If a property will produce net cash flow that grows at a rate of 1.5% per year in perpetuity, and the opportunity cost of capital is 12%, then what is the "cap rate" (net cash flow / property value) for the property?
(a) 8%.
(b) 10%.
(c) 10.5%.
(d) 12%.

Answers

Answer 1

Answer:

(c) 10.5%.

Explanation:

Calculation to determine what is the "cap rate

Using this formula

x 1/r-g

Let plug in the formula

1/12-1.5


Related Questions

On January 1, Year 7, Colorado Corp. purchased a machine having an estimated useful life of 8 years and no salvage value. The machine was depreciated by the double-declining-balance (DDB) method for both financial statement and income tax reporting. On January 1, Year 9, Colorado justifiably changed to the straight-line method for both financial statement and income tax reporting. Accumulated depreciation at December 31, Year 8, was $525,000. If the straight-line method had been used, the accumulated depreciation at December 31, Year 8, would have been $300,000. The retroactive adjustment to the accumulated depreciation account on January 1, Year 9, as a result of the change in depreciation method is

Answers

Answer:

Colorado Corp.

The retroactive adjustment to the accumulated depreciation account on January 1, Year 9, as a result of the change in depreciation method is:

= $0.

Explanation:

a) Data and Calculations:

Accumulated depreciation at December 31, Year 8 based on double declining balance method = $525,000

Accumulated depreciation at December 31, Year 8 based on straight-line method = $300,000

The required adjustment to the accumulated depreciation account = $0 ($525,000 - $525,000)

b) The accumulated depreciation account does not require a retrospective adjustment.  It will remain at $525,000 while the company continues to apply the straight-line method going forward. The change is called a change in accounting estimate and not a change in accounting principle that requires retrospective application and adjustment to the previous years' accounts.


Briefly state the reasons why a company would not wish to distribute all its profits to its shareholders.​

Answers

Answer:

Explanation:

The profits of a company may be used to invest in equipment, land or some other capital as a one time purchase.

the company may anticipate that they will not make a profit in the following year so they need the current year profits to absorb that loss.

Compute the payback period for each of these two separate investments:

a. A new operating system for an existing machine is expected to cost $290,000 and have a useful life of four years. The system yields an incremental after-tax income of $83,653 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $11,000.
b. A machine costs $200,000, has a $15,000 salvage value, is expected to last eleven years, and will generate an after-tax income of $46,000 per year after straight-line depreciation.

Answers

Answer:

1.89 years

3.18 years

Explanation:

Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows

Payback period = Amount invested / cash flow

Cash flow = net income + depreciation

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

(290,000 -11,000) / 4 = 69,750

Cash flow = $83,653 + 69,750 = 153,403

Payback = $290,000 / 153,403 = 1.89

(200,000 - 15,000) / 11 = 16,818.18

Cash flow = $46,000 +  16,818.18 = 62,818.18

Payback = 200,000 / 62,818.18 = 3.18

1.57

MacKenzie Company sold $400 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 2.0% service charge for sales on its credit cards and credits MacKenzie's account immediately when sales are made. The journal entry to record this sale transaction would be:

Answers

Answer:

Date                         Account Title                               Debit                  Credit

XX-XX-XXXX          Cash                                             $392

                                Credit card service charge         $   8

                                Sales                                                                        $400

Working

Cash :

= 400 * (1 - 2% service charge)

= $392

Credit card service charge:

= 400 * 2%

= $8

If the subtotal of the income statement debit column is $250,000, the subtotal of the income statement credit column is $300,000, and the total of the Statement of Retained Earnings debit column is $475,000, what is the beginning balance in Retained Earnings

Answers

Answer:

$425,000

Explanation:

Calculation to determine the beginning balance in Retained Earnings

First step is to prepare the Income Statement

Revenues $300,000

Less Expenses ($250,000)

Profit $50,000

Now let calculate the beginning balance in Retained Earnings

Using this formula

Beginning balance in Retained Earnings= Statement of Retained Earnings debit column -Income Statement Profit

Let plug in the formula

Beginning balance in Retained Earnings=$475,000-$50,000

Beginning balance in Retained Earnings=$425,000

Therefore the beginning balance in Retained Earnings is $425,000

Consider the following data that gives the quantity produced and unit price for three different goods across two different years. Assume that the base year is 2015.Good 2015 Price 2015 Quantity 2016 Price 2016 QuantityA $2 250 $3 200B $3 300 $ 2 400C $4 400 $5 500What was the real gross domestic product (GDP) in 2016?A. $3,000
B. $3,350
C. $3,600
D. $3,900
E. $8,550

Answers

Answer:

C. $3,600

Explanation:

The value of gross domestic product after adjusting the inflation effect in the valuation of the product.

Calculate the real GDP as follow

Real GDP of 2016 = ( $2 x 200 ) + ( $3 x 400 ) + ( $4 x 500 )

Real GDP of 2016 = 400 + 1200 + 2000

Real GDP of 2016 = $3600

Hence, real gross domestic product (GDP) in 2016 is $3,600

Penelope withdraws $4,115.23 at the end of a five-year investment yielding 4% interest, compounded annually. How much did Penelope originally deposit

Answers

Answer:

$3,382.42

Explanation:

The amount originally deposited by Penelope (PV) can be determined using a Financial calculator as follows :

FV = $4,115.23

PMT = $0

N = 5

I = 4 %

P/YR  = 1

PV = ?

The PV is $3,382.42

thus,

Penelope originally deposited $3,382.42

Exercise 4-9 Recording purchases, sales, returns, and shipping LO P1, P2 Following are the merchandising transactions of Dollar Store. Nov. 1 Dollar Store purchases merchandise for $2,900 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1. 5 Dollar Store pays cash for the November 1 purchase. 7 Dollar Store discovers and returns $250 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund. 10 Dollar Store pays $145 cash for transportation costs for the November 1 purchase. 13 Dollar Store sells merchandise for $3,132 with terms n/30. The cost of the merchandise is $1,566. 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $270 and cost $135; the items were not damaged and were returned to inventory. Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.

Answers

Answer:

Dollar Store

Journal Entries:

Nov. 1 Debit Inventory $2,900

Credit Accounts Payable $2,900

To record the purchase of goods on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.

Nov. 5 Debit Accounts Payable $2,900

Credit Cash $2,842

Credit Cash Discount $58

To record the payment for the goods, including discounts.

Nov. 7 Debit Cash $250

Credit Inventory $250

To record the return of goods for cash.

Nov. 10 Debit Freight-in $145

Credit Cash $145

To record payment for transportation of goods.

Nov. 13 Debit Accounts Receivable $3,132

Credit Sales Revenue $3,132

To record the sale of goods with terms n/30.

Debit Cost of goods sold $1,566

Credit Inventory $1,566

To record the cost of goods sold.

Nov. 16 Debit Sales Returns $270

Credit Accounts Receivable $270

To record the return of goods.

Debit Inventory $135

Credit Cost of goods sold $135

To record the cost of goods returned.

Explanation:

a) Data and Analysis:

Nov. 1 Inventory $2,900 Accounts Payable $2,900

on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.

Nov. 5 Accounts Payable $2,900 Cash $2,842 Cash Discount $58

Nov. 7 Cash $250 Inventory $250

Nov. 10 Freight-in $145 Cash $145

Nov. 13 Accounts Receivable $3,132 Sales Revenue $3,132

with terms n/30

Cost of goods sold $1,566 Inventory $1,566

Nov. 16 Sales Returns $270 Accounts Receivable $270

Inventory $135 Cost of goods sold $135

g The declaration, record, and payment dates in connection with a cash dividend of $59,400 on a corporation's common stock are July 9, August 31, and October 1. Journalize the entries required on each date.

Answers

Answer:

Dr Retained earnings $59,400

Cr Dividend payable $59,400

August 31 No entry

October 1

Dr Dividend payable $59,400

Cr Cash $59,400

Explanation:

Preparation of the journal entries required on each date.

July 9

Dr Retained earnings $59,400

Cr Dividend payable $59,400

August 31 No entry

October 1

Dr Dividend payable $59,400

Cr Cash $59,400

Purple Lemon Fruit Company has two divisions: one is very risky, and the other exhibits significantly less risk. The company uses its investors’ overall required rate of return to evaluate its investment projects. It is most likely that the firm will become:

Answers

Answer: b. Riskier over time, and its value will decrease

Explanation:

Because the company is using the investor's required rate of return instead of one that takes into account the riskiness of the two division, you find that risk is not being adequately accounted for.

This would lead to a situation where the company becomes riskier because it is not accounting for its risk properly. With higher risk, the company will be unable to seek funding easily which would lead to lower investments being undertaken and an overall decrease in company value.

Arisk-neutral consumer is deciding whether to purchase a homogeneousproduct from one of two firms. One firm produces an unreliable product andthe other a reliable product. At the time of the sale, the consumer is unable todistinguish between the two firmsîproducts. From the consumerîs perspec-tive, there is an equal chance that a given firmîs product is reliable or unreli-able. The maximum amount this consumer will pay for an unreliable productis $0, while she will pay $50 for a reliable product.
a. Given this uncertainty, what is the most this consumer will pay to purchaseone unit of this product?
b. How much will this consumer be willing to pay for the product if the firmoffering the reliable product includes a warranty that will protect the con-sumer? Explain

Answers

Answer:

Uncertainty over Reliable and Unreliable Product

a. Given this uncertainty, the most this consumer will pay to purchase one unit of this product is $25

b. The amount that this consumer will be willing to pay for the product if the firm offering the reliable product includes a warranty that will protect the consumer is $50.

c. This is because the stated maximum amount that the consumer is willing to pay for the reliable product is $50.  She is not prepared to spend more than this amount on the reliable product.

Explanation:

a) Data and Calculations:

                                                                    Unreliable     Reliable

Maximum amount the consumer will pay      $0              $50

Probability of reliability                                    0.5              0.5

Expected amount to pay for either product  $0              $25 ($50 * 0.5)

a. Given this uncertainty, the most this consumer will pay to purchase one unit of this product is $25 ($0 + $25)

Compute a three-period moving average forecast given demand for shopping carts for the last five periods. (Round all your answers to two decimal points.) Period Demand 1 58 2 54 3 60 4 53 5 63

Answers

Answer:

Computation of a Three-Period Moving Average Forecast

Period  Demand   3-period moving average

1                58

2               54

3               60          57.33

4               53          55.67

5              63           58.67

Explanation:

a) Data and Calculations:

Period  Demand   3-period moving average

1                58

2               54

3               60          57.33 (58 + 54 + 60)/3

4               53          55.67 (54 + 60 + 53)/3

5              63           58.67 (60 + 53 + 63)/3

b) The three-period moving average is computed by summing the demand for periods 1, 2, and 3 and dividing it by 3.  The result becomes the moving average for period 3.  This process is repeated by eliminating the first one and adding the next number until the end.

Eric receives a portion of his income from his holdings of interest-bearing U.S. government bonds. The bonds offer a real interest rate of 4.5% per year. The nominal interest rate on the bonds adjusts automatically to account for the inflation rate. The government taxes nominal interest income at a rate of 10%. The following table shows two scenarios: A low-inflation scenario and a high- inflation scenario. Given the real interest rate of 4.5% per year, find the nominal interest rate on Eric's bonds, the after-tax nominal interest rate, and the after-tax real interest rate under each inflation scenario. Inflation Rate Real Interest Nominal Interest After-Tax After-Tax (Percent) Rate Rate Nominal Interest Rate Real Interest (Percent) (Percent) (Percent) (Percent)2.0 4.5 7.0 4.5Compared with higher inflation rates, a lower inflation rate will_________ nominal interest income. This tends to_________ the after-tax real interest rate when the government taxes saving, thereby________ the quantity of investment in the economy and________ the economy's long-run growth rate.

Answers

Solution :

Given :

The bonds offer a [tex]\text{real interest rate}[/tex] of 4.5% per year

Tax rate = 10% = 0.10

Inflation rate = 2

[tex]\text{Nominal interest rate}[/tex] = [tex]\text{real interest rate}[/tex] + [tex]\text{inflation rate}[/tex]

[tex]\text{Nominal interest rate}[/tex] = 2 + 4.5

                                   = 6.5

[tex]\text{After tax nominal rate}[/tex] = [tex]\text{Nominal interest rate}[/tex] [tex]$\times (1-\text{tax rate})$[/tex]

[tex]\text{After tax nominal interest rate}[/tex] = [tex]$6.5 \times (1-0.10)$[/tex]

                                                  [tex]$=6.5 \times 0.90$[/tex]

                                                 = 5.85

After tax real interest rate = [tex]\text{after tax nominal rate}[/tex] - [tex]\text{inflation rate}[/tex]

                                           = 5.85 - 2.0

                                            = 3.85

[tex]\text{Inflation rate}[/tex] = 7.0

[tex]\text{Real interest rate = 4.5}[/tex]

[tex]\text{Nominal interest rate}[/tex] = [tex]\text{real interest rate}[/tex] + [tex]\text{inflation rate}[/tex]

                                   = 7 + 4.5

                                  = 11.5

[tex]\text{After tax nominal interest rate}[/tex] = [tex]\text{Nominal interest rate}[/tex] [tex]$\times (1-\text{tax rate })$[/tex]

                                                  [tex]$=11.5 \times (1 - 0.10)$[/tex]

                                                  [tex]$=11.5 \times 0.90$[/tex]

                                                = 10.35

[tex]\text{After tax nominal interest rate}[/tex] = 11.5 x (1 - 0.10)

                                          = 11.5 x 0.90

                                         = 10.35

[tex]\text{After tax nominal interest rate}[/tex] = [tex]\text{after tax nominal rate}[/tex] - [tex]\text{inflation rate}[/tex]

                                           = 10.35 - 7.0

                                          = 3.35

Putting all the value in table :

[tex]\text{Inflation rate}[/tex]    Real interest  Nominal interest  After tax nominal  After tax  

                                  rate                rate               interest rate       interest rate

2.0                             4.5                  6.5                        5.85                   3.85

7.0                              4.5                11.5                         10.35                3.35

Comparing with the [tex]\text{higher inflation rate}[/tex], a [tex]\text{lower inflation rate}[/tex] will increase the after after tax real interest rate when the government taxes nominal interest income. This tends to encourage saving, thereby increase the quantity of investment in the economy and the increase the economy's long-run growth rate.

The Abner Corporation, a retail seller of television sets, wants to determine how many television sets it must sell to earn a profit of $10,000 per month. The price of each television set is $300, and the average variable cost is $100. What is the required sales volume if the Abner Corporation’s monthly fixed costs are $5,000 per month?

Answers

Answer: 75

Explanation:

The required sales volume if the Abner Corporation’s monthly fixed costs are $5,000 per month will be:

Required sales = (Fixed cost + target profit) / (Selling price - AVC)

= (5,000 + 10,000) / (300 - 100)

= 15,000 / 200

= 75

Therefore, the required sales volume is 75.

Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of process costing. At the beginning of the month, the forming department has 25,000 units in inventory, 60% complete as to materials and 40% complete as to conversion costs. The beginning inventory cost of $60,100 consisted of $44,800 of direct materials costs and $15,300 of conversion costs. During the month, the forming department started 300,000 units. At the end of the month, the forming department had 30,000 units in ending inventory, 80% complete as to materials and 30% complete as to conversion. Units completed in the forming department are transferred to the painting department. Cost information for the forming department follows. Beginning work in process inventory$60,100 Direct materials added during the month 1,231,200 Conversion added during the month 896,700 Exercise 03-7A FIFO: Costs per EUP LO C4 Assume that Fields uses the FIFO method of process costing. 1. Calculate the equivalent units of production for the forming department. 2. Calculate the costs per equivalent unit of production for the forming departmen

Answers

Answer:

Fields Company

Forming Department

                                                            Materials       Conversion

1. The equivalent units of production 304,000          294,000

2. The costs per equivalent unit            $4.05               $3.05

Explanation:

a) Data and Calculations:

                                  Units       Materials       Conversion

Work in Process     25,000          60%                 40%

Units started        300,000

Ending WIP            30,000          80%                 30%

Units completed 295,000        100%                100%

Equivalent Units:

                                  Units       Materials       Conversion

Work in Process     25,000       10,000 (40%)   15,000 (60%)

Units started        300,000

Ending WIP            30,000       24,000 (80%)      9,000 (30%)

Units completed 295,000        100%                100%

Units started and

completed         270,000     270,000             270,000

Total equivalent units           304,000             294,000

                                  Units          Materials       Conversion   Total

Costs added during the month $1,231,200       $896,700   $2,127,900

Total equivalent units                    304,000         294,000

Cost per equivalent unit                 $4.05               $3.05

If the nominal interest rate is 5% and the inflation rate is 3%, what is the real interest rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answers

Answer:

The real interest rate is "3%".

Explanation:

Given:

Nominal interest rate,

n = 5%

Inflation rate,

i = 3%

As we know,

⇒ [tex](1+n) = (1+r)\times (1+i)[/tex]

or,

⇒ [tex](1+r)=\frac{(1+n)}{(1+i)}[/tex]

By substituting the values, we get

   [tex](1+r)=\frac{1+0.05}{1+0.03}[/tex]

   [tex](1+r)=\frac{1.05}{1.03}[/tex]

   [tex](1+r)=1.029[/tex]

            [tex]r=1.029-1[/tex]

               [tex]=0.029[/tex]

or,

               [tex]=3[/tex]%    

The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division $5,400,000 $30,000,000 Commercial Division 6,250,000 25,000,000 Internet Division 1,800,000 12,000,000 a. Compute the return on investment for each division.

Answers

Answer:

Retail Division = 18 %

Commercial Division =  25 %

Internet Division = 15 %

Explanation:

Return on Investment = Net Income / Assets employed x 100

therefore,

Retail Division = $5,400,000 / $30,000,000 x 100

                        = 18 %

Commercial Division = $6,250,000 / $25,000,000 x 100

                                   =  25 %

Internet Division = $1,800,000 / $12,000,000 x 100

                           = 15 %

A set of procedures and approvals for verifying, approving and recording liabilities for eventual cash payment, and for issuing checks for payment only of verified, approved, and recorded liabilities is referred to as a(n):

Answers

Answer:

Voucher system.

Explanation:

voucher system can be regarded as methodused in authorizing when it comes to disbursement of cash. A voucher that will give identification of

amount, account number that is needed to pay on is been filled.

It should be noted that the A set of procedures and approvals for verifying, approving and recording liabilities for eventual cash payment, and for issuing checks for payment only of verified, approved, and recorded liabilities is referred to as Voucher system..

What is Company XYZ's intrinsic equity value using the WACC as the discount rate and assuming the terminal value is based on the EBITDA exit multiple

Answers

Answer:

$315,198

Explanation:

WACC = [ Equity / Total value ] * cost of equity + [ Debt / Total value ] * Cost of debt.

WACC = 11.5%

Exit multiple = Total cash outflow / Total cash inflow

Exit multiple = $120,000 / 36,000 = 3.3x

EBITDA of the company is $178,412.

The specific pace and quota of work and tight surveillance indicate that company 1 has a(n) _______ culture.

Answers

Question options:

-traditional

-contingency

-androgynous

-mechanistic

-organic

Answer:

mechanistic

Explanation:

The mechanistic culture in an organization is one that works by strict rules, structure and guidelines. It is different from the organic culture that is more open and flexible. Mechanistic organizations are characterized by hierarchy and bureaucracy, specifying labour divisions for it's employees in a formal, close-knitted and "mechanistic" approach. mechanistic organizations can be found among older organizations such as universities, hospitals, government organizations etc. Organic organizations can be found among newer organizations such as tech companies.

In a mechanistic culture-based organization, the specific pace, quota of work and tight surveillance are indicator that the company practice such culture.

The mechanistic culture is usually adopted by organization because its works by strict rules, structure and guidelines.

Mechanistic organizations can be found among older organizations such as universities, hospitals, government organizations etc.

In conclusion, the specific pace and quota of work and tight surveillance indicate that company 1 has a mechanistic culture,

Read more about mechanistic culture

brainly.com/question/8985614

Explain how an enterprise can use functional level strategy to improve 1) efficiency, 2) quality, and 3) customer responsiveness.

Answers

Answer:

Explanation:

Functional level strategies can improve a company’s ability to attain superior efficiency, quality, innovation, and customer responsiveness by reducing costs and improving production by ways such as economies of scale, learning effects, marketing strategies or efficient information technologies.

The ending inventory of finished goods has a total cost of $9,000 and consists of 600 units. If the overhead applied to these goods is $3,000, and the overhead rate is 75% of direct labor, how much direct materials cost was incurred in producing these units

Answers

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On January 1, 2020, Cheyenne Company purchased 40% of Santos Corporation 465,000 outstanding shares of common stock at a total cost of $13 per share. On October 25, Santos declared and paid a cash dividend of $0.40 per share. On December 31, Santos reported a net income of $934,000 for the year and the market price of its common stock was $14 per share. Prepare all necessary journal entries for Mica company for 2020.

Answers

Solution :

The following journal entry will be prepared to record the transactions

Date          General Journal                                 Debt($)                  Credit($)

Jan 1    Investment in Cheyenne Co.               2,418,000

             (465,000 x 40% x $13)

           Cash                                                                                         2,418,000

Oct. 25  Cash (465,000 x 40% x $0.4)             74,400    

             Investment in Cheyenne Co.                                                 74,400

Dec 31   Investment in Cheyenne Co.               373,600

               ($934,000 x 40%)  

              Equity income in Cheyenne Co.                                           373,600

You are given the following data Stock A Expected return 8.00% Standard deviation 23.00% Stock B Expected return 7.50% Standard deviation 33.00% The correlation of Stock A and Stock B is 0.05. What is the variance of risky portfolio P with 43% in Stock A and the rest in Stock B

Answers

Answer:

Variance of risky portfolio P = 4.61%

Explanation:

WA = Weight of stock A = 43%, or 0.43

WB = Weight of stock B = 1 - 0.43 = 0.57

SA = Standard deviation of stock A = 23%, or 0.23

SB = Standard deviation of stock B = 33%, or 0.33

Cab = Correlation of Stock A and Stock B = 0.05

Therefore, we have:

Variance of risky portfolio P = (WA^2 * SA^2) + (WB^2 * SB^2) + (WA * SA * WB * SB * Cab) = (0.43^2 * 0.23^2) + (0.57^2 * 0.33^2) + (0.43 * 0.23 * 0.57 * 0.33 * 0.05) = 0.0461, or 4.61%

Portfolio Expected Return An investor puts 32% of their money in Stock 1 with a 10.15% expected return, 27% of their money in Stock 2 with a 10.95% expected return and the rest in Stock 3 with an expected return of 13.55%. What is the portfolio's expected return

Answers

Answer:

the expected return of the portfolio is 11.76%

Explanation:

The computation of the expected return of the portfolio is shown below:

= Respective return × Respective weights

= 0.32 × 10.15 +  0.27 × 10.95 + 0.41 × 13.55

= 3.248% + 2.9565% + 5.5555%

= 11.76%

Hence, the expected return of the portfolio is 11.76%

The same should be considered and relevant

Scenario:
AlphaCo and BetaCo are both mid-sized pharmaceutical companies that employ over a thousand workers. The highest paid employees at each company are the executives and the senior level researchers.
This year, both companies have a raise pool of $5,000,000 - that is, each can raise the total compensation paid to all of its workers by a total of five million dollars.
AlphaCo uses $3,500,000 of its raise pool to increase pay for executives and researchers. Most of the other workers receive small raises, and some receive no raise at all.
BetaCo uses $3,500,000 of its raise pool to give everyone in the firm an equal 5% raise. Some key employees receive a raise of over 5%.
1. Which company will have employees who are, overall, more satisfied? Why?
2. Which company is likely to outperform the other over the next year? Why?

Answers

Answer:

BetaCo  BetaCo

Explanation:

BetaCo raised the salaries of everyone in the company meaning that even those who were not getting paid so much saw their salaries increase. Employees here will feel more appreciated as a result of this financial incentive as opposed to AlphaCo that neglected to cater for all its employees in an equal manner.

BetaCo will outperform AlphaCo over the next year all else equal because motivated employees tend to work harder for a company. In addition, BetaCo increased the salaries of key staff by more than 5%. Those key staff will work harder as a result of this incentive and push the company further than AlphaCo.

In June 2007 General Motors (GM) posted a price-earnings ratio of 9.84. If
the price of the stock at that time was $36 per share, which of the following
must have been true?
a. GMâs earnings per share was 3.66.
b. GMâs coupon payment was $35 per year.
c. GMâs dividend yield for the year was 26%.
d. GMâs revenues that month were $366 million.

Answers

Answer:

General Motors (GM)

If  the price of the stock at that time was $36 per share, the true statement is:

a. GM's earnings per share was 3.66.

Explanation:

a) Data and Calculations:

Price-earnings ratio = 9.84

Market price of stock at that time = $36 per share

Earnings per share = Market price per share/Price-earnings ratio

= $36/9.84 = 3.659

= $3.66

Check:

Price-earnings ratio = Market price per share/Earnings per share

= 9.84 ($36/$3.66)

Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 177,000 kilometers during a year, the average operating cost is 12.3 cents per kilometer. If a truck is driven only 118,000 kilometers during a year, the average operating cost increases to 15.5 cents per kilometer.

Required:
a. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation.
b. Express the variable and fixed costs in the form Y = a + bX.
c. If a truck were driven 147,000 kilometers during a year, what total cost would you expect to be incurred?

Answers

the answer is option a

Zero Calories Company has 16,000 shares of cumulative preferred 1% stock, $40 par and 80,000 shares of $150 par common stock. The following amounts were distributed as dividends:
Year 1 $21,600
Year 2 4,000
Year 3 100,800
Determine the dividends per share for preferred and common stock for each year.

Answers

year 3 i just took the test trust me it is year 3

Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $548,080 Number of setups 680 Ordering costs 313,200 Number of orders 17,400 Machine costs 939,400 Machine hours 42,700 Receiving 343,000 Receiving hours 9,800 Deoro produces two models of dishwashers with the following expected prime costs and activity demands:
Model A Model B
Direct materials $600,000 $800,000
Direct labor $480,000 $480,000
Units completed 16,000 8,000
Direct labor hours 6,000 2,000
Number of setups 400 200
Number of orders 6,000 12,000
Machine hours 24,000 18,000
Receiving hours 3,000 7,000
The company's normal activity is 8,000 direct labor hours.
Required:
1. Determine the unit cost for each model using direct labor hours to apply overhead.
Unit Cost
Model A $
Model B $
2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent.
Unit Cost
Model A $
Model B $
3. Which method produces the more accurate cost assignment?

Answers

Answer:

Deoro Company

1. Unit cost using direct labor hours to apply overhead:

Unit Cost

Model A $167.985

Model B $226.99

2. Unit cost using the four activity drivers:

Unit Cost

Model A $133.97  

Model B $287.28

3. Activity-based costing method always produces the more accurate cost assignment.

Explanation:

a) Data and Calculations:

Activity                    Expected Cost      Activity Driver    Activity Capacity

Setting up equipment   $548,080       Number of setups          680

Ordering costs                 313,200        Number of orders     17,400

Machine costs                 939,400        Machine hours         42,700

Receiving                         343,000        Receiving hours         9,800

Total overhead costs $2,142,680

Activity Rates:

Setting up equipment   $806 per setup ($548,080/680)

Ordering costs              $18 per order ($313,200/17,400)

Machine costs              $22 per machine hour ($939,400/42,700)

Receiving                     $35 per receiving hour ($343,000/9,800)

                                    Model A            Model B

Direct materials        $600,000          $800,000

Direct labor               $480,000          $480,000

Overhead applied  $1,063,500        $1,018,200

Total costs              $2,143,500      $2,298,200

Units completed            16,000               8,000

Cost per unit                $133.97         $287.275

Direct labor hours          6,000               2,000

Number of setups             400                  200

Number of orders          6,000             12,000

Machine hours             24,000             18,000

Receiving hours             3,000               7,000

The company's normal activity is 8,000 direct labor hours.

Assignment of overhead costs:

                                        Model A                               Model B

Number of setups         $322,500 (400 * $806)    $161,200 (200 * $806)

Number of orders            108,000 (6,000 * $18)      216,000 (12,000 * $18)

Machine hours                528,000 (24,000 * $22)  396,000 (18,000 * $22)

Receiving hours               105,000 (3,000 * $35)    245,000 (7,000 * $35)

Total overhead applied $1,063,500                    $1,018,200

Overhead based on direct labor hours:

Total overhead costs = $2,143,680

Total direct labor hours = 8,000 (6,000 + 2,000)

Overhead rate per DLH = $267.96

Allocation of overhead:

                                    Model A                           Model B

Direct labor hours          6,000                            2,000

Overhead (DLH) $1,607,760 ($267.96 *6,000) $535,920 ($267.96  * 2,000)

                                    Model A            Model B

Direct materials        $600,000          $800,000

Direct labor               $480,000          $480,000

Overhead applied  $1,607,760          $535,920

Total costs             $2,687,760        $1,815,920

Units completed           16,000                8,000

Cost per unit            $167.985            $226.99

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