a) Break-even analysis determines the point where revenue equals costs, resulting in zero net income.
b) Sales volume, costs, and profits are the variables used by managers to plan and control.
c) Assumptions of CVP analysis: linear cost behavior, separation of costs into fixed and variable, all costs incurred for the product, equal production and sales volume, and no inventory level changes.
d) Break-even chart is a graphical representation of break-even analysis, showing sales volume on the horizontal axis and revenue and costs on the vertical axis.
a) Break-even analysis is a technique used to determine the point at which the company's revenue covers all of its costs (fixed and variable costs). It is the point at which the company's net income is zero.
b) The three variables that reflect the information used by managers to plan and control are sales volume, costs, and profits.
c) The five underlying assumptions of Cost, Volume, Profit (CVP) analysis are:
i) cost behavior is linear;
ii) total costs can be separated into fixed and variable components;
iii) all costs are incurred only to produce the product under review;
iv) production volume equals sales volume; and
v) changes in inventory levels are zero.
d) A Break-even chart is a graphical representation of the break-even analysis. The break-even chart consists of a horizontal axis that shows sales volume and a vertical axis that shows revenue and costs.
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What advice would you give to Winters if you were Bridges? How would you connect this advice to the needs of Hudson College?
Provide recommendations about how Hudson College can change the culture to place more emphasis on succession planning.
What questions or challenges would a talent management strategy address? When is a talent management strategy appropriate, and when is it not appropriate?
Advice for Winters (Bridges): Foster a culture of mentorship and knowledge sharing at Hudson College to ensure smooth succession planning.
Encourage senior employees to guide and develop junior staff, creating a pipeline of future leaders.
Connecting the advice to Hudson College's needs: Emphasize the importance of long-term sustainability and growth for the college. By nurturing talent internally and preparing successors for key positions, Hudson College can ensure a seamless transition of leadership and maintain its reputation and success.
To change the culture at Hudson College, implement the following recommendations:
1. Establish formal mentorship programs that pair experienced employees with potential successors.
2. Encourage knowledge sharing through regular training sessions, workshops, and collaborative projects.
3. Recognize and reward employees who actively participate in succession planning efforts.
4. Include succession planning as a key performance indicator and incorporate it into the performance appraisal process.
5. Develop career paths and growth opportunities for employees, showcasing the benefits of staying with the organization.
A talent management strategy addresses questions and challenges related to identifying, attracting, developing, and retaining top talent within an organization. It focuses on aligning talent with organizational goals, nurturing their potential, and creating opportunities for growth. A talent management strategy is appropriate when an organization wants to cultivate a strong workforce, ensure business continuity, and proactively plan for future leadership needs. It is not appropriate when an organization has a short-term focus, limited resources, or does not prioritize talent development and succession planning.
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Question 6 of 8 -/15 View Policies Current Attempt in Progress Fishing Designs has arranged to borrow $10,000 today at 13% interest. The loan is to be repaid with end-of-year payments of $3,000 at the end of years 1 through 4. At the end of year 5, the remainder will be paid. What is the year 5 payment? $ Round entry to the nearest dollar. Tolerance is ±4. Click here to access the TVM Factor Table Calculator Save for Later Attempts: 0 of 4 used Submit Answer ||| Question 7 of 8 < -/15 View Policies Current Attempt in Progress The Joshi Fish Farm (JFF), a saltwater aquarium company, is planning to expand its operations. It anticipates that an expansion will be undertaken in 4 years. In anticipation of the expansion, JFF invests money into a mutual fund that earns 6% compounded annually to finance the expansion. At the end of year 1, they invest $70,000. They increase the amount of their investment by $34,000 each year. How much will JFF have at the end of 4 years so that it can pay for the expansion? Click here to access the TVM Factor Table calculator. $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±50. Save for Later Attempts: 0 of 4 used Submit Answer >
6) The value of the year 5 payment is $13,206.
7) The amount that JFF will have at the end of the fourth year to pay for the expansion is $305,618
Question 6: Given that,Fishing Designs has arranged to borrow $10,000 today at 13% interest. The loan is to be repaid with end-of-year payments of $3,000 at the end of years 1 through 4.
At the end of year 5, the remainder will be paid.The outstanding balance after the fourth payment can be calculated using the present value of an annuity formula as shown below;
PV = P * [(1 - (1+i)^-n)/i]
Where,
P = 3000
i = 13%/year
n = 4 years.
Substituting the values, we get;
PV = 3000[(1 - (1.13)^-4)/(0.13)]
PV = 9000.25
Therefore, the outstanding balance after the fourth payment is $9,000.25.
Then, we can find the payment that will be made at the end of year 5 using the present value formula.PV = FV/(1+i)^n
Where,FV = the future value that will be paid after the fifth year.
Substituting the values, we get;
9000.25 = FV/(1.13)^5
Therefore, the future value of the fifth-year payment is $13,205.88, which will be paid at the end of the fifth year.
Question 7: Given that,The Joshi Fish Farm (JFF), a saltwater aquarium company, is planning to expand its operations. It anticipates that an expansion will be undertaken in 4 years.
In anticipation of the expansion, JFF invests money into a mutual fund that earns 6% compounded annually to finance the expansion. At the end of year 1, they invest $70,000.
They increase the amount of their investment by $34,000 each year.
To find the amount that will be available at the end of the fourth year to finance the expansion, we can use the future value formula as shown below;
FV = PV(1+i)^n + PMT[((1+i)^n - 1)/i]
Where,PV = $70,000
i = 6%/year
n = 4 years
PMT = $34,000
Substituting the values, we get;
FV = 70000(1+0.06)^4 + 34000[((1+0.06)^4 - 1)/0.06]
FV = 305,617.64
Therefore, the amount that JFF will have at the end of the fourth year to pay for the expansion is $305,618 (rounded to the nearest dollar).
Hence, the answer is $305,618.
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3 4 a) List three strategies that you will use to engage and build your target audience based on the social media channel you choose. b) Explain your rationale for each one. a) Explain how often will
If the social media channel chosen is lnstagram, here are three strategies to engage and build the target audience.
1. Consistent and High-Quality Visual Content: lnstagram is a highly visual platform, so creating and sharing visually appealing and high-quality content is crucial. This includes well-crafted images, videos, and graphics that align with the brand's identity and resonate with the target audience. Consistency in posting content helps maintain audience interest and build a recognizable brand presence.
Rationale: lnstagram users are drawn to visually appealing content, and consistent posting establishes credibility and reliability. High-quality visuals are more likely to catch the attention of users, increasing the chances of engagement, likes, comments, and shares.2. Use of Relevant Hashtags: Hashtags play a vital role in expanding the reach of lnstagram content. Research and identify relevant hashtags that are popular within the target audience and industry. Incorporate these hashtags in the captions and comments of posts to increase discoverability and engagement.
Rationale: Hashtags help categorize and index content, making it easier for users to find posts related to their interests. By using relevant hashtags, the content becomes more visible to the target audience and increases the chances of being discovered by users who are interested in similar topics.3. Engaging with the Community: Actively engaging with the target audience and the wider lnstagram community is essential for building relationships and fostering a sense of community. Respond to comments, reply to direct messages, and participate in conversations by liking and commenting on relevant posts from users within the target audience.
Rationale: Engagement demonstrates a genuine interest in the audience and fosters a sense of connection. It encourages interaction, builds trust, and establishes a loyal community of followers. Engaging with the wider lnstagram community also helps expand reach and gain exposure to new potential followers.By employing these strategies on lnstagram, the goal is to create visually appealing and engaging content, increase visibility through hashtags, and foster meaningful connections with the target audience and the broader lnstagram community.
The correct question is:
List three strategies that you will use to engage and build your target audience based on the social media channel you choose. b) Explain your rationale for each one.
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f) Now, assume that the government does not want to wait for the self-adjustment process to take its course and would like to bring the economy back to its medium-run level of output using fiscal policy. Calculate the exact level of change in government budget balance that will bring the economy back to its natural rate of output. Show the effect of this policy action on IS-LM graph.
To calculate the exact level of change in the government budget balance that will bring the economy back to its natural rate of output, we need more information regarding the specific values of the government spending multiplier and the tax multiplier. These multipliers determine the impact of changes in government spending and taxes on the overall output of the economy.
Once we have the values of these multipliers, we can calculate the required change in the government budget balance by using the following formula:
Change in budget balance = (Required change in output) / (Government spending multiplier + Tax multiplier)The required change in output is the difference between the current output level and the natural rate of output.Once we have the change in the budget balance, we can analyze the effect of this policy action on the IS-LM graph. By increasing government spending or decreasing taxes, the IS curve will shift to the right, indicating an increase in output. The LM curve may also shift depending on the specific monetary policy actions taken by the central bank in response to the fiscal policy measures.
Without specific values or information regarding the government spending and tax multipliers, it is not possible to provide an exact calculation or graph.
About economyIn general, economics has an understanding as a science that studies how humans fulfill their life needs by using available resources. All forms of business and human effort in meeting the needs of life in order to obtain life welfare
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Suppose that there are two types of firms in a perfectly competitive market for widgets (w). Firms of type A have costs given by CA(w) = 5*w^2 + 2*w + n. Firms of type B have costs given by CB(w) = 3*w^2 + m. There are 100 firms of type A and 180 firms of type B.
a. What are the individual firm supply functions for each type type of firm (SA(p) and SB(p)? Are there any prices at which no firms produce? Are there any prices at which some firms produce but others do not?
b. What is the industry supply function? Graph the industry supply function and be certain to label any kinks and all relevant slopes.
c. Suppose that in the long run, when firms can adjust all inputs, all firms have the following cost function: C(w) = w^3 − 20w^2 + 110*w. The market demand for widgets is still given by D(p) = 1000 − p. What must the price of widgets be in the long run equilibrium? How many firms will there be producing widgets?
a. The individual firm supply functions:
For firms of type A: SA(p) depends on the cost function CA(w) and the value of n.For firms of type B: SB(p) depends on the cost function CB(w) and the value of m.There may be prices at which no firms produce if the cost of production exceeds the price.There may be prices at which some firms produce but others do not, depending on the cost functions and price levels.b. The industry supply function is the sum of the quantities supplied by all individual firms in the market, and it may exhibit kinks or changes in slope at the prices where firms enter or exit the market.
c. The long-run equilibrium price of widgets will be determined by setting the market demand equal to the total quantity supplied by all firms, and the number of firms producing widgets will depend on the equilibrium quantity supplied and market demand at that price.
a. The individual firm supply functions for each type of firm are as follows:
For firms of type A (SA(p)): Set CA(w) = p and solve for w. The resulting supply function will depend on the value of n.
For firms of type B (SB(p)): Set CB(w) = p and solve for w. The resulting supply function will depend on the value of m.
At certain prices, there may be no firms producing if the cost of production exceeds the price (i.e., when p < min(CA(w), CB(w))). There may also be prices at which some firms produce but others do not, depending on the cost functions and price levels.
b. The industry supply function is obtained by summing up the quantities supplied by all individual firms in the market at each price level. To graph the industry supply function, plot the total quantity supplied on the vertical axis and the price on the horizontal axis. The industry supply curve may exhibit kinks or changes in slope at the prices where some firms enter or exit the market.
c. In the long-run equilibrium, the price of widgets will be such that the quantity supplied by all firms in the market matches the market demand. To determine the long-run equilibrium price, set the market demand D(p) equal to the total quantity supplied by all firms. Solve for p, which will be the long-run equilibrium price.
The number of firms producing widgets in the long run equilibrium will depend on the quantity supplied by each firm and the market demand. The total quantity supplied by all firms should match the market demand at the long-run equilibrium price.
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The Holtz Corporation acquired 80 percent of the 100,000
outstanding voting shares of Devine, Inc., for $6.40 per share on
January 1, 2020. The remaining 20 percent of Devine’s shares also
traded ac
The worksheet to consolidate these two companies as of December 31, 2018:
The Financial WorksheetHoltz Corporation
Devine, Inc.
Total
Sales
$787,000
$392,000
$1,179,000
Cost of goods sold
$282,000
$105,000
$387,000
Operating expenses
$346,000
$117,000
$463,000
Dividend income
$16,000
$0
$16,000
Net income
$175,000
$170,000
$345,000
Retained earnings, 1/1/18
$727,000
$330,000
$1,057,000
Net income (above)
$175,000
$170,000
$345,000
Dividends declared
$50,000
$20,000
$70,000
Retained earnings, 12/31/18
$902,000
$500,000
$1,402,000
Current assets
$379,500
$162,000
$541,500
Investment in Devine, Inc
$512,000
$0
$512,000
Buildings and equipment (net)
$785,000
$422,000
$1,207,000
Trademarks
$148,000
$206,000
$354,000
Total assets
$1,824,500
$790,000
$2,614,500
Liabilities
$652,500
$210,000
$862,500
Common stock
$320,000
$100,000
$420,000
Retained earnings, 12/31/18 (above)
$902,000
$500,000
$1,402,000
Total liabilities and equities
$1,824,500
$790,000
$2,614,500
The 2018 consolidated income statement for Holtz and Devine:
Sales
$1,179,000
Cost of goods sold
$387,000
Operating expenses
$463,000
Dividend income
$16,000
Net income
$345,000
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The Complete Question
The Holtz Corporation Acquired 80 Percent Of The 100,000 Outstanding Voting Shares Of Devine, Inc., For $6.40 Per Share On January 1, 2017. The Remaining 20 Percent Of Devine’s Shares Also Traded Actively At $6.40 Per Share Before And After Holtz’s Acquisition. An Appraisal Made On That Date Determined That All Book Values Appropriately Reflected The Fair
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.40 per share on January 1, 2017. The remaining 20 percent of Devine’s shares also traded actively at $6.40 per share before and after Holtz’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine’s underlying accounts except that a building with a 5-year future life was undervalued by $62,000 and a fully amortized trademark with an estimated 10-year remaining life had a $67,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $260,000.
Following are the separate financial statements for the year ending December 31, 2018:
Holtz
Corporation Devine,
Inc.
Sales $ (787,000 ) $ (392,000 )
Cost of goods sold 282,000 105,000
Operating expenses 346,000 117,000
Dividend income (16,000 ) 0
Net income $ (175,000 ) $ (170,000 )
Retained earnings, 1/1/18 $ (727,000 ) $ (330,000 )
Net income (above) (175,000 ) (170,000 )
Dividends declared 50,000 20,000
Retained earnings, 12/31/18 $ (852,000 ) $ (480,000 )
Current assets $ 379,500 $ 162,000
Investment in Devine, Inc 512,000 0
Buildings and equipment (net) 785,000 422,000
Trademarks 148,000 206,000
Total assets $ 1,824,500 $ 790,000
Liabilities $ (652,500 ) $ (210,000 )
Common stock (320,000 ) (100,000 )
Retained earnings, 12/31/18 (above) (852,000 ) (480,000 )
Total liabilities and equities $ (1,824,500 ) $ (790,000 )
At year-end, there were no intra-entity receivables or payables.
1) Prepare a worksheet to consolidate these two companies as of December 31, 2018.
2) Prepare a 2018 consolidated income statement for Holtz and Devine.
49. Allen Company's Shareholders' equity comprised of 50,000 shares of P100 par ordinary shares, P3,000,000 of share premium and retained earnings of P1,500,000. Share dividends of 10% were declared w
The share dividend of 10% mentioned does not impact the shareholders' equity directly.
Based on the given information, Allen Company's shareholders' equity consists of three components:
50,000 shares of P100 par ordinary shares: This indicates that the company has issued 50,000 ordinary shares with a par value of P100 each. The total value of the ordinary shares can be calculated by multiplying the number of shares (50,000) by the par value (P100), resulting in P5,000,000.
P3,000,000 of share premium: Share premium represents the amount received by a company in excess of the par value when issuing shares. In this case, Allen Company has received P3,000,000 as share premium.
Retained earnings of P1,500,000: Retained earnings are the accumulated profits of a company that have not been distributed as dividends. Allen Company has retained earnings of P1,500,000.
To calculate the total shareholders' equity, we add the three components together:
P5,000,000 (ordinary shares) + P3,000,000 (share premium) + P1,500,000 (retained earnings) = P9,500,000.
It represents a distribution of profits to shareholders in the form of additional shares rather than cash. The impact of the share dividend would be reflected in the number of shares outstanding rather than the equity amount.
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how I do connect with you in myhomeworkhelp89?
how i connect with you?
Requirement 1. Allocate the support departments' costs to the operating departments using the direct method. (Do not round intermediary calculations. Only round the amount you input in the cell to the
To connect with me, you can follow these steps:
Visit the website or platform where you have access to the MyHomeworkHelp89 service.Look for the "Support" or "Contact Us" section on the website. It is usually located at the top or bottom of the page. Click on it.You will be directed to a page where you can find various contact options. Look for a live chat feature, email address, or phone number. These are the most common ways to connect with customer support.If there is a live chat option, click on it to initiate a conversation. A chat window will open, and you can type your queries or concerns directly to the support representative.If there is an email address provided, you can compose a detailed message explaining your requirements, questions, or issues. Be sure to include all relevant information so that the support team can assist you effectively.In case there is a phone number listed, you can call the support line and speak directly with a representative. Prepare your questions or concerns beforehand to ensure a smooth conversation.Once you have connected with the support team, clearly explain that you require assistance with allocating support departments' costs to the operating departments using the direct method.Provide any relevant information or data required for the calculation, such as the cost breakdown for support departments and the operating departments involved.The support representative will guide you through the process and may ask for additional details if needed. They should help you understand and implement the direct method of allocating costs.If you encounter any difficulties or have further questions during the process, don't hesitate to ask for clarification or additional support from the customer service team.Remember to remain polite and patient throughout your interaction, as it will help facilitate a productive conversation with the support team.For such more question on implement
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Fill in information about your company to create your comprehensive business plan . your bussiness plan should include :
.business overview
. sales and marketing
. operating plan
.people
. action plean
It is the cornerstone of a company's strategy and helps businesses remain competitive.
The five essential sections of a comprehensive business plan are explained below. Business Overview The first part of your business plan is the business overview. It's a brief summary of your company, including what it does, its structure, mission, and vision statements, management team, and any significant achievements.
Sales and Marketing The sales and marketing section should explain your go-to-market strategy. You'll need to detail who your target customers are and how you plan to reach them. Furthermore, you'll need to describe your product or service and how it fits into the market. Finally, your sales and marketing plan should also include details on how you plan to price your product.
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An increase in the price level will cause a ______________ the aggregate demand curve.
An expansion in the value level will cause a movement up along the aggregate demand curve.
The option (A) is correct.
As per the standard aggregate demand-aggregate supply (AD-AS) model, the total interest bend addresses the connection between the general cost level and the amount of genuine Gross domestic product requested in an economy. The total interest bend has a descending slant, demonstrating a reverse connection between the cost level and the amount of genuine Gross domestic product requested.
At the point when the cost level increments, it lessens the buying force of purchasers and builds the expense of creation for firms. Thus, the amount of genuine Gross domestic product requested diminishes, and there is a development up along the total interest bends to a lower level of result and consumption.
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This question is not complete, Here I am attaching the complete question:
An increase in the price level will cause a ______________ the aggregate demand curve.
(A) movement up along
(B) rightward shift of
(C) leftward shift of
The yield to maturity of a $1,000 bond with a 8% coupon rate, semiannual coupons, and two years to maturity is 5% APR, compounded semiannually. What is its price? The price of the bond is $. (Round to the nearest cent.)
The price of the bond is [tex]\$1,003.80[/tex].
[tex]\[\text{{Price}} = \frac{{C}}{{(1 + r)^1}} + \frac{{C}}{{(1 + r)^2}} + \ldots + \frac{{C}}{{(1 + r)^n}} + \frac{{M}}{{(1 + r)^n}}\][/tex]
Where:
[tex]\begin{{align*}}C & = \text{{Coupon payment}} \\r & = \text{{Yield to maturity rate per period}} \\n & = \text{{Number of periods}} \\M & = \text{{Face value or principal payment}}\end{{align*}}[/tex]
In this case, the bond has a $1,000 face value, an [tex]8\%[/tex] coupon rate, semiannual coupons, and two years to maturity. The coupon payment per period is calculated as [tex]$\frac{{8\% \times \$1,000}}{{2}} = \$40$.[/tex]
The yield to maturity rate is given as [tex]5\%[/tex] APR, compounded semiannually. To find the periodic yield rate, we divide it by the number of compounding periods per year:
[tex]\[\text{{Periodic Yield Rate}} = \frac{{5\%}}{{2}} = \frac{{0.05}}{{2}} = 0.025\][/tex]
Using this information, we can calculate the bond's price:
[tex]\[\text{{Price}} = \frac{{\$40}}{{1.025^1}} + \frac{{\$40}}{{1.025^2}} + \frac{{\$1,000}}{{1.025^2}}\][/tex]
Calculating the values:
[tex]\[\text{{Price}} = \$39.02 + \$37.86 + \$926.92 = \$1,003.80\][/tex]
Therefore, the price of the bond is [tex]\$1,003.80[/tex].
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if , then find the value of b (in terms of c and d) for which 0.
The value of b in terms of c and d for which the given integral is zero is [tex]\(b = \frac{\frac{1}{2}(c^2 - d^2)}{d - c}\).[/tex]
To find the value of b in terms of c and d for which the given integral is equal to zero, let's evaluate the integrals separately:
[tex]\(\int_{c}^{d} (x+b)\ dx = 0\)[/tex]
we can evaluate the integral and solve for b.
Expanding the integral expression, we have:
[tex]\(\int_{c}^{d} x\ dx + \int_{c}^{d} b\ dx = 0\)[/tex]
The integral of x with respect to x is:
[tex]\(\frac{1}{2}x^2\)[/tex]
Thus, we can rewrite the equation as:
[tex]\(\frac{1}{2}d^2 + bd - \frac{1}{2}c^2 - bc = 0\)[/tex]
To solve for b, we rearrange the equation:
[tex]\(bd - bc = \frac{1}{2}c^2 - \frac{1}{2}d^2\)[/tex]
Factoring out b:
[tex]\(b(d - c) = \frac{1}{2}(c^2 - d^2)\)[/tex]
Now, we can solve for b:
[tex]\(b = \frac{\frac{1}{2}(c^2 - d^2)}{d - c}\)[/tex]
Therefore, the value of b in terms of c and d is:
[tex]\(b = \frac{\frac{1}{2}(c^2 - d^2)}{d - c}\)[/tex]
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The correct question is:
If 0 < c < d, then find the value of b (in terms of c and d) for which [tex]\displaystyle { \int_{c}^{d} (x+b)\ dx = 0[/tex]
Samir purchased shares of a chartered bank for $75 a share. The shares paid a dividend of $2.50 each year. The dividends were reinvested. After 3 years Samir sold the shares for $92 each. What was his effective annual return? A 10.17% B 32.7% C 7.04% D 20.51% 0/1 Completed Points: 1
The effective annual return is 7.56%.The correct answer is C) 7.04%.
Given: Samir purchased shares of a chartered bank for $75 a share. The shares paid a dividend of $2.50 each year. The dividends were reinvested. After 3 years Samir sold the shares for $92 each.
To find: What was his effective annual return?
Solution:
Dividend paid by the shares = $2.50 per share per annum.
Number of shares purchased = 1
Cost of 1 share = $75
Cost of all shares purchased = 1 × $75
= $75
Initial investment by Samir = $75
After one year:
Samir received a dividend of $2.50 and he reinvested that amount.
Therefore, the number of shares he owned at the end of the first year was:
$2.50 / $75
= 0.033
Shares purchased = 0.033 × 1
= 0.033
Total number of shares = 1.033Cost of 1 share
= $75
Cost of all shares purchased
= 1.033 × $75
= $77.48
After two years:
Samir received a dividend of $2.50 and he reinvested that amount.
Therefore, the number of shares he owned at the end of the second year was:
$2.50 / $75 = 0.033
Shares purchased = 0.033 × 1.033 = 0.034
Total number of shares = 1.067
Cost of 1 share = $75
Cost of all shares purchased = 1.067 × $75
= $80.02
After three years: Samir received a dividend of $2.50 and he reinvested that amount.
Therefore, the number of shares he owned at the end of the third year was:
$2.50 / $75 = 0.033
Shares purchased = 0.033 × 1.067 = 0.036
Total number of shares = 1.103
Cost of 1 share = $75
Cost of all shares purchased = 1.103 × $75
= $82.73
The selling price of the shares = $92 each.
Selling price of 1 share = $92
Number of shares sold = 1
Total selling price = 1 × $92 = $92.00
Therefore, Total capital after 3 years = $92.00
Now, we can calculate the effective annual return using the below formula:
Effective Annual Return = [(Total Capital / Initial Investment) ^ (1 / Number of Years)] - 1
Effective Annual Return = [(92/75)^(1/3)]-1
Effective Annual Return = [1.2266^(1/3)]-1
Effective Annual Return = 1.0756-1
Effective Annual Return = 0.0756
Effective Annual Return = 7.56%
Hence, the effective annual return is 7.56%.The correct option is C) 7.04%.
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which of the following statements is true about education credits? multiple choice a taxpayer may be eligible to claim the education credits regardless of their agi amount. a taxpayer can use the same qualifying expenses for both the american opportunity tax and lifetime learning credits. a taxpayer cannot claim an american opportunity tax credit or lifetime learning credit in the same year he/she takes a tax-free distribution from a coverdell education savings account. the lifetime learning credit may be limited by agi levels and may completely phase out when modified agi exceeds a certain amount.
The statement that is true about education credits is "The lifetime learning credit may be limited by agi levels and may completely phase out when modified AGI exceeds a certain amount."
When it comes to education credits, the Lifetime Learning Credit is one that may be limited by AGI levels. This means that if a taxpayer's modified AGI exceeds a certain amount, the credit may be completely phased out. As a result, the Lifetime Learning Credit has certain AGI thresholds that limit who can benefit from it and how much they can benefit.Taxpayers who wish to claim education credits must first determine whether they are eligible. These credits are claimed on a taxpayer's Form 1040 or 1040-SR. Eligibility is determined by the taxpayer's tax filing status, their MAGI, and the amount of qualifying expenses they incurred during the tax year. When it comes to education credits, the Lifetime Learning Credit is one that may be limited by AGI levels. This means that if a taxpayer's modified AGI exceeds a certain amount, the credit may be completely phased out.
As a result, the Lifetime Learning Credit has certain AGI thresholds that limit who can benefit from it and how much they can benefit. Moreover, a taxpayer cannot claim an American Opportunity Tax Credit or Lifetime Learning Credit in the same year he/she takes a tax-free distribution from a Coverdell Education Savings Account. Additionally, if the same qualifying expenses are used for both the American Opportunity Tax Credit and Lifetime Learning Credit, a taxpayer cannot use the same qualifying expenses for both credits. Therefore, taxpayers must carefully review the IRS guidelines before claiming any education credits on their tax returns.
In conclusion, taxpayers can claim education credits as long as they meet certain eligibility criteria. While the American Opportunity Tax Credit and the Lifetime Learning Credit are the most well-known credits available, each credit has different eligibility requirements. The Lifetime Learning Credit, for example, may be limited by AGI levels and may completely phase out when modified AGI exceeds a certain amount. Consequently, taxpayers must be mindful of these AGI thresholds while deciding which credit to claim.
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You plan to purchase a company and wish to estimate the expected return on the company’s equity using a three-factor model. You believe the appropriate factors are the market return, the percentage change in GNP and the oil price return. The market is expected to grow by 6 per cent, GNP is expected to grow by 2 per cent, and the oil price is expected to fall by 5 per cent. The company has betas of 0.8, 0.3 and −0.1 for the market, GNP and oil respectively. The expected rate of return on the equity is 15 percent. What is the revised expected return if the market falls by 8 per cent, GNP contracts by 0.3 per cent and the oil price grows by 9 per cent?
The revised expected return on equity is -6.39%.
To calculate the expected return on a company's equity using a three-factor model, the following equation can be used: R_i = R_f + β_i, m(R_m - R_f) + β_i, g RP + β_i, o RP where R_i is the expected return on the equity, R_f is the risk-free rate, β_i, m, β_i, g, and β_i, o are the betas for the market, GNP, and oil respectively, R_m is the expected market return, g RP is the percentage change in GNP, and o RP is the oil price return.
Given the following information, we can calculate the expected return: R_f = 5%R_m = 6%gRP = 2%oRP = -5%Beta_m = 0.8Beta_g = 0.3Beta_o = -0.1Expected return on equity = 15%Plug in the values into the formula above to calculate the expected return:15% = 5% + 0.8(6% - 5%) + 0.3(2%) - 0.1(-5%)Simplify and solve:15% = 5.4% + 0.6% + 0.6% + 0.5%15% = 7.1%Therefore, the expected return on equity is 7.1%.
Now, let's assume that the market falls by 8%, GNP contracts by 0.3%, and the oil price grows by 9%. We can use the same formula with the new values to calculate the revised expected return on equity: R_f = 5%R_m = -8%gRP = -0.3%oRP = 9%Beta_m = 0.8Beta_g = 0.3Beta_o = -0.1Expected return on equity = ?Plug in the new values into the formula above: Expected return on equity = 5% + 0.8(-8% - 5%) + 0.3(-0.3%) - 0.1(9%)Simplify and solve: Expected return on equity = 5% - 10.4% - 0.09% - 0.9%Expected return on equity = -6.39%Therefore, the revised expected return on equity is -6.39%.
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Write a short note on
The Concept Of EBQ
The Assumptions of CVP Analysis And Its Application In Real World
Notional Profits
EBQ (Economic Batch Quantity) EBQ (Economic Batch Quantity) is defined as the optimum size of batch that is to be ordered to minimize the total costs associated with the purchase, transportation, and storage of inventory. This quantity is usually calculated by the use of mathematical formulas, and is based on the tradeoff between the ordering costs and the carrying costs.
In addition, this quantity is usually determined by the use of statistical techniques such as regression analysis and forecasting methods.
CVP (Cost-Volume-Profit) Analysis is a management accounting tool that is used to analyze the relationship between the fixed costs, variable costs, and the level of sales volume. Some of the key assumptions that underlie this analysis include the assumption that the selling price is constant per unit, the assumption that the variable costs are constant per unit, the assumption that the total fixed costs are constant over the relevant range, and the assumption that the sales mix is constant over the relevant range.
CVP Analysis is widely used in the business world to make various kinds of decisions such as pricing decisions, product mix decisions, and cost control decisions. For example, a company might use CVP Analysis to determine the selling price of its products, or to determine the optimal product mix that will maximize its profits.
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What are your thoughts about the medical model of addiction? Is addiction a disease? Is addiction caused by low or poor morals?
The medical model of addiction portrays addiction as a disease. Addiction is a mental condition that involves altered brain function and compulsive drug-seeking behaviors.
In recent times, research has shown that addiction is a chronic and relapsing disease, which means that it is characterized by a cycle of recovery and relapse. This cycle is similar to the cycle of other chronic diseases such as diabetes, asthma, or hypertension.
According to this model, addiction is a medical issue, which means that it should be treated as a disease that requires professional medical treatment. The medical model views addiction as a complex disorder that involves biological, psychological, and social factors
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Information provided for the Trust In 2018 Johnny's father passed away and some of his assets were placed in a Trust for Alexis, David and Stevie Johnny and Moira are the trustees The trust has a year end of January 31 Under the terms of the trust, no distributions are to be made until Alexis turns 25 During the year the trust earned interest income of $2,000 and eligible dividend income of $10,000 The trust paid expenses of $500 Required: Determine the trust tax payable
The trust taxable interest of payable cannot be determined without considering the applicable tax rates, deductions, and other factors outlined in the tax laws.
To decide the trust charge payable, we want to compute the available pay of the trust and apply the suitable expense rates.
The trust procured interest pay of $2,000 and qualified profit pay of $10,000. In any case, since no disseminations were made during the year, the pay will be held in the trust and charged at the trust level.
In the first place, we deduct the costs of $500 from the complete pay, bringing about an available pay of $11,500 ($2,000 + $10,000 - $500).
Then, we want to decide the duty payable in view of the expense rates pertinent to trusts. The specific assessment rates might change relying upon the locale, so it is essential to allude to the particular duty regulations in the pertinent ward.
When the duty not entirely settled, the available pay is increased by the relevant assessment rate to ascertain the expense payable. For instance, assuming the duty rate is 30%, the assessment payable would be $3,450 ($11,500 x 0.30).
It is vital to talk with an expense proficient or allude to the duty regulations in the particular purview to guarantee exact computation of the trust charge payable in view of the given data.
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escribing accounting responsibilities LO C1 Determine whether each of the following accounting duties mainly involves financial accounting, managerial accounting, or tax accounting Accounting Duties Area of Accounting 1. Internal auditing 2. External auditing 3. Cost accounting 4. Budgeting 5. Enforcing tax laws 6. Planning transactions to minimize taxes 7. Preparing external financial statements 8. Analyzing external financial reports
Accounting duties can be categorized into three main areas: financial accounting, managerial accounting, and tax accounting.
Let's determine the area of accounting for each of the listed duties:
Internal auditing: This duty primarily falls under managerial accounting. Internal auditors assess and evaluate internal controls, risk management processes, and operational efficiency within an organization.External auditing: This duty mainly involves financial accounting. External auditors review financial statements, records, and transactions to provide an independent opinion on their accuracy and compliance with accounting standards.Cost accounting: Cost accounting is a subset of managerial accounting. It involves tracking and analyzing costs associated with production, operations, and decision-making within an organization.Budgeting: Budgeting is primarily a managerial accounting responsibility. It involves creating, monitoring, and controlling budgets to allocate resources efficiently and achieve organizational goals.Enforcing tax laws: This duty falls under tax accounting. It involves ensuring compliance with tax regulations, investigating tax evasion, and collecting taxes owed.Planning transactions to minimize taxes: This duty also falls under tax accounting. It involves strategizing and structuring transactions to minimize tax liabilities within the boundaries of tax laws and regulations.Preparing external financial statements: This duty primarily falls under financial accounting. It involves preparing financial statements (e.g., income statement, balance sheet, cash flow statement) for external stakeholders such as investors, creditors, and regulatory authorities.Analyzing external financial reports: This duty mainly involves financial accounting. It entails reviewing and interpreting financial reports to assess the financial performance, position, and trends of an organization.For such more question on Accounting
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selling techniques of selling product tooth paste in 300
words
Selling techniques refer to the methods or strategies that salespeople use to persuade potential customers to buy a particular product or service. In the case of toothpaste, salespeople use various techniques to attract customers and convince them to choose their product over others.
One selling technique is to highlight the benefits of the toothpaste. For instance, salespeople can emphasize that their toothpaste has cavity-fighting ingredients, teeth whitening capabilities, and fresh breath effects. By highlighting the benefits, salespeople show potential customers why their product is superior to others.
Another technique that salespeople use is to offer free samples or product demonstrations. This approach allows customers to experience the benefits of the product first-hand and increases the chances that they will purchase the product in the future.
Salespeople can also use testimonials or endorsements from dentists or celebrities to persuade customers to buy their product. This technique works because customers are more likely to trust a product that has been endorsed by a reputable professional or well-known personality.
Additionally, creating a sense of urgency can also be an effective selling technique. For example, salespeople can offer limited-time discounts or promotions to create a sense of urgency that encourages customers to make a purchase right away.
Another technique is to provide excellent customer service. By providing exceptional service, salespeople can build a rapport with customers and create a positive image of their product. Good customer service can also lead to repeat customers and positive word-of-mouth advertising.
Finally, salespeople can leverage technology to sell their toothpaste product. By creating engaging social media posts, online advertisements, and website content, salespeople can reach a wider audience and increase brand awareness.
In conclusion, toothpaste salespeople use various selling techniques to persuade potential customers to purchase their product. These techniques include highlighting the product's benefits, offering free samples, providing endorsements, creating a sense of urgency, offering excellent customer service, and leveraging technology. By using these techniques, salespeople can increase brand awareness, attract new customers, and generate more sales.
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In the Capacity Allocation problem with two classes, companies have to determine Group of answer choices How many discount customers should be allowed to book reservations How many full-fare customers should be postpone for later reservations How many full-fare customers are allowed to book reservations How many customers they should allow to book reservations
Answer:
The answer is "First Choice".
Explanation:
The capacity allocation implies assets within each instance; the instance is system activation. That location of resources that are subject to several optimization algorithm restrictions involves an extensive debris field whenever the status of each process is role transition, that's why the Firms must decide how often discount customers must be permitted to reserve for capacity distribution with 2 groups.
The Matching Concept
A.
Breaks accounting activities into separate periods or fiscal years
B.
Matches the accounting procedures used during one period to the next
C.
Is the process of matching costs (efforts) with their associated revenues (accomplishments)
D.
Ensures the accounting entries are matched to reliable sources
The Matching Concept is defined as the process of matching costs (efforts) with their associated revenues (accomplishments). Option C.
The Matching Concept is a fundamental accounting principle that requires expenses to be recorded when they are incurred and revenues to be recorded when they are earned. This principle seeks to ensure that accounting activities break into separate periods or fiscal years and match the accounting procedures used during one period to the next.
By doing so, the matching principle ensures that accounting entries are matched to reliable sources. Answer (C) Is the process of matching costs (efforts) with their associated revenues (accomplishments).
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1 Question 1 Consider an economy where the nominal interest rate (i), the inflation rate () and the growth rate of real GDP (g) are constant unless otherwise stated. (1.1) Interpret the following equation and argue why it must hold: Dt+1= Dt+1-Dt=Gt -Tt+rDt where Dt is the real government debt at time t, G, is the real government expenditure at time t, Tt is the real tax revenue at time t and r is the real interest rate. (1.2) Show that the law of motion for the debt-to-GDP ratio (dt = P) is Gt -Tt p(8-a)+ dt+1
1.1 The given equation is: Dt+1= Dt+1-Dt=Gt -Tt+ t Where,Dt = real government debt at time t,Dt+1 = real government debt at time t+1,Gt = real government expenditure at time t,Tt = real tax revenue at time t,r = real interest rateThe above equation represents the change in the government debt from time t to time t+1. It states that the change in the government debt between time t and time t+1 is equal to the difference between real government expenditure (Gt) and real tax revenue (Tt), plus the interest rate on government debt (r) multiplied by the initial value of the debt at time t.The equation must hold because it represents the government's budget constraint, which implies that the government cannot spend more than its revenue (taxes) and must borrow the difference between its spending and revenue. The equation also implies that the government's debt at time t+1 depends on its debt at time t, its spending, its revenue, and the interest rate it pays on its debt.1.2
The law of motion for the debt-to-GDP ratio is given by the following equation:dt = P(8 - a) + dt+1Where,dt = Debt-to-GDP ratio at time t,dt+1 = Debt-to-GDP ratio at time t+1,Gt = Real government expenditure at time t,Tt = Real tax revenue at time t,P = Primary surplus,G = Real GDP,a = Growth rate of real GDP The primary surplus (P) is the difference between real tax revenue (Tt) and real government expenditure (Gt), excluding interest payments on government debt. The law of motion for the debt-to-GDP ratio states that the debt-to-GDP r atio at time t+1 is equal to the product of the primary surplus (P) and a constant (8-a), plus the debt-to-GDP ratio at time t. The constant (8-a) represents the inverse of the growth rate of real GDP, which is the maximum rate at which the debt-to-GDP ratio can decline without a primary surplus.
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the short-run average total cost curve eventually begins to increase at an increasing rate because of a. increasing returns to scale to capital. b. diseconomies of scale phenomena. c. diminishing returns phenomena. d. a constraint that does not allow the firm to change its production technology.
The short-run average total cost curve eventually begins to increase at an increasing rate because of b) diseconomies of scale phenomena.
The short run is the period of time in which the organization operates at least one fixed factor of production. When the fixed factor of production is adjusted, it is referred to as the long run. The cost per unit of production is the total cost of production divided by the number of units produced. Along the short-run average total cost curve, the U-shape can be seen. The law of diminishing returns causes the curve to rise. When all other inputs are constant, adding another factor of production to the mix will eventually cause output to decline.
This rise in the curve also causes average fixed costs to decline. The cost curve eventually starts to rise at an increasing rate due to diseconomies of scale. When all other inputs are constant, adding another factor of production to the mix will eventually cause output to decline. When production costs rise, the cost curve is usually due to diseconomies of scale.
Therefore, the correct answer is b) diseconomies of scale phenomena.
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ASAP ...... don't copy-paste... I will give a downvote
...
Yolo Corporation experienced financial difficulty in 2020. It
decided to go into note receivable discounting to be able to ease
some of its f
ASAP stands for "as soon as possible." It is a commonly used acronym to indicate urgency or promptness in completing a task or providing a response to a request.
In the given scenario, Yolo Corporation is experiencing financial difficulty in 2020 and has decided to go into note receivable discounting to ease some of its financial burdens.
Note receivable discounting is a financing technique in which a company sells its notes receivable to a financial institution or a third-party investor at a discounted price to obtain cash upfront. This is done to receive immediate cash in hand, which can then be used to pay off any outstanding debts or to invest in the company's growth.
Yolo Corporation may choose to discount its notes receivable if it needs to obtain immediate cash for an upcoming project or investment opportunity. However, it is important to note that note receivable discounting comes with a cost, which is the discount rate. The discount rate is the percentage of the note's face value that the financial institution or third-party investor charges to purchase the note.
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The adjusted balances at December 31, 2020, for Derlak Enterprises are shown in alphabetical order below: 2020 2019 Accounts payable $ 66,300 $ 11,500 21,100 13,100 4,000 3,300 Accumulated amortizatio
The adjusted balances for Derlak Enterprises for the year 2020 are $66,300 for accounts payable, $21,100 for accounts receivable, and $4,000 for accumulated amortization. Derlak Enterprises is a service providing company that manages its business operations in accordance with the accrual accounting system.
In this context, the financial statements of the company are prepared by following the accrual accounting principle, which implies that revenue is recognized when earned and expenses are recognized when incurred. The statement of financial position or balance sheet represents the financial position of the company as of a particular date (December 31, 2020).
The adjusted balances at December 31, 2020, for Derlak Enterprises are shown in alphabetical order below: 2020 2019 Accounts payable $ 66,300 $ 11,500
Accounts Receivable $ 21,100 $ 13,100
Accumulated Amortization $ 4,000 $ 3,300
The adjusted balances indicate the ending balances of the accounts as of December 31, 2020. Accounts payable amount is $66,300, which represents the amount that Derlak Enterprises owes to its suppliers as of December 31, 2020. The balance of accounts receivable is $21,100, which represents the amount that Derlak Enterprises will collect from its customers in the future.
Accumulated amortization balance is $4,000, which represents the cumulative amount of amortization charged against long-term assets such as plant and equipment. Thus, the adjusted balances for Derlak Enterprises for the year 2020 are $66,300 for accounts payable, $21,100 for accounts receivable, and $4,000 for accumulated amortization.
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Boeing executives have just reviewed the company's 2018 operating performance and financial status at its April 29, 2019 annual shareholder meeting. Besides voting on new directors and approving executive compensation, in addition to other company business, such meetings are held to afford shareholders the opportunity to question Boeing's financial practices from an investor standpoint. Shareholder meetings are typically the only time during the year when shareholders and company executives interact.
Key investor takeaways from the shareholder meeting are as follows:
Boeing’s net income for 2018: $10.46B
Boeing issued a 10% stock dividend on December 4.
Market value per share on December 4: $342.50 (close)
Boeing executives revealed a plan to build a new $52B factory in South Carolina, opening a third production line for the 787 Dreamliner. Their plans include a $5B bond issue to finance, in part, the new factory. In addition, they announced a cut of 20% in the annual cash dividend from $6.84 to $5.47 per share starting in 2019.
Market value per share on December 31: $322.50 (close). Retained earnings as of December 31: $55.94B. Availability of retained earnings for dividends on December 31 is restricted by $50B owing to the planned new 787 factory.
Boeing executives explained that the drop in share price at December 31 was due solely to a downturn in the overall market and not to past or projected operating performance.
To encourage executive and shareholder interaction, officials from the company’s investor relations program asked shareholders attending the meeting to submit written questions about Boeing’s financial management. As Boeing’s chief auditor and an independent, objective source of the company’s financial data, Investor Relations has asked you to respond to the following question. Your response will be emailed, via Investor Relations, directly to the shareholder who posed the question.
Shareholder (an investor with financial acumen): "If you have set aside $20B in retained earnings for the new 787 factory, why are you borrowing $5B and not just the $2B needed?"
Explanation :
Shareholder (an investor with financial acumen): "If you have set aside $20B in retained earnings for the new 787 factory, why are you borrowing $5B and not just the $2B needed
Boeing has revealed a plan to build a new $52B factory in South Carolina, opening a third production line for the 787 Dreamliner. As a part of financing the new factory, the company has announced a cut of 20% in the annual cash dividend from $6.84 to $5.47 per share starting in 2019.
However, the availability of retained earnings for dividends on December 31 is restricted by $50B owing to the planned new 787 factory. The shareholders attending the meeting submitted a written question regarding the borrowing of $5B by the company to finance the new factory when they have already set aside $20B in retained earnings for it.
The borrowed $5B is needed for the construction of the factory. Boeing has retained earnings of $20B that can be used for various purposes, including dividends and strategic acquisitions. Borrowing the money instead of using all the retained earnings makes sense because the company wants to keep some amount of cash on hand for other investments, possible future crises or any strategic initiatives the company may take.
Furthermore, using all the retained earnings can hamper the company's flexibility and liquidity, which can be detrimental to the interests of the shareholders. Hence, borrowing $5B is a logical decision.
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Four different corporations, Aries, Gemini, Leo, and Pisces, show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of stockholders' equity, are summarized as follows: Total Assets Total Liabilities Beginning of the year $75,200 $30,100 End of the year $120,300 $50,500 On the basis of the above data and the following additional information for the year, determine the net income (or loss) of each company for the year. (Hint: First determine the amount of increase or decrease in stockholders' equity during the year.) Aries: No additional common stock was issued, and no dividends were paid. Gemini: No additional common stock was issued, but dividends of $4,400 were paid. Leo: Additional common stock of $9,200 was issued, but no dividends were paid. Pisces: Additional common stock of $13,200 was issued, and dividends of $5,200 were paid.
The net income for Pisces is $32,700.
In the given question, we need to find out the net income (or loss) for four different corporations.
To find the answer, we first need to find out the amount of increase or decrease in the stockholders' equity during the year.
Increased or decreased stockholders' equity = End of the year total assets – End of the year total liabilities – Beginning of the year total assets + Beginning of the year total liabilities
Aries: As given, no additional common stock was issued and no dividends were paid.
So, increased or decreased stockholders' equity = $120,300 – $50,500 – $75,200 + $30,100
= $24,700
Therefore, the net income for Aries is $24,700.
Gemini: As given, no additional common stock was issued, but dividends of $4,400 were paid.
Increased or decreased stockholders' equity = $120,300 – $50,500 – $75,200 + $30,100= $24,700
So, the net income for Gemini is $24,700 – $4,400
= $20,300.
Leo: As given, additional common stock of $9,200 was issued, but no dividends were paid.
So, increased or decreased stockholders' equity = $120,300 – $50,500 – $75,200 + $30,100
= $24,700 + $9,200
= $33,900
Therefore, the net income for Leo is $33,900.
Pisces: As given, additional common stock of $13,200 was issued, and dividends of $5,200 were paid.
Increased or decreased stockholders' equity = $120,300 – $50,500 – $75,200 + $30,100
= $24,700 + $13,200 – $5,200
= $32,700
Therefore, the net income for Pisces is $32,700.
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ACME Toys accounting system provided the following data for the last two years : 2022 2021 Revenues \$55; 42, 25 Gross profit 41,000 2,000 Operating expenses 11,500 7,750 Interest expense 4,500 3,500 Income tax 1,500 1,100 Total assets 150,000 185,000 Total liabilities 95,000 77,500 Total equity 90; 86 Required : Calculate the net income , profit margin , return on assets , and return on equity for 2022. Where applicable use averages in your calculations .
Therefore, the net income, profit margin, return on assets, and return on equity for 2022 are $23,500, 42.72%, 7.94%, and 27.33% respectively.
The calculations of net income, profit margin, return on assets, and return on equity for 2022 are as follows:
Calculation of Net Income:
Net income is calculated by subtracting operating expenses, interest expenses, and income tax from gross profit.
Net Income = Gross Profit - Operating Expenses - Interest Expense - Income Tax
Net Income for 2022 = 41,000 - 11,500 - 4,500 - 1,500 = $23,500
Calculation of Profit Margin:
Profit Margin can be calculated as a ratio of net income to revenues.
Profit Margin = (Net Income / Revenues) × 100Profit Margin for 2022 = (23,500 / 55,000) × 100 = 42.72%
Calculation of Return on Assets:
Return on Assets can be calculated as a ratio of net income to total assets.
Return on Assets = (Net Income / Total Assets) × 100
Return on Assets for 2022 = (23,500 / ((150,000 + 185,000) / 2)) × 100 = 7.94%Calculation of Return on Equity:
Return on Equity can be calculated as a ratio of net income to total equity.
Return on Equity = (Net Income / Total Equity) × 100
Return on Equity for 2022 = (23,500 / ((90,000 + 86,000) / 2)) × 100 = 27.33%
Therefore, the net income, profit margin, return on assets, and return on equity for 2022 are $23,500, 42.72%, 7.94%, and 27.33% respectively.
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ered wer You are an American (USD $) exporter selling to Canada (CAD=C). The transaction size is 520,000 Canadian dollars due in 3 months. Futures contracts come in 125000 C increments. How much would you eventually receive for the goods if you hedged with futures given the following data. All numbers are $/C. Now 3 months from now Spot 0.762 0.779 0.955 0.962 Futures 0.777 0.969 592.600 400,600 margin of error +/-2
If you hedged with futures, you would eventually receive 403,440 USD for the goods.
How to calculate w much would you eventually receive for the goods if you hedged with futureswe need to determine the value of the Canadian dollars you will receive at the future exchange rate.
Here's the calculation:
Determining the number of futures contracts needed:
Transaction size in CAD = 520,000 CAD
Futures contract size = 125,000 CAD
Number of futures contracts = Transaction size / Futures contract size
=520,000 CAD / 125,000 CAD
= 4.16 contracts (round up to the nearest whole number)
= 5 contracts (since futures contracts come in increments of 125,000 CAD)
Calculating the future exchange rate using the given data:
Spot exchange rate = 0.762 USD/CAD (Now)
Futures exchange rate = 0.777 USD/CAD (3 months from now)
Calculating the amount you will receive in USD:
Amount in CAD = Transaction size in CAD
Amount in USD = Amount in CAD * Futures exchange rate
= 520,000 CAD * 0.777 USD/CAD
= 403,440 USD
Therefore, if you hedged with futures, you would eventually receive 403,440 USD for the goods.
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