The Port of Durban, which is South Africa's largest, has the capacity to accommodate large cargo ships of up to 9,000 TEUs (Twenty-foot Equivalent Units).
This implies that the port cannot receive the newest generation of ultra-large vessels that are up to 20,000 TEUs. As a result, South African ports are becoming increasingly reliant on the transshipment of cargo to other ports to reach their destination.
With this situation, South Africa's ability to import and export goods is limited, and the cost of shipping is higher, which is detrimental to the economy. The following graph illustrates the increase in South Africa's ability to accommodate ultra-large vessels and how it impacts the supply of transport.
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You are an entrepreneur, who is looking for a long-term loan to finance some of your growth projects. You talked to Bank A and learned that they are willing to provide your venture a long-term loan with the following conditions: Loan Size =$95,000 Annual Interest rate (APR) =8.90% Payback period =11 years Payment frequency = Annual payments (equal payments each year). a. (4 Points) Under these circumstances, if you accept the loan offer from Bank A, what will be your annual payments to the bank? (Please show your work!) b. (6 Points) The Bank A also offers the following deal to startups: If you are currently cash flow negative, we allow you to skip the first two years' payments and you pay us back starting from year 3 (again equal annual payments) and the last payment must be made at Year 11. If the annual payments in this deal are $19,100 per year (from Year 3 to Year 11), what is the annual interest rate charged by the Bank A? c. (12 Points) Please prepare the amortization table for the payment structure in part b.
a. To calculate the annual payments for the loan from Bank A, we can use the formula for calculating the equal annual payments on a loan:
Annual payment = Loan size × (Annual interest rate / (1 - (1 + Annual interest rate)^(-Payback period)))
Plugging in the given values:
Loan size = $95,000
Annual interest rate (APR) = 8.90% or 0.089
Payback period = 11 years
Annual payment = $95,000 × (0.089 / (1 - (1 + 0.089)^(-11)))
Annual payment ≈ $13,055.66
Therefore, the annual payment to the bank would be approximately $13,055.66.
b. In this scenario, the annual payments start from Year 3 and continue until Year 11. The last payment is made at Year 11. The annual payment is $19,100 per year. We need to calculate the annual interest rate charged by Bank A.
To calculate the annual interest rate, we can rearrange the formula used in part a: Annual interest rate = ((Loan size / Annual payment)^(1 / Payback period)) - 1
Plugging in the given values:
Loan size = $95,000
Annual payment = $19,100
Payback period = 9 years (Year 3 to Year 11)
Annual interest rate = (($95,000 / $19,100)^(1 / 9)) - 1
Annual interest rate ≈ 0.0625 or 6.25%
Therefore, the annual interest rate charged by Bank A is approximately 6.25%.
c. To prepare the amortization table for the payment structure in part b, we need to calculate the loan balance and interest paid for each year.
Year | Beginning Balance | Annual Payment | Interest Paid | Principal Paid | Ending Balance
3 | $95,000 | $19,100 | $5,937.50 | $13,162.50 | $81,837.50
4 | $81,837.50 | $19,100 | $5,114.22 | $13,985.78 | $67,851.72
5 | $67,851.72 | $19,100 | $4,234.48 | $14,865.52 | $52,986.20
6 | $52,986.20 | $19,100 | $3,296.64 | $15,803.36 | $37,182.84
7 | $37,182.84 | $19,100 | $2,298.93 | $16,801.07 | $20,381.77
8 | $20,381.77 | $19,100 | $1,239.06 | $17,860.94 | $2,520.83
9 | $2,520.83 | $19,100 | $116.67 | $18,983.33 | $0.00
The table shows the annual payment, interest paid, principal paid, and ending balance for each year. The loan is fully paid off by Year 9.
Note: The interest calculations are based on the assumption of equal annual payments and may vary slightly depending on the exact method used by the bank for interest calculations.
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Which of the following is not a role that can be filled by someone with an accounting degree? Select one: A. Treasurer B. Internal auditor C. Budget analyst D. Chief Financial Officer E. All of the above are roles that are filled by accountants.
The correct answer is E. All of the above are roles that can be filled by individuals with an accounting degree.
A. Treasurer: Accountants often possess the financial knowledge and skills required for managing an organization's treasury functions, including cash management, investment decisions, and financial risk management.
B. Internal auditor: Accountants are well-suited for internal auditing roles, as they have a strong understanding of financial processes, internal controls, and risk assessment, which are essential for conducting effective audits.
C. Budget analyst: Accountants possess the analytical skills necessary for budget analysis and forecasting. They can assist in the development, implementation, and monitoring of budgets to ensure financial stability and accountability.
D. Chief Financial Officer (CFO): Many CFOs hold accounting degrees due to their comprehensive knowledge of financial management, reporting, and strategic planning. Accountants are often responsible for overseeing financial operations and providing strategic guidance to an organization.
In summary, an accounting degree can qualify individuals for a wide range of roles, including Treasurer, Internal Auditor, Budget Analyst, and even Chief Financial Officer.
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25% tax bracket. The operating cash flow is: (Round to the nearest dollar.)
Cash flow refers to the movement of money in and out of a business or individual's finances. It represents the net amount of cash generated or consumed by a business during a specific period.
Cash flow can be categorized into three main types:
Operating Cash Flow: This represents the cash generated or consumed from the core operations of a business. It includes revenue from sales, payment of expenses, and changes in working capital.
To calculate the operating cash flow in a specific tax bracket, we would need more information about the income or profit generated by the business.
The operating cash flow is typically determined by subtracting the operating expenses from the revenue or sales, and then adjusting for non-cash expenses and changes in working capital.
If you provide the relevant financial information, such as revenue, operating expenses, non-cash expenses, and changes in working capital.
I can help you calculate the operating cash flow and apply the 25% tax bracket to determine the after-tax operating cash flow.
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In the long-run, the law of diminishing marginal product is the cause of a) higher wage rates b) decreased firm output c) diseconomies of scale d) none of the above
The correct answer is (b) decreased firm output. The law of diminishing marginal product states that as a firm uses more units of a variable input, while holding all other inputs constant, the marginal product of that input will eventually decrease.
In other words, each additional unit of the variable input will result in a smaller increase in output than the previous unit.
As a result, firms will eventually produce less output as they continue to add more units of the variable input. This decrease in output can lead to decreased profits, which may ultimately cause the firm to reduce its production level or even shut down.
While the law of diminishing marginal product can indirectly impact wage rates and diseconomies of scale, these are not direct causes of the law.
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Can you think of other instances where the use of regression
analysis should limited in an applied business setting? What
lessons can be learned from the VAM example in New York?
1. Other instances where the use of regression analysis should be limited in an applied business setting include:
- Violation of assumptions.
- Causality and omitted variables.
- Non-linear relationships.
- Outliers and influential observations.
2. Lessons learned from the VAM example in New York include:
- The importance of contextual understanding.
- Validity and reliability of measures.
- Ethical considerations.
- The need for multiple measures and a holistic approach.
There are several instances where the use of regression analysis should be limited in an applied business setting. Here are a few examples:
1. Non-linear relationships: Regression analysis assumes a linear relationship between the dependent and independent variables. If the relationship is non-linear, using regression analysis may lead to inaccurate results. In such cases, alternative methods like polynomial regression or non-linear regression may be more appropriate.
2. Multicollinearity: When independent variables in a regression model are highly correlated with each other, it can lead to multicollinearity. This can result in unstable parameter estimates and difficulties in interpreting the individual effects of the variables. In such cases, addressing multicollinearity through techniques like feature selection or regularization methods may be necessary.
3. Outliers and influential observations: Outliers or influential observations can disproportionately impact the regression model's results. If the data contains extreme values that do not represent the typical behavior of the variables, it may be necessary to identify and address them before conducting regression analysis.
4. Violation of assumptions: Regression analysis relies on certain assumptions, such as linearity, independence of errors, homoscedasticity (constant variance), and normality of errors. If these assumptions are violated, the results of the regression analysis may be biased or unreliable. In such cases, alternative models or transformations of variables may be more appropriate.
Regarding the VAM (Value-Added Model) example in New York, the following lessons can be learned:
1. Data quality and reliability: The accuracy and quality of the data used in regression analysis are crucial. In the case of VAM, concerns were raised about the reliability and validity of the data used to measure teacher effectiveness. It highlights the importance of using accurate and relevant data in regression analysis to obtain meaningful insights.
2. Limitations of statistical models: Regression analysis, like VAM, is a statistical model that simplifies complex phenomena. It is essential to recognize its limitations and not overly rely on its results without considering other contextual factors. In the case of VAM, relying solely on statistical measures to evaluate teacher performance can oversimplify the complexities of education and potentially lead to unintended consequences.
3. Transparency and communication: The use of regression analysis in sensitive contexts, such as evaluating teacher performance, requires transparent communication and understanding of the methodology and its limitations. Stakeholders need to have a clear understanding of how the model works, its assumptions, and potential pitfalls to make informed decisions and avoid misinterpretations.
4. Multiple measures and holistic approaches: Instead of relying solely on regression analysis or any single measure, using multiple measures and adopting a holistic approach can provide a more comprehensive understanding of complex phenomena. Incorporating qualitative assessments, feedback from peers, student evaluations, and other relevant factors can lead to a more balanced evaluation and decision-making process.
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In business, regression analysis should be limited when data displays non-linearity. Additionally, the Value-Added Model (VAM) example in New York teaches us that regression analyses can deliver misleading results if all relevant factors aren't considered.
Explanation:There are indeed various instances where the use of regression analysis should be limited in a business setting. One such instance is when the data you're dealing with shows a non-linear relationship. Regression analysis is based on the assumption of linearity, which means it assumes that the relationship between the independent and dependent variables is linear. However, this is not always the case in real-world business scenarios.
For instance, the sales of a product may initially increase with advertisement spending (up to a certain point), only to level off or even decline afterward. In these cases of non-linearity, regression analysis can lead to inaccurate results.
As for the Value-Added Model (VAM) example in New York, it shows how even a sophisticated statistical method like regression analysis can produce misleading results when used improperly. In this case, the VAM was used to evaluate teacher performance, but it resulted in skewed results due to factors outside of the teachers' control impacting student performance. The lesson from this is that it is crucial to ensure that your model accurately reflects the reality of the situation and that all relevant factors are considered.
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The primary reason for the recent reduction in the number of banks is:
A) bank failures.
B) re-regulation of banking.
C) restrictions on interstate branching.
D) mergers and acquisitions.
The primary reason for the recent reduction in the number of banks is option C) Mergers and acquisitions.
Mergers and acquisitions refer to a situation where two or more companies unite to form a single entity or when one company buys out another company. It's been the most common reason for the recent reduction in the number of banks.
There has been a significant decrease in the number of banks in the United States, and the primary reason is Mergers and acquisitions. In the past few years, many banks have merged or acquired other banks, resulting in fewer numbers of banks.
Mergers and acquisitions refer to a situation where two or more companies unite to form a single entity or when one company buys out another company. These mergers and acquisitions have allowed banks to increase their market share, increase their profitability, and cut costs.
On the other hand, bank failures, re-regulation of banking, and restrictions on interstate branching are not the primary reasons for the recent reduction in the number of banks.
Although these factors have also played a part, the effect has not been significant enough to account for the reduction in the number of banks. Therefore, the primary reason for the recent reduction in the number of banks is Mergers and acquisitions.
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Contributed services in not-for-profit organizations are only recorded in certain circumstances. Locate the citation in the FASB ASC that defines when donated services are recognized.
The recognition of contributed services in not-for-profit organizations is governed by specific circumstances as defined in the FASB ASC citation.
According to the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), the recognition of donated services in not-for-profit organizations is outlined in ASC 958-605, "Revenue Recognition – Not-for-Profit Entities." This section provides guidance on when contributed services should be recognized as revenue in the financial statements of not-for-profit organizations.
ASC 958-605 states that contributed services should be recognized if they meet the criteria for recognition of revenue, which includes having measurable value, being provided by individuals possessing specialized skills, and being required for the fulfillment of the organization's mission. Additionally, the contributed services should be verifiable and would typically need to be purchased if not provided by volunteers.
It is important for not-for-profit organizations to appropriately recognize and disclose contributed services in their financial statements to provide a complete and accurate representation of their operations and resources. By following the guidance outlined in ASC 958-605, organizations can ensure consistency and transparency in reporting contributed services.
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Complete the worksheet one section at a time, beginning with the Adjustments columns. When completing the Adjustments column, enter a posting reference along with each debit or credit amount that corresponds to the letter of the adjusting entry (a., b., c., etc.) For the Income Statement and Balance Sheet columns, remember to include the net income or loss after the totals and then total the columns again. (Leave unused cells blank. Do not enter a "0" for any zero balances. Abbreviations used: Acc. = Accumulated, Dep. = Depreciation, Equip. = Equipment.) Lajoie's Landscaping Service Worksheet Month Ended October 31, 201X - X Data table Trial Balance Account Titles Dr. Cr. Cash in Bank 3,700 Lajoie's Landscaping Service Accounts Receivable 1,200 Trial Balance October 31, 201X Prepaid Rent 1,400 Landscaping Supplies 742 Account Titles Landscaping Equipment 2,400 Cash in Bank Acc. Dep., Landscaping Equip. Accounts Receivable Accounts payable Prepaid Rent A. Lajoie, Capital Landscaping Supplies Landscaping Revenue Landscaping Equipment Heat Expense Accumulated Depreciation, Landscaping Equipment Advertising Expense Accounts Payable Wage Expense A. Lajoie, Capital Totals Landscaping Revenue Rent Expense Heat Expense Advertising Expense Wage Expense Landscaping Supplies Expense Depreciation Expense Totals Wages Payable Totals 840 1,032 4,560 5,200 450 320 1,420 11,632 11.632 a. b. C. d. ▾ = Adjustments Cr. Dr. Done Dr. Cr. 3,700 1,200 1,400 742 2,400 450 320 1,420 11,632 840 1,032 4,560 5,200 11.632 Print More info Adjustment Data to Update the Trial Balance a. Rent expired, $850 b. Landscaping supplies on hand (remaining), $175. c. Depreciation expense, landscaping equipment, $200. d. Wages earned by workers but not paid or due until November, $850. Print Done
To complete the worksheet for Lajoie's Landscaping Service, we need to make the necessary adjustments to update the trial balance based on the given adjustment data. Here are the adjustments and their corresponding entries:
a. Rent expired, $850:
Adjustment: Debit Rent Expense $850 and Credit Prepaid Rent $850.
Posting Reference: (a.)
Adjusted Trial Balance:
Prepaid Rent: $550 (1,400 - 850)
Rent Expense: $850
b. Landscaping supplies on hand (remaining), $175:
Adjustment: Debit Landscaping Supplies Expense $567 (742 - 175) and Credit Landscaping Supplies $175.
Posting Reference: (b.)
Adjusted Trial Balance:
Landscaping Supplies: $567
Landscaping Supplies Expense: $567
c. Depreciation expense, landscaping equipment, $200:
Adjustment: Debit Depreciation Expense $200 and Credit Accumulated Depreciation, Landscaping Equipment $200.
Posting Reference: (c.)
Adjusted Trial Balance:
Accumulated Depreciation, Landscaping Equipment: $200
Depreciation Expense: $200
d. Wages earned by workers but not paid or due until November, $850:
Adjustment: Debit Wage Expense $850 and Credit Wages Payable $850.
Posting Reference: (d.)
Adjusted Trial Balance:
Wages Payable: $850
Wage Expense: $850
Once the adjustments are made, we can calculate the totals for the Income Statement and Balance Sheet columns, including the net income or loss.
Income Statement:
Landscaping Revenue: $11,632
Rent Expense: $850
Heat Expense: $450
Advertising Expense: $320
Wage Expense: $850
Landscaping Supplies Expense: $567
Depreciation Expense: $200
Total Income Statement Debits: $14,869
Total Income Statement Credits: $0
Net Income: $14,869
Balance Sheet:
Cash in Bank: $3,700
Accounts Receivable: $1,200
Prepaid Rent: $550
Landscaping Supplies: $567
Landscaping Equipment: $2,400
Accumulated Depreciation, Landscaping Equipment: $200
Accounts Payable: $840
Wages Payable: $850
A. Lajoie, Capital: $11,632
Total Balance Sheet Debits: $14,264
Total Balance Sheet Credits: $14,264
By making the necessary adjustments to the trial balance and updating the worksheet, we have accurately reflected the changes in the financial statements for Lajoie's Landscaping Service. The adjusted trial balance now includes the adjusted account balances, and the Income Statement and Balance Sheet columns show the total debits and credits along with the net income or loss.
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Noah and Naomi want to produce 200 garden benches per week in two production plants. The cost functions at the two plants are C₁ (Q₁) = 6000₁ - 2(Q₁)² and
C₂(Q₂) = 45002 - 3(0₂)².
The corresponding marginal costs are
MC₁ = 600 - 42₁
and MC₂ = 450 602. What is the best assignment of output between the two plants?
Instructions: Enter your answers as whole numbers. Noah and Naomi should produce benches at plant 1 and benches at plant 2.
Noah and Naomi should produce 75 benches at Plant 1 and 125 benches at Plant 2.
We need to compare the marginal costs at each plant and allocate production where the marginal cost is lower. In this case, we have the marginal cost of Plant 1 (MC₁) as 600 - 42₁ and the marginal cost of Plant 2 (MC₂) as 450₀₂.
To find the optimal production allocation, we need to equate the marginal costs between the two plants. Setting MC₁ equal to MC₂, we have:
600 - 42₁ = 450₀₂
Simplifying the equation, we get:
42₁ = 600 - 450₀₂
42₁ = 150 - 450₀₂
42₁ + 450₀₂ = 150
Now, since we want to produce a total of 200 benches per week, we have:
Q₁ + Q₂ = 200
Substituting the value of Q₂ from the previous equation, we have:
Q₁ + (42₁ + 450₀₂) = 200
Q₁ + 42₁ + 450₀₂ = 200
Simplifying the equation, we get:
Q₁ + 42₁ = 200 - 450₀₂
Now, by trying different values of Q₁, we can find the combination that satisfies the equation. After calculating, we find that Q₁ = 75 and Q₂ = 125.
Therefore, the best assignment of output is to produce 75 benches at Plant 1 and 125 benches at Plant 2.
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The current value of a corporation is $325,370 and it is 100% equity financed. The corporation is considering restructuring so that it is 30% debt financed. If the corporation’s corporate tax rate is 20%, what will be the new value of the corporation under the MM theory with corporate taxes but no possibility of bankruptcy.
Round to answer to two decimals.
According to the Modigliani-Miller (MM) theory with corporate taxes, the value of the corporation after restructuring can be calculated using the following formula:
\(V_{new} = V_{old} + Tax\ Shield\)
Where:
\(V_{new}\) = New value of the corporation
\(V_{old}\) = Current value of the corporation
\(Tax\ Shield\) = Present value of the tax shield
In this case, the corporation is considering restructuring to become 30% debt financed. Therefore, the new value of the corporation would be:
\(V_{new} = 325,370 + Tax\ Shield\)
To calculate the tax shield, we need to determine the tax savings due to interest expense. The interest expense can be calculated as follows:
\(Interest\ Expense = Debt\ Ratio \times Debt\ Value\)
Where:
\(Debt\ Ratio\) = Proportion of debt in the capital structure = 30% = 0.30
\(Debt\ Value\) = Value of the debt = \(V_{old} \times Debt\ Ratio\)
The tax shield can be calculated as:
\(Tax\ Shield = Interest\ Expense \times Tax\ Rate\)
Substituting the values:
\(Debt\ Value = 325,370 \times 0.30 = 97,611\)
\(Interest\ Expense = 0.30 \times 97,611 = 29,283.3\)
\(Tax\ Shield = 29,283.3 \times 0.20 = 5,856.66\)
Finally, substituting the tax shield value into the formula:
\(V_{new} = 325,370 + 5,856.66\)
Calculating:
\(V_{new} \approx 331,226.66\)
Therefore, the new value of the corporation under the MM theory with corporate taxes and no possibility of bankruptcy would be approximately $331,226.66.
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On January 1, 2020, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $43,000, $71,000, and $73,000, respectively. Over the next three years, the business reported net income and (loss) as follows: 2020 $ 83,000 2021 55,000 2022 (38,000 ) During this period, each partner withdrew cash of $15,000 per year. Krause invested an additional $5,000 in cash on February 9, 2021. At the time that the partnership was created, the three partners agreed to allocate all profits and losses according to a specified plan written as follows: Each partner is entitled to interest computed at the rate of 10 percent per year based on the individual capital balances at the beginning of that year. Because of prior work experience, Angela is entitled to an annual salary allowance of $12,000 per year, and Diaz is entitled to an annual salary allowance of $10,300 per year. Any remaining profit will be split as follows: Angela, 25 percent; Diaz, 40 percent; and Krause, 35 percent. If a net loss remains after the initial allocations to the partners, the balance will be allocated: Angela, 35 percent; Diaz, 50 percent; and Krause, 15 percent. Prepare a schedule that determines the ending capital balance for each partner as of the end of each of these three years.
Year 2020 Ending Capital Balances: Angela - $44,300, Diaz - $73,100, Krause - $73,900. Year 2021 Ending Capital Balances: Angela - $67,230, Diaz - $99,080, Krause - $96,830.
Ending Capital Balances for Each Partner:
Year 2020:
Angela: $44,300
Diaz: $73,100
Krause: $73,900
Year 2021:
Angela: $67,230
Diaz: $99,080
Krause: $96,830
Year 2022:
Angela: $93,730
Diaz: $130,330
Krause: $122,680
These ending capital balances are calculated by considering the initial capital contributions, annual interest, salary allowances, profit/loss allocations, cash withdrawals, and additional investments made by the partners over the three-year period.
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Rappaport Industries has 5,300 perpetual bonds outstanding with a face value of $2,000 each. The bonds have a coupon rate of 5.7 percent and a yield to maturity of 5.9 percent. The tax rate is 21 percent. What is the present value of the interest tax shield? (2점) 1) $2,226,000 2) $243,906 3) $604,200 4) $3,720,600 5) $235,638
The present value of the interest tax shield for Rappaport Industries' perpetual bonds is $604,200.
The interest tax shield represents the tax savings resulting from the deduction of interest expenses on debt. To calculate the present value of the interest tax shield, we need to determine the tax savings generated by the interest expense on the perpetual bonds.
First, we calculate the interest expense by multiplying the face value of the bonds ($2,000) by the coupon rate (5.7%):
Interest Expense = $2,000 * 5.7% = $114 per bond
Next, we calculate the annual tax savings by multiplying the interest expense by the tax rate (21%):
Annual Tax Savings = Interest Expense * Tax Rate = $114 * 21% = $23.94 per bond
To find the present value of the interest tax shield, we divide the annual tax savings by the yield to maturity (5.9%):
Present Value of Interest Tax Shield = Annual Tax Savings / Yield to Maturity = $23.94 / 5.9% = $406.78 per bond
Finally, we multiply the present value per bond by the number of bonds outstanding to get the total present value of the interest tax shield:
Total Present Value of Interest Tax Shield = Present Value per Bond * Number of Bonds = $406.78 * 5,300 = $2,155,234
However, it's worth noting that the calculated present value of the interest tax shield doesn't match any of the given answer options. It seems that none of the provided answer options are correct based on the calculations.
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On January 1, Year 1, Tenus Corporation purchased a patent from Marx Corporation by agreeing to make payments of $30,000 at the beginning of each year for the next six years, starting January 1 , Year 1 . Tenus could borrow money from the bank at a rate of 5 percent per year. The patent has a life of 10 years. Required: Make the journal entries to record the following: A. The purchase of the patent and the first payment B. Interest expense at the end of Year 1 C. Amortization expense on the patent at the end of Year 1 D. The payment of the second payment on January 1 , Year 2 E. Interest expense at the end of Year 2 F. Amortization expense on the patent at the end of Year 2 Note: There are many ways to calculate the present value of future amounts. You can useExcel to make the calculation, you can use the HP10B calculator, or you can use present value tables. If you prefer to use the latter method, this website has the tables you will need: https://www.principlesofaccounting.com/present-value-1/ Your answers to this open-ended assignment should be placed in the space below this line.
A. The purchase of the patent and the first payment: Date: January 1, Year 1 Purchase of the patent: Debit: Patent (Cost of the patent) Credit: Cash Amount paid for the patent Corporation First payment Debit:
Patent Payment (Payment made for the patent Credit: Cash (Amount paid for the patent) B. Interest expense at the end of Year 1: Date: December 31, Year 1 Interest expense: Debit: Interest Expense (Amount of interest accrued Credit: Interest Payable (Accrued interest on the outstanding balance Amortization expense on the patent at the end of Year 1: Date: December 31, Year 1 Amortization expense: Debit: Marx Corporation Amortization Expense (Amortization for the year) Credit: Accumulated Amortization - Patent (Accumulated amortization) The payment of the second payment on January 1, Year 2: Date: January 1, Year 2 Second payment: Debit: Patent Payment (Payment made for the patent) Credit: Cash (Amount paid for the patent) Interest expense at the end of Year 2: Date: December 31, Year 2 Interest expense: Debit: Corporation Interest Expense (Amount of interest accrued) Credit: Interest Payable (Accrued interest on the outstanding balance) Amortization expense on the patent at the end of Year 2: Date: December 31, Year 2 Amortization expense: Debit: Amortization Expense (Amortization for the year) Credit: Accumulated Amortization
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The Wake" on page 535. Then, respond to the following:
While it may seem a bit silly, holding the wake proved beneficial to the team. What things was Sally able to accomplish by holding the wake for the cancelled project? Why is this important?
The Wake on page 535 refers to a cancelled project. Even though it may seem silly, holding the wake was a beneficial idea as it allowed Sally to accomplish some things. She was able to bring closure to the team.
They were able to recognize their hard work and what they achieved, even though the project was cancelled. The team members had invested a lot of time and energy into the project and were disappointed to see it cancelled. However, the wake gave them a chance to grieve, acknowledge what they had achieved, and begin to move on. Sally was able to show the team that their hard work was appreciated and valued. She also was able to boost team morale by encouraging them to recognize their achievements and to look forward to future projects. This is important as it helps the team to move on, to learn from their experiences, and to maintain a positive attitude. It is essential to recognize people's efforts and achievements, even if the project was not completed, and to encourage them to move forward.
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The following data are for Ruldofo limited. It relates to the February 2022. The management forecast to produce and sell 5250 units. The following information is also available BWP
Direct material 94,500
Direct labour 63,000
Direct Expenses 15,600
Depreciation Factory Machinery (all Fixed) 21,000
Other manufacturing overheads (70% variable) 44,300
Selling and administrative expenses (all fixed) 31,500
Required: Calculate the following:
1) Prime costs per unit
2) Total conversion costs
3) Total manufacturing costs
4) Total period costs
the calculations are as follows:
Prime costs per unit = 33 BWP per unitTotal conversion costs = 94,010 BWPTotal manufacturing costs = 217,400 BWPTotal period costs = 75,800 BWP1. Prime costs per unit:
Prime costs per unit can be calculated by adding up the direct material, direct labor, and direct expenses, and then dividing by the number of units produced.
Prime costs per unit = (Direct material + Direct labor + Direct expenses) / Number of units produced
Prime costs per unit = (94,500 + 63,000 + 15,600) / 5250
Prime costs per unit = 173,100 / 5250
Prime costs per unit = 33 BWP per unit
2. Total conversion costs:
Total conversion costs include direct labor and manufacturing overhead costs.
Total conversion costs = Direct labor + Manufacturing overhead costs
Total conversion costs = 63,000 + (70% of 44,300)
Total conversion costs = 63,000 + (0.7 * 44,300)
Total conversion costs = 63,000 + 31,010
Total conversion costs = 94,010 BWP
3. Total manufacturing costs:
Total manufacturing costs include prime costs and manufacturing overhead costs.
Total manufacturing costs = Prime costs + Manufacturing overhead costs
Total manufacturing costs = (Direct material + Direct labor + Direct expenses) + Manufacturing overhead costs
Total manufacturing costs = 94,500 + 63,000 + 15,600 + 44,300
Total manufacturing costs = 217,400 BWP
4. Total period costs:
Total period costs include manufacturing overhead costs, selling expenses, and administrative expenses.
Total period costs = Manufacturing overhead costs + Selling and administrative expenses
Total period costs = 44,300 + 31,500
Total period costs = 75,800 BWP
So, the calculations are as follows:
Prime costs per unit = 33 BWP per unit
Total conversion costs = 94,010 BWP
Total manufacturing costs = 217,400 BWP
Total period costs = 75,800 BWP
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An organization has struggled to track employee training and development plans. Which type of HR technology system could facilitate this tracking? Answers a.Mobile learning. b.Knowledge management system. c. Skills bank and skills tracking. d. Learning management system
A learning management system (LMS) could facilitate the tracking of employee training and development plans for an organization that has struggled in this area. Therefore option(d) is correct.
A learning management system (LMS) is a type of HR technology system that is specifically designed to manage and track employee training and development activities. It provides a centralized platform where organizations can create, deliver, and track various learning programs and courses.
With an LMS, organizations can easily create and assign training courses to employees, track their progress, and monitor completion rates. The system allows employees to access training materials, participate in online courses, and complete assessments or quizzes.
It also provides reporting and analytics features, enabling HR professionals and managers to generate reports on training activities, identify skill gaps, and assess the effectiveness of training programs.
By implementing an LMS, the organization can streamline and automate the process of tracking employee training and development plans. It offers a convenient and efficient way to manage training activities, ensuring that employees receive the necessary training and development opportunities.
Additionally, the LMS provides a centralized repository for training materials, making it easier to organize and update content. Overall, an LMS can enhance the organization's ability to track and monitor employee training, leading to improved workforce skills and performance.
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The Miami Company just paid a cash dividend of $4 per share. Investors require a 20 percent return from investments such as this. What would the stock of Miami Company sell for if the dividend was expected to grow at 15 percent per year for the next three years and then level off at 5 percent per year thereafter? Round your final answer to two decimal places. Question 21 3 pts The Miami Company just paid a cash dividend of $2 per share. Investors require a 20 percent return from investments such as this. If the dividend is expected to grow at a steady 5 percent per year, what is the current value of the stock? Round your final answer to two decimal places.
To calculate the stock price of the Miami Company, we can use the Gordon Growth Model, which values a stock based on its expected dividends and the required rate of return.
In the first scenario, where the dividend is expected to grow at 15% for the next three years and then level off at 5% thereafter, we can calculate the stock price as follows:
Dividend in Year 1: $4 * (1 + 0.15) = $4.60
Dividend in Year 2: $4.60 * (1 + 0.15) = $5.29
Dividend in Year 3: $5.29 * (1 + 0.15) = $6.08
From Year 4 onwards, the dividend growth rate levels off at 5%.
Using the Gordon Growth Model formula: Stock Price = Dividend / (Required Rate of Return - Dividend Growth Rate)
In this case, the required rate of return is 20%, and the dividend growth rate is 5%.
Stock Price = $6.08 / (0.20 - 0.05) = $40.53 (rounded to two decimal places)
Therefore, the stock of the Miami Company would sell for approximately $40.53 per share under the given conditions.
In the second scenario, where the dividend is expected to grow at a steady 5% per year, we can calculate the current value of the stock as follows:
Dividend: $2
Using the Gordon Growth Model formula with a dividend growth rate of 5% and a required rate of return of 20%:
Stock Price = $2 / (0.20 - 0.05) = $13.33 (rounded to two decimal places)
Therefore, the current value of the stock of the Miami Company would be approximately $13.33 per share in this scenario.
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Several fectors affect a firm's need for extemal funds. Evaluate the effect of each following factor and piace a check next to each factor that is likely to increase a firm's need for external capital-that is, its AFN (addibonal funds needed), Check all that apply. The firm's inventory tumover decreases, with no effect on the sales forecast and the cost of goods sold as a percentage of sales. The firm increases its dividend payout ratio. The firm improves its production system and increases its profit margin. Accounts payable and accrued habilities represent obligabons that the firm must pay off. Assuming everything else hoids constant, if they increase, the firm's AFN will
The factors that are likely to increase a firm's need for external capital (AFN) are: The firm's inventory turnover decreases and The firm increases its dividend payout ratio.
Based on the given factors, the effect on a firm's need for external funds (AFN) can be evaluated as follows:
The firm's inventory turnover decreases, with no effect on the sales forecast and the cost of goods sold as a percentage of sales.
Check: This factor is likely to increase the firm's need for external capital. A decrease in inventory turnover indicates that the firm is holding inventory for a longer period, tying up its funds in inventory rather than generating sales.
The firm increases its dividend payout ratio.
Check: This factor is likely to increase the firm's need for external capital. By increasing the dividend payout ratio, the firm distributes more of its profits to shareholders, leaving fewer funds available for reinvestment in the business. Therefore, additional external funds may be required for investment in growth and operations.
The firm improves its production system and increases its profit margin.
No check: This factor is not likely to increase the firm's need for external capital. Improving the production system and increasing the profit margin can generate higher internal funds, reducing the reliance on external capital.
Accounts payable and accrued liabilities represent obligations that the firm must pay off.
No check: This factor is not likely to increase the firm's need for external capital. Accounts payable and accrued liabilities are short-term obligations that the firm must pay, but they do not directly impact the need for additional external funds.
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Sustainable Consults Co. pays out 40% of its earnings as dividends. Net Income for the firm is $20,000. Sales are $1,000,000.
Debt outstanding is only $1,000 and common equity is about 133,330. In the lectures, a formula was provided that can help
project a stable dividend growth rate for a firm. What is the stable dividend growth rate for this firm?
The stable dividend growth rate for Sustainable Consults Co. is calculated to be 3.6% based on its dividend payout ratio, retention ratio, and return on equity, indicating the expected annual growth of dividends.
To calculate the stable dividend growth rate for Sustainable Consults Co., we need to use the formula provided in the lectures. Given the net income, sales, and equity information, we can determine the stable dividend growth rate for the firm. The formula for calculating the stable dividend growth rate is: Dividend Payout Ratio × Retention Ratio × Return on Equity (ROE).
In this case, the dividend payout ratio is 40% (0.40) since the company pays out 40% of its earnings as dividends. The retention ratio can be calculated as (1 - Dividend Payout Ratio), which is 60% (0.60) in this case. The return on equity (ROE) can be calculated as Net Income divided by Common Equity, which is approximately 0.15 (20,000/133,330).
Now we can calculate the stable dividend growth rate using the formula:
Stable Dividend Growth Rate = Dividend Payout Ratio × Retention Ratio × ROE
= 0.40 × 0.60 × 0.15
= 0.036 or 3.6%
Therefore, the stable dividend growth rate for Sustainable Consults Co. is 3.6%. This means that the company can expect its dividends to grow at an annual rate of 3.6% based on its current dividend payout ratio, retention ratio, and return on equity.
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Using the PVA and EAR formula to calculate the principal amount of $995433:
a. i. Initial fortnightly payment of a 20-year mortgage. ii. Fortnightly payment in Year 5 – 8 if the interest rate is increased by 2.5% after 4 years. iii. Fortnightly payment from Year 9 onwards if the interest rate is further increased by 2% after 8 years. iv. Effective annual interest rate for Year 1-4, Year 5-8, and Year 9 onwards. v. Average effective annual interest rate of this mortgage. b.Explain how the extra fortnightly repayment affects the terms of the mortgage.
Using the PVA and EAR formula to calculate the principal amount of 995433, the initial fortnightly payment of a 20-year mortgage is given by;The formula for calculating the present value of annuity.
PVA = A * [(1 - (1 + r/n)^(-nt)) / (r/n)]PVA
= 995,433r
= Annual interest rate
= 4.75% / 100
= 0.0475n
= Compounding periods per year
= 26t = Number of years
= 20A
= PVA / [(1 - (1 + r/n)^(-nt)) / (r/n)]A
= 995,433 / [(1 - (1 + 0.0475/26)^(-26*20)) / (0.0475/26)]A
= 2,812.11If the interest rate is further increased by 2% after 8 years, the fortnightly payment from Year 9 on wards is given by;The formula for calculating the present value of annuit.
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How different do you think the United States would have been
without political parties?
Without political parties, the United States would have likely experienced a fundamentally different political landscape. The absence of parties would have resulted in a shift in power dynamics, altered policy-making processes, and changed the way elections are conducted.
The United States' political system has been deeply rooted in the existence of political parties since its early days. Without political parties, the country would have witnessed a significant shift in power dynamics. Instead of the current two-party system dominated by Democrats and Republicans, the absence of parties might have led to the emergence of various factions and interest groups vying for power.
Without parties, the process of developing and passing legislation would likely be more fluid and individual-centric. Elected officials would need to build support and consensus on a case-by-case basis, negotiating with various stakeholders to push their agenda forward. This could lead to more diverse policy outcomes, as representatives would not be bound by party platforms and would have greater freedom to form alliances based on specific issues or regional interests.
Moreover, the absence of parties would have changed the way elections are conducted. Currently, parties play a central role in candidate selection, campaign financing, and mobilizing voters. Without party affiliation, elections would become more candidate-centered, relying heavily on individual qualifications and platforms. Voters would need to evaluate candidates based on their personal attributes, policy positions, and track records rather than relying on party labels for guidance.
Overall, the absence of political parties in the United States would have had profound implications on the power structure, policy-making processes, and electoral dynamics. While it is challenging to predict the exact outcomes, it is likely that the political landscape would have been more fragmented, policy decisions more fluid, and elections more candidate-centric.
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A technology startup company has a balance sheet titem that lists a patent valued at 50% of total assets while current liabilities are isted at 60% of total liabilies and equity Which senous risk exposure does this company face? Insufficient current assets to meet current liabilities Insufficient cash flows to cover accounts payable Inflated value of the patent Inflated shareholdef Dequity
The serious risk exposure that this technology startup company faces is an inflated value of the patent. A patent valued at 50% of total assets implies that a significant portion of the company's assets is attributed to the patent.
However, if the value of the patent is inflated or overestimated, it can lead to a misrepresentation of the company's financial position. This can have several negative consequences. Firstly, it can result in an overvaluation of the company's assets, potentially leading to misleading financial statements and inaccurate assessments of the company's worth. Secondly, an inflated value of the patent can impact investment decisions, as investors may rely on this information to evaluate the company's potential for generating future income.
Lastly, an overvaluation of the patent can mask underlying financial issues and expose the company to financial instability if the actual value of the patent does not align with its reported value. Therefore, it is crucial for the company to accurately assess and value its patent to mitigate this risk exposure.
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Internal quality audit is considered as one of the tools for improvement. Explain how internal quality audit is managed and conducted in the company.
Internal quality audits are a tool for improvement in a company. They are managed and conducted through a systematic process involving planning, conducting the audit, analyzing findings, and implementing corrective actions.
Internal quality audits play a crucial role in assessing and improving the effectiveness of a company's quality management system. The management and conduct of internal quality audits involve several key steps.
Firstly, the company needs to establish a clear audit plan. This includes defining the scope of the audit, identifying the audit criteria and objectives, and determining the audit schedule. The audit plan ensures that all relevant areas and processes are thoroughly evaluated.
Next, the audit is conducted by a team of qualified auditors. They systematically review processes, procedures, documentation, and records against established standards and requirements. Auditors gather evidence, conduct interviews, and perform observations to assess compliance and identify areas for improvement.
After the audit, the findings are analyzed and documented in an audit report. The report outlines any non-conformities or areas of concern, as well as opportunities for improvement. The report serves as a basis for corrective actions and improvement initiatives.
Finally, the company implements corrective actions based on the audit findings. This involves addressing identified non-conformities, making necessary process adjustments, and monitoring the effectiveness of the implemented actions.
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The M2 money supply consists of ____
a. MI plus savings deposits. b. MI plus savings deposits, money market mutual funds, and checkable deposits. c. savings deposits, money market mutual funds, and checkable deposits. d. MI plus savings deposits, money market mutual funds, and small denomination CDs. e. savings deposits, money market mutual funds, and small denomination CDs.
The M2 money supply consists of savings deposits, money market mutual funds, and small denomination CDs.
The M2 money supply is a measure of the money stock in an economy that includes a broader range of financial assets compared to the narrower measure of the M1 money supply. It represents a broader definition of money that includes not only currency (MI) and checkable deposits but also other types of liquid assets held by individuals and institutions.
Among the options provided, the correct answer is e) savings deposits, money market mutual funds, and small denomination CDs. These components are included in the M2 money supply because they are considered relatively liquid and readily accessible forms of money. Savings deposits are accounts held by individuals in banks or other financial institutions, while money market mutual funds are investment vehicles that invest in short-term debt securities. Small-denomination CDs refer to certificates of deposit with lower values.
The inclusion of these additional components in the M2 money supply reflects the broader range of financial assets that are widely accepted as a medium of exchange and store of value in an economy.
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Adam Harris started a new business called Jom Cetak Sdn. Bhd, which provides printing services, on 1 April 2021. The following is a list of the business's transactions for April 2021:
Adam Harris made an RM200,000 cash investment in the company.
Jom Cetak paid RM450,000 for a piece of land and a building. The company made a cash payment of RM165,000 and signed a note payable for the remainder.
Jom Cetak purchased office equipment from Wow Interiors Sdn. Bhd. for RM30,000. The company made a cash payment of RM17,000 and agreed to pay the balance within 60 days.
Jom Cetak purchased a motorcycle on credit for RM3,400 from Motorex Sdn. Bhd. The motorcycle is to be used for customer deliveries. The company agreed to pay Motorex Sdn. Bhd. within ten days.
Jom Cetak completed payment on the account payable to Motorex Sdn. Bhd.
Jom Cetak obtained an RM30,000 loan from Bank Kaya and signed a six-month note payable.
Based on the above information, you are required to:
a. Show the effects of all the above transactions in the accounting equation
b. Prepare the journal entries to record all the transactions
a. The effects of the transactions on the accounting equation are as follows:
1. Adam Harris's cash investment of RM200,000 increases the company's assets (cash) and equity (owner's equity).
2. The purchase of land and a building for RM450,000 decreases the company's assets (cash) and increases its assets (land and building) and liabilities (note payable).
3. The purchase of office equipment for RM30,000 decreases the company's assets (cash) and increases its assets (office equipment) and liabilities (accounts payable).
4. The purchase of a motorcycle on credit for RM3,400 increases the company's assets (motorcycle) and liabilities (accounts payable).
5. The completion of payment on the account payable to Motorex Sdn. Bhd. decreases the company's liabilities (accounts payable) and assets (cash).
6. The loan obtained from Bank Kaya for RM30,000 increases the company's assets (cash) and liabilities (note payable).
The accounting equation can be summarized as: Assets = Liabilities + Owner's Equity.
b. Journal entries to record the transactions:
1. Cash 200,000
Owner's Equity 200,000
2. Land and Building 450,000
Cash 165,000
Note Payable 285,000
3. Office Equipment 30,000
Cash 17,000
Accounts Payable 13,000
4. Motorcycle 3,400
Accounts Payable 3,400
5. Accounts Payable 3,400
Cash 3,400
6. Cash 30,000
Note Payable 30,000
These journal entries reflect the effects of each transaction on the relevant accounts in the company's books.
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Bob Jones invests $100,000 into a retirement account. Bob expects to earn 6% interest
compounded annually. Bob plans to retire when the account balance exceeds $300,000.
In what year will the account balance be greater than $300,000 and Bob will retire?
On June 1, 2022, Carson Automotive issues 7% stated rate bonds with a total face
amount of $250,000. The bonds mature in ten (10) years on June 1, 2032.
Interest is paid semiannually on December 1 and June 1. The market rate of interest, on June 1, 2022, for similar bonds was 8%.
Determine the price of the bond on June 1, 2022. Please post formula with answer in excel format
Present value = 3.5% x $250,000 / (1 + 8%/2)^(20) + $250,000 / (1 + 8%/2)^(20)Present value = $128,593.69 + $53,426.36Present value = $182,020.05Answer: $182,020.05Formula in Excel format:=(0.035*250000)/(1+0.08/2)^20+250000/(1+0.08/2)^20.
Bob Jones invests $100,000 in a retirement account at a 6% interest compounded annually. The account balance will exceed $300,000 when he retires. We are to determine the year when he will retire.Using the formula for compound interest, A = P(1 + r/n)^(nt) where A is the amount, P is the principal, r is the rate, t is the time in years, and n is the number of times compounded annually. We have P = $100,000, r = 6%, n = 1, and A = $300,000.Therefore, 300,000 = 100,000(1 + 0.06/1)^(1t)Simplifying the above equation gives us: 3 = 1.06^tTaking the logarithm of both sides, we have log(3) = t × log(1.06)Then t = log(3) / log(1.06) ≈ 22.79The year Bob Jones retires is the current year, 2021, plus 23 years ≈ 2044. Answer: 2044On June 1, 2022, Carson Automotive issues bonds with a total face amount of $250,000 and a stated rate of 7%.
The bonds mature in ten years, and interest is paid semiannually on June 1 and December 1. The market rate of interest, on June 1, 2022, for similar bonds was 8%.To determine the price of the bond, we can use the present value formula:Present value = Interest payments + Par value / (1 + r/n)^(nt)where r is the market rate, n is the number of payments per year, t is the total number of payments, and Par value is the face value of the bond.In this case, r = 8%, n = 2, t = 10 x 2 = 20, and Par value is $250,000. Each interest payment is half the stated rate of 7% = 3.5%.Therefore, Present value = 3.5% x $250,000 / (1 + 8%/2)^(20) + $250,000 / (1 + 8%/2)^(20)Present value = $128,593.69 + $53,426.36Present value = $182,020.05Answer: $182,020.05Formula in Excel format:=(0.035*250000)/(1+0.08/2)^20+250000/(1+0.08/2)^20
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a student, with a well paid job on Wall Street she now takes the plane to Boston to visit her grandmother. For this student, travel by Redhound bus is A. a complement good. B. a normal good. C. a substitute good. D. an inferior good. E. a good with negative preferences.
For the student in this scenario, travel by Redhound bus can be considered a substitute good. A substitute good refers to a product or service that can be used in place of another to fulfill a similar need or purpose.
In this case, the student has the financial means to afford a well-paid job on Wall Street and chooses to take a plane to Boston to visit her grandmother. However, if the student were to consider taking the Redhound bus instead, it would serve as a substitute mode of transportation to reach the same destination.
While the student has the ability to choose between different modes of travel, the Redhound bus becomes a substitute good for the plane. This implies that if the price or availability of plane tickets becomes less favorable or if the student desires a different travel experience, she may opt for the Redhound bus as an alternative. Therefore, travel by Redhound bus can be seen as a substitute good for the student in this particular scenario.
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What is a fixed-rate mortgage? A. A mortgage in which a fixed interest rate is specified for the term of the mortgage. B. A mortgage that can be renewed before the end of the current mortgage term without paying a penalty. C. A mortgage that restricts your ability to pay off the mortgage balance during the mortgage term unless you are willing to pay a financial liability. D. A mortgage in which the interest charged on the loan changes in response to movements in the prime lending rate
A fixed-rate mortgage is a type of mortgage loan in which the interest rate remains constant, or fixed, for the entire duration of the loan. This means that the borrower's monthly mortgage payments also remain the same throughout the term of the mortgage. Regardless of any changes in the market interest rates, the interest rate on a fixed-rate mortgage does not fluctuate. This provides borrowers with the advantage of predictability and stability in their mortgage payments over time.
A. A mortgage in which a fixed interest rate is specified for the term of the mortgage.
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A fixed-rate mortgage is option(A) i.e.A mortgage in which a fixed interest rate is specified for the term of the mortgage.
A fixed-rate mortgage is a type of mortgage loan in which the interest rate remains constant, or fixed, for the entire duration of the loan. This means that the borrower's monthly mortgage payments also remain the same throughout the term of the mortgage. Regardless of any changes in the market interest rates, the interest rate on a fixed-rate mortgage does not fluctuate. This provides borrowers with the advantage of predictability and stability in their mortgage payments over time.
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Ryun Inc has an order to manufacture several specialty products. The beginning cash and equity balances were $105,000. All other beginning balances were $0. Use your T-Account worksheet to record the following transactions: 1. Purchased $44,000 of direct materials on account. 2. Used $40,000 direct materials in production during the month. 3. Manufacturing employees worked 2,500 hours and were paid at a rate of $15 per hour. Paid cash for the direct labor expense. 4. The company applies OH based on direct labor cost. This year's annual overhead is estimated to be $450,000. The actual direct labor cost last year was $800,000. The company estimates it will spend $750.000 in labor cost this year. 5. Compute and record the OH applied to the job. 6. Completed units costing $50,000 during the month. 7. Sold 5.000 units costing $5.50 during the month. The selling price is 40% above cost. Received cash. 8. This year, the company paid $25,400 cash for actual OH expenses incurred. Last year the: company paid $86,000 cash for OH expenses. Record the actual OH costs. 9. The company considers OH differences less than $4,000 to be immaterial. By how much was OH over applied or under applied? Record the difference. Now, CHOOSE 6 CORRECT STATEMENTS from the choices below. You should have 6 check marks indicating your answer choices. Each answer choice is worth 4 points: 1. The predetermined overhead rate is? 2. The direct labor that is debited to labor expense is? 3. How much are the total current manufacturing costs? 4. How much revenue did the company earn? 5. By how much was MOH over/under applied? 6. How much are the costs of goods manufactured? The cost of goods manufactured is $27,500 The amount of sales revenue earned was $38,500 The cost of goods manufactured is $40,000 The direct labor that will be debited to direct labor expense is $160,137 The amount of over/under applied MOH is $0 The total current manufacturing costs are $100,000 The amount of over/under applied MOH is $2,950 The direct labor that will be debited to direct labor expense is $22,500 The direct labor that will be debited to direct labor expense is $37,500 The predetermined MOH rate is $.60 The amount of over/under applied MOH is $667 The amount of sales revenue earned was $50,000 The direct labor that will be debited to direct labor expense is $0 The amount of sales revenue earned was $27.500 The predetermined MOH rate is $.75 The direct iabor that will be debited to direct tabor expense is $162,833 The cost of goods manufactured is $50,000 The predetermined MOH rate is $1.67
Ryun Inc recorded various transactions related to manufacturing specialty products, starting with a cash and equity balance of $105,000. The transactions included purchasing direct materials, using them in production, paying manufacturing employees, etc,.
The company also recorded actual overhead expenses and determined the over/under application of overhead. To answer the given statements, the cost of goods manufactured is $27,500, the amount of sales revenue earned is $38,500, the direct labor debited to direct labor expense is $22,500, the total current manufacturing costs are $100,000, the over/under application of MOH is $2,950, and the predetermined overhead rate is $1.67.
Ryun Inc started with a cash and equity balance of $105,000 and recorded transactions throughout the month. They purchased $44,000 of direct materials on account and used $40,000 of those materials in production. The manufacturing employees worked 2,500 hours, and their wages of $15 per hour were paid in cash as direct labor expenses.
The company applied overhead (OH) based on direct labor cost. The annual overhead estimate for this year is $450,000, and the actual direct labor cost of the previous year was $800,000. The company expects to spend $750,000 on labor cost this year. The OH applied to the job can be computed based on these values.
During the month, Ryun Inc completed units costing $50,000 and sold 5,000 units costing $5.50 each. The selling price was 40% above the cost. They received cash for the sales revenue.
The company also recorded actual overhead costs. They paid $25,400 cash for this year's overhead expenses and $86,000 cash for last year's expenses.
To determine the over/under application of overhead, the company considers differences less than $4,000 to be immaterial. The difference can be calculated based on the applied overhead and actual overhead costs.
In response to the given statements, the cost of goods manufactured is $27,500, the amount of sales revenue earned is $38,500, the direct labor debited to direct labor expense is $22,500, the total current manufacturing costs are $100,000, the over/under application of MOH is $2,950, and the predetermined overhead rate is $1.67.
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Consider the case of Kuhn Co. Kuhn Co. Is considering a new project that will require an initial investment of $20 million. It has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. Kuhn has noncallable bonds outstanding that mature in flve years with a face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050.76. The yield on the company's current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell shares of preferred stock that pay an annual dividend of $9 at a price of $95.70 per share. Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $33.35 per share, and it is expected to pay a dividend of $1.36 at the end of next year. Flotation costs will represent 3% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 8.7%, and they face a tax rate of 25%. What will be the WACC for this project? (Note: Round your intermediate calculations to two decimal places.)
The WACC of Kuhn Co. for the new project is 10.69%.
:Given data Initial Investment = $20 million Debt = 45%Preferred Stock = 4%Common Equity = 51%Noncallable bonds outstanding that mature in five years Annual Coupon Rate = 10%Market Price = $1,050.76Face Value = $1,000Yield is a good approximation of the yield on any new bonds that it issues. Company can sell preferred stock with an annual dividend of $9 and a price of $95.70 per share. Common stock is selling for $33.35 per share. Dividend expected at the end of next year is $1.36Flotation costs will represent 3% of the funds raised by issuing new common stock. Company is projected to grow at a constant rate of 8.7%.Tax rate = 25%We will calculate the cost of each component of capital.1. Cost of Debt Cost of Debt = Annual Interest payment/Market Value of Debt Annual Interest payment = 10% * Face Value = $100Market Value of Debt = $1,050.76Therefore,Cost of Debt = (10% * $1,000)/$1,050.76 = 9.5%2. Cost of Preferred Stock Cost of Preferred Stock = Annual Dividend/Net Proceeds of Preferred Stock Annual Dividend = $9Net Proceeds of Preferred Stock = $95.70Therefore,Cost of Preferred Stock = $9/$95.70 = 9.4%3. Cost of Common Equity We will use the CAPM to calculate the cost of common equity. Cost of Common Equity = Risk-free Rate + Beta * Market Risk Premium Risk-free rate = 1.9% Beta = 1.55Market Risk Premium = 8.5%Therefore, Cost of Common Equity = 1.9% + (1.55 * 8.5%) = 14.075% We have to adjust the cost of common equity for the flotation costs, as they represent 3% of the funds raised by issuing new common stock.
Cost of Common Equity = 14.075% * (1 - 3%) = 13.6%4. Weighted Average Cost of Capital (WACC)WACC = (w1 * r1) + (w2 * r2) + (w3 * r3)Where, w1 = Weight of Debt = 45%w2 = Weight of Preferred Stock = 4%w3 = Weight of Common Equity = 51%r1 = Cost of Debt = 9.5%r2 = Cost of Preferred Stock = 9.4%r3 = Cost of Common Equity = 13.6%Therefore,WACC = (0.45 * 9.5%) + (0.04 * 9.4%) + (0.51 * 13.6%) = 10.69%Hence, the WACC of Kuhn Co. for the new project is 10.69%.
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