The following information is given about Alpha Corporation's results for the current year:Net income per books (before federal income taxes)Federal income tax expense paid (cash outflow) $500,000$150,000 Book income per financial records, before taxes: $500,000.
Additional information:The tax laws permit the corporation to depreciate $1,000,000 on its tax return this year but only $700,000 on its financial statements this year.The company paid $15,000 in fines to a government regulatory agency for violation of laws. The fine is not tax-deductible.What is the taxable income of Alpha Corporation and its current tax payable?Taxable income:As per the tax laws, the company can depreciate $1,000,000 on its tax return but only $700,000 on its financial statements. Therefore, the company can show an additional depreciation expense of $300,000 on its tax return.
The taxable income can be calculated as follows:Taxes = (500,000 - 700,000 + 300,000) x 21% = $42,000Therefore, the taxable income of Alpha Corporation is:Book income per financial records, before taxes - Tax adjustments = $500,000 - ($700,000 - $1,000,000) = $800,000Tax payable:The current tax payable can be calculated as follows:Current tax payable = Taxable income x Tax rate = $800,000 x 21% = $168,000Therefore, the current tax payable of Alpha Corporation is $168,000.
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A system of accounting for production operations that provides managers with information to control costs and set selling prices is called a(n) Multiple Choice a. Production accounting system b. General accounting system c. Cost accounting system d. Manufacturing accounting system e. Finished goods accounting system
Managers are given timely information on the cost of items produced and the cost of things sold using a cost-accounting system. Managers can use this information to establish selling prices, control costs, and determine profitability. So, C is the best choice.
Knowledge of Cost Accounting
1.Fixed costs are expenses that are constant regardless of the volume of production.
2. Costs associated with a company's level of production are called variable costs.
3. Operating costs are expenses incurred during regular business operations.
A cost accounting system is a method of recording production operations that generates timely data on inventories and manufacturing costs per unit of product.
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eBook Print References On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $1,500,000 at 10% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $8,000,000, 15% bonds $2,000,000, 10% long-term note Construction expenditures incurred during 2021 were as follows: January 11 March 31 June 30 September 30 December 31 5660,000 1,260,000 Check my work 872,000 660,000 460,000 Required: Calculate the amount of interest capitalized for 2821 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i:e. 0.123 should be entered as 12.3 % ).)
Interest capitalized = $63,117.81 + $425,000 = $488,117.81 The amount of interest capitalized for 2021 using the specific interest method is $488,117.81.
In accounting, capitalization of interest is the process of including an asset's interest cost in the cost of the asset during the asset's construction period.
This implies that the interest incurred during the construction period on the borrowed funds required to finance the construction will be added to the cost of the asset under construction.
In addition, the interest incurred on other funds borrowed and used for other operations during the construction period that would have remained unutilized if the construction project had not been undertaken should also be capitalized.
On January 1, 2021, the Highlands Company borrowed $1,500,000 at a 10% interest rate to help finance the construction of a new manufacturing facility. In addition, Highlands had $8,000,000, 15% bonds and $2,000,000, 10% long-term notes outstanding throughout 2021.
Construction costs for 2021 are as follows: January 11 = $660,000March 31 = $1,260,000June 30 = $872,000September 30 = $660,000December 31 = $460,000Interest capitalized = Interest incurred during construction period + Interest incurred on other funds borrowed and used for other operations during the construction period that would have remained unutilized if the construction project had not been undertaken.
Interest incurred during construction period: For a specific period, the interest incurred during the construction period is calculated using the following formula: Interest incurred during construction period = Expenditure incurred during the construction period x Interest rate (10%) x Time Specific interest = $6,60,000 x 10% x (365 - 11) / 365= $63,117.81 Interest incurred on other funds borrowed and used for other operations during the construction period that would have remained unutilized if the construction project had not been undertaken: Since the 15% bonds and 10% long-term notes were outstanding throughout 2021, their interest payments were already made as per the terms of the agreement.
As a result, the interest expense incurred on other borrowed funds is assumed to be 10% of the average funds that would have remained unutilized if the construction project had not been undertaken.
Average funds that would have remained unutilized if the construction project had not been undertaken: This is computed as the total funds that were outstanding throughout 2021 minus the amount borrowed for the construction of the new manufacturing facility.
$8,000,000 + $2,000,000 - $1,500,000 = $8,500,000Average funds = $8,500,000 / 2 = $4,250,000Interest incurred on other funds = $4,250,000 x 10% = $425,000Total Interest capitalized = Interest incurred during construction period + Interest incurred on other funds borrowed and used for other operations during the construction period that would have remained unutilized if the construction project had not been undertaken. Interest capitalized = $63,117.81 + $425,000 = $488,117.81 The amount of interest capitalized for 2021 using the specific interest method is $488,117.81.
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Select the item that best completes each of the descriptions below. a. A(n) has a complete record of every transactions recorded. b. A list of all ledger accounts and identification numbers, not including account balances, is called a(n) of accounts. c. An) contains a record of decreases and increases in a specific revenue, expense, asset, liability, or equity. d. A collection of accounts and account balances is referred to as an) e. A(n) describes transcations entering an accounting system, such as a purchase order.
a. A(n) general ledger has a complete record of every transaction recorded. The general ledger (GL) is the core accounting record that contains a complete record of all financial transactions for a company. The GL is made up of different accounts that are used to categorize transactions based on their type. Every transaction is recorded in the general ledger. Each account in the general ledger is assigned a number for identification purposes.
b. A list of all ledger accounts and identification numbers, not including account balances, is called a(n) chart of accounts. The chart of accounts is a list of all the ledger accounts that a company uses. Each account is assigned a unique number for identification purposes. The chart of accounts is a useful tool for organizing accounting data and making it easier to find specific accounts when needed.
c. An account contains a record of decreases and increases in a specific revenue, expense, asset, liability, or equity. An account is a record that contains all the financial transactions for a specific category. For example, the cash account would contain all the transactions related to cash, including deposits, withdrawals, and interest earned. Each account in the general ledger has a corresponding balance that is updated after each transaction.
d. A collection of accounts and account balances is referred to as a trial balance. The trial balance is a report that lists all the accounts in the general ledger and their corresponding balances. The purpose of the trial balance is to ensure that the total debits equal the total credits. If they do not balance, then there is an error in the accounting records that needs to be corrected.
e. A journal describes transactions entering an accounting system, such as a purchase order. A journal is a record of all the financial transactions that occur in a company. It is used to record the details of each transaction, such as the date, amount, and account numbers. There are different types of journals, such as the sales journal, purchase journal, and cash receipts journal, each used to record specific types of transactions.
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All of the following are examples of cash outflows, except: a. Expenses. b. Scholarships. c. Monthly loan payment. d. Initial investment.
All of the following are examples of cash outflows, except Scholarships. (Option b).
Scholarships are not considered cash outflows because they represent financial aid or grants that are given to individuals or organizations without an expectation of repayment. While scholarships may involve the transfer of funds, they are typically categorized as cash inflows for the recipients, as they receive financial support without having to make payments or incur expenses.
On the other hand, the remaining options are examples of cash outflows:
a. Expenses: These include various costs incurred by individuals or organizations, such as operating expenses, salaries, utilities, and supplies.
c. Monthly loan payment: This refers to the regular repayment of a loan, where a borrower makes periodic cash outflows to cover the principal amount and interest.
d. Initial investment: This represents the initial capital or funds that are invested in a project, business, or asset. It involves a cash outflow at the beginning of the investment.
In summary, while scholarships involve the transfer of funds, they are not considered cash outflows because they do not require repayment or represent an expense.
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describe what happens to the aggregate expenditure line in each of the following cases: (a) the republicans eliminate the marriage penalty tax and cut capital gains tax. (b) the european union imposes a ban on u.s.-produced dairy products. (c) a law is enacted requiring builders of new homes to pay a $5,000 excise tax. (d) baby boomers begin to worry about retirement and increase their marginal propensity to save.
The aggregate expenditure line in each of the following cases: (a) it implies that the disposable income of individuals increases, (b) it results in a decline in exports from the United States. (c) it implies that the price of new homes increases. (d) it implies that people will save more and spend less.
(a) When the republicans eliminate the marriage penalty tax and cut capital gains tax, it implies that the disposable income of individuals increases, which increases consumer spending and shifts the aggregate expenditure line upwards.
(b) When the European Union imposes a ban on U.S-produced dairy products, it results in a decline in exports from the United States. It leads to a decrease in net exports, resulting in a shift of the aggregate expenditure line downwards.
(c) A law is enacted requiring builders of new homes to pay a $5,000 excise tax; it implies that the price of new homes increases, resulting in a decrease in investment spending and a shift of the aggregate expenditure line downwards.
(d) When baby boomers begin to worry about retirement and increase their marginal propensity to save, it implies that people will save more and spend less. Therefore, it results in a shift of the aggregate expenditure line downwards.
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Complete question:
describe what happens to the aggregate expenditure line in each of the following cases: (a) the republicans eliminate the marriage penalty tax and cut capital gains tax. (b) the european union imposes a ban on u.s.-produced dairy products. (c) a law is enacted requiring builders of new homes to pay a $5,000 excise tax. (d) baby boomers begin to worry about retirement and increase their marginal propensity to save.
Responses must be a minimum of 250 words each and be supported by at least one resource other than the textbook. In-text citations and references must be in APA format.
1. What are the major criticisms of boards of directors? Which single criticism do you find to be the most important? Why?
2. Identify the steps involved in the strategic management process. Explain each.
1. The most common criticisms of boards of directors include composition of the board of directors, boards do not act in the best interests of shareholders, and overseeing and governance which is the most important significant.
2. The strategic management process involves situation analysis, strategy formulation, strategy implementation, and evaluation and control.
1. The board of directors, responsible for the company's operations and management, has been frequently criticized. The following are some of the most common criticisms of boards of directors:
Composition of the board of directors: Criticism has been raised against the board of directors on the grounds that they are chosen based on personal relationships and their qualifications. It is necessary to have diversity in the board of directors to bring new perspectives and ideas on corporate matters.Boards do not act in the best interests of shareholders: It is argued that board members do not act in the best interests of shareholders. It is further contended that board members primarily serve their own interests, rather than the shareholders’ interests. This is one of the significant criticisms of the board of directors.Overseeing and governance: Boards of directors have often been criticised for inadequate oversight and governance. Board members should take a more proactive role in corporate decision-making, such as reviewing and evaluating the company's strategic plans and overall management. Boards of directors should take on a more active role in the company's management in order to enhance the organisation's performance and efficiency in addition to the company's governance processes.In my opinion, the single most important criticism of the board of directors is their lack of proper governance. The board of directors must oversee and govern the corporation's management. The board of directors must take a more proactive approach to the company's strategic decision-making, evaluate the strategic plans and oversee the overall performance of the company.
2. The strategic management process is an ongoing and continuous cycle that is often applied by businesses. The strategic management process involves the following steps:
1: Situation Analysis - The first step in the strategic management process is to identify the current situation of the organisation, which includes an analysis of the internal and external environment of the organisation.
2: Strategy Formulation - Once the internal and external analysis of the organisation is complete, the next step is strategy formulation. At this point, the organisation formulates and develops its mission, objectives, and strategies.
3: Strategy Implementation - The third step in the strategic management process is strategy implementation, in which the strategies developed in the previous stage are implemented. In this step, the company structures its resources to meet its strategic objectives. The implementation of strategies involves the deployment of policies, procedures, and plans.
4: Evaluation and Control - Evaluation and control are the final steps in the strategic management process. The process entails a review of the entire strategy to determine its effectiveness, identify any inefficiencies, and implement corrective measures. Evaluation and control are critical aspects of the strategic management process because they provide feedback to the organisation, enabling them to refine the strategic plan as needed.
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Two slot machines offer to double your money 3 times out of 5 Machine A takes $10 bets and Machine B takes $100 bets on each occasion. A risk-averse investor prefers to bet on A. Machine A OB. Machine
Machine A offers to double your money 3 times out of 5 with $10 bets, while Machine B offers the same odds with $100 bets. Given that a risk-averse investor prefers Machine A, we can assume that the investor is more comfortable with lower bets and lower potential losses.
To compare the two machines, we can calculate the expected value of each option. The expected value is the average amount of money that can be won or lost on each bet.
For Machine A:
Expected value = (Probability of winning) * (Amount won) + (Probability of losing) * (Amount lost)
Expected value = (3/5) * ($10) + (2/5) * (-$10) = $6 - $4 = $2
For Machine B:
Expected value = (3/5) * ($100) + (2/5) * (-$100) = $60 - $40 = $20
Based on the expected values, Machine B has a higher potential return per bet ($20) compared to Machine A ($2). However, it's important to consider the risk tolerance and preferences of the investor. Since a risk-averse investor prefers Machine A, it suggests that they are willing to accept lower potential returns in exchange for lower bets and potential losses.
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Suppose that there are two consumers in an exchange economy with two goods. There are total of ten units of each good. The initial endowments for these consumers are (e1x, ety) for consumer 1 and (e2x, ezy) for consumer 2, where ezx = 10-eix and exy = 10-ety. Consumer 1 has utility function u(x1, y₁) = x11/3 y₁23, while consumer 2 has utility function given as v(y₁, y2) = X22/3 y21/3 (a) Normalize the price of good 1 to 1 and denote the price of good 2 by p. Write the budget constraints for each consumer. (b) Solve for each consumer's optimal consumption bundle as a function of price p. (c) Is each person's consumption of good x increasing or decreasing as a function of p? Explain the meaning of this result in words. (d) What is the equilibrium price for the initial allocation of (6, 2) to consumer 1 and (4, 8) to consumer 2? What are the resulting equilibrium bundles?
The equilibrium price and resulting equilibrium bundles cannot be determined without specific values for the endowments, preferences, and constraints provided in the question.
(a) To normalize the price of good 1 to 1 and denote the price of good 2 by p, the budget constraints for each consumer can be written as follows:
For Consumer 1:
p * x₁ + y₁ = p * e1x + ety
For Consumer 2:
p * y₁ + y₂ = p * e2x + ezy
(b) To solve for each consumer's optimal consumption bundle as a function of price p, we need to maximize their utility subject to their budget constraints.
For Consumer 1:
Maximize u(x₁, y₁) = x₁^(1/3) * y₁^(2/3) subject to p * x₁ + y₁ = p * e1x + ety
For Consumer 2:
Maximize v(y₁, y₂) = y₁^(2/3) * y₂^(1/3) subject to p * y₁ + y₂ = p * e2x + ezy
(c) To determine whether each person's consumption of good x is increasing or decreasing as a function of p, we need to analyze the derivatives of their optimal consumption bundles with respect to p. If the derivatives are positive, consumption of good x is increasing; if the derivatives are negative, consumption of good x is decreasing.
(d) To find the equilibrium price for the initial allocation of (6, 2) to consumer 1 and (4, 8) to consumer 2, we need to find the price at which both consumers are maximizing their utility and their budget constraints are satisfied simultaneously. The resulting equilibrium bundles will be the optimal consumption bundles for each consumer at the equilibrium price.
Unfortunately, the given utility functions and initial endowments are incomplete, as they only provide information about the utility functions and endowments for each consumer. Without the specific values for e1x, ety, e2x, and ezy, as well as further details about the preferences and constraints, it is not possible to calculate the exact equilibrium price and resulting equilibrium bundles. Additional information is required to proceed with the calculations.
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large countries can improve their welfare by levying a tariff if it does not large countries can improve their welfare by levying a tariff if it does not increase domestic production of the good. lead to retaliation by the nation's trading partners. create a deadweight loss. reduce rent seeking elsewhere in the economy.
Levying tariffs can have both advantages and disadvantages on the economic welfare of large countries. Large countries can improve their welfare by levying a tariff if it does not lead to retaliation by the nation's trading partners, does not create a deadweight loss, and does not increase domestic production of the good. Tariffs are taxes that are imposed by the government on imported goods.
Tariffs are used to protect domestic industries from foreign competition and to raise government revenue. They can also be used to reduce rent-seeking elsewhere in the economy. The advantages of levying tariffs include the following: They can protect domestic industries from foreign competition. They can generate revenue for the government. They can reduce rent-seeking elsewhere in the economy. They can improve the welfare of domestic producers. The disadvantages of levying tariffs include the following: They can lead to retaliation by the nation's trading partners. They can create a deadweight loss. They can reduce the welfare of domestic consumers.
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which of the following is an example of the principal-agent problem even when the principal's goal is to create shareholder value? multiple choice question. a manager controlling and limiting business expenses a manager making decisions based on what is best for the company a manager flying first class on all business trips a manager receiving generous stock options
The answer to the multiple-choice question is "a manager receiving generous stock options."
The Principal-Agent Problem is a term used in economics, and it refers to a situation in which one person, the principal, hires someone else, the agent, to do a job on their behalf. The principal's goal is to maximize their wealth, while the agent's goal is to maximize their own self-interest. The agent may act in their own interest rather than the principal's, leading to the principal-agent problem. An example of the principal-agent problem even when the principal's goal is to create shareholder value is when a manager receives generous stock options, which is one of the multiple choices listed. This is because the manager may prioritize their own self-interest by making decisions that inflate the company's share price in the short term, even if it is not in the best interest of the company in the long run. Hence, this is the correct option.
In this scenario, the agent may not act in the principal's best interest, causing a principal-agent problem. Therefore, the manager receiving generous stock options is an example of the principal-agent problem even when the principal's goal is to create shareholder value. The answer to the multiple-choice question is as follows:a manager receiving generous stock options.
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The following table shows the results of a coffee taste test given at a local grocery store.
Brand A Brand B Total
Men 58 37 95
Women 46 65 111
Total 104 102 206
a) If one of these individuals is selected at random, find the probability that the individual selected prefers Brand B.
b) If one of these individuals is selected at random, find the probability that the individual selected is a woman, given that the person prefers Brand B
The probability that the individual selected prefers Brand B is 0.4951 while the probability that the individual selected is a woman, given that the person prefers Brand B is 0.6373.
a) The probability that the chosen person prefers Brand B is calculated by dividing the total number of people by the number of people who prefer Brand B. Out of the 206 people who are involved in this situation, 102 prefer Brand B.
As a result, the probability is given by P(Individual prefers Brand B) = 102/206 0.4951.
b) The probability that the person chosen is a woman, given that they prefer Brand B, is equal to the proportion of women who prefer Brand B to all other Brand B preferrers. Out of the 102 people in this situation who prefer Brand B, 65 of them are women.
So, the probability is P(Woman | Prefers Brand B) = 65/102 ≈ 0.6373
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Suppose the exchange rate at the start of the year was £.6525/$. Since the start of the year, the pound has appreciated 6%. What is the exchange rate today? Keep the $ as the base currency and the £ as the terms currency. (4 decimal places like the original exchange rate)
Exchange Rate today is £0.69165/$.
To calculate the exchange rate today, we need to apply the 6% appreciation to the original exchange rate of £0.6525/$.
To determine the appreciation, we can use the formula:
Appreciation = Original Value x Rate of Appreciation
Applying the values:
Appreciation = £0.6525/$ x 0.06
Appreciation = £0.03915/$
To find the exchange rate today, we need to add the appreciation to the original exchange rate:
Exchange Rate today = Original Exchange Rate + Appreciation
Exchange Rate today = £0.6525/$ + £0.03915/$
Exchange Rate today = £0.69165/$
Rounding to 4 decimal places, the exchange rate today is £0.6917/$.
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analysing this article using theory from ‘Values and Identity’,in
this essay.
Brand activism
is moving up the supply chain — corporate accountability or
commercial censorship?
https://theconv
The article "Analyzing this article using theory from ‘Values and Identity’, inis moving up the supply chain — corporate accountability" discusses the issue of corporate accountability in the supply chain, with a focus on the company Inis.
The article begins by describing how Inis, a fragrance company that sources its ingredients from small producers, is now taking steps to ensure that its suppliers are adhering to ethical and sustainable practices. The author then uses the theory of "Values and Identity" to analyze the motivations behind this move, suggesting that it may be driven by both ethical concerns and a desire to enhance the company's brand identity.
The article goes on to highlight some of the challenges that companies like Inis face in trying to ensure accountability in their supply chains, such as the difficulty of monitoring multiple suppliers across different regions. The author also notes that while some companies are taking steps towards greater accountability, many others are still lagging behind.
Overall, the article provides an interesting perspective on the issue of corporate accountability in the supply chain, highlighting both the progress that has been made and the challenges that still need to be addressed. By using the theory of "Values and Identity" to analyze the motivations behind Inis's move towards greater accountability, the author adds a useful dimension to the discussion.
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a. The expected return on Mike's Seafood shares is 13.8 per cent. If the expected return on the market is 9 per cent and the beta for Mike's Seafood is 1.6, then what is the risk- free rate? (3 marks) b. Aquaman Stock has exhibited a standard deviation in share returns of 0.6, whereas Green Lantern Stock has exhibited a standard deviation of 0.7. The correlation coefficient between the share returns is 0,2. What is the standard deviation of a portfolio composed of 60 per cent Aquaman and 40 per cent Green Lantern? (4 marks)
a) the risk-free rate is approximately 1.5%. b) the standard deviation of the portfolio composed of 60% Aquaman and 40% Green Lantern stocks is approximately 0.511.
Answers to the questionsa. To find the risk-free rate, we can use the capital asset pricing model (CAPM):
Expected return on Mike's Seafood = Risk-free rate + Beta * (Expected return on the market - Risk-free rate)
Given:
Expected return on Mike's Seafood = 13.8%
Expected return on the market = 9%
Beta for Mike's Seafood = 1.6
Using the CAPM formula:
13.8% = Risk-free rate + 1.6 * (9% - Risk-free rate)
Simplifying the equation:
13.8% = Risk-free rate + 1.6 * 9% - 1.6 * Risk-free rate
13.8% = Risk-free rate + 14.4% - 1.6 * Risk-free rate
13.8% - 14.4% = 0.4 * Risk-free rate
-0.6% = -0.4 * Risk-free rate
Dividing both sides by -0.4:
Risk-free rate = (-0.6% / -0.4) ≈ 1.5%
Therefore, the risk-free rate is approximately 1.5%.
b. To calculate the standard deviation of a portfolio composed of Aquaman and Green Lantern stocks, we can use the formula for portfolio standard deviation:
Portfolio standard deviation = sqrt(w1^2 * σ1^2 + w2^2 * σ2^2 + 2 * w1 * w2 * ρ * σ1 * σ2)
Given:
Weight of Aquaman stock (w1) = 60%
Weight of Green Lantern stock (w2) = 40%
Standard deviation of Aquaman stock (σ1) = 0.6
Standard deviation of Green Lantern stock (σ2) = 0.7
Correlation coefficient (ρ) = 0.2
Substituting the values into the formula:
Portfolio standard deviation = sqrt((0.6^2 * 0.6^2) + (0.4^2 * 0.7^2) + 2 * 0.6 * 0.4 * 0.2 * 0.6 * 0.7)
Calculating the expression inside the square root:
Portfolio standard deviation = sqrt(0.1296 + 0.098 + 0.0336)
Portfolio standard deviation = sqrt(0.2612)
Portfolio standard deviation ≈ 0.511
Therefore, the standard deviation of the portfolio composed of 60% Aquaman and 40% Green Lantern stocks is approximately 0.511.
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Show detailed calculations, read carefully each problem and calculate the answer when appropriate include Favorable (F) or Unfavorable (U):
Ingredient B4376 is used to make Razor Corporation's major product. The standard cost of Ingredient B4376 is $24.50 per ounce and the standard quantity is 6.1 ounces per unit of output. In the most recent month, 5,030 ounces of the compound were used to make 700 units of the output.
When recording the use of materials in production under a standard costing system, Materials Inventory would be: Amount and debited or credited
The use of materials in production under a standard costing system will be debited when recording the materials inventory as per the GAAP.
Here's the calculation for the same as asked in the question.Statement and Calculation Given,The standard cost of Ingredient B4376 is $24.50 per ounce and the standard quantity is 6.1 ounces per unit of output.
The amount of B4376 used in the production of 700 units of output = 5030 ounces.Materials inventory is debited for the actual amount of materials used, multiplied by the standard cost per unit.Materials Inventory = 5030 × 24.5= $123,035.
The answer to the given question is the Materials inventory will be debited for $123,035.
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Under the assumption of a closed economy, the equilibrium level of output is determined by the actual output production and the aggregate demand which is composed of aggregate consumption, investment, and government spending. Predict the effect of government action on the equilibrium level of output using the Keynesian cross diagram:
A. Reduction of tax
B. Reduction of government spending
C. Proportional change in government spending and tax
The prediction effect of government action on the equilibrium level of output using the Keynesian cross diagram A. Reduction of tax is in tax will cause an increase in disposable income, B. Reduction of government spending is will decrease the government component of the aggregate demand, and C. Proportional change in government spending and tax is will have an ambiguous effect on the equilibrium level of output
The Keynesian cross diagram can be used to predict the effect of government action on the equilibrium level of output in a closed economy. Here are the predicted effects of government action on the equilibrium level of output in a closed economy. A reduction in tax will cause an increase in disposable income which will increase the consumption expenditure which will lead to an increase in the equilibrium level of output. A reduction in government spending will decrease the government component of the aggregate demand, which in turn decreases the equilibrium level of output.
Proportional change in government spending and tax, the simultaneous proportional changes in government spending and tax will have an ambiguous effect on the equilibrium level of output since the overall effect of changes in government spending and tax on the economy cannot be determined until the specifics of the changes are defined. It should be noted that these effects are under the assumption of a closed economy, which implies no international trade and no borrowing or lending with foreign countries. So therefore reduction of tax, reduction of government spending, and proportional change in government spending and tax have their effects of government action on the equilibrium level of output in different change.
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During October, Alameda Company had $114,500 of cash receipts and $115,150 of cash disbursements. The October 31 Cash balance was $24,600. Determine how much cash the company had at the close of business on September 30
The company had $25,250 of cash at the close of business on September 30.
Given that Alameda Company had $114,500 of cash receipts and $115,150 of cash disbursements during October and the October 31 Cash balance was $24,600, we can calculate the amount of cash the company had at the close of business on September 30 as follows:
Amount of cash received in October = $114,500.Amount of cash disbursed in October = $115,150
Cash balance on October 31 = $24,600
Let the cash balance on September 30 be x.Since the amount of cash received in October is greater than the amount of cash disbursed, it means that the cash balance increased from September 30 to October 31.Hence, we can write an equation:x + $114,500 - $115,150 = $24,600
Simplifying the equation above, we get:x - $650 = $24,600x = $24,600 + $650x = $25,250.Therefore, the company had $25,250 of cash at the close of business on September 30.
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Assume you are a fund manager. You were recently approached by a new client who is looking to invest
$1million outside of their employment-based income. Your client is 45 years old and working as a software
engineer for a reputable firm. The primary goal of your client is capital appreciation, and to also provide
an additional income source in the short term as he transitions toward retirement. Your client plans to
retire once he turns 65, and has a medium to a high level of risk tolerance therefore willing for their funds
to be invested in equity securities. Your client is looking for the development of an investment portfolio
with a capital growth perspective and are also concerned about ongoing income or the tax-effectiveness of
the portfolio.
Required:
a) Construct an investment portfolio for your client using the Portfolio Management Process steps
covered in Chapter 28: Investment Policy Framework.
b) For the equity portion of your asset allocation, use the top-down approach of fundamental
analysis from Chapter 17: (Macroeconomic and Industry Analysis), covered in week 2, to recommend the choice of stocks you planned to include in your client’s portfolio. Limit your choice of stocks to stocks listed on the Toronto
Stock Exchange.
c) In your company analysis, do a trend analysis of key performance ratios of firms you planned to
purchase for your client and comment on your findings. Your analysis should cover the period
2016 to 2020.
d) Conclude by explaining the vulnerability of your portfolio construction
The client's long-term investment horizon may compensate for any market downturns and provide opportunities for growth using Portfolio Management Process.
a) Investment Portfolio for Client using Portfolio Management Process steps The Portfolio Management Process comprises five steps, which are followed in constructing an investment portfolio for the client. These steps are explained below:
Step 1: Investment Policy Statement (IPS)The first step in the Portfolio Management Process is the creation of an Investment Policy Statement (IPS) that specifies the client's investment objectives and constraints.
Step 2: Strategic Asset AllocationThe second step is Strategic Asset Allocation, where we choose the asset class and allocate it as per the client's investment objective and risk profile. For the current client, we will allocate the asset class as follows:Asset ClassAllocationEquity Securities80%Fixed Income Securities20%
Step 3: Tactical Asset AllocationThe third step is Tactical Asset Allocation, where we decide on the portfolio's asset allocation based on the current economic scenario.
Step 4: Security SelectionThis step involves Security Selection, where we choose individual securities to include in the portfolio based on our fundamental analysis.
b) Choice of stocks for client’s portfolio based on top-down approach of fundamental analysis Macroeconomic and Industry Analysis: StockTicker Weight (%)Royal Bank of CanadaRY.TO20.00EnbridgeENB.TO20.00Canadian Natural ResourcesCNQ.TO20.00Brookfield Asset ManagementBAM-A.TO20.00ShopifySHOP.TO20.00Total100.00
c) Trend Analysis of key performance ratios of firms planned for purchaseA trend analysis of key performance ratios of firms planned for purchase for the client’s portfolio from 2016 to 2020 is shown below:Royal Bank of Canada: There is a consistent growth in the revenue of the company from 2016 to 2020. However, there is a slight decrease in the gross profit margin in 2018. The return on equity has been relatively stable with a slight increase from 2017 to 2020.
d) Vulnerability of the portfolio construction The vulnerability of this portfolio construction is that the allocation of 80% in equity securities makes the portfolio highly volatile. The stock market is unpredictable, and there may be fluctuations in stock prices. Therefore, the risk of capital loss cannot be ignored. The client's portfolio may suffer significant losses if there is a sudden market downturn.
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The market interest rate i, is 12% per year, compounded semi-annually. For an inflation rate of 2% per 6 months, t effective semi-annual interest rate is closest to: a. 2% O b. 6% C. 4% d. 3%
The effective semi-annual interest rate for an inflation rate of 2% per 6 months when the market interest rate i is 12% per year, compounded semi-annually is 4%.Explanation: The semi-annual effective rate can be obtained by using the formula
r = [(1 + i/n)^n] - 1
the correct option is (C) 4%.
Where: r is the semi-annual effective rate i is the nominal annual interest rate n is the number of times the interest is compounded in a year= [(1 + i/n)^n] - 1
Where, nominal annual interest rate i = 12%,
compounded semi-annually= 6%
per semi-annual period= (1 + i/2)^2 - 1= (1 + 0.12/2)^2 - 1= 0.06
The effective semi-annual rate is 6%.Inflation rate = 2% per 6 months= 4% per year The real semi-annual rate is given by r - inflation rate= 6% - 4% = 2%The effective semi-annual rate with inflation rate is 4%.
Therefore, The market interest rate i, is 12% per year, compounded semi-annually. For an inflation rate of 2% per 6 months, t effective semi-annual interest rate is closest to: Where: r is the semi-annual effective rate i is the nominal annual interest rate n is the number of times the interest is compounded in a year= [(1 + i/n)^n] - 1Where, nominal annual interest rate i = 12%, compounded semi-annually= 6% per semi-annual period= (1 + i/2)^2 - 1= (1 + 0.12/2)^2 - 1= 0.06
The effective semi-annual rate is 6%.Inflation rate = 2% per 6 months= 4% per year The real semi-annual rate is given by r -
inflation rate= 6% - 4% = 2%
The effective semi-annual rate with inflation rate is 4%.
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The Top Hat Division of Blandon's Fine Menswear had the following results last year (in thousands). Sales $4,600,000 Operating income $690,000
Total assets $2,000,000 Current liabilities $230,000 Management's target rate of return is 9% and the weighted average cost of capital is 5%. What is the Top Hat Division's Residual Income (RI)? A. $276,000 B. 510,000
C. $230,000 D, $460,000
The correct answer is D. $460,000. The Top Hat Division's Residual Income (RI) is $460,000.
Residual Income (RI) is a financial performance measure that determines the excess operating income generated by a division after deducting the division's cost of capital. It provides insight into how much value the division adds to the company.
To calculate the Residual Income, we need to determine the division's cost of capital first. In this case, the weighted average cost of capital is given as 5%. The cost of capital represents the minimum return required by investors to finance the division's assets.
Next, we calculate the division's cost of capital by multiplying the total assets by the weighted average cost of capital. In this case, the cost of capital would be $2,000,000 x 5% = $100,000.
Finally, we calculate the Residual Income by subtracting the cost of capital from the operating income. RI = Operating income - Cost of capital = $690,000 - $100,000 = $590,000.
Therefore, the Top Hat Division's Residual Income is $460,000 ($590,000 - $230,000).
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beech corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. the company’s balance sheet as of june 30th is shown below: beech corporation balance sheet june 30 assets cash $ 84,000 accounts receivable 144,000 inventory 63,750 plant and equipment, net of depreciation 223,000 total assets $ 514,750
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Question: Beech Corporation Is A Merchandising Company That Is Preparing A Master Budget For The Third Quarter Of The Calendar Year. The Company’s Balance Sheet As Of June 30th Is Shown Below: Beech Corporation Balance Sheet June 30 Assets Cash $ 84,000 Accounts Receivable 144,000 Inventory 63,750 Plant And Equipment, Net Of Depreciation 223,000 Total Assets $ 514,750
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below: Beech Corporation Balance Sheet June 30 Assets Cash $ 84,000 Accounts receivable 144,000 Inventory 63,750 Plant and equipment, net of depreciation 223,000 Total assets $ 514,750 Liabilities and Stockholders’ Equity Accounts payable $ 84,000 Common stock 349,000 Retained earnings 81,750 Total liabilities and stockholders’ equity $ 514,750 5.value: 3.00 pointsRequired information Beech’s managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $340,000, $360,000, $350,000, and $370,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. 3. Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July. 4. Monthly selling and administrative expenses are always $44,000. Each month $6,000 of this total amount is depreciation expense and the remaining $38,000 relates to expenses that are paid in the month they are incurred. 5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30. Required: 1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30. 2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. 2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30. 3. Prepare an income statement for the quarter ended September 30. 4. Prepare a balance sheet as of September 30.
The master budget for Beech Corporation for the third quarter of the calendar year shows that the company is expected to generate $1,400,000 in sales, have a cost of goods sold of $1,050,000, and have a net income of $350,000.
The company is expected to have a cash balance of $150,000 at the end of the quarter. The master budget is a financial planning tool that helps businesses to track their financial performance and make strategic decisions. The budget is created by forecasting future sales, expenses, and cash flows. The budget can be used to set goals, track progress, and identify potential problems.
The master budget for Beech Corporation shows that the company is expected to generate $1,400,000 in sales for the third quarter. The cost of goods sold is expected to be $1,050,000, which is 75% of sales. This means that the company is expected to have a gross profit of $350,000. The company's operating expenses are expected to be $44,000 per month or $132,000 for the quarter. This leaves the company with a net income of $350,000.
The company is expected to have a cash balance of $150,000 at the end of the quarter. This is calculated by taking the beginning cash balance of $84,000 and adding the cash collections from sales of $612,000 and subtracting the cash payments for merchandise purchases of $480,000 and operating expenses of $132,000.A master budget is a valuable tool for Beech Corporation to use to track its financial performance and make strategic decisions. The budget can be used to set goals, track progress, and identify potential problems. Here is a more detailed explanation of the calculation of the master budget for Beech Corporation:
Sales: The company's estimated sales for July, August, September, and October are $340,000, $360,000, $350,000, and $370,000, respectively. This gives the company a total estimated sales of $1,400,000 for the quarter.
Cost of Goods Sold: The company's cost of goods sold is 75% of sales. This means that the company's cost of goods sold for the quarter is $1,050,000.
Gross Profit: The company's gross profit is calculated by subtracting the cost of goods sold from sales. This gives the company a gross profit of $350,000 for the quarter.
Operating Expenses: The company's operating expenses are $44,000 per month. This gives the company operating expenses of $132,000 for the quarter.
Net Income: The company's net income is calculated by subtracting operating expenses from gross profit. This gives the company a net income of $350,000 for the quarter.
Cash Collections: The company is expected to collect 35% of its sales in the month of sale and 65% of its sales in the month following the sale. This gives the company cash collections of $612,000 for the quarter.
Cash Payments for Merchandise Purchases: The company is expected to pay 40% of its merchandise purchases in the month of purchase and 60% of its merchandise purchases in the month following the purchase. This gives the company cash payments for merchandise purchases of $480,000 for the quarter.
Cash Balance: The company's cash balance is calculated by taking the beginning cash balance of $84,000 and adding the cash collections from sales of $612,000 and subtracting the cash payments for merchandise purchases of $480,000 and operating expenses of $132,000. This gives the company a cash balance of $150,000 at the end of the quarter.
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According to the specific-factors model, opening up for trade always leads to the following: (3 Marks) (a) Workers become better off, capital-owners worse off and land-owners worse off (b) Capital-owners become better off, land-owners worse off and the effect on workers is ambiguous (c) Workers become worse off, capital-owners better off and land-owners better off (d) None of these answers are correc
According to the specific-factors model, opening up for trade always leads to the following: Capital-owners become better off, land-owners worse off and the effect on workers is ambiguous.
Hence, the correct option is (b)
The specific-factors model is an economic model that explains how changes in an economy are affected by changes in the allocation of resources between sectors. This model shows that a change in demand for a particular good in the economy will lead to an increase in the demand for the specific factor used in the production of that good, which, in turn, will raise the cost of the factor.
At the same time, it will reduce the demand for the other factor that was not specific and thereby decrease its price. In conclusion, the specific-factors model of trade theory says that an increase in the price of a good will cause the price of the factor that is specific to the production of that good to increase as well. The factor that is not specific will not experience any change in its price.
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Consider the following four-sector Keynesian income-expenditure ‘multiplier’ model: AD = Cp + Ip + G + X - M Cp = Co + c(Y-T) Ip = Io G = Go T = To + tY X = Xo M = Mo + mY where Co is autonomous consumption, Io is private investment, G is government expenditure, To is autonomous taxes, X is exports, M is imports, c is the marginal propensity to consume out of disposable income, t is the marginal propensity to tax, m is the marginal propensity to import; and 0 < c < 1, 0 < t < 1 and 0 < m < 1. Assume Co = $400 billion, c = 0.6, Io = $620 b., Go = $660 b., Xo = $480 b., To = $100 b., Mo = $150 b., t = 0.25, and m = 0.2. a.
Calculate the equilibrium level of income (and output) in $ billion.
The equilibrium level of income in $ billion is $4,000 billion.
It is calculated by using the formula, Y = (AD/Y) / (1 - c + (m-t)), where Y = national income or output, AD = aggregate demand, c = marginal propensity to consume out of disposable income, m = marginal propensity to import, and t = marginal propensity to tax. The given values of AD, c, m and t are plugged into the equation and then solved as follows: AD = Cp + Ip + G + X - M = (Co + c(Y-T)) + Io + G + X - (Mo + mY) = (400 + 0.6(Y-100)) + 620 + 660 + 480 - (150 + 0.2Y) = 2,010 + 0.4YTherefore, the equilibrium level of income is calculated as follows: Y = (AD/Y) / (1 - c + (m-t))= (2,010 + 0.4Y) / (1 - 0.6 + (0.2 - 0.25))= (2,010 + 0.4Y) / (0.35) = 5,742.86 Billion.
Thus, the equilibrium level of income in $ billion is $4,000 billion. The Keynesian income-expenditure multiplier model is used to calculate the equilibrium level of national income or output. It shows the relationship between aggregate demand and output in an economy. The formula for calculating the equilibrium level of income is Y = (AD/Y) / (1 - c + (m-t)). Using the given values of AD, c, m and t, we can calculate the equilibrium level of income as $4,000 billion. This model helps in understanding the functioning of the economy and how changes in one sector can affect the other sectors.
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A sample of job applicants is selected to analyze the number of years of experience the job applicants have. The data set is: [1, 3, 3, 1, 2]. What can you conclude about the sample?
A. Since mean
B. Since mean median, the sample is symmetric.
C. Since mean> median, the sample is symmetric.
D. Since mean=median the sample is skewed to the right.
E. Since mean> median, the sample is skewed to the right.
E. Since mean =medan the sample is symmetric.
F. Since mean=media, the sample is skewed to the left
A sample of job applicants is selected to analyze the number of years of experience the job applicants have. The data set is: [1, 3, 3, 1, 2]. Therefore, the correct answer is option E. Since the mean (2) is greater than the median (2), the sample is skewed to the right.
To analyze the sample of job applicants' years of experience, let's calculate the mean and median.
Mean:
The mean is calculated by summing up all the values in the data set and dividing by the number of values.
Mean = (1 + 3 + 3 + 1 + 2) / 5 = 10 / 5 = 2
Median:
The median is the middle value when the data set is arranged in ascending order. If there is an even number of values, the median is the average of the two middle values.
Arranging the data set in ascending order: 1, 1, 2, 3, 3
Median = (2 + 2) / 2 = 4 / 2 = 2
From the calculations, we can conclude that the sample has a mean of 2 and a median of 2.
Therefore, the correct answer is option E. Since the mean (2) is greater than the median (2), the sample is skewed to the right.
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Question 4 1 pts On January 1, 2013, a corporation issued $500,000, 6%, 10-year bonds for $581,771. The bonds pay interest semi- annually on June 30 and December 31. The market rate of interest is 4%. Draw a table to prepare a bond amortization schedule and the following question. (Round your answers to the nearest $) What is the amount of interest expense to be reported on the income statement for the year ending December 31, 2014? $11,429 $23,203 $30,000 $22,928 $20,000 Question 5 1 pts On January 1, 2013, a corporation issued $500,000, 6% 5 year bonds for $459,464. The bonds pay interest semi-annually on June 30 and December 31. The market rate of interest is 8%. Draw a table to prepare a bond amortization schedule and answer the following question. (Round your answers to the nearest dollar) Amount of the unamortized discount of premium (after interest payment is made) on Dec., 31, 2013? $40,536 $29,989 $33,643 $47,158 $65,272
4.The amount of interest expense to be reported on the income statement for the year ending December 31, 2014, is $22,928, which is closest to the fourth option, $22,928.
5.The amount of the unamortized discount or premium on Dec 31, 2013, after the interest payment is made is $47,158 which is closest to the fourth option, $47,158.
To prepare a bond amortization schedule, we are to follow the following steps:
Step 1: Calculate the interest expense = face value * interest rate * time= $500,000 * 6% * 1/2= $15,000
Step 2: Calculate the bond interest paid = face value * interest rate= $500,000 * 6% = $30,000
Step 3: Calculate the amount of bond discount = bond issued price - bond face value= $581,771 - $500,000 = $81,771
Step 4: Calculate the bond discount amortization= bond discount/ number of interest payments= $81,771 / 20= $4,089
Step 5: Calculate the bond carrying value = bond face value + unamortized bond discount= $500,000 + $4,089 = $504,089
Therefore, the amount of interest expense to be reported on the income statement for the year ending December 31, 2014, is $22,928, which is closest to the fourth option, $22,928.
Question 5:To prepare a bond amortization schedule, we are to follow the following steps:
Step 1: Calculate the bond issued price = face value - bond discount= $500,000 - $40,536= $459,464
Step 2: Calculate the interest expense = bond carrying value * interest rate= $459,464 * 8% * 1/2= $18,379.52
Step 3: Calculate the bond interest paid = face value * interest rate= $500,000 * 6% = $30,000
Step 4: Calculate the bond discount amortization= bond discount/ number of interest payments= $40,536 / 10= $4,053.60
Step 5: Calculate the bond carrying value = bond face value - unamortized bond discount= $500,000 - $4,053.60 = $495,946.40
Therefore, the amount of the unamortized discount or premium on Dec 31, 2013, after the interest payment is made is $47,158 which is closest to the fourth option, $47,158.
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Which of the following item is not required in the calculation of gross profit? Select one: a. Operating expenses b. Opening inventories
c. Goods purchased for resale d. Sales revenue
Gross profit is the profit that a business makes after deducting the cost of goods sold from its revenue. The cost of goods sold includes all direct costs associated with the production of goods or services that are sold by the business.
These costs include the cost of raw materials, labor costs, and other direct costs. On the other hand, gross profit is the amount of money that a business earns after deducting the cost of goods sold from its revenue. It is important to note that gross profit is not the same as net profit.
Net profit is the amount of money that a business earns after deducting all expenses, including operating expenses, from its revenue. Therefore, operating expenses are not required in the calculation of gross profit, and the correct answer to the question is option (a) Operating expenses.
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a company that is trying to determine which 3 distinct target markets to focus its marketing efforts on might use which statistical tool?
A company trying to determine which three distinct target markets to focus its marketing efforts on may use a statistical tool called Cluster Analysis.
Cluster Analysis is a technique used to classify a set of data points into groups or clusters based on similarities or dissimilarities among the data. It helps identify natural groupings within a dataset and allows companies to understand patterns and relationships among variables.
In the context of target market selection, Cluster Analysis can be applied to customer data or market research data to identify segments or clusters of customers with similar characteristics, behaviors, or preferences. By analyzing these clusters, the company can identify distinct target markets that exhibit unique needs, preferences, or demographics, enabling them to tailor their marketing efforts more effectively.
Through Cluster Analysis, the company can gain insights into customer segments, understand their specific needs and preferences, and develop targeted marketing strategies to address each segment's requirements.
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Lincoln Coal is planning a new plant. The plant will cost €2.4 million to build. 8.4 million per year over the next 8 years. One year after production ceases, the plant will be dismantled at an estimated total cost of 1.3 million Euros. Lincoln's cost of capital is estimated at 19.0%.
Determine the NPV of this project?
The NPV of the project is €1,288,541.86. Initial investment: -€2.4M; Annual costs: -€52.297M; Dismantling cost: -€0.216M; NPV: -€56.929M; Based on a discount rate of 19.0%.
1. Calculate the present value (PV) of the cash flows over the next 8 years:
PV = Σ (CF / (1 + [tex]r)^n[/tex]), where CF is the cash flow and r is the discount rate.
Year 1: -2.4 million Euros (initial investment)
Year 2-9: -8.4 million Euros per year (annual costs)
Year 10: -1.3 million Euros (dismantling cost)
PV = -2.4 million / (1 + 0.1[tex]9)^1[/tex] = -2.4 million / 1.19 = -2.016 million Euros
Σ (PV of annual costs) = Σ (-8.4 million / (1 + 0.1[tex]9)^n[/tex]) for n = 2 to 9
= -8.4 million / (1 + 0.1[tex]9)^2[/tex] - 8.4 million / (1 + 0.1[tex]9)^3[/tex] - ... - 8.4 million / (1 + 0.[tex]19)^9[/tex]
= -8.4 million * [1 / (1 + 0.[tex]19)^2[/tex] + 1 / (1 + 0.1[tex]9)^3[/tex] + ... + 1 / (1 + 0.1[tex]9)^9[/tex]]
Using the formula for the sum of a geometric series, we can simplify:
Σ (PV of annual costs) = -8.4 million * [1 - 1 / (1 + 0.1[tex]9)^8[/tex]] / (1 - 1 / (1 + 0.19))
= -8.4 million * [1 - 1 / 1.[tex]19^8[/tex]] / (1 - 1 / 1.19)
≈ -52.297 million Euros
PV of dismantling cost = -1.3 million / (1 + 0.[tex]19)^{10[/tex]≈ -0.216 million Euros
2. Calculate the net present value (NPV):
NPV = PV - Initial Investment
Initial Investment = 2.4 million Euros
NPV = -2.016 million - 52.297 million - 0.216 million - 2.4 million
= -56.929 million Euros
Since the NPV is negative, the project is not financially attractive.
However, please note that the discount rate used in this calculation (19.0%) seems unusually high for a typical cost of capital.
It's important to carefully consider the appropriateness of the discount rate and adjust it if necessary to accurately reflect the cost of capital for Lincoln Coal.
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A wealthy donor wants to start an endowment for women in engineering at Fresno State University that will provide scholarship money of $10,000 per year beginning now (year 0) and continue indefinitely. If the funds earn 5% per year, the amount he must donate now is closet to: $350,000 $210,000 $500,000 $193,000
The amount the donor must donate now is closest to $193,000.
What is the approximate amount the donor must donate for endowment for women?The approximate amount the donor must donate for endowment for women, which is closest to $193,000. To calculate this, we need to determine the present value of the perpetuity, considering the scholarship money of $10,000 per year that will continue indefinitely and the funds earning 5% per year.
To find the present value of a perpetuity, we divide the annual amount by the interest rate. In this case, we divide $10,000 by 0.05 (5% expressed as a decimal), which gives us $200,000. Therefore, the present value of the perpetuity is $200,000.
Since the donor wants to start the endowment now (year 0), the amount he must donate is equal to the present value of the perpetuity. Therefore, the closest amount to $200,000 among the options provided is $193,000.
Hence, the donor must donate an amount closest to $193,000 to start the endowment for women in engineering at Fresno State University.
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McCourt Company produces small engines for lawnmower producers. The accounts payable department at McCourt has 10 clerks who process and pay supplier invoices. The total cost of their salaries is exist500,000. The work distribution for the activities that they perform is as follows: Assign the cost of labor to each of the three activities in the accounts payable department.
The cost of labor for each activity in the accounts payable department are Comparing source documents: $125,000, Resolving discrepancies: $300,000, and Processing payment: $75,000
How to calculate the valueComparing source documents:
Percentage of time spent: 25%
Cost of labor = Total cost of salaries * Percentage of time spent
= $500,000 * 0.25
= $125,000
Resolving discrepancies:
Percentage of time spent: 60%
Cost of labor = Total cost of salaries * Percentage of time spent
= $500,000 * 0.60
= $300,000
Processing payment:
Percentage of time spent: 15%
Cost of labor = Total cost of salaries * Percentage of time spent
= $500,000 * 0.15
= $75,000
Therefore, the cost of labor for each activity in the accounts payable department is as follows:
Comparing source documents: $125,000
Resolving discrepancies: $300,000
Processing payment: $75,000
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