Answer:
Please see solution below
Explanation:
a. Details from the above question;
MPC = 0.50
Change in consumption spending = $345.8 billion
Recall that;
Marginal propensity to consume = 1 / 1 - MPC
= 1 / 1 - 0.5
= 1 / 0.5
= 2
Hence, change in GDP = change in consumption spending × 2
= $345.8 × 2
= $691.6 billion
Therefore,
Change in GDP = $691.6 billion
b. Recall that; change in investment = -$100 billion
Marginal propensity to consume [Change in real GDP / Change in investment = 1 / 1 - MPC
=1 / 1 - 0.5
= 1 / 0.5
= 2
Change in GDP = Change in investment × 2
= (-$100) × 2
= -$200 billion
Hence, total change in GDP
= $691.6 - $200
= $491.6 billion
c. Percentage change in real GDP
= (change in real GDP / GDP at year end of 2014) × 100
= (491.6 / 15,982.3) × 100
= 3.08%
The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves assessing whether the diversification move A. will make the company better off because it will produce a greater number of core competencies. B. will make the company better off by improving its balance sheet strength and credit rating. C. will make the company better off by spreading shareholder risks across a greater number of businesses and industries. D. offers potential for the company's existing businesses and new businesses to perform better together under a single corporate umbrella. E. will benefit shareholders due to gains in earnings per share and faster stock price appreciation.
Answer:
A. will make the company better off because it will produce a greater number of core competencies.
Explanation:
The better-off test means that a business must benefit from the proposed diversification. This benefit van be a one time benefit or a continuous benefit
Reasons for diversification that don't pass the better of test
Diversification to diversify shareholders investments Increasing the size of the company.A country wants to promote economic growth by giving companies more
freedom. It cuts taxes on corporations, eliminates environmental regulations,
and makes it easier to start new businesses. The government tries to limit its
involvement in economic issues as much as possible.
This situation best reflects the influence of which economic thinker?
Answer:
Adam Smith
Explanation:
Adam Smith lived in the 18th century. He was Scottish, a decorated philosopher, economist, and author. Many view him as the father of modern economics.
Adam Smith was a principal advocate of the market economy. In his book, ''The Wealth of Nations," Adam emphasized that the individual's need to satisfy self-interest has more societal benefit. Adam Smith wrote this book at a time when markets were heavily regulated by the state, church, and trading societies . He argued that removing unnecessary interference would permit trade to flourish and prosper. Although Smith advocated for individual profits maximization and low trade barriers, he also saw to need for government to participate through regulation. Smith thought that the government had a big role in education and the country's defense.
Smith believed that competition in business ensures that private firms driven by profit motive will produce their goods at the lowest possible cost. This benefits society and ensures markets use resources efficiently.
Smith is also accredited with developing the gross domestic product (GDP) concept and the theory of compensating wage differentials.
On January 1, 2019, Nichols Corporation granted 10,000 options to key executives. Each option allows the executive to purchase one share of Nichols' $5 par value common stock at a price of $20 per share. The options were exercisable within a 2-year period beginning January 1, 2021, if the grantee is still employed by the company at the time of the exercise. On the grant date, Nichols' stock was trading at $25 per share, and a fair value option-pricing model determines total compensation to be $400,000. On May 1, 2021, 8,000 options were exercised when the market price of Nichols' stock was $30 per share. The remaining options lapsed in 2023 because executives decided not to exercise their options. Instructions: Prepare the necessary journal entries related to the stock option plan for the years 2019 through 2023.
Answer:
1/1/19 No entry on the date of the grant
12/31/19
Dr Compensation expense200,000
Cr Paid-in capital-stock options200,000
12/31/20
Dr Compensation expense200,000
Cr Paid-in capital-stock options200,000
5/1/21
Dr Cash 160,000
Dr Paid-in capital-stock options 320,000
Cr Common stock 40,000
Cr Paid-in capital in excess of par 440,000
1/1/23
Dr Paid-in capital-stock options 80,000
Cr Paid-in capital-expired options 80,000
Explanation:
Preparation of the necessary journal entries that is related to the stock option plan for the years 2019 through 2023.
1/1/19 No entry on the date of the grant
12/31/19
Dr Compensation expense200,000
Cr Paid-in capital-stock options200,000
(400,000×1/2)
12/31/20
Dr Compensation expense200,000
Cr Paid-in capital-stock options200,000
($400,000 x 1/2)
5/1/21
Dr Cash 160,000
(8,000 x $20)
Dr Paid-in capital-stock options 320,000
($400,000 x 8,000 / 10,000 = $320,000)
Cr Common stock 40,000
(8,000 x $5)
Cr Paid-in capital in excess of par 440,000
(320,000+160,000-40,000)
1/1/23
Dr Paid-in capital-stock options 80,000
Cr Paid-in capital-expired options 80,000
($400,000–$320,000)
You run a nail salon. Fixed monthly cost is $5,093.00 for rent and utilities, $5,924.00 is spent in salaries and $1,370.00 in insurance. Also every customer requires approximately $4.00 in supplies. You charge $116.00 on average for each service.You are considering moving the salon to an upscale neighborhood where the rent and utilities will increase to $11,944.00, salaries to $6,992.00 and insurance to $2,427.00 per month. Cost of supplies will increase to $8.00 per service. However you can now charge $151.00 per service. At what point will you be indifferent between your current location and the new loaction
Answer:
The indifference point is 290 services.
Explanation:
Current location:
Rent and utilities= $5,093
Salies= $5,924
Insurance= $1,370
Total fixed cost= $12,387
Contribution margin per unit= 116 - 4= $112
New location:
Rent and utilities= $11,944
Salies= $6,992
Insurance= $2,427
Total fixed costs= $21,363
Contribution margin per unit= 151 - 8= $143
First, we need to structure the total income formula (y):
Current location:
y= 112x - 12,387
New location:
y= 143x - 21,363
x= number of services
Now, we equal both formulas and isolate x:
112x - 12,387 = 143x - 21,363
31x =8,976
x= 289.55 = 290 services
The indifference point is 290 services.
Prove:
y= 112*290 - 12,387= $20,093
y= 143*290 - 21,363= $20,107
The difference is due to round up.
P Company purchased the net assets of S Company for $225,000. On the date of P's purchase, S Company had no investments in marketable securities and $30,000 (book and fair value) of liabilities. The fair values of S Company's assets, when acquired, were: Current assets $120,000 Noncurrent assets 180,000 Total $300,000 How should the $45,000 difference between the fair value of the net assets acquired ($270,000) and the consideration paid ($225,000) be accounted for by P Company? A. The noncurrent assets should be recorded at $ 135,000. B. The $45,000 difference should be credited to retained earnings. C. The current assets should be recorded at $102,000, and the noncurrent assets should be recorded at $153,000. D. A gain of $45,000 should be recorded.
Answer:
D. A gain of $45,000 should be recorded.
Explanation:
The computation is shown below
Fair value difference is
= Total assets - book & fair value of liabilities - net assets purchased
= $300,000 - $30,000 - $225,000
= $270,000 - $225,000
= $45,000
hence, the correct option is d. $45,000 and the same is to be considered
We simply applied the above formula
Temperature and Chemicals are used in which process?
Answer:
Cooking
Explanation:
because cooking use heat. heat is a temperature and chemicals is gas.
Investment X offers to pay you $4,800 per year for 9 years, whereas Investment Y offers to pay you $7,100 per year for 5 years. If the discount rate is 6 percent, what is the present value of these cash flows
Answer and Explanation:
The computation is shown below:
Present value of investment X is
= Annuity × [1 - 1 ÷ (1 + r)^n] ÷ r
= $4,800 × [1 - 1 / (1 + 0.06)^9] ÷ 0.06
= $4,800 * 6.801692
= $32,648.12
And,
The Present value of investment Y is
= Annuity × [1 - 1 ÷ (1 + r)^n] ÷ r
= $7,100 × [1 - 1 ÷ (1 + 0.06)^5] ÷ 0.06
= $7,100 × 4.212364
= $29,907.78
A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $4,225; Freight In, $467; Purchases, $14,439; Purchases Returns and Allowances, $2,701; Purchases Discounts, $319. The cost of merchandise purchased is equal to
Answer:
$11,886
Explanation:
the cost of merchandise purchased = purchases (goods purchased by the company) + freight in costs (cost of transporting purchased goods to the company) - purchase returns and allowances (goods returned to suppliers) - purchase discounts (discounts handed out by suppliers) = $14,439 + $467 - $2,701 - $319 = $11,886
The initial inventory is not included in the calculation since it was purchased during previous periods.
You want to invest an amount of money today and receive back twice that amount in the future. You expect to earn 8 percent interest. Approximately how long must you wait for your investment to double in value
Answer:
It will take 8.75 years to double the investment.
Explanation:
Giving the following information:
Interest rate= 8%
To calculate the time required to double any amount of money, we can use the rule of 70. The rule of 70 is a means of estimating the number of years it takes for an investment or your money to double.
Number of Years to Double= 70/Annual Rate of Return
Number of Years to Double= 70/8
Number of Years to Double= 8.75
It will take 8.75 years to double the investment.
South Sea Baubles has the following (incomplete) balance sheet and income statement. BALANCE SHEET AT END OF YEAR (Figures in $ millions) Assets 2015 2016 Liabilities and Shareholders' Equity 2015 2016 Current assets $ 105 $ 215 Current liabilities $ 80 $ 105 Net fixed assets 950 1,050 Long-term debt 675 900 INCOME STATEMENT, 2016 (Figures in $ millions) Revenue $ 2,025 Cost of goods sold 1,105 Depreciation 425 Interest expense 255 a&b. What is shareholders’ equity in 2015 and 2016? (Enter your answers in millions.) c&d. What is net working capital in 2015 and 2016? (Enter your answers in millions.) e. What are taxes paid in 2016? Assume the firm pays taxes equal to 35% of taxable income. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) f. What is cash provided by operations during 2016? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) g. Net fixed assets increased from $950 million to $1,050 million during 2016. What must have been South Sea’s gross investment in fixed assets during 2016? (Enter your answer in millions.)
Answer:
South Sea Baubles
1. Shareholders' equity in 2015 and 2016 = $300 and $260 respectively.
2. Net working capital in 2015 and 2016 = $25 and $110 respectively.
3. Taxes paid in 2016 = $84.
4. Cash provided by operations during 2016 = $666.
5. South Sea's gross investment in fixed assets = $100 ($105 - $95).
Explanation:
a) Data and Calculations:
BALANCE SHEET AT END OF YEAR (Figures in $ millions)
Assets 2015 2016
Current assets $ 105 $ 215
Net fixed assets 950 1,050
Total assets $1,055 $1,265
Current liabilities $ 80 $ 105
Long-term debt 675 900
Total liabilities $755 $1,005
Shareholders' equity $300 $260
Liabilities and Shareholders' Equity $1,055 $1,265
INCOME STATEMENT, 2016 (Figures in $ millions)
Revenue $ 2,025
Cost of goods sold 1,105
Gross profit $ 920
Depreciation 425
EBIT $495
Interest expense 255
Profit before taxes $240
Income taxes (35%) 84
Net Income $ 156
Cash provided by operations:
Net income = $156
Depreciation 425
Working capital:
Current assets 110
Current liabilities (25)
Net cash $666
Students, Mark and Sarah, are discussing expectations of warehouses today. Mark says that warehouses are expected to execute more transactions in less time. Sarah says that warehouses are expected to handle and store more items. Which student, Mark or Sarah, is correct?
A. Mark is correct
B. Sarah is correct
C. Both is correct
D. Neither is correct
This is the trial balance of Crane Company on September 30. CRANE COMPANY Trial Balance September 30, 2017 Debit CreditCash $ 23,860 Accounts Receivable 7,260 Supplies 5,040 Equipment 10,940 Accounts Payable $ 9,460Unearned Service Revenue 4,040Common Stock 19,660Retained Earnings 13,940 $47,100 $47,100The October transactions were as follows.Oct. 5 Received $1,370 in cash from customers for accounts receivable due.10 Billed customers for services performed $5,850.15 Paid employee salaries $1,260.17 Performed $580 of services in exchange for cash.20 Paid $1,830 to creditors for accounts payable due.29 Paid a $340 cash dividend.31 Paid utilities $470.Prepare a general ledger using T-accounts. Enter the opening balances in the ledger accounts as of October 1. Journalize the transactions. Post to the ledger accounts. Prepare a trial balance on October 31, 2017.
Find full question attached
Answer and Explanation:
Answer and explanation attached
For productivity to increase 1. the total production or output has to increase. 2. the total number of hours worked has to increase 3. the value of the production per hour worked has to increase.
Answer:
. the value of the production per hour worked has to increase.
Explanation:
Productivity is a measure of output generated from per unit of input. It is a measure of the efficiency of a machine, worker, system, or factory in converting inputs to desired outputs. Productivity is calculated by dividing the average output per period by the incurred input (labor, time, capital, material, energy).
For productivity to increase, the value of production per hour has to increase. The output per hour has to increase compared to the input used.
If a union operates in a right to work state, it will not be allowed to create a ________ workplace, but may have a ________ workplace.
Answer:
If a union operates in a right to work state, it will not be allowed to create a CLOSED SHOP workplace, but may have a OPEN SHOP workplace.
Explanation:
A closed shop workplace refers to a company where all the employees must belong to the union in order to be hired or to continue working for the company. An open shop workplace refers to a company where joining a union is optional, and no one can be fired (or not hired) for not belonging to a union.
The fill in the blanks should be filled with union shop and open shop.
The following information should be considered:
In the case when the union operated for right to work so it is not permitted to develop the union shop workplace.But at the same time, the open shop workplace should be created.Therefore we can conclude that The fill in the blanks should be filled with union shop and open shop.
Learn more: brainly.com/question/16115373
Houston repeatedly promised his daughter, Allyson, that he would pay one-half of the costs for Allyson to attend a private, historically African-American college or university. Relying on this promise, Allyson applied to and was accepted into Clark Atlanta University. Houston reiterated this promise after Allyson’s acceptance and specifically agreed to pay one-half of the costs of her tuition, room, board, books, and other expenses at Clark (less certain scholarship, work study, and grant monies). Allyson relied on this reiterated promise and, forgoing opportunities to apply to and enroll in other colleges or universities of significantly less cost, enrolled in Clark. Houston nevertheless refused to honor his commitment. Allyson sued her father alleging promissory estoppel. Did she have a good promissory estoppels claim?
Yes, Allyson has a good promissory estoppel claim against her father, Houston. Promissory estoppel is a legal doctrine that allows a party to enforce a promise, even if there is no valid contract, if certain elements are met. Considering these elements, Allyson has a strong promissory estoppel claim against her father, Houston, as she fulfilled the requirements necessary to invoke this legal doctrine.
These elements are:
1. A clear and definite promise: In this case, Houston repeatedly promised Allyson that he would pay one-half of the costs for her education at a private, historically African-American college or university. Houston even reiterated this promise after Allyson's acceptance into Clark Atlanta University, specifically agreeing to pay one-half of her tuition, room, board, books, and other expenses.
2. Reasonable and justifiable reliance: Allyson relied on her father's promise by applying to and enrolling in Clark Atlanta University, forgoing opportunities to apply to and enroll in other colleges or universities of significantly less cost. Her reliance on her father's promise was reasonable and justifiable given the specific agreement they had regarding the financial support for her education.
3. Detrimental reliance: Allyson suffered a detriment by forgoing other opportunities and enrolling in Clark Atlanta University based on her father's promise. This detriment is evidenced by the fact that she incurred the costs of tuition, room, board, books, and other expenses at Clark, which she would not have incurred if she had chosen a less expensive option.
4. Injustice without enforcement: It would be unjust for Houston to refuse to honor his commitment after Allyson reasonably relied on his promise and suffered a detriment. Promissory estoppel exists to prevent such injustices and to hold parties accountable for their promises, even in the absence of a formal contract.
Learn more about Promissory Estoppel here:
https://brainly.com/question/15583496
#SPJ2
The ethical dilemma in the Getaway Cruise Lines case can best be described as: The external auditors are being blocked by the client in attempting to verify accounting treatment of surplus electricity and water provided by the client to the local government The external auditors question the requirement to make facilitating payments to the local authorities The Director of International Accounting questions the requirement to provide surplus electricity and water to the local government The Director of International Accounting questions the requirement to provide surplus electricity and water and make facilitating payments to the local authorities
Answer:
The Getaway Cruise Lines
The ethical dilemma in the Getaway Cruise Lines case can best be described as:
The Director of International Accounting questions the requirement to provide surplus electricity and water and make facilitating payments to the local authorities
Explanation:
Kirsten as the Director of International Accounting faces an ethical dilemma or with the difficult choice of assuaging the demands of the Brazilian authorities or complying with her company's high ethical standards, including the issue of foreign bribes in the US.
For example, an ethical dilemma or moral judgement call is required when Kirsten is faced with the difficult choice of two courses of action, either of which entails transgressing a moral principle.
Which of the following statements is true of the social responsibilities of a business? Multiple Choice Legal responsibilities are often subsumed under the idea of corporate citizenship, reflecting the notion of voluntarily giving back to society. A firm’s ethical responsibilities go beyond its legal responsibilities. Shareholders mandatorily require a firm to perform its ethical and philanthropic responsibilities. Ethical responsibilities are the foundational building block of a firm’s social responsibility.
Answer:
A firm’s ethical responsibilities go beyond its legal responsibilities.
Explanation:
where in the book do you find calcualtions for Dennis is a self-employed hair stylist who operates a salon in his home. The property taxes and interest allocated to the business amount to $5,000, maintenance and utilities allocated to the business total $2,100, and depreciation allocated to the business use of the home equals $3,100 for the 2020 tax year. a. If Dennis' gross revenue after deducting supplies for his business is $5,900 for the current tax year, calculate his allowable deductions for the home office. b. If Dennis' gross revenue after deducting supplies for his business is $13,800, calculate his allowable deductions for the home office.
Answer:
Explanation:
a. . If Dennis' gross revenue after deducting supplies for his business is $5,900 for the current tax year, calculate his allowable deductions for the home office.
The allowable deductions for the home office will be $5900. It should be noted that of the $5900, $5,000 will be for taxes and interest while the remaining $900 will be for maintenance and utilities.
b. Dennis' gross revenue after deducting supplies for his business is $13,800, calculate his allowable deductions for the home office.
Allowable deductions will be:
= $5,000 + $2,100 + $3,100
= $10,200
Flint Enterprises had the following cost and production information for April: Units Produced 20,000 Unit Sales Price $ 170 Manufacturing Cost Per Unit Direct Material $ 30 Direct Labor $ 15 Variable Manufacturing Overhead $ 13 Fixed Manufacturing Overhead ($500,000/20,000) = $ 25 Full Manufacturing Cost Per Unit $ 83 Nonmanufacturing Costs Variable Selling Expenses $ 77,000 Fixed General and Administrative Costs $ 100,000 Inventory increased by 3,000 units during April. What is Flint Enterprise's income under variable costing?
Answer:
Net operating income= $1,563,000
Explanation:
The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).
First, we need to calculate the total variable cost:
Total variable cost= (30 + 15 + 13)*20,000 + 77,000= 1,237,000
Now, we can determine the net operating income:
Sales= 20,000*170= 3,400,000
Total variable cost= (1,237,000)
Contribution margin= 2,163,000
Fixed overhead= (500,000)
Fixed General and Administrative Costs= (100,000)
Net operating income= 1,563,000
Your brother-in-law borrowed $1,000 from you 10 years ago and then disappeared. Yesterday he returned and expressed a desire to pay back the loan, including the interest accrued. Assuming you had agreed to charge him interest of 7.00% per year, and that he wishes to make five equal annual payments beginning in one year, how much would your brother-in-law have to pay annually (rounded to the nearest dollar) to extinguish the debt
Answer:
$479.11
Explanation:
Loan + Accrued interest (1000*1.07^10) = 1,967.15
PMT = P *r*(1+r)^n / ((1+r)^n - 1)
PMT=Monthly payment , P = Principal=1967.15 , r = interest rate=0.07,n=number of payment =5
PMT=1967.15*.07*(1+.07)^5/((1+.07)^5 – 1)
PMT = 479.11
Journalize the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transaction. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
1.Stockholders invest $40,000 in cash in starting a real estate office operating as a corporation.
2.Purchased $500 of supplies on credit.
3.Purchased equipment for $25,000, paying $3,500 in cash and signed a 30-day, $21,500, note payable.
4.Real estate commissions billed to clients amount to $4,000.
5.Paid $700 in cash for the current month's rent.
6.Paid $250 cash on account for office supplies purchased in transaction 2.
7.Received a bill for $800 for advertising for the current month.
8.Paid $2,500 cash for office salaries.
9.Paid $1,200 cash dividends to stockholders.
10.Received a check for $2,000 from a client in payment on account for commissions billed in transaction 4.
Answer:
Date Account titles and explanation Debit Credit
1. Cash $40,000
Common stock $40,000
(To record cash invested)
2. Supplies $500
Accounts payable $500
(To record supplies purchased on credit)
3. Equipment $25,000
Cash $3,500
Notes payable $21,500
(To record equipment purchased)
4. Accounts receivable $4,000
Service revenue $4,000
(To record real estate commissions billed to clients)
5. Rent expense $700
Cash $700
(To record rent expense)
6. Accounts payable $250
Cash $250
(To record cash paid for office supplies purchased)
7. Advertising expense $800
Cash $800
(To record advertising expense paid)
8. Salaries expense $2,500
Cash $2,500
(To record office salaries paid)
9. Cash dividends $1,200
Cash $1,200
(To record cash dividends paid)
10. Cash $2,000
Accounts receivable $2,000
(To record check received from a client)
Department A had 5,000 units in Work in Process that were 60% completed as to labor and overhead at the beginning of the period. 34,000 units of direct materials were added during the period, 31,000 units were completed during the period, and 8,000 units were 80% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for material costs for the period was
Answer:
34,000 units
Explanation:
The computation of the number of equivalent units of production for material costs is shown below:
= (Opening work in process × completion percentage) + (Completed units × completion percentage) + (ending work in process × completion percentage)
= (5000 × 0%) + ((31,000 - 5,000) × 100%) + (8000 × 100%)
= 34000 Units
Hence, the number of equivalent units for production is 34,000 units
Ten years ago, you took out a $500,000 loan to buy a small apartment building. The loan had a 6.25% interst rate, 25-year amortization and, like all mortgage loans, had monthly payments and interest compounding. Currently, mortgage rates have declined so that you could refinance the current loan balance with a new loan having a 5.75% interest rate and 20 year amortization period. You intend to own the property for 5 more years and are considering refinancing. a) Calculate the payments on the original loan b) Calculate the current loan balance of the original loan c) Calculate the loan balance of the original loan 5 years from now. d) Using the current, lower interest rate, calculate the present value of the remaining original loan payments (i.e. the PV of 60 monthly loan payments and the repayment of the loan balance after 5 years) e) Assume you refinance, taking out a new loan at the lower rate with an initial balance equal to the current balance of the original loan (i.e. the new loan amount is your answer from part b). Calculate the payments on this new loan. f) Calculate the loan balance of the new loan 5 years from now.
Answer:
a) Calculate the payments on the original loan
monthly payment = principal / annuity factor
principal = $500,000
PV annuity factor, 300 periods, 0.52% = 151.59095
monthly payment = $500,000 / 151.59095 = $3,298.349934 ≈ $3,298.35
b) Calculate the current loan balance of the original loan
I prepared an amortization schedule on an excel spreadsheet. The balance after the 120th payment is $384,681.
c) Calculate the loan balance of the original loan 5 years from now.
the balance after the 180th payment = $293,760
d) Using the current, lower interest rate, calculate the present value of the remaining original loan payments
we can use the present value of an ordinary annuity formula to determine the present value of the remaining 60 payments (of $3,298.35 each) and the present value of $293,760.
PV of loan payments = $3,298.35 x 52.0404 (PV annuity factor, 0.479%, 60 periods) = $171,647.45
PV of principal = $293,760 / (1 + 5.75%)⁵ = $222,121.59
total = $393,769.04
e) Assume you refinance, taking out a new loan at the lower rate with an initial balance equal to the current balance of the original loan (i.e. the new loan amount is your answer from part b). Calculate the payments on this new loan.
monthly payment = principal / annuity factor
principal = $384,681PV annuity factor, 240 periods, 0.479% = 142.43323monthly payment = $384,681 / 142.43323 = $2,700.78
f) Calculate the loan balance of the new loan 5 years from now.
I prepared a second amortization schedule (modified amortization schedule). The principal balance after the 60th payment is $325,235
Fuzzy Button Clothing Company reported sales of $820,000 at the end of last year; but this year, sales are expected to grow by 10%. Fuzzy Button expects to maintain its current profit margin of 23% and dividend payout ratio of 10%. The firm’s total assets equaled $500,000 and were operated at full capacity. Fuzzy Button’s balance sheet shows the following current liabilities: accounts payable of $65,000, notes payable of $25,000, and accrued liabilities of $60,000. Based on the AFN (Additional Funds Needed) equation, what is the firm’s AFN for the coming year? -$149,214 -$164,135 -$186,518 -$134,293
Answer:
-$149,214
Explanation:
EFN = (A/S) x (Δ Sales) - (L/S) x (Δ Sales) - (PM x FS x (1-d))
A/S = assets / sales = 500,000 / 820,000 = 0.60976
ΔSales = $820,00 x 10% = $82,000
L/S = liabilities / sales = 125,000 / 820,000 = 0.15244
PM = profit margin = 23%
FS = forecasted sales = $902,000
1 - d = 1 - 10% = 0.9
EFN = (0.60976 x $82,000) - (0.15244 x $82,000) - ($902,000 x 0.23 x 0.9) = $ 50,000 - $12,500 - $186,714 = -$149,214
The following information applies to the questions displayed below) Serendipity Sound, Inc., manufactures and sells compact discs. Price and cost data are as follows: Selling price per unit (package of two CDs) 25.00Variable costs per unit: Direct material 10.50 Direct labor 5.00Manufacturing overhead 3.00 Selling expenses 1.30Total variable costs per unit 19.80 Annual fixed costs: Manufacturing overhead 192000 Selling and administrative 276000Total fixed costs 468000Forecasted annual sales volume (120,000 units) 3000000 In the following requirements. Ignore income taxes.
1. If the company's direct-labor costs do increase by 8 percent, what selling price per unit of product must it charge to maintain the same contribution-margin ratio?2. What is Serendipity sounds break even point in units?3. How many units would be Serendipity sound have to sell in order to earn 260000?
Answer:
$25.5090,000 units140,000 unitsExplanation:
1. Current contribution margin ratio
= (Selling price - Variable cost)/ Selling price
= (25 - 19.8) / 25
= 0.208
New Direct labor = 5.0 * ( 1 + 8%)
= $5.40
New variable cost = 19.8 + 0.4 = $20.20
To maintain 0.208
0.208 = (Selling price - 20.20) / Selling price
0.208 * Price = Price - 20.20
0.208Price - Price = -20.20
-0.792Price = -20.20
Price = -20.20/-0.792
Price = $25.50
2. Breakeven = Fixed Cost / Contribution Margin
Contribution Margin = Selling price - Variable cost
= 25 - 19.8
= $5.20
= 468,000/5.2
= 90,000 units
3. To earn $260,000;
= (Fixed Cost + 260,000) / Contribution margin
= (468,000 + 260,000) /5.2
= 140,000 units
"You are considering an investment in the FIN340 Company and want to evaluate the firm's free cash flow; From the income statement, you see that FIN340 Company earned an EBIT of $1,725,000, paid taxes of $326,025, and its depreciation expense was $86,250; FIN340 Company's gross fixed assets increased by $500,000 from 2017 to 2018. The firm's current assets increased by $545,000 and spontaneous current liabilities increased by $97,000 - What is FIN340 Company's free cash flow in 2018?
A. "$170,725
B. "$450,975
C. "$1,398,975
D. "$1,485,225
E. "$364,725
D. "$537,225
Answer:
D
Explanation:
Free cash flow is the cash flow available to all the providers of capital of a firm
FCF = EBIT ( 1 - Tax rate) + deprecation - fixed capital - working capital
Tax rate = $326,025 / $1,725,000 = 18.9%
$1,725,000(1 - 0.189) + $86,250 - $500,000 - ( $545,000 - $97,000)
= $537,225
Andrew is the chief financial officer for Glowlight Industries. Glowlight has been involved in a number of negotiations for acquisitions in the last few years, and Andrew feels the CEO is overly focused on making an acquisition. Andrew thinks the board of directors should
Answer: A) establish a system of checks and balances to challenge the CEO regarding proposed acquisitions.
Explanation:
If Andrew feels like the CEO is overly focused on making an acquisition with no business basis to it, it would be best to find out if there are basis to what the CEO is trying to do.
One way of doing so is to get the Board of Directors to establish a system of checks and balances that will challenge the CEO when it comes to acquisitions. They will check to see why the CEO wants those acquisitions as well as limit the CEO's power to seek acquisitions haphazardly.
Toot! TiX Total Users 16,700 23,100 39,800 Revenues $ 2,100,000 $ 1,880,000 $ 3,980,000 Engineering hours 13,600 9,600 23,200 Engineering cost $ 330,000 $ 450,000 $ 780,000 Administrative costs $ 1,671,600 Required: a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the revenue to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service?
Answer:
Instructions are below.
Explanation:
First, we need to calculate the revenue proportion:
Toot!= 2,100,000/3,980,000= 0.53
TiX= 1,880,000/3,980,000= 0.47
Now, we can allocate administrative costs:
Toot!= 0.53*1,671,600= $885,948
TiX= 0.47*1,671,600= $785,652
Finally, the total, and unitary profit per product:
Toot!:
Revenues= 2,100,000
Engineering cost= (330,000)
Administrative costs= (885,948)
Total profit= $884,052
Unitary profit= 884,052/16,700= $52.937
TiX:
Revenues= 1,880,000
Engineering cost= (450,000)
Administrative costs= (785,652)
Total profit= $644,348
Unitary profit= 644,348/23,100= $27.894
Zurich Corporation has 38,000 shares of $90 par common stock outstanding. On February 8, Zurich Corporation declared a 4% stock dividend to be issued April 11 to stockholders of record on March 10. The market price of the stock was $117 per share on February 8. Journalize the entries required on February 8, March 10, and April 11.
Answer and Explanation:
The journal entries are shown below:
1. Stock dividend (38,000 × 117 × 4 % ) $177,840
To stock dividend distributable (38,000 × 90 × 4 %) $136,800
To paid in capital in excess of par common stock ($177,840 - $136,800) $41,040
(being the stock dividend is recorded)
2. No journal entry is required as no transaction is take place
3. stock dividend distributable $136,800
To common stock $136,800
(being the stock dividend is recorded)
Investment X offers to pay you $7,700 per year for 9 years, whereas Investment Y offers to pay you $10,600 per year for 5 years. a. If the discount rate is 7 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If the discount rate is 21 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Answer:
Investment X
Present value if discount rate is 7% = $50,167.29
Present value if discount rate is 21% = $30,071.84
Investment Y
Present value if discount rate is 7% = $43,462.09
Present value if discount rate is 21% = $31,015.43
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Investment X
Cash flow each year from year 1 to 9 = $7,700
Present value if discount rate is 7% = $50,167.29
Present value if discount rate is 21% = $30,071.84
Investment Y
Cash flow each year from year 1 to 5 = $10,600
Present value if discount rate is 7% = $43,462.09
Present value if discount rate is 21% = $31,015.43
