Answer:
The expected return is 22.29%
Explanation:
The computation of the expected return on the common stock after refinancing is shown below:
= Expected return + (Debt ÷ Equity) × (Expected return - debt yield)
= 18% + (0.30 ÷ 0.70) × (18% - 8%)
= 18% + (0.30 ÷ 0.70) × 10%
= 22.29%
Hence, the expected return is 22.29%
We simply applied the above formula
A newly issued 20-year, $1,000, zero coupon bond just sold for $311.05. What is the implicit interest, in dollars, for the first year of the bond's life
Answer: $18.70
Explanation:
Based on the information given in the question, let the yield be represented by i
The beginning value of the coupon is $311.05.
The ending value is calculated as $329.75
Implicit interest will now be:
= $329.75 - $311.05
= $18.70
Check attachment for further explanation.
Loaded-Up Fund charges a 12b-1 fee of 1.00% and maintains an expense ratio of 0.50%. Economy Fund charges a front-end load of 3.0%, but has no 12b-1 fee and an expense ratio of 0.25%. Assume the rate of return on both funds’ portfolios (before any fees) is 6% per year.
Required:
a. How much will an investment of $1,000 in each fund grow to after 1 year?
b. How much will an investment of $1,000 in each fund grow to after 2 year?
c. How much will an investment of $1,000 in each fund grow to after 11 year?
Answer:
a) $1025.8
b) $1084.8
c) $1794.1
Explanation:
The formula for this question is
End value of investment = I * (1 - f) * (1 + r - t)^T,
where
I = basic investment, $1000
f = front end load, 3% = 0.03
r = ratio, 6% = 0.06
t = true expense ratio, 0.25% = 0.0025
T = time of investment, 1, 2 and 11 years.
Now, applying the values to the formula, we have
End of Investment after 1 year =
1000 * (1 - 0.03) * (1 + 0.06 - 0.0025)¹ =
1000 * 0.97 * 1.0575 =
$1025.8
End of Investment after 2 years =
1000 * (1 - 0.03) * (1 + 0.06 - 0.0025)² =
1000 * 0.97 * 1.1183 =
$1084.8
End of Investment after 11 years =
1000 * (1 - 0.03) * (1 + 0.06 - 0.0025)¹¹ =
1000 * 0.97 * 1.8496 =
$1794.1
Aggregate Planning is a. the activity of developing a plan that combines the efforts of the firm and its suppliers. b. the activity of developing a plan that combines the efforts of the firm and its distributors. c. the activity of matching supply of output with demand over the medium time range. d. the activity of matching supply of output with demand over the short time range. e. All of the above.
Answer:
C. the activity of matching supply of output with demand over the medium time range.
Explanation:
Aggregate Planning is the activity of matching supply of output with demand over the medium time range through the use of information gotten from the inventory levels.
This ultimately implies that, an aggregate planning is a strategic technique used by organizations to make an aggregate plan for its manufacturing (production) process typically ahead of time, in order to have an idea of the level of goods are to be produced and what resources are required so as to reduce the total cost of production to its barest minimum.
Hence, aggregate planning is an attempt to forecast consumer demands within the criteria set by product, production process and distribution methods i.e within the intermediate range of its capacity.
wesimann co. issed 11-year bonds a year ago at a coupon rate of 7.1% The bonds make semiannual payments and have a par value of 1,000. if the ytm on these bonds is 5.4%, what is the current bond price
Answer:
$1,130.04
Explanation:
The computation of the current bond price is shown below:
But before that following calculations need to be done
Number of periods = 11 - 1 = 10 × 2 = 20
Rate = 5.4% ÷ 2 = 2.7%
Coupon = (7.1% of 1000) ÷ 2 = $35.5
Now
The Current bond price is
= Coupon × [1 - 1 ÷ (1 + r)^n] ÷ r + FV ÷ (1 + r)^n
= $35.5 × [1 - 1 ÷ (1 + 0.027)^20] ÷ 0.027 + $1,000 ÷ (1 + 0.027)^20
= $35.5 × [1 - 0.586937] ÷ 0.027 + $586.936514
= $35.5 × 15.29863 + $586.936514
= $1,130.04
Data concerning Bedwell Enterprises Corporation's single product appear below:
Selling price per unit $ 185.00
Variable expense per unit $ 94.00
Fixed expense per month $ 437,240
The unit sales to attain the company's monthly target profit of $24,000 is closest to:__________ (Do not round intermediate calculations.)
a. 5,069
b. 4,907
c. 4,805
d. 2,493
Answer:
Number of units= 5,069
Explanation:
Giving the following information:
Selling price per unit $ 185.00
Variable expense per unit $ 94.00
Fixed expense per month $ 437,240
Desired profit= $24,000
To calculate the number of units to be sold, we need to use the following formula:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= 461,240 / (185 - 94)
Break-even point in units= 5,069 units
Answer:Unit sales to attain the company;s monthly target = 5,069---A
Explanation:
Total desired Contribution =Fixed cost+Target profits
= $437,240 + $24,000 =$461,000
Contribution margin = Selling price per unit -variable expense per unit
= $185 -$94 =$91
of $24,000
Break even point / unit sales to attain= Total desired Contribution/ Contribution margin
= $461,240/ $91
= 5,068.57
rounded to 5,069 units
Assume that two units are sold on May 23 for $313 total. Determine the gross profit for May and ending inventory on May 31 using (a) FIFO, (b) LIFO, and (c) weighted average cost methods.
Answer:
(a) Gross profit for May = $360; and Ending inventory on May 31 = $142
(b) Gross profit for May = $348; and Ending inventory on May 31 = $130
(c) Gross profit for May = $354; and Ending inventory on May 31 = $136
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Three identical units of merchandise were purchased during May, as follows:
Date Magnesium XP Units Cost
May 3 Purchase 1 $130
10 Purchase 1 136
19 Purchase 1 142
Total 3 $408
Assume that two units are sold on May 23 for $313 total. Determine the gross profit for May and ending inventory on May 31 using (a) FIFO, (b) LIFO, and (c) average cost methods. The perpetual inventory method is used.
The explanation to the answer is now given as follows:
(a) Determine the gross profit for May and ending inventory on May 31 using FIFO.
First In First Out (FIFO) refers to the inventory method under which the inventory purchased first is sold first.
Based on the above, we have:
Cost of goods sold = Cost of May 3 Purchases + Cost of May 10 Purchases = (1 * $130) + (1 * $136) = $130 + $136 = $266
Sales revenue = Units sold * Price per unit = 2 * $313 = $626
Gross profit for May = Sales revenue - Cost of goods sold = $626 - $266 = $360
Ending inventory on May 31 = Cost of May 19 Purchases = 1 * $142 = $142
(b) Determine the gross profit for May and ending inventory on May 31 using LIFO.
Last In First Out (FIFO) refers to the inventory method under which the inventory purchased last is sold first.
Based on the above, we have:
Cost of goods sold = Cost of May 19 Purchases + Cost of May 10 Purchases = (1 * $142) + (1 * $136) = $142 + $136 = $278
Sales revenue = Units sold * Price per unit = 2 * $313 = $626
Gross profit for May = Sales revenue - Cost of goods sold = $626 - $278 = $348
Ending inventory on May 31 = Cost of May 3 Purchases = 1 * $130 = $130
(c) Determine the gross profit for May and ending inventory on May 31 using average cost method.
Average cost method can be described as an inventory costing technique under which the average cost per unit is obtained by dividing the total cost of the goods available for sale by the total number of units available for sales.
Based on the above, we have:
Average cost per unit = $408 / 3 = $136
Cost of goods sold = Average cost per unit * Units sold = $136 * 2 = $272
Sales revenue = Units sold * Price per unit = 2 * $313 = $626
Gross profit for May = Sales revenue - Cost of goods sold = $626 - $272 = $354
Ending inventory on May 31 = Average cost per unit * Units remaining unsold = $136 * 1 = $136
When a bill is paid in QuickBooks using the Pay Bills window, QuickBooks: Multiple Choice Increases the Accounts Payable account and increases the Checking account Increases an Expense account and increases the Accounts Payable account Decreases an Expense account and decreases the Checking account Decreases the Accounts Payable account and decreases the Checking account
Answer:
Decreases the Accounts Payable account and decreases the Checking account
Explanation:
In the case when the bill is paid in quick books by using the window of pay bills so the liabilities would be reduced also the liquid asset would be decreased
Since the liabilities is reduced i.e. account payable so automatically the checking account would also be reduced
hence, the last option is correct
The same is to be considered
Answer:
You would decrease the accounts payable (paying the bill relieves part of the balance in this account) and decreases the cash account (when you pay the bill, you use or reduce the cash)
Explanation:
see my answer for explanation
Litton Industries uses a perpetual inventory system. The company began its fiscal year with inventory of $267,000. Purchases of merchandise on account during the year totaled $845,000. Merchandise costing $902,000 was sold on account for $1,420,000. Prepare the journal entries to record these transactions.
Answer and Explanation:
The journal entries are shown below:
1. Inventory Dr $845,000
To Account payable $845,000
(Being inventory purchase on the account)
2. Account receivable Dr $1,420,000
To Sales revenue $1,420,000
(Being sale on the account is recorded)
3. Cost of goods sold Dr $902,000
To Inventory $902,000
(Being cost of sales is recorded)
These journal entries are to be recorded
On your first day at your new company you notice a large sign stating that ethics is one of the company’s core values. Of what is this an example? An assumption An espoused value or norm An enacted value or norm An artifact
Answer:
A. Espoused value or norm
Effect of Doubtful Accounts on Net IncomeDuring its first year of operations, Mack's Plumbing Supply Co. had sales of $630,000, wrote off $10,100 of accounts as uncollectible using the direct write-off method, and reported net income of $69,300. Determine what the net income would have been if the allowance method had been used, and the company estimated that 2.5% of sales would be uncollectible.
Answer:
Mack's Plumbing Supply Co.
Effect of Doubtful Accounts on Net Income
Mack's would have reduced the net income further by $5,650.
This implies that net income reported would have been $63,650 ($69,300 - $5,650).
Explanation:
Sales revenue = $630,000
Allowance method = 2.5% of sales as uncollectible.
Uncollectible Allowance = $15,750 ($630,000 * 2.5%)
Direct write-off method, uncollectible allowance = $10,100
Reported net income = $69,300
Effect on net income of using the allowance method = $63,650 ($69,300 - $15,750 + $10,100)
Describe the process of conducting a performance appraisal review and when disciplinary action is necessary.
Answer:
Performance appraisal is a method of evaluating an employees work production.
Explanation:
Performance appraisal is also known as performance evaluation or performance review in an organization. It is defined as a method of evaluation and documentation of an employees work performance or productivity in the organization.
The process of conducting performance appraisal review in the organization includes :
1. In conducting a performance appraisal review a formal system should be in place and it should be used consistently.
2. Establishing performance standards.
3. The tools used for performance appraisal should always reflect the job description of the employees and it should based on various surveys or scales.
4. Data should be collected so as to ensure unbiased evaluation and thorough evaluation over time.
5. Compare the performance of an employee in the organization to all the employee metrics.
6. Employee feedback is also taken regarding their job description and the key areas that they are working.
Disciplinary action is taken in an organization in order to correct a work related behavior. It is not meant for giving punishment to the employees but to correct their behavior and ethics. Every employees are expected to work according to the company policy and maintain the work ethics and company secrets. If an employee fails to maintain the work ethics, disciplinary action is taken against him so as to correct his actions.
A company has a DSO of 28 days. The company’s average daily sales are $4,000. What is the level of accounts receivable? Assume there are 365 days in a year.
Answer:
the level of accounts receivable is $112,000
Explanation:
The computation of the level of sales is shown below:
Days Sales Outstanding (DSO) = Accounts Receivable (A/R) ÷ Average Daily Sales
28 days = Account receivable ÷ $4,000
So, the account receivable is
= $4,000 × 28 days
= $112,000
Hence, the level of accounts receivable is $112,000
We simply applied the above formula so that the correct value could come
And, the same is to be considered
You wish to buy a $27,500 car. The dealer offers you a 6-year loan with a 7.2 percent APR. What are the monthly payments?
Answer:
$471.49
Explanation:
The formula for computing the monthly payment is shown below:
PMT=P(r/n)/1-(1+r/n)^(-nt)
P=loan amount=$27,500
r=interest rate=7.2%
n=number of monthly payments in a year=12
t= duration of loan=6 years
PMT=27500*(7.2%/12)/(1-(1+7.2%/12)^(-6*12)
PMT=27500*0.6000% /(1-(1+0.6000%)^-72
PMT=165 /(1-0.650047943 )
PMT=$471.49
On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available: Beginning inventory, January 1: $4,200 Net sales: $71,000 Net purchases: $69,000 The company's gross margin ratio is 25%. Using the gross profit method, the estimated ending inventory value would be:
Answer:
$19,950
Explanation:
The formula for determining the estimated ending inventory value is given below:
estimated ending inventory value=cost of goods available for sale -cost of goods sold
cost of goods available for sale=beginning inventory+purchases
cost of goods available for sale=$4,200+$69,000=$73200
Cost of goods sold=net sales-(net sales*gross margin)
Cost of goods sold=$71000-($71000*25%)=$53250
estimated ending inventory value=$73200 -$53250 =$19,950
A buyer plans to buy designer bows at $15,000 cost with an average MU of 47%. The first purchase is for $4,500.00 at cost and $9,000.00 at retail. What must the markup on the balance of the purchases be in order to maintain the average MU percentage?
Answer:
24.29%
Explanation:
markup percentage = (selling price - cost per unit) / cost per unit
total markup:
0.47 = (total retail price - $15,000) / $15,000
$15,000 x 0.47 = total retail price - $15,000
$7,050 = total retail price - $15,000
total retail price = $22,050
the store already sells $9,000 worth of goods, so that means that $13,050 goods at retail price will be purchased
we repeat our formula, only that this time we will calculate the MU %:
MU % = ($13,050 - $10,500) / $10,500 = $2,550 / $10,500 = 0.2429 = 24.29%
Managerial accounting information: Multiple Choice Is used mainly by external users. Involves gathering information about costs for planning and control decisions. Is generally the only accounting information available to managers. Can be used for control purposes but not for planning purposes. Has little to do with controlling costs.
Answer:
Involves gathering information about costs for planning and control decisions.
Explanation:
Managerial accounting is also cost called cost accounting. It is used by managers to efficiently manage a business enterprise by identifying, measuring, analysis, and interpretation of accounting information mainly for internal use.
External bodies do not use managerial accounting information.
Therefore the information gained is used by managers mainly to make planning and control decisions within the business.
If the alternatives are mutually exclusive and the MARR is 15% per year, the alternative to select is
Answer: Only Alternative B
Explanation:
As the alternatives are mutually exclusive, the alternative to select would be the one that is superior to all of the others and above MARR.
B, C and D all have rates of return higher than MARR so they will pass the first step.
When C is compared to B, it has an incremental return of 10% which is less than the MARR so C will be discarded as B is a better option.
Now compare B with D. When D is compared to B, it has an incremental return of 13% which is less than the MARR so B is again superior.
Alternative B should therefore be chosen as it is better than the other options.
Vanilla Bean Restaurant is considering a project with an initial cost of $525,000. The project will not produce any cash flows for the first three years. Starting in year 4, the project will produce cash inflows of $721,000 a year for three years. This project is risky, so the firm has assigned it a discount rate of 16 percent. What is the project's net present value
Answer:
Vanilla Bean Restaurant
The project's net present value (NPV) is:
$511,798
Explanation:
a) Data and Calculations:
Initial project cost = $525,000 in year 1
Project's inflows in Year 4, 5, & 6 = $721,000 each
Discount rate = 16%
Present value of inflows:
Year 4 = $721,000 * 0.552 = $397,992
Year 5 = $721,000 * 0.476 = $343,196
Year 6 = $721,000 * 0.410 = $295,610
Total present value = $1,036,798
Therefore, the NPV = $511,798 ($1,036,798 - $525,000). The present value is the difference between the present value of the project's cash inflows and the present value of project's cash outflows during the project's life.
g Suppose the risk-free rate is 2.79% and an analyst assumes a market risk premium of 5.07%. Firm A just paid a dividend of $1.38 per share. The analyst estimates the β of Firm A to be 1.24 and estimates the dividend growth rate to be 4.04% forever. Firm A has 259.00 million shares outstanding. Firm B just paid a dividend of $1.51 per share. The analyst estimates the β of Firm B to be 0.84 and believes that dividends will grow at 2.12% forever. Firm B has 181.00 million shares outstanding. What is the value of Firm A?
Answer:
Firm A's total value = $7,378,170,000
Explanation:
Firm A:
equity cost (Re) = 2.79% x (1.24 x 5.07%) = 9.08%
Div₀ = $1.38
Div₁ = $1.435752
g = 4.04%
P₀ = $1.4358 / (9.08% - 4.04%) = $1.435752 / 5.04% = $28.48714286
total outstanding stocks = 259,000,000
Firm A's total value = $28.48714286 x 259,000,000 = $7,378,170,000
Mary wants to invest her recent bonus in an 12-year, 8 percent coupon bond that pays semiannual coupon payments. The bonds are selling at $1,043.24 today. If she buys this bond and holds it to maturity, what would be her yield-to-maturity
Answer:
7.48%
Explanation:
yield to maturity = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]
yield to maturity = {40 + [(1,000 - 1,043.24)/24]} / [(1,000 + 1,043.24)/2] = 38.2 / 1,021.62 = 0.03739 x 2 = 0.07478 x 100 = 7.48%
whenever you purchase a bond at a premium (price higher than face value), the yield to maturity will be lower than the coupon rate
At the beginning of December, Global Corporation had $2,400 in supplies on hand. During the month, supplies purchased amounted to $3,500, but by the end of the month the supplies balance was only $2,500. What is the appropriate month-end adjusting entry?
Answer and Explanation:
The appropriate month-end adjusting entry is shown below:
Supplies expense Dr $3,400
To Supplies $3,400
(being supplies expense is recorded)
Working note:
= Supplies on hand at the beginning + purchase - end of the month
= $2,400 + $3,500 - $2,500
= $3,400
Here the supplies expense is debited as it increased the supplies and credited the supllies as it decreased the assets
On average, your firm sells $26,400 of items on credit each day. The firm's average operating cycle is 41 days and it acquires and sells inventory, on average, every 24 days. What is the average accounts receivable balance
Answer:
$448,800
Explanation:
Calculation for the average accounts receivable balance
Average accounts receivable balance = $26,400 x (41 days - 24 days)
Average accounts receivable balance = $26,400×17days
Average accounts receivable balance = $448,800
Therefore the Average accounts receivable balance will be $448,800
American Chemical Company manufactures a chemical compound that is sold for $52 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new variant, the selling price would be $73 per gallon. American expects the market for the new compound variant to be 8,600 gallons initially and determines that processing costs to refine the basic compound into the new variant would be $146,200. Required: a. What would be the effect on total profit if American produces the new compound variant
Answer:
Effect on income= $34,400 increase
Explanation:
Giving the following information:
Actual price= $52
New variant price= $73
Number of units= 8,600 gallons
Total cost= $146,200
To calculate the effect on income, we need to use the following formula:
Effect on income= increase in income - total cost
Effect on income= 8,600*(73 - 52) - 146,200
Effect on income= $34,400 increase
Big-Mouth Frog Corporation had revenues of $330,000, expenses of $200,000, and dividends of $45,000. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a:
Answer: Credit of $130,000
Explanation:
If Income summary is closed to Retained Earnings, it means that the Income for the period is sent to the Retained earnings account.
The amount to be sent is;
= Revenue - expenses
= 330,000 - 200,000
= $130,000
As the Retained Earnings account will be increasing as a result of this, it will be a credit.
At what wage rate will there be excess labor supplied in the market?
If the wage is free to adjust in response to market forces it will move to We, where the demand for labor equals the supply. When the wage is above We, more labor will be presented for employment than firms in the industry can profitably hire. It will pay workers to lower their wages to obtain employment in the industry.
On January 1, 2016, your sister's pet supplies business obtained a 30-year amortized mortgage loan for $275,000 at a nominal annual rate of 7.0%, with 360 end-of-month payments. The firm can deduct the interest paid for tax purposes. What will the interest tax deduction be for 2016
Answer:
$52,259
Explanation:
debt = $750,000
monthly payment = $750,000 / 150.3075 (PV annuity factor, 360 periods, 0.583%) = $4,989.77
I prepared an amortization schedule using an excel spreadsheet. Total interest expense for the first 12 months = $52,259.
The first edition hardcover of a new book by a popular writer has a demand which is uniformly distributed between 1 and 2 million. The production and transportation costs per hardcover are $10, and the sale price in bookstores is $25. When the paperback version comes out, the hardcover books go on sale for $5. How many hardcovers should be produced
Answer: 1,750,000
Explanation:
From the question, the cost per unit for the underestimated demand is given as: $25 - $10 = $15; while for the overestimated demand is given as $5.
The probability of optimal production will be calculated as:
= 15/(15+5)
= 15/20
= 3/4
= 0.75
The optimal production will then be:
= (2,000,000 - 1,000,000) × 0.75 + 1,000,000
= (1,000,000 × 0.75) + 1,000,000
= 750,000 + 1,000,000
= 1,750,000
The number of hardcovers produced is 1,750,000
Oriole Company has a new product going on the market next year. The following data are projections for production and sales: Variable costs $430000 Fixed costs $450000 ROI 16% Investment $2200000 Sales 200000 units What is the markup percentage
Answer:
The markup percentage is 40%
Explanation:
The computation of the markup percentage is shown below:
Markup percentage is
= Return on investment ÷ Total cost
= ($2,200,000 × 16%) ÷ ($430,000 + $450,000)
= $352,000 ÷ $880,000
= 40%
Hence, the markup percentage is 40%
We simply applied the above formula
And, the same is to be considered
Sales would be ignored in this case
Using the Shannon and Weaver Model of Communication to describe a web page, the web page itself would be:______
Answer:
channel
Explanation:
Shannon and Weaver Model of Communication is usually reffered to as "the mother of all model" gives theory about how human communication can disintegrated into concepts such as
✓Encoder
✓Sender
✓Channel
✓Reciver
✓Noise
Recorder.
It works in a way in which One sending the message (sender) will encode it, then forward it through technological "channel"such as telephone to the receiver, which is convert to codes and send through a medium.It should be noted that Using the Shannon and Weaver Model of Communication to describe a web page, the web page itself would be channel.
Mariota Industries has sales of $380,080 and costs of $178,290. The company paid $32,390 in interest and $14,500 in dividends. It also increased retained earnings by $69,626 during the year. Of the company's depreciation was $19,820, what was its average tax rate
Answer:
tax rate = 43.76%
Explanation:
Mariota's net income before taxes = $380,080 - $178,290 - $19,820 - $32,390 = $149,580
Mariota's net income after taxes = $69,626 + $14,500 = $84,126
$149,580 x (1 - tax rate) = $84,126
1 - tax rate = $84,126 / 149,580 = 0.5624
1 - tax rate = 0.5624
1 - 0.5624 = tax rate
tax rate = 0.4376 = 43.76%
