The given statement "when bonds are issued at a discount, the total interest cost to the issuing corporation equals the interest payments minus the bond discount" is true because the total interest cost to the issuing corporation when bonds are issued at a discount equals the interest payments minus the bond discount.
This is because the bond discount represents the difference between the amount that the corporation receives when it issues the bonds and the amount that it has to repay when the bonds mature. Therefore, the total interest cost to the corporation is the amount of the interest payments minus the amount of the bond discount.
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Albert Einstein once said ' we cannot solve today`s problems bythinking in the same way we thought when we created them'' Discussthis view in the context of effective leadership.
Albert Einstein's quote highlights the importance of adaptability and innovation in solving problems. In the context of effective leadership, this means that leaders should be open to new ideas and approaches in order to address current challenges.
For example, if a company is experiencing a decline in sales, a leader should not rely on the same strategies that may have worked in the past. Instead, they should be open to exploring new marketing techniques or reevaluating their product offerings.
Furthermore, effective leaders should be able to recognize when their current way of thinking is not working and be willing to change their approach. This requires a level of self-awareness and humility, as well as the ability to listen to feedback from others.
In conclusion, effective leadership requires the ability to adapt and innovate in order to solve problems. Leaders should not rely on the same way of thinking that may have contributed to the problem in the first place, but instead be open to new ideas and approaches.
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If the discount rate is 8 percent compounded quarterly, what is
the effective monthly rate?
Group of answer choices
0.05%
0.66%
1.04%
8.24%
The effective monthly rate would be 0.66% when the discount rate is 8%.
To find the effective monthly rate, we first need to convert the discount rate from a quarterly rate to a monthly rate. We can do this by dividing the discount rate by 4, since there are 4 quarters in a year:
8% / 4 = 2%
Now, we can use the formula for the effective monthly rate:
Effective monthly rate = (1 + discount rate / 12) ^ 12 - 1
Plugging in our values:
Effective monthly rate = (1 + 2% / 12) ^ 12 - 1
Effective monthly rate = (1 + 0.0016666666666666668) ^ 12 - 1
Effective monthly rate = 1.020113842 ^ 12 - 1
Effective monthly rate = 1.006618278
Effective monthly rate = 0.006618278
Effective monthly rate = 0.66%
Therefore, the correct answer would be 0.66%.
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write a 500 word critique of a selected text based on its claim,
context and properties as a written material using your own
words
Answer:
in image
Explanation:
hope it helped u,if yes then please mark me a brainliest :-)
Writing a critique of a selected text requires analyzing the text's claim, context, and properties as a written material.
The text's claim should be the basis of the critique. Analyze how the text argues its point, including how it presents its evidence. Consider the logical strength of the argument, any gaps in logic or evidence, and how well the claim is supported. It is also important to consider the biases or assumptions underlying the claim and to explore any counterarguments.
The context of the text is also important. Look at the historical and cultural background of the text, as well as the target audience and the author's intent. Additionally, consider the implications of the text and its impact on readers. This will help provide a deeper understanding of the text.
Lastly, analyze the text's properties as a written material. This includes the text's structure, tone, and style. Explore the text's use of figurative language and its effectiveness. Also, consider how the text is organized and how well it communicates its message.
By considering these aspects of the text, this 500-word critique will provide an in-depth analysis of its claim, context, and properties as a written material.
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Why is audit quality so important? How can audit quality be
maintained in a much more complex world when the auditing
environment is rapidly being transformed into an environment
characterized by the
Audit quality is important because it ensures that financial statements are presented accurately and fairly. This helps investors, creditors, and other stakeholders make informed decisions about the company. In a rapidly changing and complex world, maintaining audit quality can be a challenge.
However, it can be achieved through several measures:
1. Maintaining independence: Auditors should remain independent and objective in their work. This means avoiding any conflicts of interest and not allowing personal or professional relationships to influence their judgment.
2. Continuing education: Auditors should stay up-to-date on the latest accounting and auditing standards, as well as any changes in the business environment.
3. Using technology: Auditors should use technology to improve their work processes and make their audits more efficient and effective.
4. Effective communication: Auditors should communicate clearly and effectively with all parties involved in the audit, including the company being audited, other auditors, and regulators.
5. Quality control: Auditing firms should have strong quality control systems in place to ensure that their audits are conducted in accordance with professional standards and regulations.
By following these measures, auditors can maintain audit quality and continue to provide reliable and accurate information to stakeholders.
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Discuss the main pricing/financial and public relations issues that mold claims in Texas homeowners insurance raised for insurance companies and how this could apply to other insurance issues such as storm surge.
In Texas, homeowners insurance rates have been on the rise in recent years, largely due to the increasing number of mold claims. Insurance companies must balance the cost of providing coverage against the potential financial burden of mold-related claims.
To do this, they must carefully consider the cost of coverage, the risk of a mold claim, and the potential financial and public relations repercussions of not providing adequate coverage.
For instance, insurance companies must consider the potential costs associated with a mold-related class action lawsuit, as well as the potential negative publicity that could arise if they fail to appropriately cover mold-related losses.
These same financial and public relations considerations apply to other insurance issues, such as storm surge. Insurance companies must carefully weigh the risk of an expensive storm surge claim against the cost of providing coverage. This helps ensure that insurers are providing fair and adequate coverage for the risks posed by storms and other natural disasters.
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Gustav's best friend, Garfield, owns a lasagna factory. Garfield's financial skills are not very strong, so he asked Gustav to take a look at his financials. Here is the information Garfield provided to Gustav for 2019.
EBIT was $8028;
Depreciation was $2934;
Tax rate was 0.40
December 31, 2018
December 31, 2019
Current Operating Assets
$2940
$3528
Net Fixed Assets
$16560
$18840
Current Operating Liabilities
$2592
$2484
Compute the free cash flow for this company.
The free cash flow for Garfield's company in 2019 was $2774.8.
To compute the free cash flow for Garfield's company, we need to use the following formula:
Free cash flow = EBIT - Taxes + Depreciation - Change in Net Working Capital - Change in Net Fixed Assets
First, we need to calculate the taxes. We can do this by multiplying the EBIT by the tax rate:
Taxes = $8028 * 0.40 = $3211.2
Next, we need to calculate the change in net working capital. We can do this by subtracting the current operating assets and liabilities at the beginning of the year from the current operating assets and liabilities at the end of the year:
Change in Net Working Capital = ($3528 - $2940) - ($2484 - $2592) = $588 - (-$108) = $696
Finally, we need to calculate the change in net fixed assets. We can do this by subtracting the net fixed assets at the beginning of the year from the net fixed assets at the end of the year:
Change in Net Fixed Assets = $18840 - $16560 = $2280
Now we can plug all of these values into the formula to find the free cash flow:
Free cash flow = $8028 - $3211.2 + $2934 - $696 - $2280 = $2774.8
Therefore, the free cash flow for Garfield's company in 2019 was $2774.8.
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Raw materials inventory has a march 31 balance of $80,000. Raw materials purchases in april are $500,000, and total factory payroll cost in april is $363,000. Actual overhead costs incurred in april are indirect materials, $50,000; indirect labor, $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. Predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 cash in april 2. Determine the total cost assigned to each job as of april 30 (including the balances from march 31)
Work 306's total cost is calculated as follows: Direct material cost + (Direct labour cost x Predetermined overhead rate). This knowledge is intended to be helpful.
Calculation of April's Total Manufacturing Costs:
Inventory of raw materials, balance as of March 31: $80,000
Addition: $50000 spent on raw material procurement in April.
$580,000 worth of raw materials are readily available.
Direct labour expenses for April were $363,000 (from plant payroll).
$50,000 in indirect materials
$23,000 for indirect labour
$32,000 is the factory rent.
$19,000 for factory utilities
Depreciation on factory equipment: $51,000
$175,000 was spent in actual overhead in April.
April's total manufacturing expenditures:
Materials directly used: $580,00
$363,00 for direct labour
$175,000 in manufacturing overhead
Total: $1,118,000
Predetermined Overhead Rate Calculation
50% of the direct labour cost is the predetermined overhead rate.
April's direct labour expense was $363,000.
Fixed overhead rate: 50% times $363,000 equals $181,500
Expenses Assigned to Work 306:
the price of the raw materials:
Work 306's total cost is calculated as follows: Direct material cost + (Direct labour cost x Predetermined overhead rate). This knowledge is intended to be helpful.
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Cheeseburger and Taco Company purchases 8,427 boxes of cheese each year. It costs $15 to place and ship each order and $6.65 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders.
Calculate Economic Order Quantity.
Round the answer to the whole number.
The nearest whole number, the Economic Order Quantity for Cheeseburger and Taco Company is 195 boxes.
The Economic Order Quantity (EOQ) model is used to determine the optimal order quantity that minimizes total inventory costs. The formula for EOQ is:
EOQ = √((2 × D × S) / H)
Where:
D = Annual demand in units
S = Ordering cost per order
H = Holding cost per unit per year
In this case, D = 8,427 boxes, S = $15, and H = $6.65. Plugging these values into the formula gives:
EOQ = √((2 × 8,427 × 15) / 6.65)
EOQ = √(252,810 / 6.65)
EOQ = √(38,009.77)
EOQ = 194.96
Rounding to the nearest whole number, the Economic Order Quantity for Cheeseburger and Taco Company is 195 boxes.
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As a general matter, banks are high leverage and low margin entities. Their capital levels are generally in the area of what percentage of assets?
As a general matter, banks are high leverage and low margin entities. Their capital levels are generally in the area of percentage of 8% assets under Basel III.
Investors view a bank's net worth or equity value as being the difference between its assets and liabilities, or bank capital. The asset component of a bank's capital is made up of cash, bonds, and loans with interest for e.g., mortgages, letters of credit, and inter-bank loans. The liabilities portion of a bank's capital includes loan-loss reserves and any outstanding debt. The amount by which creditors would still be paid if a bank had to liquidate its assets is known as capital.
Tiers of regulatory bank capital are established by Basel III. They are based on a bank's subordination and its capacity to absorb losses, with a clear separation between capital instruments used when the bank is still solvent and those used after it declares bankruptcy. The book value of common shares, paid-in capital, and retained earnings less goodwill and any other intangibles make up common equity tier 1 (CET1). CET1 instruments must be of the highest subordination and lack maturity.
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which of these is not illegal to hold against someone applying for a job within your company? a. for revealing his plan to pray for half the daily lunch break b. no fork lift certification, but applying to operate a fork lift c. being qualified in every way except having deafness in one ear d. when she tells you that she just learned she is pregnant
Choose any five of seven Organizational Leadership Styles and compare and contrast them outlining their strengths and weaknesses.
The five Organizational Leadership Styles that I will compare and contrast are Autocratic, Democratic, Laissez-Faire, Transactional, and Transformational.
1. Autocratic Leadership: This style is characterized by a leader who makes all of the decisions and has complete control over their team. The strength of this style is that it can lead to quick and efficient decision-making. However, the weakness is that it can create a lack of motivation and creativity among team members.
2. Democratic Leadership: This style involves the leader including their team in the decision-making process. The strength of this style is that it can lead to higher levels of motivation and creativity among team members. However, the weakness is that it can lead to slower decision-making.
3. Laissez-Faire Leadership: This style involves the leader giving their team complete autonomy and allowing them to make their own decisions. The strength of this style is that it can lead to high levels of creativity and motivation among team members. However, the weakness is that it can lead to a lack of direction and accountability.
4. Transactional Leadership: This style is characterized by a leader who uses rewards and punishments to motivate their team. The strength of this style is that it can lead to high levels of productivity. However, the weakness is that it can lead to a lack of creativity and motivation among team members.
5. Transformational Leadership: This style involves the leader inspiring and motivating their team to achieve their goals. The strength of this style is that it can lead to high levels of motivation and creativity among team members. However, the weakness is that it can be difficult to implement and maintain.
In conclusion, each of these Organizational Leadership Styles has its own strengths and weaknesses. It is important for a leader to choose the style that best fits their team and the goals they are trying to achieve.
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Please don't copy and paste the current answers.You are asked to construct a marketing plan for a specific area within your responsibility. Identify measures for evaluating the success of the plan. Explain the process that is required in order to secure approval within your organisation. Discuss how the plan supports strategic objectives.(less than 300 words)
A marketing plan is an important aspect of an organization's overall strategy. To construct a successful marketing plan for a specific area within your responsibility, you should first identify the measures for evaluating the success of the plan. These measures could include metrics such as sales volume, customer satisfaction, and brand awareness.
Next, it is important to consider the process that is required in order to secure approval within your organization. This could involve presenting the marketing plan to key stakeholders, such as senior management, and incorporating their feedback into the plan.
Finally, it is important to consider how the marketing plan supports the organization's strategic objectives. This could involve identifying the key target markets for the organization and developing marketing strategies that align with these target markets.
Overall, a successful marketing plan requires careful consideration of the measures for evaluating success, the process for securing approval within the organization, and the ways in which the plan supports the organization's strategic objectives.
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Your real estate group has narrowed down investment property to two locations. The return you need is 14%. After market analysts has researched market rents for comparable properties, calculate NPV and IRR for both properties. Which of the two properties would you chose? Property 1 Property 2 Year Cash Flow Year Cash Flow 0 -$1,000,000 0 -$975,000 1 250,000 1 -50,000 2 400,000 2 750,000 3 700,000 3 675,000 A. Property 1. NPV = $18,492 IRR = 14.79% B. Property 2 NPV = $13,847 IRR = 14.64% C. Property 2 NPV = $9,304 IRR = 14.53% D. Property 1 NPV = $13,847 IRR = 14.64%
Based on the calculations of net present value (NPV) and internal rate of return (IRR), the property with the highest NPV and highest IRR should be chosen. The correct answer is A. Property 1. NPV = $18,492 IRR = 14.79%.
To calculate the NPV and IRR for both properties, we can use the following formulas:
NPV = ∑ (Ct / (1 + r) ^ t) - C0
Where:
Ct = cash flow at time t
r = discount rate
C0 = initial investment
IRR = the discount rate that makes the NPV of an investment equal to zero
For Property 1:
[tex]NPV = (250,000 / (1 + 0.14) ^ 1) + (400,000 / (1 + 0.14) ^ 2) + (700,000 / (1 + 0.14) ^ 3) - 1,000,000[/tex]
NPV = $18,492
IRR = 14.79%
For Property 2:
[tex]NPV = (-50,000 / (1 + 0.14) ^ 1) + (750,000 / (1 + 0.14) ^ 2) + (675,000 / (1 + 0.14) ^ 3) - 975,000[/tex]
NPV = $13,847
IRR = 14.64%
Based on the calculations, Property 1 has a higher NPV and IRR, making it the better investment choice.
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What technique can students use to narrow down the amount of information their online search results give them?
A.
Learn to read lots information as quickly as possible.
B.
Stick mostly to only the top results of the search.
C.
Narrow results down to the most recently updated sites.
D.
Use precise keywords and refine their searches.
Your query will be more targeted more the keywords you choose. You might also consider utilizing more targeted keywords.(option d)
How can I focus my Online search?To omit a specific phrase, use the sign. These terms cannot appear in you search results on browser. Always add particular keywords in your search results by using the plus sign . These terms must always appear in search results. By selecting other terms, you can further focus your search. For this example, other keywords might concentrate on a related topic, an age bracket, or even a particular technology. Your findings become more manageable by substituting a more precise term, like television, for technology.
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The stockholders' equity section of benton corporation's balance sheet as of december 31, 2015 is as follows:
For the stock dividends, the fair market value per share is used to calculate the number of additional shares issued. Hence, no journal entries.
Here are the journal entries required for each transaction:
Jan. 5:
Cash (532,000 shares x $8) $4,256,000
Common stock ($5 par value x 532,000 shares) 2,660,000
Paid-in capital in excess of par 1,596,000
No entry is required for the authorization of the shares.
Jan. 16:
Retained earnings 60,000
Dividends payable 60,000
Feb. 10:
Cash (40,000 shares x $13) $520,000
Common stock ($5 par value x 40,000 shares) 200,000
Paid-in capital in excess of par 320,000
No entry is required for the authorization of the shares.
Mar. 1:
Retained earnings 1,590,000
Common stock (180,000 shares x $5 par) 900,000
Paid-in capital in excess of par 690,000
Apr. 1:
No journal entry is required for a stock split.
July 1:
Retained earnings 1,530,000
Common stock (27,000 shares x $5 par) 135,000
Paid-in capital in excess of par 1,395,000
Aug. 1:
Retained earnings 60,000
Dividends payable 60,000
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The complete question is:
The stockholders' equity section of Benton Corporation's balance sheet as of December 31, 2014 is as follows:
Stockholders' Equity
Common stock, $5 par value; authorized, 1,500,000 shares; issued, 300,000 shares $1,500,000
Paid-in capital in excess of par 840,000
Retained earnings 3,060,000
Total $5,400,000
The following events occurred during 2015:
Jan. 5 32,000 shares of authorized and not issued common stock were sold for $8 per share.
Jan. 16 Declared a cash dividend of 20 cents per share, payable February 15 to stockholders of record on February 5.
Feb. 10 40,000 shares of authorized and not issued common stock were sold for $13 per share.
March 1 A 30% stock dividend was declared and issued. Fair market value per share is currently $15.
April 1 A two-for-one split was carried out. The par value of the stock was to be reduced to $2.50 per share. Fair market value on March 31 was $18 per share.
July 1 A 15% stock dividend was declared and issued. Fair market value is currently $10 per share.
Aug. 1 A cash dividend of 20 cents per share was declared, payable September 1 to stockholders of record on August 21.
Required:
Prepare the journal entries required for each of these transactions. If any do not require a journal entry, explain why not.
as 1- Jan Started business with $2,000 in the bank 2- Jan Purchased goods $ 175 on credit from M Mills 3- Jan Bought fixtures and fittings $ 150 paying by cheque. 5- Jan Sold goods for cash $ 275. 6- Jan Bought goods on credit $ 144 from S Watts. 10-Jan Paid rent by cash $ 15 12-Jan Bought stationery $ 27 paying by cash. 18- Jan Goods returned to M Mills $ 23 21- Jan Let off part of the premises receiving rent by cheque $ 5 23- Jan Sold goods on credit to Henry for $ 77 24-Jan Bought Motor van paying by cheque $ 500 30- Jan Paid wages by cash $ 117 31-Jan The proprietor took cash for himself $ 44.
A sole proprietorship might do business under its owner's name or a fictional name. The transactions that have occurred during the month of January can be recorded in a ledger using the double-entry accounting system. Each transaction will have a corresponding debit and credit entry.
On 1st Jan, Jan started a business with $2,000 in the bank. On 2nd Jan, Jan purchased goods worth $175 on credit from M Mills. On 3rd Jan, Jan bought fixtures and fittings worth $150 and paid by cheque. On 5th Jan, Jan sold goods for cash worth $275.
On 6th Jan, Jan bought goods on credit worth $144 from S Watts. On 10th Jan, Jan paid rent by cash worth $15. On 12th Jan, Jan bought stationery worth $27 and paid by cash. On 18th Jan, Jan returned goods to M Mills worth $23. On 21st Jan, Jan let off part of the premises receiving rent by cheque worth $5.
On 23rd Jan, Jan sold goods on credit to Henry worth $77. On 24th Jan, Jan bought a motor van paying by cheque worth $500. On 30th Jan, Jan paid wages by cash worth $117. On 31st Jan, Jan took cash for himself worth $44.
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A single share of stock in a company has a current price of 80. Suppose that there are only four possibilities for the stock's return over the course of the next year. These possibilities, along with the probability of each occurring, are provided in the table below. IR -17% -7% 8% 29% P[R] 0.13 0.34 0.37 0.16 Find the expected annual return for the stock. 3.31% 0 4.21% 3.91% 03.61% O3.01%
The expected annual return for the stock is 3.01%.
By calculating multiplying each possible return by the probability of that return occurring and then summing the results. This can be represented by the formula:
E[R] = ∑ IR * P[R]
Where E[R] is the expected return, IR is the possible return, and P[R] is the probability of that return occurring. Using the values provided in the table, we can plug them into the formula to find the expected annual return:
E[R] = (-17% * 0.13) + (-7% * 0.34) + (8% * 0.37) + (29% * 0.16)
E[R] = -2.21% + -2.38% + 2.96% + 4.64%
E[R] = 3.01%
Therefore, the expected annual return for the stock is 3.01%. The correct answer is 3.01%.
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At the beginning of the year, a firm has current assets of $329 and current liabilities of $233. At the end of the year, the current assets are $495 and the current liabilities are $273. What is the change in net working capital? Multiple Choice $206 $126 $166
The change in net working capital is $126.
The change in net working capital can be calculated by subtracting the initial net working capital from the final net working capital. Net working capital is the difference between current assets and current liabilities.
Initial net working capital = Current assets at the beginning of the year - Current liabilities at the beginning of the year
= $329 - $233
= $96
Final net working capital = Current assets at the end of the year - Current liabilities at the end of the year
= $495 - $273
= $222
Change in net working capital = Final net working capital - Initial net working capital
= $222 - $96
= $126
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14. If a company borrows $2,000,000 from a line of credit, it will be required to (1) maintain a compensating balance in the amount of $80,000, (2) pay interest in the amount of $120,000, and (3) pay an up-front commitment fee in the amount of $4,000. What is this lending arrangement's EAR?
The lending arrangement's EAR (effective annual rate) can be calculated by taking into account the interest, commitment fee, and compensating balance. Therefore the EAR is 6.06%.
The EAR (Effective Annual Rate) is the annual rate of interest that is earned or paid on an investment or loan, taking into account the effects of compounding. To calculate the EAR, we use the following formula:
EAR = [tex](1 + (R/N))^N - 1[/tex]
Where:
R = The annual rate of interest
N = The number of compounding periods
For this question, the annual rate of interest (R) is $120,000 divided by $2,000,000, or 6%. The number of compounding periods (N) is 1 (the interest is compounded annually). Thus, the EAR is:
EAR = [tex](1 + (6percent/1))^1 - 1 =[/tex] 6.06%.
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In class we discussed the use of tickmarks to document work performed. It was suggested that:
I. Write down the explanation of the tickmark, before it is used.
II. Include a "conclusion" in the tickmark explanation.
a. I is true; II is true.
b. I is true; II is false.
c. I is false; II is true.
d. I is false; II is false
In class we discussed the use of tickmarks to document work performed. It was suggested that Write down the explanation of the tickmark, before it is usedand Include a "conclusion" in the tickmark explanation.
The correct answer is option a. I is true; II is true.
Tickmarks are symbols used by auditors to document the work performed during an audit. It is important to write down the explanation of the tickmark before it is used, as it helps to ensure that the tickmark is used consistently throughout the audit and that the auditor remembers the meaning of the tickmark.
Including a "conclusion" in the tickmark explanation is also important, as it helps to summarize the auditor's findings and provides a clear understanding of the work performed.
Therefore, both statements I and II are true in regards to the use of tickmarks in documenting work performed during an audit.
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Financial data for Porcine Sun for the prior year is as follows:
Sales 16,000,000
Operating expenses 13,400,000
Operating income 2,600,000
Average operating assets 8,000,000
Required:
1. Compute the company’s margin, turnover, and return on investment for last year.
2. The Board of Directors of Porcine Sun have set a minimum required return of 25%. What was the company’s residual income last year?
3. An investment opportunity is available to Porcine Sun that would require an investment of $100,000 in new operating assets and earn earnings before interest and taxes of $30,000.
i. Would the management of Porcine Sun likely accept the investment opportunity if evaluated based on return on investment? Explain and show calculations.
ii. Would the management of Porcine Sun likely accept the investment opportunity if evaluated based on residual income? Show calculation and explain.
The residual income of the investment opportunity is positive, the management of Porcine Sun would likely accept the investment opportunity if evaluated based on residual income.
1. To calculate the company’s margin, turnover, and return on investment for last year, you can use the following equations:
Margin = Operating Income / Sales
Turnover = Sales / Average Operating Assets
Return on Investment = Operating Income / Average Operating Assets
Using the data provided, the company's margin = 2,600,000 / 16,000,000 = 0.1625, turnover = 16,000,000 / 8,000,000 = 2.0, and return on investment = 2,600,000 / 8,000,000 = 0.325.
2. To calculate the company’s residual income last year, you can use the following equation:
Residual Income = Operating Income - (Minimum Required Return x Average Operating Assets)
Using the data provided, the company's residual income = 2,600,000 - (0.25 x 8,000,000) = 500,000.
3.i. To calculate the return on investment for the new investment opportunity, you can use the following equation:
Return on Investment = Earnings Before Interest and Taxes / Investment
Using the data provided, the return on investment for the new investment opportunity = 30,000 / 100,000 = 0.3.
Since this return on investment does not exceed the minimum required return of 25%, the management of Porcine Sun would not likely accept the investment opportunity if evaluated based on return on investment.
3.ii. To calculate the residual income for the new investment opportunity, you can use the following equation:
Residual Income = Earnings Before Interest and Taxes - (Minimum Required Return x Investment)
Using the data provided, the residual income for the new investment opportunity = 30,000 - (0.25 x 100,000) = 5,000.
Since the residual income is positive, the management of Porcine Sun would likely accept the investment opportunity if evaluated based on residual income.
Since the ROI of the investment opportunity (30%) is lower than the company’s current ROI (32.5%), the management of Porcine Sun would likely not accept the investment opportunity if evaluated based on ROI.
= 5,000
Since the residual income of the investment opportunity is positive, the management of Porcine Sun would likely accept the investment opportunity if evaluated based on residual income.
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identify two conflict of interests that credit rating agenciesface Should we continue to trust the ratings of credit ratingagencies?
Two conflicts of interest that credit rating agencies face are: Pressure from issuers,Pressure from investors.
1. Pressure from issuers: Credit rating agencies are paid by the issuers of securities to rate their products. This creates a conflict of interest because the agencies may feel pressure to give higher ratings to the issuers' products in order to maintain their business relationship.
2. Pressure from investors: Credit rating agencies also face pressure from investors, who rely on their ratings to make investment decisions. This creates a conflict of interest because the agencies may feel pressure to give higher ratings to securities in order to satisfy the investors' expectations.
In light of these conflicts of interest, it is important to be cautious when relying on the ratings of credit rating agencies. While they can be a useful tool for evaluating the creditworthiness of securities, they should not be the sole basis for investment decisions. Investors should also consider other factors, such as their own risk tolerance and the overall state of the economy, when making investment decisions.
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(0)1. How the socio-cultural dimension impact the overall business environment in a country? Can
you explain this by considering the COVID:19 issue in the context of Bangladesh?2. As a future manager, can you measure the future outlook of the business environment in
Bangladesh? Make your argumentative analysis with relevant examples.
1. The socio-cultural dimension of a country has a significant impact on the overall business environment. It includes factors such as the values, beliefs, attitudes, and lifestyles of the people in a society. 2. As a future manager, it is possible to measure the future outlook of the business environment in Bangladesh by analyzing various factors such as the economic, political, and technological environment.
1.The factors influence consumer behavior, which in turn affects the demand for goods and services. In the context of COVID-19 in Bangladesh, the socio-cultural dimension has had a significant impact on the business environment.
On the other hand, the demand for online shopping and home delivery services has increased, which has positively impacted businesses in these sectors.
2.For example, if the economy is growing and there is political stability, it is likely that the business environment will be favorable in the future. On the other hand, if there is economic instability and political unrest, the business environment may be unfavorable in the future.
Overall, by analyzing these factors and using relevant examples, a future manager can measure the future outlook of the business environment in Bangladesh.
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11-15 The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs $6,750 and has an expected life of 3 years. Annual project cash flows begin 1 year after the initial investment is made and have the following probability distributions:
Project A
Project B
Probability
Cash Flows
Probability
Cash Flows
0.2
$6,500
0.2
$0
0.6
$6,750
0.6
$6,750
0.2
$7,500
0.2
$18,000
BBC has decided to evaluate the riskier project at 12% rate and the less risky project at a 10% rate.
A. What is the expected value of the annual net cash flows from each project? What is a coefficient of variation CV?
B. What is the risk-adjusted NPV of each project?
C. If it were known that project B is negatively correlated with other cash flows of the firm whereas project A is positively correlated, how would this affect that decision? If project B's cash flows were negatively correlated with gross domestic product GDP, would that influence your assessment of its risk?
PLEASE SHOW WORK
A. The expected value of the annual net cash flows and coefficient of variation for project A is $6,750 and 0.0513 and for project B is $7,350 and 0.5857 respectively. The risk-adjusted NPV for project A is $5,096.52 and for project B is $4,892.22. C. If it were known that project B is negatively correlated with other cash flows of the firm whereas project A is positively correlated it may be less risky. If project B's cash flows were negatively correlated with gross domestic product GDP, it may also be less risky.
A. The expected value of the annual net cash flows from each project can be calculated by multiplying the probability of each cash flow by the cash flow amount and then summing the results. The coefficient of variation (CV) is a measure of relative variability and can be calculated by dividing the standard deviation of the cash flows by the expected value of the cash flows.
For Project A:
Expected value = (0.2 x $6,500) + (0.6 x $6,750) + (0.2 x $7,500) = $6,750
Standard deviation = sqrt[(0.2 x ($6,500 - $6,750)^2) + (0.6 x ($6,750 - $6,750)^2) + (0.2 x ($7,500 - $6,750)^2)] = $346.41
CV = $346.41 / $6,750 = 0.0513
For Project B:
Expected value = (0.2 x $0) + (0.6 x $6,750) + (0.2 x $18,000) = $7,350
Standard deviation = sqrt[(0.2 x ($0 - $7,350)^2) + (0.6 x ($6,750 - $7,350)^2) + (0.2 x ($18,000 - $7,350)^2)] = $4,304.35
CV = $4,304.35 / $7,350 = 0.5857
B. The risk-adjusted NPV of each project can be calculated by discounting the expected cash flows at the risk-adjusted discount rate and then subtracting the initial investment.
For Project A:
NPV = ($6,750 / 1.1) + ($6,750 / 1.1^2) + ($6,750 / 1.1^3) - $6,750 = $5,096.52
For Project B:
NPV = ($7,350 / 1.12) + ($7,350 / 1.12^2) + ($7,350 / 1.12^3) - $6,750 = $4,892.22
C. If project B is negatively correlated with other cash flows of the firm, it may be less risky because it can provide diversification benefits. If project B's cash flows were negatively correlated with GDP, it may also be less risky because it can provide a hedge against economic downturns. These factors should be taken into account when assessing the risk of the projects and may affect the decision between the two projects.
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A company's stock currently sells for $120 per share. The company announced a 12% stock dividend, which will result in 1,400,000 shares outstanding after the stock dividend. Assuming there are no market imperfections or tax effects, what is the current number of shares outstanding ( before the stock dividend)?
The amount of shares currently in circulation prior to the stock dividend is 1,250,000.
To find the current number of shares outstanding before the stock dividend, we need to use the formula:
Current number of shares outstanding = (Number of shares outstanding after the stock dividend) / (1 + Stock dividend percentage)
Plugging in the given values:
Current number of shares outstanding = (1,400,000) / (1 + 0.12)
Current number of shares outstanding = (1,400,000) / (1.12)
Current number of shares outstanding = 1,250,000
Therefore, the current number of shares outstanding before the stock dividend is 1,250,000.
Note that the company's stock price and any market imperfections are irrelevant to this calculation, as we are only concerned with the number of shares outstanding.
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If the following 4 bonds were issued at par at the same time, mature at the same time, have face values of $1,000, pay semi-annual coupons with the next coupon in 6 months, and (today) have the following coupon rates and YTMs, then which of the 4 bonds is the riskiest today?. Bond A: coupon rate of 12% and YTM of 8%. Bond B: coupon rate of 5% and YTM of 6%. Bond C: coupon rate of 8% and YTM of 3%. Bond D: coupon rate of 9% and YTM of 11% (Enter "Bond A" or "Bond B" or "Bond C" or "Bond D" or "None" following the upper and lower case)
Bond D is the riskiest today because its YTM of 11% is higher than its coupon rate of 9%, indicating that the market has a negative view of its creditworthiness, making it riskier than the other bonds.
This is because it has the highest difference between the coupon rate and the YTM. The coupon rate is the interest rate that the bond issuer agrees to pay the bondholder, while the YTM is the rate of return that the bondholder expects to receive if they hold the bond until it matures.
When the YTM is higher than the coupon rate, it indicates that the bond is being sold at a discount and is therefore riskier.
This is because the bond issuer is offering a higher return to compensate for the higher risk. Bond D has a coupon rate of 9% and a YTM of 11%, which is a difference of 2%. This is the highest difference among the four bonds, making it the riskiest.
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Sales Budget Expected sales volume: 3,000 units in the first quarter with 500-unit succeeding quarter. increases in each Sales price: $60 per unit Production Budget Company can meet future sales needs with an ending nventory of 20%of next quarter's budgeted sales volume Direct Materials Budget Company maintains an ending inventory of raw materials equal to 10% of the next quarter's production requirements The manufacture of each uinit requires 2 pounds of raw materials, and the expected cost per pound is $4 Assume that the desired ending direct materials amount is 1,020 pounds for the fourth quarter of 2017 Direct Labor Budget Two hours of direct labor are required to produce each unit of finished goods. The anticipated hourly wage rate is $10 Manufacturing OH Budget Company expects variable costs to fluctuate with production volume on the basis of the following rates per direct labor hour indirect materials $1.00, indierect labor $1.40, utilities $0.40, and maintenance $0.20 Supervisory salaries are 520,000 per quarter Depreciation is $3,800 per quarter Property taxes for the year are $36,000, paid evenly over each quarter Flat maintenance fee of $5,700 is paid each quarter. Selling and Admin Expense Budget Variable expense rates per unit of sales are sales commissions $3 and freight-out $1. Variable expenses per quarter are based on the unit sales from the sales budget Advertising expense for the year is $20,000 paid evenly each quarter Sales salaries are $15,000 each quarter The office manager is paid a salary of $7,500 each quarter Depreciation for office equipment is $1,000 each quarter Property taxes are $6,000 for the year, paid evenly each quarter Budgeted Income Statement Additional items:Interest expense is expected to be $100 Income taxes are estimated to be $12,000 Cash Budget Assumptions The January 1, 2017,cash balance is expected to be 538,000. The Company wishes to maintain a balance of at least $15,000. 1. Sales: 60% are collected in the quarter sold and 40% are collected in the following quarter Accounts receivable of $60,000 at December 31, 2016, are expected to be collected in full in the first quarter of 2017 2. 3. Short-term investments are expected to be sold for $2,000 cash in the first quarter Direct materials. SO% are paid in the quarter purchased and 50% are paid in the following quarter. Accounts payable of $10,600 at December 31, 2016, are expected to be paid in full in the first quarter of 2017 4, S. Direct labor: 100% is paid in the quarter incurred. 6. Manufacturing overhead and selling and administrative expenses: All items except depreciation 7. 8. 9. are paid in the quarter incurred Management plans to purchase a truck in the second quarter for $10,000 cash The Company makes equal quarterly payments of its estimated annual income taxes. Loans are repaid in the earliest quarter in which there is sufficient cash (that is, when the cash on hand exceeds the $15,000 minimum required balance). Budgeted Balance Sheet Pertinent data from the budgeted balance sheet at December 31, 2016, are as follows Buildings and equipment $182,000 Accumulated depreciation Common stock Retained earnings 28,800 225,000 46,480 My Company Manufacturing Overhead Budget For the Year Ending December 31, 2017 Year variable Costs Total variable costs Fxed costs Total fixed costs Total manufacturing OH Direct labor hours Manufacturing OH rate per DL hour My Company Selling and Administrative Expense Budget For the Year Ending December 31, 2017 Budgeted sales in units Variable expenses Total variable expenses Fixed expenses Total fixed expenses Total selling and admin expense My Company Budgeted income Statement For the Year Ending December 31, 2017 Cest of good sold Gross profit and administrative expense Income from operations interest expense ncome tax expenve My Compary Sthetule ofespected collections 4, 1/31/16 First quarter second quarter Thind quarser Fourth quarter se home have no My Company chedule of expected payments far DM Buncbases Year 12/31/1 Second suarte My Company Cash Budget For the Year Ending December 31. 2017 Quarter Beginning cash balance Add Recepts Total receipts Total available cash Less: Disbursements Total disbursements Excess (deficiency) Financing Add: Borrowings Less: Repayments (including interest) Ending cash balance My Company Budgeted Balance Sheet December 31, 2017 Assets Current assets Cash Accounts receivable Finished goods inventory Raw materials inventory Total current assets Property, plant, and equipment Buildings and equipment Less: Accumulated depreciation Total assets Liabilities and Stockholders Equity Liabilities Accounts payable Stockholders equity Common stock Retained earnings Total stockholders equity Total liabilities and stockholders equity
The company's budgeting process includes creating a sales budget, production budget, direct materials budget, labor budget, manufacturing overhead budget, selling and administrative expense budget, budgeted income statement,budgeted balance sheet. Each of these budgets is used to estimate the company's financial performance .
The sales budget estimates the expected sales volume and sales price for the upcoming year. The production budget is used to estimate the amount of inventory the company needs to produce to meet sales needs. The direct materials budget estimates the amount of raw materials the company needs to purchase to meet production needs. The direct labor budget estimates the amount of labor hours and labor cost needed to produce the company's products.
The manufacturing overhead budget estimates the costs associated with manufacturing, including indirect materials, indirect labor, utilities, and maintenance. The selling and administrative expense budget estimates the costs associated with selling the company's products and running the business. The budgeted income statement estimates the company's revenues, expenses, and net income for the upcoming year.
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DIY Chef
(Post Series A Capitalization Table)
Shares %
Common Stock:
Founders: Sierra & Derrick 4,000,000 40%
Reserved for Stock Option Plan 2,000,000 20%
Series A Preferred Stock:
CMU Ventures II, LP 4,000,000 40%
Total Capital Stock 10,000,000 100%
Use the above capitalization table for DIY Chef and assume that:
- Founders (Sierra & Darrick) purchased their shares of common stock for $0.001 per share (for a total of $4,000).
- A venture capital fund managed by Carson and Shanell of CMU Ventures ("CMUV") recently paid $2.00 for each share of its Series - A preferred stock (for a total of $8,000,000).
- Immediately after the Series A financing, CMUV has the right to convert each share of its Series A preferred stock into one share of common stock.
- The Series A preferred stock has "full ratchet" price-based anti-dilution protection.
- The Series A preferred stock has a ONE times liquidation preference right (i.e., LP = 1X) AND the Series A preferred stock is "full participating."
- The above capitalization table is accurate and complete (i.e., immediately after the Series A financing: (a) there are no other outstanding shares of stock or options to purchase stock; and (b) DIY Chef has not yet issued any shares reserved for its Stock - - --- Option Plan).
1. Again, for this question, assume that: (a) a large Delaware corporation, Big Public Co., is going to buy all of DIY Chef's assets for $28,000,000; (b) immediately after the sale, no shares of DIY Chef's common stock will be subject to any vesting; (c) immediately after the sale, DIY Chef has no debts or other liabilities; and, (d) DIY Chef is going to distribute all of the sale proceeds to its stockholders.
Also, for purposes of this question only, assume that CMUV had acquired NON-participating preferred stock (i.e., instead of the full participating preferred stock). Assume further that the NON-participating preferred stock has a ONE times liquidation preference right (i.e., LP = 1X).
Should CMUV convert its preferred stock to common stock after learning about the terms of the sale (HINT: 50% of $28,000,000 is $14,000,000)?
a. No - because converting to common stock would cause CMUV to lose its special rights
b. No - because converting to common stock would cause CMUV to receive LESS cash (than it would receive if it does NOT convert)
c. Yes - because converting to common stock would cause CMUV to receive MORE cash (than it would receive if it does NOT convert)
d. It does not matter. CMUV will receive exactly the same amount of cash regardless of whether it converts the preferred stock to common stock
b. No - because converting to common stock would cause CMUV to receive LESS cash (than it would receive if it does NOT convert)
If CMUV converts its preferred stock to common stock, it would receive 50% of the $28,000,000 sale proceeds, which is $14,000,000. However, if CMUV does not convert its preferred stock to common stock, it would receive its liquidation preference of $8,000,000 (1X of its initial investment) plus its pro rata share of the remaining $20,000,000 (which is 40% of $20,000,000 or $8,000,000).
Therefore, CMUV would receive a total of $16,000,000 if it does not convert its preferred stock to common stock. Since $16,000,000 is more than $14,000,000, CMUV would receive less cash if it converts its preferred stock to common stock.
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A bond's market price is $1,150. It has a $1,000 par value, will mature in 14 years, and has a coupon interest rate of 11 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 20 years? What if it matures in 5 years?
The bond's yield to maturity is 9.25%, if it matures in 20 years is 9.25%, and if the bond matures in 5 years 7.44%
The bond's yield to maturity (YTM) can be calculated using the following formula:
YTM = [(C + (F - P) / N) / ((F + P) / 2)] * 100
Where:
C = Annual coupon payment
F = Face value of the bond
P = Market price of the bond
N = Number of years to maturity
Plugging in the given values into the formula, we get:
YTM = [($110 + ($1000 - $1150) / 14) / (($1000 + $1150) / 2)] * 100
YTM = [($110 - $10.71) / $1075] * 100
YTM = 9.25%
Therefore, the bond's yield to maturity is 9.25%.
If the bond matures in 20 years, the YTM will be:
YTM = [($110 + ($1000 - $1150) / 20) / (($1000 + $1150) / 2)] * 100
YTM = [($110 - $7.5) / $1075] * 100
YTM = 9.53%
If the bond matures in 5 years, the YTM will be:
YTM = [($110 + ($1000 - $1150) / 5) / (($1000 + $1150) / 2)] * 100
YTM = [($110 - $30) / $1075] * 100
YTM = 7.44%
Therefore, the bond's yield to maturity will be 9.53% if it matures in 20 years and 7.44% if it matures in 5 years.
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A student has three options for summer work. He can mow lawns for $500 per week, work at the local soccer camp for $465 per week, or work at the local pool for $475 per week. Each of the three options would require approximately 24 hours of work per week. The student loves soccer and has chosen to work at the local soccer camp. What is the opportunity cost of this decision? $475 per week $25 per week $500 per week $35 per week
The student's decision to work at the local soccer camp provides an opportunity cost of $35 per week. Therefore, the correct answer to this question is option D: "$35 per week".
The opportunity cost of the student's decision to work at the local soccer camp is $500 per week. This is because the student could have earned $500 per week by mowing lawns, but instead chose to work at the soccer camp for $465 per week. The difference between the two options, $500 - $465 = $35, represents the opportunity cost of the decision. Therefore, the correct answer is D: "$35 per week".
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