The beta of an all equity firm is 2.3. If the firm changes its capital structure to 50% debt and 50% equity using 8% debt financing, what will be the equity beta of the levered firm? The beta of debt is 0.2. (Assume no taxes.) Provide your answer with 2 digits after the comma.
Answer:
4.40
Explanation:
Equity beta, is a term in business or economics, which is.oftemr referred to as Levered beta, which measures the risk of a firm in respect to debt and equity in its capital structure to the volatility of the stock market.
Therefore, Formula for equity beta is giving as = βE = equity firm + (debt/equity)(equity firm - beta of debt)
Given that, equity firm = 2.3
Capital structure to debt = 50% = 0.5
Capital structure to equity = 50% = 0.5
Beta of debt = 0.2
βE = 2.3 + (0.5/0.5)(2.3 - 0.2) =
2.3 + (0.5/0.5)(2.3 - 02) =
= 2.3 + (1)(2.1)=
2.3 + 2.1= 4.40
Hence, the final is 4.40
Rita Gonzales won the $53 million lottery. She is to receive $2.2 million a year for the next 20 years plus an additional lump sum payment of $9 million after 20 years. The discount rate is 12 percent. What is the current value of her winnings
Answer:
PV= $17,365,776.86
Explanation:
Giving the following information:
Cf= 2,200,000
Number of years= 20
Discount rate= 12%
Additional lump sum= 9,000,000
First, we need to calculate the future value using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual cash flow
FV= {2,200,000*[(1.12^20) - 1]} / 0.12 + 9,000,000
FV= $167,515,373.4
Now, the present value:
PV= FV/(1+i)^n
PV= 167,515,373.4/1.12^20
PV= $17,365,776.86
WinterDreams operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a 16 % return on the company's $ 115 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. WinterDreams projects fixed costs to be $ 35 comma 600 comma 000 for the ski season. The resort serves 800 comma 000 skiers and snowboarders each season. Variable costs are $ 8 per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices.
Required:
a. Would Mountain Point emphasize target pricing or cost-plus pricing? Why?
b. If other resorts in the area charge $66 per day, what price should Mount Snow charge?
Answer:
a. Would Mountain Point emphasize target pricing or cost-plus pricing? Why?
They emphasize cost plus pricing because the investors are seeking a desired rate of return on their investment and they do it by adding the desired profit margin to their costs.b. If other resorts in the area charge $66 per day, what price should Mount Snow charge?
$75.50 in order for them to generate the required ROI. Since the resort has a very good reputation, it can charge a higher price than its competitors.Explanation:
company's assets = $115,000,000
expected return on investment = 16%
fixed costs = $35,600,000
number of customers = 800,000
variable costs = $8 per customer x 800,000 = $6,400,000
total costs = $42,000,000
total cost per client = $42,000,000 / 800,000 = $52.50
desired profit = $115,000,000 x 16% = $18,400,000
desired profit per client = $18,400,000 / 800,000 = $23
price per ticket = $75.50
Talk to your mentor, family members, or relatives between the ages of 25-30 and who are employed to see what their budgets look like. Develop a sample budget for someone aged 25 to 30 years old
Answer:
Household budget for someone aged 25 to 30 is given below.
Explanation:
Income $1,200
Particulars Budget Amount Actual Expense Difference
House Rent $300 $300 0
Utility Bills $85 $93 -8
Groceries $195 $175 20
Clothing expense $50 $78 -28
Entertainment $20 $55 -35
Laundry $5 $6 -1
Study material $10 $25 -15
Which of the following provisions, if included in a mandatory arbitration agreement, would not likely render it unenforceable?
A. A provision that the employee pay the costs of the arbitrator’s services.
B. A provision that gives the employer the right to choose any arbitrator.
C. A provision that requires the employee to prove his case.
D. All of the above.
Answer:
C. a provision that requires the employee to prove his case.
Explanation:
Arbitration is a form of resolving dispute outside of the court system. Here, the parties involved agrees to have their dispute settled through a third party other than a judge. Mandatory arbitration is a provision that is included in a contract , which requires concerned parties to resolve their contract dispute before an arbitrator instead of the normal court system.
In a situation where one of the parties to a contractual agreement feels cheated or the other party has not performed his term of the agreement, such may seek redress through an arbitrator. For a mandatory arbitration to be enforceable, there must be a provision that the employee pay the cost of the arbitrator's service and also a provision that the employer has the right to choose any arbitrator.
Great Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $80 per passenger. Great Cruiseline's variable cost of providing the dinner is $40 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $240,000 per month. The company's relevant range extends to 13,000 monthly passengers. Use this information to compute the following:
A. What is the contribution margin per passenger?
B. What is the contribution margin ratio?
C. Use the unit contribution margin to project operating income if monthly sales total 10,000 passengers.
D. Use the contribution margin ratio to project operating income if monthly sales revenue totals $515,000.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Selling price= $80
Unitary variable cost= $40
Fixed costs= $240,000
First, we need to calculate the unitary contribution margin and the contribution margin ratio:
Contribution margin= 80 - 40= $40
Contribution margin ratio= contribution margin/selling price
Contribution margin ratio= 40/80= 0.5
Now, we can calculate the operating income for 10,000 units:
Total contribution margin= 40*10,000= 400,000
Fixed costs= (240,000)
Net operating income= 160,000
Finally, the operating income for $515,000:
Net operating income= (contribution margin ratio*sales) - fixed costs
Net operating income= 515,000*0.5 - 240,000
Net operating income= 17,500
1. Name several business etiquette guidelines that promote positive workplace conversations, in the office and at work-related social functions.
2. How can you ensure that your telephone calls on the job are productive? Name at least six suggestions.
3. List at least three guidelines that courteous cell phone users follow to avoid offending others.
Answer:
Please see explanations below
Explanation:
1.
• Ignore or avoid negative remarks when interacting with people either at work or anywhere.
• Give sincere and specific praise to people when they surpass your expectation.
• Always use correct names and titles when addressing people.
• Always choose appropriate topics when sending mails or when communicating.
• Recognize people for good work
• listen to learn in order to be better
2.
• Be smart, cheerful and accurate at all times
• One has to be professional and courteous at all times
• Avoid small or irrelevant talk that can waste too many time hence causes delay in hitting the point of making the call
• Always end the call with a tactful cue without the receiver being offended
• Summarize the points of the call in order to be sure everyone is satisfied with the discussion.
• Plan an agenda to handle calls in-order to know what one has to discuss
3.
• When in a face to face conversation, be sure you pay utmost attention or avoid having divided attention
• One should learn how to lower his or her voice when making calls openly
• Receiving calls when you are already engaged in a face to face conversation is disrespectful hence should not be imbibed.
"Pine Street Inc. makes unfinished bookcases that it sells for $57.10. Production costs are $37.94 variable and $10.50 fixed. Because it has unused capacity, Pine Street is considering finishing the bookcases and selling them for $72.02. Variable finishing costs are expected to be $7.14 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases. (Round answers to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)"
Answer and Explanation:
The Preparation of analysis on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases is prepared below:-
Particulars Sell unfinished Process further Net income
(loss)
Sales per unit $57.10 $72.02 $14.92
Cost per unit
Variable $37.94 $45.08 -$7.14
($37.94 + 7.14)
Fixed $10.5 $10.5
Total $48.4 $55.58 $7.78
Net income per
unit $8.66 $16.44 $7.78
From the above calculation The bookcases to be sold and process further.
You are thinking of building a new machine that will sve you 2,000 in the first year the machine will then begin to wear out so that the savings decline at a rate of 4% per year forever. What is the present value of the savings if the interest rate is 5% per year? (Hint: this is a growing perpetuity.)
Answer:
The present value of the savings is $22222.22
Explanation:
A perpetuity is an indefinite series of equal payments made after equal intervals of time and for an unlimited period. A growing perpetuity is a kind of perpetuity whose period payments are not equal and they grow(or decline) at a constant rate each period for an indefinite period of time.
The formula for the present value of a growing perpetuity is attached.
The present value of the savings can be calculated as follows,
Present value = 2000 / (0.05 - (-0.04)
Present value = 2000 / (0.05 + 0.04)
Present value = 2000 / 0.09
Present value = $22222.22
Trudy is Jocelyn's friend. Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can go to work. During the year, Jocelyn paid Trudy $4,090 to care for her son. What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $30,900
For this discussion, you are to pretend that you're on a team project that's running behind schedule. Let's say you and your project team are three months into an eight-month project and you realize that you're already 2.5 weeks behind schedule and 15% over budget. What would you do?
Answer:
Explanation:
The discussion or focus is on PROJECT MANAGEMENT.
You are on a team project that is running behind schedule. You and your project team are 3 months into an 8-month project.
There is a deficiency in both time management and money management.
For the project to be 3 months old, out of 8 months, then it's already in the execution stage.
Being behind schedule by 2.5 weeks implies that you have spent 2.5 weeks extra, achieving what you ought to achieve without or before the extra time. Discuss with your project team and make them more active in delivering their tasks. Time is crucial. Time is money also.
You're 15% over budget, hence you've spent 15% more than you should. Check the vendors of items and tools used in the project. You might have to change them if their products are too costly. Ensure proper accounting also. Do not disburse funds without the consultation and approval of team members who are finance experts.
In all, not more than 2 days or thereabout should be used in making these adjustments because time and money are equally pertinent!
A bond has a $1,000 par value, 20 years to maturity, and pays a coupon of 5.5% per year, annually. The bond is callable in ten years at $1,075. If the bond’s yield to maturity is 5.89% per year, what is its yield to call? Question 13 options: A) 5.87% B) 6.57% C) 6.11% D) 6.43% E) 6.68%
Answer:
6.68% , option E is correct
Explanation:
The price of the bond can be computed using the below formula for bond price calculation:
bond price=face value/(1+r)^n+coupon*(1-(1+r)^-n)/r
face value is $1000
r is the yield to maturity which is 5.89%
coupon=face value*coupon rate=1000*5.5%=55
n is the number of coupons the bond would pay which is 11 coupons over 20 years
bond price=1000/(1+5.89%)^20+55*(1-(1+5.89%)^-20)/5.89%
bond price=$ 954.87
The yield on the call can be determined using excel rate function as further explained below:
=rate(nper,pmt,-pv,fv)
nper is the number of coupons the bond would pay before being called in ten years' time i.e 10 coupons
pmt is the is the amount of annual coupon=$1000*5.5%=$55
pv is the current price of $954.87
fv is the call price which is $1,075
=rate(10,55,-954.87,1075)=6.68%
"Which of the following statements are TRUE regarding the rights agent? I The rights agent usually handles the mechanics of a rights offering II The rights agent is usually the existing transfer agent of the issuer III The rights agent issues the additional shares upon presentation of the rights certificates with payment"
Answer:
I, II, and III
I The rights agent usually handles the mechanics of a rights offering
II The rights agent is usually the existing transfer agent of the issuer
III The rights agent issues the additional shares upon presentation of the rights certificates with payment
Explanation:
Aright is defined as an offering to existing shareholders to purchase more shares. Usually there is a proportion of original shares the shareholder can now purchase. For example 1 to 5 shares means the shareholder can buy one share for every 5 old shares owned.
A rights agent is a person or entity that is responsible for maintaining records on behalf of rights holders.
When rights are issued, a rights agent is handles sales to shareholders, he is usually the initial transfer agent for the issuing company, and he issues the additional shares when payment and rights certificates are presented.
The following cost behavior patterns describe anticipated manufacturing costs for 2013: raw material, $8.20/unit; direct labor, $11.20/unit; and manufacturing overhead, $386,400 + $9.20/unit. Required: If anticipated production for 2013 is 42,000 units, calculate the u
Answer:
Note: The missing part of the question is "using variable costing and absorption costing. Explain the difference"
Solution
According to variable costing, the unit cost based was
= $8.20 + $11.20 + $9.20
= $28.6
According to absorption costing,
Total Manufacturing costs= Direct material + Direct labor + Overhead
= $8.20 + $11.20 + ($386,400/42,000 units) + $9.20
= $8.20 + $11.20 + $9.2 + $9.2
= $37.8
The difference between the variable costing and the absorption cost is because the product costing using variable costing method only includes variable costs.
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $487,000 cost with an expected four-year life and a $23,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following:
Expected annual sales of new product $1,910,000
Expected annual costs of new product:
Direct materials 495,000
Direct labor 674,000
Overhead (excluding straight-line depreciation on new machine) 335,000
Selling and administrative expenses 159,000
Income taxes 38%
Required:
1. Compute straight-line depreciation for each year of this new machine's life.
2. Determine expected net income and net cash flow for each year of this machine's life.
3. Compute this machine's payback period, assuming cash flows occur evenly throughout each year.
4. Compute this machine's accounting rate of return, assuming income is earned evenly throughout each year.
5. Compute net present value, using a discount rate of 6% and that assuming that cash flows occur at each year-end.
Answer:
1. $116,000
2. Net Income = $81,220 and Net Cash flow = $247,000
3. The payback period is 1 year and 11 months .
4. 31.85 %
5. $368,881.09
Explanation:
Straight Line Method charges a fixed amount of depreciation expense over the life of an asset.
Depreciation Expense = (Cost - Residual Value) / Estimated Useful Life
= ($487,000 - $23,000) / 4
= $116,000
Net Income = Sales - Expenses
Sales $1,910,000
Less Expenses :
Direct materials ($495,000)
Direct labor ($674,000)
Overhead ( $335,000 + $116,000) ($451,000)
Selling and administrative expenses ($159,000)
Operating Income before tax $131,000
Income tax at 38% ($49,780)
Net Income $81,220
Net Cash Flow Calculation :
Operating Income before tax $131,000
Add Depreciation Expense $116,000
Net Cash flow $247,000
Payback period
Payback period = Year 1 + Year 2
$487,000 = $247,000 + $240,000 / $247,000 × 12
= 1 year, 11 months
Therefore, the payback period is 1 year and 11 months .
Accounting Rate of Return = Average Profits / Average Investment × 100
Where, Average Profits = Sum of Profits ÷ Number of Years
= ($81,220 × 4) ÷ 4
= $81,220
and Average Investment = (Initial Investment + Scrape Value) ÷ 2
= ($487,000 + $23,000) ÷ 2
= $255,000
Therefore, Accounting Rate of Return = $81,220 / $255,000 × 100
= 31.85 %
NET PRESENT VALUE (NPV)
Calculation of NPV of Project A using a Financial Calculator :
($487,000) Cfj
$247,000 Cfj
$247,000 Cfj
$247,000 Cfj
$247,000 Cfj
6 I/Yr
Shift NPV $368,881.09
Per Unit Percent of Sales Selling price $ 115 100 % Variable expenses 69 60 Contribution margin $ 46 40 % Fixed expenses are $83,000 per month and the company is selling 2,500 units per month. rev: 06_04_2020_QC_CS-205709, 06_18_2020_QC_CS-216765 Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,800 and monthly sales increase by $17,250
Answer:
Net operating income will increase by $8,450 per month.
Explanation:
Prepare a Incremental analysis to reflect the impact of the new circumstances.
Incremental analysis
Incremental Sales $17,250
Less Incremental Fixed Cost ($8,800)
Incremental Income $8,450
Conclusion :
Net operating income will increase by $8,450 per month.
B&B has a new baby powder ready to market. If the firm goes directly to the market with the product, there is only a 60 percent chance of success. However, the firm can conduct customer segment research, which will take a year and cost $1.14 million. By going through research, the company will be able to better target potential customers and will increase the probability of success to 75 percent. If successful, the baby powder will bring a present value profit (at time of initial selling) of $19.1 million. If unsuccessful, the present value payoff is only $6.1 million. The appropriate discount rate is 14 percent.
Required:
Calculate the NPV for the firm if it conducts customer segment research and if it goes to market immediately.
Answer:
NPV = $13.9m
NPV = $11.05m (if conducts customer segment research)
Explanation:
DATA
Successfull probability = 60%
Unsuccessful probability = 40%
Initial selling = $19.1m
Unsuccessful present value = $6.1 m
Research cost = $1.14m
Discount rate = 14%
Solution ( NPV If the firm goes to market immediately)
NPV = (Successful probability x initial selling) + (Unsuccessful probability x Unsuccessful present value)
NPV = (60% x $19.1m) + ( 40% x $6.1 m)
NPV = $11.46m + $2.44m
NPV = $13.9m
Solution (NPV if the firm conducts customer segment research)
NPV = ((Successful probability x initial selling) + (Unsuccessful probability x Unsuccessful present value)/1+discount rate ) - research cost
NPV = [tex]\frac{13.9m}{1+0.14} - 1.14[/tex]
NPV = $12.19m - $1.14m
NPV = $11.05m
Note: We can calculate NPV if the firm conducts customer segment research by dividing NPV calculated above by (1+discount rate) and research cost is deducted from the whole.
Use the information for the question(s) below. Project A Project B Time 0 −10,000 −10,000 Time 1 5,000 4,000 Time 2 4,000 3,000 Time 3 3,000 10,000 If WiseGuy Inc. uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest?
Answer:
PROJECT B
Explanation:
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
IRR can be calculated using a financial calculator
For project A,
Cash flow in year 0 = -10,000
cash flow in year 1 = 5,000
cash flow i year 2 - 4,000
cash flow in year 3 = 3,000
IRR = 10.65%
For project B,
Cash flow in year 0 = -10,000
cash flow in year 1 = 4,000
cash flow i year 2 - 3,000
cash flow in year 3 = 10,000
IRR = 26.37%
Project B would be ranked higher because it has a higher IRR
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button
What is the first step of the process of creating a new product?
A. Idea generation
B. Idea screening
C. Focus group testing
D. Business analysis
Answer: A. Idea generation
Explanation:
The beginning fo creating a great product is to generate fantastic ideas.
Idea generation includes the stage of constructing through the idea, innovating the concept, developing the process, and the main thing is bringing the concept to reality.Behind any product, the idea of creating it is the necessary step to show it in reality, without it a person cannot create a plan to construct a product.
Hence, the first step of the process of creating a new product is A. Idea generation .
Rest other 3 steps are after this.
Answer:
idea generation
Explanation:
4. (10 points). Prezas Company's balance sheet showed total current assets of $4,250, all of which were required in operations. Its current liabilities consisted of $975 of accounts payable, $600 of 6% short-term notes payable to the bank, and $250 of accrued wages and taxes. What was its net operating working capital
Answer: $3,025
Explanation:
The Net Working Capital is used to find out if the company is able to use its current assets to cater for it's Current Liabilities and as such is calculated by subtracting Current Assets from Current Liabilities.
= Current Assets - Current Liabilities
Current Liabilities = 975 + 250
= $1,225
The interest bearing funds are not included when Calculating Net Working Cap.
Net Working Capital = 4,250 - 1,225
= $3,025
Customer-Level Planning Circle K operates a number of convenience stores worldwide. Assume that an analysis of operating costs, customer sales, and customer patronage reveals the following:Fixed costs per store ............................................$80,000.00/year
Variable cost ratio...............................................0.80
Average sale per customer visit....................................$15.00
Average customer visits per week..................................1.75
Customers as portion of city population .............................0.04
Determine the city population required for a single Circle K to earn an annual profit of $40,000
Answer:
11,000 people
Explanation:
fixed costs per store $80,000
variable cost ratio 0.80
average sale per customer $15
average customer sales per week 1.75
customers as portion of population 4%
each customer shops 1.75 x 52 = 91 times per year
contribution margin per visit = $15 - ($15 x 0.8) = $3
contribution margin per client per year = $3 x 91 = $273
in order to make $40,000 in profits, you need at least:
($80,000 + $40,000) / $273 = 439.56 ≈ 440 customers
to determine the city's total population = 440 / 0.04 = 11,000
At the end of the first year of operations, Gaur Manufacturing had gross accounts receivable of $412,000. Gaur's management estimates that 8% of the accounts will prove uncollectible. What journal entry should Gaur record to establish an allowance for uncollectible accounts
Answer:
Dr bad debt 32,960
Cr Allowance for uncollectible account 32,960
Explanation:
Preparation of the journal entry that Gaur should record to establish an allowance for uncollectible accounts
Since we were told that he had gross accounts receivable of the amount of $412,000 in which 8% of the accounts will prove uncollectible this means the transaction will be recorded as:
Dr Bad debt 32,960
Cr Allowance for uncollectible account 32,960
($412,000×8%)
Moraine, Inc., has an issue of preferred stock outstanding that pays a 3.50 dividend in perpetuity. If this issue currently sells for 85 per share, what is the required return
Answer:
4.12%
Explanation:
Given that:
Payment of dividend per year = $3.50
Issue price of preferred stock = $85
(Note: Assumed that $85 is the face value of the preferred stock)
Hence, the formula for Required return = Dividend per year/ face value of the stock
= $3.5/ $85 = 0.0411764705
Then converting the answer to percentage, we have
0.0411764705 * 100% = 4.1764705
Therefore, the required return is = 4.12% (approximately)
Which of the following business combinations is a vertical integration? A. The corner gas station buys the competitor across the street and shuts them down to increase its own market share. B. The corner gas station and the competitor across the street agree to set their prices at the same level. C. The corner gas station acquires the gasoline distributor to ensure they can get gas in times of shortages. D. The corner gas station starts selling fireworks during December/January and June/July.
Answer:
C. The corner gas station acquires the gasoline distributor to ensure they can get gas in times of shortages.
Explanation:
Vertical integration is the situation where the same company owns both the sources of supply and the distribution (retail) outlets. The description of (C) matches this definition.
On January 1, 20X9, Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash. The fair value of the noncontrolling interest at that date was determined to be $40,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
Gulliver Corp. Sea-Gull Corp.
Cash $ 60,000 $ 20,000
Accounts Receivable 80,000 30,000
Inventory 90,000 40,000
Land 100,000 40,000
Buildings and Equipment 200,000 150,000
Less: Accumulated Depreciation (80,000) (50,000)
Investment in Sea-Gull Corp. 160,000
Total Assets $ 610,000 $ 230,000
Accounts Payable $ 110,000 $ 30,000
Bonds Payable 95,000 40,000
Common Stock 200,000 40,000
Retained Earnings 205,000 120,000
Total Liabilities and Equity $ 610,000 $ 230,000
At the date of the business combination, the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory, which had a fair value of $45,000, and land, which had a fair value of $60,000.
1. Based on the preceding information, what amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination?
A. $130,000
B. $135,000
C. $90,000
D. $45,000
2. Based on the preceding information, what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?
A. $0
B. $40,000
C. $20,000
D. $15,000
3. Based on the preceding information, what amount of total assets will be reported in the consolidated balance sheet prepared immediately after the business combination?
A. $720,000
B. $840,000
C. $825,000
D. $865,000
4. Based on the preceding information, what amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?
A. $395,000
B. $280,000
C. $275,000
D. $195,000
5. Based on the preceding information, what amount will be reported as noncontrolling interest in the consolidated balance sheet prepared immediately after the business combination?
A. $0
B. $15,000
C. $40,000
D. $46,000
6. Based on the preceding information, what amount of consolidated retained earnings will be reported immediately after the business combination?
A. $205,000
B. $120,000
C. $325,000
D. $310,000
7. Based on the preceding information, what amount will be reported as total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination?
A. $445,000
B. $205,000
C. $565,000
D. $550,000
Answer:
1. Amount of inventory:
D. $45,000
2. Amount of Goodwill:
A. $0
3. Total assets:
A. $720,000
4. Total liabilities:
C. $275,000
5. Non-controlling interest:
C. $40,000
6. Consolidated Retained Earnings
A. $205,000
7. Stockholders' Equity:
$405,000
Explanation:
a) Data:
1. Balance Sheets
Gulliver Corp. Sea-Gull Corp.
Book value Fair value
Cash $ 60,000 $ 20,000 $20,000
Accounts Receivable 80,000 30,000 30,000
Inventory 90,000 40,000 45,000
Land 100,000 40,000 60,000
Buildings and Equipment 200,000 150,000 150,000
Less: Acc. Depreciation (80,000) (50,000) (50,000)
Investment in Sea-Gull Corp.160,000
Total Assets $ 610,000 $ 230,000 $255,000
Accounts Payable $ 110,000 $ 30,000 $30,000
Bonds Payable 95,000 40,000 40,000
Unrealized gain on fair value 25,000
Common Stock 200,000 40,000 0
Retained Earnings 205,000 120,000 0
Total Liabilities & Equity $ 610,000 $ 230,000
For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions):
Sales $28,600
Food and packaging $9,710
Payroll 7,200
Occupancy (rent, depreciation, etc.) 6,630
General, selling, and administrative expenses 4,200
$27,740
Income from operations $860
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin? Round to the nearest tenth of a million (one decimal place)
b. What is McDonald's contribution margin ratio? Round to one decimal place.
c. How much would income from operation increase if the same-store sales increased by $900 million for the coming year, with NO change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place)
Answer:
a. What is McDonald's contribution margin?
contribution margin = total sales - total variable costs = $28,600 - [$9,710 + $7,200 + (0.4 x $4,200)] = $10,010
b. What is McDonald's contribution margin ratio?
contribution margin ratio = contribution margin / total sales = $10,010 / $28,600 = 0.35 ≈ 0.4
c. How much would income from operation increase if the same-store sales increased by $900 million for the coming year, with NO change in the contribution margin ratio or fixed costs?
increase in total contribution margin = $900 x 0.35 = $315
Income from operations will increase by $315 million
Hampton Corporation has a beta of 1.3 and a marginal tax rate of 34%. The expected return on the market is 11% and the risk-free interest rate is 4%. Estimate the firm’s cost of internal equity.
Answer: 13.1%
Explanation:
Using the Capital Asset Pricing Model, the expected return is;
Expected Return = Risk Free rate + beta(expected return - risk free rate)
= 4% + 1.3( 11% - 4%)
= 4% + 9.1%
Expected Return = 13.1%
Conduct online research on the taxes your state levies and compare them with federal tax rates.
Answer:
In new York federal tax rate is 22% and state tax rate is 6.21%
Explanation:
In New York there are four tax brackets staring from 3.078% on taxable income of $12,000 per annum. Many states have income taxes but their rules may vary significantly. Federal taxes are progressive which mean higher rate of tax is applied on higher incomes. Some states may also have progressive income tax policies. There may also be a flat rate for everyone which means every individual has to pay same level of tax rate irrespective of their income.
Answer: in Illinois it’s 15% for Levies rather than 4.95% for federal tax rates.
Explanation:
Fern Corporation manufacturers a single product that has a selling price of $25.00 per unit. Fixed expenses total $50,000 per year, and the company must sell 5,000 units to break even. If the company has a target profit of $15,500, sales in units must be:
Answer:
Sales unit to achieve target profit =6,550 units
Explanation:
Break-even point is the level of activity that achieves no profit or loss. At this level profit is zero because the the total revenue is equal to total cost.
The break-even point is calculated as
Break -even in units = total general fixed cost/(selling price - variable cost)
ley represent tah variable cost per unit with letter "y"
5,000 = 50,000 / (25 - y)
cross multiply
5000× (25 - y) = 50,000
125000 - 5000 y = 50,000
collect like terms
125,000 - 50,000 = 5000 y
75000 = 5,000y
divide both sides by 5,000
y = 75,000/5000 = 15
Variable cost per unit = 15
Sales units to achieve target profit = Fixed cost + target profit/(selling price - variable cost per unit)
Sales unit to achieve target profit
= (50,000 + 15,500)/(25-15)
= 6,550
Sales unit to achieve target profit =6,550 units
One basic factor for success with DynamoDB. select one
Answer:
how can I select one of there isn't any options.
When calculating a project’s net present value, which type of cash flows should be considered? Question 2 options: A) Free cash flows B) Net operating profit cash flows C) Operating cash flows D) External cash flows E) Alternative cash flows
Answer:
Operating cash flows
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV is a capital budgeting method used to determine profitable investments