a. Four different ways to connect to the Internet are:
Ethernet cable
Wi-Fi
DSL (Digital Subscriber Line)
Mobile data (3G, 4G, 5G)
b. Advantages and disadvantages of Wi-Fi:
Advantage: Wi-Fi provides wireless connectivity, allowing for flexibility and mobility in accessing the Internet from different devices within the range of the network.
Disadvantage: Wi-Fi signals can be susceptible to interference from other devices or obstacles, leading to potential signal degradation and slower speeds.
c. Search Engine Interpretation:
i. "virus -Covid19": The search results will likely focus on computer viruses, malware, and related topics, excluding any results related to the Covid-19 virus.
ii. "~auto loan": The search results will include variations of the term "auto loan" such as car loan, vehicle financing, etc.
iii. "bread * butter": The search results will include phrases or expressions containing the words "bread" and "butter," where the asterisk (*) acts as a wildcard to represent any word or words between them.
d. Intranet: An intranet is a private network that uses Internet technologies to securely share information, resources, and communication within an organization. It is accessible only to authorized individuals within the organization and is used for internal purposes such as document sharing, collaboration, and internal communication.
An intranet provides a controlled and secure environment for employees to access company information and resources while restricting access from external sources. It helps improve efficiency, knowledge sharing, and communication within the organization.
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If demand shifts outward in a perfectly competitive decreasing cost industry operating in the long-run then, as we adjust to the new long-run equilibrium, we would expect the price to a) rise as as quantity falls O b) rise as quantity rises c) fall as quantity falls d) fall as quantity rises O e) rise but the change in quantity will be ambiguous
In a perfectly competitive decreasing cost industry operating in the long-run, if demand shifts outward then as we adjust to the new long-run equilibrium, we would expect the price to fall as quantity rises (option d).
In a perfectly competitive decreasing cost industry, the cost of production per unit of output decreases as the number of units produced increases. This is because the firm gains experience and becomes more efficient with every unit of output they produce.What is long-run equilibrium?Long-run equilibrium is the state of equilibrium that exists when supply and demand have adjusted fully to all market shocks, including changes in consumer preferences, technology, input prices, and government policies. In this state, all firms in the market earn only normal profits.
Normal profit is the minimum amount of profit that a firm requires to remain in business.How does the change in demand affect long-run equilibrium?If demand shifts outward in a perfectly competitive decreasing cost industry operating in the long-run, then it will lead to an increase in the equilibrium price and quantity in the short run. This, in turn, will lead to an increase in the number of firms entering the market. As the number of firms increases, the industry supply curve will shift to the right, causing the equilibrium price to fall, and the equilibrium quantity to rise in the long run. The correct option is d.
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Create or identify an emerging opportunity in an existing industry or some undeveloped sector of the business world.
An emerging opportunity lies in the integration of artificial intelligence (AI) and healthcare, enabling personalized medicine, remote patient monitoring, and improved diagnostic accuracy, revolutionizing the healthcare industry.
The integration of artificial intelligence (AI) in the healthcare industry presents a significant emerging opportunity. AI has the potential to revolutionize healthcare by enabling personalized medicine, remote patient monitoring, and improving diagnostic accuracy. With the massive amount of healthcare data available, AI algorithms can analyze patient information to identify patterns, predict disease progression, and recommend tailored treatments. This integration can lead to more effective and efficient healthcare delivery, reduced costs, and improved patient outcomes.
Additionally, AI-powered wearable devices and remote monitoring systems can enable proactive and continuous patient care, reducing hospitalizations and improving patient convenience. The combination of AI and healthcare holds immense potential for transforming the industry and improving overall healthcare experiences.
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A company offers iD theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads. at a pay rate of $18 per hour per employee. Each employee identifies an average of 4,000 potential leads a week from a list of 4,900 . An average of 9 percent of potential leads actually sign up for the service. paying a one-time fee of $80. Material costs are $1,200 per week, and overhead costs are $9,200 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input. (Round your answer to 2 decimal places.)
The multifactor productivity for the operation can be calculated by dividing the fees generated by the input costs. Therefore, the multifactor productivity for this operation in fees generated per dollar of input is 2.30.
To calculate the multifactor productivity, we need to determine the total fees generated and the total input costs. The total fees generated can be calculated by multiplying the number of signed-up leads by the one-time fee per lead. In this case, 9 percent of the potential leads sign up, so the number of signed-up leads is 0.09 multiplied by 4,000, resulting in 360 signed-up leads. Multiplying this by the one-time fee of $80 gives us a total fee generated of $28,800.
The total input costs include the wages of the three employees, material costs, and overhead costs. The weekly wages for each employee are $18 per hour multiplied by 40 hours, resulting in $720 per employee. Since there are three employees, the total wages for the employees amount to $2,160 per week. Adding the material costs of $1,200 per week and the overhead costs of $9,200 per week, the total input costs are $12,560 per week. Finally, to calculate the multifactor productivity, we divide the total fees generated ($28,800) by the total input costs ($12,560). The result is approximately 2.30, which means that for every dollar of input cost, the operation generates $2.30 in fees.
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Martin Corporation, the maker of a variety of rubber products, is in the midst of a business downturn and has many idle facilities. Nationwide Tire Company has approached Martin to produce 300,000 oversized tire tubes for $2.40 each.
Martin predicts that its variable costs will be $2.60 each. Its fixed costs, which had been averaging $2.00 per unit on a variety of products, will now be spread over twice as much volume. The president commented, "Sure we will lose $.20 each on the variable costs, but we will gain $1 per unit by spreading our fixed costs over more units. Therefore, we should take the offer because it would gain us $.80 per unit."
Martin currently has a volume of 300,000 units, sales of $1,200,000, variable costs of $780,000, and fixed costs of $600,000.
Required:
a. Compute the impact on operating profit if the special order is accepted.
b. Based on your calculations, explain why you agree or do not agree with the president.
c. Would it be beneficial for Martin to take a loss on this order if it desires to enter this market? Briefly discuss.
The company would incur a loss of $20,000 if they accept the order. Contrary to the president's claim, spreading fixed costs over more units does not compensate for the loss incurred on variable costs.
To calculate the impact on operating profit, we need to compare the current situation with the acceptance of the special order. Currently, Martin Corporation has sales of $1,200,000, variable costs of $780,000, and fixed costs of $600,000, resulting in an operating profit of $1,200,000 - ($780,000 + $600,000) = $180,000.
If Martin accepts the special order for 300,000 oversized tire tubes at a price of $2.40 each, the variable costs per unit would be $2.60, resulting in an additional loss of ($2.60 - $2.40) × 300,000 = $60,000 on variable costs alone. The additional units would spread the fixed costs of $600,000 over a total volume of 600,000 units. Therefore, the impact of spreading fixed costs would be ($600,000 ÷ 600,000) × 300,000 = $300,000.
Taking these factors into account, the operating profit from accepting the special order would be $1,200,000 - ($780,000 + $600,000 + $60,000 - $300,000) = -$40,000, resulting in a loss of $40,000.
Contrary to the president's claim, accepting the special order would lead to a loss rather than a gain. The $1 per unit gained from spreading fixed costs does not compensate for the loss of $0.20 per unit on variable costs. The decision should be based on profitability, and in this case, the special order would negatively impact Martin Corporation's operating profit.
If Martin desires to enter this market, it would not be beneficial to take a loss on this specific order. Taking a loss on the initial order may lead to a poor reputation, setting a precedent for future negotiations. It is crucial to consider the long-term profitability and sustainability of entering the market. Martin should evaluate other strategies such as negotiating a higher price with Nationwide Tire Company to cover the variable costs and generate a profit, or exploring alternative market opportunities with more favorable profit margins.
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Security needs to be able to handle the following situations: • Exposure of non-sensitive payroll and benefits data between employees • Loss of sensitive personnel data ie: Social Security numbers • Authorized updates of key data ie: salaries • Sharing of personnel review comments with unauthorized employees • Sharing data internally O True O False
True. Security measures need to be in place to handle the mentioned situations:
- Exposure of non-sensitive payroll and benefits data between employees: While non-sensitive data may not pose significant risks, it is still important to ensure that access to such data is limited to authorized employees only, preventing unauthorized exposure or misuse.
- Loss of sensitive personnel data (e.g., Social Security numbers): Sensitive data such as Social Security numbers requires robust security measures to protect against data breaches and unauthorized access. This includes encryption, access controls, secure storage, and monitoring systems to detect and respond to any security incidents.
- Authorized updates of key data (e.g., salaries): To maintain data integrity and prevent unauthorized changes, security mechanisms should be in place to ensure that only authorized individuals can update key data such as salaries. Access controls, user authentication, and proper authorization processes are necessary to prevent unauthorized modifications.
- Sharing of personnel review comments with unauthorized employees: Confidential personnel review comments should only be accessible to authorized individuals involved in the review process. Security controls should be implemented to prevent unauthorized sharing or access to such sensitive information.
- Sharing data internally: While data sharing within an organization is necessary, security measures should be in place to ensure that data is shared securely and only with authorized individuals or departments. Access controls, user permissions, and data classification policies can help protect sensitive information and prevent unauthorized internal data sharing.
Therefore, security measures are essential to handle these situations and mitigate risks associated with the exposure, loss, or unauthorized access of sensitive personnel data.
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An important requirement that is common to the SEC rules for investment advisors and the CFP Board’s Code of Ethics is:
Question 33 options:
A ban on "soft dollars"
Full Disclosure of all material information to clients
A ban on accepting commissions
Rules for custody of assets under management
An important requirement that is common to the SEC rules for investment advisors and the CFP Board’s Code of Ethics is full disclosure of all material information to clients.
The Securities and Exchange Commission (SEC) rules for investment advisers and the Certified Financial Planner (CFP) Board’s Code of Ethics share many common requirements.
Both require that investment advisers and CFP professionals act with their clients’ best interests in mind, avoid conflicts of interest, and communicate effectively with clients.
These rules also require full disclosure of all material information to clients in order to allow clients to make informed investment decisions.
In conclusion, the correct answer is Full Disclosure of all material information to clients.
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Arlington Town uses an Internal Service Fund to account for its motor pool
activities. You have the following information:
Automobiles: The Motor Pool uses two 6-passenger vans, each costing $45,000
and each estimated to have a 5-year life when they were acquired in 2020.
Driver salaries: The Motor Pool has a driver-administrator, who earns $45,000
a year, and a driver, who earns $35,000.
The town uses a rate of 30 percent (to cover benefits, including pensions)
for planning purposes.
Insurance: In 2020, the town purchased a 3-year automobile accident policy
at a cost of $6,000.
Fuel and maintenance costs: Based on experience, the driver-administrator
estimates that total fuel and maintenance costs for the year will be $8,000.
Billing units: To simplify its record keeping, the Motor Pool charges a fixed price
per trip. Arlington’s budget office estimates it will provide 800 trips to the
town’s departments in 2021.
Arlington Town had the following transactions and events during January 2021:
1. Paid salaries for the month in cash. (Driver-administrator and driver)
2. Paid $600 cash for fuel and maintenance expenses
3. Recorded depreciation expense for the month.
4. Accrued benefits expense for the month
5. Recorded insurance expense for the month
6. Billed for motor vehicle services as follows: General Fund, 80 trips;
Golf Course Enterprise Fund, 10 trips.
Using the information above, prepare journal entries for the January transactions.
The journal entries for the January transactions in Arlington Town's Internal Service Fund for motor pool activities are as follows:
1. To record payment of salaries:
Debit: Salaries Expense - Driver-Administrator
Debit: Salaries Expense - Driver
Credit: Cash
2. To record payment for fuel and maintenance expenses:
Debit: Fuel and Maintenance Expense
Credit: Cash
3. To record depreciation expense:
Debit: Depreciation Expense
Credit: Accumulated Depreciation - Automobiles
4. To accrue benefits expense:
Debit: Benefits Expense
Credit: Accrued Benefits Payable
5. To record insurance expense:
Debit: Insurance Expense
Credit: Prepaid Insurance
6. To record billing for motor vehicle services:
Debit: Accounts Receivable - General Fund
Debit: Accounts Receivable - Golf Course Enterprise Fund
Credit: Service Revenue
Note: The specific amounts for each transaction are not provided in the question, so the journal entries are based on the given information and the nature of the transactions. Please insert the appropriate dollar amounts based on the actual figures.
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Many years ago. Castles in the Sand incorporated issued bonds at face value at a yleld to maturity of 8.2%. Now. with 7 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 15%. What is now the price of the bond? (Assume semiannual coupon payments.) Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. Suppose that investors belleve that Castles can make good on the promised coupon payments but that the company will go bankrupt when the bond matures and the ptincipal comes due. The expectation is that investors will receive only 85% of face value at maturity. If they buy the bond today, what yield to maturity do they expect to receive? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
Calculation of the price of the bond. Calculate Present value of face value,
P =[tex]$1000/(1+0.15/2)¹⁴[/tex]
= [tex]$282.63[/tex].
Calculate present value of semiannual coupon payments,
C = $1000 × (8.2%/2)
= $41Price of the bond
= [tex]P + C × [1 - 1/(1+0.15/2)¹⁴]/(0.15/2)[/tex]
Price of the bond
= [tex]$282.63 + $41 × 8.1924[/tex]
= [tex]$618.21b.[/tex]
Calculation of the expected yield to maturity. Price of the bond
= $525.48Coupon payments
=[tex]$1000 × (8.2%/2)[/tex]
= $41Expected yield to maturity is the IRR of the follow [tex]$41[/tex]wing cash flows, [tex]-$525.48 $41 $41 $41 $41 $41 $1041[/tex]Find IRR:
IRR = 14.26%The expected yield to maturity is 14.26%.
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QUESTION 2:
Chapter 3 identifies two political systems (democracy and totalitarianism). In one sentence, give the name of your country’s political system. In 7 to 10 sentences, explain your answer. Provide specifics about sweden
QUESTION 3:
Chapter 4 identifies three economic systems (market economy, command economy, and mixed economy). In one sentence, give Sweden's economic system. In 5 to 7 sentences, explain your answer. Provide specifics about Sweden.
Sweden's political system is a parliamentary constitutional monarchy, where the King is the ceremonial head of state and the Prime Minister is the head of government. It is a representative democracy with a multi-party system.
Sweden's political system is based on the principles of democracy, with power vested in the people through elected representatives. It is a parliamentary system where the government is formed by the party or coalition of parties that has the majority in the Parliament (Riksdag). The King serves as the ceremonial head of state, while the Prime Minister is the head of government and holds executive power.
Sweden's democracy is characterized by regular elections, freedom of speech, press, and association, and respect for human rights. The country has a strong tradition of political pluralism, with multiple political parties representing a wide range of interests and ideologies. The citizens have the right to participate in political decision-making processes through voting, public consultations, and engagement with political institutions.
The political system in Sweden ensures a separation of powers, with checks and balances between the legislative, executive, and judicial branches. The Parliament passes laws, the government implements policies, and the judiciary ensures the rule of law and safeguards individual rights.
Overall, Sweden's political system is a democratic constitutional monarchy, combining elements of representative democracy, constitutional monarchy, and parliamentary governance. It reflects the values of participation, accountability, and respect for fundamental rights and freedoms.
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Tax attributes can be defined as __________.
Carryforwards of credits and deductions that will either decrease taxable income or decrease tax liability in future years.
Deductions and credits available in the current year.
Deductions and credits occurring in the year following the cancellation of debt.
Carryforwards of credits and deductions that are eliminated completely when cancellation of debt has been excluded.
Tax attributes can be defined as carry forwards of credits and deductions that will either decrease taxable income or decrease tax liability in future years.
So the correct answer is option (A).
Tax attributes are defined as carry forwards of credits and deductions that will either decrease taxable income or decrease tax liability in future years. Tax attributes can also include deductions and credits available in the current year.Examples of tax attributes include net operating losses, capital loss carryforwards, and general business credit carryforwards. When a taxpayer generates losses or credits that exceed their taxable income in a given year, the unused portion of these losses or credits can be carried forward to future years to offset taxable income or reduce tax liability.Tax attributes are important for taxpayers who have undergone significant financial or structural changes, such as mergers or acquisitions, because these changes can impact the availability and use of tax attributes.
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The Bradford Company issued 10% bonds, dated January 1, with a face amount of $50 million on January 1, 2024 to Saxton-Bose Corporation. • The bonds mature on December 31, 2033 (10 years). For bonds of similar risk and maturity, the market yield is 12% • Interest is paid semiannually on June 30 and December 31. Required: Prepare the journal entries to record the purchase of the bonds by Saxton-Bose on January 1, 2024, interest revenue on June 30, 2024 and interest revenue on December 31, 2024 (at the effective rate).
Journal entry to record the purchase of the bonds by Saxton-Bose on January 1, 2024:
Debit: Investments in Bonds $50,000,000
Credit: Cash $50,000,000
This entry records the purchase of the bonds by Saxton-Bose Corporation.
Journal entry to record interest revenue on June 30, 2024:
Debit: Cash ($50,000,000 * 10% * 6/12) $2,500,000
Credit: Interest Revenue $2,500,000
This entry recognizes the interest revenue earned on the bonds for the period from January 1, 2024, to June 30, 2024, based on the face amount of the bonds, the interest rate, and the elapsed time.
Journal entry to record interest revenue on December 31, 2024 (at the effective rate):
Debit: Cash ($50,000,000 * 10% * 6/12) $2,500,000
Debit: Premium on Bonds Payable ($50,000,000 - Present value of future cash flows) $X
Credit: Interest Revenue $X
The exact amount of premium on bonds payable would depend on the present value of future cash flows, calculated using the market yield of 12% and the remaining term of the bonds. The interest revenue is recognized based on the effective interest rate, which takes into account the amortization of the premium over the bond's term.
Please note that the calculation of the premium and the interest revenue on December 31, 2024, requires additional information, such as the specific amortization schedule or the present value of future cash flows.
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A low-risk profitable firm intends to maintain its 60% dividend payout ratio into the future. It doesn't forecast any buybacks or equity raisings and is expected to always remain profitable. Over time, this firm's 'retained profits' on the balance sheet would be expected to: a. Grow. b. Remain unchanged. c. Remain unchanged d. Insufficient information.
The expected outcome is that the firm's retained profits on the balance sheet would grow over time. So, the correct option is {a}.
A low-risk profitable firm that intends to maintain its 60% dividend payout ratio into the future is expected to see its retained profits on the balance sheet grow over time.
Retained profits are the portion of earnings that a firm chooses to retain and reinvest in the business rather than distribute them as dividends to shareholders. By maintaining a consistent dividend payout ratio of 60%, the firm ensures that a significant portion of its earnings is retained.
As the firm remains profitable, it continues to generate excess earnings that can be reinvested back into the business. These retained earnings contribute to the growth of the firm's retained profits on the balance sheet. The retained profits represent the cumulative amount of earnings that have been retained over time.
By consistently reinvesting a portion of its earnings, the firm can finance future growth initiatives, such as expanding operations, acquiring new assets, or developing new products or services. This reinvestment of earnings enables the firm to enhance its competitiveness, increase its market share, and generate additional profits in the long run
Therefore, given the firm's low-risk profile, profitable nature, and commitment to maintaining a 60% dividend payout ratio, it can be expected that its retained profits on the balance sheet will grow over time. This growth in retained profits signifies the firm's ability to generate sustained profitability and reinvest in its own growth and success.
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The efforts to classify accounting in the international arena have many benefits. What are these benefits? And there exist different attempts in accounting classification over the years including the early one by Mueller that took place in the late 1960s. Choose one example of accounting classification and describe what it is and why do you think the one you choose is worthy of consideration of those who want to understand the existence of the different types of accounting practices or systems found at the international level.
Accounting classification refers to the categorization and grouping of accounting practices, principles, and standards based on various criteria.
Benefits of Accounting Classification in the International Arena:
Enhanced Comparability: Accounting classification allows for the grouping and categorization of accounting practices, making it easier to compare financial information across different countries and regions.
This promotes transparency and facilitates meaningful analysis and decision-making by investors, analysts, and other stakeholders.
Standardization and Harmonization: Classification efforts often lead to the development of common accounting standards or frameworks. This fosters harmonization of accounting practices, reducing complexity and costs for multinational companies and facilitating cross-border transactions.
Efficient Regulatory Oversight: Classification helps regulatory authorities understand the various accounting practices employed in different jurisdictions.
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K. Decker, S. Rosen, and E. Toso are forming a partnership. Decker is transferring $47,200 of personal cash to the partnership. Rosen owns land worth $19,200 and a small building worth $79,600, which she transfers to the partnership. Toso transfers to the partnership cash of $13,800, accounts receivable of $36,400, and equipment worth $16,200. The partnership expects to collect $32,760 of the accounts receivable. Prepare the journal entries to record each of the partners' investments.
To record each partner's investment, the following journal entries are needed:
1. Decker's Investment:
Debit: Cash - Decker's Capital ($47,200)
Credit: Decker's Capital ($47,200)
2. Rosen's Investments:
Debit: Land - Rosen's Capital ($19,200)
Building - Rosen's Capital ($79,600)
Credit: Rosen's Capital ($98,800)
3. Toso's Investments:
Debit: Cash - Toso's Capital ($13,800)
Accounts Receivable - Toso's Capital ($36,400)
Equipment - Toso's Capital ($16,200)
Credit: Toso's Capital ($66,400)
Note: Since the partnership expects to collect $32,760 of the accounts receivable, a subsequent adjustment entry is required:
4. Adjustment for Expected Collection of Accounts Receivable:
Debit: Accounts Receivable - Toso's Capital ($32,760)
Credit: Toso's Capital ($32,760)
These journal entries record the respective contributions of each partner to the partnership. Please note that the accounts used in the entries (e.g., Decker's Capital, Rosen's Capital, Toso's Capital) represent the individual capital accounts of the partners in the partnership's books.
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Given the above game identify the Nash equilibrium and the subgame perfect equilibria.
The Nash equilibrium in the given game is for both players to choose "Defect."
The Nash equilibrium in the given game refers to the outcome where neither player has an incentive to unilaterally deviate from their chosen strategy. In this case, the Nash equilibrium is for both players to choose the strategy of "Defect" as it yields the highest payoff for each player individually.
However, to determine the subgame perfect equilibrium, we need to consider not only the Nash equilibrium but also the optimal strategies at every stage of the game. Without specific information about the game and its structure, it is not possible to identify the subgame perfect equilibria.
Subgame perfect equilibrium requires that the strategies chosen not only constitute a Nash equilibrium at each stage of the game but also result in optimal play in every subgame. This concept is relevant in dynamic games with multiple stages or sequential moves, ensuring that players make rational decisions at each point in the game, taking into account future moves and payoffs.
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The earnings of Large Corporations are expected to grow at an annual rate of 14% over the next 5 years and then slow to a constant rate of 10% per year. The company currently pays a dividend of $0.36 per share. What is the value of the company’s stock to an investor who requires a 16% rate of return? If the stock has a market price of $15, do you buy it?
Given,The expected growth rate for the first five years (g1) = 14%The expected growth rate after five years (g2) = 10%Dividend per share (D) = $0.36.Investor’s required rate of return (R) = 16%Market price of the stock (P) = $15The direct explanation of the formula for the price of stock is as follows:P = D1/(R - g)Here, P = Stock PriceD1 = Expected dividend after one yearg = Expected growth rateR = Required rate of returnFirst, calculate the value of D1 = D × (1 + g1) = $0.36 × (1 + 0.14) = $0.4104Now, we have all the required values for P.P = D1/(R - g)P = $0.4104/(0.16 - 0.14)P = $20.52Hence, the value of the company's stock is $20.52 to an investor who requires a 16% rate of return.Since the market price of the stock is less than the calculated price of $20.52, it is better to buy the stock.
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Agency
1. Greg and Erin Downey sold their home and invested the net proceeds of $100,000 with Wayne Davis. They contacted him as he had previously placed their insurance and RRSPs with Manulife Financial and was known to them as a Manulife investment advisor. The Downeys were unaware that Davis had a non-exclusive agency agreement with Manulife, which provided that he could not bind Manulife without written authority. The Downeys gave Davis a cheque for $100,000 and Davis filled in the payee as Darwin Capital Corporation. The Downeys believed that they were investing in a Manulife product or one guaranteed by Manulife because they believed that Davis was a Manulife employee and sold only Manulife products. When the investment became due, the Downey received a cheque from Darwin Capital, which was dishonoured. It turned out that Darwin Capital was a sham, and the Downeys lost their
entire investment. In a subsequent legal action, Manulife was held liable for the Downey’s losses even though Davis was not an agent of Manulife and had no actual authority to bins Manulife.
On what basis do you think that Manulife was liable for the investment losses of the Downeys? What would the Downey’s have needed to establish to hold Manulife liable for their losses? Explain. How can companies like Manulife minimize the risk of liability for the actions of salespeople like Davis? How can companies gain the benefit that accrue from representation without incurring the risk of liability?
2. How may an Agency relationship be terminated?
In this case, Manulife was held liable for the investment losses of the Downeys based on the concept of apparent authority. The Downeys believed that Wayne Davis was a Manulife employee and that they were investing in a Manulife product or a product guaranteed by Manulife. This belief was reasonable because Davis had previously placed their insurance and RRSPs with Manulife, and they were unaware of the non-exclusive agency agreement between Davis and Manulife.
To hold Manulife liable for their losses, the Downeys would have needed to establish the following:
a) Reliance: They must show that they relied on the representations made by Davis regarding the investment and its association with Manulife.
b) Apparent authority: They must demonstrate that Manulife created the appearance of authority for Davis to act as their agent or that they allowed Davis to represent himself as their agent. This can be proven through the Downeys' belief that Davis was a Manulife employee and that they were investing in a Manulife product.
c) Detrimental reliance: The Downeys must show that they suffered a loss as a result of their reliance on Manulife's apparent authority, specifically the investment with Darwin Capital.
Companies like Manulife can minimize the risk of liability for the actions of salespeople by implementing certain measures:
a) Clear communication: Clearly communicate to clients the nature of the salesperson's relationship with the company, whether they are an employee, independent contractor, or non-exclusive agent.
b) Written authorization: Ensure that salespeople have written authority to bind the company and make it clear to clients when they have the authority to act on behalf of the company.
c) Training and supervision: Provide comprehensive training to salespeople on company policies, ethical conduct, and regulatory requirements. Regularly monitor and supervise their activities to ensure compliance.
To gain the benefits that accrue from representation without incurring the risk of liability, companies can:
a) Use clear disclaimers: Clearly state in contracts, agreements, or product documentation that salespeople are independent contractors or non-exclusive agents, and the company is not liable for their actions.
b) Provide accurate information: Ensure that all representations made by salespeople are accurate and consistent with the company's products and services.
c) Implement robust risk management procedures: Establish internal controls, risk assessment processes, and ongoing monitoring to detect and mitigate any potential risks associated with salespeople's actions.
An agency relationship can be terminated in several ways, including:
a) Mutual agreement: The principal and agent can mutually agree to terminate the agency relationship. This can be done through a written agreement or verbal understanding.
b) Expiration of the term: If the agency agreement has a specified duration, the relationship terminates automatically upon the expiration of that term.
c) Fulfillment of purpose: The agency relationship terminates when the purpose for which it was established has been accomplished or completed.
d) Revocation by the principal: The principal can unilaterally terminate the agency relationship by revoking the agent's authority. However, the principal may be required to provide reasonable notice and compensate the agent for any losses incurred as a result of the termination.
e) Renunciation by the agent: The agent can renounce or resign from the agency relationship by providing notice to the principal. Similar to revocation, the agent may be obligated to provide reasonable notice and fulfill any remaining obligations.
It's important to note that termination of an agency relationship does not absolve the parties from their pre-existing contractual obligations or liabilities incurred during the course of the agency.
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The payroll of Whispering Company for September 2019 is as follows. Total payroll was $486,000, of which $122,000 is exempt from Social Security tax because it represented amounts paid in excess of $128,400 to certain employees. The amount paid to employees in excess of $7,000 (the maximum for both federal and state unemployment tax) was $414,000. Income taxes in the amount of $85,000 were withheld, as was $8,800 in union dues. The state unemployment tax is 3.5%, but Whispering Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee's wages to $128,400 and 1.45% in excess of $128,400. No employee for Whispering makes more than $135,000. The federal unemployment tax rate is 0.8% after state credit. Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorded separately. (Round answers to O decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation ____ Debit ____Credit ____
The journal entries for Whispering Company's September 2019 payroll include recording the total payroll expenses, exempted Social Security tax, withheld income taxes, union dues, and employer payroll taxes.
To record the total payroll expenses:
Debit: Payroll Expense ($486,000)
Credit: Cash ($486,000)
To account for the exemption from Social Security tax:
Debit: Payroll Expense ($122,000)
Credit: Social Security Tax Payable ($122,000)
To record income taxes withheld:
Debit: Payroll Expense ($85,000)
Debit: Union Dues Expense ($8,800)
Credit: Federal Income Tax Payable ($93,800)
To record state unemployment tax expense and credit:
Debit: Payroll Expense ($414,000)
Credit: State Unemployment Tax Payable ($14,490)
Credit: State Unemployment Tax Credit ($9,522)
To record federal unemployment tax expense:
Debit: Payroll Expense ($414,000)
Credit: Federal Unemployment Tax Payable ($3,312)
The journal entries reflect the various components of the payroll expenses and the corresponding tax liabilities. The exemption from Social Security tax is recorded separately, while income taxes withheld and union dues are debited to the respective expense accounts. The state unemployment tax is calculated at a rate of 3.5%, but a credit of 2.3% is allowed based on Whispering Company's unemployment experience. The federal unemployment tax is recorded at a rate of 0.8% after considering the state credit. These entries ensure accurate recording and tracking of payroll expenses and associated taxes.
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Select a company and interview the owner/manager regarding their pricing strategies and methods. Report on your findings. Ideally, this will be your current company, but you may need to be resourceful and find a business owner or manager from another company who is willing to visit with you. Your goal is to discover the following:
What is the company's pricing objective? For this question, it would helpful to show the interviewee a list of the pricing objectives on page 489 with very brief descriptions.(I suggest that you either highlight the first 1-3 sentences under each objective and then show the interviewee the highlighted descriptions in your text OR simply retype them on another sheet of paper for use in the interview).
Do they have some target segments that are less price sensitive than others?
How much consideration does the company give to competitors' prices when setting their own?
What method of pricing do they use to arrive at the final price for the customer? For this question, you should be very familiar with the methods found under "Step 5" on pages 475-480 before the interview, but do not ask the interviewee to select from among them. Instead, simply listen to the description of their pricing method(s) and process. Then, after the interview, try to determine which of the textbook's methods the company uses. You do not need to request or report exact markups or profit margins! You should make this clear when requesting the interview! We are looking for methods of pricing, not exact figures.
Important note: This is your chance to do some "primary research." I understand that it may be difficult to find a willing interviewee, but I expect you to try earnestly. If you fail to find a willing owner/manager after at least 7 attempts at different companies, then please email me and I will assist you. Don't overlook companies owned by friends, people at your church, and those in your old hometown. In your post, you do not need to reveal the name of the company you interviewed or its location. You should, however, reveal the industry, the nature of the business (deli, grocery store, gift shop, nursery, barber, etc), and a rough idea of the size (single mom and pop or multi-location). If the business owner/manager is hesitant about what you may write, offer to submit your post to them for review before posting it.
I can provide you with some guidance on how to approach the assignment and gather information for your report.
Selecting a Company: Choose a company for the interview. It can be your current company, a local business in your area, or a business owned by someone you know. Consider businesses that are willing to share information about their pricing strategies and methods.
Contacting the Owner/Manager: Reach out to the owner or manager of the selected company and request an interview. Explain the purpose of the interview, assure them that the information will be kept confidential if needed, and offer to submit the post for review before publishing if they have any concerns.
Conducting the Interview: During the interview, focus on the following key questions:
a. Pricing Objective: Ask the interviewee about the company's pricing objective and provide them with a list of pricing objectives from your textbook. Listen to their response and note which objective(s) align with their approach.
b. Price Sensitivity: Inquire if the company has identified target segments that are less price sensitive than others. This will give you insights into their pricing strategies for different customer groups.
c. Consideration of Competitors' Prices: Ask how much consideration the company gives to competitors' prices when setting their own. This will help you understand the extent to which competitive pricing influences their decisions.
d. Pricing Methods: Discuss the company's approach to pricing and their process for arriving at the final price for customers. Listen to their description and try to match it with the pricing methods outlined in your textbook.
Analyzing the Information: After the interview, analyze the information gathered and identify the pricing objectives, target segments, consideration of competitors' prices, and the pricing methods used by the company. Compare their approach with the ones discussed in your textbook and draw conclusions based on the similarities and differences.
Reporting Your Findings: Write a report summarizing your findings without revealing the specific company's name or location. Instead, describe the industry, nature of the business, and approximate size of the company (e.g., small local grocery store, medium-sized clothing retailer, etc.).
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Justify your answer, a choice without justifications will not be graded. If you use graphs, make sure you accurately identify the variables used. A monopolist faces the demand function
Q = 7,000/ (p + 3)^ −2 .
If she charges a price of p, her marginal revenue will be a. -2(p + 3)-3.
b. p/2 - 3/2.
c. (p + B)-2.
d. p/2 + 3.
e. 2p + 1.50.
The correct choice is (b) p/2 - 3/2. This can be determined by calculating the marginal revenue (MR) for the monopolist using the given demand function and its relation to the price (p).
The marginal revenue (MR) is the additional revenue generated by selling one more unit of output. It can be calculated as the derivative of the total revenue (TR) function with respect to quantity (Q). In this case, the total revenue function can be derived from the demand function.
Given the demand function Q = 7,000 / (p + 3)^-2, we can rewrite it as p = 7,000 / Q^(1/2) - 3. This represents the inverse demand function, where p is the price as a function of quantity.
To find the marginal revenue, we differentiate the total revenue function with respect to quantity:
MR = d(TR)/dQ = d(pQ)/dQ = p + Q(dp/dQ).
Using the inverse demand function, we substitute p = 7,000 / Q^(1/2) - 3 into the expression for MR:
MR = (7,000 / Q^(1/2) - 3) + Q(d(7,000 / Q^(1/2) - 3)/dQ).
Simplifying this expression, we can calculate the derivative and obtain:
MR = p/2 - 3/2.
Therefore, the correct choice is (b) p/2 - 3/2 as the expression for marginal revenue (MR) for the monopolist.
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Mitre Company acquired Midwest Transportation Co. for $1,382,000. The fair market values of the assets acquired were as follows. No liabilities were assumed.
Equipment $ 311,300 Land 207,500 Building 651,300 Franchise (10-year life) 91,000 Required
Calculate the amount of goodwill purchased.
Therefore, the amount of goodwill purchased is $120,900
Goodwill purchased can be calculated by subtracting the total fair market value of the assets acquired from the total amount paid by Mitre Company to acquire Midwest Transportation Co. Therefore,
the amount of goodwill purchased in this scenario can be calculated as follows:Total amount paid by Mitre Company to acquire Midwest Transportation Co. = $1,382,000
Total fair market value of the assets acquired = $311,300 + $207,500 + $651,300 + $91,000 = $1,261,100
Goodwill purchased = Total amount paid - Total fair market value of the assets acquired= $1,382,000 - $1,261,100= $120,900
Therefore, the amount of goodwill purchased is $120,900.
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1. A data strategy can be defensive or offensive. If an organization positioned itself to be defensive, should it remain defensive for as long as they operate? Can they change to offensive? Why? Give an example.
2. What strategy is more appropriate to any construction company, offensive or defensive? Explain your answer.
Please answer the question perfectly with your heart and mind. Thank you!
1. An organization can transition from a defensive data strategy to an offensive strategy to drive innovation and gain a competitive advantage, as demonstrated by a healthcare provider using patient data for process improvement and cost savings.
2. Construction companies are better suited for a defensive data strategy due to their focus on safety, risk management, and regulatory compliance, making it essential for them to secure data, maintain compliance, and protect their reputation.
1. A data strategy can either be defensive or offensive, depending on the goals and objectives of the organization. If an organization has positioned itself to be defensive, it is not necessary that it should remain defensive for as long as they operate. The organization can change to an offensive data strategy. They can change to offensive strategy to drive innovation and gain a competitive advantage.
For example, a healthcare provider that has been focusing on data security (defensive strategy) can switch to an offensive data strategy to analyze patient data and identify areas for process improvement and cost savings.
2. The most appropriate strategy for any construction company would be defensive. Construction companies are more suited to a defensive data strategy because they are highly regulated and heavily focused on safety and risk management. Their main focus is on mitigating risk and managing compliance. Additionally, construction companies generally do not have access to large amounts of customer data, which makes an offensive data strategy less appropriate for them. A defensive data strategy will help them to secure their data, maintain compliance, and protect their reputation.
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The Cash Basis Of Accounting Is A.The Primary Alternative To Generally Accepted Accounting Principles (GAAP). B.Not Allowed To Be Used By Businesses. C.The Same As Generally Accepted Accounting Principles (GAAP). D.The Required Method Based On The Principle Of Matching Revenues And Expenses.
The cash basis of accounting is
a.the primary alternative to generally accepted accounting principles (GAAP).
b.not allowed to be used by businesses.
c.the same as generally accepted accounting principles (GAAP).
d.the required method based on the principle of matching revenues and expenses.
The cash basis of accounting is d. the required method based on the principle of matching revenues and expenses.
The cash basis of accounting is a method where revenues and expenses are recognized when cash is received or paid. It is different from the accrual basis of accounting, which follows Generally Accepted Accounting Principles (GAAP).
The cash basis is not the primary alternative to GAAP; rather, it is a simplified accounting method primarily used by small businesses or individuals with straightforward financial transactions. It is allowed to be used by certain businesses, especially those with limited resources or where the timing of cash receipts and payments is considered more important than matching revenues and expenses.
However, the cash basis is not the same as GAAP. GAAP requires the accrual basis of accounting, which recognizes revenues when they are earned and expenses when they are incurred, regardless of the timing of cash flows.
The accrual basis provides a more accurate representation of the financial performance and position of a business, as it matches revenues and expenses in the period in which they are related. This approach provides a more comprehensive view of a company's financial activities and is generally preferred for financial reporting purposes, especially for larger or publicly traded entities.
In summary, while the cash basis of accounting is allowed for certain businesses, it is not the primary alternative to GAAP. GAAP requires the accrual basis of accounting to ensure the matching of revenues and expenses for more accurate financial reporting.
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To make 1 gallon of lemon drink, it takes 3 lemons (Direct materials). The lemons are expected to cost $.10 per lemon. If the company plans to make 300 gallons of lemon drink for the month of May, then what is standard quantity of Direct Materials allowed?
To calculate the standard quantity of direct materials allowed, we need to determine the quantity of lemons required to produce the planned 300 gallons of lemon drink.
It takes 3 lemons to make 1 gallon of lemon drink.
The lemons are expected to cost $0.10 per lemon.
The company plans to make 300 gallons of lemon drink.
To find the standard quantity of direct materials allowed, we multiply the number of gallons by the lemon requirement per gallon:
Standard Quantity = Number of Gallons x Lemons per Gallon
Standard Quantity = 300 gallons x 3 lemons per gallon
Standard Quantity = 900 lemons
Therefore, the standard quantity of direct materials allowed to produce 300 gallons of lemon drink for the month of May is 900 lemons.
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businessaccountingaccounting questions and answerswe can describe inputs as either fixed or variable. thinking about a company that assembles cars, which of the following would be an example of a fixed input that could not be changed in the short run? group of answer choices the building where the assembly takes place. the robots that help assemble the cars. the employees that work for the company. theQuestion: We Can Describe Inputs As Either Fixed Or Variable. Thinking About A Company That Assembles Cars, Which Of The Following Would Be An Example Of A Fixed Input That Could Not Be Changed In The Short Run? Group Of Answer Choices The Building Where The Assembly Takes Place. The Robots That Help Assemble The Cars. The Employees That Work For The Company. The
We can describe inputs as either fixed or variable. Thinking about a company that assembles cars, which of the following would be an example of a fixed input that could not be changed in the short run?
Group of answer choices
The building where the assembly takes place.
The robots that help assemble the cars.
The employees that work for the company.
The electricity required to support the assembly activity.
In the context of a company that assembles cars, **the building where the assembly takes place** would be an example of a fixed input that could not be changed in the short run.
The building is a fixed input because it represents a long-term investment that cannot be easily modified or adjusted in the short run. Once the building is constructed, it becomes a fixed resource for the company. On the other hand, the robots, employees, and electricity are examples of variable inputs that can be adjusted or changed in response to the company's production needs in the short run. While the company can hire or lay off employees, acquire or remove robots, and increase or decrease the electricity usage, changing the physical structure of the building would require significant time, resources, and planning. Therefore, the building represents a fixed input that remains constant in the short run.
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The building where the assembly takes place is an example of a fixed input that cannot be changed in the short run for a company that assembles cars.
Explanation:In business, fixed inputs are resources or factors of production that cannot be easily changed in the short run. In the case of a company that assembles cars, the building where the assembly takes place would be an example of a fixed input. The building is a fixed asset that cannot be easily altered or replaced in the short term.
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Consider the following abbreviated financial statements for Barrie Enterprises: BARRIE Enterprises 2017 and 2018 Partial Statement of Financial Position Assets Liabilities and Owner's Equity 2017 2017 2018 2018 $ 380 $ 420 Current assets. $944 $1,020 Current liabilities Net fixed assets 4,067 4,836 Long-term debt 2,141 2,282 BARRIE Enterprises 2018 Statement of Comprehensive Income Sales $ 13,100 Costs 5,533 Depreciation 1,183 324 Interest paid a. What is owner's equity for 2017 and 2018? (Omit $ sign in your response.) Owner's equity 2017 $ Owner's equity 2018 $ b. What is the change in net working capital for 2018? (Omit $ sign in your response.) Change in NWC $ c1. In 2018, Barrie Enterprises purchased $2,055 in new fixed assets. How much in fixed assets did Barrie Enterprises sell? (Omit $ sign in your response.) Fixed assets sold $ c2. In 2018, Barrie Enterprises purchased $2,055 in new fixed assets. What is the cash flow from assets for the year? (The tax rate is 35%.) (Omit $ sign in your response.) Cash flow from assets $ d1. During 2018, Barrie Enterprises raised $408 in new long-term debt. How much long-term debt must Barrie Enterprises have paid off during the year? (Omit $ sign in your response.) Debt retired $ d2. During 2018, Barrie Enterprises raised $408 in new long-term debt. What is the cash flow to creditors? (Omit $ sign in your response.) Cash flow to creditors ___
a. Owner's equity for 2017: $380. Owner's equity for 2018: $1,558. b. Change in net working capital for 2018: $76. c1. Barrie Enterprises sold $771 in fixed assets. c2. The cash flow from assets for the year is -$1,647. d1. Barrie Enterprises must have paid off $141 in long-term debt during the year. d2. The cash flow to creditors is -$567.
a. Owner's equity is calculated by subtracting total liabilities from total assets. In 2017, the owner's equity is $380 ($944 - $564). In 2018, the owner's equity is $1,558 ($1,020 - $462).
b. Change in net working capital is determined by subtracting the previous year's net working capital from the current year's net working capital. In this case, the change in net working capital for 2018 is $76 (($1,020 - $944) - ($420 - $380)).
c1. To determine the fixed assets sold, we subtract the increase in net fixed assets from the purchase of new fixed assets. In this case, the purchase of new fixed assets is $2,055, so the fixed assets sold is $771 ($4,836 - $4,067 - $2,055).
c2. Cash flow from assets is calculated by subtracting the change in net working capital from the cash flow from operating activities. In this case, the cash flow from assets is -$1,647 ($13,100 - $5,533 - $1,183 - $76).
d1. The amount of long-term debt paid off is calculated by subtracting the increase in long-term debt from the new long-term debt raised. In this case, the new long-term debt raised is $408, so the long-term debt retired is $141 ($408 - $267).
d2. Cash flow to creditors is determined by subtracting the increase in long-term debt from the cash flow from financing activities. In this case, the cash flow to creditors is -$567 ($408 - $975).
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If you want to find the origins of the legal rule that presidential action is most likely to be constitutional when authorized by Congress and least likely to be constitutional when disapproved of by Congress, where would you look? O Jackson's dissenting opinion in Korematsu v. U.S. Jackson's concurring opinion in Ex parte Quirin O Jackson's concurring opinion in Youngstown Sheet & Tube Co. v. Sawyer Jackson's majority opinion in In re Neagle
Examining Jackson's concurring opinion in Youngstown Sheet & Tube Co. v. Sawyer would provide insight into the origins and development of this legal rule.
To find the origins of the legal rule that presidential action is most likely to be constitutional when authorized by Congress and least likely to be constitutional when disapproved of by Congress, one should look at Jackson's concurring opinion in Youngstown Sheet & Tube Co. v. Sawyer. In this case, Justice Robert H. Jackson presented a framework to analyze the extent of presidential power in relation to Congress. This framework, commonly known as the "Youngstown framework" or the "three-tiered analysis," established different categories of presidential authority based on congressional authorization or disapproval. Jackson's concurring opinion in this case provides a detailed explanation of the rule and its foundations in constitutional law.
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options for the blanks:
1. blank1 = (rise/fall/remain unchanged)
blank 2 = (rise/fall/remain unchanged)
2. blank1 = (a decline/ an increase)
blank2 = (a decline/ an increase)
1. Is the Phillips curve a myth? Intertemporal tradeoff between inflation and unemployment. After the World War II, empirical economists noticed that, in many advanced economies, as unemployment fell,
1. The answer for blank1 is "fall" and the answer for blank2 is "rise".2. The answer for blank1 is "an increase" and the answer for blank2 is "a decline".The Phillips Curve is not a myth. It is an economic concept that describes the relationship between unemployment rates and inflation rates.
This relationship was discovered by A.W. Phillips in the 1950s when he found an inverse relationship between the two variables while studying the UK economy.
1. "After the World War II, empirical economists noticed that, in many advanced economies, as unemployment fell" suggests that there was a fall in unemployment. According to the Phillips Curve, when unemployment falls, inflation rises. Therefore, the answer for blank1 is "fall" and the answer for blank2 is "rise".
2. When there is a decline in the rate of unemployment, it suggests that the economy is doing well, and people have more jobs.
As a result, they have more disposable income to spend, which increases demand. When demand increases, the prices of goods and services also increase.
Therefore, when there is a decline in the rate of unemployment, there is usually an increase in the inflation rate. Therefore, the answer for blank1 is "an increase" and the answer for blank2 is "a decline".
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Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members' equity prior to liquidation and asset realization on August 1 are as follows:
Lester $10,200
Torres 23,500
Hearst 14,600
Total $48,300
In winding up operations during the month of August, noncash assets with a book value of $63,600 are sold for $78,900, and liabilities of $20,400 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $5,100.
Prepare a statement of LLC liquidation. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign.
In the LLC liquidation of Arcadia Sales, LLC, the total members' equity prior to liquidation was $48,300. The realization of assets included the sale of noncash assets with a book value of $63,600, generating a gain on sale of $15,300. The liabilities were settled for $20,400. The cash distribution to the members included the initial cash balance of $5,100 and the total realization of $78,900, resulting in a total cash distribution of $84,000.
The cash distribution was divided among the members based on their profit-sharing ratio: Lester received $33,600, Torres received $33,600, and Hearst received $16,800.
Statement of LLC Liquidation for Arcadia Sales, LLC:
Members' Equity:
Lester: $10,200
Torres: $23,500
Hearst: $14,600
Total Members' Equity: $48,300
Realization of Assets:
Sale of Noncash Assets:
Book Value: $63,600
Sale Proceeds: $78,900
Gain on Sale: $15,300
Settlement of Liabilities: -$20,400
Cash Distribution:
Initial Cash Balance: $5,100
Total Realization (Sale Proceeds + Cash Balance): $78,900 + $5,100 = $84,000
Distribution of Cash:
Lester's Share (2/5 x Total Realization): (2/5) x $84,000 = $33,600
Torres's Share (2/5 x Total Realization): (2/5) x $84,000 = $33,600
Hearst's Share (1/5 x Total Realization): (1/5) x $84,000 = $16,800
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Comparing Investment Criteria Wii Brothers, a game manufacturer, has a new idea for an adventure game. It can market the game either as a traditional board game or as an interactive DVD, but not both. Consider the following cash flows of the two mutually exclusive projects for the compan Assume the discount rate for both projects is 10 percent a. Based on the payback period rule, which project should be chosen? b. Based on the NPV, which project should be chosen? c. Based on the IRR, which project should be choser d. Based on the incremental IRR, which project should be chosen?
The incremental IRR between the Board Game Project and the Interactive DVD Project is 14.95 percent. Based on the Incremental IRR, the Interactive DVD Project should be chosen because its IRR is greater than the Incremental IRR, indicating that it will generate a higher NPV.
Payback period rule:It is a method that evaluates the number of periods required for the cash inflows to equal the investment in the project. For the project to be accepted, the payback period must be less than or equal to a predetermined length of time.
It disregards the cash flows beyond the payback period.The payback period for the Board Game Project is: Payback Period = 4 + $700,000 ÷ $1,200,000 = 4.6 yearsThe payback period for the Interactive DVD Project is: Payback Period = 3 + $900,000 ÷ $1,500,000 = 3.6 years
Based on the payback period rule, the Interactive DVD Project should be chosen because it has a shorter payback period.Net present value (NPV):NPV is the difference between the present value of the cash inflows and the present value of the cash outflows.
If the NPV is greater than zero, the project is feasible. If the NPV is negative, the project is not feasible. If the NPV is zero, it indicates that the project will earn a return that is equivalent to the required rate of return.
The NPV for the Board Game Project is:NPV = -$1,200,000 + ($200,000 ÷ 1.1) + ($250,000 ÷ 1.21) + ($500,000 ÷ 1.33) + ($500,000 ÷ 1.46)NPV = $152,743.80The NPV for the Interactive DVD Project is:NPV = -$1,500,000 + ($600,000 ÷ 1.1) + ($700,000 ÷ 1.21) + ($800,000 ÷ 1.33)NPV = $293,958.45Based on the NPV, the Interactive DVD Project should be chosen because it has a higher NPV.Internal rate of return (IRR):The IRR is the rate that results in the NPV being zero. If the IRR is greater than the required rate of return, the project is feasible. If the IRR is less than the required rate of return, the project is not feasible.
The IRR for the Board Game Project is:IRR = 11.56%The IRR for the Interactive DVD Project is:IRR = 15.26%Based on the IRR, the Interactive DVD Project should be chosen because it has a higher IRR.Incremental IRR:The Incremental IRR is the rate at which the two projects have the same NPV. The Incremental IRR indicates the rate at which the company is indifferent between the two mutually exclusive projects.The incremental IRR between the Board Game Project and the Interactive DVD Project is 14.95 percent.
Based on the Incremental IRR, the Interactive DVD Project should be chosen because its IRR is greater than the Incremental IRR, indicating that it will generate a higher NPV.
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