Answer:
January 23rd
Dr Investment in Tolle 300,100
Cr Cash 300,100
(to record the acquired of 10,000 Tolle's shares at $30 each and a brokerage cost of $100)
April 12th
Dr Cash 5,000
Cr Dividend Revenue 5,000
(to record dividend revenue from 10,00 Tolle's shares at $0.5 each)
June 10th
Dr Cash 135,900
Cr Investment on Tolle 120,040
Cr Gain on investment disposal 15,860
(to record the sales of 4,000 Tolle's shares at $34 plus $110 commission fees incurred).
Explanation:
All the explanation is given at the end of each transaction. Further explanation as below:
Given there is no information mentioned whether the share acquired is fro 20% to above and the partial disposal of the investment comes quite near to the time of first acquire; we apply the Cost Method for accounting these transactions.
In the June 10th transaction, we have:
- The actual selling price per share = (Selling price x share sold - Brokerage commission) / share sold = ( 34 x 4,000 - 100) / 4,000 = $33.975;
- The cost of share sold per share = ( Purchasing price x share purchase - Brokerage commission)/ share purchased = ( 30 x 10,000 + 100) / 10,000 = $30.01
=> Cost of share recorded ( Cr Investment account) = 30.01 x 4,000 = 120,040;
=> Gain on investment disposal = ( 33.975 - 30.01) x 4,000 = 15,860.
=> Cash receipt = 4,000 x 34 - 100 = $135,900.
Lone Star has computed the following unit costs for the year just ended:
Direct material used $12
Direct labor $18
Variable manufacturing overhead $25
Fixed manufacturing overhead $29
Variable selling and administrative cost $10
Fixed selling and administrative cost $17
Under absorption costing, each unit of the company's inventory would be carried at:
$55.
$65.
some other amount.
$84.
$35.
Answer:
$84
Explanation:
The computation of each unit of the company's inventory under absorption costing is shown below:
= Direct material used + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead
= $12 + $18 + $25 + $29
= $84
We simply added the first four-unit cost through which total unit cost would come
All other information which is given is not relevant. Hence, ignored it
Instability of user capability needs, design, and production processes are most likley to cause:_________-
Answer:
Cost increase and Schedule Slips
Explanation:
Schedule slips is the act of missing the deadline of the project and in order to avoid the schedule slips, person should plan their projects carefully so that could avoid the delays the schedule.
Instability, states it lacks the stability in the capability design, production processes and needs of the project, so, if the users lacks in the following areas, which in turn result in the increase in the cost of the project as well as the schedule slips.
Sammie's Shiny Shoes is a firm that operates in a competitive market. The number of firms in the shoe-shining market increases. In the short run, Sammie will _______.
A. cut back on the number of shoes he shines
B. increase the number of shoes he shines to maintain market share
C. wait and see what happens to the market price
D. not be affected by the number of competitors
Answer:
A. cut back on the number of shoes he shines
Explanation:
Assuming a competitive market, in the short run, an increase in the number of firms means an increase in competitiveness and, consequently, an increase in the service supply while demand stays the same. This change causes Sammie to experience a decrease in his market share and, therefore, he will cut back on the number of shoes he shines.
Assume cereal and milk are complements for most consumers. Use the slider to show what will happen to the demand for cereal if the price of milk decreases?
A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 77 pounds of Kona coffee beans a day. (Demand can be assumed to be distributed normally with a standard deviation of 14 pounds per day). After ordering (fixed cost = $14 per order), beans are always delivered from Hawaii in exactly 4 days. Per-pound annual holding costs for the beans are $2.
a) What is the economic order quantity? (EOQ) for Kona coffee beans?b) What are the total annual holding costs of stock for Kona coffee beans?
Answer:
a. 464 beans
b. $464
Explanation:
a. The computation of the economic order quantity is shown below:
= [tex]\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
where,
Annual demand = 200 days × 77 pounds = 15,400
And, all other items values would remain the same
Now put these values to the above formula
So, the value would equal to
= [tex]\sqrt{\frac{2\times \text{15,400}\times \text{\$14}}{\text{\$2}}}[/tex]
= 464 beans
The average inventory would equal to
= Economic order quantity ÷ 2
= 464 units ÷ 2
= 232 units
b. Holding cost = average inventory × carrying cost per unit
= 232 units × $2
= $464
The net present value of a proposed investment is negative. Therefore, the discount rate used must be:
A. greater than the project's internal rate of return.
B. less than the project's internal rate of return.
C. greater than the minimum required rate of return.
D. less than the minimum required rate of return.
Answer:
A. greater than the project's internal rate of return.
Explanation:
Net present value method: In this method, the initial investment is subtracted from the discounted present value cash inflows. If the amount comes in positive than the project is beneficial for the company otherwise not. It shows the inverse relationship between the net present value and the discount rate
The computation of the Net present value is shown below
= Present value of all yearly cash inflows after applying discount factor - initial investment
The discount factor should be computed by
= 1 ÷ (1 + rate) ^ years
Internal rate of return: It is that rate of return in which the net present value is zero. i.e NPV = zero
Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl-Hirschman index of 2,765. Case’s share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the post merger Herfindahl-Hirschman index increase?
Answer:
The Post Merger Herfindahl-Hirschman index will increase by 528 Points
Explanation:
Herfindahl-Hirschman index or simply the HH Index measures a market's level of competitiveness based on the number of firms participating in the industry.
HH Index has a maximum of 10,000 points for a market that is dominated by one firm and continues to reduce and tend towards 0 as the number of firms with equal sizes in the industry increases. In other words, the increase in an industry's HH Index is a function of the decrease in the number of firms in the industry and the disparities in sizes among the firms in the industry.
For acceptable levels of HH Index, the general consideration is that a market with HH Index between 1,500 and 2,500 has a moderate concentration, while any market with HHI higher than 2,500 points is highly concentrated.
To the Question,
the Success of the Merger between Fiat and Case would reduce the number of firms in the market and this will lead to an increased HHI,The formula for increase in HH Index==10,000 (Maximum HHI Points) [(22% (Case's Market Share + 12% (Fiat's Market Share)^2 - (22%)^2- (12%)^2]= 10,000 [(0.22 + 0.12)^2 - (0.22)^2 - (0.12)^2]=10,000 (0.0528)=528 PointsThis means the Post Merger HH Index will increase by 528 Points from 2,765 to 3, 293 (2,765+528)The Herfindahl-Hirschman Index (HHI) post the merger between Fiat and Case with market shares of 12% and 22% respectively, increases by 532.
Explanation:Herfindahl-Hirschman Index (HHI) is used to measure the concentration of market by adding the square of the market share of each firm in the industry. In this case, there is a merger between Fiat and Case with market shares of 12% and 22% respectively. You calculate market concentration post-merger by squaring the new combined market share of the merged entity (Fiat-Cases), and add it to the HHI of the other remaining firms. The increased HHI after the merger can be calculated as follows: ((12 + 22)^2 - (12^2 + 22^2)) = (34^2 - (144 + 484)) = 1160 - 628 = 532. Hence, the post merger Herfindahl-Hirschman index would increase by 532.
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Water resource economics. The riparian doctrine Select one: a. Is a method of allocating water, according to proportion of land next to a stream, used in the west and east United States. b. Is a method of allocating water dubbed "first-in-time, first-in-right." c. Is a method of allocating water developed by miners to account for water scarcity. d. Is a method of allocating water effective in humid climates (Eastern US) but that was replaced by the doctrine of prior appropriation in the west.
Answer:
a. Is a method of allocating water, according to proportion of land next to a stream, used in the west and east United States
Explanation:
Riparian Water Rights (Riparian Rights)
This reprsents a water allocation system, allowing landowners who owned lands along rivers and streams to use the water for basic domestic purposes including cooking, bathing, drinking and watering livestock.
These landowners were also responsible for ensuring that the water body is preserved in a unpolluted and undiminshed condition.
This Riparian Water Rights was used in may areas of common law heritage such as Western and Eastern United States including Canada among others. Outside the United States, Australia also used the Riparian Water Rights.
The government has the ability to influence the level of output in the short run using monetary and fiscal policy. There is some disagreement as to whether the government should attempt to stabilize the economy.
Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply.
a.Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses.
b. The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates.
c. Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president.
d. Businesses make investment plans many months in advance.
Which of the following are examples of automatic stabilizers? Check all that apply.
a. Unemployment insurance benefits
b. Personal income taxes
c. The discount rate
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Quirch Inc. manufactures machine parts for aircraft engines. The CEO, Chucky Valters, was considering an offer from a subcontractor who would provide 2,400 units of product PQ107 for Valters for a price of $150,000. If Quirch does not purchase these parts from the subcontractor it must produce them in-house with the following costs:
Cost per Unit:
DM 31
DL 18
Variable Overhead 9
Answer:
Supplier's quotation (2,400 x $6.25) 150,000
Less: Relevant cost of production:
Direct material (2,400 x $31) 74,400
Direct labour (2,400 x $18) 43,200
Variable overhead (2,400 x $9) 21,600 139,200
Savings 10,800
The parts should be produced in-house since the relevant cost of production is lower than supplier's quotation.
Explanation:
In this case, we need to compare supplier's quotation to the relevant cost of production. The price of $6.25 above was computed by dividing the total price charged by the supplier by the number of parts. Moreso, the relevant cost of production is obtained by the aggregate of direct material, direct labour and variable overhead.
To make an informed decision, Chucky Valters, the CEO of Quirch Inc., needs to compare the costs of purchasing 2,400 units of product PQ107 from the subcontractor with the in-house production costs. The purchase price from the subcontractor is $150,000 for 2,400 units, which translates to $62.50 per unit.
On the other hand, if Quirch produces the parts in-house, they would incur the following costs per unit:.s (DM) $31, Direct Labor (DL) $18, and Variable Overhead $9, totaling $58 per unit.
By comparing the purchase price of $62.50 with the in-house production cost of $58 per unit, Chucky can make an informed decision about whether to accept the subcontractor's offer or produce the parts in-house. If the purchase price is lower than the in-house production cost, it may be more cost-effective to buy from the subcontractor, but if the in-house production cost is lower, it would be better to manufacture the parts internally.
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The equilibrium price of peanut butter is $5. A study comes out that says the fat in peanut buffer is good for your heart. Holding all other factors constant, which of the following scenarios could happen?
a. The price of peanut butter increases to $7 because of a supply shift.
b. The price of peanut butter decreases to $4 because of a supply shift.
c. The price of peanut butter decreases to $4 because of a demand shift.
d. The price of peanut butter increases to $7 because of a demand shift.
e. The price of peanut butter increases to $7 because of a demand AND a supply shift.
Answer:
The equilibrium price of peanut butter is $5. A study comes out that says the fat in peanut buffer is good for your heart. Holding all other factors constant, which of the following scenarios could happen?
The price of peanut butter increases to $7 because of a demand AND a supply shift
Explanation:
As a result of price increment, there would be a shift in the demand and supply. the increase in demand as a result of health importance would directly cause an increase in supply for the increase in demand to be met.
If a study comes out claiming that the fat in peanut butter is good for your heart, the demand for peanut butter would increase, leading to a higher price and quantity of peanut butter.
Explanation:In this scenario, the equilibrium price of peanut butter is $5. If a study comes out that says the fat in peanut butter is good for your heart, it would likely increase the demand for peanut butter. This would result in an increase in both the price and quantity of peanut butter, as the demand curve shifts to the right.
So, the correct answer is d. The price of peanut butter increases to $7 because of a demand shift.
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At L=64, K = 82, the marginal product of labor is 10 and the marginal product of capital is 20. What is the marginal rate of technical substitution (labor measured on the horizontal axis)?
The marginal rate of technical substitution is _________.(Enter a numeric response using real number rounded up to two decimal places)
Answer:
-0.5
Explanation:
Marginal rate of technical substitution (MRTS) refers to the rate at which the inputs are substituted for one another in a production of particular good.
Given that,
The marginal product of labor = 10
The marginal product of capital = 20
Hence,
[tex]MRTS=(-)\frac{MP_{L} }{MP_{K} }[/tex]
[tex]MRTS=(-)\frac{10}{20}[/tex]
= - 0.5
Therefore, the marginal rate of technical substitution is - 0.5.
The Marginal Rate of Technical Substitution (MRTS) is -0.5, indicating that each additional unit of capital can substitute 0.5 units of labor while maintaining the same production level.
Explanation:The Marginal Rate of Technical Substitution (MRTS) measures the rate at which a firm can substitute capital for labor and still remain at the same level of production. It is calculated by taking the negative ratio of the marginal product of labor (MPL) to the marginal product of capital (MPK), as labor is measured on the horizontal axis. In the given scenario, the MPL is 10 and the MPK is 20.
To calculate the MRTS, we use the formula: MRTS = -MPL/MPK. By substituting the given values, we get MRTS = -10/20 = -0.5.
So, in this case, the Marginal Rate of Technical Substitution is -0.5, meaning that each additional unit of capital used would decrease the amount of labor needed by 0.5 units, maintaining the same level of production.
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You bought a stock one year ago for $ 50.00 per share and sold it today for $ 55.00 per share. It paid a $ 1.00 per share dividend today.
a.What was your realized return?
b. How much of the return came from dividend yield and how much came from capital gain?
Answer:
a. 12%
b. 2% and 10%
Explanation:
a. The computation of the realized return is shown below:
= {(Ending share price - initial price) + Dividend} ÷ (Initial price) × 100
= {$1 + ($55 - $50)} ÷ $50
= 12%
b. The computation of the dividend yield and the capital gain is shown below:
Dividend yield
= (Dividend) ÷ (initial price) × 100
= $1 ÷ $50 × 100
= 2%
For capital gain yield:
= (Ending share price - initial price) ÷ (Initial price) × 100
= ($55 - $50) ÷ ($50) × 100
= $5 ÷ $50 × 100
= 10%
You own a portfolio that is invested 20 percent in stock A, 30 percent in stock B, and the remainder in stock C. The expected returns on these stocks are 3.7 percent, 14.5 percent, and 18.2 percent, respectively. What is the expected return on the portfolio?
Answer:
The expected return on the portfolio is 14.19%.
Explanation:
This problem require us to calculate the expected return on entire portfolio. The expected return on every stock that will be the part of portfolio is given in the question and their weightage in portfolio is also provided in the problem.
We can easily calculate the expected return using following weightage average formula.
ER portfolio' = WA * ERA + WB * ERB + WC* ERC
' WA = Weightage of stock in portfolio
ERA = Expected return on stock A
= 20% * 3.7 + 30% * 14.5 + 50* 18.2
= 14.19%
he demand for labor is L = 4000minus300w, where L is the number of workers demanded and w is the hourly wage rate. The supply of labor is L = 200w. The equilibrium wage rate in this market is $ 8, and the equilibrium quantity of labor is 1600 workers. (Enter your responses as integers.) A minimum wage law is passed that sets the minimum wage at $9 per hour. As a result, 1300 workers are demanded and 1800 workers are supplied, so unemployment is 500workers. (Enter your responses as integers.) Do all workers benefit from the minimum wage law? No, because not everyone can find work at the higher wage. Which group of workers will have the least difficulty finding work at the minimum wage? A. Highly educated workers. Your answer is correct.B. Low skilled workers. C. Young and inexperienced workers. D. All of the above. The deadweight loss from the minimu
Answer:
Please find the detailed answer as follows:
Explanation:
The deadweight loss for the given information is = 1/2*2.5*300 = $375
The supply of labor of 1800 will have wage rate 1300 = 200*w
or w = 1300/200 = $6.5
Then the area of shaded portion in the figure or the deadweight loss will be 1/2*base(9-6.5) *altitude (1600-1300).
The establishment of a minimum wage leads to unemployment among workers and deadweight loss in the labor market, with highly educated workers facing the least difficulty in finding employment.
Explanation:The introduction of a minimum wage law sets the price of labor above the equilibrium, causing the quantity demanded by employers to fall and the quantity supplied by workers to rise, resulting in unemployment. At a minimum wage of $9, 1300 workers are demanded while 1800 are supplied, creating unemployment of 500 workers. Not all workers benefit from the minimum wage law; in fact, it often leads to a surplus of labor where some workers struggle to find employment.
When considering which group of workers will have the least difficulty finding work at the minimum wage, it is typically highly educated workers who fare better due to their qualifications and experience compared to low-skilled or young and inexperienced workers.
The deadweight loss in the labor market arises because the minimum wage creates a gap between the quantity of labor supplied and the quantity demanded, leading to inefficient allocation of resources and potential losses in welfare for both workers and employers.
A portfolio has 30% of its value in IBM shares and the rest in Microsoft (MSFT). The volatility of IBM and MSFT are 35% and 30%, respectively, and the correlation between IBM and MSFT is 0.5. What is the standard deviation of the portfolio excel?
The portfolio's standard deviation is calculated using a designated formula that incorporates the weights of the stocks in the portfolio, their individual volatilities, and their correlation. Substituting the given values into this formula will provide the standard deviation.
Explanation:To find the standard deviation of the portfolio, we first need to consider the weights of each stock in the portfolio and their respective volatilities. The weight of IBM (x) is 30% and Microsoft (y) is 70%. The volatilities, or measures of risk, for IBM and Microsoft are 35% and 30% respectively. The correlation between IBM and Microsoft, which measures how the two stocks move in relation to each other, is given as 0.5.
Given these values, we can use the portfolio standard deviation formula, which is represented as:
σp = sqrt[(x^2)*(σ1^2) + (y^2)*(σ2^2) + 2*x*y*corr(1,2)*σ1*σ2]
where σp is the portfolio standard deviation, x and y are the weights, σ1 and σ2 are the standard deviations (volatilities) of the two stocks, and corr(1,2) is the correlation between the two stocks.
You need to plug the given values for the weights, volatilities and correlation into the formula. Remember, when computing the result, the volatility values should be expressed in decimal form, i.e., 35% would be 0.35.
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Assume that you are a vending machine dealer. You plan to purchase a vending machine for $200,000. One year later, you are expected to sell it back and receive $224,000 as cash. What is the IRR (internal rate of return) on this investment? Be sure to apply the definition of IRR and show your work.
3 points>
In order to buy the vending machine, you plan on borrowing $80,000 from Bank at 5% of interest rate and raise $120,000 from investors at 10% of cost of equity, are you going to accept this project? Why? (Tax rate is 30%). Show your work.
Answer:
1) 22%
2) YES as the return in the investment is 12% while the average cost of capital in this case; is of 8% hence there is a gain above the minimum accepted return.
Explanation:
[tex]-200,000 + \frac{224,000}{1+ IRR} = 0[/tex]
IRR = 12%
weighted-average cost of capital:
DEBT 80,000 x 5% = 4,000
EQUITY 120,000 x 10% = 12,000
VALUE 200,000 16,000
16,000 / 200,000 = 8%
Which of the following statements about the consumers’ responses to rising gasoline prices is correct?
a.About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.
b.About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars
.c.About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
d.Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run
Answer:
c.About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
Explanation:
In a long run, The demand is more elastic than in a short run, this is because the consumers have both more time and number of substitutes to switch to. So almost 50% of long-run decrease in quantity demanded is due to less driving by people, while rest 50% is due to people switching to more fuel-efficient cars.
When the price level declines the interest rate falls, and consumers borrow more funds, which causes a movement down along the aggregate demand curve. interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left. the interest rate rises, and consumers borrow fewer funds, which causes a movement up the aggregate demand curve. the interest rate is not affected, so there is no movement along the aggregate demand curve.
Answer:
Interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left.
Explanation:
The quantity of money demanded is inversely related to the interest rate. One of the most useful features of the liquidity preference framework is that it allows us to see how changes in the demand and supply of money affect interest rates.
Equilibrium interest rates will increase if there is a…
Increase in money demand (+)
Decrease in money supply (+)
Equilibrium interest rates will decrease if there is a…
Decrease in money demand (-)
Increase in money supply (-)
A lower price level has the opposite affect inducing a decrease in the interest rate which triggers an increase in borrowing used for consumption expenditures and investment expenditures. The negative slope of the aggregate demand curve captures the inverse relation between the price level and aggregate expenditures on real production.When the price level changes, the interest-rate effect is activated, which is what then results in a change in aggregate expenditures and the movement long the aggregate demand curve.A higher interest rate can add to the overall cost of the expenditure. A lower interest rate can reduce the overall cost of the expenditure.
This means that changes in the interest rate can have a big impact on consumption and investment spending. The interest rate tends to increase and decrease as the price level increases and decreases. This means that a higher price level induces a higher interest rate which raises the cost of borrowing and discourages investment and consumption spending. A lower price level has the opposite result.
An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.
Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.
(a) Payment of interest on notes payable. Financing activityOper. activity(loss); invest. activity(cash proceeds from sale)Operating activityInvesting activityNoncash investing and financing activity
(b) Exchange of land for patent. Operating activityInvesting activityOper. activity(loss); invest. activity(cash proceeds from sale)Financing activityNoncash investing and financing activity
(c) Sale of building at book value. Investing activityOperating activityNoncash investing and financing activityOper. activity(loss); invest. activity(cash proceeds from sale)Financing activity
(d) Payment of dividends. Financing activityOperating activityNoncash investing and financing activityInvesting activityOper. activity(loss); invest. activity(cash proceeds from sale)
(e) Depreciation. Operating activityInvesting activityFinancing activityOper. activity(loss); invest. activity(cash proceeds from sale)Noncash investing and financing activity
(f) Receipt of dividends on investment in stock. Investing activityFinancing activityOper. activity(loss); invest. activity(cash proceeds from sale)Operating activityNoncash investing and financing activity
(g) Receipt of interest on notes receivable. Noncash investing and financing activityOper. activity(loss); invest. activity(cash proceeds from sale)Investing activityFinancing activityOperating activity
(h) Issuance of capital stock. Investing activityOper. activity(loss); invest. activity(cash proceeds from sale)Financing activityOperating activityNoncash investing and financing activity
(i) Amortization of patent. Noncash investing and financing activityInvesting activityOper. activity(loss); invest. activity(cash proceeds from sale)Operating activityFinancing activity
(j) Issuance of bonds for land. Oper. activity(loss); invest. activity(cash proceeds from sale)Operating activityFinancing activityInvesting activityNoncash investing and financing activity
(k) Purchase of land. Financing activityOper. activity(loss); invest. activity(cash proceeds from sale)Investing activityOperating activityNoncash investing and financing activity
(l) Conversion of bonds into common stock. Financing activityOperating activityInvesting activityNoncash investing and financing activityOper. activity(loss); invest. activity(cash proceeds from sale)
(m) Loss on sale of land. Noncash investing and financing activityInvesting activityOperating activityOper. activity(loss); invest. activity(cash proceeds from sale)Financing activity
(n) Retirement of bonds. Noncash investing and financing activityOper. activity(loss); invest. activity(cash proceeds from sale)Investing activityFinancing activityOperating activity
Answer:
Explanation:
There are three types of activities in the cash flow statement which are described below:
1. Operating activities: It includes those transactions which affect the working capital after net income. The increase in current assets and a decrease in current liabilities would be deducted whereas the decrease in current assets and an increase in current liabilities would be added.
These changes in working capital would be adjusted. Moreover, the depreciation expense is added to the net income
2. Investing activities: It records those activities which include purchase and sale of the long term assets. The purchase is an outflow of cash whereas sale is an inflow of cash
3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance. The issue of shares is an inflow of cash whereas redemption and dividend is an outflow of cash.
So, the categorization is shown below:
(a) Payment of interest on notes payable - Operating activity
(b) Exchange of land for patent - non- cash investing and financing activity
(c) Sale of building at book value - Investing activity
(d) Payment of dividends - Financing activity
(e) Depreciation - Operating activity
(f) Receipt of dividends on investment in stock - Operating activity
(g) Receipt of interest on notes receivable - Operating activity
(h) Issuance of capital stock - Financing activity
(i) Amortization of patent - Operating activity
(j) Issuance of bonds for land - Non-cash investing and financing activity
(k) Purchase of land - Investing activity
(l) Conversion of bonds into common stock - Non-cash investing and financing activity
(m) Loss on sale of land - Operating activity
(n) Retirement of bonds. - Financing activity
Your project sponsor, after reading through the risk response plan, has sent you an email asking you to justify the costs associated with the risk responses. You have decided to have each risk owner justify the cost for the responses to their risks. In delegating this work to them, provide instructions on how they would complete this analysis to show the benefit of the risk responses.
Answer:
Please find the detailed answer as follows:
Explanation:
A cost benefit analysis will be the most appropriate in this case.
Instructions to develop cost association with the risk responses:
List the risks associated with the system Note down the direct costs associated with the risk Note down the indirect costs associated with the risk Highlight the benefits associated with the solution for the risk
Jeremy operates his own small business, but he doesn't want to be bothered with accounting information. He tells his friends, "All I need accounting for is to prepare my income tax return for my business. I'll hire someone to do that for me." Jeremy's attitude would be disastrous if he managed a large firm, but is a reasonable view for a small business owner. (Points : 2) True False
Answer:
The correct answer is the option True, it would be reasonable.
Explanation:
To begin with, accounting is one of the most importants subjects to have in mind regarding the fact of openning and managing a business, no matter how small or large that firm will be. Moreover, accounting will facilitate the fact of keeping up with everything that goes in and goes out regarding money in the business and to also help the manager to see how well the incomes and outcomes are doing in the balance sheet. Therefore that accounting can help the manager to improve the performance of the business if the information is understood and used properly. Besides, accounting information is obligatorily important when regarding subjects of taxes and legal matters as well.
Secondly, although is important to keep up with the accounting of the business, a small company could not pay too much attention to it and instead focusing in other matters. However, it is very important to understand that to be a master in managing a business and to improve the performance of it, it is very important to give more attention to accounting information with the purpose of understanding the business better.
Jeremy's disregard for accounting principles, except for tax preparation, is not a reasonable view for any business owner as it overlooks the importance of accounting in decision-making and understanding the business's financial health.
Explanation:The statement that Jeremy's attitude toward accounting would only be reasonable for a small business owner but disastrous for a large firm is false. Accounting offers more than just preparation for income tax; it is a crucial element for decision-making at any business size. Accurate profit and loss accounting helps entrepreneurs make informed decisions about resource utilization and consider opportunity costs, which directly impact the viability and strategic planning of the business. Even for a small business, ignoring accounting principles can lead to suboptimal decisions, such as underpaying oneself or failing to grasp the full financial impact of business operations. Thus, a thorough understanding of accounting is vital irrespective of the enterprise’s size.
Grace owns a house. She can rent her house for two years to one tenant for a profit of $24,000 a year, or she can rent it to two tenants each year for a profit of $10,000 per tenant per year. Calculate the economic rent over the course of two years of renting to one tenant.
Answer:
The economic rent will be $8,000
Explanation:
The formula to compute the economic rent renting to 1 tenant is as:
Economic rent = Marginal Product - Opportunity Cost
where
Marginal cost would be for two years $24,000 × 2
= $48,000
Opportunity cost would be renting to 2 tenant per year
= $10,000 × 2 year × 2 person
= $40,000
Putting the values above:
= $48,000 - $40,000
= $8,000
Ginger, Inc., has declared a $5.70 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 20 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid.
The company's stock sells for $94.15 per share, and the stock is about to go ex dividend. What do you think the ex-dividend price will be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$89.59
Explanation:
The computation of the ex-dividend price would be
= Sale price of the stock - after-tax dividend
where,
The sale price of the stock would be $94.15
And, the after-tax dividend would be
= Dividend per share × (1 - tax rate)
= $5.70 × (1 - 0.20)
= $5.70 × 0.80
= $4.56
Now put these values to the above formula
So, the value would equal to
= $94.15 - $4.56
= $89.59
The ex-dividend price of Ginger, Inc. would be $89.59 per share after accounting for a 20% tax on its declared $5.70 dividend. This price represents the stock's value after the dividend's after-tax amount has been subtracted from its current price.
Explanation:The question involves the concept of an ex-dividend price, which is the price that a stock typically drops to after a dividend is paid out. In this scenario, Ginger, Inc. has declared a $5.70 per share dividend. Since capital gains are not taxed but dividends are taxed at a rate of 20%, investors will receive only $5.70 - ($5.70 × 0.20) = $4.56 per share after taxes. To find the ex-dividend price, we subtract this after-tax dividend from the stock's current price of $94.15. Therefore, the ex-dividend price would be $94.15 - $4.56 = $89.59.
To illustrate further, consider a scenario where an investor buys a share for $100 with an expectation of a $6.00 dividend. If the stock price rises to $105 and they sell, they receive a capital gain in addition to the dividend. Similarly, if they bought a share of Wal-Mart for $45 and sold it for $60, the $15 profit is also a capital gain. Whether it's an increase in stock value or receiving dividends, both contribute to the investor's rate of return.
A higher Discount Rate tends to ___________ the price of loans because the overall supply of bank reserves tends to be smaller..
Answer:
decrease
Explanation:
Discount rates on loans have an inverse relationship with loan prices; if the rate increases, the price will decrease and vice versa. In this case, a higher discount rate will decrease the price of loans as excess reserves in commercial banks and other lending institutions get smaller. This reduces the overall money supply in the economy.
Hancock Inc. retains most of its earnings. The company currently has earnings per share of $11. Hancock expects its earnings to grow at a constant rate of 2 percent per year. Furthermore, the average PE ratio of all other firms in Hancock's industry is 12. Hancock is expected to pay dividends per share of $3.50 during each of the next three years. If investors require a 10 percent rate of return on Hancock stock, a fair price for Hancock stock today is ___A) 113.95
B) 111.32
C) 131.49
D) none of the above
Answer:
D1 = $3.50
D2 = $3.50
D3 = $3.50
Ke = 10% = 0.1
Po = D1 + D2 + D3
(1+ke) (1+ke)2 (1+ke)3
Po = $3.50 + $3.50 + $3.50
(1+0.1) (1+0.1)2 (1+0.1)3
Po = $3.18 + $2.89 + $2.63
Po = $8.70
None of the above
Explanation:
In this scenario, we need to discount the dividend in each year by the required at rate of return of 10%. The aggregate of the price obtained as a result of discounting in year 1 to year 3 gives the current market price.
Suppose Amazon Inc. pays no dividends but spent $ 2.95 billion on share repurchases last year. If Amazon's equity cost of capital is 7.6 %, and if the amount spent on repurchases is expected to grow by 6.4 % per year, estimate Amazon's market capitalization. If Amazon has 428 million shares outstanding, what stock price does this correspond to?
Answer:
Market Capitalization = $261.567 Billion
Stock Price per share = $611.137 per share
Explanation:
given data
spent = $2.95 billion
equity cost of capital ke = 7.6 % = 0.076
grow = 6.4 % per year = 0.064
shares outstanding = 428 million = 0.428 Billion
to find out
Amazon’s Market Capitalization and stock price
solution
first we get here Amazon's market capitalization that is express as
Market Capitalization = Cash Flow (1 + g) ÷ (Ke - g) ..............1
here g is grow rate and ke is equity cost of capital
Market Capitalization = [tex]\frac{2.95(1+0.064)}{(0.076-0.064)}[/tex]
Market Capitalization = $261.567 Billion
and
Stock Price per share will be as
Stock Price per share = [tex]\frac{Market\ Capitalization}{shares\ outstanding}[/tex] ..................2
Stock Price per share = [tex]\frac{261.567}{0.428}[/tex]
Stock Price per share = $611.137 per share
Silver Mining is opening a new mineral extraction facility in the local town and will employ several thousand people. They have decided to install scrubbers on the smokestacks of their facility in order to protect the environment, even though they are not required by the law to install them. This is an example of:
Final answer:
Silver Mining's installation of scrubbers on smokestacks at a new facility is an example of corporate environmental responsibility aimed at reducing air pollution.
Explanation:
When Silver Mining opens a new mineral extraction facility and voluntarily installs scrubbers on their smokestacks without a legal requirement, they are engaging in corporate environmental responsibility. Scrubbers are used to clean emissions such as SO₂, NOx, and particulate matter before they enter the atmosphere. This decision reflects a commitment to reducing air pollution and protecting both the environment and local population's health, which could also prevent future environmental damage and public health issues, such as those experienced in communities near mining operations, as described in the provided references.
Final answer:
Silver Mining's installation of scrubbers is a form of corporate environmental responsibility that exceeds legal requirements to reduce pollution from their new mineral extraction facility, showing commitment to protecting the environment and public health.
Explanation:
The decision by Silver Mining to install scrubbers on the smokestacks of their new mineral extraction facility, even when not legally required to do so, is an example of corporate environmental responsibility. This proactive step goes beyond compliance and demonstrates a commitment to reducing the environmental impact of their operations. Scrubbers are technologies that clean emissions such as sulfur dioxide (SO₂), nitrogen oxides (NOx), particulate matter, and mercury from the smoke before it is released into the atmosphere. Power plants commonly use these devices to minimize air pollution. While other strategies may also achieve pollution reduction, such as switching to lower sulfur coal or using renewable energy, the installation of scrubbers is a direct method that addresses emissions at the source.
Environmental challenges associated with extractive industries, like mining, have historically led to significant health and environmental issues for local communities. These include air and water contamination from harmful chemicals and the degradation of land. Silver Mining's installation of scrubbers represents a trend where companies are recognizing the importance of not just meeting legal requirements, but also engaging in practices that safeguard the environment and public health.
The body system most responsible for homeostasis in response to stress and broadly dictates metabolism is ___.
The body system most responsible for homeostasis in response to stress and broadly dictates metabolism is the immune system
Explanation:
The immune system is a diverse cell and protein system that protects the body from infection. Each germ (microbe) which the immune system has ever overcome will be registered, so it can quickly recognize and remove the microbe if it goes in the body.
The capacity of the immune system to combat antigens is decreased when we become stressed. We are therefore more vulnerable to infections. The corticosteroid stress hormone can minimize the immune system efficacy (i.e., decreased lymphocyte numbers).
Andy "Nard Dog" Bernard graduated from Cornell in May of 2018 with a BA in Women's Studies. As a graduation gift, Nard Dog's father, a widower, gave him an old Toyota Prius because, according to the father, "the Ferarri is more your brother's style and the old Prius reminds me of you." The Prius was originally purchased 8 years ago for $33,000 and today it is worth $16,000.
1. How much of the gift is subject to the gift tax?
2. If Andy's father sold the Prius for $16,000 and then gave Andy the proceeds from the sale, how much of the gift would be subject to federal gift taxes?
3. If Andy's father sold the Prius for $16,000 and then gave the proceeds from the sale to Cornell to pay for Andy's graduate school tuition, how much of the gift would be subject to federal gift taxes?
Solution:
1. Amount of gift subject to gift tax is only $ 1,000.
In 2018, the gift tax exclusion limit is $ 15,000. Hence, only the amount over and above $ 15,000 is subject to gift tax and IRS form 109 to be filled.
Here, the fair value of car is considered as the worth of gift.
So, taxable amount of gift is $ 16,000 - $ 15,000 = $ 1,000.
2. Amount of gift subject to gift tax = $ 1,000
The gift tax provisions will not change even if Andy's father gifted him a car or in terms of sale proceeds (cash).
Any asset money or money's worth is given to another person where full consideration is not received back is a gift.
3. If Andy's father give sale proceeds to Cornell, Amount of gift subject to federal gift tax = $ 0
Any amount given directly to an educational institution to pay tution fees as a gift is exempt from gift tax.
Here, Andy's father directly give the sale proceeds of $ 16,000 to Cornell as a gift for his further studies, that amount is exempt from gift tax.
The portion of the gift subject to gift tax depends on the value of the gift and the annual exclusion limit. If the gift is below the annual exclusion limit or qualified education expense, no gift taxes would be owed.
Explanation:1. The gift tax applies to the portion of the gift that exceeds the annual gift tax exclusion limit. For 2018, the annual exclusion limit is $15,000 per recipient. Since the value of the Prius is $16,000, only $1,000 would be subject to gift tax.
2. If Andy's father sold the Prius for $16,000 and then gave him the proceeds, the gift would still be $16,000. However, since it is below the annual exclusion limit, no federal gift taxes would be owed.
3. If Andy's father sold the Prius for $16,000 and then gave the proceeds to Cornell for Andy's graduate school tuition, the gift would still be $16,000. However, since it is a qualified education expense, it would not be subject to federal gift taxes.