Answer:
payback period is lesser than 15 years we can say that they should buy the machine
so correct option is c. 4.8 years
Explanation:
given data
Purchase Cost = $300,000
Savings offered = $62,500 per year
Life of machine = 15 years
to find out
Payback period
solution
first we get here Payback period that is express as
Payback period = purchase cost ÷ savings ...........1
put here value we get
Payback period = [tex]\frac{300000}{62500}[/tex]
Payback period = 4.8 years
and here payback period is lesser than 15 years we can say that they should buy the machine
so correct option is c. 4.8 years
ABC Steel Co. would purchase the new machine since the payback period of 4.8 years is less than the company's maximum acceptable period of 7 years.
Explanation:The question asks whether ABC Steel Co. would purchase a new machine based on its payback period policy. To determine the payback period, we need to divide the initial purchase cost of the equipment by the annual savings it offers. In this case, the purchase cost is $300,000 and the savings are $62,500 per year. To calculate the payback period: $300,000 / $62,500 per year = 4.8 years. Comparing this result with the company policy, which rejects proposals with a payback period of more than 7 years, the new machine has a payback period that is well within the acceptable range. Therefore, ABC Steel Co. would likely approve the purchase of the new machine.
The Latimore Company invested $8.5 million in a new plant in Italy when the exchange rate was 1.1500 euros to the dollar. At the end of the year, the rate was 1.2000 euros to the dollar. (Indirect quotes.)
a. Did Latimore make or lose money on the exchange rate movement? If so, how much?
b. What kind of exchange rate gain or loss was it?
c. What was the tax impact if Latimore’s marginal tax rate is 40%?
Answer:
Latinmore made money on the exchange rate movement. It was an exchange rate gain of $369,566. The marginal tax impact was $147,826.
Explanation:
Since the standard practice in accounting is to reflect the current situation of the company, any change in the exchange rate that affects the assets of the company abroad must be recognized. The financial income of exchange gains are registered in the Income Statement and affects the base to pay income tax.
Describe three different types of organizational cultures. When would each be most and least effective for a research and development company dependent on employee innovation?
Explanation:
Organizational culture is the set of values, policies, beliefs that is shared by all employees of an organization in order to drive the behavior of all organizational parts.
Some types of organizational culture may be:
Power Culture: In this model of organizational culture, the focus is on leadership, usually attributed to the entrepreneur or a manager. It is more centralized and focused on results. There are also barriers to the development of skills and competencies among employees, due to the difficulty of implementing innovation in organizational processes, which is only incumbent on the leader.Role Culture: The focus is on employee performance, but there are still well-structured and inflexible processes that make it difficult for employees to implement innovation.People Culture: The focus of this type of culture is the employees, they are well valued, there is greater interaction between teams and there is a great chance for professional growth and development, as this is the most relevant type of culture for workers to collaborate with. innovative ideas and creative solutions to aid in organizational processes.In preparing for the upcoming holiday season, Fresh Toy Company (FTC) designed a new doll called The Dougie that teaches children how to dance. The fixed cost to produce the doll is $100,000. The variable cost, which includes material, labor, and shipping costs, is $34 per doll. During the holiday selling season, FTC will sell the dolls for $42 each. If FTC over produces the dolls, the excess dolls will be sold in January through a distributor who has agreed to pay FTC $10 per doll. Demand for new toys during the holiday selling season is uncertain. The normal probability distribution with an average of 60,000 dolls and a standard deviation of 15,000 is assumed to be a good description of the demand. FTC has tentatively decided to produce 60,000 units (the same as average demand), but it wants to conduct an analysis regarding this production quantity before finalizing the decision.
Create a what-if spreadsheet model using formulas that relate the values of production quantity, demand, sales, revenue from sales, amount of surplus, revenue from sales of surplus, total cost, and net profit. What is the profit when demand is equal to its average (60,000 units)?
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Final answer:
To calculate total revenue, multiply the price per unit by the quantity sold. To calculate marginal revenue, subtract the total revenue of the previous level from the total revenue of the current level. The profit maximizing quantity is where marginal revenue equals marginal cost.
Explanation:
To calculate total revenue, multiply the price per unit by the quantity sold. In this case, the price of one dog coat is $72. To calculate marginal revenue, subtract the total revenue of the previous level from the total revenue of the current level. Total cost is the sum of fixed costs and variable costs. Marginal cost is the change in total cost divided by the change in quantity. The profit maximizing quantity is where marginal revenue equals marginal cost.
Quantity | Total Revenue | Marginal Revenue | Total Cost | Marginal Cost
1 | $72 | $72 | $164 | $100
2 | $144 | $72 | $248 | $84
3 | $216 | $72 | $362 | $114
4 | $288 | $72 | $546 | $184
5 | $360 | $72 | $816 | $270
On one diagram, plot the total revenue curve starting at zero quantity and increasing with each unit sold. Plot the total cost curve starting at the fixed cost and increasing with the variable cost for each unit sold. On another diagram, plot the marginal revenue curve as a horizontal line since the price is constant. Plot the marginal cost curve starting at the first unit and increasing with each additional unit. The profit maximizing quantity is where marginal revenue equals marginal cost, which is at a quantity of 4 units.
Kaplan purchased 2500 shares of its own previously issued $10 par common stock for $62500. As a result of this event,
a. Kaplan’s Common Stock account decreased $25000.
b. Kaplan’s total stockholders’ equity decreased $62500.
c. Kaplan’s Paid-in Capital in Excess of Par Value account decreased $37500.
d. All of these answer choices are correct.
Answer:
b. Kaplan’s total stockholders’ equity decreased $62500.
Explanation:
In the given scenario, the previously issued common stock was purchased for $62,500 which reflects the treasury stock and as we know that, the treasury stock reduces the balance of the total stockholder equity.
While computing the stockholder equity balance, we deduct the treasury stock
So, the total stockholders’ equity would decreased by $62,500
The correct answer is d. All of these answer choices are correct.
Explanation:The correct answer is d. All of these answer choices are correct.
When a company repurchases its own shares, it reduces the amount of shares outstanding. This results in a decrease in the Common Stock account, as the company buys back its own stock. Additionally, the repurchase of shares using more than their par value results in a reduction in Paid-in Capital in Excess of Par Value account. Finally, repurchasing shares also decreases the total stockholders' equity, as stock is being taken out of circulation.
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Telicia, a single taxpayer, purchased a famous painting for $69,000. Several years later, she sold it for $99,000. Telicia's marginal tax rate is 35%. Telicia's gain on the sale of the painting will be taxed at a rate of
Answer:
28%
Explanation:
Please see attachment
"A triangle has a perimeter of 13 and one side of length 3. If the lengths of the other two sides are equal, what is the length of each of them?"
Answer:
The length of each is 5
Explanation:
Perimeter of triangle = sum of three sides
Assuming the length of each of the equal sides is y
13 = y+y+3
13-3 = 2y
2y = 10
y = 10/2 = 5
For a nonmonetary exchange of plant assets, accounting recognition should not be given to
a. a loss when the exchange has no commercial substance.
b. a gain when the exchange has commercial substance.
c. part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange).
d. part of a gain when the exchange has no commercial substance and cash is received (cash paid or received is less than 25% of the fair value of the exchange).
Answer: The correct answer is "c. part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange).".
Explanation: For a nonmonetary exchange of plant assets, accounting recognition should not be given to part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange).
In nonmonetary exchanges of plant assets in accounting, recognition should not be given to part of a gain when the exchange lacks commercial substance and cash is received, as long as the cash paid or received is less than 25% of the fair value of the exchange.
Explanation:In the context of accounting, a nonmonetary exchange of plant assets pertains to a transaction where an entity swaps assets that are not cash, for something else. The key rule is that accounting recognition should not be given to part of a gain when the exchange has no commercial substance and cash is received, if the cash paid or received is less than 25% of the fair value of the exchange, as per the US GAAP regulations. Hence, answer (d) is the most appropriate.
The recognition of a loss or gain when the exchange has commercial substance doesn't generally result in a defiance with US GAAP rules on recognition. A nonmonetary exchange that has commercial substance will generally lead to recognition of a loss or gain due the fact that the future cash flows change as a result of the transaction.
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The guidance for having infant sleep on their back to reduce the incidence of SIDS has a grade of A. Group of answer choices Problem Description Etiology Recommendations Implementation and Evaluation
Answer:
The correct answer is letter "D": Recommendations.
Explanation:
Evidence-based public health (EBPH) practice is the application, and assessment of effective public health programs and policies by applying scientific reasoning principles. It includes several recommendations on basic practices that should be followed to avoid future medical conditions.
Nachman Industries just paid a dividend of D 0 = $1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock's current market value?
a. $41.59
b. $42.65
c. $43.75
d. $44.87
e. $45.99
Answer:
option D
Explanation:
End of PV Calculation PV of Dividend
Year (Div x PVIF9%,n)
1 $1.32(1.30) = $1.716 x 0.9174 $1.574
2 $1.716(1.10) = $1.8876 x 0.8417 $ 1.588
$3.162
Value of stock at the end of year 2 = $1.9820/0.04 = $49.55
P V of $38.275 at the end of year 2 = $49.55(PVIF 9%,2) = $41.71
∴ V = $3.162 + $41.71 = $44.87
Hence, the correct answer is option D
On January 1, 2017, Lynn Company borrows $3,000,000 from National Bank at 11% annual interest. In addition, Lynn is required to keep a compensatory balance of $300,000 on deposit at National Bank which will earn interest at 5%. The effective interest that Lynn pays on its $3,000,000 loan is a. 10.0%. b. 11.0%. c. 11.5%. d. 11.6%.
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Your uncle offers you a choice of $115,0 in 10 years or $52,000 today, if the money is discounted at 9%, which should you do ose? 2. If you invest $9,500 per period or the fotioning number of periods how much would you have? A. 10years at 10% B. 15years at 9%
Answer:
1) we would choose the second offer i.e. $52,000 today
2) For A) 10 years at 10%
Future value = $151,405.53
For B) 15 years at 9%
Future value = $278,928.70
Explanation:
1) Future value = $115,000
Time, n = 10 years
Discount rate, r = 9% = 0.09
Now,
Present value of the money provided after 10 years
= Future Value ÷ [ ( 1 + r )ⁿ ]
= $115,000 ÷ [ ( 1 + 0.09 )¹⁰ ]
= $48,577.24
Since,
The Present value of $115,000 is less than the money to offered today i.e $52,000
Hence, we would choose the second offer i.e. $52,000 today
2) Payment per period = $9,500
Future value = Yearly Payment × [ { ( 1 + r ) ⁿ - 1 } ÷ r ]
Thus,
For A) 10 years at 10%
Future value = $9,500 × [ { ( 1 + 0.1 )¹⁰ - 1 } ÷ 0.1 ]
= $151,405.53
For B) 15 years at 9%
Future value = $9,500 × [ { ( 1 + 0.09 )¹⁵ - 1 } ÷ 0.09 ]
= $278,928.70
How has the pattern of trade changed in the United States since 1960?
A. Exports and imports have grown at the same rate, and the United States has remained a net exporter.
B. Imports have grown faster than exports, and the United States has become a net importer.
C. Exports have grown faster than imports, and the United States has become a net importer.
D. Imports have grown faster than exports, and the United States has remained a net exporter.
E. Exports have grown faster than imports, and the United States has remained a net exporter.
Answer:
The correct answer is letter "B": Imports have grown faster than exports, and the United States has become a net importer.
Explanation:
International trade is not just a major engine of the U.S. economy, but for the global economy. The total trade share in terms of the global Gross Domestic Product was 25% in 1960 and it has raised to 56% in 2017. Though, imports have surpassed the level of exports, making America be a net importer. Main imports are in the form of raw materials for the production of different goods mainly vehicles, and clothing.
Item Prior year Current year Accounts payable 8,120.00 7,915.00 Accounts receivable 6,002.00 6,603.00 Accruals 1,020.00 1,571.00 Cash ??? ??? Common Stock 11,862.00 12,878.00 COGS 12,799.00 18,209.00 Current portion long-term debt 5,011.00 5,066.00 Depreciation expense 2,500 2,760.00 Interest expense 733 417 Inventories 4,243.00 4,814.00 Long-term debt 14,938.00 13,767.00 Net fixed assets 50,217.00 54,795.00 Notes payable 4,346.00 9,870.00 Operating expenses (excl. depr.) 13,977 18,172 Retained earnings 28,963.00 29,912.00 Sales 35,119 46,835.00 Taxes 2,084 2,775 What is the firm's cash flow from financing? Assignment is past due:
Answer:
$2,321
Explanation:
For computing the net cash flow from financing activities, first we have to determine the net income and then the dividend amount which is shown below:
Net income = Sales - Cost of Goods Sold - Operating Expenses - Depreciation Expense - Interest Expense - Taxes
= $46,835 - $18,209 - $18,172 - $2,760 - $417 - $2,775
= $4,052
Now the dividend would be computed below:
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
$29,912 = $28,963 + $4,052 - dividend paid
$29,912 = $33,015 - dividend paid
So, the dividend would be
= $33,015 - $29,912
= $3,103
Cash flow from Financing activities
Add: Increase in Common Stock $1,016 ($12,878 - $11,862)
Add: Current Portion Long-term Debt $55 ($5,066 - $5,011)
Less: Decrease in Long-term Debt -$1,171 ($13,767 - $14,938)
Add: Increase in Notes Payable $5,524 ($9,870 - $4,346)
Less: Dividend Paid $3,103
Net Cash flow from Financing activities $2,321
Which of the following is NOTa consideration when making tradeoffs among various functional areas to achieve a balanced design?
A. Environmental concerns
B. Machinery
C. Materials
D. Profits from manufacturing
Profits from manufacturing is NOT a consideration when making trade-offs among various functional areas to achieve a balanced design
Explanation:
Profit means the income produced more than the production cost or the cost of selling products more than the investment capital. The estimated average profit proportion of the manufacturer differs from 25% to 35%.
The concept of trade-off is an exchange in which one thing you give up to have something that you want. An example of a deal is when you want to travel a half-hour to make more cash.
To take decisions, one product against someone else needs to be traded. In business, the term "business off" is often used as a cost of chance, the preferred alternative. A deal involves a sacrifice to achieve a product or experience.
According to the modern view of the Phillips curve, expansionary macroeconomic policy that leads to inflation will reduce unemployment
a. only if people underestimate the inflationary side effects of the policy.
b. only if people overestimate the inflationary side effects of the policy.
c. if people accurately anticipate the inflationary side effects of the policy.
d. only if monetary policy provides the macroeconomic stimulus.
Answer:
a. only if people underestimate the inflationary side effects of the policy.
Explanation:
The modern Phillips curve suggests that as inflation increases, unemployment reduces and vice versa dependent on two factors; the level of inflation and the excess of growth rate of wages over the expected inflation. The larger the excess, the greater the effect of the expansionary monetary policy. Thus, if it is underestimated, then the unemployment will greatly reduce.
One of the ways Mark and Sue can prevent having a balance due next year is to use the Tax Withholding Estimator at IRS.gov and then adjust their withholding.
a. True
b. False
Answer:
a. True
Explanation:
They can check their withholding using the Tax Withholding Estimator at IRS.gov and adjust accordingly.
Answer:
True ( A )
Explanation:
Mark and sue can prevent having a balance due next year by making very good use of the tax withholding Estimator. this will help them update your current year income and other important factors that has a very significant effect on your tax.
A withholding estimator is an estimator found in the IRS website, it is used to help employees to do a checkup on their paycheck i.e to ensure that taxes been held from their paycheck is the right amount.
using an estimator you will require to enter an estimate of your yearly income and other forms of income and also your number of dependents if it has changed over the year this will help you know how your current year taxes will affect you while filing for your tax next year.
In 1993, the government increased the tax on gasoline producers from 14.1 cents per gallon to 18.4 cents per gallon. Our model of supply and demand predicts that:_____a. the demand for gasoline decreased. b. the supply for gasoline increased. c. the demand for gasoline increased. d. the supply for gasoline decreased. e. both the supply and demand for gasoline decreased.
Answer:
In 1993, the government increased the tax on gasoline producers from 14.1 cents per gallon to 18.4 cents per gallon. Our model of supply and demand predicts that
both the supply and demand for gasoline decreased.
Explanation:
The reason why both supply and demand will be decreased is a result in the increase of tax which will have direct effect on the price i.e the price will increase as result of tax increment and this will affect the rate at which the gasoline will be demanded for, hence; affects the supply rate as little quantity will be made available for sales.
On January 1, 2017, Garzon purchased 6% bonds issued by PBS Utilities at a cost of $40,000, which is their par value. The bonds pay interest semiannually on July 1 and January 1. For 2017, prepare entries to record Garzon's July 1 receipt of interest and its December 31 year-end interest accrual. (Do not round your intermediate calculations.)
Answer:
July 1st: Debit Cash=$1,200 Credit Interest Received=$1,200
December 31st: Debit Interest Receivable=$1,200, Credit Interest Earned= $1,200
Explanation:
July 1st Receipt of Interest
Step 1: Calculate Interest Receivable for the entire Year
=($40,000×6%)= 40,000×0.06= $2,400
=$2,400
Step 2: Calculate Interest Receivable for the first 6 months (Semi-annual Payment)
January 1st to July 1st is 6 Months, we therefore divide the annual interest receivable into 2
$2,400÷2=$1,200
Step 3: Entries for the July 1 Receipt of Interest
Debit Cash = $1,200
Credit Interest Received=$1,200
Step 4: Calculate the Interest Accrual for the Decembe 31st
Between July 1st and December 31st is equally 6 months, therefore, the remaining $1,200 is for the second half of the year.
Step 5: Entries for December 31st Interest Accrual
Debit Interest Receivable = $1,200
Credit Interest Earned= $1,200
On January 23, 10,000 shares of Tolle Company are acquired at a price of $30 per share plus a $100 brokerage commission. On April 12, a $0.50-per-share dividend was received on the Tolle Company stock. On June 10, 4,000 shares of the Tolle Company stock were sold for $34 per share less a $100 brokerage commission. Journalize the transaction.
Answer:
January 23rd
Dr Investment in Tolle 300,100
Cr Cash 300,100
(to record the acquired of 10,000 Tolle's shares at $30 each and a brokerage cost of $100)
April 12th
Dr Cash 5,000
Cr Dividend Revenue 5,000
(to record dividend revenue from 10,00 Tolle's shares at $0.5 each)
June 10th
Dr Cash 135,900
Cr Investment on Tolle 120,040
Cr Gain on investment disposal 15,860
(to record the sales of 4,000 Tolle's shares at $34 plus $110 commission fees incurred).
Explanation:
All the explanation is given at the end of each transaction. Further explanation as below:
Given there is no information mentioned whether the share acquired is fro 20% to above and the partial disposal of the investment comes quite near to the time of first acquire; we apply the Cost Method for accounting these transactions.
In the June 10th transaction, we have:
- The actual selling price per share = (Selling price x share sold - Brokerage commission) / share sold = ( 34 x 4,000 - 100) / 4,000 = $33.975;
- The cost of share sold per share = ( Purchasing price x share purchase - Brokerage commission)/ share purchased = ( 30 x 10,000 + 100) / 10,000 = $30.01
=> Cost of share recorded ( Cr Investment account) = 30.01 x 4,000 = 120,040;
=> Gain on investment disposal = ( 33.975 - 30.01) x 4,000 = 15,860.
=> Cash receipt = 4,000 x 34 - 100 = $135,900.
Wendell Company provided the following pertaining to its recent year of operation:
• Common stock with a $10,000 par value was sold for S50,000 cash.
• Cash dividends totaling S20,000 were declared, of which S15,000 were paid.
• Net income was S70,000.
• A 5% stock dividend resulted in a common stock distribution, which had a S5,OOO par value and a S23,000 market value.
• Treasury stock costing 9,000 was sold for $7,000.
How much did Wendell's total stockholders' equity increase during the recent year of operation?
A. S107,000.
B. $84,000.
c. S98,000.
D. $112,000.
Answer:
Option (B) is correct.
Explanation:
Wendell's total stockholders' equity increase during the recent year of operation:
= Issued common stock - Cash dividend declared + Net Income - Stock dividend distributed + Sale of treasury stock below cost
= $50,000 - $20,000 + $70,000 - $23,000 + $7,000
= $84,000
Therefore, Wendell's total stockholders' equity increase by $84,000.
(Last Word) From 2006-2010, the federal government paid $600 million in retirement benefits to deceased federal employees, with the checks being illegally cashed by relatives. This example illustrates
A. the benefits-received principle.
B. logrolling.
C. bureaucratic inefficiency.
D. the problem of limited and bundled choices.
Answer:
c. bureaucreatic inefficiency
Explanation:
When establishing the bureaucracy, it is essential to understand that it is based on issues such as the division of labor, the hierarchy of authority, rules and norms, professional commitment, rationality, impersonality as regards the application of procedures and rules or written records. In a negative connotation, bureaucracy is understood as inefficient administration by paperwork and formalities, and the excessive influence of civil servants in public affairs.
Buffalo in the United States almost became extinct while cattle, an animal that provides similar products, never has been close to extinction. The difference is due to
Question 1 options:
the greater marginal value of a buffalo relative to a steer, leading to the overharvesting of buffalo.
the greater marginal value of a head of cattle relative to buffalo, leading to over-hunting of buffalo.
the use of private property rights on cattle and common property rights on buffalo.
cattle existing in Europe also while buffalo were specific to North America.
Answer:
The greater marginal value of a buffalo relative to a steer, leading to the over harvesting of buffalo.
Explanation:
Marginal value looks at the increased amount of value that can be achieved by providing an additional source of output. So as the marginal value of Buffalo relative to a steer increases, people tends to over harvest it leading to its extinction.
Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 400 bikes were produced and 240 were sold; this left 160 bikes in ending inventory. The income statement information under variable costing follows.
Sales (240 × $1,650) $ 396,000
Variable product cost (240 × $650) 156,000
Variable selling and administrative expenses (240 × $55) 13,200
Contribution margin 226,800
Fixed overhead cost 72,000
Fixed selling and administrative expense 85,000
Net income $ 69,800
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
For its first month of operations, 400 bikes were produced and 240 were sold; this left 160 bikes in ending inventory. The income statement information under variable costing follows.
Sales (240 × $1,650) $ 396,000
Variable product cost (240 × $650) 156,000
Variable selling and administrative expenses (240 × $55) 13,200
Contribution margin 226,800
Fixed overhead cost 72,000
Fixed selling and administrative expense 85,000
Net income $ 69,800
Under absorption costing the fixed costs are allocated to the production costs for the period.
Unitary cost= variable cost per unit + unitary fixed costs
Unitary cost= 650 + (72,000/400)= $830
Income statement:
Sales (240 × $1,650) $ 396,000
COGS= (240*830)= (199,200)
Gross profit= $196,800
Variable selling and administrative expenses= (13,200)
Fixed selling and administrative expense= (85,000)
Net operating income= $98,600
IE 4-3....Suppose that a Demand shift (a change in income) moves this economy to Point F with Employment of 110 million people. The Circular Flow will be producing a Real GDP of ____________ billion with an equilibrium at Point U in the PPF. This is a ______________ situation..
Answer:
$3840
Depression (Major Recession)
Explanation:
In the problem above, if there is a shift in demand as a result of a change in income which moves the economy to point F. There will be a production of a Real GDP of approximately $3840 billion. Due to the change in the equilibrium position, the economic system will be a major recession which is also known as depression. This occurs because there is loss of customer confidence.
Bell is a product of the Baldwin company which is primarily in the Nano segment, but is also sold in another segment. Baldwin starts to create their sales forecast by assuming all policies (R&D, Marketing, and Production) for all competitors are equal this year over last. For this question assume that all 700 of units of Bell are sold in the Nano segment. If the competitive environment remains unchanged what will be the Bell product’s demand next year (in 000’s)?
Answer:
The bell product's demand will be 700 units multiplied by the annual percentage of population growth Demand = 700 * (1 + population growth in %).
Explanation:
Making the forecast where the competitors will do the same and no other change in the market is expected, the changes in demands could occur because the population grows and changes in technology. Since the forecast is only for the next year, changes in technology are not included (usually affects the long-term).
Your firm has just issued five-year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4 percent. What is the amount of the first coupon payment your firm will pay per U.S. $1,000 of face value, if six-month LIBOR is currently 7.2 percent?
Answer:
The first coupon payment is 37.25 dollars.
Explanation:
This problem require us to calculate the first coupon payment that the firm will make. This can be easily calculated by multiplying the applicable interest rate with face value of notes issued.
The applicable interest rate is six month libor + 0.25% (1/4)
so
First coupon payment = (7.45%)'/2 * 1000 = 37.25 dollars
'7.25% + 0.25% = 7,45%
Gion Company is considering eliminating its windows division, which reported an operating loss for the recent year of $105,000. Division sales for the year were $1,110,000 and its variable costs were $975,000. The fixed costs of the division were $220,000. If the windows division is dropped, 65% of the fixed costs allocated to it could be eliminated. The impact on Gion’s operating income from eliminating this business segment would be:
If Gion eliminates the Windows division, the impact on its operating income would be a negative $8,000.
Explanation:In order to determine the impact on Gion's operating income from eliminating the Windows division, we need to calculate the division's contribution margin. The contribution margin is the division's sales minus its variable costs.
The contribution margin for the windows division would be -
= $1,110,000 - $975,000
= $135,000.
If the division is dropped and 65% of the fixed costs allocated to it are eliminated, the impact on Gion's operating income would be:
Operating income impact = Division's contribution margin - 65% of its fixed costs
Operating income impact = $135,000 - (65% * $220,000)
= $135,000 - $143,000
= -$8,000
Therefore, the elimination of the Windows division would result in a negative impact of $8,000 on Gion's operating income.
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A firm is considering a new project that will generate cash revenue of $1,300,000 and cash expenses of $700,000 per year for five years. The equipment necessary for the project will cost $300,000 and will be depreciated straight line over four years. What is the expected free cash flow in the second year of the project if the firm's marginal tax rate is 35%?
A) $416,250
B) $374,625
C) $341,250
D) $499,500
Answer:
A) $416,250
Explanation:
The computation of the free cash flow is shown below:
= (Cash revenues generated - cash expenses - depreciation expense) × (1 - tax rate) + depreciation expense
= ($1,300,000 - $700,000 - $75,000) × (1 - 0.35) + $75,000
= $525,000 × 0.65 + $75,000
= $416250
Simply we added the depreciation expense in the Earning after tax amount
The (Cash revenues generated - cash expenses - depreciation expense) × (1 - tax rate) is also known as Earning after tax
Holt Company purchased a computer for $8,000 on January 1, 2019. Straight-line depreciation is used, based on a 5-year life and a $1,000 salvage value. In 2021, the estimates are revised. Holt now feels the computer will be used until December 31, 2022, when it can be sold for $500?
Answer:
$2,350
Explanation:
On January 1, 2019
Cost of computer = $8,000
Useful life = 5 years
Salvage value = $1,000
Annual Depreciation = (8000 - 1000)/5
= 7000/5
= $1,400
In 2021 estimates are revised i.e after 2 years of use
Carrying value = 8000 - (2 × 1400)
= 8000 - 2800
= $5,200
Remaining Useful life after revised estimate = 2 years
Revised salvage value = 500
Annual depreciation = (5200 - 500)/2
= 4700/2
= $2,350
Problem 10-3A On January 1, 2017, Evers Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $37,500. Related expenditures included: sales tax $3,600, shipping costs $100, insurance during shipping $50, installation and testing costs $120, and $150 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the useful life of the machine is 5 years with a $5,950 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B: The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $9,800 salvage value remaining at the end of that time period.
Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
(1) The journal entry to record its purchase on January 1, 2017.
(2) The journal entry to record annual depreciation at December 31, 2017.
Answer:
Please see the solution below:
Explanation:
Machine A:
(i) Total Machine A Cost
Purchase Price = $37,500
Sales Tax = $3,600
Shipping Cost = $100
Insurance during shipping = $50
Installation and Testing Cost = $120
Total Machine A cost = $41,370
(ii) Depreciation
Recorded Cost = $41,370
Less: Salvage Value = $5,950
Useful Life = 5 years
Straight Line Method is used to find depreciation per yer will be:
Depreciation = $7,084
(1) The Journal Entry to record purchase of equipment (Machine A)
January 1, 2017
Dr. Equipment $41,370
Cr. Cash $41,370
(2) The Journal Entry to record annual depreciation (Machine A)
December 3, 2017
Dr. Depreciation $7,084
Cr. Accumulated Depreciation - Equipment $7,084
The total cost of Machine A is recorded as $41,370. The depreciation expense for the year end 2017 is calculated to be $7,084.
Explanation:The subject matter involves the calculation and recording of purchase and depreciation of assets, a core part of business accounting.
First, to figure out the cost of machine A, we add up the related costs to the purchase price: $37,500 + $3,600 + $100 + $50 + $120 = $41,370. The cost of lubricants is not included as it is an operational cost, not a purchase cost.
(1) Therefore, the journal entry on January 1, 2017, is Debit: Machinery (account title) for $41,370 which is the total cost of machine A.
To calculate annual depreciation, we use the straight-line method. Take the total cost of the machine ($41,370), subtract the salvage value ($5,950), and then divide by the useful life of the machine (5 years): ($41,370 - $5,950) / 5 = $7,084 (rounded to the nearest dollar).
(2) The journal entry on December 31, 2017, to record annual depreciation is Debit: Depreciation Expense for $7,084, and Credit: Accumulated Depreciation for $7,084.
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