Answer:
hi how are you doing today Jasmine
Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $52,000, has a 3-year life and will be worthless after the 3 years. The pre-tax cost of borrowed funds is 10 percent and the tax rate is 33 percent. The equipment can be leased for $18,500 a year. What is the net advantage to leasing? (Do not round intermediate calculations.)
Answer:
$4,200
Explanation:
Cost of equipment = $52,000
Life of equipment = 3 years
Depreciation through straight line method = 52,000/3 = $17,333
Tax rate = 33%
Pretax cost of debt = 10%
Lease amount of equipment = $18,500
After tax cost of debt = 10%*(1-0.33)
After tax cost of debt = 10%*(0.67)
After tax cost of debt = 0.067
After tax cost of debt = 6.7%
After tax lease payment amount = 18,500*(1-0.33)
After tax lease payment amount = 18,500*0.67
After tax lease payment amount = 12,395
Present Value of 3 lease payment = 12,395/(1+0.067) + 12,395/(1+0.067)^2 + 12,395/(1+0.067)^3
Present Value of 3 lease payment = 12395/1.067 + 12395/1.1385 + 12395/1.2148
Present Value of 3 lease payment = 11616.68 + 10887.13 + 10203.33
Present Value of 3 lease payment = $32,707.14
Present Value of cost involved in purchasing the equipment is $52,000, however there will be a tax shield from depreciation therefore, this amount would reduce the company's cost.
Annual depreciation tax shield = 17,333*0.33 = $5719.89. There will be tax shield on depreciation for 3 years. Therefore, present value of $5719.89 is calculated for three years:
= $5719.89/(1+0.067) + $5719.89/(1+0.067)^2 + $5719.89/(1+0.067)^3
= $5719.89/1.067 + $5719.89/1.1385 + $5719.89/1.2148
= $5360.72 + $5024.06 + $4708.50
= $15,093.28
Present Value of the cost of buying the equipment = $52,000 - $15,093.28 = $36,906.72
Net Advantage Leasing = Present Value of the cost of buying the equipment - Present Value of 3 lease payment
Net Advantage Leasing = $36,906.72 - $32,707.14
Net Advantage Leasing = $4,199.58
Net Advantage Leasing = $4,200.
Abell and Creek, LLC has prepared the following flexible budget figures for the current period and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. Flexible Budget Price Variance Efficiency Variance Product A311 (total costs) $58,000 $1,500 F $3,000 U Product A325 (total costs) $42,000 $1,750 U $1,500 F Direct manufacturing labor only $71,000 $2,000 U $2,500 F Calculate the actual amount spent for Product A325 during the current period:
Answer:
Abell and Creek, LLC
The actual amount spent for Product A325 during the current period is:
= $42,250.
Explanation:
a) Data and Calculations:
Flexible Price Efficiency
Budget Variance Variance
Product A311 (total costs) $58,000 $1,500 F $3,000 U
Product A325 (total costs) $42,000 $1,750 U $1,500 F
Direct manufacturing labor only $71,000 $2,000 U $2,500 F
Actual amount spent for Product A325:
Flexible budget $42,000
Price variance 1,750 U
Efficiency variance 1,500 F
Actual = $42,250
Santana Company exchanged equipment used in its manufacturing operations plus $2,000 in cash for similar equipment used in the operations of Delaware Company. The following information pertains to the exchange.
Santana Co. | Delaware Co.
Equipment (cost) $28,000 | $18,000
Accumulated depreciation 9,000 | 10,000
Fair value of equipment 14,000 | 16,000
Cash given up 2,000
Please indicate whether an account is an asset (A), liability (L), or equity (E) for journal entries, adjusting entries, and closing entries.
Prepare the journal entries to record the exchange on the book of Santana Co. and Delaware Co. Assume that the exchange lacks commercial substance.
Solution :
We know that the exchange takes place when the FMV receive is equal to the FMV given up.
Where the FMV = fair market value
The commercial substance means the future cash flows exchange.
The non monetary exchange refers to the cash which is less than 25% of the fair value exchange.
The journal entries for the Santana Corp. when the exchange lack the commercial substance are reported as :
Transaction Debit ($) Credit ($)
Asset(new) 11,000
Accumulated depreciation(old) 9,000
Asset (old) 28,000
Cash 2000
The journal entries for Delaware Corp. when the exchange lacks the commercial substance.
Transaction Debit ($) Credit ($)
Asset(new) 16,000
Accumulated depreciation (old) 10,000
Loss 2500
Assets (old) 28,000
Clean123 Inc. performs $1,000 of cleaning services for a customer. After 30 days, the customer pays 50% of the involce with a check. How will
this transaction be recorded?
The customer's payment will be recorded as a debit to(blank)
and a credit to Accounts Receivable.
Answer:
Debit to CashCredit to Accounts ReceivableExplanation:
When a Receivable pays their bill, the cash account will be debited to show that cash has come into the company because cash is an asset account and assets are debited when they increase.
Accounts Receivable is an asset account as well and when the Receivable pays, they are reducing the amount that they owe(as is the case here) so their account needs to be reduced. Assets are credited when they reduce so this will be credited.
Primus, Inc., owns all outstanding stock of Sonston, Inc. For the current year, Primus reports net income (exclusive of any investment income) of $520,000. Primus has 50,000 shares of common stock outstanding. Sonston reports net income of $120,000 for the period with 40,000 shares of common stock outstanding. Sonston also has 10,000 stock warrants outstanding that allow the holder to acquire shares at $15.00 per share. The value of this stock was $30 per share throughout the year. Primus owns 5,900 of these warrants. What amount should Primus report for diluted earnings per share? (Round your intermediate percentage value to the nearest whole number and the final answer to 2 decimal places.) Diluted earnings per share
Answer:
Primus, Inc.
Diluted earnings per share is:
= $14.51.
Explanation:
a) Data and Calculations:
Primus, Inc. Sonston, Inc. Consolidated
Current net income $520,000 $120,000 $640,000
Outstanding common stock 40,000 40,000 40,000
Outstanding stock warrants 4,100 4,100
Total outstanding stock 44,100
Diluted earnings per share = Total current net income/Total outstanding stock
= $640,000/44,100
= $14.51
b) Diluted EPS is an important capital ratio for stockholders as it shows the earnings that a stockholder will be entitled to if convertible shares such as employee stock options, warrants, and debts are actually converted into common stock.
If there were no beginning work in process and no ending work in process under the weighted-average process costing method, the number of equivalent units for direct materials, if direct materials were added at the start of the process, would be __________________ A. More than the units started or transferred in during the period. B. Equal to the units completed during the period. C. Less than the units completed during the period. D. Equal to total of units started and units completed during the period.
Answer:
Equal to total of units started and units completed during the period
Explanation:
Equivalent units
These are said to be numbers of complete whole units that could be gotten from the material and effort evident or contained in partially completed units.
Equivalent units of production usually of weighted-average method is defined as the number of units taking oit or transferred to the next department or to finished goods during the timeframe in addition with the equivalent units in the departments' ending work in process inventory.
Equivalent Units of Production is simply known to be equal to the Units Transferred Out plus the Ending Units in Process.
Ending work-in-process
Beginning work in process is the addition that is Started in Process, minus units to be accounted for and minus units transferred out which will equal to ending work in process. Therefore, as a result of the fact that no beginning work-in-process and ending work-in-process is evident, the units started during the period is also the completed units on the same period.
Orin creates an irrevocable living trust to pass his 1/3rd of his assets, including stock in Petro Oil Company and other business investments, to his heirs. One advantage of this arrangement is that A. the trust earnings become public. B. the assets are doubled. C. Orin avoids having to pay death taxes on these assets. D. the assets can be transferred without going through probate.
Answer:
C. Except it isn't Orin that will avoid the taxes, but his heirs.
Explanation:
Lannister Manufacturing has a target debt-equity ratio of .95. Its cost of equity is 11 percent, and its cost of debt is 7 percent. If the tax rate is 24 percent, what is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
WACC= 5.6%
Explanation:
Weighted average cost of capital is the average cost of all of the long-term types of finance used by a company weighted according to the that amount of finance used in relation to the total pool of fund
WACC = (Wd×Kd) + (We×Ke)
After-tax cost of debt = Before tax cost of debt× (1-tax rate)
Kd-After-tax cost of debt
Ke-Cost of equity
Wd-Weight f debt
We-Weight of equity
After tax cost of debt = (1-T)× Before-tax yield on debt
= (1-0.24)× 7
=5.32
Cost of equity = 11%
WACC = (Wd×Kd) + (We×Ke)
We= 5%, Wd= 95%
WACC= (5.32× 95%) + (11%× 5%)
= 5.6%
WACC= 5.6%
Why wages differ
For each of the scenarios in the following table, indicate the most likely reason for the difference in earnings. Differences Differences in Human Capital Compensating in Natural Differential Labor
Scenario Ability Unions
1. A law firm hires Dina, a recent graduate from law school, and pays her an annual wage of $40,000. It also hires Ana, a second-year law student, and pays her an annual wage of $30,000. Dina and Ana were born in the same country, attended the same university, and studied in the same graduate program.
2. Major league soccer players earn more than minor league soccer players.
3. Three engineers have the same amount of schooling and work experience, but earn different wages. One is a computer engineer who designs and tests new computers for an annual wage of $55,000 per year. Another is a chemical engineer who works in a nuclear lab and performs experiments on radioactive materials for an annual wage of $70,000 per year. The third is a civil engineer who performs daily inspections of cables on a suspension bridge for an annual wage of $93,000 per year
Answer:
Differences in human capital
Differences in Natural Ability
Compensating differentials
Explanation:
Human capital is an example of an intangible asset. It is the economic value attached to labours' skills and expertise.
Qualities of human capital includes
• Education.
• on-the-job training.
• Hard work
• experience
• Mental and emotional well-being.
• People management.
• Communication skills.
In case 1, the law graduate is more educated than the student. thus, differences in human capital accounts for the pay difference
In case 2, the skills of the players differs and this accounts for pay differences
In case 3, pay differs by riskiness of the job. thus compensating differential is responsible for pay differences
13. A firm hires its labor in a perfectly competitive factor (or resource) market and sells its product in a perfectly competitive product market. a. Using correctly labeled side-by-side graphs, show each of the following: i. The equilibrium wage rate in the market ii. The labor supply curve the firm faces iii. The demand curve the firm faces iv. The number of workers that the firm hires
Answer:
Attached below are the graphs
Explanation:
i) The Equilibrium wage rate in the market is determined by the Intersection of the labor demand and supply curve as seen in the graph attached
ii) The Labor supply curve the firm faces is perfectly elastic in a perfectly competitive resource market
iii) The demand curve of the firm is perfectly elastic because in competitive market a slight change in price will cause a massive change in demand
iv) The firm will continue hiring as long as MRP ≥ MFC
( MRP = marginal revenue product , MFC = marginal factor cost )
For this question, use the Grove Analytics Financials. Calculate 2018 cash from financing activities for Grove Analytics. Hint: Remember to capture dividends. Also, remember that stock based compensation expense is a credit to common stock & APIC.
Below is income statement and balance sheet data for Grove Analytics. ($ in millions) Income statement 12/31/2018 Revenue 230 Operating expenses 68 Depreciation 20 Stock based compensation 13 Operating profit 129 Interest expense 5 Taxes 31 Net income 93 Balance sheet 12/31/2017 12/31/2018 Cash 50 Not provided Accounts receivable 20 25 Inventory 15 18 PP&E 30 40 Total assets 115 83 Accounts payable 8 11 Short term debt 20 22 Long term debt 48 60 Treasury stock (30) (40) Common stock & APIC 25 40 Retained earnings 44 95 Total liabilities & equity 115 188
Answer: -36
Explanation:
The 2018 cash from financing activities for Grove Analytics will be calculated as:
Issued short term debt = 22 - 20 = 2
Add: Issued long term debt = 60 - 48 = 12
Less: Purchase of treasury stock = 10
Add: Issue of common stock = (40 - 13 - 25) = 2
Less: Dividend paid = (44 + 93 - 95) = 42
Net cash used by financing activities = -36
Jasper makes a $86,000, 90-day, 7% cash loan to Clayborn Co. Jasper's entry to record the transaction should be: Multiple Choice Debit Notes Receivable for $86,000; credit Cash $86,000. Debit Accounts Receivable $86,000; credit Notes Receivable $86,000. Debit Cash $86,000; credit Notes Receivable for $86,000. Debit Notes Payable $86,000; credit Accounts Payable $86,000. Debit Notes Receivable $86,000; credit Sales $86,000.
Answer:
Debit Notes Receivable for $86,000; credit Cash $86,000
Explanation:
The journal entry to record the cash loan is given below;
Notes Receivable $86,000
To Cash $86,000
(Being cash loan is recorded)
Here the note receivable is debited as it increased the assets and credited the cash as it decreased the assets
Therefore the first option is correct
The coffee shop across the street from your tiny apartment is your haven away from home -- great beverages, healthy snacks, an atmosphere that is convivial but not so lively that you can't focus on homework, and free wifi. It lacks only one thing: some way to print out your homework and other files when you need hard copy. Your college's libraries and computer labs provide printers, but you live three miles from campus, and it's a long walk or an inconvenient bus ride.
Required:
Write a letter to the owner of the coffee shop, encouraging her to set up a printing service to complement the free wireless access. Propose that the service run at break-even prices, just enough to pay for paper, ink cartridges, and the cost of the printer itself. The benefit to the shop would be enticing patrons to spend more time and therefore more of their coffee and tea money in the shop. You might also mention that you had to take the bus to campus to print this letter, so you bought your afternoon late somewhere else.
Answer: See explanation
Explanation:
Dear Mrs Parker,
I'm one of your numerous customers at your coffee shop and I must say it's really an amazing place and you're really doing a great job.
The purpose of writing this letter is to inform you about the few changes that you could make that'll bring further revenue to you and also be of immense benefit to your customers.
Firstly, I believe that you are aware that most of your customers are young people especially college students like myself. Printing out our school works and other printing works are really a challenge to us. There are no printing shops around and we've to take a bus back to the campus anytime we want to print and this is really costly and Tien consuming.
It'll be worth it if you consider setting up a printing service to complement the free wireless access. Apart from the fact that the printing service runs at break even price, the benefit to the shop would be enticing patrons to spend more time and therefore more of their coffee and tea money in the shop.
When the printing shop is opened, the college students among us will find it beneficial as we won't have to go back to the school campus in order to print.
Furthermore, when people come to the printing shop, they'll also realize that there's a coffee shop there as well, and this can bring about an increase in the demand for coffee which ultimately increases the revenue generated from the sale of coffee.
In conclusion, I hope this letter catches your attention which will be beneficial to everyone.
Peter Williams.
Vaughn Manufacturing had the following transactions during 2022:
1. Issued $272500 of par value common stock for cash.
2. Recorded and paid wages expense of $130800.
3. Acquired land by issuing common stock of par value $109000.
4. Declared and paid a cash dividend of $21800.
5. Sold a long-term investment (cost $6540) for cash of $6540.
6. Recorded cash sales of $872000.
7. Bought inventory for cash of $348800.
8. Acquired an investment in Zynga stock for cash of $45780.
9. Converted bonds payable to common stock in the amount of $1090000.
10. Repaid a 6-year note payable in the amount of $479600.
What is the net cash provided by financing activities?
a. $(228900).
b. $250700.
c. $861100.
d. $1318900.
Answer and Explanation:
The computation of the net cash provided by financing activities is given below:
Cash provided by financing activities
Issuance of the common stock for cash $272,500
Less: cash dividend paid -$21,800
Less: repaid note payable $479,600
Net cash used in financing activities -$228,900
The positive means cash inflow and the negative means cash outflow
Roll over the items and match the examples to the sales promotion type.PromotionExamplesAdvantagesDisadvantagesCouponPremiumsContestsSweepstakesSamplesLoyalty ProgramsPOP DisplaysRebatesStimulates demandBuilds goodwillGenerates excitementIncreases involvementEncourages trialCreates loyaltyProvides visibilityLow redemption ratesBuy for premiumMust be monitoredSales declineHigh cost and risk to firmDifficult to get a good locationMay be copied by competitors
Answer:
Coupon ⇒ 20% off
Premiums ⇒ Free Keychain
Contests ⇒ 50-yard dash around the store
Sweepstakes ⇒ Win a trip to the Olympics
Samples ⇒ Ride the bike around the lot
Loyalty Programs ⇒ Buy 9, get the 10th one free.
POP Displays ⇒ Cash register display
Rebates ⇒ Mail-in for $20 off
A museum of natural history opened a gift shop that operates throughout the year. Top-selling product is a bird feeder. Annual demand for the bird feeder is 933 units. Cost per order is $55. Annual holding cost per unit is $19. Assuming that the shop uses the EOQ as the order size, what would be the total holding cost for the bird feeder
Answer:
$1396.5
Explanation:
EOQ or economic order quantity formula is given as:
[tex]EOQ = \sqrt{\frac{2DC_o}{H_c}}[/tex]
Where, D = demand per year
C_0 = ordering cost and H_c = holding cost per unit per year
[tex]EOQ = \sqrt{\frac{2\times933\times55}{19}}[/tex]
EOQ= 73.5 units
Since, the order size is EOQ then, total holding cost
= holding cost per unit per year × EOQ
=73.5×19
=$1396.5
Horatio Alger has just become product manager for Brand X. Brand X is a consumer product with a retail price of $1.00. Retail margins on the product are 33%, while wholesalers take a 12% margin. Brand X and its direct competitors sell a total of 20 million units annually; Brand X has 24% of this market. Variable manufacturing costs for Brand X are $0.09 per unit. Fixed manufacturing costs are $900,000. The advertising budget for Brand X is $500,000. The Brand X product manager's salary and expenses total $35,000. Salespeople are paid entirely by a 10% commission. Shipping costs, breakage, insurance, and so forth are $0.02 per unit.
1. What is the unit contribution for Brand X?
2. What is Brand X's break-even point?
3. What market share does Brand X need to break even?
4. What is Brand X's profit impact? Industry demand is expected to increase to 23 million units next year. Mr. Alger is considering raising his advertising budget to $1 million.
a. If the advertising budget is raised, how many units will Brand X have to sell to break even?
b. How many units will Brand X have to sell in order for it to achieve the same profit impact that it did this year?
c. What will Brand X's market share have to be next year for its profit impact to be the same as this year?
d. What will Brand X's market share have to be for it to have a $1 million profit impact?
5. Upon reflection, Mr. Alger decides not to increase Brand X's advertising budget. Instead, he thinks he might give retailers an incentive to promote Brand X by raising their margins from 33% to 40%. The margin increase would be accomplished by lowering the price of the product to retailers. Wholesaler margins would remain at 12%.
a. If retailer margins are raised to 40% next year, how many units will Brand X have to sell to break even?
b. How many units will Brand X have to sell to achieve the same profit impact next year as it did this year?
c. What would Brand X's market share have to be for its profit impact to remain at this year's level?
d. What would Brand X's market share have to be for it to generate a profit impact of $350,000?
Answer:
Horatio Alger
1. The unit contribution for Brand X is = $0.79
2. Brand X's break-even point (in units) = 1,816,456 (in sales dollars) = $1,816,456
3. The market share that Brand X needs to break-even
= 9.1%
4. Brand X's profit impact is 48.9% or $2,347,000
a. If the advertising budget is raised, units that Brand X have to sell to break-even is:
= 2,449,367 units
b. The units that Brand X have to sell in order for it to achieve the same profit impact that it did this year is:
= 5,865,886 units
c. Brand X's market share have to be 25.5% next year for its profit impact to be the same as this year.
d. Brand X's market share have to be 16.2% for it to have a $1 million profit impact.
5. a. Break-even sales units = 2,474,138 units
b. Break-even sales units = 6,520,690 units
c. Brand X's market share have to be 32.6% for its profit impact to remain at this year's level.
d. Brand X's market share have to be 15.4% to generate a profit impact of $350,000.
Explanation:
a) Data and Calculations:
Retail price of Brand X = $1.00
Units sold = 24% of 20 million = 4,800,000 units
Total sales revenue = $1.00 $4,800,000
Variable costs:
Manufacturing $0.09
Selling commision (10% of $1) $0.10
Other selling expense $0.02
Total variable costs per unit $0.21 $1,008,000
Contribution margin per unit $0.79 $3,782,000
Fixed costs:
Manufacturing $900,000
Advertising 500,000
Brand X manager's salary 35,000 $1,435,000
Net income = $2,347,000
Fixed costs/Contribution margin per unit = $1,435,000/$0.79 = 1,816,456 units
The market share that Brand X needs to break-even
= 1,816,456/20,000,000
= 9.1%
Brand X's profit impact = 48.9% ($2,347,000/$4,800,000 * 100)
With increase in advertising budget to $1 million next year,
a. Units to break-even = $1,935,000/$0.79 = 2,449,367 units
b. Units to achieve same profit impact:
Sales increased by 15% (3/20 * 100)
Net income will increase to = $2,699,050 ($2,347,000 * 1.15) to make the same impact
Therefore, the units to achieve same profit impact = ($1,935,000 + $2,699,050)/$0.79
= $4,634,050/$0.79
= 5,865,886 units
Market share next year = 25.5% (5,865,886/23,000,000)
Market share to achieve $1 million profit impact
= (FC + Profit target)/$0.79
= $1,935,000 + $1,000,000)/$0.79
= $2,935,000/$0.79
= $3,715,190
= $3,715,190/$23,000,000 * 100 = 16.2%
Fixed costs = $1,435,000
Retailer's margin raise = 40% from 33%, a 21.2% increase or decrease in price
Therefore, the new selling price = $1.00 * (1 - 0.212) = $0.79
Variable cost = $0.21
Contribution margin = $0.58
To break-even, FC/Contribution margin per unit
= $1,435,000/$0.58
= 2,474,138 units
Break-even units to achieve profit of $2,347,000 = ($1,435,000 + $2,347,000)/$0.58
= 6,520,690 units
Sales = $5,151,345 (6,520,690 * $0.79)
Market sales revenue = $15,800,000 (20,000,000 * $0.79)
= $5,151,345/$15,800,000 * 100
= 32.6%
Market impact of $350,000
Break-even units ($1,435,000 + $350,000)/$0.58
= 3,077,586 units
Sales revenue = $2,431,293 (3,077,586 * $0.79)
Market revenue = $15,800,000 (20,000,000 * $0.79)
Market share = $2,431,293/$15,800,000 * 100
= 15.4%
The roles of money
Alex just graduated from college and is now in the market for a new car. He has saved up $4,000 for a down payment. He's deciding between a Super and a Duper. The Super is priced at $23,599, and the Duper is priced at $18,999. After agonizing over the decision, he decides to buy the Duper. He writes the dealership a check for $4,000 and takes out a loan for the remainder of the purchase price. Identify what role money plays in each of the following parts of the story. (Medium of exchange, unit of account, or store of value)
A. Sean writes a check for $4,000.
B. Sean can easily determine that the price of the Super is more than the price of the Duper.
C. Sean has saved $4,000 in his checking account.
Answer:
Medium of exchange
unit of account
store of value
Explanation:
Money is anything that is generally accepted as a means of payment for goods and services and for repayment of debt.
Functions of money
1. Medium of exchange : money can be used to exchange for goods and services. For example, by writing the check, he is exchanging money for a car
2. Unit of account : money can be used to value goods and services, For example, price was used to determine which was more expensive between the super and the duper
3. Store of value : money can retain its value over the long term, this it can be used as a store of value.
During 2020, Lincoln Company hires 12 individuals who are certified to be members of a qualifying targeted group. Each employee works in excess of 600 hours and is paid wages of $13,600 during the year. Lincoln Company's work opportunity credit is_____.
Answer:
The work opportunity credit is $28,800
Explanation:
As we can see that the employees work more than 400 hours so here the company would be eligible for taking the full credit
The credit should be claimed till 40% of the first $6,000 that could allowed maximum credit of $2,400 per employee
Work opportunity credit is
= (6000 × 40%) × 12 individuals
= $28,800
Hence, the work opportunity credit is $28,800
A company is considering issuing long-term debt. The debt would have a thirty-year maturity and a ten percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of five percent of face value. In addition, the company would have to pay flotation costs of five percent of face value. The firm's tax rate is 21 percent. Given this information, the annualized after-tax cost of debt for the company would be ________.
Answer:
Find detailed explanations below
Explanation:
First and foremost, the issue price of the bond is the face value minus adjustments for discount and flotation costs
issue price=$1000*(1-5%-5%)
issue price=$900
semiannual coupon=face value*coupon rate/2
semiannual coupon=$1000*10%/2
semiannual coupon=$50
number of semiannual coupons in 30 years=30*2=60
Using a financial calculator, pretax cost of debt is computed thus:
N=60(number of semiannual coupons)
PMT=50(semiannual coupon)
PV=-900(price)
FV=1000(face value)
CPT
I/Y=5.58%(semiannual yield)
annual yield=5.58%*2=11.16%
after-tax cost of debt=annual yield*(1-tax rate)
tax rate=21%
after-tax cost of debt=11.16%*(1-21%)
after-tax cost of debt=8.82%
Alternative approach
Yield to Maturity [YTM] = Coupon Amount + [(Par Value – Bond Price) / Maturity Years] / [(Par Value + Bond Price)/2]
semiannual YTM=50+(1000-900)/30/(1000+900)/2
semiannual YTM=(50+3.33)/950
semiannual YTM=5.61%
annual YTM=5.61%*2=11.22%
after-tax cost of debt=11.22%*(1-21%)
after-tax cost of debt=8.86%
Rippelmeyer Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During June, the kennel budgeted for 3,600 tenant-days, but its actual level of activity was 3,550 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for June:
Fixed element per month Variable element per tenant day
Revenue _____________ $34,80
Wages and salaries $3900 $6
Expendables 400 9.7
Facility expenses 9400 4.5
Administrative expenses 7400 0.20
Total expenses 21,100 20.40
Actual results for May:
Revenue $73540
Wages and salaries 16170
Expendables 19735
Facility expenses 18125
Administrative expenses 7600
The net operating income in the planning budget for May would be closest to:
a. $9,140
b. $11,626
c. $12,200
d. $8,420
The net operating income in the flexible budget for May would be closest to:
a. $9,140
b. $8,420
c. $11,626
d. $12,200
Answer:
Rippelmeyer Kennel
The net operating income in the planning budget for May would be closest to:
= $30,740.
Explanation:
a) Data and Calculations:
Budgeted tenant-days = 3,600
Actual tenant-days = 3,550
Actual results for May:
Revenue $73,540
Wages and salaries $16,170
Expendables 19,735
Facility expenses 18,125
Administrative expenses 7,600
Total expenses $61,630
Net operating income $11,910
Fixed element Variable element Total
per month per tenant day
Revenue $34.80 $125,280
Wages and salaries $3,900 $6.00 $25,500
Expendables 400 9.70 35,320
Facility expenses 9,400 4.50 25,600
Administrative expenses 7,400 0.20 8,120
Total expenses 21,100 20.40 $94,540
Net Operating Income $30,740
What is the present value of 4360 to be received at the beginning of each of 30 periods discounted at 5% compound interest
Answer:
The right solution is "70375.08".
Explanation:
Given that,
Present value,
= 4360
Interest rate,
= 5%
Time period,
= 30
Now,
The present value of inflows will be:
= [tex](1+rate)\times \frac{Present \ value[1-(1+Interest \ rate)^{-time \ period}]}{rate}[/tex]
= [tex]1.05\times 4360\times \frac{[1-(1.05)^{-30}]}{0.05}[/tex]
= [tex]4360\times 16.1410736[/tex]
= [tex]70375.08[/tex]
Under the good neighbor rule, a buyer of consumer goods, who gives value and does not have
actual or constructive knowledge of the security interest, acquires clear title if there has been no filing
a. True
b. False
Baskin Promotions, Incorporated sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 77,000 T-shirts: Sales $ 1,345,190 Cost of Goods Sold 786,940 Gross Profit 558,250 Operating Expenses ($100,000 is fixed) 406,460 Operating Income 151,790 Income Taxes (30% of operating income) 45,537 Net Income $ 106,253 Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income. If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 57,000 T-shirts. What unit cost did Baskin use in budgeting the cost of goods sold for the year
Answer:
$10.22
Explanation:
The computation of the unit cost used in budgeting the cost of goods sold for the year is shown below;
= Cost of goods sold ÷ number of t-shirts
= $786,940 ÷ 77,000 shirts
= $10.22
By dividing the number of t-shirts from the cost of goods sold we can get the cost of goods sold per unit
hence, the answer is $10.22
Rebecca Bennett is an 8-year-old who was recently diagnosed with diabetes mellitus. She is hospitalized with diabetic ketoacidosis, and she is beginning to learn about the disease process. Her parents are with her continually. She has an identical twin sister who is staying with her maternal grandparents.
Mrs. Bennett is concerned that Rebecca’s sister will also develop diabetes. Based on the preceding information, an acceptable response for the nurse to make would be to:________.
a. reassure the parents that the disease is not contagious.
b. discuss the hereditary and viral factors of type 1 diabetes.
c. discuss the hereditary factors of type 1 diabetes.
d. discuss the viral factors of type 1 diabetes.
Answer:
C
Explanation:
Item 1 Lawrin is a real-estate salesperson whose compensation is commission-only. She earns a 3% commission on the sale price of each house that she sells and receives 1.5% commissions at the end of each month (the broker retains the rest per the employment agreement). During the month of July, Lawrin sold two houses totaling $445,260. What is her gross pay for the month of July
Answer:
Gross pay= $13,357.8
Explanation:
Giving the following information:
Gross commission= 3%
Sales= $445,260
The gross pay is the amount earned before tax and other deductions. We need to use the following formula:
Gross pay= commission rate*sales
Gross pay= 0.03*445,260
Gross pay= $13,357.8
The following are partial income statement account balances taken from the December 31, 2021, year-end trial balance of White and Sons, Inc.: restructuring costs, $300,000; interest revenue, $40,000; before-tax loss on discontinued operations, $400,000; and loss on sale of investments, $50,000. Income tax expense has not yet been recorded. The income tax rate is 25%. Prepare the lower portion of the 2021 income statement beginning with $800,000 income from continuing operations before income taxes. Include appropriate EPS disclosures. The company had 100,000 shares of common stock outstanding throughout the year.
Answer:
White and Sons, Inc.
The Lower Portion of the 2021 Income Statement of White and Sons, Inc.
Income from continuing operations $800,000
Interest revenue 40,000
Loss on discontinued operations, (400,000)
Loss on sale of investments (50,000)
Restructuring costs, (300,000)
Income before tax $90,000
Income tax (25%) (22,500)
Net income $67,500
Explanation:
a) Data and Calculations:
Restructuring costs, $300,000
Interest revenue, $40,000
Before-tax loss on discontinued operations, $400,000
Loss on sale of investments, $50,000
Income tax rate = 25%
Income from continuing operations = $800,000
b) The restructuring costs of $300,000 are non-recurring costs incurred during the reorganization of White and Sons. They are reported as non-operating expenses. Similarly, realized gain or loss on the sale of an investment is reported in the income statement as a separate line item after continuing operations.
Haley is expanding her tax preparation business and wants to reorganize it. She wants to better protect her personal assets from any liabilities associated with the business, and she wants to pay a lower tax rate on her business income. She also believes her business will benefit from oversight from a board of directors. Which form of business structure would clearly meet Haley's needs
Answer: Corporation
Explanation:
The form of business structure that would clearly meet Haley's needs is the corporation.
A corporation will give her limited liability therefore, her personal assets will be protected from any liabilities that's associated with the business.
Also, the tax rates for corporations are lower and also the business will benefit from oversight from a board of directors.
ProForm acquired 70 percent of ClipRite on June 30, 2017, for $770,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $450,000 was recognized and is being amortized at the rate of $12,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $330,000 at the acquisition date. The 2018 financial statements are as follows:
ProForm ClipRite
Sales $(820,000) $(640,000)
Cost of goods sold 545,000 410,000
Operating expenses 120,000 110,000
Dividend income (49,000) 0
Net income $ (204,000) $ (120,000)
Retained earnings, 1/1/18 $(1,100,000) $(870,000)
Net income (204,000) (120,000)
Dividends declared 120,000 70,000
Retained earnings, 12/31/18 $(1,184,000) $(920,000)
Cash and receivables $420,000 $320,000
Inventory 310,000 720,000
Investment in ClipRite 770,000 0
Fixed assets 1,200,000 700,000
Accumulated depreciation (400,000) (300,000)
Totals $ 2,300,000 $ 1,440,000
Liabilities $ (816,000) $ (220,000)
Common stock (300,000) (300,000)
Retained earnings, 12/31/18(1,184,000) (920,000)
Totals $(2,300,000) $(1,440,000)
ProForm sold ClipRite inventory costing $71,000 during the last six months of 2017 for $110,000. At year-end, 30 percent remained. ProForm sells ClipRite inventory costing $210,000 during 2018 for $270,000. At year-end, 10 percent is left.
Determine the consolidated balances for the following accounts:
Consolidated Balance
Sales
Cost of goods sold
Operating expenses
Dividend income
Net income attributable to noncontrolling interest
Inventory
Noncontrolling interest in subsidiary, 12/31/18
Answer and Explanation:
The computation is shown below:
The amount of consolidated sales balance is
Proform Sales 820,000
Cliprite Sales 640,000
Less: Intra-entity Sales -270,000
Consolidated Sales Balance $1,190,000
The amount of consolidated cost of goods sold balance is
Proform's Cost of Goods Sold Book Value 545,000
Cliprite's Cost of Goods Sold Book Value 410,000
Less: Intra-Entity Transfers -270,000
Adjusted Gross Profit Deferred in 2017 [(110,000 - 71,000) × 30%] -11,700
Deferral of 2018 Intra-Entity Gross Profit [(270,000 - 210,000) × 10%] 6,000
Consolidated Cost of Goods Sold Balance $679,300
The amount of consolidated operating expenses balance is
Proform's Operating Expenses Book Value 120,000
Cliprite's Operating Expenses Book Value 110,000
Amortization of Intangible Assets 12,000
Consolidated Operating Expenses Balance $242,000
The amount of consolidated dividends balance is $0 as there is an elimination in consolidation.
The amount of net income attributed is
Cliprite's Reported Income for 2018 120,000
Less: Amortization of Intangible Assets -12,000
Cliprite's Adjusted Net Income 108,000
Net Income Attributable to Non Controlling Interest (108,000 × 30%) $32,400
The amount of consolidated inventory balance is
Proform's Operating Expenses Book Value 310,000
Cliprite's Operating Expenses Book Value 720,000
Intra-Entity Gross Profit [(270,000 - 210,000) × 10%] -6,000
Consolidated Inventory Balance $1,024,000
The value of noncontrolling interest in subsidiary is
30% of Opening Book Value [(870,000 + 300,000) × 30%) 351,000
Excess January 1 Intangible Allocation [(450,000 - 12,000 ÷ 2) × 30%)] 133,200
Net Income Attributable to Noncontrolling Interest 32,400
Dividends (70,000 × 30%) -21,000
Non Controlling Interest, 12/31/18 $495,600
Nelson Won wants to withdraw $25,000 (including principal) from an investment fund at the end of each year for five years. How should he compute his required initial investment at the beginning of the first year if the fund earns 10% compounded annually
Answer:
Initial Investment= $94,769.7
Explanation:
Giving the following information:
Annual payment (A)= $25,000
Interest rate (i)= 10%
Number of periods (n)= 5 years
To calculate the initial investment, we need to use the following formula:
PV= A*{(1/i) - 1/[i*(1 + i)^n]}
PV= 25,000*{(1/0.1) - 1/[0.1*(1.1^5)]}
PV= $94,769.7