Answer:
Expected return = 12.69%
Explanation:
The capital asset pricing model is a risk-based model for estimating the return on a stock.. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. Systematic risks are those which affect all economic actors in the market, they include factors like changes in interest rate, inflation, etc. The magnitude by which a stock is affected by systematic risk is measured by beta.
Under CAPM,
E(r)= Rf + β(Rm-Rf)
E(r)- expected return, Rf-risk-free rate , β= Beta, Rm= Return on market.
Using this model, we can work out the value of beta as follows:
β-1.30, Rf- 4.5%, Rm = 10.8%
E(r) = 4.5% + 1.30 × (10.8 - 4.5)%= 12.69
Expected return = 12.69%
"What will be the results if two monopolistic competitors both launch successful advertising campaigns targeting its competitors consumers in order to draw them away from the other firm
Answer: a. These two competitor firms will negate each other's efforts.
Explanation:
The advertising campaigns that both monopolistic competitors was said to be successful which means that they were both able to draw their competitor's customers away from the other firm.
The net effect of this would be that both of them negated each other's efforts because when Firm A gained some of Firm B's customers it also lost some of its customers to Firm B which is evidently also what happened to Firm B.
To: HR Department
From: Jill Best, Manager
Re: Lost Performance Appraisal Form
Six weeks ago when our offices were being remodeled, one of the janitors accidentally threw away a small stack of papers. Included in the stack was a performance appraisal form which I had just completed on one of my subordinates, Karen Whitmore. I know you need this form, but it is gone, What should I do?
Answer with its Explanation:
The performance Appraisal form are very important when we are interested in appraising the performance of employees. It not only helps to keep the employees motivated but also helps to highlights the underperforming employees. The corrective action plan to motivate the underperforming employees can then be formulated. It also helps in deciding which employee will be valuable asset for the company and thus must be promoted.
The corrective action would be that the manager must try to reassess the performance of the employees and submit his findings in the form of Performance Appraisal Form. The manager must also have backup of his findings and that he can mail the performance appraisal form by an email.
g Delta of a call option is 0.85. How many units of the underlying stock should you hold to hedge a short position in 100 call option contracts
Answer: a.85,000
Explanation:
When using Delta to determine how many units of the underlying stock one should hold to hedge a short position, the following formula is used;
= Delta * No. of positions
= 0.85 * ( 100 * 100)
= 8,500
8,500 units of the underlying stock should be held to hedge a short position in 100 call option contracts with a contract multiplier of 100.
Purchases Budget in Units and Dollars Budgeted sales of The Music Shop for the first six months of 2014 are as follows: Month Unit Sales Month Unit Sales January 130,000 April 215,000 February 160,000 May 180,000 March 200,000 June 240,000 Beginning inventory for 2014 is 30,000 units. The budgeted inventory at the end of a month is 40 percent of units to be sold the following month. Purchase price per unit is $5. Prepare a purchases budget in units and dollars for each month, January through May.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Sales:
January 130,000
February 160,000
March 200,000
April 215,000
May 180,000
June 240,000
Beginning inventory for 2014 is 30,000 units.
The budgeted inventory at the end of a month is 40 percent of units to be sold the following month.
The purchase price per unit is $5.
To calculate the production required for each month, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
January:
Sales= 160,000
Desired ending inventory= (160,000*0.4)= 64,000
Beginning inventory= (30,000)
Total= 164,000
Total cost= 164,000*5= $820,000
February:
Sales= 130,000
Desired ending inventory= (200,000*0.4)= 80,000
Beginning inventory= (64,000)
Total= 146,000
Total cost= 146,000*5= $730,000
March:
Sales= 200,000
Desired ending inventory= (215,000*0.4)= 86,000
Beginning inventory= (80,000)
Total= 206,000
Total cost= 206,000*5= $1,030,000
April:
Sales= 215,000
Desired ending inventory= (180,000*0.4)= 72,000
Beginning inventory= (86,000)
Total= 201,000
Total cost= 201,000*5= $1,005,000
May:
Sales= 180,000
Desired ending inventory= (240,000*0.4)= 96,000
Beginning inventory= (72,000)
Total= 204,000
Total cost= 204,000*5= $1,020,000
The following data relate to factory overhead cost for the production of 10,000 computers:
Actual: Variable factory overhead $262,000
Fixed factory overhead 90,000
Standard: 14,000 hrs. at $25 350,000
If productive capacity of 100% was 15,000 hours and the total factory overhead cost budgeted at the level of 14,000 standard hours was $356,000, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $6.00 per hour.
Answer:
1.-4,000 Favorable
2.6,000 Unfavorable
3.$2,000 Unfavorable
Explanation:
1.Preparation to determine variable factory overhead Controllable variance
Using this formula
Variable factory overhead Controllable variance=Standard hours * rate- Fixed factory overhead rate
Let plug in the formula
Variable factory overhead Controllable variance=14,000 * 25.00- 6.00= 266,000
Variable factory overhead Controllable variance = 262,000- 266,000
Variable factory overhead Controllable variance= -4,000 Favorable
2. Preparation to determine fixed factory overhead volume variance .
First step is to deduct Productive capacity hours from total factory overhead cost standard hours
15,000 hours -14,000 hours =1,000 hrs
Second step is to find the fixed factory overhead volume variance
Using this formula
Fixed factory overhead volume variance=Un-used Numbers of hrs*Fixed factory overhead rate
Let plug in the formula
Fixed factory overhead volume variance=1,000 hrs*$6.00
Fixed factory overhead volume variance= 6,000 Unfavorable
3. Preparation to Determine total factory overhead cost variance
Variable Factory Overhead Controllable Variance $4,000 Favorable
Fixed Factory Overhead Volume Variance $6,000 Unfavorable
Factory Overhead Cost Variance$2,000 Unfavorable
Ultimate Corporation uses a standard cost system for the production of its water ski radios. The direct labor standard for each radio is 0.9 hours. The standard direct labor cost per hour is $7.20. During the month of August, Zanny's water ski radio production used 6,600 direct labor-hours at a total direct labor cost of $48,708. This resulted in the production of 6,900 water ski radios for August. What is Zanny's labor rate variance for August?
a. $2,808 Unfavorable
b. $1,188 Unfavorable
c. $972 Favorable
d. $2,160 Favorable
Answer:
Direct labor rate variance= $594 unfavorable
Explanation:
Giving the following information:
The standard direct labor cost per hour is $7.20.
During August, Zanny's water ski radio production used 6,600 direct labor-hours at a total direct labor cost of $48,708.
To calculate the direct labor rate variance, we need to use the following formula:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 48,078/6,600= $7.29
Direct labor rate variance= (7.20 - 7.29)*6,600
Direct labor rate variance= $594 unfavorable
Viserion, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 23 years to maturity that is quoted at 103 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. a. What is the company’s pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the tax rate is 21 percent, what is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
Viserion, Inc.
Cost of debt:
Premium on Debt = 3% (103 - 100%)
Amortization of the premium = 3%/23 = 0.13%
Interest cost = 6%
Cost of debt (pretax) = 6% - 0.13% = 5.87%
Explanation:
The cost of debt is the difference between the interest expense in percentage that Viserion, Inc. pays annually and the premium on the debt that must be amortized over the life of the debt. Since Viserion, Inc. pays 6% annually or 3% semiannually on the debt and amortizes 0.13% of the debt premium, the amortization rate is taken away from the annual interest to get the cost of debts in percentage terms.
Assume a competitive firm faces a market price of $70, a cost curve of
C = 0.003q3 + 50q + 750
and a marginal cost of:
Mc= 0.009q2 + 50.
The firm's profit maximizing output level is______units and the per unit profit at this output level is $______.
This firm will_____in the short run The firm will realize______. In the long-run, if circumstances do not change, this firm will_____.
Answer and Explanation:
The computation of Output level is shown below:-
The equilibrium condition of competitive firms will be
P = MC
70 = 0.009q^2 + 50
0.009q^2 = 70 - 50
0.009q^2 = 20
q^2 = 20 ÷ 0.009
q^2 = 2,222.222222
So,
q = 47.14045208
or
= 47.14
The computation of profit per unit is shown below:-
Total profit = Total sales - Total cost
= ($70 × 47.14) - (0.003q^3 + 50q + 750)
= $3299.8 - {0.003 (47.14)^3 + 50 × 47.14 + 500}
= -$121.460639032
or
= -$121.46
Profit per unit = Total profit ÷ Output
= -$121.46 ÷ 47.14
= -$2.58
The computation of Produce or shutdown is shown below:-
Total variable cost (TVC) = 0.003q^3 + 50q
= 0.003 (47.14)^3 + 50 × 47.14
= 2671.260639
or
= 2,671.26
AVC = Total cost ÷ Output
= 2,671.26 ÷ 47.14
= 56.66652524
or
= 56.67
Here, $70 which is the market price is higher than AVC that is 56.67, so the company will produce
The firm will realize an economic loss in the long run. If the situation will not modify, this firm will shut down.
In the short term, the company can deliver as its marginal income exceeds the marginal cost. Yet in the long run, the company would suffer an economic loss because the average income per unit is smaller than the average expense per unit. But it would suffer a loss in the long run, but then would prefer to shut down.
Chester has negotiated a new labor contract for the next round that will affect the cost for their product Camp. Labor costs will go from $3.79 to $4.39 per unit. Assume all period and other variable costs remain the same. If Chester were to absorb the new labor costs without passing them on in the form of higher prices, how many units of product Camp would need to be sold next round to break even on the product?
Complete Question:
Chester has been selling widgets for $10, total variable costs are $4.40 and fixed costs are $100,000.
Chester has negotiated a new labor contract for the next round that will affect the cost for their product Cid. Labor costs will go from $2.79 to $3.39 per unit. Assume all period and other variable costs remain the same.
If Chester were to absorb the new labor costs without passing them on in the form of higher prices, how many units of product Cid would need to be sold next round to break even on the product?
Answer:
Chester
Break-even point = Fixed costs/Contribution margin per unit
= $100,000 / $5
= 20,000 units
Explanation:
a) Data and Calculations:
Selling price = $10
Old variable cost = $4.40
Additional variable cost = $0.60
New variable costs = $5 ($4.40 + $0.60)
Contribution per unit = Selling price minus variable cost per unit
= $5 ($10 - $5)
Fixed costs = $100,000
b) Chester's Break-even point (in units) is the number of units of a product Camp that Chester requires to sell in order to recover her fixed costs. The information provided by break-even analysis guides Chester in making decisions for the production of Camps and its marketing. Without identifying the units of Camp to be produced and sold in order to remain in business, all things being equal, Chester might short-produce or short-sell Camps and run the business unprofitably.
You have just recieved notification that you have won the $2 million first prize in the centennial lottery. However, the prize will be awarded on your 100th birthday, 76 years from now.
Requried:
What is the present value of your windfall if the appropriate discount rate is 8%?
Answer:
$5,765.35
Explanation:
Preparation of the present value of your windfall if the appropriate discount rate is 8%
To find the present value we are going to use this formula
PV = FV / (1 + r)^t
Where,
FV=$2,000,000
r=8%
t=76
Let plug in the formula
PV = 2,000,000 / (1 + .08)^⁷⁶
PV = $2,000,000 / (1.98)^⁷⁶
PV=$2,000,000/346.90
PV=$5,765.35
Therefore the present value will be $5,765.35
During the Great Recession, the U.S. budget deficit worsened as tax collections fell and payments to the poor rose. In other words, the deficit worsened as a result of _________ in the federal budget.
Which of the following determine(s) the level of real interest rates? I) The supply of savings by households and business firms II) The demand for investment funds III) The government's net supply and/or demand for funds
Answer:
I II & III - All of the above.
Explanation:
Real interest rate is an interest rate that shows actual cost of funds to a borrower having taken into consideration the effects of inflation while also reflecting actual gain to the lender. It shows how purchasing power has value on interest paid on a loan.
With regards to the above, determinants of real interest rates are; the supply of savings by household and business firms, the demand for investment funds and the government's net supply/and or demand for funds.
"An economy is based on three sectorsdashagriculture, manufacturing, and services. For each unit of output, agriculture requires inputs of 0.20 unit from agriculture, 0.40 unit from manufacturing, and 0.20 unit from services. For each unit of output, manufacturing requires inputs of 0.30 unit from agriculture, 0.20 unit from manufacturing, and 0.20 unit from services. For each unit of output, services requires 0.20 unit from agriculture, 0.30 unit from manufacturing, and 0.30 unit from services. Determine the production levels needed to satisfy a final demand of 0 units for agriculture, 40 units for manufacturing, and 0 units for services. The production level needed from the agricultural sector is 40.00 units."
Answer:
Required Production to fullfil a Demand for 40 industry units
Agriculture 54.4
Industry 83.2
Services 51.2
Explanation:
Input Agricuilture Industrial Service
Agriculture 0.2 0.3 0.2
Industrial 0.4 0.2 0.3
Service 0.2 0.2 0.3
We require X input to generate a demand of 0 agriculture 40 industry and 0 services
The previous matrix will be the input we solve for the output
Output Agricuilture Industrial Service
Agriculture 0.8 -0.7 -0.8
Industrial -0.6 0.8 -0.7
Service -0.8 -0.8 0.7
We now reverse the matrix using excel:
Output Agricuilture Industrial Service
Agriculture 2 1.36 0.96
Industrial 1 2.08 0.88
Service 1 1.28 2.08
Now we multiply this by our desired outcome of
0
40
0
Agriculture 54.4
Industry 83.2
Services 51.2
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 $2,200,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021:
$9,000,000, 10% bonds
$6,000,000, 8% long-term note
Construction expenditures incurred during 2021 were as follows:
January 1 $900,000
March 31 1,500,000
June 30 1,160,000
September 30 900,000
December 31 700,000
Required:
Calculate the amount of interest capitalized for 2016 using the specific interest method.
Answer:
$255,960
Explanation:
Weighted average expenses:
January 1, $900,000 x 12/12 = $900,000March 31, $1,500,000 x 9/12 = $1,125,000June 30, $1,160,000 x 6/12 = $580,000September 30, $900,000 x 3/12 = $225,000December 31, $700,000 x 0/12 = $0total $2,830,000average interest rate for general debt = ($9,000,000 x 10%) + ($6,000,000 x 8%) = $1,380,000
$1,380,000/$15,000,000 = 9.2%
interest expense:
specific debt = $2,200,000 x 9% = $198,000
general debt = $630,000 x 9.2% = $57,960
total capitalized interest = $255,960
Construction Exp
Jan 900,000 1 900,000
Mar 1,500,000 0.75 1,125,000
June 1,160,000 0.5 580,000
Sept 900,000 0.25 225,000
Dec 700,000 0 -
5,160,000 2,830,000
Weighted avg
900,000
480,000
1,380,000
interest on difference interest on construction
9.20% 8.0%
630,000 2,200,000
57,960 176,000.0
Amount capitalized 233,960.0
Mario transferred real estate with an adjusted basis of $140,000 for similar real estate with a fair market value of $160,000. The exchange qualified as a like-kind exchange. The realized gain on the exchange was $
Answer:
$20,000
Explanation:
Calculation for th e realized gain on the exchange
Using this formula
Realized gain=Fair market value - Adjusted basis
Let plug in the formula
Realized gain=$160,000-$140,0000
Realized gain=$20,000
Therefore the realized gain on the exchange was $ 20,000
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P 9–3: Dürnstein Schnapps
Durnstein Schnapps produces three types of schnapps from locally grown Austrian pears, plums, and cherries. Schnapps is a
clear, colorless beverage distilled from fermented fruit that normally contains about 40 percent alcohol. The pear and plum
schnapps are produced using an identical process whereby the pears, and plums are fermented and then distilled. The cherry
schnapps employs a similar production process but requires more direct labor to produce the unique and highly prized Durnstein
Cherry Schnapps. Each variety of schnapps (pears, plums, and cherries) is produced in batches of 500 liters and then bottled.
Durnstein Schnapps uses an absorption costing system to assign overhead to its three products for inventory costing. A
single, predetermined, plantwide overhead rate is computed using a flexible manufacturing overhead budget. Variable
manufacturing overhead is budgeted to be €16.00 per direct labor hour and fixed manufacturing overhead is budgeted to be €
845,000 for the year. The following table summarizes budgeted and operating data for the last fiscal year.
Pear Plum Cherry
Actual batches
520 370 210
Budgeted number of batches 500 400 200
Actual direct hours per batch 17 15 34
Budgeted direct labor hours per
18 18 35
batch
Durnstein Schnaps incurred actual manufacturing overhead last year of € 1,250,500.
Required:
a. Calculate Durnstein Schnapp's plantwide overhead rate for last year.
b. One batch of plum schnapps used 20 direct labor hours. How much manufacturing overhead was absorbed by this one
batch?
c. How much over/underabsorbed overhead did Dürnstein Schnapps have last year?
Page 429
d. Recommend discuss how Durnstein Schnapps is likely to account for the over/underabsorbed overhead you
calculated in part(c).
Answer:
Dürnstein Schnapps
a. Durnstein Schnapp's Plantwide Overhead Rate for last year:
= Budgeted overhead/total budgeted direct labour hours
= € 1,216,200/23,200
= €52.42
b. Manufacturing overhead absorbed by one batch of plum schnapps using 20 direct labor hours
= Overhead rate * direct labor hours
= €52.42 * 20
= €1,048.40
c. Determination of over/underabsored overhead last year:
= Total budgeted manufacturing overhead minus actual manufacturing overhead
= € 1,216,200 - € 1,250,500
= € 34,500 under absorbed
d. Durnstein Schnapps will adjust the cost of goods sold and the ending inventory in order to account for the underabsored overhead in part (c).
The purpose is to reflect eh true absorption cost of products and ending inventory.
Explanation:
Data and Calculations:
Variable manufacturing overhead (budgeted) = €16.00 per direct labor
Fixed manufacturing overhead (budgeted) = € 845,000 for the year
Budgeted and operating data for the last fiscal year:
Pear Plum Cherry
Actual batches 520 370 210
Budgeted number of batches 500 400 200
Actual direct hours per batch 17 15 34
Budgeted direct labor hours per 18 18 35
batch
Total budgeted direct labor hours
(500*18) (400*18) (200*35) 9,000 7,200 7,000 23,200
Total actual direct labor hours
(520 * 17) (370 * 15) ( 210 * 34) 8,840 5,550 7,140 21,530
Durnstein Schnaps incurred actual manufacturing overhead last year of € 1,250,500.
Budgeted manufacturing last year = Budgeted direct labor hours * Variable manufacturing overhead per direct labour hour + Budgeted fixed manufacturing overhead
= 23,200 x €16.00 + € 845,00
= €371,200 + €845,00
= € 1,216,200
b) Absorption costing is a method that Durnstein Schnapps can use to calculate the costs of its variety of schnapps by including direct and indirect costs. It is not like marginal or variable costing method that uses only the variable elements of production costs in arriving at the costs of Durnstein schnapps. The absorption costing method tries to capture all production costs and absorb them into the costs of the pear, plums, and cherries schnapps in order to determine their appropriate prices. Variable costing method does not treat overhead production costs as product costs, but as period costs.
Which of the following statements is false about Activity-based management?
A. While useful, activity-based management and Activity-Based Costing information is not always cost efficient to obtain
B. The information needed for activity-based management is a direct byproduct of Activity-Based Costing
C. Activity-based management is an activity that is similar to Activity-Based Costing but requires a very different set of information
D. Activity-based management is designed to help management know which activities add the most value to goods and services
Answer:
C. Activity-based management is an activity that is similar to Activity-Based Costing but requires a very different set of information
Explanation:
Activity based management is the process by which a business identifies activities that contributes more to profitability of the business. These activities are retained.
While activities whose cost does not justify the profit they generate are discarded.
Activity based costing is used to allocate cost of a product based on level of activity of a particular process.
Activity based management uses information from activity based costing to identify processes that contribute more to profitability.
So the statement - Activity-based management is an activity that is similar to Activity-Based Costing but requires a very different set of information. - Is false
Activity-based management (ABM) is a way of identifying and assessing activities that a firm conducts, as well as doing a value chain analysis or a re-engineering exercise to enhance strategic and operational decisions in an organization, utilizing activity-based costing.
So, option C is correct as this is the only false statement about activity based management.
The other options are incorrect as:
Option A is incorrect as yes activity-based management and activity-based costing are not always cost-efficient.
Option B is incorrect as yes activity-based management and activity-based costing have many similarities but they need different information.
Option D is incorrect as yes activity-based management analysis every good and services provided by company and help organization know which of them add more value to organization.
Thus every statement is correct only statement C is untrue.
For more information about activity-based management refer to the link:
https://brainly.com/question/17192507
When units produced are greater than units sold under variable costing, fixed overhead is an expense and results in___________(lower, higher) net income than under absorption costing.
Answer: lower
Explanation:
Variable costing is a method used in accounting whereby the manufacturing overhead will be incurred at the particular period when the product is produced.
In the absorption costing method, the indirect expenses which are the overheads and the direct costs are taken into consideration.
The variable costing helps to solve the issue regarding absorption costing which allows for an increase in income as there is am increase in production.
Excellent Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2018 Excellent Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:
Cost pool Manufacturing overhead costs Activity level
Design changes $ 120,000 300 design changes
Setups 640,000 5,000 setups
Inspections 80,000 8,000 inspections
Total manufacturing overhead costs $840,000
During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
Activity Money Managers Hospital Systems
Pages 60,000 76,000
Design changes 10 0
Setups 20 10
Inspections 30 38
When costs are assigned using the single cost driver, number of pages printed, then:__________.
A. Money Managers will likely seek to do business with competitors
B. Money Managers is grossly under billed for the job, while other jobs will be unfairly over billed
C. Excellent Printers will want to retain this highly profitable customer
D. Money Managers is unfairly over billed for its use of printing resources
Answer:
B. Money Managers is grossly under billed for the job, while other jobs will be unfairly over billed
Explanation:
The single overhead rate would be $ 0.07 per page
Overhead Rate = $ 840,000/ 12 million pages = 0.07 per page.
The other rates are
design changes rate = $ 120,000/300= $ 400 per design
Inspections rate = $ 80,000/8000= $ 10 per inspection
Setups rate = $ 640,000/5000= $ 128 per setup
Money managers will be under billed for the job as the overhead rates for other costs are higher than the single overhead rate which is $ 0.07 per page.
And if other overhead rates are used other jobs will be over billed.
Using a single overhead rate for 60,000 pages for Money Managers would mean 60,000 * $ 0.07 = $ 4200
Where as if the same job is billed using other overhead rates it would cost
Money Managers $ 6860 = $ 4000 + $ 2560 + $ 300
Design = $400 * 10 = $ 4000
Setups = $ 128 * 20 = $ 2560
Inspections $ 10 * 30 = $ 300
So it is under billed and other jobs over billed.
Currently Baldwin is paying a dividend of $19.69 (per share). If this dividend were raised by $3.64, given its current stock price what would be the Dividend Yield?
Answer:
$23.33
Explanation:
Calculation for the Dividend yield for Baldwin
Using this formula
Dividend yield = Dividend per share + Increase in Dividend
Let plug in the formula
Dividend yield = $19.69+$3.64
Dividend yield =$23.22
Therefore the Dividend yield will be $23.22
A stock has an expected return of 11.85 percent, its beta is 1.24, and the expected return on the market is 10.2 percent. What must the risk-free rate be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
The risk free rate is 3.325%
Explanation:
The required rate of return or cost of equity of a stock can be calculated using the CAPM. The CAPM estimates the required rate of return of a stock based on three factors- risk free rate, stock's beta and the market risk premium. The equation of required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free raterM is the return on market(rM - rRF) gives us the risk premium of marketWe already have the values for r, Beta and rM. Plugging in these values in the formula, we calculate the rRF to be,
Let rRF be x.
0.1185 = x + 1.24 * (0.102 - x)
0.1185 = x + 0.12648 - 1.24x
1.24x - x = 0.12648 - 0.1185
0.24x = 0.00798
x = 0.00798/0.24
x = 0.03325 or 3.325%
Assume the MPC is 0.8. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the:__________
a. left by $180 billion.
b. left by $500 billion.
c. right by $180 billion.
d. right by $400 billion.
Answer:
b. left by $500 billion.
Explanation:
Given marginal propensity to consume, MPC = 0.8
Marginal propensity to consume + Marginal propensity to save = 1
MPC + MPS = 1
0.8 + MPS = 1
MPS = 1-0.8
MPS = 0.2
Now, the government multiplier = 1/MPS
The government multiplier = 1 / 0.2 = 5
Total fall in aggregate demand = Government multiplier × Government purchases
= 5 ×100
= $500
Since there is a fall in spending so the aggregate demand curve will shift leftwards.
Therefore, the correct option is b. left by $500 billion.
On June 15, 2021, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $220 million. The expected completion date is April 1, 2023, just in time for the 2023 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions):
2021 2022 2023
Costs incurred during the year $40 $80 $50
Estimated costs to complete as of December 31 120 60
Required:
1. Compute the revenue and gross profit will Sanderson report in its 2021, 2022, and 2023 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion. 2. Compute the revenue and gross profit will Sanderson report in its 2021, 2022, and 2023 income statements related to this contract assuming this project does not qualify for revenue recognition over time
3. Suppose the estimated costs to complete at the end of 2022 are $80 million instead of $60 million. Compute the amount of revenue and gross profit or loss to be recognized in 2022 assuming Sanderson recognizes revenue over time according to percentage of completion.
Answer:
1.
2021 Gross profit/loss $15
2022 Gross profit/loss $12
2023 Gross profit/loss $23
2.
2021 Revenue recognized $0
2022 Revenue recognized $0
2023 Revenue recognized $220
2021 Gross profit/loss $0
2022 Gross profit/loss $0
2023 Gross profit/loss $50
3.Gross profit /loss ($3)
Explanation:
1. Computation of thr Gross Profit recognize over time assuming percentage of completion method
Using PERCENTAGE OF COMPLETION
Using this formula
Choose numerator ÷ Choose denominator = % complete to date
Actual costs to date÷ Estimated total costs= %
2021 $40 ÷ $160=25.00%
(40+120)
2022 $120(40+80) ÷$180(40+80+60) = 66.67%
2023 170 170 =100.00%
(40+80+50)
2021
To date - Recognized in prior years = Recognized in 2018
Construction revenue $55(220*25%) $0 $55
Less: Construction expense $40 $0 $40
Gross profit (loss) $15 $0 $15
2022
To date - Recognized in prior years = Recognized in 2019
Construction revenue $147(220*66.66%) $55 $92
Less: Construction expense $120(40+80) $40 $80
Gross profit (loss) $27 $15 $12
2023
To date - Recognized in prior years = Recognized in 2020
Construction revenue $220 $147 $73
Less: Construction expense $170(40+80+50) $120 $50
Gross profit (loss) $50 $27 $23
2. Calculation for the Statement showing revenue and gross profit assuming this project does not qualify for revenue recognition over time. ( $ in Million)
Year Revenue recognized Gross Profit (Loss) recognized
2021 $0 $0
2022 $0 $0
2023 $220 $50(220-170)
3 Computation of the Revenue and gross profit or loss to be recognized in 2022 (using the percentage of completion )
Percentages of completion
Choose numerator ÷ Choose denominator = % complete to date
Actual costs to date ÷Estimated total costs=%
2022 $120(40+80) ÷ $200(40+80+80) = 60.00%
2022
To date Recognized in prior years Recognized in 2019
Construction revenue $132(220*60) $55 $77
Less:Construction expense $120(40+80) $40 $80
Gross profit (loss) $12 $15 ($3)
Which one of the following categories provides a common approach and frame of reference for conducting project management activities within an organization?
a. Business alignment
b. Resource integration
c. Technical support
d. Practice management
Answer:
The correct answer is the option A: Business alignment.
Explanation:
To begin with, the concept known as "Business Alignment" refers to the process by which the managers of a company tend to use the information technology in order to obtain certain business objectives inside the organization that are the goals that they looked for. In addition, this process sometimes tend to focus more on the financial improvement of the company as well as its marketplace competitiveness. Therefore that this type of term gives a good approach and frame of reference for the managers who are looking for conduct project management activities inside the company.
A(n) _____ gives managers access to large amounts of data and the processing power to convert the data into high-quality information quickly and efficiently.
Answer:
decision support system.
Explanation:
A decision support system can be defined as a technological program used by organizations to assist in decision making.
This system works by analyzing essential data for decision making, such as sales reports, revenues, operations and projections, and after the analysis, it gathers the most important information, which will help a manager to find relevant standards and make an important decision of more quickly and effectively.
This system guarantees the analysis of a high volume of information and synthesizes it in a flexible and easy way, allowing the analysis of data from graphs, for example, which facilitates decision making. Because it is an intelligent computer system, it can be developed to deliver better performance and assist in organizational decision making.
Tobitzu TV produces wall mounts for flat panel television sets. The forecasted income statement for 2015 is as follows:
TOBITZU TV Budgeted Income Statement For the Year 2015
Sales ($49 per unit) $4,900,000
Cost of good sold ($32 per unit) (3,200,000)
Gross profit 1,700,000
Selling expenses ($4 per unit) (400,000)
Net income $1,300,000
Additional Information:
a. Of the production costs and selling expenses, $600,000 and $100,000, respectively, are fixed.
b. Tobitzu TV received a special order from a hospital supply company offering to buy 12,000 wall mounts for $30. If it accepts the order, there will be no additional selling expenses, and there is currently sufficient excess capacity to fill the order. The company's sales manager argues for rejecting the order because "we are not in the business of paying $32 to make a product to sell for $30."
Required:
Calculate the net benefit (cost) of accepting the special order.
Answer:
$48,000 net benefit
Explanation:
For computing the net benefit or net cost for accepting the special order first we need to find out the variable cost of goods sold per unit which is shown below:
The variable cost of goods sold is
= total cost of goods sold - fixed production costs
= $3,200,000 - $600,000
= $2,600,000.
Now
Total units produced is
= Total revenue ÷ selling price per unit
= $4900000 ÷ 49
= 1,00,000 units.
So, variable cost of goods sold per unit is
= $2,600,000 ÷ 1,00,000
= $26 per unit.
Therefore the net benefit or cost arises is
= (Revenue generated from the special order) - (variable cost of goods sold)
= (12,000 × $30) - (12,000 × $26)
= $48,000 net benefit
Nissan’s all-electric car, the Leaf, has a base price of $32,780 in the United States, but it is eligible for a $7500 federal tax credit. A consulting engineering company wants to evaluate the purchase or lease of one of the vehicles for use by its employees traveling to job sites in the local area. The cost for leasing the vehicle will be $4200 per year (payable at the end of each year) after an initialization charge of $2500 paid now. If the company purchases the vehicle, it will also purchase a home charging station for $2200 that will be partially offset by a 50% tax credit. If the company expects to be able to sell the car and charging station for 40% of the base price of the car alone at the end of 3 years, should the company purchase or lease the car? Use an interest rate of 10% per year and annual worth analysis.
Answer:
Nissan's all-electric car, the Leaf
PV cost of Leaf Purchase = $16,529
PV cost of Leasing = $12,944.78
The company should lease the car.
Explanation:
a) Costs incurred to purchase the Leaf:
Base price $32,780
less Federal tax credit ($7,500)
Charging station 2,200
less 50% tax credit (1,100)
Cash paid $26,380
Sales value after 3 yrs (9,851) ( $26,380 - 40% of base discounted to PV)
Net PV Investment $16,529
b) Calculation of Discounted Present Values of Payments under Leasing, using online financial calculator:
PV (Present Value) $12,944.78
N (Number of Periods) 3.000
I/Y (Interest Rate) 10.000%
PMT (Periodic Payment) $4,200.00
Starting Investment $2,500.00
Total Principal $15,100.00
Total Interest $2,129.50
c) The purchase of the Leaf would involve a present value cost of $26,380 after deducting all the savings from tax. The 40% sales value of the car at the end of 3 years = $13,112 ($32,780 x 40%). When this sales value is discounted to PV of $9,851, the PV of the car investments becomes $16,529 ($26,380 - $9,851). On the other hand, leasing will cost in PV the sum of $12,944.78
.
On the first day of the fiscal year, a company issues a $2,600,000, 7%, 6-year bond that pays semiannual interest of $91,000 ($2,600,000 × 7% × ½), receiving cash of $2,477,994. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
Answer:
Dr interest expense( 10,167.17+91,000) $ 101,167.17
Cr cash $91,000.00
Cr discount on bonds payable $ 10,167.17
Explanation:
The discount on bond issuance is the difference between the cash proceeds received and the face value of the bonds.
discount on bonds payable=$2,600,000-$2,477,994=$122,006.00
amortization of discount=discount/number of semiannual interest payable
in 6 years,12 semiannual coupons are payable
amortization of discount=$122,006.00 /12=$10,167.17
a food worker is frying donuts in the deep fyer what is the food worker requied to wear to keep food safe
Answer:
Gloves and a hair net
Explanation:
Simone founded her company using $200,000 of her own money, issuing herself 200,000 shares of stock. An angel investor bought an additional 100,000 shares for $150,000. She now sells another 500,000 shares of stock to a venture capitalist for $1.5 million. What is the post-money valuation of the company
Answer:
2,400,000
Explanation:
The computation of post-money valuation of the company is shown below:-
post-money valuation of the company is
= Total shares outstanding × Price per share
= (200,000 + 100,000 + 500,000) × (1,500,000 ÷ 500,000)
= 800,000 × 3
= 2,400,000
Therefore we have applied the above formula by considering all the elements given in the question