Answer:
The correct word for the blank space is: dynamic.
Explanation:
Dynamic pricing policies are based on certain time frames in which the demand for a service is requested. According to those time frames, the time could be cheaper or more expensive. Businesses are said to establish flexible prices under this scenario.
The strategy where Uber and Lyft adjust prices based on consumer demand is known as dynamic pricing. This is a strategy used when the demand for a product or service is greater than its supply, with the price increase intended to balance the supply and demand.
Explanation:The policy you're referring to, where Uber and Lyft increase prices during periods of peak demand, is known as dynamic pricing policy.
Dynamic pricing, also called demand pricing or time-based pricing, is a strategy where businesses set flexible prices for products or services based on current market demands.
For Uber and Lyft, this means when the demand for rides is higher than the number of available drivers, prices go up. This acts as an incentive for more drivers to work during these busy times, and balances the supply and demand of rides.
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Worthington Chandler Company purchased equipment for $12,000. Sales tax on the purchase was $800. Other costs incurred were freight charges of $200, repairs of $350 for damage during installation, and installation costs of $225.
What is the cost of the equipment?
a. $12,000b. $12,800c. $13,225d. $13,575
Answer:
d. $13,575
Explanation:
The cost of the equipment includes all the cost incurred to bring the equipment to a state where it becomes available for use.
These costs are the cost of the equipment, sales tax, freight, repairs during installation and installation cost.
Therefore,
Cost of the equipment = $12,000 + $800 + $200 + $350 + $225
= $13,575
The right option is d. $13,575.
The island country of Mauritius is small but has lowered its barriers for international trading partners. Its location in the Indian ocean is close to Madagascar and the African continent. Mauritius trades between countries close by, and larger countries such as India. How does Mauritius benefit from lowering its trading barriers?
1)
Workers and companies can now specialize in competitive areas because other goods and services are imported through international trade.
2)
Its economy produces all the goods and services the country requires and thus helps the local business grow.
3)
It maintains a very high standard of living because of the domestic dominance over other products and services.
Answer:
Workers and companies can now specialize in competitive areas because other goods and services are imported through international trade.
Explanation:
The countries trade through comparative advantage as they produce the goods in which they have a specialization in and exports them in exchange for goods in which they don't have a comparative advantage in.
Final answer:
Mauritius benefits from lowered trading barriers by allowing workers and companies to specialize, expanding market access beyond nearby countries to larger economies like India, and fostering economic growth through Special Economic Zones that offer tax advantages for international trade.
Explanation:
The island country of Mauritius benefits from lowering its trading barriers in several ways:
Workers and companies can specialize in areas where they have a competitive advantage, allowing other goods and services to be imported, which promotes economic efficiency.
By being open to international trade, Mauritius can tap into larger markets such as India, allowing for a diverse range of trade partnerships beyond nearby countries.
Mauritius has experienced above-average economic growth, significant due to its government-supported Special Economic Zones (SEZ), which offer tax advantages and encourage international trade.
Through policies like these, Mauritius has seen more economic opportunities and a reduction in the pressures that domestic firms might face if they only served a local market. This has culminated in overall growth and diversification of its economy.
Complete the following statement with the correct answer. ___________ is a supply chain strategy which recognizes that all items are not the same, and that different item and market characteristics require different procurement and support strategies, as well as different relationships with suppliers
Explanation:
supply chain types: efficient, fast, continuous-flow, agile, custom-configured, and flexible
Supply chain management is a supply chain strategy recognizing different item and market characteristics require different procurement and support strategies.
Explanation:Supply chain management is a supply chain strategy which recognizes that all items are not the same, and that different item and market characteristics require different procurement and support strategies, as well as different relationships with suppliers. This strategy helps businesses optimize their supply chain processes by tailoring their approach to each specific product or market.
For example, perishable goods like fruits and vegetables require a shorter supply chain with faster delivery times, while durable goods like furniture may have a longer supply chain with more emphasis on quality control and supplier relationships. By understanding the unique characteristics of each item and market, businesses can make strategic decisions that improve efficiency and customer satisfaction.
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The owner of a hair salon spends $1,000,000 to renovate its premises, estimating that this will increase her cash flow by $220,000 per year. She constructs the above graph, which shows the net present value (NPV) as a function of the discount rate. At what dollar value should the NPV profile cross the vertical axis?A) $1,000,000B) $780,000C) Cannot be determined because inadequate information is given.D) The vertical axis crossing point cannot be calculated since the cash inflows are in perpetuity
Answer:
correct option is D) The vertical axis crossing point cannot be calculated since the cash inflows are in perpetuity
Explanation:
given data
hair salon spends = $1,000,000
increase cash flow = $220,000 per year
to find out
what dollar value should the NPV profile cross the vertical axis
solution
we know that discount rate is = 0 %
as sum of cash flow is infinite
because cash flow = $220000
cash flow is here perpetual
so we can say that correct option is D) The vertical axis crossing point cannot be calculated since the cash inflows are in perpetuity
During the recession of 2007-2009, the U.S. economy was experiencing a decrease in home prices and consumer wealth, a credit crisis in the financial markets, and declining consumer and business confidence. What components of aggregate demand were affected and what was the impact on real output?What were the policy options?
Answer:
Explanation:
It has been given that during recession of 2007-2009, the US economy was experiencing a decrease in home prices and consumer wealth, a credit crisis in the financial markets, and declining consumer and business confidence.
Decrease in home prices and consumer wealth implies that purchasing power of households was declining. In addition to this consumer confidence was also decreasing. Both these factors had result in deceased consumption spending by households during 2007-2009.
Business confidence was also decreasing. This means that during 2007-2009, businesses believed that future economic scenario will be worse than present economic scenario. As businesses were not seeing the improvement in economic scenario coupled with credit crisis in financial markets, they had put on hold the new investment with respect to new projects as well expansion of existing production capabilities. This means businesses had reduced their investment spending during 2007-2009.
Consumption and investment are component of aggregate demand.
So, consumption and investment component of aggregate demand were affected by the recession of 2007-2009.
Both consumption and investment component of aggregate demand were declining during recession of 2007-2009. This decline has brought a decline in aggregate demand as well. Decline in aggregate demand, in result, has led to decline in real output as well during recession of 2007-2009.
The policy options were as follows –
1. Government spending had to be increased. This will prop up the aggregate demand as government spending is a component of aggregate demand. This will induce the businesses to increase production to cater to increased demand being made by government. This will lead to increase in real output and elimination of recession.
2. Tax rebates had to be extended to households as this will prop up their income and there by uplift their purchasing power. This will induce them to consume more there by uplifting aggregate demand and economy out of recession.
3. Rule tightening with respect to housing market and financial markets should be undertaken so that crisis can be arrested and consumer and business confidence can be uplifted. This will prop up aggregate demand and thereby pull the economy out of recession.
In 2021, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2020, CPS’s inventories were $38 million (FIFO). CPS’s records indicated that the inventories would have totaled $28.6 million at December 31, 2020, if determined on an average cost basis. Required: 1. Prepare the journal entry to record the adjustment. (Ignore income taxes.)
CPS Company changed its inventory valuation method, resulting in decrease of inventory value from $38 million to $28.6 million. To record this change, debit a loss on change in inventory valuation method by $9.4 million and credit inventory for the same amount, to reflect the new lower average cost basis.
Explanation:In this case, CPS Company is changing its inventory valuation method from the FIFO (First In First Out) method to the Average Cost method. This change resulted in a decrease in the value of the inventory from $38 million to $28.6 million. To record this change in the company's accounting system, we would need to make an adjustment entry.
Here is how to prepare the journal entry:
Debit a loss on change in inventory valuation method account by $9.4 million (which is the difference between the FIFO and average cost amounts). Credit inventory for the same amount, $9.4 million, thus reducing the inventory account to reflect the lower average cost basis.In journal entry form:
Loss on change in inventory valuation $9.4 million
To Inventory $9.4 million
This reflects the decrease in company’s assets due to valuation method change.
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Correct identification of the underlying root cause is the desired outcome of the ________________ approach to problem solving.
A. Cause-oriented
B. Symptom-oriented
C. Historical
D. Regression analysis
Answer:
Letter A is correct. Cause-oriented.
Explanation:
A cause-oriented approach to problem solving is a method characterized by focusing on the history of the problem and then thereafter finding the root cause that originated it.
It is a very effective method when used to find solutions to various organizational problems that are apparently unsolved.
In an economy with no government and no foreign sectors, autonomous consumer spending is $250 billion, plannedinvestment spending is $350 billion, and the marginal propensity to consume is 2/3.a. Plot the aggregate consumption function and planned aggregate spending.b. What is unplanned inventory investment when real GDP equals $600 billion?c. What is Y*, income–expenditure equilibrium GDP?d. What is the value of the multiplier?e. If planned investment spending rises to $450 billion, what will be the new Y*?
Answer:
Please see attachment
Explanation:
Please see attachment
Suppose on January 1 Adam's Tavern prepaid rent of $ 20 comma 400 for the full year. At March 31, how much rent expense should be recorded for the period January 1 through March 31?
Answer:
$5,100
Explanation:
Assuming a constant monthly rent rate throughout the year, the amount that should be recorded as rent expense, per month, is:
[tex]M = \frac{\$20,400}{12}\\M=\$1.700[/tex]
From January 1st through March 31st there are three full months. Therefore, the amount that should be recorded is:
[tex]A = 3*\$1,700\\A = \$5,100[/tex]
Which of the following is NOT a limitation of the payback rule?A) It is difficult to calculate.B) It does not consider the time value of money.C) It does not consider cash flows occurring after the payback period.D) Lacks a decision criterion that is economically based.
Answer:
C) It does not consider cash flows occurring after the payback period
Explanation:
Although the payback period (payback rule) is a convenient and easy way of determining the break-even point of an investment (when will the cash inflows cover the initial expenditure), the truth is that it does not take into consideration what happens with the cash flows after the payback period.
For example, when comparing two investments with a similar payback period. It would be a mistake to immediately opt for the one with a lower payback period without assessing and determining the cash flows after the payback period for both of them.
Jerome, who files as head of household, received the following income: Wages (box 1 of Form W-2) $50,000; Interest income $1,000; Christmas ham (FMV) $22; and DCB, box 10 of Form W-2 $2,000 (Spent $1,500 for childcare). How much gross income must Jerome report?
Answer:
$51,022
Explanation:
Gross income is the aggregate of wages income, interest income, and FMV only.
Given that,
Wages (box 1 of Form W-2) = $50,000;
Interest income = $1,000;
Christmas ham (FMV) = $22;
DCB, box 10 of Form W-2 = $2,000 (Spent $1,500 for childcare)
Gross income:
= Wages + Interest + FMV
= 50,000 + 1,000 + 22
= $51,022
Therefore, the gross income must Jerome report is $51,022.
if technology improves in producing computers, what will happen to the eualibrillim price and quantity of computers?
(A) Both the equilibrium price and quantity will increase.
(B) Both the equilibrium price and quantity will decrease.
(C) The equilibrium price will increase and the equilibrium quantity will decrease.
(D) the equilibrium price will decrease and the equilibrium quantity will increase
Answer:
(D) the equilibrium price will decrease and the equilibrium quantity will increase
Explanation:
Since the technology improvement will lead to a decrease in the cost of production and an increase in the ability to produce computers. The firm can produce more computers at a lower cost so there are more computers in the market. The supply curve shifts right. The consumer demand more computer as a result of the lower price. In conclusion, the equilibrium price will decrease, the equilibrium quantity will increase.
Net sales for the year were $1,100,000 and cost of goods sold was $781,000 for the company�s existing products. A new product is presently under development and will have an expected selling price of not more than $69 per unit in order to remain competitive with similar products in the marketplace.
Required:
a.
Calculate gross profit and the gross profit ratio for the year.
Net Sales $1,100,000 ? %
Cost of Goods Sold $781,000 ? %
Gross Profits $319,000 29 %
Answer:
Gross Profits $319,000 and percentage is 29 %
Explanation:
The computations are shown below:
For gross profit:
= Net sales - cost of goods sold
= $1,100,000 - $781,000
= $319,000
And, the gross profit ratio would be
= (Gross margin ÷ net sales) × 100
= ($319,000 ÷ $1,100,000) × 100
= 29%
The gross margin is computed by deducting the cost of good sold from the net sales figure amount
And, the ratio is computed by considering the gross margin and net sales
All other information which is given is not relevant. Hence, ignored it
The district magistrate of a city has decided to reconstruct the most frequented street of the city. He plans to block the street for the duration of the work, which will cause considerable inconvenience to the people of the city. The project has three parallel paths defined as the following:
Path A-B-C-H will take 16 days.
Path A-D-E-H will take 22 days.
Path A-F-G-H will take 30 days.
In the given scenario, which of the following statements is true?
a.
The expected duration of the project is 68 days.
b.
Activities B, D, and F have an earliest starting time of 0.
c.
Path A-D-E-H has the largest slack time.
d.
Path A-F-G-H is the critical path.
During 2017 the inflation rate increased slightly but remained in the "comfort zone" and the unemployment rate was low. Why might the Fed decide to try to lower interest rates (or stimulate in other ways) in this situation? In this situation, the Fed might lower the interest rate if _______.
A. it thought that the rising inflation rate was a greater problem than unemployment
B. it thought that unemployment was a greater problem than the rising inflation rate
C. the quantity of loanable funds demanded exceeded the quantity of loanable funds supplied
D. the quantity of money was growing too quickly
Answer:B It thought that unemployment was a greater problem than the rising inflation rate
Explanation:
Inflation is the continuous rise in price of goods and services which is as a result of large volume of money in circulation used for the few available goods and services.
Unemployment is a situation where all that are willing and capable of being employed are unable to get employment.
In the above scenario lowering Interest rates will increase the volume of money in circulation which will invariably increase inflation and we equally increase level of investment as the cost of fund will be cheaper thereby lowering unemployment.
This action means unemployment is of greater problem than rising inflation.
It does not mean inflation is of more concern than unemployment otherwise it will have increase the interest rate, it will make loanable fund demanded to exceed supply and the quantity of money in supply will increase.
On December 31, 2019, Ling Co. estimated that 2% of its net accounts receivable of $450,000 will become uncollectible. The company recorded this amount as an addition to Allowance for Doubtful Accounts. The allowance account had a zero balance before adjustment on December 31, 2019. On May 11, 2020, Ling Co. determined that the Jeff Shoemaker account was uncollectible and written off $1,100. On June 12, 2020, Shoemaker paid the amount previously written off. Prepare the journal entries on December 31, 2019, May 11, 2020, and June 12, 2020.
Instructions
Prepare the journal entries on December 31, 2019, May 11, 2020, and June 12, 2020.
Journalize entries for the sale of accounts receivable. LO 2)
Answer:
December 31 2019
Dr Bad Debt Expenses 9,000
Cr Allowance for uncollectible debt 9,000
(to record bad debt expenses at year end 2019)
May 11 2020
Dr Allowance for Doubtful Debt 1,100
Cr Account Receivable 1,100
(to record written-off of Receivable from Jeff Shoemaker)
June 12 2020
Dr Account Receivable 1,100
Cr Allowance for Doubtful Debt 1,100
(to reverse the written-off of Receivable from Jeff)
Dr Cash 1,100
Cr Account Receivable 1,100
(to record collection of Receivable from Jeff).
Explanation:
Further calculation note for journal entry in 31 December 2019: As the allowance for doubtful debt account is zero in 31st Dec 2019, the increase in this account balance is calculated as Net Account Receivable at the time x Uncollectible Estimation = 450,000 x 2% = $9,000.
On Dec. 31, 2019, Ling Co. recorded it expected $9,000 of its accounts receivable to be uncollectible. It then wrote off $1,100 from Shoemaker's account on May 11, 2020, and finally, recorded the recovery of the same amount on June 12, 2020, when Shoemaker cleared his debt.
Explanation:The question pertains to accounting for doubtful accounts and journal entries for write-offs and recoveries. Here are the steps:
December 31, 20191) The estimated uncollectible accounts at the end of 2019 equal 2% of $450,000 = $9,000. This is recorded by debiting (increasing) Bad Debt Expenses and crediting (increasing) Allowance for Doubtful Accounts:
Bad Debt Expense...9,000Allowance for Doubtful Accounts...9,000May 11, 20202) The company determines Jeff Shoemaker's account ($1,100) is uncollectible. This is recorded by debiting Allowance for Doubtful Accounts and crediting Accounts Receivable:
Allowance for Doubtful Accounts...1,100Accounts Receivable–Shoemaker...1,100June 12, 20203) Shoemaker pays off his previously written-off account. First, reinstate the account by debiting Accounts Receivable and crediting Allowance for Doubtful Accounts. Then, record the payment by debiting Cash and crediting Accounts Receivable:
Accounts receivable–Shoemaker...1,100Allowance for Doubtful Accounts...1,100Cash...1,100Accounts Receivable–Shoemaker...1,100Learn more about Accounting for Doubtful Accounts here:https://brainly.com/question/39534128
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The stockholders’ equity section of Indigo Corporation’s balance sheet at December 31 is presented here.INDIGO CORPORATIONBalance Sheet (partial)Stockholders’ equity Paid-in capital Preferred stock, cumulative, 11,833 shares authorized, 7,100 shares issued and outstanding $ 710,000 Common stock, no par, 717,672 shares authorized, 555,000 shares issued 1,665,000 Total paid-in capital 2,375,000 Retained earnings 1,151,000 Total paid-in capital and retained earnings 3,526,000 Less: Treasury stock (7,000 common shares) 37,333Total stockholders’ equity $3,488,667From a review of the stockholders’ equity section, answer the following questions.(a) How many shares of common stock are outstanding?Common stock outstanding shares(b) Assuming there is a stated value, what is the stated value of the common stock?The stated value of the common stock $per share(c) What is the par value of the preferred stock?The par value of the preferred stock $per share(d) If the annual dividend on preferred stock is $49,700, what is the dividend rate on preferred stock?The dividend rate %(e) If dividends of $71,400 were in arrears on preferred stock, what would be the balance reported for retained earnings?The Retained Earnings balance $
Answer:
a) shares outstanding: 548,000
b) $3 per share
c) $10 per share
d) 7% return
e) zero as if there were retained earnings they should be used to pay the dividends in arrears to preferred stock
Explanation:
issued shares: 555,000
treasury stock: (7,000)
outstanding 548,000
b)
common stock balance: $ 1,665,000
shares issued: 555,000
face value per share: $3
c) 710,000 preferred stock blaance / 7,100 shares = 100
d)
dividend/face value of preferred stock:
49,700 / 710,000 = 0.07
The price of a dozen roses in the United States is $30. If $0.2597 can purchase 1.00 Israeli shekel, how much does the same dozen roses cost in Israel if purchasing power parity holds? shekels
Part 2 (1 point)See Hint If the actual price of a dozen roses in Israel is more than the answer you found in Part 1, how might you account for the discrepancy? Choose one or more:
A. The roses are not identical products.
B. Purchasing power parity exists only for manufactured products.
C. Transportation costs are higher for the roses bought in Israel.
D. Prices may not have fully adjusted.
Answer:
Part 1: If power parity holds, a dozen of roses in Israeli shekel price is 115.5179. Part 2: C. Transportation costs are higher for the roses bought in Israel.
Explanation:
A rose is a primary product that has the same production process everywhere. Nevertheless, it requires climate conditions that Israel does not have, so the potential difference in price is transportation cost
An auto-parts company is deciding whether to sponsor a racing team for a cost of $1 million. The sponsorship would last for three years and is expected to increase cash flows by $570,000 per year. If the discount rate is 6.9 %, what will be the change in the value of the company if it chooses to go ahead with the sponsorship?A) $747,896B) $797,756C) $847,615D) $498,597
Answer:
$498,597
Explanation:
The company's' worth would be increased by as much as the net present value of the sponsorship.
We calculate the Present value of cash flows @ 6.9%
Year 1 = 570,000 * (1/1+0.069) = 533,209 (rounded)
Year 2 = 570,000 * (1/(1+0.069)^2) = 498,792 (rounded)
Year 3 = 570,000 * (1/(1+0.069)^3) = 466,597 (rounded)
NPV = (533209 + 498792 + 466,597) - 1,000,000
NPV = $498,598
This is the net increase in value of the company.
Hope that helps.
Tyrol Company creates a subsidiary, Venice Company. Tyrol transfers cash of $50,000, land with both a cost and book value of $175,000, and a building with a cost of $150,000 and a book value of $100,000 to Venice, in exchange for all 500,000 shares of Venice’s $1 par common stock. Tyrol’s journal entry to record the transfer would include:
Answer:
The journal entry is provided below:
Explanation:
The journal entry which is to be recorded for transfer is as:
Common Stock A/c............................Dr $500,000
Land A/c...........................................Cr $175,000
Building A/c.....................................Cr $150,000
Cash A/c...........................................Cr $50,000
Paid in Capital A/c...........................Cr $125,000
Working Note:
Common Stock A/c = Number of Shares × Rate per share
= 500,000 × $1
= $500,000
Paid in Capital A/c = Common stock -(Land + Building +Cash)
= $500,000 - ($175,000 + $150,000 + $50,000)
= $500,000 - $375,000
= $125,000
Note: As the options are missing, so providing the journal entry.
The journal entry for Tyrol Company would include debiting Investment in Venice Company for $325,000 and crediting Cash, Land, and Building for the respective amounts transferred, aligning with historical cost accounting.
The subject of this question is the journal entry Tyrol Company would make to record the transfer of assets to its subsidiary, Venice Company, in exchange for common stock. Given the values of cash, land, and building transferred, and assuming there are no other considerations like liabilities or costs involved in the transaction, the journal entry on Tyrol Company's books would likely include:
Debit Investment in Venice Company for the total value of assets transferred ($325,000).
Credit Cash for the amount of cash transferred ($50,000).
Credit Land for the book value of the land transferred ($175,000).
Credit Building for the book value of the building transferred ($100,000).
This entry reflects the initial investment at historical cost, which is the amount paid for the assets at the time of the transaction. It is important to note that in other contexts, such as subsequent valuations or disposals, fair value accounting could be relevant, which represents the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.
However, the specifics of the transaction could vary, and additional entries might be necessary if there were other considerations such as liabilities assumed by the subsidiary or costs directly attributable to the transaction.
Sunway Megamall is a planned shopping center in Cebu city with nearly 400,000 square feet of shopping space, and it serves around 300,000 people who stay within 30 minutes driving time from the shopping center. It contains many department stores that provide a wide assortment of convenience, shopping, and specialty goods, plus many personal service facilities. Sunway Megamall is most likely to be an example of a:
Answer: regional shopping center
Explanation: Simply put, a regional shopping center refers to the major retail shopping center covering a city or state's separate geographic area, containing at least one large full-line department store, as well as a variety of other merchants and service companies.
It is designed along at least one complete-size department store and sometimes several; there are several specialty shops and boutiques, and typically there are several establishments.
Hence from the above we can conclude that the given case depicts regional shopping center.
Duval Inc. uses only equity capital, and it has two equally-sized divisions. Division A’s cost of capital is 10.0%, Division B’s cost is 14.0%, and the corporate (composite) WACC is 12.0%. All of Division A’s projects are equally risky, as are all of Division B's projects. However, the projects of Division A are less risky than those of Division B. Which of the following projects should the firm accept?1. A Division B project with a 13% return.2. A Division B project with a 12% return.3. A Division A project with an 11% return.4. A Division A project with a 9% return.5.A Division B project with an 11% return.
Answer:
The answer is 3. A Division A project with an 11%.
Explanation:
The projects Duval Inc. should accept is the projects generating an expected return higher than its Cost of Capital.
Because all of Division A’s projects are equally risky, as are all of Division B's projects, each project of Division A will have Cost of capital of 10.0% and each project of Division B will have a Cost of capital of 14%.
For 5 projects given, only project described in (3) has expected return higher than its cost of capital ( 11% in comparison to 10%).
As a result, (3) is the correct answer.
Based on Modigliani and Miller's Propositions I and II in a perfect world without taxes nor distress costs, if the original unlevered firm value is $100 million and the CFO is planning to carry out a leveraged recapitalization to a debt equity ratio of 1:2. What’s the levered firm value? If the unlevered equity requires 11% annual return and the debt requires a 5% of annual return, what’s the required return for the levered equity? Please show all steps and equations.
Answer:
Consider the following calculations
Explanation:
Value of levered firm = Value of unlevered firm + debt*tax rate
As tax rate = 0
Value of levered firm = Value of unlevered firm =100m
Levered cost of equity = Unlevered cost of equity+D/E*( Unlevered cost of equity-cost of debt)*(1-tax rate)
Levered cost of equity = 11+0.5*(11-5)*(1-0)
Levered cost of equity = 14
The levered firm value is the same as the unlevered firm value, which is $100 million. The required return for the levered equity is calculated to be 14% using MM Proposition II.
Based on Modigliani and Miller's Propositions I and II in a perfect world (no taxes or distress costs), the value of an unleveled firm remains constant irrespective of its debt-equity structure. Hence, the levered firm value is the same as the unlevered firm value, which is $100 million.
To determine the required return for the levered equity, we use the following formula based on MM Proposition II:
rE = rU + (rU − rD) × D/E
Where:
rE = Required return on levered equity
rU = Required return on unleveled equity = 11%
rD = Return on debt = 5%
D/E = Debt/Equity ratio = 1/2 = 0.5
Plugging in the values:
rE = 11% + (11% − 5%) × 0.5
rE = 11% + 6% × 0.5
rE = 11% + 3%
rE = 14%
Thus, the required return for the levered equity is 14%.
Lower-of-cost-or-market as it applies to inventory is best described as the:
a. drop of future utility below its original cost.
b. method of determining cost of goods sold.
c. assumption to determine inventory flow.
d. change in inventory value to market value.
Answer:
The correct answer is A
Explanation:
Lower of market or cost rule is the one which states or describe that a business or firm need to record the inventory cost at lower, that means whichever cost or the current market price is lower.
It is the term which is best illustrated as the drop or decrease of future utility below the original or the actual cost of the inventory.
Which of the following should not be considered as an opportunity cost of attending college?
(A) money spent on living expenses that are the same wether or not you attend the college
(B) lost salaries
(C) Business lunches
(D) Interest that could have been earned on your money had you put the money into a saving account instead of spending it on tuition
(E) opportunities sacrificed in the decision to attend college.
Answer:
Option (A) is correct.
Explanation:
Opportunity cost refers to the cost that is incurred by selecting some other alternative. It is the benefit that is foregone from the next best alternative.
Therefore, the opportunity of attending college is as follows:
(a) Salary amount that could have been earned from the job.
(b) Interest income from depositing money into savings account
(c) The satisfaction obtained from the business lunches.
(d) Opportunities that were sacrificed for attending college.
Bobby purchased a new machine for use in his business. He incurred the following costs with the purchase: $3,300 cash paid, $12,500 financed, a $450 delivery charge, and a $330 installation charge. Bobby's basis in the machine is __________.
Answer:
$16,580
Explanation:
Bobby's basis in the machine is the amount of cash paid by Bobby for the machine.
Given that,
incurred costs with the purchase:
$3,300 cash paid
$12,500 financed
$450 delivery charge
$330 installation charge
Bobby's basis in the machine:
= Cash paid + Amount financed + Delivery charge + Installation charge
= $3,300 + $12,500 + $450 + $330
= $16,580
Huong has been saving money for two years in order to make a down payment on her first new car. She has looked at several different makes and models of both foreign and domestic cars. She finally located the "car of her dreams." Unfortunately her "dream car" is a foreign-made car and will cost her substantially more than a domestic-made car because the car is imported into the United States. In order to control the flow of products imported into the country, what does the US government and other governments impose on some imports?
Answer: Import restrictions
Explanation: Import restrictions are methods used to control the types, quantity and value of goods being imported into a country from other countries.
There are various types of import restrictions and they are:
1. Import duties: import duties are tariffs or taxes imposed on imported goods to make them more expensive thereby discouraging the purchase and use of imported goods.
2. Import quota: this is a restriction on the volume of imported goods that would be allowed into the country at a particular period of time or from a particular country.
3. Currency restrictions: this is used to restrict the amount of foreign currency used in the settlement of imported goods.
4. Prevention of the entry of illegal or harmful items into the country.
The U.S. and other governments control imports by imposing tariffs, quotas, and sometimes outright bans. Tariffs increase the cost of imports to protect domestic industries, while quotas limit the quantity of imports. These measures can protect jobs but may also limit consumer choices and competition.
Explanation:The United States government, as well as other governments around the world, impose a variety of measures to control the flow of products imported into their countries. One such measure is the imposition of tariffs, which are taxes added on imported goods. These tariffs increase the cost of imports, making them more expensive than domestic products and thus protecting local industries. For example, in 2009, President Obama and Congress enacted a tariff on tires imported from China, which increased their price significantly over a three-year period. This decision was influenced by political interest groups like the United Steelworkers union, which saw jobs in the tire industry affected by imports.
Another measure that can be used is quotas, which are limitations on the quantity of goods that can be imported. Governments may also opt to ban the importation of certain goods entirely. Additionally, international trade allows for competition and variety, which leads to innovation and improved products, as in the case of the U.S. automobile industry facing competition from foreign carmakers.
It's important to understand the impact of international trade on local economies and how measures like tariffs and quotas can protect domestic industries while potentially limiting consumer choices and affecting prices.
Excerpts from Dowling Company's December 31, 2018 and 2017, financial statements and key ratios are presented below (all numbers are in millions):2018 2017Accounts receivable (net) $ 20 $ 16Net sales $ 115 100Cost of goods sold 60 55Net income 20 17Inventory turnover 5.22Return on assets 10.3 %Equity Multiple 2.36Dowling's average inventory balance for 2018 is (rounded):
(A) 11.(B) 12.5.(C) 12.(D) 11.5.
Answer:
Option (D) is correct.
Explanation:
Given that,
2018:
Inventory turnover = 5.22
Cost of goods sold = $60
Net sales = $115
Return on assets = 10.3%
Net income = $20
Inventory turnover = Cost of goods sold ÷ Average inventory
Average inventory = Cost of goods sold ÷ Inventory turnover
Average inventory = $60 ÷ 5.22
= 11.49 or 11.5(Approx)
In January, 2020, Yager Corporation purchased a mineral mine for $5,100,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $300,000 after the ore has been extracted. The company incurred $1,500,000 of development costs preparing the mine for production. During 2020, 600,000 tons were removed and 480,000 tons were sold. What is the amount of depletion that Yager should expense for 2020?
Yager Corporation should expense $1,890,000 for mineral depletion in 2020. This is calculated using the units of production method, where the depletion rate per ton is determined and then multiplied by the number of tons removed during the year.
Explanation:To calculate the amount of depletion expense for Yager Corporation for the year 2020, we need to apply the units of production method. This method allocates the cost of the natural resource based on the proportion of total estimated units extracted during the period.
The total cost of the mine less the residual value gives us the depletable cost basis:
Purchase price: $5,100,000Residual value: $300,000Development costs: $1,500,000Total depletable cost: ($5,100,000 - $300,000) + $1,500,000 = $6,300,000The depletion rate per ton is calculated by dividing the total depletable cost by the total estimated reserves:
Depletion rate per ton = $6,300,000 / 2,000,000 tons = $3.15 per ton
The depletion expense for the tons removed in 2020 is:
Depletion expense = 600,000 tons removed x $3.15 depletion rate per ton = $1,890,000
Therefore, Yager Corporation should expense $1,890,000 for mineral depletion in 2020.
A country that trades internationally imports a good at a price ______ than the price of the good in the domestic market before the country began to trade internationally. And it exports a good at a price ______ than the price of the good in the domestic market before the country began to trade internationally. A. higher; higher B. higher; lower C. lower; higher D. lower; lower
Answer:
C. lower; higher
Explanation:
A country that trades internationally, imports a good at a price lower than what domestic producers could produce the good for before the country began to trade internationally and exports a good at a price higher than what domestic producers could sell a good for before the country began to trade internationally.