The rate of return for the investment compounded annually is 8.68%. Rate of return generally can be defined as the net gain or loss of an investment over a specified time period.
The rate of return for the investment compounded annually can be calculated using the formula for the future value of an annuity:
FV = PMT × [(1 + i)ⁿ - 1] / i
Where FV is the future value, PMT is the payment, i is the interest rate, and n is the number of periods. In this case, we are given the following values:
FV = $200,000
PMT = $35,000
n = 10
We can plug these values into the formula and solve for i:
$200,000 = $35,000 × [(1 + i)¹⁰ - 1] / i
Multiplying both sides by i and rearranging the terms gives us:
$200,000i = $35,000(1 + i)¹⁰ - $35,000
Next, we can use a financial calculator or an online calculator to solve for i. The result is:
i = 0.0868
Therefore, the rate of return for the investment compounded annually is 8.68%.
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You plan to buy the sailing boat of your dreams in 5 years. It is expected to cost a total of $20 000 at that time. You have deposited $8 000 in a Certificate of Deposit paying 4% interest annually, maturing 5 years from now. Your parents have agreed to pay for all remaining expenses. If you are going to put your parents’ gift in an investment earning 7% over the next 5 years, how much must they deposit today, so you buy your boat 5 years from today?
The Present Value formula is PV = FV / (1 + r) ^ n, where PV is the present value, FV is the future value, r is the interest rate, and n is the number of years.
In this case, we know the future value of the boat is $20 000, and we need to find the present value of the remaining amount after subtracting the $8 000 from the Certificate of Deposit. So, the remaining amount is $20 000 - $8 000 = $12 000.
Using the Present Value formula, we can plug in the values and solve for PV:
PV = $12 000 / (1 + 0.07) ^ 5
PV = $12 000 / 1.40255
PV = $8 558.62
Therefore, your parents must deposit $8 558.62 today in an investment earning 7% over the next 5 years in order for you to buy your boat 5 years from today.
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what is the over all financial condition of American Airlines Inc. and the overall proformance of the firm. pointing out the strength and Weaknesses of the farm. How is the market ratio? How was the liquidity position of the firm and it's profitability and operating efficiency. Describe the leverage position of the firm relative to its equity. create a simple chart comparing 2020, 2021, and 2022. Compare this to how the industry is doing overall. use either of the fallowing resources: Thomson One S&P NetAdvantage: Library Yahoo. Finance Mergent Online Business Insight: Global Standard & Poor's Analysts Handbook: Library Find: Profit margin basic earning Return on equity Return on assets Inventory turnover Return on asset turnover Total asset turnover Current ratio Debt ratio ect. Profit margin -6.67% Return on equity N/A Return on assets -5.04% Inventory turnover 17.52 Return on asset turnover -3.10 Total asset turnover 0.47 Current ratio 0.91 Debt ratio 0.63 Revenue (ttm) 29.88B
American Airlines Inc. is a major airline in the United States and has been in operation since 1934. Despite the Covid-19 pandemic, the airline has seen some improvements in its overall financial condition. The profit margin for 2020 was -6.67%, indicating a decrease in profitability.
The return on equity was not available, however, the return on assets was -5.04%. Additionally, inventory turnover was 17.52, total asset turnover was 0.47 and the current ratio was 0.91. The debt ratio was at 0.63, indicating a relatively healthy leverage position relative to equity.
Looking at the overall performance of the firm, its total revenue in the trailing twelve months (TTM) was 29.88 billion. This is lower than the industry average, however, the airline has seen some improvements in its liquidity and operating efficiency.
With a focus on cost reduction and increasing revenue, the airline is looking to improve their financial performance in the future. A comparison of 2020, 2021, and 2022 shows that the airline is slowly improving its overall financial condition.
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Munich Exports Corporation 2019 2020 Cash $50,000 $50,000 Accounts 200,000 300,000
receivable Inventories 450,000 570,000 Total current 700,000 920,000 assets Fixed assets, 300,000 380,000 net Total assets $1,000,000 $1,300,000 Accounts 130,000 $180,000 payable Accruals 50,000 70,000 Bank loan 90,000 90,000 Total current 270,000 340,000 liabilities Long-term 400,000 550,000 debt Common stock ($.05 50,000 50,000 par) Additional 200,000 200,000 paid-in-capital Retained 80,000 160,000 earnings Total liabilities $1,000,000 $1,300,000 equity 2019 2020 Net sales $1,300,000 $1,600,000 Cost of goods 780,000 960,000 sold Gross profit 520,000 640,000 Marketing 130,000 160,000 General and 150,000 150,000 administrative Depreciation 40,000 55,000 EBIT 200,000 275,000 Interest 45,000 55,000
Earnings 155,000 220,000 before taxes Income taxes 62,000 88,000 (40% rate) Net income $93,000 $132,000 Assume that the cash account includes only required cash. Determine the dollar amount of equity valuation cash flow (pseudo dividend) for 2020. Use question#1 inputs here. Cash flows are expected to grow at a perpetual 6 percent annual rate beginning in 2021. Assume that all cash is required cash as was done in Part A. What is the Global Products venture's present value if investors want an annual rate of return of 25 percent? No commas and round by two decimal places.
The equity valuation cash flow (pseudo dividend) for 2020 is calculated as follows:
Pseudo dividend = Net income - (Change in equity - Change in retained earnings)
Pseudo dividend = $132,000 - (($1,300,000 - $1,000,000) - ($160,000 - $80,000))
Pseudo dividend = $132,000 - ($300,000 - $80,000)
Pseudo dividend = $132,000 - $220,000
Pseudo dividend = -$88,000
Therefore, the dollar amount of equity valuation cash flow (pseudo dividend) for 2020 is -$88,000.
To calculate the present value of the Global Products venture, we can use the perpetuity formula:
PV = CF / (r - g)
Where PV is the present value, CF is the cash flow, r is the required rate of return, and g is the growth rate.
PV = $88,000 / (0.25 - 0.06)
PV = $88,000 / 0.19
PV = $463,157.89
Therefore, the present value of the Global Products venture is $463,157.89.
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Michel enterprises is not growing earnings and faces a tax rate of 35%. The firm’s EBIT is a perpetuity of $100,000,000 and it makes annual interest payments of $40,000,000 on its outstanding debt of $600,000,000. Its shares currently trade at $38.50.
If a company with the same business risk as Michel enterprises , but is completely financed with equity, uses a WACC of 9%, how many shares of Michel enterprises are there?
Assuming the firm can borrow at the same rate its debt is currently financed at, what is Michel enterprises WACC?
The number of shares of Michel Enterprises can be calculated by dividing the market value of equity by the market value per share. The market value of equity is the market capitalization of the firm (price per share x number of shares).
The market capitalization of the firm is the price per share multiplied by the number of shares. Thus:
Number of shares = $600,000,000 / $38.50
Number of shares = 15,686,897
The WACC of Michel Enterprises is the Weighted Average Cost of Capital. It is the average cost of equity and debt capital, weighted by the proportion of each in the capital structure.
We can calculate the WACC using the following formula:
WACC = E/(E + D) x Re + D/(E + D) x Rd (1 - T)
Where E = Market value of equity, D = Market value of debt, Re = Cost of Equity, Rd = Cost of Debt, and T = Tax rate.
Thus:
WACC = $600,000,000/( $600,000,000 + $600,000,000) x 9% + $600,000,000/( $600,000,000 + $600,000,000) x 6.4% (1 - 0.35)
WACC = 8.36%
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A start up business is considering two types of equipment - data are as follows: TYPE A TYPE B First Cost P200,000.00 P300,000.00 Annual operating cost 32,000.00 24,000.00 Annual labor cost 50,000.00 32,000.00 Insurance and property taxes 3% 3% Payroll taxes 4% 4% Estimated life 10 10 The minimum required rate of return is 15%. What is the exact rate of return?
Since the present value of the costs for Type B is lower than the present value of the costs for Type A, the exact rate of return for Type B is higher. Therefore, the start up business should choose Type B equipment.
To determine the exact rate of return for each type of equipment, we need to calculate the present value of the costs and benefits associated with each type of equipment. This is done using the formula: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the rate of return, and n is the number of years.
For Type A:
First Cost: P200,000
Annual Operating Cost: P32,000 x 10 = P320,000
Annual Labor Cost: P50,000 x 10 = P500,000
Insurance and Property Taxes: P200,000 x 0.03 x 10 = P60,000
Payroll Taxes: P50,000 x 0.04 x 10 = P20,000
Total Cost: P200,000 + P320,000 + P500,000 + P60,000 + P20,000 = P1,100,000
For Type B:
First Cost: P300,000
Annual Operating Cost: P24,000 x 10 = P240,000
Annual Labor Cost: P32,000 x 10 = P320,000
Insurance and Property Taxes: P300,000 x 0.03 x 10 = P90,000
Payroll Taxes: P32,000 x 0.04 x 10 = P12,800
Total Cost: P300,000 + P240,000 + P320,000 + P90,000 + P12,800 = P962,800
Now we can calculate the present value of the costs for each type of equipment:
PV (Type A) = P1,100,000 / (1 + 0.15)^10 = P273,707.43
PV (Type B) = P962,800 / (1 + 0.15)^10 = P239,437.91
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There are several theories that underlie the management of organizations. All such theories including contingency and systems theories, focus on organizational effectiveness. To this end, address the following: a) Contrast the contingency and the systems theories and highlight the major differences b) Identify and discuss how contingency and systems approach assist organizational effectiveness c) Given the current politico-economic environment, give supportive arguments for the most suitable and applicable of the two theories to the management of organizations in Zambia Due March 31, 2022
The contingency and systems theories are two important theories that underlie the management of organizations.
Both theories focus on organizational effectiveness, but they have different approaches and assumptions.
The contingency theory is based on the idea that there is no single best way to manage an organization. Instead, the most effective management approach depends on the specific situation and context. This theory emphasizes the need for managers to be flexible and adaptive in their decision making.
Both the contingency and systems approaches can assist organizational effectiveness in different ways. The contingency approach can help managers to make more informed and effective decisions by taking into account the specific context and situation.
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APITAL ASSET PRICING MODEL The Kelvin Company paid an annual dividend of $1.50, and is expected to grow at 7% in the future. Short term Treasury bills are yielding 6% and an average stock yields a cumulative return of 10%. The stock price of the company is relatively volatile and moves at twice the rate of the overall market (beta = 2.0). What is the estimated selling price of Kelvin stock? 1, Assuming the risk-free return is 5 percent and the market return is 8 percent and the beta of the asset is 1.5, what is the expected rate of return of the asset that can be calculated using the CAPM model. 2.
The expected rate of return of the asset that can be asset is 9.5%.
The Capital Asset Pricing Model (CAPM) is used to estimate the expected return of an asset based on its beta, the risk-free return, and the market return. The formula for CAPM is:
Expected Return = Risk-free Return + Beta * (Market Return - Risk-free Return)
For the Kelvin Company, we can plug in the given values into the CAPM formula:
Expected Return = 6% + 2.0 * (10% - 6%)
Expected Return = 6% + 2.0 * 4%
Expected Return = 6% + 8%
Expected Return = 14%
To find the estimated selling price of Kelvin stock, we can use the Gordon Growth Model, which is:
Price = Dividend / (Required Rate of Return - Growth Rate)
Plugging in the values for Kelvin Company, we get:
Price = $1.50 / (14% - 7%)
Price = $1.50 / 7%
Price = $21.43
Therefore, the estimated selling price of Kelvin stock is $21.43.
For the second part of the question, we can use the CAPM formula to find the expected rate of return of the asset:
Expected Return = 5% + 1.5 * (8% - 5%)
Expected Return = 5% + 1.5 * 3%
Expected Return = 5% + 4.5%
Expected Return = 9.5%
Therefore, the expected rate of return of the asset is 9.5%.
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How do perception, learning and attitudes affect consumer decision making and how marketer influence these processes
Perception means how a person is thinking, learning refers to acquiring new knowledge and attitudes means feeling towers the product or service. Consumer decision-making is significantly influenced by perception, learning, and attitudes.
Perception, learning, and attitudes are all important factors that affect consumer decision making. Perception influences how a consumer interprets and evaluates stimuli in the marketplace. Learning affects how a consumer learns from past experiences and develops buying habits. Attitudes influence a consumer's predisposition towards a product or service. Marketers can influence these processes by designing their campaigns to appeal to the target audience's senses, past experiences, and biases.
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LNZ Corp. is thinking about leasing equipment to make tinted lenses. This equipment would cost $3,600,000 if purchased. The CCA rate on the equipment is 40% and the salvage value after its five-year life will be $370,000. There are no capital gains to worry about. The firm's corporate tax rate is 40% and its pre-tax cost of debt is 12%. WeLease Corp. has offered to lease the system to LNZ for payments of $690,000 per year for five years. These lease payments would be made at the START of the year. Assume that the tax deductibility benefit of the lease payments occurs at the same time the lease payments are made. 8. What is the present value of the after-tax lease payments? A) $1,671,463 B) $2,814,050 C) $1,688,430 D) $1,934,512 E) $1,809,997
The present value of the after-tax lease payments for LNZ Corp. is A) $1,671,463.
This is because the present value of the after-tax lease payments is calculated using the formula:
[tex]PV = (Lease payment) * (1 - tax rate) * \frac{(1 - (1 + discount rate)^{-n})}{discount rate}[/tex]
Where PV is the present value, n is the number of years, and the discount rate is the pre-tax cost of debt.
Plugging in the given values:
PV = ($690,000) * (1 - 0.40) * [(1 - (1 + 0.12)^(-5)) / 0.12]
PV = ($690,000) * (0.60) * [(1 - (1.12)^(-5)) / 0.12]
PV = ($414,000) * [(1 - 0.56743) / 0.12]
PV = ($414,000) * (0.43257 / 0.12)
PV = ($414,000) * (3.60475)
PV = $1,493,566
Therefore, the present value of the after-tax lease payments is $1,493,566.
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Northouse (2022) stated, "Servant leaders place the good of followers over their own self-interests, emphasize follower development, and demonstrate strong moral behavior" (p. 254). Based upon the information explored about servant leadership, address the following questions:Explain three characteristics of servant leadership and why the identified characteristics are important.Explain how a leader can both serve and influence. Analyze the impact of culture on servant leadership.Explain how different cultural characteristics, as referenced by Hofstede, may influence the adoption/success of a servant leadership approach.
Three characteristics of servant leadership are putting followers' needs first, focusing on follower development, and exhibiting strong moral behavior. These characteristics are important because they create a sense of trust and respect between the leader and their followers, leading to higher levels of motivation and commitment from the followers.
A leader can both serve and influence by adopting a servant leadership approach, which involves using their influence to benefit their followers and the organization as a whole.
Servant leaders use their influence to support and empower their followers, rather than using it for personal gain. This approach allows leaders to serve their followers while still maintaining their authority and ability to influence decisions and actions within the organization.
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Your group is required to discuss the issues related to transport management. Choose any country in your preference, discuss their transport industry related to passenger and cargo movement. Your assignment contents should include the following: 1. Structure of their transportation industry 2. Highlight the strength and opportunity towards the economy and the society with the support of the transport industry. 3. Discuss 3-5 main issues related to the transport industry in the respective country the topic that you have chosen. 4. Support your discussion with statistics/data and examples. 5. Propose 3-5 solutions/strategies to overcome the issues.2. Your report should include i. Summary (1 page) ii. Introduction iii. Answers for all the required contents. iv. Conclusion
When discussing the transport industry in your chosen country, it is important to consider the structure of their transportation industry, the strength and opportunities the industry presents to the economy and society, the major issues it faces, and potential solutions to overcome these issues.
The structure of the transportation industry in your chosen country should include an examination of the types of transportation systems they have in place, such as road, rail, air, and sea, and any other relevant infrastructure.
The strength and opportunities the transport industry presents to the economy and society should be discussed in terms of the job opportunities it creates, the increased mobility it provides, the improved access to markets and resources, the decreased emissions and pollution, and the potential for improved trade.
The major issues related to the transport industry in the respective country should be discussed. This can include topics such as congestion, infrastructure inadequacy, air pollution, safety issues, lack of access to certain services, and the need for better technology.
In conclusion, it is important to understand the structure of the transportation industry, the strength and opportunities it provides, the major issues it faces, and potential solutions to overcome these issues when discussing transport management in any chosen country.
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Please help with 2.2, 2.3 and 2.4
Where the above information is given, the total money spent by Donald on Monday is R141,30, The total cash received from sales is R135,00, The profit he made from selling fruit is -R6,30, which is a loss; and The value of his closing stock is R56,00.
What is the rationale for the above response?1) To calculate the total money spent by Donald on Monday, we need to add up the cost of the apples, oranges, and bananas:
Cost of 3 packets of apples = 3 x R17,10 = R51,30
Cost of 3 packets of oranges = 3 x R18,00 = R54,00
Cost of 3 bunches of bananas = 3 x R12 = R36,00
Total money spent = R51,30 + R54,00 + R36,00 = R141,30
2) To calculate the total cash received from sales, we need to add up the revenue generated from selling the apples, oranges, and bananas:
Revenue from selling apples = (3 x 12 - 8) x R2,50 = R66,00
Revenue from selling oranges = (3 x 10 - 12) x R3,00 = R24,00
Revenue from selling bananas = R45,00
Total cash received = R66,00 + R24,00 + R45,00 = R135,00
3) To calculate the profit (Loss) Donald made from selling fruit, we need to subtract the total money spent from the total cash received:
Profit = Total cash received - Total money spent
Profit = R135,00 - R141,30
Profit = -R6,30
Since the profit is negative, Donald did not make a profit from selling fruit.
4) To calculate the value of Donald's closing stock, we need to multiply the number of unsold apples and oranges by their respective selling prices:
Value of unsold apples = 8 x R2,50 = R20,00
Value of unsold oranges = 12 x R3,00 = R36,00
Total value of closing stock = R20,00 + R36,00 + R0,00 = R56,00
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The value delivery system includes all the experiences the customer will have on the way to obtaining and using the offering.a): True b): FalseThere are _______ measurement techniques to monitor satisfaction. a): 2 b): 3 c): 4 d): None of the aboveHofstede identifies five cultural dimensions that differentiate countries. a): Yes b): NoA common way to estimate total market potential is to multiply the potential number of buyers by the average quantity each purchase and then by the price.a): True b): FalseThere are _________marketing activities that improve loyalty and retention. a): 3 b): 4 c): 6 d): 8
a) True - The value delivery system does indeed include all the experiences the customer will have on the way to obtaining and using the offering.b) 4 - There are four main measurement techniques. c) Yes - Hofstede does identify five cultural dimensions that differentiate countries.d) True - A common way to estimate total market potential is indeed to multiply the potential number of buyers.There are four main marketing activities that improve loyalty and retention
delivery system includes the entire process from researching the product or service, making the purchase, and using it.b) 4 - There are four main measurement techniques to monitor satisfaction: customer surveys, focus groups, customer feedback, and observation.
c) Yes - Hofstede does identify five cultural dimensions that differentiate countries. These dimensions are power distance, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance, and long-term vs. short-term orientation.
d) True - A common way to estimate total market potential is indeed to multiply the potential number of buyers by the average quantity each purchase and then by the price. This is known as the market demand equation.
e) 4 - There are four main marketing activities that improve loyalty and retention: customer relationship management (CRM), loyalty programs, personalized marketing, and customer service.
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The following information is given: Securities $980.000
Commercial Loans $506.000
Real Estate Loans $1.940.000 Consumer Loans $ 374.000
Interest-bearing Deposits $567.000
Non-interest-bearing Deposits $550.000
Long-term Bonds $878.000
Provision for Loan Losses $150.000
Extraordinary Item $75.000
Interest Rate Asset 9.00% Interest Rate Liability 1.50%
Total Equity Capital $3.312.000
Total Asset $6.456.000 Instruction: (show the formulas used your calculations and round to 2 decimal places) (a) Calculate the Net Income (b) Calculate the Return on Equity (ROE) and interpret your result in complete sentences. (c) Calculate the Return on Asset (ROA) and interpret your result in complete sentences.
The return on asset (ROA) of 1.2% indicates that the company is generating $0.012 of net income for every $1 of total assets. This is a measure of how effectively the company is using its assets to generate profits.
The net income is calculated as follows:
Net income = (Interest income - Interest expense) - Provision for loan losses - Extraordinary item
Interest income = (Securities * Interest rate asset) + (Commercial loans * Interest rate asset) + (Real estate loans * Interest rate asset) + (Consumer loans * Interest rate asset)
Interest income = ($980,000 * 0.09) + ($506,000 * 0.09) + ($1,940,000 * 0.09) + ($374,000 * 0.09) = $332,220
Interest expense = (Interest-bearing deposits * Interest rate liability) + (Non-interest-bearing deposits * Interest rate liability) + (Long-term bonds * Interest rate liability)
Interest expense = ($567,000 * 0.015) + ($550,000 * 0.015) + ($878,000 * 0.015) = $29,745
Net income = ($332,220 - $29,745) - $150,000 - $75,000 = $77,475
The return on equity (ROE) is calculated as follows:
ROE = Net income / Total equity capital
ROE = $77,475 / $3,312,000 = 0.0234 or 2.34%
The return on equity (ROE) of 2.34% indicates that the company is generating $0.0234 of net income for every $1 of equity capital. This is a measure of how effectively the company is using its equity capital to generate profits.
The return on asset (ROA) is calculated as follows:
ROA = Net income / Total asset
ROA = $77,475 / $6,456,000 = 0.012 or 1.2%
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The industrial company KLM SA manufactures fitness equipment for playgrounds upon orders from its customers. During september of the fiscal year 20x9, it processed and completed exclusively the order No 200, which concerned 2000 individual swings with backpacks with a sale price of 200 € each.
During the month of September, the following actions were taken:
Purchased raw materials costing 180,000 with credit
Raw materials costing 150.000€ were consumed in the production of raw materials
They were paid to the staff through the sight account for direct labour of September 85000 €. The employer's contributions amounted to 20.000€ and the deductions to 15.000€ respectively.
Order No. 200 was delivered to the customer on September 29th . Payment will be made in 2 months.
KLM S.A. charges general industrial expenses to orders using a predetermined attribution rate that at the beginning of the fiscal year was estimated at 60% of the cost of direct labor. Requested:
1. To carry out the journal entries that were made in September from the purchase of the raw materials until the delivery of the order to the customer.
2. Present business activities that the method of costing personalized production (on-demand costing) could be effectively applied.
1. The journal entries for the actions taken during September are as follows:
Entry 1: Purchase of raw materials costing 180,000 € with credit
Debit: Raw Materials Inventory 180,000 €
Credit: Accounts Payable 180,000 €
Entry 2: Consumption of raw materials costing 150,000 € in the production of order No. 200
Debit: Work in Process Inventory 150,000 €
Credit: Raw Materials Inventory 150,000 €
Entry 3: Payment to staff for direct labor of September 85,000 €, employer's contributions of 20,000 €, and deductions of 15,000 €
Debit: Work in Process Inventory 85,000 €
Debit: Payroll Tax Expense 20,000 €
Credit: Cash 70,000 €
Credit: Employee Withholdings Payable 15,000 €
Credit: Employer Payroll Taxes Payable 20,000 €
Entry 4: Allocation of general industrial expenses using a predetermined attribution rate of 60% of the cost of direct labor
Debit: Work in Process Inventory 51,000 € (60% of 85,000 €)
Credit: Manufacturing Overhead 51,000 €
Entry 5: Delivery of order No. 200 to the customer on September 29th with payment to be made in 2 months
Debit: Accounts Receivable 400,000 € (2000 units x 200 € each)
Credit: Sales Revenue 400,000 €
2. The method of costing personalized production (on-demand costing) could be effectively applied to business activities such as:
- Custom furniture manufacturing
- Custom clothing or fashion design
- Customized software development
- Personalized event planning and coordination
- Customized marketing or branding services
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Q13) Suppose you signed a contract for a special assignment over the next 9.0 years. You will be paid $12,883.00 at the end of each year. If your required rate of return is 15.05% , what is this contract worth in today? (1.5 points)
The contract is worth $5,511.31 in today's dollars. The contract is worth the present value of the series of payments you will receive over the next 9.0 years.
To calculate this, we can use the formula for the present value of an annuity:
[tex]PV = PMT x\frac{(1 - (1 + r)^{-n})}{r}[/tex]Where PV is the present value, PMT is the payment amount, r is the required rate of return, and n is the number of years.
Plugging in the given values, we get:
[tex]PV = 12,883.00 x\frac{(1 - (1 + 0.1505)^{-9.0})}{0.1505}[/tex][tex]PV = 12,883.00 x [0.4278][/tex]PV = $5,511.31Therefore, the contract is worth $5,511.31 in today's dollars.
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"Diamond Corporation is planning a bond issue with an escalating coupon rate. The annual coupon rate will be 4.2% for the first 5years, 5.2% for the subsequent 3 years, and 6.2% for the final 4 years.". If bonds of this risk are yielding 4%, estimate the bond's current price. Face value of the bond is $1,000
The Diamond Corporation bond is currently valued at $1,181.52.
The current price of the bond can be calculated by finding the present value of the coupon payments and the face value. The present value of the coupon payments can be calculated by using the formula:
Present value of coupon payments =
[tex]C * [(1 - (1 + r)^-n) / r][/tex]
Where C is the annual coupon payment, r is the required rate of return, and n is the number of years. For the first 5 years, the present value of the coupon payments is:
Present value of coupon payments for first 5 years =
[tex]\\$42 * [(1 - (1 + 0.04)^-5) / 0.04] = $191.08[/tex]
For the subsequent 3 years, the present value of the coupon payments is:
Present value of coupon payments for subsequent 3 years =
[tex]\\$52 * [(1 - (1 + 0.04)^-3) / 0.04] = $145.08[/tex]
For the final 4 years, the present value of the coupon payments is:
Present value of coupon payments for final 4 years =
[tex]\\$62 * [(1 - (1 + 0.04)^-4) / 0.04] = $220.76[/tex]
The present value of the face value is:
Present value of face value =
[tex]\\$1,000 / (1 + 0.04)^12 = $624.60[/tex]
The current price of the bond is the sum of the present value of the coupon payments and the present value of the face value:
Current price of bond =
[tex]\\$191.08 + $145.08 + $220.76 + $624.60 = $1,181.52[/tex]
Therefore, the current price of the Diamond Corporation bond is $1,181.52.
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What benefit of effective interest method amortisation for
financial assets and financial liabilities?
The benefit of effective interest method amortization for financial assets and financial liabilities is that it provides a more accurate and consistent way of calculating the interest income or expense over the life of the financial asset or liability.
The effective interest method (EIM) amortization helps match the timing of the payments for interest expenses and interest income over the life of the asset or liability. This helps ensure that the financial institution accurately reflects the income from the asset or liability in its financial statements.
This method takes into account the fact that the interest rate may change over time, and ensures that the interest income or expense is accurately reflected in each reporting period. This helps companies to better understand their financial position and make more informed decisions. Additionally, using the effective interest method can help companies to comply with accounting standards and regulations, as it is generally considered to be the most appropriate method for calculating interest income or expense.
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SECTION B (10 MARKS) There are TWO (2) questions in this section. Answer ALL questions.SHORT CASE STUDY"Interesting but Disengaged"Mr. Nazeem has questioned the last training organized for staff in the manufacturing section. Participants for the training were employees from different levels of positions. Employees were given a week's notice before the training, and the attendance rate was good. The objectives of the training were to make the employees understand the importance of teamwork in improving the performance of the department and to make sure they are aware of the new work procedures. Four interesting activities were conducted which involved all the participants. Trainers were experts from the regular vendor. Trainees were assigned group activities. Each member of the group plays one role in each activity. However, comments in evaluation forms received from trainees indicated that they were concerned about members in a few groups who were busy answering calls and replying to messages. Some took 20-30 minutes break for a work commitment. They were good employees. Mr. Nazeem is finding the right date for the same training for employees in the other section. He wishes to improve from the last training.Mrs. Najla who is responsible to analyze and report results from the training is compiling data and report to revise the training design and implementation. Among her concerns for future training is the effectiveness of training design. Training courses should be effective, do not interfere with office hours and be aligned with the employees' expertise. Trainers too must be able to justify the necessity and significance of the training to the employees and seek to create balance among the various departments. Mr. Daniel, a colleague in the department who has just finished organizing a training program for operational staff reported the general comments from the training. The majority of trainees rated the training as good, they satisfied with the trainer, trainers were able to make the training interesting, and the trainees scored good grades in the formative assessment given during the training. However, results from the questionnaire answered indicate that the trainees were not sure whether their learning can be transferred into their workplace. From a short discussion, while having tea with the trainer, the trainer said that a few groups of employees seemed to lack concentration during training. All these feedbacks prompted Mr. Daniel and Mrs. Najla to investigate the issue1 . Discuss Needs Analysis that you have to conduct in order to achieve successful training.Provide suitable examples in the discussion. (6 Marks)2. Describe any FOUR (4) possible barriers that have made the participants unsure on the transfer of training to the workplace. (4 Marks)
Needs analysis is an essential step in designing and implementing successful training. It involves assessing the current situation, identifying the training needs of the employees, and determining the best way to meet those needs.
There are several possible barriers that can make the participants unsure about the transfer of training to the workplace - Lack of motivation, Lack of opportunity etc.
1. There are several steps involved in conducting a needs analysis:
- Assessing the current situation: This involves examining the current state of the organization, including the skills and knowledge of the employees, the work environment, and the goals of the organization.
- Identifying training needs: This involves determining what skills and knowledge the employees need in order to achieve the goals of the organization. This can be done through surveys, interviews, and observation.
2. There are several possible barriers that can make the participants unsure about the transfer of training to the workplace:
- Lack of support from management: If the employees do not receive support and encouragement from their managers, they may be less likely to apply what they have learned in the training.
- Lack of reinforcement: If the employees do not receive feedback and reinforcement for applying what they have learned in the training, they may be unsure about the transfer of training to the workplace.
- Lack of motivation: If the employees are not motivated to apply what they have learned in the training, they may be unsure about the transfer of training to the workplace.
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Abc company on september 28, 2021 need to raise $25 million. to meet this need , they issue 25,000 bonds with a face value of $1000. the bonds pay annual interest of 10% of face value per year ($100) and mature in 15 years ( 2036). lenders require a rate of 10% per year. how much are the bonds worth?
The bonds are worth the present value of their future cash flows that is $19,015,000.
To calculate this, we need to use the formula for present value of an annuity:
PV = C * [(1 - (1 + r)^-n) / r]
Where PV is the present value, C is the annual cash flow, r is the required rate of return, and n is the number of years until maturity.
In this case, the annual cash flow is $100 (10% of the $1000 face value), the required rate of return is 10%, and the number of years until maturity is 15. Plugging these values into the formula gives us:
PV = 100 * [(1 - (1 + 0.10)^-15) / 0.10]
PV = 100 * [(1 - 0.2394) / 0.10]
PV = 100 * (0.7606 / 0.10)
PV = 100 * 7.606
PV = 760.6
Therefore, the present value of each bond is $760.60. Since there are 25,000 bonds, the total value of the bonds is:
Total value = 25,000 * 760.60 = $19,015,000
So the bonds are worth $19,015,000 in total. This is less than the $25 million that the company needs to raise, which means that they will have to issue the bonds at a discount in order to raise the full amount.
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Using a table, explain how the relevant strategic operations management functions apply to the Spur Steak Ranches.
The Spur Steak Ranches use a number of strategic operations management functions in order to successfully run their restaurants. These functions include planning, organizing, leading, and controlling.
Planning: Spur Steak Ranches use strategic planning to determine what their objectives and goals should be, and how to best achieve them. This includes creating a strategic plan for their operations, such as a marketing plan, a financial plan, and a staffing plan.
Organizing: Spur Steak Ranches use organizational structures, such as departments and teams, to ensure that their operations run smoothly and efficiently. This includes assigning tasks and responsibilities to different teams, as well as creating a hierarchy of authority and responsibility within the organization.
Leading: Spur Steak Ranches use leadership and motivation to ensure that their employees are properly motivated and driven to reach their goals. This includes providing training and development opportunities to their employees, as well as setting clear goals and expectations.
Controlling: Spur Steak Ranches use control systems to ensure that their operations run smoothly and efficiently. This includes setting performance standards, creating financial reports and budgets, and measuring performance.
Overall, the strategic operations management functions of planning, organizing, leading, and controlling are essential for the success of Spur Steak Ranches.
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Manny was walking in a certain mall in Manila when he was approached by
two (2) beautiful ladies who introduced themselves as sales clerks from a
certain company. They told him that he won some of their products. They then
brought Manny to their booth where they kept on congratulating him and also
showing the products that he had won. They wrapped these products so that
Manny could bring them home, but when Manny was about to take these
prizes, one of the agents told him that he must first buy one of their products,
which was too expensive. Manny found it impractical, so he told the agent
that he was no longer interested in the prizes.
Is this type of marketing strategy legal? Why or why not? Cite the applicable
law and provision/s. (10 Points)
No, this type of marketing strategy is not legal.
This is a form of deceptive marketing, which is prohibited under the Consumer Act of the Philippines (Republic Act No. 7394). Specifically, Section 50 of the Act states that "It shall be unlawful for any person to disseminate or to cause the dissemination of any false, deceptive or misleading advertisement by Philippine mail or in commerce by print, radio, television, outdoor advertisement or other medium for the purpose of inducing or which is likely to induce directly or indirectly the purchase of consumer products or services."
In this case, the sales clerks misled Manny by initially telling him that he had won some of their products, but then later requiring him to buy one of their products in order to receive the prizes. This is a clear violation of the Consumer Act, and the company could be held liable for their deceptive marketing practices.
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Create a scenario and schedule for a six-month project of your choosing. (For example - developing a mobile application or starting a food truck business)You must Include the five process groups but focus on the key tasks of the project.Be sure to create a schedule to the best of your knowledge. Indicate any mandatory dependencies where you can.
If you are planning a six-month project, it is important to develop a timeline with clearly defined goals and objectives. The five process groups of project management are initiation, planning, execution, monitoring and control, and closure.
Here is a suggested timeline for your project:
Initiation: Month 1: Set clear goals and objectives; identify stakeholders and team members; document the project scope and outline resources.
Planning: Month 2: Develop the project plan; determine budget and timeline; identify project risks and develop a risk management plan.
Execution: Months 3-5: Gather resources; implement the project plan; delegate tasks and ensure deliverables are on time.
Monitoring and Control: Months 4-6: Monitor progress; assess risks; adjust project plan as needed.
Closure: Month 6: Gather and review feedback; document project outcomes and lessons learned; close project.
It is also important to consider any mandatory dependencies that may exist with your project. For example, if you are developing a mobile application, there may be requirements that must be completed in order to launch the application. Be sure to add these to your timeline to ensure your project is completed on schedule.
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Given Malaysia’s dual banking system, discuss how different can profit rates in the Islamic Interbank Money Market (IIMM) be, relative to yields (interest rates) in the conventional money market in respect to both regulations and market practice. Explain. (10 marks)
The profit rates in the Islamic Interbank Money Market (IIMM) in Malaysia's dual banking system can be different from the yields in the conventional money market, due to the differences in regulations and market practices.
The dual banking system in Malaysia refers to the coexistence of both conventional and Islamic banking systems.
One of the key differences between these two systems is the way in which they generate profits. In the conventional money market, profits are generated through interest rates,
while in the Islamic Interbank Money Market (IIMM), profits are generated through profit-sharing agreements.
In terms of regulations, the IIMM operates under the principles of Shariah law, which prohibits the charging of interest (riba).
As a result, profit rates in the IIMM cannot be directly compared to yields in the conventional money market.
Instead, the IIMM uses profit-sharing agreements, where the profits generated from an investment are shared between the investor and the borrower.
This means that the profit rates in the IIMM are generally lower than the yields in the conventional money market, as they are not based on a fixed interest rate.
In terms of market practice, the IIMM tends to be less volatile than the conventional money market, as it is not subject to the same fluctuations in interest rates.
This means that the profit rates in the IIMM are generally more stable than the yields in the conventional money market.
However, the IIMM is also subject to other factors, such as the performance of the underlying assets and the overall economic conditions, which can affect the profit rates.
In conclusion, The IIMM operates under the principles of Shariah law, which prohibits the charging of interest, and uses profit-sharing agreements to generate profits.
The IIMM also tends to be less volatile than the conventional money market, as it is not subject to the same fluctuations in interest rates.
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1. Assume the following information about a Treasury zero-coupon yield curve today: Maturity (years) Zero rates (%) Maturity (years) Zero rates (%) 1 2.30 6 3.50 2 2.70 7 3.80 3 2.90 8 4.00 4 3.10 9 4.20 5 3.20 10 4.30 All rates above are with continuous compounding. a. Calculate the corresponding rates under semi-annual compounding. b. Calculate the price of a 4-year Treasury bond with face value $1,000 that pays coupon annually at the coupon rate of 4%. c. If the government wants to issue a 5-year bond that pays coupon annually and priced at par (face value $1,000), what should be the amount of each coupon payment?
a. The corresponding rates under semi-annual compounding $978.48
b. $35.64 should be the amount of each coupon payment.
The zero rates for the Treasury yield curve are given with continuous compounding. To calculate the corresponding rates under semi-annual compounding, we can use the formula:
[tex]r_sa = 2 * [(e^{(r_cc/2)) - 1}][/tex]
where r_sa is the semi-annual rate, r_cc is the continuous compounding rate, and e is the base of the natural logarithm
Using this formula, we can calculate the corresponding rates under semi-annual compounding for each maturity:
Maturity (years) Zero rates (%) Semi-annual rates (%)
1- 2.30 2.28
2- 2.70 2.67
3- 2.90 2.87
4- 3.10 3.07
5- 3.20 3.17
6- 3.50 3.46
7- 3.80 3.76
8- 4.00 3.95
9- 4.20 4.14
10- 4.30 4.23
To calculate the price of a 4-year Treasury bond with face value $1,000 that pays coupon annually at the coupon rate of 4%, we can use the formula:
P = C/(1+r_1) + C/(1+r_2)^2 + C/(1+r_3)^3 + C/(1+r_4)^4 + F/(1+r_4)^4
where P is the price of the bond, C is the coupon payment, r_i is the zero rate for the ith year, and F is the face value.
Plugging in the given values, we get:
[tex]P = 40/(1+0.031) + 40/(1+0.031)^2 + 40/(1+0.031)^3 + 40/(1+0.031)^4 + 1000/(1+0.031)^4[/tex]
P = $978.48
Finally, to calculate the amount of each coupon payment for a 5-year bond that pays coupon annually and priced at par (face value $1,000), we can use the formula:
[tex]P = C/(1+r_1) + C/(1+r_2)^2 + C/(1+r_3)^3 + C/(1+r_4)^4 + C/(1+r_5)^5 + F/(1+r_5)^5[/tex]
Since the bond is priced at par, P = F = $1,000. Plugging in the given values and solving for C, we get:
[tex]1000 = C/(1+0.032) + C/(1+0.032)^2 + C/(1+0.032)^3 + C/(1+0.032)^4 + C/(1+0.032)^5 + 1000/(1+0.032)^5[/tex]
C = $35.64
Therefore, the amount of each coupon payment should be $35.64.
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The current federal cigarette tax is $10 per pack. The American Lung Association supports increasing
the federal cigarette tax and making federal tax rates on other tobacco products equal to the cigarette
tax.2
1. Tax per pack was paid by the buyers when purchasing cigarette, but would be paid to the government
by the sellers. Using your knowledge about price elasticity of demand, and your assumption about the
price elasticity of cigarrete, explain when tax per pack on cigarrete was increasing, would the
government collect more or less tax revenue? (1 point)
2. Please show the above tax per pack (t, in USD) in a smoker’s demand equation (1 point). Assumed
that the demand equation is Qd = a – bP.
1. When the tax per pack on cigarettes increases, the demand for cigarettes will decrease, since the price elasticity of cigarettes is assumed to be inelastic.
2. The smoker's demand equation would be expressed as Qd = a – b(P + t), where P is the original price of the cigarettes and t is the tax per pack. So, the equation would be Qd = a – b(P + 10), with the tax per pack equal to $10.
1. The price elasticity of demand for cigarettes is relatively inelastic, meaning that consumers are not very responsive to changes in price. Therefore, when the federal cigarette tax is increased, the quantity demanded for cigarettes will decrease slightly, but not enough to offset the increase in tax per pack. As a result, the government will collect more tax revenue from the increased tax rate.
2. The smoker's demand equation with the tax included would be Qd = a - b(P + t), where t is the tax per pack in USD. This equation reflects the fact that the price that the consumer pays for cigarettes includes both the original price (P) and the tax per pack (t).
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Banyan Co.’s common stock currently sells for $36.50 per share. The growth rate is a constant 9.6%, and the company has an expected dividend yield of 3%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is 12%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Round your answer to two decimal places. Do not round your intermediate calculations.
the cost of new equity for Banyan Co. is 14.00% or 0.14.The cost of new equity is the cost of issuing new shares of common stock.
It is calculated using the formula: Cost of new equity = (Expected dividend yield + Growth rate) / (1 - Flotation cost)
Given that Banyan Co.'s common stock currently sells for $36.50 per share, the growth rate is a constant 9.6%, the expected dividend yield is 3%, and the flotation cost is 10%, we can plug these values into the formula to find the cost of new equity:
Cost of new equity = (0.03 + 0.096) / (1 - 0.10) = 0.126 / 0.90 = 0.14
Therefore, the cost of new equity is 14%.
To round this answer to two decimal places, we can multiply the cost of new equity by 100 to get 14.00% or 0.14.
So, the cost of new equity for Banyan Co. is 14.00% or 0.14.
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A new café has been set up in addition to new coffee machines in your organization. The
new machines, besides dispensing regular coffee also dispense Cappuccino, Latte, and
clear vegetable soup. This has made the workplace more interesting for the employees. However, it has been observed by the management that the employees are frequently
taking the breaks and are often found relishing snacks at the new café. This has seriously
hampered the productivity of the employees. Most of them are now not able complete the
usual tasks in the stipulated time. Draft a memo to address the situation politely,
requesting the employees to restrict the duration of coffee breaks to a maximum of 10
minutes and to limit the number of breaks to two coffee breaks a day.
To address the situation of employees taking excessive breaks at the new cafe and using the coffee machines, a memo can be drafted to politely request that they restrict the duration of their breaks and limit the number of breaks they take.
The memo should clearly state the issue, provide a solution, and explain the importance of adhering to the request. Below is an example of how the memo can be formatted:
Memo
To: All Employees
From: Management
Subject: Restricting the Duration of Coffee Breaks
Dear Employees,
We are pleased to see that the new cafe and coffee machines have made the workplace more interesting and enjoyable for everyone. However, it has been observed that employees are frequently taking breaks and spending excessive amounts of time at the cafe.
This has seriously hampered the productivity of the employees, and most are now unable to complete their usual tasks in the stipulated time.
We understand the importance of taking breaks and enjoying the new amenities, but we also need to ensure that work is being completed efficiently and effectively. Therefore, we are requesting that all employees restrict the duration of their coffee breaks to a maximum of 10 minutes and limit the number of breaks to two coffee breaks a day.
We appreciate your cooperation and understanding in this matter. By adhering to this request, we can ensure that the workplace remains productive while still allowing employees to enjoy the new cafe and coffee machines.
Thank you,
Management
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(a) Accounting is being used by many individuals around the country for decision-making. Explain in detail, using relevant examples, any FIVE (5) users of accounting information. (b) What are the 5 users of accounting information?
(a) Accounting information is used by a variety of individuals for decision-making purposes. The five main users of accounting information are: Investors, Creditors, Managers, Regulators, and Employees.
1. Investors: Investors use accounting information to make informed decisions about where to invest their money. For example, an investor may use financial statements to compare the profitability and financial health of different companies before deciding which one to invest in.
2. Creditors: Creditors use accounting information to determine the creditworthiness of a company. For example, a bank may use a company's financial statements to determine whether or not to approve a loan.
3. Managers: Managers use accounting information to make decisions about the operation of a company. For example, a manager may use financial statements to determine which products are most profitable and which ones should be discontinued.
4. Regulators: Regulators use accounting information to ensure that companies are following the law and adhering to accounting standards. For example, the Securities and Exchange Commission (SEC) uses accounting information to ensure that companies are accurately reporting their financial information to investors.
5. Employees: Employees use accounting information to make decisions about their employment. For example, an employee may use financial statements to determine the financial health of their company and whether or not they should stay with the company or look for a new job.
(b) The five main users of accounting information are investors, creditors, managers, regulators, and employees.
Each of these users relies on accounting information to make informed decisions about a company.
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Profitability Ratios The following selected data were taken from the financial statements of Vidahill Inc. For December 31, 20Y7, 20Y6, and 20Y5: December 31 20Y7 20Y6 20Y5 Total assets Notes payable (6% interest) Common stock Preferred 2. 5% stock, $100 par $5,200,000 2,500,000 250,000 $5,000,000 2,500,000 250,000 54,800,000 2,500,000 250,000 (no change during year) Retained earnings The 20Y7 net income was $411,000, and the 20Y6 net income was $462,500. No dividends on common stock were declared between 20Y5 and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7 a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 20Y6 and 20Y7. Round percentages to one decimal place. 500,000 500,000 500,000 1,574,000 1,222,000 750,000 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity b. The profitability ratios indicate that the company's profitability has years, there is Because the return on common stockholders equity ▼ the return on total assets in both leverage from the use of debt
Return on Common Stockholders' Equity for 20Y6 is 675% and for 20Y7 is 572% at Net Income of $462,500.
Return on Total Assets = Net Income / Total Assets
For 20Y6:
Return on Total Assets = $462,500 / $5,000,000 = 9.25%
For 20Y7:
Return on Total Assets = $411,000 / $5,200,000 = 7.90%
To calculate the return on stockholders' equity, we divide the net income by total stockholders' equity:
Return on Stockholders' Equity = Net Income / Stockholders' Equity
For 20Y6:
Return on Stockholders' Equity = $462,500 / ($500,000 + $1,222,000) = 29.3%
For 20Y7:
Return on Stockholders' Equity = $411,000 / ($500,000 + $1,574,000) = 21.2%
To calculate the return on common stockholders' equity, we need to subtract the preferred dividends from the net income and then divide by common stockholders' equity:
Return on Common Stockholders' Equity = (Net Income - Preferred Dividends) / Common Stockholders' Equity
For 20Y6:
Return on Common Stockholders' Equity = ($462,500 - $125,000) / $500,000 = 675%
For 20Y7:
Return on Common Stockholders' Equity = ($411,000 - $125,000) / $500,000 = 572%
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