Answer:
correct option is B. $15,000
Explanation:
given data
contributed cash = $120,000
Fair Value of land = $160,000
originally paid = $90,000
Sale value of land = $190,000
to find out
how much of the gain from sale of land should be credited to Griffin for financial accounting purposes
solution
gain on sale is here as
gain on sale = Sale value of land - Fair Value of land -
Gain on sale of land = $190,000 - $160,000
Gain on sale of land = $30000
split the $30000 between the equal partners for a total gain credited to Griffin
total gain credited to Griffin = $15000
so correct option is B. $15,000
Yehle Inc. regularly uses material Y51B and currently has in stock 460 liters of the material for which it paid $2,530 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch $4.55 per liter. New stocks of the material can be purchased on the open market for $5.45 per liter, but it must be purchased in lots of 1,000 liters. You have been asked to determine the relevant cost of 720 liters of the material to be used in a job for a customer. The relevant cost of the 720 liters of material Y51B is:
a. $3,924
b. $5,450
c. $3,510
d. $3,276
Answer:
3924
Explanation:
The relevant cost is the price of the actual quantity of materials to be used for the job. Although they can only buy in 1000, the relevant cost is the cost of buying the 720 liters of the material regardless of their surplus or loss.
relevant cost = 720 × 5.45 = $ 3924
Answer:a. $3924
Explanation:
The product Y51B which is in stock was bought for $5.5 , selling at a surplus will be $4.5 , however the firm must consider the replacement cost of the material if it's used for the production and this is the cost that will be used to value Y51B for the new project. Which is $5.45 * 720 units which gives $ 3924
A doctor’s clinic evaluates incoming disposable cottontipped applicators using the single sampling plan N= 8000, n =62 and c=1. Construct the OC curve using about 7 points.
Answer:
Calculated and constructed on the excel file
Explanation:
You could find the attached file for the constructed OC Curve. It was used 7 points and relevant numbers which were given.
On August 5, 2021, Blossom Furniture shipped 50 dining sets on consignment to Furniture Outlet, Inc. The cost of each dining set was $220 each. The cost of shipping the dining sets amounted to $1850 and was paid for by Blossom Furniture. On December 30, 2021, the consignee reported the sale of 40 dining sets at $720 each. The consignee remitted payment for the amount due after deducting a 5% commission, advertising expense of $470, and installation and setup costs of $650. The total profit on units sold for the consignor is
Final answer:
The total profit on units sold for the consignor is $13,390.
Explanation:
To calculate the total profit on units sold for the consignor, we need to consider the cost of the dining sets, the cost of shipping, and the deductions made by the consignee.
The total cost of the 50 dining sets is 50 x $220 = $11,000.
The cost of shipping the dining sets is $1850.
The consignee reported the sale of 40 dining sets at $720 each, which amounts to $28,800.
The consignee deducted a 5% commission of $1,440 (40 x $720 x 0.05), advertising expense of $470, and installation and setup costs of $650.
Therefore, the total profit on units sold for the consignor is
= $28,800 - $1,440 - $470 - $650 - $11,000 - $1,850
= $13,390.
Given an interest rate of 5.3 percent per year, what is the value at date t = 7 of a perpetual stream of $6,400 payments that begins at date t = 15?
The present value of a perpetual stream of $6,400 payments starting from date t=15, when calculated for date t=7 at an interest rate of 5.3% per year, is approximately $87,864.1135.
Explanation:This question is about calculating the present value of a perpetual stream of payments. The formula to calculate the present value of a perpetual stream is PV = C / r, where C represents the cash flow per period and r represents the interest rate.
However, we also need to take into account the fact that these payments start at a future date (t = 15). To calculate the present value at date t=7, we first need to calculate the present value of the future cash flows as of t=15, and then discount this back 8 years to date t=7.
In this example, C = $6400 and r = 0.053. That would give us a present value at t=15 of PV = $6400 / 0.053 = $120,754.717. We will then discount this amount back to t=7 by dividing it by (1+0.053)⁸, which gives a final value of $87,864.1135.
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Consider an asset that has a beta of 1.25. If the risk free rate is 3.25 and the mrket risk premium is 5.5% caculate the expected return on the asset.
Answer:
10.125%
Explanation:
The formula to compute the expected return on the asset is shown below:
Expected return on the asset = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 3.25% + 1.25 × 5.5%
= 3.25% + 6.875%
= 10.125%
The (Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is used in the computation part
Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. If the firm's tax rate is 40%, what is the component cost of debt for use in the WACC calculation? Select one: a. 4.35% b. 4.58% c. 4.83% d. 5.08% e. 5.33%
Answer:
after tax cost of debt = 5.08
so correct option is d. 5.08%
Explanation:
given data
maturity = 20 years
annual coupon = 9.25%
sells price = $1,075
par value = $1,000
tax rate = 40%
to find out
component cost of debt
solution
we get here yield to maturity YTM that is express as
periodic interest payment PMT × [tex](\frac{1-(1+YTM/2)}{YTM/2})^{-40}[/tex] + [tex](\frac{par\ value}{1+YTM/2})^{40}[/tex] = sells price .................1
periodic interest payment PMT = par value × coupon rate ÷ 2
periodic interest payment PMT = $46.25
so from equation 1 we get
46.25 × [tex](\frac{1-(1+YTM/2)}{YTM/2})^{-40}[/tex] + [tex](\frac{par\ value}{1+YTM/2})^{40}[/tex] = 1075
YTM = 8.46 %
and
after tax cost of debt will be here as
after tax cost of debt = YTM ( 1- tax rate )
after tax cost of debt = 8.46% ( 1- 40% )
after tax cost of debt = 5.08
so correct option is d. 5.08%
Pharoah Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. (a) On July 1, (1) Pharoah purchase $76,000 of inventory, terms 3/10, n/30, FOB shipping point. (2) Pharoah paid freight costs of $1,276. (b) On July 3, Pharoah returned damaged goods and received credit of $7,600. (c) On July 10, Pharoah paid for the goods.
Answer:
inventory 76,000 debit
accounts payable 76,000 credit
---to record purchase on account--
freigth-in 1,276 debit
cash 1,276 credit
--to record payment of freigth--
accounts payable 7,600 debit
returns and allowance 7,600 credit
--to record return of good to supplier--
accounts payable 68,400 debit
purchase discount 2,052 credit
cash 66,348 credit
--to record payment within discount period--
Explanation:
As the company determinates inventory on a periodic basis we do not adjust right away, we use discount and return accounts instead of inventory
76,000 original invoice nominal
-7,600 discount
68,400 nominal after return subject to discount of 3%
-2,052 discount
66,348 cash outlay to settle with supplier
HD Corp. and LD Corp. have identical assets, sales, interest rates paid on their debt, tax rates, and EBIT. However, HD uses more debt than LD. Which of the following statements is CORRECT? Without more information, we cannot tell if HD or LD would have a higher or lower net income. HD would have the lower equity multiplier for use in the Du Pont equation. HD would have to pay more in income taxes. HD would have the lower net income as shown on the income statement. HD would have the higher net income as shown on the income statement.
Which of these is not a major characteristic of a plant asset?
a. Possesses physical substance
b. Acquired for use in operations
c. Yields services over a number of years
d. All of these are major characteristics of a plant asset.
Answer:
d. All of these are major characteristics of a plant asset.
Explanation:
The total assets comprise of current assets, fixed assets, and the intangible assets
The current assets include cash, stock, account receivable, etc
Fixed assets include plant & machinery, land, equipment, furniture & fittings, etc.
And, the intangible assets include patents, copyrights, goodwill, etc.
The fixed assets have the physical substance plus it is acquired for use only and it provides the services to the number of years.
All the stated options, possessing physical substance, being acquired for use in operations, and yielding services over a number of years, are major characteristics of a plant asset. Therefore, the answer to the question is d. All of these are major characteristics of a plant asset.
Explanation:All of the options provided in the question are indeed major characteristics of a plant asset. A plant asset, also known as a fixed asset, characteristically possesses physical substance, meaning that it is tangible. Examples include machinery, buildings, and land. This asset is also typically acquired for use in operations — it contributes to the functions and profitability of a business. Lastly, a plant asset is expected to yield services over a number of years, meaning this asset has a prolonged use or lifespan that transcends just a single fiscal year. Though some might be confused, option d is the most correct response as it states that all of these are indeed characteristics of a plant asset.
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Simple majority rule can generate inefficient outcomes because
a. it does not register the intensity of voters' preferences.
b. it cannot adjust for special interest lobbying efforts.
c. it does not adjust for the costs of rational ignorance.
d. people are often misinformed on what it is they are voting on.
e. none of the above
Answer:
A
Explanation:
1. In uncertain circumstances, the conservatism principle guides accountants to A. accelerate revenue recognition and delay expense recognition. B. accelerate expense recognition and delay revenue recognition. C. recognize expense of prepaid items when payment is made. D. delay both expense recognition and revenue recognition.
Answer:
A
Explanation:
A cost that changes in proportion to changes in volume of activity is a(n): Select one: a. Differential cost. b. Fixed cost. c. Incremental cost. d. Variable cost. e. Product cost.
Answer:
The correct option is D
Explanation:
Variable cost is the corporate cost or an expense which varies in proportion or relation to the production output. Increase or decrease in the variable cost grounded on the production volume of the company or firm, which in short means that increase or rise in variable cost and the production increases and fall in variable cost, production decreases.
Therefore, the cost which changes or varies in the proportion to change in the volume of the activity is known or referred as variable cost.
Apple's $3 billion acquisition of Beats Electronics and Beats Music in 2014 was an attractive strategy option for entering promising new industries in headphones and streaming music services because it
Apple's $3 billion acquisition of Beats Electronics and Beats Music in 2014 allowed Apple to enter the headphones and streaming music industries, leveraging Beats' expertise and customer base. This acquisition helped Apple diversify its product offerings and revenue streams.
Explanation:Apple's $3 billion acquisition of Beats Electronics and Beats Music in 2014 was an attractive strategy option for entering promising new industries in headphones and streaming music services because it allowed Apple to leverage the expertise and existing customer base of Beats to expand its presence in these markets.
By acquiring Beats, Apple gained access to a popular brand known for its high-quality headphones and a streaming music service with a substantial user base. This acquisition provided Apple with an immediate and significant presence in the headphones and streaming music industries, which were both growing rapidly at the time.
Furthermore, Apple's acquisition of Beats helped the company diversify its product offerings and revenue streams. Prior to the acquisition, Apple primarily focused on hardware products like iPhones and Mac computers. By entering the headphones and streaming music markets, Apple was able to capture additional sources of revenue and potentially attract new customers who were interested in these types of products and services.
The particular type of shareholder voting used has become less important with the influence of takeovers, leveraged buy-outs, and other challenges to management control.
A. True
B. False
Answer: B. False
Explanation:
Even in the case of take over or mergers or acquisition, a shareholder remains part of the organization because the shareholder still has the shares within the company and therefore could play a decisive role in the voting.
Technical Performance Measures should be selected for those parameters that: [Use Technical Performance Measures to track progress in program risk areas during systems development.]
A. Are expected to have the highest degree of risk.
B. Will not be addressed at technical design reviews.
C. Are expected to exceed the objectives contained in the Capability Development Document (CDD).
D. Will not be subjected to formal test and evaluation.
Answer:
The correct answer is letter "A": Are expected to have the highest degree of risk.
Explanation:
A Technical Performance Measure or TPM is an instrument that shows how well a program meets its specifications or goals. Technical Performance Measures are useful for risk tracking to identify the factors of an objective that can potentially affect the original plan of an organization.
Technical performance measures should be selected for those parameters that are expected to have the highest degree of risk. Thus, Option A. is the correct statement.
What do you mean by technical performance measures?A Technical Performance Measure is a system that measures the risks involved in a technical system to determine how well an item meets the stated requirements.
Technical Performance Measure or TPM is a tool that shows how well a system meets its specifications or objectives. They are useful in tracking risks in order to identify objective factors that may influence an actual organizational process.
Thus, Option A. that is "Technical performance measures are expected to have the highest degree of risk" is the correct statement.
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Which one of the following statements is true regarding a partner's personal liability for partnership assets?
a.In a general partnership, all partners are liable for entity debts.
b.LLC members can never be liable for entity debts.
c.In a limited liability partnership, a partner might be subject to liability for other partners' malpractice.
d.In a limited partnership, all partners have limited liability for partnership debts.
e.None of these statements are true.
Answer:
The correct answer is A
Explanation:
General partnership is a kind of business partnership or the business arrangement in which 2 or more individuals or person agreed to share all the profits, legal liabilities, assets financial liabilities of a business which is jointly-owned. And any partner of the business might be sued for the entirety of a business debts of partnership.
So, the correct statement is that in general partnership, all partners are held liable for the debts of the entity in the partnership.
Final answer:
The correct answer is a: In a general partnership, all partners are liable for entity debts. This structure allows partners to share the responsibility for the business, including liabilities, which could affect their personal assets.
Explanation:
The question concerns the personal liability of partners in different partnership structures. Regarding the options provided:
a. In a general partnership, all partners are indeed liable for entity debts which means each partner can be responsible for all of the business's debts, potentially including those incurred by other partners.b. LLC members refer to members of a Limited Liability Company, and while the primary feature of an LLC is to provide limited liability protection to its members, the statement that they can 'never' be liable is too absolute, and there could be exceptions where members might be personally liable.c. In a limited liability partnership (LLP), generally partners are not liable for the malpractice of other partners, though they may be responsible for their own acts. However, laws can vary by jurisdiction, so this statement might be partly accurate depending on the local regulations.d. In a limited partnership, there are both general and limited partners. Limited partners indeed have limited liability for partnership debts, but general partners do not, which makes the statement partially incorrect.An understanding of each partnership type's liability structure is essential for anyone involved in partnership business arrangements.Barrington Corporation reports the following information.
2017 2016
Cash $15,960 $14,490
Net operating working capital $6,150 $3,300
Net long-term operating assets $9,360 $9,300
Net nonoperating obligations $2,700 $2,100
Net operating profit after tax $1,950 $1,620
Weighted average cost of capital 7.0% 7.0%
a. What is the company's residual operating income (ROPI) for 2017?
Select one:
A. $ 864
B. $1,068
C. $1,215
D. $ 988
E. None of the above
Answer:
Option (B) is correct.
Explanation:
Net operating assets (Beginning):
= Net operating working capital + Net long-term operating assets
= $3,300 + $9,300
= $12,600
Company's residual operating income (ROPI) for 2017:
= Net operating profit after tax - [Net operating assets (Beginning) × Weighted average cost of capital]
= $1,950 - [$12,600 × 7.0%]
= $1,950 - $882
= $1,068
You are evaluating two different silicon wafer milling machines. The Techron I costs $245,000, has a three-year life, and has pretax operating costs of $63,000 per year. The Techron II costs $420,000, has a five-year life, and has pretax operating costs of $35,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $40,000. If your tax rate is 22 percent and your discount rate is 10 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Answer:
Techron I
EAC = -$120,263.94
Techron II
EAC = -$114,504.27
Explanation:
Techron I
Cost of Machine = $245,000
Useful Life = 3 years
Annual Depreciation = Cost of Machine / Useful Life
Annual Depreciation = $245,000 / 3
Annual Depreciation = $81,666.67
Salvage Value = $40,000
After-tax Salvage Value = $40,000 × (1 - 0.22)
After-tax Salvage Value = $31,200
Annual OCF = Pretax Operating Costs × (1 - tax) + tax × Depreciation
Annual OCF = -$63,000 × (1 - 0.22) + 0.22 × $81,666.67
Annual OCF = -$31,173.33
NPV = -$245,000 - $31,173.33 × PVIFA(10%, 3) + $31,200 × PVIF(10%, 3)
NPV = -$245,000 - $31,173.33 × 2.4869 + $31,200 × 0.7513
NPV = -$299,084.39
EAC = NPV / PVIFA(10%, 3)
EAC = -$299,084.39 / 2.4869
EAC = -$120,263.94
Techron II:
Cost of Machine = $420,000
Useful Life = 5 years
Annual Depreciation = Cost of Machine / Useful Life
Annual Depreciation = $420,000 / 5
Annual Depreciation = $84,000
Salvage Value = $40,000
After-tax Salvage Value = $40,000 × (1 - 0.22)
After-tax Salvage Value = $31,200
Annual OCF = Pretax Operating Costs × (1 - tax) + tax × Depreciation
Annual OCF = -$35,000 × (1 - 0.22) + 0.22 × $84,000
Annual OCF = -$8,820
NPV = -$420,000 - $8,820 × PVIFA(10%, 5) + $31,200 × PVIF(10%, 5)
NPV = -$420,000 - $8,820 × 3.7908 + $31,200 × 0.6209
NPV = -$434,062.78
EAC = NPV / PVIFA(10%, 5)
EAC = -$434,062.78 / 3.7908
EAC = -$114,504.27
The most effective means of increasing productivity and overcoming economic crisis in the Late Middle Ages came from Select one: a. guild supervision and standards. b. higher wages. c. technological advances. d. the Hanseatic League and similar trade associations. e. the decline in guilds.
Answer:
c. technological advances
Explanation:
The most effective means of increasing productivity and overcoming economic crisis in the Late Middle Ages came from increasing the efficiency of workers and providing workers with better tools
The budgeting process ________.
(A) usually begins about one month before the beginning of the budget period to allow for more current information to be considered
(B) does not need input from all levels because it is the role of management to control costs and meet revenue goals
(C) is standard among all types of companies
(D) requires significant coordination among the company's various business segments
Answer:
D. requires significant coordination among the company's various business segments
Explanation:
The budgeting process requires significant coordination among the company's various business segments
11. At Stolen Horse Corporation, indirect labor is a variable cost that varies with direct labor hours. Last month's flexible budget performance report showed that actual indirect labor cost totaled $2,056 for the month and 5,140 direct labor hours were actually worked. The report also showed the spending variance for indirect labor was $257 unfavorable and the activity variance for indirect labor was $28 favorable. What was the amount of direct labor hours Stolen Horse budgeted for last month?
Answer:
5,220 hours
Explanation:
Lets summarize the information first,
Actual Hours = 5,140
Actual Indirect labor cost = $2,056
Spending Variance = $257 Unfavorable
Activity Variance = $28 Favorable
We can reverse work for budgeted labor hours, first for the standard rate,
Spending variance = Actual hours * Standard rate/hour - Actual Overheads
-257 = 5140x - 2056
x = (2056-257)/5140
x = 0.35/hour (This is the standard over head rate )
Activity Variance = Standard rate*Standard hrs - Standard rate*Actual Hrs
28 = 0.35y - 0.35*5140
Solving for y,
y = 1827/0.35
y = 5,220
So budgeted hours for Stolen Horse Corporation were = y = 5,220 hours
Hope that helps.
.In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog cost $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following statements is correct? a. When 2006 is chosen as the base year, the consumer price index is 90 in 2007. b. When 2006 is chosen as the base year, the inflation rate is 150 percent in 2007. c. When 2007 is chosen as the base year, the consumer price index is 100 in 2006. d. When 2007 is chosen as the base year, the inflation rate is 50 percent in 2007.
Answer:
d.) When 2007 is chosen as the base year, the inflation rate is 50 percent in 2007.
After calculating the total costs in 2006 and 2007 and the CPI, we find that all proposed statements are incorrect. The CPI in 2007 with 2006 as the base year is 150, and the inflation rate is 50%, not 150%.
To calculate the Consumer Price Index (CPI) and inflation rate, we will first need to determine the total cost of the consumer's basket in both years.
Using 2006 as the base year, the total cost of the fixed basket in 2006 is:
10 hot dogs × $3 per hot dog = $30
6 hamburgers × $5 per hamburger = $30
Total cost in 2006 (base year): $30 (hot dogs) + $30 (hamburgers) = $60
The total cost of the fixed basket in 2007 is:
10 hot dogs × $5.40 per hot dog = $54
6 hamburgers × $6 per hamburger = $36
Total cost in 2007: $54 (hot dogs) + $36 (hamburgers) = $90
The CPI for 2007 with 2006 as the base year is:
CPI = (Cost in Current Year / Cost in Base Year) × 100 = ($90 / $60) × 100 = 150
The inflation rate from 2006 to 2007 is the percentage increase in the CPI, which can be calculated as:
Inflation Rate = [(CPI in Current Year - CPI in Base Year) / CPI in Base Year] 100 × = (150 - 100) / 100 × 100 = 50%
Therefore, statement a is incorrect because the CPI in 2007 with 2006 as the base year is 150, not 90. Statement b is incorrect as the inflation rate is actually 50%, not 150%. Statement c cannot be correct because the CPI is always 100 in the base year, and 2006 is the base year in this example. Finally, statement d is incorrect because the inflation rate in 2007 is 50%, not 50 percentage points higher than in the base year.
York Casting Services started the year with total assets of $110,000 and total liabilities of $50,000. The revenues and the expenses for the year amounted to $140,000 and $50,000, respectively. During the year, the company did not issue any common stock, but it distributed dividends of $70,000. Calculate the amount of increase or decrease in stockholders' equity for the year.
Answer:
Net income: $
Revenue 140,000
Expenses (50,000)
Dividend paid (70,000)
Net income 20,000
Net income is the amount of increase in stockholders' equity.
Explanation:
Net income is the excess of revenue over expenses and dividend. A positive net income increases the stockholders' equity. Common stockholders are legal owners of a company, thus, any income not distributed as dividend increases their equity.
Consider a firm that operates in a market that competes aggressively in prices. Due to the high fixed cost of obtaining the technology associated with entering this market, only a limited number of other firms exist. Furthermore, over 70 percent of the products sold in this market are protected by patents for the next eight years. Does this industry conform to an economist’s definition of a perfectly competitive market?
Answer:
No.
Explanation:
A perfectly competitive market has no barriers for firms to entry or exit; the product is homogenous (not patents involved), and the firms have no power to push the prices up or down. The characteristics described a market that tends to be an oligopoly, with entry barriers and non-homogenous products.
The industry described in question does not fit the economists' definition of a perfectly competitive market due to high entry costs and existing patents limiting competition. It rather resembles an oligopoly.
Explanation:The described market in your question does not fit the definition of a perfectly competitive market. A perfectly competitive market, as defined by economists, assumes a scenario where there are many sellers in the industry, products sold are identical, and there is easy entry and exit for firms. In the scenario you've described, the high-fixed costs associated with entering the market and the existence of patents protecting over 70 percent of products both limit the ease of entry. This situation seems more akin to an oligopoly, a market dominated by a small number of firms that own a significant market share and where entry by new competitors can be difficult.
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Helena Company reports the following total costs at two levels of production. Classify each cost as variable, fixed, or mixed. 5,000 Units 10,000 Units Indirect labor $ 3,000 $ 6,000 Property taxes 7,000 7,000 Direct labor 28,000 56,000 Direct materials 22,000 44,000 Depreciation 4,000 4,000 Utilities 5,000 7,000 Maintenance 9,000 11,000
Answer:
Explanation:
Mainly there are three types of cost i.e variable cost, fixed cost, and the mixed cost. The variable cost is that cost which is change when the production level change in the same proportion like as in double units. whereas the fixed cost is that cost which remains constant whether production level changes or not . The mixed cost is that cost which include some part of variable cost and the fixed cost
So, the variable cost includes indirect material, indirect labor, and factory supplies
The fixed cost includes supervision, taxes ,and depreciation expense.
The mixed cost includes utilities,maintenance,etc
So, the categorization is shown below:
Indirect labor - Variable cost
Property taxes - Fixed cost
Direct labor - Variable cost
Direct material - Variable cost
Depreciation - Fixed cost
Utilities - Mixed cost
Maintenance - Mixed cost
Newcastle Coal Co. owns a warehouse that it is not currently using. It could sell the warehouse for $300,000 or use the warehouse in a new project. Should Newcastle Coal Co. include the value of the warehouse as part of the initial investment in the new project?
(A) Yes, because the firm could sell the warehouse if it didn’t use it for the new project.
(B) No, because the cost of the warehouse is a sunk cost.
(C) No, because the company will still be able to sell the warehouse once the project is complete.
Answer:
A) Yes, because the firm could sell the warehouse if it didn’t use it for the new project.
Explanation:
The option A is correct in our scenario, because the firm still have the option to sale the warehouse even they want to use it for the new project.The option B is not correct as the cost of warehouse is not sunk cost, such a cost that has been utilized and can't be recovered, but we can sale the warehouse and get the payment.The option C is incorrect as once the project is complete then it would be a part of that project so they will not sale the warehouse.Newcastle Coal Co. should include the $300,000 potential sale price of the warehouse as part of the initial investment in the new project, as it represents an opportunity cost. This is different from sunk costs, which are costs that have already been incurred and cannot be recovered, and do not influence future business decisions.
Explanation:When considering whether the value of a warehouse should be included in the initial investment for a new project, Newcastle Coal Co. should indeed consider the opportunity cost associated with using the warehouse instead of selling it. This is because the opportunity cost represents the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. In the case of Newcastle Coal Co., if they choose to use the warehouse for a new project, the $300,000 that could have been earned from selling it is an opportunity cost and should be factored into the initial investment decision for the new project.
It is important to distinguish between sunk costs and opportunity costs. Sunk costs, such as the original cost of the warehouse, are irrelevant for future decisions as they have already been incurred and cannot be recovered. However, the current potential sale price of the warehouse is not a sunk cost, but rather a relevant factor in deciding whether to proceed with using the warehouse for a new project or to sell it.
The correct choice in this situation is (A) Yes, because the firm could sell the warehouse if it didn’t use it for the new project, as this considers the most economically sound approach of including opportunity costs in project evaluation.
The TrunkLine Company will earn $60 in one year if it does well. The debtholders are promised payments of $35 in one year if the firm does well. If the firm does poorly, expected earnings in one year will be $30 and the repayment will be $20 because of the dead weight cost of bankruptcy. The probability of the firm performing poorly or well is 50%.
If bondholders are fully aware of these costs what will they pay for the debt?
The interest rate on the bonds is 10%.
a. $25.00
b. $27.50
c. $29.55
d. $32.50
e. $35.00
Answer:
The answer is a. $25.00
Explanation:
The bondholder's cash flow in one-year time from holding a TrunkLine's bond is calculated as:
(The possibility of TrunkLine doing well x Repayment receipt in case TrunkLine doing well) + (The possibility of TrunkLine doing poorly x Repayment receipt in case TrunkLine doing poorly) = (0.5 x 35) + (0.5 x 20) = $27.50.
The current price bondholders are willing to pay for a bond is equal to the present value of a bond's cash flow in one-year time, discounted at the interest rate on the bond 10% which is calculated as below:
27.50 / (1+10%)^1 = $25
Thus, the correct choice is a. $25.00
True/False
Advertising cannot affect an internal search. However, it can be a very effective tool once a consumer begins an external search.
Answer:
False
Explanation:
Internal search is when a consumer search for the alternatives from the prior knowledge or memory about the category of service or the product.
Internal search is usually done when the low involvements are to be considered.
External search is when a consumer search for the alternatives from the friends or specialized sources like reports or available analytics or from the
These are done when there is high involvement of capital or resources
hence,
Advertising creates an impact in a way that it stores some visual or impression of the product in the mind of consumer i.e an impression while making choices in internal search
IE 10-1 ... AS/AD Model – Suppose this economy is at Year 4 as a result of an "over-expansion" of the Money Supply by the FED. With the Price Level at $2.34 and employment at __________, the Real Production GDP will be $5200 b. In the PPF Model the economy will be at Point _________ ..
Answer:
Employment at 122 million. At Point S.
Explanation:
The economy system is known as Demand Inflation. This is the economic condition that exists when the total aggregate demand for goods and services is more than the total aggregate supply of goods and services. It is also referred to as the demand-pull inflation and it occurs when there is insufficient supply which leads to an increase in price. Therefore, employment is at approximately 122 million and the economy is at point S.
Which of the following is true of public stock companies?A. There exists an implicit contract based on trust between society and the public stock company.B. Public stock companies are not required to disclose financial statements.C. The public stock company is not an important institutional arrangement in developing economies.D. Society expects public stock companies to add value to society by making profits for shareholders.
Answer:
A. There exists an implicit contract based on trust between society and the public stock company
Explanation:
A public stock company is a type of company where members of the public can become shareholders or owners of the company by acquiring shares of the company.
A public stock company is usually run by a board of directors elected by shareholders.
There is an implicit trust between society and public trust companies that the public trust companies are acting in the best interest of members of the public and shareholders.
Profits of the public stock company distributed to shareholders are known as dividends. It's not all the time dividends are declared.
Public stock companies are required by law to disclose yearly financial statements.
Due to the high cost of capital required to run a company, public stock companies are usually important in developing economies.
I hope my answer helps you.