Answer:
Curiosity. Technology develops at different rates and in different ways around the world.
A Sense of Impatience. Entrepreneurs need impatience in order to recognize inefficiencies
Sociability. It’s important for any entrepreneur to have a good network of like-minded people to
Explanation:
You should meet with your academic adviser at least once a __________.
Group of answer choices
Answer:
Once a Semester
Explanation:
Advisors can help you decide if you want to minor in something, and what the requirements are. They can ensure you're odds of graduating in four years is on track, or give you special permissions to take certain classes.
Johnson Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing.
Current Machine New Machine
Original purchase cost $15,300 $25,100
Accumulated depreciation $6,200 ------
Estimated annual operating costs $24,800 $19,800
Remaining useful life 5 years 5 years
If sold now, the current machine would have a salvage value of $10,800. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after 5 years.
Should the current machine be replaced?
Answer:
The current machine should be replaced. It costs more plus the overhead costs to maintain the current machine than it would cost to maintain the new machine.
The analysis is as follows:
Explanation:
1. Cost Analysis of Current Machine:
Book value of equipment = $9,100 ($15,300 - $6,200)
Annual Operating Costs for 5 years = $124,000 ($24,800 x 5)
Total cost = $133,100 ($9,100 + $124,000)
2. Cost Analysis for New Machine:
Purchase cost = $25,100
Annual operating costs for 5 years = $99,000 ($19,800 x 5)
Total cost for 5 years = $124,100 ($25,100 + $99,000)
Since both machines have no salvage value at the end of 5 years, it makes sense to purchase the new machine with a cost saving of $9,000 ($133,100 - $124,100) plus the overtime cost that will be eliminated.
Tiki Corporation had net income of $120,000 during the year. Depreciation expense was $6,000. The following information is available: Held- to-Maturity Bonds purchased25,000increase Common Stock issued70,000increase Accounts Receivable10,000decrease Accounts Payable15,000increase Gain on sale of AFS Investment5,000increase What amount should Tiki report as net cash provided by operating activities in its statement of cash flows for the year
Answer:
Tiki should report $101,000 as net cash provided by operating activities in its statement of cash flows for the year.
Explanation:
Tiki Corporation
Statement of cash flows (extract)
Net income $120,000
Add: Depreciation expense 6,000
Less: Increase Accounts Receivable (10,000)
Less: Decrease in Accounts Payable (15,000)
Net cash flows from operating activities $101,000
If a firm has retained earnings of $2.7 million, a common shares account of $4.7 million, and additional paid-in capital of $9.4 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity.
Answer:
Change in retained earnings = $1.02 million (Decrease)
Change in common shares account = $5.17 million (Increase)
Change in additional paid-in capital = $10.61 million (Increase)
Explanation:
Given:
Retained earnings = $2.7 million
Common shares account = $4.7 million
Additional paid-in capital = $9.4 million
Stock dividend = 10%
Find:
Changes in account.
Computation:
1. Change in retained earnings
Change in retained earnings = Retained earnings - (Retained earnings - Common shares account - Additional paid-in capital)Stock dividend
Change in retained earnings = $2.7 million - ($2.7 million - $4.7 million - $9.4 million)10%
Change in retained earnings = $2.7 million - 1.68 million
Change in retained earnings = $1.02 million (Decrease)
2. Change in common shares account
Change in common shares account = Common shares account (1+Stock dividend)
Change in common shares account = $4.7 million (1+10%)
Change in common shares account = $5.17 million (Increase)
3. Change in additional paid-in capital
Change in additional paid-in capital = Additional paid-in capital + (Additional paid-in capital + Retained earnings)Stock dividend
Change in additional paid-in capital = $9.4 million + ($9.4 million + $2.7 million)10%
Change in additional paid-in capital = $9.4 million + 1.21 million
Change in additional paid-in capital = $10.61 million (Increase)
Matt and Joel are equal partners in the MJ Partnership. For the current year ended December 31, the partnership has book income of $80,000, which includes the following deductions: (1) guaranteed payments (salaries) to partners: Matt, $35,000; and Joel, $25,000; and (2) charitable contributions, $6,000. The book income amount does not include any sales of capital assets or Sec. 1231 assets or any taxminusexempt income. Based on the above information, what amount should be reported as ordinary income on the partnership return?
Answer:
$86,000
Explanation:
A partnership is a pass through entity that is not taxed directly, but instead its partners are taxed. Even the partners' salaries are recorded as drawings, not salary expense.
The partnership's total ordinary income = book income + any donations or contributions to charities = $80,000 + $6,000 = $86,000
Bottum Corporation, a manufacturing Corporation, has provided data concerning its operations for May. The beginning balance in the raw materials account was $23,500 and the ending balance was $43,000. Raw materials purchases during the month totaled $70,000. Manufacturing overhead cost incurred during the month was $114,500, of which $2,700 consisted of raw materials classified as indirect materials. The direct materials cost for May was:
Answer:
Direct Materials Used In May $ 50,500
Explanation:
Bottum Corporation
We add the beginning inventory with the purchases and subtract the ending inventory to get the direct materials used.
Beginning balance Raw materials $23,500
Add Raw materials purchases $70,000
Less Ending balance Raw materials $43,000
Direct Materials Used In May $ 50,500
The cost of the purchases remains the same that is $ 70,000 but the direct materials used during May are $ 50,500
Answer:
$47,800
Explanation:
Direct materials cost= beginning raw material inventory + raw material purchases - ending raw materials
$23,500 + $70,000- $43,000 - 2700 = $47,800
Precise Machinery is analyzing a proposed project. The company expects to sell 2,100 units, give or take 5 percent. The expected variable cost per unit is $260 and the expected fixed costs are $589,000. Cost estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $129,000. The sales price is estimated at $750 per unit, give or take 2 percent. The tax rate is 35 percent. The company is conducting a sensitivity analysis on the sales price per unit using a sales price estimate of $755. What is the operating cash flow based on this analysis
Answer:
$337,975
Explanation:
Operating Cash Flow:
Operating Cash Flow
{[($755 - $260) x 2,100 units] - $589,000} {1 - 0.35} + {$129,000 x 0.35}
{[$495 x 2,100 units] - $589,000} {0.65} + {$129,000 x 0.35}
{$1,039,500 - $589,000} {0.65} + $45,150
{$450,500} {0.65} + $45,150
$292,825 + $45,150
$337,975
What does the phrase "Revenue is recognized at the point of sale" mean? a.Revenue is recorded in the accounting records when the goods are received from a supplier and reported on the income statement when sold to the customer. b.Revenue is recorded in the accounting records when the goods are sold to a customer and reported on the income statement when the cash payment is received from the customer. c.Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer. d.Revenue is recorded in the accounting records and reported on the income statement when the cash is received from the customer.
Answer: C
Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer.
Explanation:
The term revenue recognition at the point of sale refers to the process of recording revenue from manufacturing and selling activities at the time of sale. The revenue recognition principle states a company can record revenue when two conditions are met. They must be realized or realizable, and earned.
Poe Company is considering the purchase of new equipment costing $80,000. The projected net cash flows are $35,000 for the first two years and $30,000 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine.Periods Present Valueof $1 at 10% Present Value of anAnnuity of $1 at 10%1 0.9091 0.90912 0.8264 1.73553 0.7514 2.48694 0.6830 3.1699
Answer:
NPV = $23,773.65
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator:
Cash flow in year 0 = $-80,000
Cash flow each year for 1 and 2 = $35,000
Cash flow each year for 3 and 4 = $30,000
I = 10%
NPV = $23,773.65
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
What is the effect of just-in-time inventory strategies? A. They increase business efficiency by reducing inventory costs. B. They outsource manufacturing jobs to underdeveloped nations. C. They eliminate the need for tasks such as welding and assembling. D. They expand businesses with the use of worldwide telecommunication.
The answer is A
Explanation:
Brooke and John formed a partnership. Brooke received a 40% interest in partnership capital and profits in exchange for contributing land (basis of $30,000 and fair market value of $120,000). John received a 60% interest in partnership capital and profits in exchange for contributing $180,000 of cash. Three years after the contribution date, the land contributed by Brooke is sold by the partnership to a third party for $150,000. What gain must Brooke recognize on the land contribution when establishing the partnership
Answer:
$102,000
Explanation:
According to 26 US code Section 704(c) - Partner's distributive share :
Taxable gain to be recognized from sale = Sale value - ( Partner's share * Fair market value )
Brooke contributed the land, the gain realized before the land was contributed = $120,000 - $90,000 will be allocated entirely to her. She will also be allocated 40% of the gain after the contribution was made = ($150,000 - $120,000) x 40% = $30,000 x 40% = $12,000.
So the total gain recognized by Brooke will be $90,000 + $12,000 = $102,000.
Partnerships are pass through entities, the partners are taxed, not the partnership itself.
The average starting salary for this year's graduates at a large university (LU) is $20,000 with
a standard deviation of $8,000. Furthermore, it is known that the starting salaries are normally
distributed.
a. What is the probability that a randomly selected LU graduate will have a starting salary
of at least $30,400? (3 marks)
b. What is the probability that a randomly selected LU graduate will have a salary of
exactly $30,400? (2 marks)
c. Individuals with starting salaries of less than $15600 receive a low income tax break.
What percentage of the graduates will receive the tax break? (2 marks)
d. If 189 of the recent graduates have salaries of at least $32240, how many students
graduated this year from this university? (3 marks)
Answer:
a) The probability that a randomly selected LU graduate will have a starting salary of at least $30,400 = P(x ≥ 30400) = 0.0968
b) The probability that a randomly selected LU graduate will have a salary of exactly $30,400 = 0.000021421
c) Percentage of students that will receive a tax break = 29.12%
d) Total Number of graduates this year = 3,000
Explanation:
This is a normal distribution problem with
Mean = μ = $20,000
Standard deviation = σ = $8,000
a) The probability that a randomly selected LU graduate will have a starting salary of at least $30,400 = P(x ≥ 30400)
We first normalize or standardize $30,400
The standardized score for any value is the value minus the mean then divided by the standard deviation.
z = (x - μ)/σ = (30400 - 20000)/8000 = 1.30
The required probability
P(x ≥ 30400) = P(z ≥ 1.30)
We'll use data from the normal probability table for these probabilities
P(x ≥ 30400) = P(z ≥ 1.30) = 1 - P(z < 1.30)
= 1 - 0.90320
= 0.0968
b) The probability that a randomly selected LU graduate will have a salary of exactly $30,400
Here, we will use the normal distribution formula. The normal distribution formula is presented in the attached image
P(X = x) = f(x) = [1 ÷ σ√(2π)] × e^(-0.5z²)
x = $30,400
σ = $8,000
z = 1.30
P(X = 30400) = f(30400) = 0.000021421
c) Individuals with starting salaries of less than $15600 receive a low income tax break.
What percentage of the graduates will receive the tax break?
Required probability = P(x < 15600)
We first normalize or standardize $15,600
z = (x - μ)/σ = (15600 - 20000)/8000 = -0.55
The required probability
P(x < 15600) = P(z < -0.55)
We'll use data from the normal probability table for these probabilities
P(x < 15600) = P(z < -0.55)
= 0.29116 = 29.116% = 29.12%
d) If 189 of the recent graduates have salaries of at least $32240, how many students
graduated this year from this university?
We first find the percentage of LU graduates with salaries more than $32240
Required probability = P(x ≥ 32240)
We first normalize or standardize $32,240
z = (x - μ)/σ = (32240 - 20000)/8000 = 1.53
The required probability
P(x ≥ 32240) = P(z ≥ 1.53)
We'll use data from the normal probability table for these probabilities
P(x ≥ 32240) = P(z ≥ 1.53) = 1 - P(z < 1.53)
= 1 - 0.93699
= 0.06301 = 6.301%
So, 6.301% of the graduates this year = 189
Total Number of graduates this year = (189/0.06301) = 2999.5 = 3000 graduates this year.
Hope this Helps!!!
Money's power to buy goods and services changes ________.
Answer:
...with rates of inflation.
Explanation:
The more that a particular currency appears in the market without any work (value) being associated with that currency, the smaller the value of that particular form of currency (For example, the U.S. dollar). When inflation is high, banks will increase interest rates on loans in order to get rid of some of the of the surplus currency in the market, bringing down inflation and increasing the total value of a particular form of currency.
Which of the following statement(s) is(are) true regarding municipal bonds? I) A municipal bond is a debt obligation issued by state or local governments. II) A municipal bond is a debt obligation issued by the federal government. III) The interest income from a municipal bond is exempt from federal income taxation. IV) The interest income from a municipal bond is exempt from state and local taxation in the issuing state.
Answer:
I, III and IV Only.
Explanation:
A municipal bond is explained to be a debt obligation issued by a nonprofit organization, a private-sector corporation or another public entity using the loan for public projects such as constructing schools, hospitals and highways.
A municipal bond is categorized based on the source of its interest payments and principal repayments. A bond can be structured in different ways offering various benefits, risks and tax treatments. Income generated by a municipal bond may be taxable.
Answer: I) A municipal bond is a debt obligation issued by state or local governments.
III) The interest income from a municipal bond is exempt from federal income taxation.
IV) The interest income from a municipal bond is exempt from state and local taxation in the issuing state.
Explanation:
A municipal bond is usually a debt security issued by a state, or local government to finance its capital expenditures, which usually includes the construction of Roads, Bridges or Institutions( schools ). They can be considered as loans that an investor gives to local governments. This kind of bonds are exempted from federal taxes and most state and local taxes, Which makes them very attractive to interested individuals who are on high income tax brackets.
elb Company currently manufactures 50,000 units per year of a key component for its manufacturing process. Variable costs are $2.95 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $61,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.90 per unit. Calculate the total incremental cost of making 50,000 units and buying 50,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier
Answer: Please refer to Explanation
Explanation:
Incremental Cost of Making Product
Variable costs are $2.95 per unit and 50,000 units are to be made. Total Variable Cost is therefore,
= 2.95 * 50,000
= $147,500
Fixed costs associated with the production are$ 67,000 so added tl the variable costs is,
= 147,500 + 67,000
= $214,500
$214,500 is the cost making the product.
Cost of Buying Product
Component can be bought for $3.90 per unit. 50,000 units to be bought gives,
= 50,000 * 3.9
= $195,000
Cost of buying is $195,000
Decision
Company should buy the component as it spends less in buying it than I making it.
Note - Allocated fixed costs were not included in calculation because they will be there regardless of the decision. Hence the term, incremental costs.
Answer:
elb Company
a) Incremental Cost of making 50,000 units:
Variable costs = $2.95 x 50,000 = $147,500
Avoidable fixed costs = $67,000
Total = $214,500
b) Incremental Cost of buying 50,000
Buy-in costs =- $3.90 x 50,000 = $195,000
c) The company should buy this component from the outside supplier.
Explanation:
In make or buy decisions, only variable and avoidable costs are taken into consideration. Unavoidable fixed costs are sunk costs which must be incurred irrespective of the choice made.
Therefore, the unavoidable allocated fixed costs of $61,500 should not be taken into consideration. Afterall, no matter the decision, it would still be incurred and allocated.
If the government set a price ceiling of $40, there would be: Group of answer choices a shortage (or excess supply) of about 8 units a shortage (or excess supply) of about 12 units a surplus (or excess demand) of about 8 units a surplus (or excess demand) of about 12 units
Answer:
A surplus (or excess demand) of about 8 units
Explanation:
The picture attached shows the diagram necessary for the question which is part of the question. Solution is given below;
At the above ceiling at price of 40$
Quantity supplied will be 16
Quantity demanded will be 24
So when demand is more than supply than there will be a shortage in quantity by (24-16) 8 units.
When there is demand more than supply than it is an excess demand.
So surplus or excess demand by 8 units.
Suppose that SoS sells both versions and wants to charge different prices for different versions. What is the highest price of the bluetooth version for the high-valuation buyers? (Hint: Since low-valuation buyers will not have an incentive to buy the more expensive version, the highest price of the stripped-down version for the low-valuation buyers is equal to their willingness to pay, i.e., pL = $250)
Answer:
Check the explanation
Explanation:
Since the high valuation customers are willing to pay $500 for the Bluetooth headphones, that price should be set for the Bluetooth versions. The problem will arise if the high valuation customers shift to the stripped down version as well. However, since they care for the Bluetooth versions and stripped down versions separately, it is highly likely that they will prefer the Bluetooth headphones.
So the highest price that can be set for the Bluetooth headphones for the high value buyer will be $500.
5) If the price is set at $500 for high value customers and $250 for low value customers, total profit can be given as
Profit = 1,000,000 * (250 - 100) + 800,000 * (500 - 100)
Profit = 150,000,000 + 320,000,000 = $470 million
At the beginning of 20D, Braga Company had office supplies inventory of $800. During 20D, the company purchased office supplies amounting to $2,500 (paid for in cash and debited to office supplies inventory). At December 31, 20D, the end of the accounting year, a count of office supplies still on hand reflected $500. The adjusting entry Braga Company will record on December 31, 20D to adjust the office supplies inventory account would include a A) debit to office supplies expense for $2,800. B) debit to office supplies inventory for $2,800. C) debit to supplies expense for $2,500. D) credit to office supplies inventory for $500.
Answer:
A) debit to office supplies expense for $2,800
Explanation:
When Supplies is purchased, Debit supplies and credit Cash/Accounts payable. As Supplies are used up, debit supplies expense (with the amount used) and Credit Supplies account.
The movement in the balance of supplies at the start and end of a period is as a result of usage and purchases. While usage reduces the balance in supplies, purchases increases the balance. This may be expressed mathematically as
Opening balance + purchases - units used = closing balance
Hence,
$800 + $2500 - amount used = $500
amount used up = $800 + $2500 - $500
= $2800
On November 1, 2018, Green Valley Farm entered into a contract to buy a $150,000 harvester from John Deere. The contract required Green Valley Farm to pay $150,000 in advance on November 1, 2018. The harvester (cost of $110,000) was delivered on November 30, 2018. The journal entry to record the contract on November 1, 2018 includes a Group of answer choices a) credit to Accounts Receivable for $150,000 b) credit to Sales Revenue for $150,000. c) credit to Unearned Sales Revenue for $150,000. d) debit to Unearned Sales Revenue for $150,000.
Answer:
d) debit to Unearned Sales Revenue for $150,000
Explanation:
Green Valley Farm Journal entry
Dr Unearned Sales Revenue 150,000
Cr Sales Revenue150,000
Dr Cost of Goods Sold 110,000
Cr Inventory110,000
Therefore the journal entry to record the contract on November 1, 2018 is debit to Unearned Sales Revenue for $150,000
The CFO’s objective is to make certain that the capital consumed in farming is renewed and that the farm remains efficient, utilizing the best technology and equipment appropriate for its competitive situation. How would you expect the CFO to calculate depreciation expense?
Explanation:
Since the CFO wants the company to be competitive in the Industry he has to upgrade the machines and equipment in time when a new technology hits the market. which makes the company to increase the depreciation expense and write of the asset as early as possible.
The members of the farm is sharing the profits and assumes no other way of remuneration or incentive, Hence there will not be any opposition in charging higher depreciation.
So it is suitable for the company to claim depreciation on Straight Line method or Double Decline method which will amortize the capital expense early.
Beeman Company exchanged machinery with an appraised value of $3,538,500, a recorded cost of $5,435,000 and accumulated depreciation of $2,717,500 with Lacey Corporation for machinery Lacey owns. The machinery has an appraised value of $3,358,500, a recorded cost of $6,430,000, and accumulated depreciation of $3,536,500. Lacey also gave Beeman $180,000 in the exchange. Assume depreciation has already been updated. Prepare the entries on both companies' books assuming that the exchange had commercial substance. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Answer:
Check the explanation
Explanation:
a.) Commercial Substance :
Beeman Machinery........................................................................Dr. 3,390,000
Cash............................................................................................Dr. 120,000
Accumulated Depreciation of Machinaery...............................................2,700,000
Gain on Disposal of Machinary..............................................................810,000
Machinery...........................................................................................5,400,000
Working:
Cost............................. 5,400,000
Accumulated Dep............ 2,700,000
Book Value......................................2,700,000
Face Value......................................3,510,000
Gain...............................................$ 810,000
Lacey machinery.......................................................Dr. 3,510,000
Accum Dep of Machinery...........................................Dr. 3,564,000
Gain on Disposal of Machinery.....................................474,000
Machinery.................................................................6,480,000
Cash.........................................................................120,000
b.) No Commercial Substance
Beeman Machinery.........................................................................Dr. 2,607,692
Cash.............................................................................................Dr. 120,000
Accumulated Depreciation - Machinery.............................................Dr.2,700,000
Gain on Disposal of Machinery...................................................27,692
Machinery................................................................................5,400,000
$ 120,000 / ( $ 120,000 + $ 3,390,000 ) * $ 810,000 = $ 27,692
Lacey Machinery...................................................................................Dr. $ 3,036,000
Accumulated Depreciation - Machinery...................................................Dr. $ 3564,000
Machinery...............................................................................6,480,000
Cash......................................................................................120,000
Apple Inc. designs, manufactures, and markets personal computers and related software. Apple also manufactures and distributes music players (iPod) and mobile phones (iPhone) along with related accessories and services, including online distribution of third-party music, videos, and applications. The following information was taken from a recent annual report of Apple: Property, Plant, and Equipment (in millions): Current Year Preceding Year Land and buildings $ 6,956 $ 4,863 Machinery, equipment, and internal-use software 37,038 29,639 Other fixed assets 5,263 4,513 Accumulated depreciation and amortization (26,786) (18,391)
a. Compute the book value of the fixed assets for the current year and the preceding year. Current year book value (in millions) $ Preceding year book value (in millions) $ A comparison of the book values of the current and preceding years indicates that they increased . A comparison of the total cost and accumulated depreciation reveals that Apple purchased $ million of additional fixed assets, which was offset by the additional depreciation expense of $ million taken during the current year.
b. Would you normally expect Apple's book value of fixed assets to increase or decrease during the year?
Answer:
Explanation:
current year($) preceeding year($)
Land and building 6956 4863
Machinery ,equipment 37038 29639
internal-use software
Other fixed asset 5263 4513
Total asset 49257 39015
less:Accumulated depreciation -26786 -18391
and amortization
Book value 22471 20624
Additional fixed asset purchased : 49257 - 39015 = 10242 million
Depreciation : 26786 - 18391 = 8395
b) It is generally expected that apple fixed asset will increase as it requires latest fixed asset and technology for its manufacturing process.
Companies within the oneworld, Star, and Sky Team alliances have also engaged in major mergers and acquisitions (M&A): American and US Air (oneworld), Delta and Northwest (Sky Team), and Continental and United (Star). What are the advantages and disadvantages of M&A versus non-equity alliances in this industry? 15-4. Some airlines, such Daniels, John. International Business (p. 425). Pearson Education. Kindle Edition.
Answer:
Check the explanation
Explanation:
Merger and acquisition. It is a general terminology used to mention consolidation of firms merger that takes place when two businesses join together to form a new organization.
While Acquisition is the buying of one firm by another company.
The following are the benefits of merger and acquisition in the airlines industry:
• Executes economies of scale
• Help obtain coordination effect
• Competitors restriction
• Improved resources allocation
The following are the drawbacks of merger and acquisition in the airlines industry:
• Cultural mismatch among companies during merger
•Antitrust
• Placing risk of acquired workers
The R-Bar-M Ranch in Montana would like a new mechanized barn, which will require a GH¢600,000 initial cash outlay. The barn is expected to provide after-tax annual cash savings of GH¢90,000 indefinitely (for practical purposes of computation, forever). The ranch, which is incorporated and has a public market for its stock, has a weighted average cost of capital of 14.5 percent. For this project, Mark O. Witz, the president, intends to provide GH¢200,000 from a new debt issue and another GH¢200,000 from a new issue of common stock. The balance of the financing would be provided internally by retaining earnings. The present value of the after-tax flotation costs on the debt issue amount to 2 percent of the total debt raised, whereas flotation costs on the new common stock issue come to 15 percent of the issue. What is the net present value of the project after allowance for flotation costs? Should the ranch invest in the new barn?
Answer:
The Net present value of the project after allowance for flotation costs is - GH¢18,686.10 .
The ranch should not invest in the new barn becuase The NPV is negative.
Explanation:
According to the given data Outflows are as follows:
Initial outlay = GH¢600,000
Flotation cost:
Debt after tax flotation cost in % = 2%
Debt flotation cost = GH¢200,000 / (100% - 2%) * 2% = GH¢4,081.633
Equity flotation cost in % = 15%
Equity flotation cost = GH¢200,000 / (100% - 15%) * 15% =GH¢35,294.118
Total flotation costs = GH¢4,081.633 + GH¢35,294.118 = GH¢39,375.751
According to the given data Inflows are as follows:
Expected to generate perpetual after tax annual cash savings = $90,000
WACC = 14.5%
Present Value of inflows = Perpetual after tax annual cash savings / WACC = GH¢90,000 / 14.5% = GH¢620,689.655
Therefore, to calculate the Net present value of the project after allowance for flotation costs we would have to make the following calculation:
Net present value of the project after allowance for flotation costs = GH¢620,689.655 - GH¢600,000 - GH¢39,375.751 = - GH¢18,686.10
The Net present value of the project after allowance for flotation costs is - GH¢18,686.10
The ranch should not invest in the new barn becuase The NPV is negative.
The ability to think strategically is a critical element for any organization to compete successfully and build the necessary competitive advantage needed for sustained superior performance. Managers and business leaders will be asked to make critical business decisions that will determine the future of the organization. Discuss how the business simulation will contribute to the development of these skills. What value can a new employee with the ability to think strategically bring to an organization? How do you intend to develop these skills over the length of the class?
Answer:
Answer 1:
A business reenactment is a domain that demonstrates sensible serious circumstances to pioneers in a setting where they stand up to jobs and have introduction to the all display. Members settle on choice without genuine dangers, giving them an encounter of basic interdependencies, to implement best practices, and test the devices they can representative to increase their organization's key execution pointers.
They are a magnificent instrument for incite instinct about cooperation’s among the factors that direct hierarchical presentation, additionally give a organized composite condition inside which pioneers can test, without chance and to comprehend cause-impact communications among factors. The bit of leeway with deference genuine world is they can attempt again in the event that they committed errors the first run through
Answer 2:
Extraordinary worth. Think deliberately is a key ability so as to increment authoritative execution, this capacity give a significant device to bargain settle on choices process every day, on the grounds that individuals can envision impacts of their own decisions in a sensible degree. It is definitely an important condition for advancement of developing pioneers.
Answer 3:
The thought is to manufacture huge mental models that fill in as a structure to effectively confront future circumstances.
The student-run newspaper asks students to visit a web page and respond to questions regarding a proposed tuition increase. Only responses to the questions are recorded. Summary statistics based on the survey responses are used in an article published the following week, and no one outside of the newspaper has access to the individual responses. The newspaper's survey is considered to be A) confidential. B) anonymous. C) both anonymous and confidential. D) neither anonymous nor confidential.
Answer:
C) both anonymous and confidential
Explanation:
As the student-run, the new paper and ask other students to visit a link firm the new paper and respond to those questions and the responses for only those questions were recorded. This indicates that the newspaper survey is anonymous and confidential as the ant student can fill the survey and the information that is confidential as none outside the newspaper has access to those responses.Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 7.6 ounces $ 4.00 per ounce $ 30.40 Direct labor 0.5 hours $ 10.00 per hour $ 5.00 Variable overhead 0.5 hours $ 5.00 per hour $ 2.50 The company reported the following results concerning this product in June. Originally budgeted output 3,000 units Actual output 3,100 units Raw materials used in production 20,000 ounces Purchases of raw materials 17,400 ounces Actual direct labor-hours 470 hours Actual cost of raw materials purchases $ 45,000 Actual direct labor cost $ 13,000 Actual variable overhead cost $ 3,400 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for June is:
Answer:
Variable overhead rate variance $1,050 unfavorable
Explanation:
Variable overhead rate variance is the difference between the standard variable overhead cost allowed for the actual hours worked and the actual variable overhead incurred for the period
$
470 hours should have cost (470× $ 5.00) 2,350
but did cost 3,400
Variable overhead rate variance 1050 unfavorable
Variable overhead rate variance $1,050 unfavorable
The area manager of the Red, White, and Brew Restaurants is considering two possible expansion alternatives. The required investments, expected controllable margins, and the ROIs of each are as follows:
Project Investment Controllable Margin ROI
Phoenix $120,000 $30,000 25%
Chicago $540,000 $50,000 9.25%
The Red, White, and Brew segment has currently $2,000,000 in invested capital and a controllable margin of $250,000.
1. Which one of following projects will increase the Red, White, and Brew division’s ROI?
O Both the Phoenix and Chicago optionsO Only the Phoenix optionO Only the Chicago optionO Neither the Phoenix nor the Chicago options
Answer:
Only the Phoenix
Explanation:
According to the scenario, computation of the given data are as follow:-
ROI of Red, White And Brew Segment = Controllable Margin ÷ Total Investment × 100
$250,000 ÷ $2,000,000 × 100 = 12.5%
ROI of Phoenix = 25%
ROI of Chicago = 9.25%
So only phoenix will increase the red, white and brew division’s ROI, Because Chicago ROI is less than ROI of Red, White and Brew Segment.
Mercury Company reports depreciation expense of $49,000 for Year 2. Also, equipment costing $168,000 was sold for its book value in Year 2. There were no other equipment purchases or sales during the year. The following selected information is available for Mercury Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $ 655,000 $ 823,000 Accumulated Depreciation-Equipment 464,000 545,000 Multiple Choice $49,000. $87,000. $38,000. $81,000. $40,500.
Answer:
The cash received from sale is $38000
Explanation:
We first need to calculate the book value of the equipment that is sold.
Book value = Cost - Accumulated depreciation
The accumulated depreciation on the equipment sold can be calculated by calculating the change in overall accumulated depreciation. Using the following equation to calculate the closing balance of accumulated depreciation, we can calculate the accumulated depreciation for the equipment that is sold.
Closing balance = Opening balance + Depreciation expense for the year - Accumulated depreciation on the asset disposed
Let Accumulated depreciation on the asset disposed be x.
464000 = 545000 + 49000 - x
x = 594000 - 464000
x = 130000
Thus, the book value of the asset sold was,
Book value = 168000 - 130000 = $38000
As the asset is sold for its book value, the cash received from sale is also $38000
On June 30, 2021, Moran Corporation issued $13.5 million of its 8% bonds for $12.2 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2021. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2021?
Answer:
$70,000
Explanation:
Moran Corporation
Semiannual interest paid on 31 Dec 2021
= $13,500,000*8%*6/12
= $540,000
Therefore If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2021 will be $70,000
Effective interest expense on 31 Dec.2021
= $12,200,000 * 10% * 6/12
= $610,000
Bond discount to be reduced for 6 months ended 31 Dec 2021
= $610,000 - $540,000
= $70,000
