Answer:
14.58%
Explanation:
WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate) + weight of preferred equity x dividend yield
According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)
r= 3% + 1.1 x 8 = 11.8
equity = 0.4 x 11.8% = 4.72
d = 0.4 x 5 x (1 -0.21) = 1.58
p = 0.2 x 6 = 1.2
11.8 + 1.58 + 1.2 =
MFK Corp. wants to raise capital and is considering an offer of bonds and debentures. It is not sure of a particular disclosure requirement, so MFK poses its question to the SEC and requests an interpretation letter. If the SEC issues an interpretive letter addressing MFK's question and MFK follows the statements contained in the letter, MFK cannot be penalized should the advice be incorrect.
a. True
b. False
Answer:
B FALSEEEEEEEEEEEEEEEEEEEE
You were hired as a consultant to the ABC Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of equity is 11.25%, and the tax rate is 40%. What is ABC's WACC
Answer:
8.15%
Explanation:
The weighted average cost of capital is the sum of costs of different sources of finance multiplied by their respective weights as shown by the formula below:
WACC=(cost of equity*weight of equity)+(cost of preferred stock*weight of preferred stock)+(after-tax cost of debt*weight of debt)
cost of equity=11.25%
weight of equity=55%
cost of preferred stock=6.00%
weight of preferred stock=10%
after-tax cost of debt=6.50%*(1-40%)=3.90%
weight of debt=35%
WACC=(11.25%*55%)+(6.00%*10%)+(3.90%*35%)
WACC=8.15%
When currency traders move as a herd in the same direction at the same time, such as what occurred when George Soros bet against the British pound in 1992, a(n) _____ occurs.
Answer: Bandwagon Effect
Explanation:
The bandwagon effect is simply used to describe a scenario that occurs when people behave in certain ways simply because others are doing the same thing.
In this case, when currency traders move as a herd in the same direction at the same time, such as what occurred when George Soros bet against the British pound, this shows that a bandwagon effect occured.
There are different kinds of effects. Based on the above scenario, the Bandwagon Effect occurs.
What is bandwagon effect?This is described as the act or phenomenon where there is a growing form of success of a cause or something. An example is a cause, fad, or type of behavior, etc.
They often attracts a kind of huge support or adoption as a lot of people perceive and are influenced by its high popularity.
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On October 1st of the current year, Molloy Corporation prepared a cash budget for October, November, and December. All of Molloy sales are made on account. The following information was used in preparing estimated cash collections :
Aug sales (actual) 50,000
Sep sales (actual) 60,000
Oct sales. (estimated) 30,000
Nov sales (estimated) 80,000
Dec sales (estimated) 70,000
approximately 65% of all sales are collected in the month of the sale, 20% is collected in the following month, and 15% is collected in the month thereafter.
Determine :
1. Budgeted collections from customers in October total : Choose from the following:
a. 49,500
b. 31,500
c. 140,000
d. 39,000
2. Budgeted collections from customers in Nov total : Choose from the following :
a. 170,000
b. 68,500
c. 67,000
d. 58,000
Budgeted collections from customers in Dec total : Choose from the following :
a. 66,000
b. 61,500
c.180,000
d. 63,500
Answer: 1. $39000
2. $67000
3. $66000
Explanation:
1. Budgeted collections from customers in October will be:
Current month sales = 30000 × 65% = 19500
Add: Collection from September = 60000 × 20% = 12000
Add: Collection from August = 50000 × 15% = $7500
Budgeted collections from customers in October total = $39000
2. Budgeted collections from customers in November total:
Current month sales = 80000 × 65% = 52000
Add: Collection from October = 30000 × 20% = 6000
Add: Collection from September = 60000 × 15% = $9000
Budgeted collections from customers in November total = $67000
3. Budgeted collections from customers in December total:
Current month sales = 70000 × 65% = $45500
Add: Collection from November = 80000 × 20% = $16000
Add: Collection from October = 30000 × 15% = $4500
Budgeted collections from customers in December total = $66000
The preliminary version of a security offer that is circulated to potential buyers before SEC approval (registration) is obtained is called a: Final prospectus Shelf registration statement Due diligence draft Waiting period offer Red herring prospectus
Answer:
red herring prospectus.
Explanation:
Red herring can be regarded as preliminary prospectus that is been filed by a company that has Securities and Exchange Commission (SEC), and this is usually have connection with
initial public offering of the company (IPO). A red herring prospectus encompass most of the information pertaining to the operations as well as prospects of the company though does not include key details like security issue, that's its price as well as number of shares offered.It should be noted that The preliminary version of a security offer that is circulated to potential buyers before SEC approval (registration) is obtained is called red herring prospectus.
A stock is expected to return 8% in a normal economy, 12% if the economy booms, and lose 3% if the economy moves into a recessionary period. Economists predict a 56% chance of a normal economy, a 25% chance of a boom, and a 19% chance of a recession. The expected return on the stock is __%.
Answer: 6.91%
Explanation:
Expected return = Sum of (Probability of state of economy * Return given state of economy)
= (56% * 8%) + (12% * 25%) + (19% * -3%)
= 4.48% + 3% - 0.57%
= 6.91%
Alice worked for Fountain Valley, Inc., a corporation that manufactured baby supplies. According to her employment contract with the corporation, Alice was to be paid $78,000/year plus a 5% bonus of all sales in excess of the previous 12 months sales. The corporation sold baby supplies worth $200,000 in 2017 more than in 2016. Alice was then terminated at the end of December 2017. Is Alice entitled to a bonus of $10,000
Question Completion with Answer Options:
A. Yes, according to the terms of her contract.
B. Yes, according to the duty of good faith and fair dealing.
C. No, according to the at-will termination provision in her contract.
D. No, because subsequent conduct of the parties modified the contract.
Answer:
Fountain Valley, Inc. and Alice
B. Yes, according to the duty of good faith and fair dealing.
Explanation:
Alice is entitled to the bonus of $10,000 because the duty of good faith and fair dealing requires Fountain Valley not to deny Alice the benefits arising from their valid contract. Since Alice's employment contract included a 5% bonus of all sales in excess of the previous 12 months' sales, the Fountain Valley, Inc. should not deny Alice's claim to the benefits.
b) Employment contract terms = $78,000/year plus 5% bonus of all sale in excess of the previous 12 months' sales. The value of sales in 2017 is $200,000 more than in 2016. 5% of $200,000 = $10,000. Therefore, Alice is entitled to the bonus.
Crane Company sells radios for $50 per unit. The fixed costs are $465000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $165000 and variable costs will be 50% of the selling price. The new break-even point in units is:
Answer:
25,200
Explanation:
Breakeven quantity are the number of units produced and sold at which net income is zero
Breakeven quantity = fixed cost / price – variable cost per unit
Fixed cost = $465000 + $165000 = $630,000
Price = $50
variable cost = 0.5 x 50 = $25
Breakeven = $630,000 / $25 = 25,200
Olmo, Inc., manufactures and sells two products: Product K0 and Product H9. The annual production and sales of Product of K0 is 700 units and of Product H9 is 700 units. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Activity Cost Pools Activity Measures Estimated Overhead Cost Expected Activity
Product K0 Product H9 Total
Labor-related DLHs $549,108 5,600 7,000 12,600
Production orders orders 52,119 500 400 900
Order size MHs 834,716 4,200 4,400 8,600
$1,435,943
The overhead applied to each unit of Product K0 under activity-based costing is closest :_________
Answer:
Cost per unit= 680,655 / 700= $972.36
Explanation:
First, we need to calculate the activities rates:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Labor-related= 549,108 / 12,600= $43.58 per direct labor hour
Production= 52,119 / 900= $57.91 per order
Order size= 834,716 / 8,600= $97.06 per machine-hour
Now, we can allocate costs to Product K0:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Product K0 Product H9 Total
Labor-related DLHs $549,108 5,600 7,000 12,600
Production orders orders 52,119 500 400 900
Order size MHs 834,716 4,200 4,400 8,600
Labor-related= 43.58 *5,600= $244,048
Production= 57.91 / 500= $28,955
Order size= 97.06*4,200= $407,652
Total allocated costs= $680,655
Finally, the cost per unit:
Cost per unit= 680,655 / 700= $972.36
Which part of the citation below refers to the publisher?
“Projections Overview.” Occupational Outlook Handbook. Bureau of Labor Statistics, 29 March 2012. Web. 1 May 2013.
a)Bureau of Labor Statistics
b)Occupational Outlook Handbook
c)Projections Overview
d)Web
Answer:
A
Explanation:
the bureau of labor statistics is the company publishing the book, the occupational outlook handbook is what they published, projection overview is the specific chapter or part of the handbook. and web is just stating what form the citation is in
Bureau of Labor Statistics of the citation below refers to the publisher. “Projections Overview.” Occupational Outlook Handbook. Bureau of Labor Statistics, 29 March 2012. Web. 1 May 2013. The correct option is a.
What is the Bureau of Labor Statistics?The U.S. Bureau of Labor Statistics gathers, examines, and disseminates trustworthy data on a variety of aspects of our economy and society. We track changes in employment, pay, worker security, output, and prices.
The Bureau of Labor Statistics (BLS) is a United States government agency that collects, analyzes, and disseminates statistical data on the American labor market and economy. The BLS is responsible for producing a wide range of economic and employment data, including the monthly Employment Situation Report, which provides the latest information on employment, unemployment, and wages in the United States.
Other key data produced by the BLS include the Consumer Price Index (CPI), which tracks changes in the prices of goods and services over time, and the Producer Price Index (PPI), which measures changes in the prices of goods and services purchased by businesses.
Thus, the ideal selection is option a.
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The balance sheet of Cranium Gaming reports total assets of $380,000 and $680,000 at the beginning and end of the year, respectively. Sales revenues are $1.30 million, net income is $63,000, and operating cash flows are $54,000. Calculate the cash return on assets, cash flow to sales, and asset turnover for Cranium Gaming. (Enter your answers in dollars, not millions (i.e., $10.1 million should be entered as 10,100,000).)
Answer:
See below
Explanation:
1. Cash return on assets
= Operating cash flow / Average total asset
Operating cash flows = $54,000
Average total asset = [($380,000 + $680,000) / 2] = $530,000
Cash return on assets
= $54,000 / $530,000
= 10.19%
2. Cash flow to sales
= Operating cash flows / Net sales
Operating cash flows = $54,000
Net sales = $1,300,000
Cash flow to sales
= $54,000 / $1,300,000
= 4.15%
3. Asset turnover
= Net sales / Average total assets
Net sales = $1,300,000
Average total assets = $530,000
Asset turnover
= $1,300,000 / $530,000
= 2.5 times
Tyrion considers taking a new job. He focuses on the increased opportunities for promotion and the higher salary rather than his increased responsibilities; therefore, he views the new position as a ________ rather than a ________. a. threat; challenge b. challenge; distress c. challenge; threat d. distress; eustress
Answer:
b) challenge ; distress
Explanation:
Tyrion, in her new job - focuses on increased opportunities for promotion and the higher salary rather than his increased responsibilities.
He views the new position as a Challenge rather than a Distress.
As : Challenge means participation in a difficult competitive situation, & prove expertise, for higher rewards. Distress means being worried, anxious.
In 2022 the Splish Brothers Inc. had net credit sales of $1020000. On January 1, 2022, the Allowance for Doubtful Accounts had a credit balance of $23100. During 2022, $34200 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage-of-receivables basis). If the accounts receivable balance at December 31 was $242000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2022
Answer:
$35,300 (Credit)
Explanation:
Given that;
Allowance = 10% × $242,000 = $24,200
Amount written off of $34,200 would have made the balance in the allowance for doubtful debts
= $34,200 - $23,100
= $11,100 (Debit)
However, the balance in the account at the end of the year should amount to $24,200 hence the adjustment required
= $24,200 + $11,100
=$35,300 (Credit)
