period they generate revenue. This treatment simplifies accounting for these costs by recognizing them immediately rather than spreading their expense over multiple periods through amortization.
During 2020, Harvey Industries reported cash provided by operations of $670,000, cash used in investing of $1,039,000, and cash used in financing of $145,000. In addition, cash spent for fixed assets during the period was $404,000. No dividends were paid. Based on this information, what was Harvey's free cash flow?
Answer:
$266,000
Explanation:
The formula to compute the free cash flow is shown below:
Free Cash flow = Operating cash flow - capital expenditure
= $670,000 - $404,000
= $266,000
The operating cash flow is come from cash provided by operations and capital expenditure is the cash spent for fixed assets
All other information which is given is not relevant. Hence, ignored it
A company has 525 shares of $50 par value preferred stock outstanding, and the call price of its preferred stock is $61 per share. It also has 21,000 shares of common stock outstanding, and the total value of its stockholders' equity is $716,625. The company's book value per common share equals: $33.29.
$31.80.
$32.88.
$34.13.
$32.60.
Answer:
$32.60
Explanation:
The formula and the computation is shown below:
Book value per share = (Total equity - preferred stock) ÷ (outstanding number of shares)
where,
Total equity is $716,625
Preferred stock would be
= 525 shares × $61
= $32,025
And, the outstanding number of shares is 21,000 shares
So, the book value per share would be
= ($716,625 - $32,025) ÷ (21,000 shares)
= ($684,600) ÷ (21,000 shares)
= $32.60
Aug. 1 Established the petty cash fund by writing a check payable to the petty cash custodian for $242.00. 15 Replenished the petty cash fund by writing a check for $196.00. On this date, the fund consisted of $46.00 in cash and these petty cash receipts: freight-out $53.40, entertainment expense $15.00, postage expense $12.70 and miscellaneous expense $112.50. 16 Increased the amount of the petty cash fund to $442.00 by writing a check for $200.00. 31 Replenished the petty cash fund by writing a check for $304.00. On this date, the fund consisted of $138.00 in cash and these petty cash receipts: postage expense $124.00, entertainment expense $153.60, and freight-out $25.40.
Answer:
petty cash fund 242 debit
cash 242 credit
--to establish a petty fund--
freigth-out 53.40 debit
entertainment expense 15.00 debit
postage expense 12.70 debit
miscellaneous expense 112.50 debit
cash shortage loss 2.40 debit
cash 196 credit
--to replenish the fund on August 15th--
petty cash fund 200 debit
cash 200 credit
--to increase petty fund by 200 dollars--
freigth-out 25.40 debit
entertainment expense 153.60 debit
postage expense 124.00 debit
cash shortage loss 1.00 debit
cash 304 credit
--to replenish the fund on August 31th--
Explanation:
when replenish we don't use the petty fund account we adjust directly against cash leaveing the petty fund balance untouched. We only adjusted for increases or decreases in the total amount available at the petty cash fund.
If the price that determined where marginal revenue equaled marginal cost were below the bottom of the average variable cost curve, then the profit- maximizing, monopolistically competitive firm would produce an output amount where marginal cost equals marginal revenue and make a small profit. produce an output amount that corresponded to the place where average total cost equals average variable cost and incur a small loss. shut down because it would cost more to produce and sell output than it would to shut down and lose all fixed costs. produce an output amount that corresponded to the place where marginal cost equals marginal revenue and break even. produce an output amount that corresponded to the place where marginal cost equals marginal revenue, but make a small loss.
Answer:
c) c) shut down because it would cost more to produce and sell output than it would to shut down and lose all fixed costs.
Explanation:
The question seems not to have a correct format, googling a little bit you can find that it is composed by several options that in this case were not specified. Then, the question would look like this:
If the price that determined where marginal revenue equaled marginal cost were below the bottom of the average variable cost curve, then the profit- maximizing, monopolistically competitive firm would:
a) produce an output amount where marginal cost equals marginal revenue and make a small profit.
b) produce an output amount that corresponded to the place where average total cost equals average variable cost and incur a small loss.
c) shut down because it would cost more to produce and sell output than it would to shut down and lose all fixed costs.
d) produce an output amount that corresponded to the place where marginal cost equals marginal revenue and break even.
e) produce an output amount that corresponded to the place where marginal cost equals marginal revenue, but make a small loss.
And the correct answer is c). It is necessary for the company to close production in order to recover losses from fixed costs, because the price is lower than average variable cost.
In other words, the company loses less by closing (fixed costs), than by operating (fixed costs + variable costs).
Bristlebird Corporation (E&P of $700,000) has 3,000 shares of common stock outstanding. Juan owns 1,500 shares and his wife, Roberta, owns 1,500 shares. Juan and Roberta each have a basis of $90,000 in their Bristlebird stock. In the current year, Bristlebird Corp. redeems 1,000 shares from Juan for $250,000. With respect to the distribution in redemption of the Bristlebird stock:
a. Juan has dividend income of $250,000
b. Juan has dividend income of $190,000
c. Juan has a capital gain of $250,000
d. Juan has a capital gain of $190,000
e. None of the above
Answer:
A: Juan has dividend income of $250,000
Explanation:
Related party = dividend (extent of E&P)
Juan has a capital gain of $190,000 because the redemption of stock is considered a sale, with the capital gain calculated as the difference between the selling price and his basis in the shares.
The correct option is 'd'.
To determine the nature of the transaction for Juan after Bristlebird Corp. redeems 1,000 of his shares for $250,000, we must consider the tax implications. Generally, a redemption of stock is treated as a sale or exchange, resulting in capital gain or loss, unless the redemption is essentially equivalent to a dividend, in which case it is treated as dividend income.
If the redemption qualifies as a sale, Juan's capital gain or loss is calculated as the difference between the selling price ($250,000) and the basis of the shares redeemed. Juan's basis in 1,000 shares would be (1,000/1,500) * $90,000 = $60,000. Thus, if the transaction qualifies as a sale, Juan would realize a capital gain of $250,000 - $60,000 = $190,000.
In this case, it is not stated that the redemption is treated as a dividend. Therefore, we assume the default treatment as a sale. So, based on the provided information, the correct answer would be 'd. Juan has a capital gain of $190,000'.
Suppose you think Wal-Mart stock is going to appreciate in the next year. Current price is $100, and the call option expiring in one year has an exercise price, X, of $100 and is selling at a price, C, of $10. With $10,000 to invest, you invest all in 1,000 options (10 contracts). Alternatively, you can invest all in the stock. What is the rate of return for each alternative if one year later the stock price is $120?
Answer:
the rate of return for each alternative if one year later the stock price is $120 is 100% and 20%
Explanation:
Price of buying call option = 10*1000 = 10000
After 1 year the person can reverse the trade and get profit without having to buy the stock.
Hence profit = 120-100 = 20
Minus call price = 10
Profit per each share = 10
On 1000 shares = 10,000
Hence profit = 10,000/10,000 = 100%
In case we buy stock:
Price of stock = 100*1000 = 100,000
Profit on one stock = 120-100 = 20
On 1000 stock = 20,000
Profit = 20,000/100,000 = 20%
Therefore,the rate of return for each alternative if one year later the stock price is $120 is 100% and 20%
Final answer:
The proposed investment scenario compares buying call options versus direct stock for Wal-Mart stock anticipated to rise. If the stock price increases from $100 to $120, investing in call options yields a 100% return due to leverage, whereas direct stock investment yields a 20% return.
Explanation:
The scenario provided asks about the rate of return using either call options or direct stock investment if Wal-Mart stock appreciates from $100 to $120 within one year. With $10,000, one could invest in either 1,000 call options (10 contracts) with an exercise price of $100 and a price of $10 each or buy 100 shares of the stock directly also at $100 each.
Calculating the Rate of Return for Call Options
If the stock price rises to $120, the value of the call option will also go up. Each call option is now worth $20 (stock price of $120 - exercise price of $100). This makes the total value of the options $20,000 (1,000 options x $20). Subtracted from this the initial investment of $10,000, we get a profit of $10,000. The rate of return on the call options would be the profit divided by the investment, which results in 100% (($10,000 / $10,000) x 100%).
Calculating the Rate of Return for Stock Investment
Investing in the stock itself at $100 per share, with $10,000 you could buy 100 shares. At the end of the year, if the stock price is $120, your investment is worth $12,000 (100 shares x $120). The profit is $2,000 ($12,000 - $10,000), and the rate of return is 20% (($2,000 / $10,000) x 100%).
Investing in call options in this case provides a much higher rate of return due to the leverage effect, which means that for the same amount of money, you control many more shares through options than you could if buying the stock outright. However, the risk is also higher with options, as they can expire worthless if the stock price does not rise above the exercise price by the expiration date.
An employee's net (or take-home) pay is determined by gross earnings minus amounts for income tax withholdings and the employee's:
a. portion of FICA taxes and unemployment taxes.
b. and employer's portion of FICA taxes, and unemployment taxes.
c. portion of FICA taxes, unemployment taxes, and any voluntary deductions.
d. portion of FICA taxes and any voluntary deductions.
Answer:
c. Portion of FICA taxes, Unemployment Taxes and any Voluntary Deductions
Explanation:
Payroll deductions are amounts that an employee deducts or withholds from an employee's gross earnings for different purposes. These deductions are categorised either mandatory or voluntary. Mandatory deductions are mainly taxes including FICA taxes, unemployment taxes and income tax, pension contributions among others. Voluntary deductions include dues such as union and uniform dues among others.
FICA represents Federal Insurance Contribuion Act and it is a federal payroll contribution statutorily paid by employees and employees specifically to help the fund federal programs such as social security and healh care for people with disabilities and retirees among other.
Unemployment Taxes
These are taxes that are contributed to a fund for paying unemployment benefits to employees that have been laid off from their jobs and not those who voluntarily left their jobs. The State Unemploymet Tax is to be paid only by employers while the Federal Unemployment Tax is also to be paid by employees.
Any Voluntary Deductions- these are union dues and other dues that the employee is aware of and agrees to its payment.
The fixed overhead cost variance measures how well the business ________.A. keeps costs of variable overhead inputs within standardB. uses its variable overhead inputsC. keeps fixed overhead within standardD.explains why fixed overhead is under allocated or overallocated
Answer: Option C
Explanation: In simple words, fixed overhead cost variance refers to the difference between the actual overhead that are incurred and the standards that was predetermined by the accountants and production managers.
These estimates helps an organisation to evaluate their performance and detect the prelim because of which the expenditures are exceeding the expectations. Management can use this criteria to take corrective actions, therefore, it is of high importance.
The fixed overhead cost variance measures how well the business keeps fixed overhead within standard. It evaluates the efficiency of managing fixed overhead costs and compares actual costs with standard costs.
Explanation:The fixed overhead cost variance measures how well the business keeps fixed overhead within the standard. It is a measure of the difference between the actual fixed overhead costs incurred and the standard fixed overhead costs. It helps to evaluate the efficiency of the business in controlling and managing its fixed overhead costs.
For example, if the actual fixed overhead costs are lower than the standard fixed overhead costs, the variance would be favorable, indicating that the business has managed to keep the fixed overhead costs within the expected range. On the other hand, if the actual fixed overhead costs are higher than the standard fixed overhead costs, the variance would be unfavorable, suggesting that the business has overspent on fixed overhead expenses.
The fixed overhead cost variance does not directly deal with variable overhead inputs or explain why fixed overhead is under-allocated or overallocated. Therefore, options A, B, and D are incorrect.
Learn more about Fixed overhead cost variance here:
https://brainly.com/question/32667541
#SPJ6
Financial statement analysis involves all of the following except:
Multiple Choice
The application of analytical tools to general-purpose financial statements and related data for making business decisions.
Transforming accounting data into useful information for decision-making.
Helping users to make better decisions.
Helping to reduce uncertainty in decision-making.
Assuring that the company will be more profitable in the future.
Answer:
The correct answer is does not assure the company that it will be more profitable in the future.
Explanation:
Financial statements is the one of the most important statements for the company which is prepared or made by the management of the company, it represents the financial position and the performance for a particular period.
It involves the income statements, statement of cash flows, balance sheet and statement of owner's equity.
It analysis the profit, transform the data so that can be used in decision making. But does not assure the company that it will be more profitable in the future.
Financial statement analysis involves using analytical tools to transform accounting data into useful information for decision-making.
Explanation:Financial statement analysis is the process of evaluating a company's financial statements, such as the balance sheet, income statement, and cash flow statement, to assess its financial health, and performance, and make investment or business decisions. Financial statement analysis involves the application of analytical tools to general-purpose financial statements and related data for making business decisions.
It transforms accounting data into useful information to help users make better decisions and reduce uncertainty in decision-making. While financial statement analysis helps users gain insights into a company's financial performance, it does not assure that the company will be more profitable in the future as it depends on various factors.
Learn more about Financial Statement Analysis here:https://brainly.com/question/31663529
#SPJ6
If short-run marginal cost and average variable cost curves for a competitive firm are given by SMC = 2 + 4Q, and AVC = 2 + 2Q, a)how many units of output will it produce at a market price of $10? (15 points)b)At what level of fixed cost will this firm earn zero economic profit?
Answer:
units of output = 2 units
fixed cost = 8
Explanation:
given data
SMC = 2 + 4Q
AVC = 2 + 2Q
to find out
how many units of output will it produce at a market price and what level of fixed cost will this firm earn zero economic profit
solution
we know here that under perfect competition
so at the equilibrium here Price (P) will be = MC
P = MC = 10
and
SMC = 2 + 4Q ,
P = 2 + 4Q
10 = 2 + 4Q
Q = 2 units
and
at zero economic profit we get
TR = TC
TR = P × Q
TR = 10 × 2
TR = 20
so
TC = TFC + TVC
20 = TFC + 12
TFC = 8
because here [ TVC = AVC × Q ]
[ TVC = (2 + 2 × 2) × 2 ]
[ TVC = 12 ]
The competitive firm will produce 2 units of output at a market price of $10. The level of fixed cost for the firm to earn zero economic profit is $8.
Explanation:To determine how many units of output the firm will produce at a market price of $10, we set the market price equal to the short-run marginal cost (SMC). Thus, we have 10 = 2 + 4Q. Solving for Q gives us Q = 2 units. This is the quantity at which marginal revenue (MR), which equals the market price for a competitive firm, is equal to marginal cost (MC).
For the second part of the question, to find the level of fixed cost at which the firm will earn zero economic profit, we must first calculate the total cost (TC) when producing the profit-maximizing quantity. Since TC = Total Fixed Cost (TFC) + Total Variable Cost (TVC) and TVC can be found by integrating the marginal cost curve, we can calculate TC. At Q = 2, TVC = ∫ (2 + 4Q)dQ = 2Q + 2Q^2 = 4 + 8 = 12. To earn zero economic profit, TC must equal total revenue (TR), which is price times quantity. At Q = 2 and P = $10, TR = 10×2 = 20. Therefore, TFC = TC - TVC = 20 - 12 = $8. This is the fixed cost level for zero economic profit.
Metaline Corp. uses the weighted average method for inventory costs and had the following information available for the year. Equivalent units of production for the year are:
Beginning inventory of Work in Process (40% complete, $1,100) 200 units
Ending inventory of Work in Process (80% complete) 400 units
Total units started during the year 3,200 units
A. 3,200 units.
B. 3,320 units.
C. 3,240 units.
D. 3,520 units.
E. 3,800 units.
Answer:
Equivalent units of production for the year will be 3320
So option (b) will be correct answer
Explanation:
We have given beginning inventory = 200 units
Total unit started during the year = 3200 units
Ending inventory = 400 units
Calculation of units transferred during the year = Beginning inventory + Total units started during the year - Ending inventory
= 200 + 3200 - 400
= 3000 units
Calculation of Equivalent units of production for the year = Unit transferred + closing inventory × percentage of completion = 3000 + 0.8 ×400 = 3000 + 320 = 3320 units
So option (b) will be correct answer
Use your knowledge of relative scarcity to rank the following items from least scarce (top) to most scarce (bottom):
a. Salt water,
b. Diamonds,
c. Drinking water
The scarcity order of the items least scarce (top) to most scarce (bottom) is:
Drinking waterSalt waterDiamondBasically, scarcity means the state of being scarce or short in supply.
Hence, the scarcity order of the items least scarce (top) to most scarce (bottom) is drinking water, salt water, diamond.
Therefore, the Option is C, A, B in order
Read more about scarcity
brainly.com/question/24403498
Final answer:
From least to most scarce, the items rank as follows: salt water, drinking water, and diamonds. Salt water is most abundant, followed by unevenly distributed drinking water and rare, luxurious diamonds.
Explanation:
Relative scarcity refers to how rare or common an item is compared to the demand for it. To answer the question on ranking the given items from least scarce to most scarce, we consider the global availability of salt water, diamonds, and drinking water. Here's the list, starting with the least scarce:
Salt Water: Abundant in oceans, but not drinkable without desalination.Drinking Water: Although there's enough fresh water for everyone, its distribution is uneven and often inaccessible or polluted, leading to scarcity in many areas.Diamonds: Though valuable, they are considered a luxury and are less available, making them the most scarce item on this list.The value of an item is often tied to its scarcity and the demand for it. While water is essential for life, the availability of drinkable water is less than that of salt water. Diamonds, due to their rarity and desirability, are considered more scarce than both forms of water.
A lottery winner can take $6 million now or be paid $600,000 at the end of each of the next 16 years. The winner calculates the internal rate of return (IRR) of taking the money at the end of each year and, estimating that the discount rate across this period will be 4%, decides to take the money at the end of each year. Was her decision correct?A) Yes, because it agrees with the payback rule.B) Yes, because it agrees with the Net Present Value rule.C) Yes, because it disagrees with the Net Present Value rule.D) Yes, because it agrees with both the Net Present Value rule and the payback rule.
Answer:
B) Yes, because it agrees with the Net Present Value rule
Explanation:
The Net present value is the present value of after tax cash flows from an investment minus the amount invested.
If the amount is positive, the project is desirable and if it is negative, it is not desirable.
The net present value can be calculated using a financial calculator.
Cash flow for year 0 = $-6,000,000
Cash flow each year from year 1 to 16 =$600,000
I = 6%
NPV = $991,377.365
The present value of $600,000 for 16 years is greater than the value of $6,000,000 now. Therefore, it is more profitable to take $600,000 every year for 16 years.
The payback period isn't useful here because it is used to calculate the amount of time it takes to recoup the amount from an investment.
I hope my answer helps you.
At the beginning of 2019, Robotics Inc. acquired a manufacturing facility for $13.5 million. $10.5 million of the purchase price was allocated to the building. Depreciation for 2019 and 2020 was calculated using the straight-line method, a 25-year useful life, and a $2.5 million residual value. In 2021, the estimates of useful life and residual value were changed to 20 total years and $650,000, respectively. What is depreciation on the building for 2021
Answer:
$511,667
Explanation:
The computation of the depreciation expense for 2019 and 2020 is shown below:
= (Purchase price - residual value) ÷ (useful life)
= ($10,500,000 - $2,500,000) ÷ (25 years)
= ($8,000,000) ÷ (25 years)
= $320,000
The depreciation in this method is the same for the rest of the useful life
Now the book value for 2021 would be
= Purchase price - depreciation for 2 years
= $10,500,000 - $320,000 × 2
= $9,860,000
Now the depreciation for 2021 would be
= ($9,860,000 - $650,000) ÷ 18 years
= $511,667
The depreciation on the building for 2021, following the change in estimates of useful life and residual value, would be $513,333.33. This is calculated using the book value at the beginning of 2021, subtracting the new residual value, and dividing by the remaining useful life.
Explanation:To calculate the depreciation on the building for 2021 under the straight-line method, we need to consider the revised useful life and residual value. Initially, Robotics Inc. had a depreciation expense of ($10.5 million - $2.5 million) / 25 years = $320,000 per year. However, in 2021, the estimates for useful life and residual value were changed to 20 years and $650,000 respectively.
We need to determine how much of the building's cost has already been depreciated in 2019 and 2020, which is $320,000 * 2 years = $640,000. So, the book value at the beginning of 2021 is $10.5 million - $640,000 = $9.86 million.
Then to compute depreciation for 2021, we subtract the new residual value from the book value, and divide by the remaining useful life. Our new annual depreciation becomes: ($9.86 million - $650,000) / (20 years - 2 years) = $513,333.33.
So, the depreciation on the building for 2021 would be $513,333.33.
Learn more about Depreciation Calculation here:https://brainly.com/question/31180880
#SPJ11
Zumba classes sell all 20 participant spots at a price of $4.50 each. When the instructor raised the prices to $5.50, 10 people attended the class. From the midpoint method, the price elasticity of demand for Zumba is:
A. 0.50.B. 3.33.C. 2.50.D. 0.20.E. 0.20
The price elasticity of demand calculated using the midpoint method in this scenario is -0.50. Nonetheless, it's significant to note that elasticity is often considered in terms of absolute value for its magnitude's relevance; hence, the answer might need to be reassessed.
The question requires us to apply the midpoint method to calculate the price elasticity of demand which is an advanced principle of economics. The midpoint method calculates the percentage change in quantity and price using the average of the original and new quantity and price levels. Accordingly, we can calculate the price elasticity of demand as follows:
(% Change in Quantity demanded) / (% change in price). In the given scenario, we can calculate the price elasticity as follows:
(Change in Quantity / Average Quantity) / (Change in Price / Average Price)
( (20 - 10) / ((20 + 10) / 2) ) / ((5.50 - 4.50) / ((5.50 + 4.50) / 2))
After solving the above-made equation, it gives the price elasticity of demand as -0.50. The negative sign here indicates an inverse relationship meaning demand for Zumba classes decreases as the price increases, which generally happens in the case of normal goods. Given the options, however, this value is not valid; the correct answer should likely be expressed in terms of absolute value, as elasticity is typically considered as a positive figure given its magnitude importance. Do double-check the values provided.
Learn more about price elasticity of demand here:https://brainly.com/question/31452681
#SPJ3
Sheridan Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance method.
Year Straight-Line Sum-of-the- Years'-Digits Double-Declining- Balance
1 $10,260 $17,100 $22,800
2 10,260 13,680 13,680
3 10,260 10,260 8,208
4 10,260 6,840 4,925
5 10,260 3,420 1,687
Total $51,300 $51,300 $51,300
Answer the following questions.Part A: What is the cost of the asset being depreciated? Part B: What amount, if any, was used in the depreciation calculations for the salvage value for this asset?
Answer:
A. The cost of asset being depreciated is $57,000
B.The amount of salvage value is $5,700
Explanation:
Among the above-mentioned methods of depreciation, the only method that never consider salvage value on its computation of depreciation expense is the double declining method. So let’s use this method to work back the exact amount depreciable amount of an asset.
Formula : 100% / life of an asset x 2
100% / 5 x 2 = 40%
Y1 = $22,800/40 = 57,000
so to check if the amount is correct, let’s do the computation of 5-year depreciation.
Y1 57,000 x 40% = 22,800 (same as the given data)
Y2 (57,000 - 22,800) x 40% =13,680
Y3 (57,000 - 22,800 - 13,680) x 40% = 8,208
Y4 (57,000-22,800 - 13,680 - 8,208) x 40% = 4,925
Y5 (57,000 -22,800 - 13,680 - 8,208 - 4,925) x 40% = 1,687* (adjusted based on the depreciable amount)
B. To compute the salvage value, we simply deduct the total depreciation from the cost of an asset.
57,000 - 51,300 = 5,700
To check:
(57,000 - 5,700) / 5 years = 10,260
Epley Industries stock has a beta of 1.30. The company just paid a dividend of $.30, and the dividends are expected to grow at 4 percent. The expected return on the market is 13 percent, and Treasury bills are yielding 6.3 percent. The most recent stock price for the company is $80. a. Calculate the cost of equity using the DCF method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) DCF method % b. Calculate the cost of equity using the SML method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) SML method
Answer:
The cost of equity using the DCF method: 4.39%.
The cost of equity using the SML method: 15.01%.
Explanation:
a. The cost of equity using the DCF method:
We have: Current stock price = Next year dividend payment / ( Cost of equity - Growth rate) <=> Cost of equity = Next year dividend payment/Current stock price + Growth rate = 0.3 x 1.04/80 + 4% = 4.39%.
b. The cost of equity using the SML method:
Cost of equity = Risk free rate + beta x ( Market return - risk free rate); in which Risk free rate is rate on T-bill.
=> Cost of equity = 6.3% + 1.3 x ( 13% -6.3%) = 15.01%.
Which one of the following is not a good type of rival for an offensive-minded company to target?
A. Market leaders that are vulnerable
B. Runner-up firms with weaknesses in areas where the offensive-minded challenger is strong
C. Small local and regional companies with limited capabilities
D. Struggling enterprises that are on the verge of going under
E. Other offensive-minded companies with a sizable war chest of cash and marketable securities
Answer:
The correct answer is E
Explanation:
Offensive strategy or minded is the kind or type of strategy, in which it comprise or involved of the actively trying to follow the changes in the industry.
Companies or business which follow the offensive minded or strategy, mostly invest in the R&D area (Research and Development) and the technology, so that could stay ahead in the competition.
So, the other offensive minded or strategy companies ,which have the war chest of the securities which are marketable and the cash is not the good kind of rival for targeting.
Final answer:
Struggling enterprises that are on the verge of going under are not good targets for offensive-minded companies.
Explanation:
The type of rival that is not a good target for an offensive-minded company is:
Market leaders that are vulnerableRunner-up firms with weaknesses in areas where the offensive-minded challenger is strongSmall local and regional companies with limited capabilitiesStruggling enterprises that are on the verge of going underOther offensive-minded companies with a sizable war chest of cash and marketable securitiesTargeting struggling enterprises on the verge of going under would not be beneficial for an offensive-minded company because they may not have the resources or stability to offer a significant challenge.
The Frank Company has issued 10%, fully participating, cumulative preferred stock with a total par value of $300,000 and common stock with a total par value of $900,000. Dividends for one previous year are in arrears. How much cash will be paid to the preferred stockholders and the common stockholders, respectively, if cash dividends of $222,000 are distributed at the end of the current year?
Answer:
$78000 to Preferred stockholder and $144000 to common stockholder.
Explanation:
Given: Current common stock outstanding = $900000.
Current preferred stock outstanding=$300000.
Total Cash dividend to be distributed= $222000.
Dividend to be distributed at 10%.
As we know, preferred shareholder are given preference over common stockholder for dividend payment. Company has to pay dividend in arrear next year if they miss out paying dividend to preferrence shareholder in any particualr year.
First, lets compute the annual dividend of preferred stockholder.
As given, Dividends for one previous year are in arrears and dividend is issued at 10%.
∴ Preferrence stock dividend= [tex]\$ 300000\times 10\%[/tex]
Preferrence stock dividend= [tex]\$ 300000\times \frac{10}{100} = \$ 30000[/tex]
∴ Preferrence stckholder´s:
current year dividend to be paid is $30000
Arrear to be paid of previous year is $30000
Now, compute dividend to be paid to common stockholder.
Dividend to be paid to common stockholder= [tex]\$900000\times 10\%[/tex]
∴ Common stockholder´ dividend= [tex]\$ 900000\times \frac{10}{100} = \$ 90000[/tex]
As given, Total shareholder dividend to be paid is $222000 and it is fully participative and cumulative.
∴ Balance of total dividend= [tex]\$222000-(\$60000+\$90000)= \$2220000-\$150000[/tex]
Balance of total dividend=[tex]\$ 72000[/tex]
Next, distributing the balance of total dividend on pro rata basis.
Preferred stock= [tex]\frac{3}{12} \times \$72000= \$ 18000[/tex]
Common stock= [tex]\frac{9}{12} \times 72000=\$ 54000[/tex]
Finally, computing total dividend paid current year
Preferred stock= [tex]\$30000+\$30000+\$18000= \$78000[/tex]
Common stock= [tex]\$90000+\$54000= \$144000[/tex]
∴ $78000 to Preferred stockholder
$144000 to common stockholder
Jiminy’s Cricket Farm issued a bond with 30 years to maturity and a semiannual coupon rate of 6 percent 4 years ago. The bond currently sells for 105 percent of its face value. The company’s tax rate is 23 percent. The book value of the debt issue is $60 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 8 years left to maturity; the book value of this issue is $35 million, and the bonds sell for 67 percent of par.
a.
What is the company’s total book value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)
b. What is the company’s total market value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)
c. What is your best estimate of the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
Explanation:
a.)
The total debt amount in Jiminy's Cricket Farm's balance sheet on the liabilities side is referred to as the book value of debt. It is calculated by be the summing up of the individual book values of the two bonds that this company has.
Total book value ;
Book value of 30 year bond = $60,000,000
Book value of the Zero-coupon bond = $35,000,000
Total book value of debt = $60 + $35 = $95,000,000
b.)
The sum of market values of the two bonds this company makes up the total market value of debt. It is calculated by multiplying the current price of the bond by the number of outstanding bonds.
Formula for market value = Price * number of bonds
30 year bond;
Number: 60,000,000/1000 = 60,000 bonds
Market value = 1.10 * 1000 *60,000 = $66,000,000
Zero-coupon bond;
Number: 35,000,000/1000 = 35,000 bonds
Market value = 0.67 * 1000 *35,000 = $23,450,000
Total market value of debt = $66,000,000 + $23,450,000 = $89,450,000
c.) Companies who have debt in their capital structure benefit from tax shield on their debt interest rates . Jiminy’s Cricket Farm has two bonds, find the average of the two rates to get after tax cost of debt.
Calculate the Pretax cost of debt first. Using a financial calculator, input the following;
30 year bond;
N = 30*2 = 60
PV = -$66,000,000
PMT = (6%/2)* $60,000,000 = $1,800,000
FV = $60,000,000
then compute semiannual rate; CPT I/Y = 2.664%
Convert to annual rate = 5.329% (this is the pretax cost of debt)
Zero-coupon bond;
N = 8
PV = -$23,450,000
PMT = 0
FV = $35,000,000
then CPT I/Y = 5.133% (this is the pretax cost of debt)
Next, find the average pretax cost of debt = (5.329% + 5.133%) /2 = 5.231%
After tax cost of debt = pretax cost of debt (1-tax)
After tax cost of debt = 5.231% (1-0.23) = 4.03%
Key Company is considering the addition of a new product to its current lines. The expected cost and revenue data for the new product are as follows :Annual Sales : 2500 unitsSelling Price Per Unit : $304Variable Cost Per Unit :Production : $125Selling : $49Avoidable Fixed Cost Per Year :Production : $50,000Selling : $75,000Allocating common corporate cost per year : $55,000If the new product is added, the combined contribution margin of the other , existing product lines is expected to drop $65,000 per year, the common corporate costs would be unaffected by decision of whether to add the product. If new product is added next year, the increase in net operating income from this decision would be :A) 325,000 B) 200,000 C) 145,000 D) 135,000 E) None
Answer:
D) 135,000
Explanation:
The increase in net operating income would be
= Contribution margin per unit × number of units sold - production fixed cost - selling fixed cost - expected drop in contribution margin
= $130 × 2,500 units - $50,000 - $75,000 - $65,000
= $325,000 - $50,000 - $75,000 - $65,000
= $135,000
The contribution margin per unit would be
= Contribution margin per unit = Selling price per unit - Variable expense per unit
= $304 - $125 - $49
= $130
You are managing a project to build an urgent care clinic. Your company is expanding and has constructed 25 clinics so far. Which estimating technique makes the most sense to use in this situation:
Select an answer:
A. Parametric modeling
B. Delphi technique
C. Top-down estimating
D. Asking an expert
Answer:
B. Delphi technique
Explanation:
Delphi technique is considered the best way as it helps in estimating the cost and forecast also, For constructing 25 clinics estimate is the biggest function to build the clinics.
Answer:
B. Delphi technique is the correct answer.
Explanation:
The Delphi Technique is a method used to estimate the likelihood and outcome of future events. A group of experts exchange views, and each independently gives estimates and assumptions to a facilitator who reviews the data and issues a summary report.
A(n) _______ is a limitation or deficiency in one or more of a firm's resources or capabilities relative to its competitors that creates a disadvantage in effectively meeting customer needs.
Answer:
Weakness
Explanation:
Some of these weaknesses can be outdated equipments, lack of internal controls, lack of clear strategic direction, poor marketing skills, excess debt, missing some key skills, lack of important assets, etc.
All these are is a limitations or deficiencies that create a disadvantage in effectively meeting customer needs.
Lillian Fok is president of Lakefront Manufacturing, a producer of bicycle tires. Fok makes 1,000 tires per day with the following resources: Labor: 400 hours per day @ $12.50 per hour Raw material: 20,000 pounds per day @ $1 per pound Energy: $5,000 per day Capital costs: $10,000 per day a) What is the labor productivity per labor-hour for these tires at Lakefront Manufacturing? b) What is the multifactor productivity for these tires at Lakefront Manufacturing? c) What is the percent change in multifactor productivity if Fok can reduce the energy bill by $1,000 per day without cutting production or changing any other inputs?
Answer:
A) 2.5 bicycle tires per labor hour B) 0.025 dollars per bicycle tires C) It would mean an increase of 11.1% in the multifactor productivity.
Explanation: To calculate the productivity of labor per hour simply divide the total number of tires produced in 1 day with the total labor hour used (1000/400=2,5). To calculate the multifactor productivity, you have to sum the total cost of all resources labor, capital, raw material and energy, and divide the total output per the total cost of inputs (1000/40000=0.025). Finally, to calculate the impact of improvements in energy use, from 5,000$ per day to 1,000$, adjust the total cost of inputs by 4,000 (40,000-4,000=3,6000), divide production with the new cost (1,000/36,000=0.02777) and calculate the percentual change (0.0277-0.025/0.025=0.111)
A firm is considering changing their credit terms. It is estimated that this change would result in sales increasing by $1,600,000. This in turn would cause inventory to increase by $125,000 , accounts receivable to increase by $100,000 , and accounts payable to increase by $90,000 . What is the firm's expected change in net working capital?
A) $315,000
B) $135,000
C) $225,000
D) $1,735,000
Answer:
D) $1,735,000
Explanation:
Change in Net Working capital = Increase/(decrease) in sales + Increase/(decrease) in inventory + Increase/(decrease) in receivable - Increase/(decrease) in payable ; in which any value decrease is negative value or to be subtracted
Change in Net Working capital of this firm = sales increasing by $1,600,000 + inventory to increase by $125,000 + accounts receivable to increase by $100,000 - accounts payable to increase by $90,000
= $1,735,000
Final answer:
The firm's expected change in net working capital would be A) $315,000.
Explanation:
The change in net working capital is the difference between a company's current assets and current liabilities from one period to another. It reflects the variation in short-term financial resources needed to support day-to-day operations. A positive change indicates an increase in resources, while a negative change signifies a reduction, impacting liquidity and financial health.
The firm's expected change in net working capital can be calculated by summing up the changes in inventory, accounts receivable, and accounts payable. In this case, the inventory increases by $125,000, accounts receivable increases by $100,000, and accounts payable increases by $90,000. Adding these amounts together, the firm's expected change in net working capital would be $315,000 (A).
Which of the following statements is correct?
A. As a public transfer payment, Social Security benefit is available only to the poor.
B. Social Security benefits are received by people who had contributed to the fund during their active work years.
C. The Social Security program funnels transfers from retired individuals to the youngest children of low-income families.
D. Social Security is an entitlement which is available to everyone, including those who have not contributed to the fund during their active work years.
Answer:
B
Explanation:
Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods.a. Calculate each country's productivity and real GDP per person.b. Which country is better off?
Answer:
a) Productivity of country A = 20 goods per hour
Productivity of country B = 25 goods per hour
Real GDP per person for country A = 128 goods per person
Real GDP per person for country B = 135 goods per person
b) Country B is better off
Explanation:
Data provided in the question:
For country A
Population = 1,000
Number of workers = 800
Number of working hour per day = 8
Final goods = 128,000
For country B
Population = 2,000
Number of workers = 1,800
Number of working hour per day = 6
Final goods = 270,000
Now,
(a) The Productivity is given as
= [ Total Output ÷ Total Productive Hours ]
Thus,
Productivity of country A
= [ 128,000] ÷ [ 800 × 8 ]
= 20 goods per hour
Productivity of country B
= [ 270,000 ] ÷ [ 1800 × 6 ]
= 25 goods per hour
and,
Real GDP per person = [ Final goods ] ÷ [ Population ]
Real GDP per person for country A
= 128000 ÷ 1000
= 128 goods per person
Real GDP per person for country B
= [ 270000 ] ÷ 2000
= 135 goods per person
(b) Since,
The Real GDP per person for country B is greater than the Real GDP per person for country A
Therefore,
Country B is better off
The productivity and real GDP per person for Country A and Country B were calculated and compared. It was found that County B has a higher productivity and real GDP per person making it the better off country based on these metrics.
Explanation:Productivity is calculated as the total output divided by the total input. For Country A, we calculate productivity as 128,000 final goods divided by (800 workers * 8 hours), which results in a productivity of 20 goods produced per man-hour. For Country B, we use the same method, and calculate productivity as 270,000 goods divided by (1,800 workers * 6 hours) which gives us a value of 25 goods produced per man-hour. Therefore, Country B is more productive on a per hour basis.
Real GDP per person is calculated as the total output divided by the population. For Country A, real GDP per person is calculated by dividing 128,000 goods by 1,000 residents, which equals 128 goods per person. For Country B, we calculate real GDP per person by dividing 270,000 goods by 2,000 residents, which equals 135 goods per person. Again, Country B is better off.
So, based on these calculations, Country B is more productive and has a higher real GDP per person. However, it's important to note that this calculation doesn't take other factors such as income inequality, environmental factors, etc into account.
Learn more about Productivity and Real GDP calculations here:https://brainly.com/question/30403285
#SPJ3