Answer:
18%
Explanation:
Average rate of return= Average net income/Average investment ×100/1
Average net income= $216,000/4
= $54,000
Average investment= $600,000/2
= $300,000
Therefore, the average rate of return is calculated as follows.
= $54,000/$300,000 ×100/1
= 0.18×100
=18%
Hence the average rate of return is 18%
Answer:
The answer is 18%
Explanation:
Average rate of Return
= expected total net income / Average investment
Average net income
=$216,000 / 4 = $54,000
Average investment
= $600,000 / 2 = $300,000
Then the expected average rate of return
= $54,000 / $300,000
= 0.18 x 100
= 18%
18% is the average rate of return
The IS curve represents Select one: a. the single level of output where financial markets are in equilibrium. b. the combinations of output and the interest rate where the money market is in equilibrium. c. the single level of output where the goods market is in equilibrium. d. the combinations of output and the interest rate where the goods market is in equilibrium.
Answer:
D. the combinations of output and the interest rate where the goods market is in equilibrium.
Explanation:
The IS curve means investment-savings curve.
The IS curve is the combinations of output and the interest rate where the goods market is in equilibrium.
It is a curve which shows the different combinations of income (Y) and the real interest rate (r) such that the market for goods and services is in equilibrium.
This means that, every point on the IS curve is an income/real interest rate pair (Y,r) such that the demand for goods is equal to the supply of goods(Qs=Qd) or equivalently, the desired national saving is equal to desired investment.
Answer:
d. the combinations of output and the interest rate where the goods market is in equilibrium.
Explanation:
British economist John Hicks was the first to introduce the IS-LM model in 1937, where IS stands for Investment-Savings and LM stands for Liquidity preference-Money supply. It is a Keynesian macroeconomic model that gives the relationship between the market for economic goods (Investment-Savings) and the money market (Liquidity preference-Money supply). The IS-LM model is a graphical representation of Keynesian economic theory.
The IS curve represents the combinations of output and the interest rate where the goods market is in equilibrium. When there's an increase in government spending, the IS curve would shift to the right on the graph.
Also, when there's an increase in the interest rate, it causes investment spending to decrease as the IS curve shifts to the left with respect to economy.
The CEO of Lexington decides to impose a transfer price since the two divisions cannot agree. She chooses the highest feasible price. Her reasoning is that selling for a high price is better for Lexington's profit. Is the CEO's reasoning sound? Explain why or why not.
Answer: Not Sound as Company does not benefit as a Whole.
Explanation:
This question alludes to the presence of Divisions in a company tasked with producing different segments of a good.
One Division makes a segment of the good and transfers it for a price to the other division so that they may be able to show Revenue on their books.
The reasoning of the CEO of Lexington is flawed because if she chooses the highest feasible Transfer Fee for the goods it will be good for the Division doing the Transferring because they make more revenue.
However, it will increase the cost of those being transferred to by the same amount that it increase the revenue of the Division transferred from.
As a result, the increase in Cost and the Increase in Revenue in the two divisions will cancel each other out meaning that the company did not benefit.
Discuss the statement: ‘Silence is Golden’ in approximately a hundred 300 words, in
relation to ethics in communicating at the workplace.
Answer:
Silence is golden
Silence is very peace word and it is describing as the golden word. It is the very popular proverb. In the common word we say, it is the better word for everyone to make silence because, without any important topic, unnecessary talk creates bad effort, so it better to remain in the silent zone.
‘Silence is golden’ is the great idiom used by the most nations. Silence is the best policy and everyone have to better understand the value of the make silence.
‘Speech is silver, Silence is golden’ is the full phrase. It is better to maintain the quiet and silent and not say nothing. One should think before saying any words.
There is the comparison in both words listen and silent is same letters but arranged differently.
Latin word
The Latin version of “Silence is Golden” is “silentium est aurum”. “Silentium’ means “Silence” and “aurum” means “Gold or something made of gold”.
It is the tendency of human to talk more and to listen less, the main cause of it is that we have forgotten the art of waiting and allowing ourselves to listen to other viewpoints.
Explanation:
When the person is a silent, they should prefer to keep quiet, so it will be the great think for them. It is abstaining from speaking for the people.
The understanding and learned people say something only that time when talking are necessary and meaningful.
On the other hand, people say that little thing, which expresses the knowledge of them and where it needs to speak.
The one thing is always should in our mind is that whenever you want to speak something, so before saying any word you have to understand the own word.
It displays great ability of everyone, so make good control during speaking and speak related to the subject, what they want to say.
Value of silence
The value of silence is great, especially when it is desirable.
You don’t need to speak every time to create an impression.
Sometimes, people leave better impressions who display the strength of character by remaining quiet and calm during challenging moments.
Remember, that “words are like arrows, you can’t take them back after you let them back.”
Why make silence
When we are silent and waiting, something great inside us keeps on growing, and silence gives birth to creativity, moreover the more we keep silent the less the heart that can be hurt.
There are times when silence become the most potential way of communication and it’s more effective than words, for instance sometimes a silent angry look from our parents enough to let us feel their fury and agony, and this angry look capable of making us behave better than harsh reprimand or scolding.
Lovers all over the world prefer to communicate with silent, It’s more romantic and it’s a famous telepathy between two people who have strong feelings for each other.
Undeniably, silence needs a special kind of power and authority of mind, to say nothing is more difficult than expressing anger, happiness, love, betrayal with words.
That’s why it’s a quite difficult conflict between a man and his mind to a long journey of controlling our senses and reactions.
A newly issued bond pays its coupons once annually. Its coupon rate is 5.7%, its maturity is 20 years, and its yield to maturity is 8.5%. a. Find the holding-period return for a 1-year investment period if the bond is selling at a yield to maturity of 7.5% by the end of the year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
16.56%
Explanation:
Intial Price, P0=753.03
when n=20, pmt=57 ,fv=1,000 ,i=8.5
Next year price = P1= $820.74
when n=19, pmt= 57, fv =1,000, i= 7.5
HPR=$57+(820.74-75303) / $753.03
HPR= 0.165611 = 16.56%
The holding period return is 16.56%
The company produced 5,600 units during the month.A total of 14,700 pounds of material were purchased at a cost of $41,160.There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,940 pounds of material remained in the warehouse.During March, 3,000 direct labor-hours were worked at a rate of $19.50 per hour.Variable manufacturing overhead costs during March totaled $6,950. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for March is:
Answer:
-$3,500 Unfavorable
Explanation:
For computation of materials quantity variance for March firstly we need to find out the standard quantity and actual quantity which is shown below:-
Standard quantity = Production units × Standard quantity of direct material
= 5,600 × 2.0
= 11,200
and
Actual quantity = Total pounds of material - Ending pounds of material
= 14,700 - 2,940
= 11,760
Now, we will put these value by using the formula of material quantity variance for march which is shown below:
Materials quantity variance for March = (Standard quantity - Actual quantity) × Standard price
= (11,200 - 11,760) × $6.25
= -$560 × $6.25
= -$3,500 Unfavorable
The unfavorable variance is the variance at which the actual cost is more than the standard cost and the same is to be considered
The key difference between an agency shop agreement and an open shop agreement is that in an agency shop:_____________
a) workers must agree not to join a union in order to keep their jobs while in an open shop workers are free to join a union if they wish, but they are not required to do so.
b) the union is restricted to a limited number of employees who perform specific types of jobs, but in an open shop membership in the union is available to all workers.
c) workers must join the union within a stipulated time period (usually 30, 60, or 90 days) in order to keep their jobs, but in an open shop the workers are not required to join the union.
d) workers who do not join the union must pay a fee or regular dues, while in an open shop workers who choose not to join the union do not have to pay any union fees or dues.
Answer:
A
Explanation:
The key difference between an agency shop agreement and an open shop agreement is that in an agency shop workers must agree not to join a union in order to keep their jobs while in an open shop workers are free to join a union if they wish, but they are not required to do so. Thus, option (a) is correct.
What is agreement?An agreement is a written agreement between two or more persons to do something. To make a legally binding commitment, two or more parties must agree on the parameters of the agreement. The terms and conditions are always included in the signed agreement.
The fundamental distinction between the agent shop arrangement and the flow shop agreement is that the employees are in the shop agreement but are not union members. In the agency shop agreement, the order to join a union was the focal point, and the shop staff were members of the union.
As a result, the significance of the agreement are the aforementioned. Therefore, option (a) is correct.
Learn more about on agreement, here:
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El Niño wind patterns affected the weather across the United States during the winter of 1997–1998. Suppose the demand for home heating oil in Connecticut is given by Q = 20 – 2 Phho + 0.5 Png – TEMP, where Q is the quantity of home heating oil demanded, Phho is the price of home heating oil per unit, Png is the price of natural gas per unit, and TEMP is the absolute difference between the average winter temperature over the past 10 years and the current average winter temperature. If the current price of home heating oil is $1.20, the current price of natural gas is $2.00, and the average winter temperature this year is 40 degrees compared to 28 degrees over the past 10 years, the price elasticity of demand for home heating oil is:
Answer:
The price elasticity of demand for home heating oil is-0.36
Explanation:
In order to calculate the price elasticity of demand for home heating oil we would have to use the following formula:
Elasticity of demand = (dQ/dPhho)*(P/Q)
According to the given data we have the following:
demand for home heating oil in Connecticut=Q = 20 – 2 Phho + 0.5 Png – TEMP
current price of home heating oil=$1.20
current price of natural gas =$2.0
Therefore, if Q = 20 – 2 Phho + 0.5 Png – TEMP, then:
Q=20 – 2*1.2 + .5*2 – 12
Q=6.6
Therefore, price elasticity of demand = (-2)*(1.2/6.6)
price elasticity of demand =-0.36
The price elasticity of demand for home heating oil is-0.36
True or False? Modern companies deal with many different suppliers in order to avoid problems that can arise when one supplier is unable to provide needed parts or materials.
Answer:
True
Explanation:
The statement modern companies deal with many different suppliers in order to avoid problems that can arise when one supplier is unable to provide needed parts or materials is true because businesses try to maintain different suppliers for a specific good to be able to react quickly and have the material available if one of the suppliers have a problem to provide itl. For example, on key materials some companies decide to buy most of the material to the supplier that offers the best value in terms of price and quality but they decide to buy a small percentage from another supplier to guarantee that they will always have the material available in case the main supplier is not able to provide the good and they can cover the immediate need with the other one.
In 2015, a former Google engineer, Erica Baker, made a spreadsheetshowing pay disparities at the company. She shared the information in a Twitter thread. In 2017, the U.S. Department of Labor alleged that the search giant had "systematic compensation disparities against women" and sought payroll records. Google annually reviews pay levels and denies any disparities. In reviewing pay levels, Google's management is focused on:________a. Job satisfaction b. Organizational justice c. Organizational commitment
Answer:
b. Organizational justice.
Explanation:
In reacting to the allegations that Google engages in "systematic compensation disparities against women" and the request of payroll records by the U.S. Department of Labor in 2017.
Google annually reviews pay levels and denies any disparities against women. In reviewing pay levels, Google's management is focused on organizational justice. The concept of organizational justice was first introduced by Greenberg in the year 1987.
Organizational justice is an organizational concept that describes an employee's perception of decisions, fairness, behaviors and actions with respect to how these employees are affected or influenced both psychologically and other wise at work.
Organisational justice deals with all workplace related activities, ranging from salary to relationships between superiors and their subordinates, equal rights, gender equality and even access to training and promotion.
For the purpose of trust, loyalty and progressive work attitudes, it is very important that organizations prioritize organizational justice.
Hence, if Google focuses on organizational justice, it will help to build trust and address the issue of pay level disparities among its employees.
A senior MIS design class project team has developed the following schedule of activities for their project, using their best estimate of completion times. Both written and oral reports are required. Draw the project network. Find the Critical Path.
Activity Time Immediate PredecessorA. Find client 4 ---B. Write prospectus 2 A C. Obtain approval from client 3 B and professorD. Complete programming 12 CE. Do industry background research 10 ---
F. Write final paper 6 D, EG. Write oral report 5 D, E
Answer:
see below for the network
ABCDF is the critical path
Explanation:
The critical path is the longest path from start to finish. Here, it is ...
A-B-C-D-F . . . critical path
The total time required is 4+2+3+12+6 = 27 time units. In order to accomplish the project in that time, the team must be capable of executing task E in parallel with some parts of A, B, C, and D; and it must be capable of executing task G in parallel with task F.
A firm wishes to shut down an office and fire 100 employees. The company will save $3000 per month per employee. It is estimated that each employee contributes $4,100 to the company. The firm rents office space for this group of employees at $1500. What should the company do
Answer:
The multiple choices are as follows:
a.Fire the employees and save $1500 on rent
b.Not fire the employees keeping them generates a profit of $1100 per employee
c.Not fire the employees since keeping them generates a profit of $1085 per employee
d.None of the above
The correct option is C,not fire the employees since keeping them generates a profit of $1085 per employee
Explanation:
The cost of paying all 100 employees is $300,000 i.e ($3000*100)
Since each employee contributes $4,100 to the company bottom-line,all of them would contribute $410,000 as a whole.
The rent of office of $1,500 is also a cost to consider as shutting down would mean rent is no longer paid
Profit from employees=$410,000-$300,000-$1,500=$108,500
Profit per employee=$108500 /100=$1085
The question is incomplete. Here is the complete question
A firm wishes to shut down an office and fire 100 employees. The company will save $3000 per month per employee. It is estimated that each employee contributes $4,100 to the company. The firm rents office space for this group of employees at $1500. What should the company do
a. Fire the employees and save $1500 on rent
b. Not fire the employees keeping them generates a profit of $1100 per employee
c. Not fire the employees since keeping them generates a profit of $1085 per employee
d. None of the above
Answer:
Not fire the employees since keeping them generates a profit of $1085
Explanation:
The amount of money contributed by each employee in the company is $4,100
The amount of expenses made is $3,000
Fixed costs can be calculated by dividing the amount of money used in purchasing the office space by the total number of employees
= 1500/100
= $15
Therefore, the earnings made from each employee is
= $4,100-$3,000-$15
= $1085
Hence since the company is making a profit of $1085 per employee then there is no need to fire them.
5. Suppose that you are the governor of Istanbul and trying to decide whether you should support the third Bosporus Bridge construction project. The project is estimated to take 5 years to complete. The project will require $50 million in construction materials per year and $20 million in labor costs per year. In addition, the project will disrupt transportation within the city for the duration of the construction. The transportation disruption lengthens transport times for 1 million workers by 20 hours a year. The project, when finished, will ease transportation within the city. Each of the 1 million workers will have their transport time reduced by 60 hours a year as compared to the pre-construction transport time for 10 years. Assume that all workers are paid $10 per hour (in other words, one hour of a worker lost/gained is worth $10), the discount rate is 5% and the benefits of the project is accrued between years 6 and 15. (a) (10 points) Show the yearly benefits and costs of this project on a table. (b) (10 points) Calculate the present value of the net benefits of this project.
Answer:
Explanation:
Part a)
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Benefits $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000
Costs
Construction materials $50,000,000 $50,000,000 $50,000,000 $50,000,000 $50,000,000
Labor costs $20,000,000 $20,000,000 $20,000,000 $20,000,000 $20,000,000
Transport disruption cost $200,000,000 $200,000,000 $200,000,000 $200,000,000 $200,000,000
Net benefit -$270,000,000 -$270,000,000 -$270,000,000 -$270,000,000 -$270,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000
Part b)
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Benefits $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000
Costs
Construction materials $50,000,000 $50,000,000 $50,000,000 $50,000,000 $50,000,000
Labor costs $20,000,000 $20,000,000 $20,000,000 $20,000,000 $20,000,000
Transport disruption cost $200,000,000 $200,000,000 $200,000,000 $200,000,000 $200,000,000
Net benefit -$270,000,000 -$270,000,000 -$270,000,000 -$270,000,000 -$270,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000 $600,000,000
P V F at 5% $0.9524 $0.9070 $0.8638 $0.8227 $0.7835 $0.7462 $0.7107 $0.6769 $0.6447 $0.6140 $0.5848 $0.5570 $0.5305 $0.5052 $0.4811
P V of net benefit -$257,148,000 -$244,890,000 -$233,226,000 -$222,129,000 -$211,545,000 $447,720,000 $426,420,000 $406,140,000 $386,820,000 $368,400,000 $350,880,000 $334,200,000 $318,300,000 $303,120,000 $288,660,000
Present value of net benefit = sum of P V of net benefit = $2,461,722,000
cheers i hope this helped !!
The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Use this information to answer the question that follow. Assets Cash and short-term investments $38,612 Accounts receivable (net) 27,852 Inventory 27,691 Property, plant, and equipment 265,063 Total assets $359,218 Liabilities and Stockholders' Equity Current liabilities $67,177 Long-term liabilities 88,562 Stockholders' equity—Common 203,479 Total liabilities and stockholders' equity $359,218 Income Statement Net Sales $88,992 Cost of goods sold (35,597) Gross margin 53,395 Operating expenses (27,302) Interest expense (4,450) Net income $21,643 Number of shares of common stock outstanding 6,044 Market price of common stock $35 Total dividends paid $8,900 Cash provided by operations $38,612 Using the data provided for Diane Company, what is the return on total assets? a.8.5% b.9.5% c.7.3% d.7.0%
Answer:
The Return on total assets is 7.3%. The right answer is c
Explanation:
In order to calculate the the return on total assets we would have to calculate the following formula:
Return on total assets = Earnings before interest and taxes / Average total assets
Earnings before interest and taxes=Net income + Interest expense
Net income=$21,643
Interest expense=$4,450
Average total assets =$359,218
Return on total assets= ($21,643 + $4,450) / $359,218
Return on total assets=0.0726=7.3%
The Return on total assets is 7.3%
Markup on job cost 75%
Department
Milling Assembly
Machine-hours 60,000 3,000
Direct labor-hours 8,000 80,000
Total fixed manufact$ 390,000 $500,000
uring overhead cost
Variable manufacturing overhead per machine-hour $2.00
Variable manufacturing overhead per direct labor-hour $3.75
Cost summary for Job 407 Department
Milling Assembly
Machine-hours 90 4
Direct labor-hours 5 20
Direct materials $800 $370
Direct labor cost $70 $280
Enter a formula into each of the cells marked with a ? below
Step 1: Calculate the estimated total manufacturing overhead cost for each department
Step 2: Calculate the predetermined overhead rate in each department
Step 3: Calculate the amount of overhead applied from both departments to Job 407
Step 4: Calculate the total job cost for Job 407
Total cost of Job 407
Step 5: Calculate the selling price for Job 407
Answer:
Instructions are below.
Explanation:
Giving the following information:
Markup on job cost 75%
Milling Assembly
Machine-hours 60,000 3,000
Direct labor-hours 8,000 80,000
Total fixed manufacturing overhead cost $ 390,000 $500,000
Variable manufacturing overhead per machine-hour $2.00
Variable manufacturing overhead per direct labor-hour $3.75
Job 407:
Milling Assembly
Machine-hours 90 4
Direct labor-hours 5 20
Direct materials $800 $370
Direct labor cost $70 $280
1) We need to calculate the total overhead costs:
Milling= 390,000 + 2*60,000 + 3.75*8,000= $540,000
Assembly= 500,000 + 2*3,000 + 3.75*80,000= $806,000
2) Now, the predetermined overhead rate per department:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
For Milling we will use machine hours as allocation base:
Milling= 540,000/60,000= $9 per machine hour
For Assembly, we will use direct labor hours:
Assembly= 806,000/80,000= $10.075 per direct labor hour
3) We need to allocate overhead to Job 407
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Milling= 9*90= $810
Assembly= 10.075*20= $201.5
Total overhead= $1,011.5
4) Total cost= (800 + 370) + (70 + 280) + 1,011.5
Total cost= $2,531.5
5) Finally, the selling price:
Selling price= 2,531.5*1.75= $4,430.125
Hanschu Inc. issues an $800,000, 10%, 10-year mortgage note on December 31, 2019, to obtain financing for a new building. The terms provide for annual installment payments of $130,196. Prepare the entry to record the mortgage loan on December 31, 2019, and the first installment payment on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Answer:
For mortgage loan:
Dr cash $800,000
Cr mortgage payable $800,000
Repayment of $130,196
Dr interest expense $80,000
Dr mortgage payable $50,196
Cr cash $130,196
Explanation:
The repayment of $130,196 comprises of both principal repayment and interest payment.
Interest payment=mortgage amount*rate of interest
mortgage amount is $800,000
rate of interest is 10%
interest payment=$800,000*10%=$80,000
Principal repayment=$130,196-$80,000=$50,196
You just won the lottery and after taxes you have $32,000. You want to have $1,000,000 by the time you are 65, which is 45 years from now. Assuming that you can earn 9 percent each year on your money, how much (in dollars) of the $32,000 must you invest today
Answer:
$20.692.24 must be invested
Explanation:
The amount to be invested today is the present value of $1,000,000 discounted at 9%.
PV = FV× (1+r)^-n
PV - present value , FV- Future value , r- rate of return, n- number of years
FV =1,000,000, r- 9%, n- 45
PV = 1,000,000 × 1.09^(-45)
PV = 20,692.24
Present Value = $20.692.24
$20.692.24 must be invested out of the $32,000
Selected transactions completed by Canyon Ferry Boating Corporation during the current fiscal year are as follows. Journalize the transactions. If no entry is required, select "No Entry Required" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. Jan. 8. Split the common stock 2 for 1 and reduced the par from $100 to $50 per share. After the split, there were 300,000 common shares outstanding. Jan. 8 Apr. 30. Declared semiannual dividends of $0.60 per share on 16,000 shares of preferred stock and $0.22 per share on the common stock payable on July 1. Apr. 30 July 1. Paid the cash dividends. July 1 Oct. 31. Declared semiannual dividends of $0.60 per share on the preferred stock and $0.11 per share on the common stock (before the stock dividend). In addition, a 5% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $56. Oct. 31 Oct. 31 Dec. 31. Paid the cash dividends and issued the certificates for the common stock dividend. Dec. 31 Dec. 31
Answer:
Canyon Ferry Boating Corporation
Journal Entries:
Debit Credit
Jan. 8: Stock Split
Jan. 8: Dividends: Preferred $9,600
Dividends: Common Stock $66,000
Dividends Payable $75,600
To record semiannual dividends declared.
July 1: Dividends Payable $75,600
Cash Account $75,600
To record the payment of the cash dividends.
Oct. 31: Dividends: Preferred $9,600
Dividends: Common Stock $33,000
Dividends Payable $42,600
To record semiannual dividends declared.
Oct. 31: Dividends: Common Stock $750,000
Dividends Payable $750,000
To record 5% dividend declared on the common stock.
Dec. 31: Dividends Payable $42,600
Cash Account $42,600
To record the payment of the cash dividends.
Dec. 31: Dividends Payable $750,000
Common Stock $750,000
To record the issue of certificates for the common stock dividend.
Explanation:
a) A decision by a company's board of directors to increase the number of outstanding shares through the issue of more shares to current shareholders is called a stock split. The purpose is to lower the market price of stock to a comfortable range for most investors, thereby increasing the liquidity of the shares. For example, in a 2-for-1 stock split, an additional share is given for each share held by a shareholder. The decision usually lowers the stock price and increases the number of shares by the same ratio, it does not necessitate for accounting records.
b) A stock dividend is payment to shareholders in the form of additional shares in the company, rather than as cash. There is no taxation on stock dividends until the shares granted are sold by their owners.
When two people are talking, they want the listener to understand what they are saying. They both want to be effective communicators. The same is true of the salesperson who wants the buyer to listen to a sales presentation. What can the salesperson do to help ensure that the buyer is listening
You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 3.6 percent indefinitely. The company just paid a dividend of $3.71 and you feel that the required return on the stock is 12 percent. What is the price per share of the company's stock?
Answer:
$45.76
Explanation:
Next dividend = Dividend just paid * (1 + Dividend growth rate) = $3.71 * (1 + 0.036) = $3.84356
Using the formula for the dividend discount model, we can calculate he price per share of the company's stock as follows:
Stock price = Next dividend / (Required return - Dividend growth rate) = $3.84356 / (0.12 - 0.036) = $45.76
Therefore, the price per share of the company's stock is $45.76.
Maggie must decide if she wants to open a start-up or work as an economics tutor. The business she is considering is risky because with 60% probability she earns $300 and with 40% probability she earns nothing. As an economics tutor she earns $160 with certainty. She has an initial wealth of $100 and her utility function is
Answer: The answer is provided below
Explanation:
Here is the complete question:
Maggie must decide if she wants to open a start-up or work as an economics tutor. The business she is considering is risky because with 60% probability she earns $300 and with 40% probability she earns nothing. As an economics tutor she earns $160 with certainty. She has an initial wealth of $100 and her utility function is
U(C) = ✓C
a. What is Maggie's expected income from her start up?
b. What is Maggie's expected utility for opening the start up?
c. What is Maggie's certainty equivalent associated with opening the start up?
a. Expected income = 60% of ($100 + $300) + (40% of $100)
= (0.6 × 400) + (0.4 × 100)
= $240 + $40
= $280
Maggie's expected income from her start up is $280.
b. Expected utility
= (60% × ✓100 + ✓300) + (40% × ✓100)
= (0.6 × ✓400) + (0.4 × 10)
= (0.6 × 20) + (0.4 × 10)
= 12 + 4
= 16
Maggie's expected utility for opening the start up is 16
c. Certainty equivalent
U(C) = ✓C
Since expected utility= 16
✓C = 16
C = 16²
C = 16 × 16
= 256
Maggie's certainty equivalent associated with opening the start up is 256.
Assume a firm is a monopoly and enjoys $10 million profits per year. The firm lobbies to have a moratorium passed by Congress on new firms in its market for the next 25 years. If there is no discount rate, how much would the firm be willing to pay to deter entry? A. $250 million. B. $100 million. C. $250 billion. D. $25 million.
Answer: A. $250 million
Explanation:
The firm is a Monopoly and is lobbying Congress to remain that way. As a monopoly it makes $10 million a year and wants to remain a monopoly for the next 25 years.
Assuming there is no discount rate which means that the value of money stays the same over the 25 years, if they succeed in Congress, they have a chance to make a total profit of,
= 10 million * 25 years
= $250 million
If the maximum amount the firm can make if the lobbying is successful is $250 million, this is the maximum they will pay to lobby for a deterrence to entry. If they pay any amount more than $250 million, they will be making a loss and therefore it would make no sense to spend that amount of the lobbying.
You have $1,000 to invest over an investment horizon of three years. The bond market offers various options. You can buy (i) a sequence of three one-year bonds; (ii) a three-year bond; or (iii) a two-year bond followed by a one-year bond. The current yield curve tells you that the one-year, two-year, and three-year yields to maturity are 3.5 percent, 4.0 percent, and 4.5 percent respectively. You expect that one-year interest rates will be 4 percent next year and 5 percent the year after that. Assuming annual compounding, compute the return on each of the three investments.
a. Expected return for (i)
b. Expected return for (ii)
c. Expected return for (iii)
Answer:
a) 13.02%
b) 14.12%
c) 13.57%
Explanation:
Given:
Yield to maturity for:
One year = 3.5%
Two year = 4.0%
Three year = 4.5%
Required:
Compute the return on investments
One year interest rate = 4%
Next year (2nd year) interest rate = 5%
a) For sequence of three one-year bonds:
1000 x (1+3.5%)(1+4%)(1+5%)
=1000 x 1.13022
= $1,130.25
Return =(1130.22/1000)-1 = 0.13022 = 13.02%
b) For a three-year bond; or
1000 x (1+4.5%)³
=1000 x 1.141166125
= $1,141.166
Return = (1,141.166/1000)-1 = 14.12%
c) For two-year bond followed by a one-year bond.
1000 x (1+4.0%)² (1+5%)
= 1000 x 1.13568
=$1,135.68
Return =(1135.68/1000)-1 = 13.568%
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years, because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $18 per share exactly 10 years from today and will increase the dividend by 6 percent per year thereafter. If the required return on this stock is 13 percent, what is the current share price
Answer:
The current share price $85.60
Explanation:
Share Price is the present value of all the future dividends associated with that share.
Use following formula to calculate the value of share at year 9.
Price of share at year 9 = Dividend / ( Required rate of return - growth rate )
Price of share at year 9 = $18 / ( 13% - 6% )
Price of share at year 9 = $257.14
The Current Price of the bond can be calculated by discounting the Price of share at year 9.
Current Price = Price of share at year 9 x ( 1 + r )^-n
Current Price = $257.14 x ( 1 + 13% )^-9
Current Price = $85.60
Suppose the following transactions occur during the current year:
1. Rajiv orders 40 cases of beer from a Dutch distributor at a price of $40 per case.
2. A U.S. company sells 200 transistors to a Spanish company at $15.00 per transistor.
3. Yakov, a U.S. citizen, pays $1,100 for a computer he orders from Dellosoft (a U.S. company).
Complete the following table by indicating how the combined effects of these transactions will be reflected in the U.S. national accounts for the current year.
Amount
Consumption
Investment
Government Purchases
Imports
Exports
Net Exports
Gross Domestic Product (GDP)
Answer:
Consumption - $2,700
Investment - $0
Government Purchases - $0
Imports - $1,600
Exports - $3,00
Net Exports - $1,400
Gross Domestic Product (GDP) - $4,100
Explanation:
1. Consumption.
Consumption is the amount of goods and services consumed in the economy in a given period by citizens themselves. Things such as beer and laptops fall under here.
The consumption for the above economy are the computer purchased as well as the beer.
Adding them up would be,
= 1,100 + (40* 40)
= 1,100 + 1,600
= $2,700
Consumption is $2,700
Investment refers to the amount of money that private citizens spend on either investments or on Capital projects such as buildings. There are none here so the answer is $0.
Government Purchases are straightforwardly the transactions that involved the Government paying for goods and services. There are no such transactions here either so the answer is $0.
Imports are goods and services purchased from a foreign company by a consumer in the local Economy. From the above scenario there is a purchase from a Dutch Distributor. This is an import.
Imports are therefore,
= $40 * 40 cases of beer.
= $1,600.
Exports are goods and services that are bought by a foreign company from the local Economy. From the above there is an Export of 200 transistors to Spain.
That means that the exports in the Economy total,
= 200 * $15
= $3,000
The Net Exports are calculated by Subtracting Imports from Exports.
= 3,000 - 1,600
= $1,400
The Gross Domestic Product is a very important Economic measure that calculates the amount of goods and services produced in an Economy within a given period which is usually a year. The goods must be finished goods as intermediate goods would results in an overestimation due to Double Counting.
The formula for the GDP calculation is,
= C + G + I + X - M
Where,
C is Consumption
G is Government Spending
I is Investment and
X - M is Net Imports
GDP = 2,700 + 0 + 0 + 1,400
GDP = $4,100
Dickinson Company has $11,820,000 million in assets. Currently, half of these assets are financed with long-term debt at 9.1 percent and a half with the common stock having a par value of $8. Ms. Smith, Vice President of Finance, wishes to analyze two refinancing plans, one with more debt (D) and one with more equity (E). The company earns a return on assets before interest and taxes of 9.1 percent. The tax rate is 40 percent. Tax-loss carryover provisions apply, so negative tax amounts are permissible.
How would each of these plans affect earnings per share? Consider the current plan and the two new plans. (Round your answers to 2 decimal places.)
Answer:
Current Plan Plan D Plan E
Earnings per share (EPS) 0.44 0.34 0.04
Explanation:
I-Current Plan :
Total assets $11,820,000 million
Total debt 50% $11,820,000
= $5,910,000 million
Total equity
= $5,910,000 million
Number of shares
5910000/8= 738750 million
Current Plan:
Return on asset before interest and tax is 9.1%
= 11820000*9.1%
=$1075620 million
Less Interest paid to debt holders 9.1%
=5910000*9.1%
= ($537810) million
Less Tax 40%
=(1075620-537810)*40%
= ($215124)million
Available Net Income to equity shareholder
$322686 million
EPS=322686/738750
= 0.44
II-Plan D
Total assets= $11,820,000 million
Total debt= (50% ×11,820,000)+2955000
= $8865000 million
Total equity
5910000 - (369375*8)
=5910000-2955000
= $2955000 million
Number of shares =
=2955000/8
=369375 million
Plan D :
Return on asset before interest in which tax is given as 9.1%
= 11820000*9.1%
=$1075620 million
Less Interest paid to debt holders 9.1% =5910000*9.1%
= ($537810) million
Less Interest paid to debt holders 11.1%
=295500*11.1%
= ($328005) million
Less Tax40%
=(1075620-537810-328005)*40%
($83922)million
Net Income available to equity shareholder $125883 million
EPS=
=125883/369375= 0.34
III Plan E :
Total assets= $11,820,000 million
Total debt
= 5910000-2955000
=$2955000 million
Total equity
= 5910000 + (369375*8)
=5910000+2955000
= $8865000 million
Number of shares =8865000/8
=1108125 million
Plan E :
Return on asset before interest and tax is given as 9.1%
= 11820000*9.1%
=$1075620 million
Less Interest paid to debt holders 9.1% =2955000*9.1%= ($268905) million
Less Tax 40%
=(1075620-268905)*40% ($322686)million
Net Income available to equity shareholder $484029 million
EPS
=484029/1108125= 0.04
Current Plan Plan D Plan E
Earnings per share (EPS) 0.44 0.34 0.04
Assume that you own an annuity that will pay you $15,000 per year for 12 years, with the first payment being made today. You need money today to start a new business, and your uncle offers to give you $156,000 for the annuity. If you sell it, what rate of return would your uncle earn on his investment
Answer: 2.72%
Explanation:
An annuity is a series of payments that is made at equal intervals. Examples are monthly home mortgage payments, regular deposits to a savings account, pension payments.
Number of payment period (NPER) = 12 years
Payment per period (PMT) = $15000
Amount needed, PV = $156000
The formula for an annuity is calculated as:
P = PMT x ((1 – (1 / (1 + r) ^ -n)) / r)
= Rate(12,15000,-156000,1)
Rate = 2.72%
Angelena files as a head of household. In 2018, she reported $52,300 of taxable income, including a $10,000 qualified dividend. What is her gross tax liability, rounded to the nearest whole dollar amount
Answer:
Her gross tax liability is $4,882
Explanation:
According to given data out of $52,300 , $10,000 is qualified dividend so remaining $42,300 will be taxed at normal rate.
Therefore, tax on ordinary income = $1,360 + ($42,300-$13,700)*12% =
tax on ordinary income =$4,792
In qualified dividend is taxed at 0% if income upto $51,700.
Hence excess $52,300-$51,700) will be taxed at 15%
Hence tax on dividend = $600*15% = $90
Hence total tax = $4,792+$90 = $4,882
Her gross tax liability is $4,882
Journalize the transactions. If no entry is required, select "No Entry Required" and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank. Jan. 8. Split the common stock 2 for 1 and reduced the par from $80 to $40 per share. After the split, there were 150,000 common shares outstanding. Jan. 8 Apr. 30. Declared semiannual dividends of $0.75 on 18,000 shares of preferred stock and $0.28 on the common stock payable on July 1. Apr. 30 July 1. Paid the cash dividends. July 1 Oct. 31. Declared semiannual dividends of $0.75 on the preferred stock and $0.14 on the common stock (before the stock dividend). In addition, a 5% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $52. Cash dividends Stock dividends Dec. 31. Paid the cash dividends and issued the certificates for the common stock dividend. Payment Issuance
Answer:
Journal Entries:
Jan 8: Stock split
Jan 8:
Debit Dividends: Preferred $13,500
Debit Dividends: Common Stock $42,000
Credit Dividends Payable $55,500
To record semiannual dividends declared.
July 1:
Debit Dividends Payable $55,500
Credit Cash Account $55,500
To record payment of cash dividends.
Oct. 31:
Debit Dividends: Preferred $13,500
Debit Dividends: Common Stock $21,000
Credit Dividends Payable $34,500
To record semiannual dividends declared.
Oct, 31:
Debit Dividends: Common Stock $300,000
Credit Dividends Payable $300,000
To record 5% stock dividend on common stock.
Dec. 31:
Debit Dividends Payable $34,500
Credit Cash Account $34,500
To record cash dividends paid.
Dec. 31:
Debit Dividends Payable $300,000
Credit Common Stock $300,000
To record the issue of certificates for the common stock dividend.
Explanation:
a) Stock split is a decision to increase the number of outstanding shares and reduce the market price of shares by the same ratio. It makes the shares attractive to most investors. The transaction does not have any financial effect, since the number of shares are increased and the share price is reduced by the same amount.
b) Stock dividend is payment to stockholders in the form of stock and not cash. It involves the issue of additional share certificate to outstanding stockholders as a compensation. The dividend is not usually subject to tax at the time of issue until the shares are sold.
The Stone Harbor Fund is a closed-end investment company with a portfolio currently worth $430 million. It has liabilities of $8 million and 10 million shares outstanding. If the fund sells for $40 a share, what is its premium or discount as a percent of NAV
Answer:
5.21%
Explanation:
The Stone Harbor Fund
NAV= Investment in portfolio - liabilities/ Numbers of share outstanding
(430-8)/10
=422/10
=$42.2
Discount will be : $42.2 -40 shares
=$2.2
Hence:
$2.2/$42.2
=5.21%
Therefore the premium or discount as a percent of NAV will be 5.21%
In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. You and your new spouse each bring home $1400 each month after taxes and other payroll deductions. By living frugally, you intend to live on just one paycheck and save the other in a mutual fund yielding 7.83% compounded monthly. How long will it take to have enough for a 20% down payment on a $165,000 condo in the city? (Round your answer to two decimal places.)
Answer:
1.93618 or 1.94 years
Explanation:
Monthly household income = 1400(Since you are using just one spouse's income as savings)
Down payment Needed = 20% of $165,000 = $33,000
Interest rate = 7.83% compounded monthly.
This can be easily solved using a financial calculator by inputting following variables
N = this is what we have to calculate.
Interest rate = 7.83%/12 = 0.6525% -----> since it is compounded monthly.
Present Value = 0
PMT = -1400(This is what you intend to invest). Ensure that you put a negative sign here. Because "Cash out flow is treated as negative and cash inflow as positive)
Future Value = 33,000(The required down payment on the house)
When you solve for N, you get the answer as 23.23415 months. To get it in years, divide it by 12.
23.23415/12 = 1.93618 or 1.94 years
Alternatively, you can use the formula =NPER (0.6525%,-1400,0,33000,0) in Excel to obtain the number of months as 23.23415. 0.6525% is the monthly interest rate, -1400 is the payment per period, 0 is the Present Value, 33000 is the required down payment, and the last zero is telling excel to calculate everything at the end of the period