Intangible assets are often called wasting assets because they are physically consumed when used. This statement is False.
Intangible assets are long-term resources that are used to produce revenues and profits over several accounting periods. Intangible assets do not have a physical existence, unlike tangible assets like machinery and equipment. Intangible assets are not physically consumed or exhausted as they are used.
For example, patents and copyrights can exist forever, and trademarks can exist for as long as they are used in commerce.
Intangible assets are often classified as non-amortizable or amortizable. Amortizable intangible assets have a definite useful life and are depreciated over that period. Wasting assets are a type of amortizable intangible asset. This is where your question comes into play. Wasting assets are intangible assets that decline in value over time due to their usage. Their value can be attributed to their usage as opposed to their durability or lifespan.
The term "wasting assets" refers to assets that are consumed over time. Intangible assets, in contrast, are not physical and are not consumed in the same way as wasting assets. Therefore, Intangible assets are often not called wasting assets because they are not physically consumed when used.
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the formula to compute the budgeted direct labor cost is
The formula to compute the budgeted direct labor cost is
Budgeted Direct Labor Cost = Budgeted Direct Labor Hours × Budgeted Hourly Labor Rate
What is budgeted direct labor cost?Budgeted direct labor cost refers to the estimated or planned cost of employing direct labor in a specific period or project. It is an anticipated expense that is included in the budgeting process to help organizations allocate resources and plan their financial activities.
The budgeted direct labor cost takes into account factors such as the number of direct labor hours required for production or service delivery and the expected hourly labor rate. By estimating the direct labor cost in advance, organizations can set realistic targets, allocate funds appropriately, and monitor their labor expenses during the budgeted period.
The budgeted direct labor cost is an essential component of the overall budgeting process, enabling businesses to manage their labor costs effectively and make informed decisions about resource allocation and pricing strategies.
This formula calculates the estimated cost of direct labor based on the projected number of direct labor hours and the budgeted hourly labor rate. It helps in forecasting and planning for the direct labor expenses in a given period.
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Intel's average cost in a given year falls with the quantity that it produces. In addition, extra production this year lowers the average cost curve next year. For example, in year 1, AC=42 if quantity is 20 and AC=34 if quantity is 60. If Intel produces 20 in year 1 and 40 in year 2, the average cost in year 2 will be 30.However, for every extra 10 units it produces in year 1, its AC for any given quantity in year 2 falls by 10%.
1.) What is the total cost and the average cost over the two years combined if the firm produces 20 in year 1 and 40 in year 2?
A. The total cost (C) is:
B. The average cost (AC) is:
2.) What is the total cost and average cost over the two years combined if the firm produces 60 in year 1 and 40 in year 2?
A. The total cost (C) is:
B. The average cost (AC) is:
3.) Over the two years combined, what is the true additional cost of producing 60 instead of 20 in year 1?
A. The marginal cost of producing 60 units in year 1 instead of 20 is:
Total cost and average cost when the firm produces 20 in year 1 and 40 in year 2:Given: AC = 42 when quantity is 20 (year 1) AC = 34 when quantity is 60 (year 1) AC = 30 when quantity is 40 (year 2)
To calculate the total cost (C), we need to find the sum of the costs in year 1 and year 2:
Year 1 cost:
Cost = AC * Quantity ,Cost1 = 42 * 20 (when quantity is 20)
Year 2 cost: Cost = AC * Quantity, Cost2 = 30 * 40 (when quantity is 40)
Total cost: C = Cost1 + Cost2
Average cost in year 1:
AC1 = 42 (when quantity is 20)
Average cost in year 2:
AC2 = 30 (when quantity is 40)
Average cost over the two years:
AC = (AC1 * Quantity1 + AC2 * Quantity2) / (Quantity1 + Quantity2)
Now let's plug in the values: Quantity1 = 20 ,Quantity2 = 40
AC1 = 42, AC2 = 30
Total cost (C) is: Cost1 + Cost2
Average cost (AC) is: (AC1 * Quantity1 + AC2 * Quantity2) / (Quantity1 + Quantity2)
Given:
AC = 42 when quantity is 20 (year 1)
AC = 34 when quantity is 60 (year 1)
AC = 30 when quantity is 40 (year 2)
To calculate the total cost (C), we need to find the sum of the costs in year 1 and year 2:
Year 1 cost:
Cost = AC * Quantity
Cost1 = 34 * 60 (when quantity is 60)
Year 2 cost:
Cost = AC * Quantity
Cost2 = 30 * 40 (when quantity is 40)
Total cost:
C = Cost1 + Cost2
To calculate the average cost (AC), we need to find the weighted average of the average costs in year 1 and year 2, weighted by the quantity:
Average cost in year 1:
AC1 = 34 (when quantity is 60)
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Match the payment with the corresponding annual amount of money spent on it. Medicaid spending Medicare benefit payments Charitable contributions Tax exemptions $492 billion $44 billion $23 billion $398 billion
Medicaid spending: **$492 billion**
Medicare benefit payments: **$398 billion**
Charitable contributions: **$23 billion**
Tax exemptions: **$44 billion**
The corresponding annual amounts of money spent on each payment are as follows:
- Medicaid spending: $492 billion
- Medicare benefit payments: $398 billion
- Charitable contributions: $23 billion
- Tax exemptions: $44 billion
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Which ONE of the following statements is NOT true with respect to investment appraisal?
a. The NPV method fails to take account of the timing of cash flows over the life of a project
b. Sensitivity analysis examines the impact of a change in the value of one variable at a time on the project's NPV.
c. If acceptance of a project changes the tax liabilities of a firm, then incremental tax effects need to be incorporated into the analysis.
d. To calculate the expected return, the mean outcome is calculated by weighting each of the possible outcomes by the probability of occurrence and then summing the result.
The NPV method fails to take account of the timing of cash flows over the life of a project.- this statements is NOT true with respect to investment appraisal. So, the correct option is (a).
This statement is not true. The Net Present Value (NPV) method does consider the timing of cash flows over the life of a project. It discounts the future cash flows back to the present using a discount rate, taking into account the time value of money.
By discounting the cash flows, the NPV reflects the value of those cash flows at the present time. Therefore, the NPV method explicitly considers the timing of cash flows and their present value.
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Read the case "A Stressful Job" on page 193 of your "Management of Occupational Health and Safety" text. As the HR Representative in this case, explain what you think is possibly going on here. Are Joan’s concerns likely to be a result of stress? What stressors are present in this environment? If Joan is the only one complaining in this department, does this mean that her complaints are not real?
Joan's concerns are likely a result of stress, and there are several stressors present in her environment.
Joan's concerns are likely a result of stress because she is experiencing symptoms commonly associated with work-related stress, such as fatigue, irritability, and difficulty concentrating. Additionally, she mentions feeling overwhelmed by her workload and pressured to meet unrealistic deadlines, which are common stressors in the workplace.
The presence of stressors in Joan's environment further supports the likelihood that her concerns are a result of stress. The case mentions a high-pressure work environment, where employees are constantly expected to meet tight deadlines and work long hours. This indicates that there may be excessive job demands and a lack of control over one's work, both of which are known stressors.
Moreover, the lack of support from management and coworkers also contributes to the stress Joan is experiencing. She mentions feeling unsupported and isolated, which can exacerbate the negative effects of stress. Additionally, the case highlights a lack of communication and feedback, which further adds to the stressors present in the environment.
It is important to note that just because Joan is the only one complaining in her department does not mean her complaints are not real. Individuals respond to stress differently, and some may be more vocal about their concerns while others may internalize them. It is possible that other employees are also experiencing stress but have chosen not to voice their complaints.
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9-9: Your company has developed a new weight-loss breakfast shake that has proven to be successful in the test market phase. Users have experienced an average weight loss of two pounds per week. You hold a patent on the product. The cost to produce the shake is relatively low, with a total manufacturing costs running about $0.05 per ounce. Each shake is eight ounces. What pricing strategy do you recommend for this product?
Based on the information provided, the recommended pricing strategy for the new weight-loss breakfast shake would be value-based pricing.
Value-based pricing involves setting the price based on the perceived value that the product delivers to customers. In this case, the shake has been successful in the test market phase, with users experiencing an average weight loss of two pounds per week. This positive outcome suggests that customers may highly value the product for its effectiveness in achieving weight loss goals.To determine the pricing strategy, you should consider the following factors:
Customer Value: Assess the perceived value that the product offers to customers.
Consider the benefits they receive from the shake, such as weight loss, convenience, and nutrition. Understanding the value customers place on these benefits will help determine an appropriate price.Competitive Landscape: Analyze the pricing strategies of competitors offering similar weight-loss products or breakfast shakes. Determine how your product's value proposition and unique features compare to those of competitors. This analysis will guide your pricing decisions.
Manufacturing Costs: Take into account the cost of producing the shake, which is stated to be relatively low at $0.05 per ounce. Understanding the cost structure is crucial for setting a profitable price while considering market demand and positioning.
Considering these factors, the recommended pricing strategy would be to set the price of the weight-loss breakfast shake at a premium level. The perceived value of the product, backed by the successful test market results and the patent, justifies a higher price compared to regular breakfast shakes. However, the price should still be competitive within the weight-loss product market.
By implementing a value-based pricing strategy, you can capture the perceived value of the weight-loss benefits while remaining profitable. It is important to continuously monitor market dynamics, customer feedback, and competitors' actions to adjust the pricing strategy as needed.
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the cyclically-adjusted budget estimates the federal budget deficit or surplus if:
The cyclically-adjusted budget estimates the federal budget deficit or surplus if the economy is operating at its potential or full employment level.
The cyclically-adjusted budget is a tool used to account for the effects of the business cycle on government finances. It calculates what the federal budget deficit or surplus would be if the economy were operating at its potential or full employment level, regardless of the current economic conditions. This approach removes the impact of cyclical fluctuations in economic activity, such as recessions or booms, which can significantly influence tax revenues and government spending.
By considering the economy's potential output, the cyclically-adjusted budget provides a more accurate assessment of the underlying fiscal position and long-term sustainability of government finances. It helps policymakers evaluate the structural health of the budget and make informed decisions regarding fiscal policy, such as setting tax rates, determining spending priorities, and implementing measures to achieve fiscal stability.
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Total Revenue ($) Price (Marginal Profitability to the Box Mill) ($) Quantity (Units of Paper equivalent to One Box) $30 1 $30 $24.00 $27 2 $54 $18.00 $24 3 $72 $12.00 $21 4 $84 $6.00 $18 5 $90 $0.00 $15 6 $90 -$6.00 $12 7 $84 -$12.00 $9 8 $72 -$18.00 $6 9 $54 -$24.00 $3 10 $30 If the paper mill sets the price of paper to sell to the box mill, it will set a price of will be $ for the paper mill. Companywide profits will be $ marginal profitability of each unit of paper, or box, to the box mill.) Suppose the paper mill is forced to transfer paper to the box mill at marginal cost ($9.50). In this case, the box mill will demand Marginal revenue ($) Total Cost ($) $9.50 $20.50 $9.50 $19.00 $35.00 $9.50 $28.50 $43.50 $9.50 $38.00 $46.00 $9.50 $47.50 $42.50 $9.50 $57.00 $33.00 $9.50 $66.50 $17.50 $9.50 $76.00 -$4.00 $9.50 $85.50 -$31.50 $9.50 $95.00 -$65.00 units of paper to the box mill. Profits (Hint: Recall that the prices in the table represent the ▼and sell Marginal Cost ($) units of paper. This leads to companywide profits of $ Profit ($) ^^^^^^^A
Based on the given data and assumptions, setting the price at $18 will maximize companywide profits for the paper mill.
if the paper mill sets the price of paper to sell to the box mill, it will set a price of $18. companywide profits will be $90 (marginal profitability of each unit of paper, or box, to the box mill).
however, if the paper mill is forced to transfer paper to the box mill at marginal cost ($9.50), the box mill will demand 6 units of paper. profits will be $33.00.
the given table provides information on the relationship between price, quantity, and total revenue for the paper mill. based on the data, we can observe that at a price of $18, the paper mill can achieve maximum total revenue of $90. this implies that setting the price at $18 will yield the highest profits for the company.
now, let's consider the scenario where the paper mill is compelled to transfer paper to the box mill at the marginal cost of $9.50 per unit. by examining the second set of data, we can determine that at a price of $9.50, the box mill will demand 6 units of paper. the total cost for the paper mill to produce and transfer 6 units of paper to the box mill is $57.00, resulting in profits of $33.00.
it's important to note that in the second scenario, the box mill's demand for paper is influenced by the lower transfer price, leading to an increase in the quantity of paper demanded. this affects the total cost and, subsequently, the overall profits for the company. however, if the paper mill is forced to transfer paper at the marginal cost of $9.50, the box mill will demand 6 units of paper, resulting in profits of $33.00.
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Research the internet and share for your first initial post: 1. The Nature of the recent issue between brands Ulta and Kate Spade? 2. How did the companie(s) responded? 3. As the Marketing Director, do you agree or disagree with the way the issue was handled? Elaborate your answer. - PART 2: Second post Select a different day during the weeks of September sth to September 20 th EOD to respond to one of your classmate's posts.
My responses are based on the information available to me up until September 2021. Therefore, I cannot provide specific information about recent issues between Ulta and Kate Spade or their responses.
I can provide some general guidance on how to approach the second part of your request. To respond to a classmate's post, you can follow these steps:
1. Start by reading your classmate's post carefully, ensuring that you understand their perspective and the points they have made.
2. Analyze the information provided by your classmate and consider their viewpoint on the handling of the issue between Ulta and Kate Spade.
3. Formulate your response by expressing whether you agree or disagree with your classmate's opinion and provide reasons to support your stance.
4. Elaborate on your answer by providing relevant examples, insights, or additional information that strengthen your argument.
5. Be respectful and constructive in your response, fostering a healthy and meaningful discussion with your classmate.
Remember to consider different perspectives, use evidence to support your arguments, and provide a well-reasoned response. Good luck with your class discussions!
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Suppose the government imposes a $2 on this market.
Refer to Figure 6-29. The buyers will bear a higher share of the tax burden than sellers if the demand is
1. D1, and the supply is S1.
2. D2, and the supply is S1.
3. D1, and the supply is S2.
4. D2, and the supply is S2.
3, where the demand is d1 and the supply is s2, is the scenario where the buyers bear a higher share of the tax burden compared to the sellers.the buyers will bear a higher share of the tax burden than sellers if the demand is:
3. d1, and the supply is s2.
when analyzing the tax burden, it depends on the relative elasticities of demand and supply. if the demand is more inelastic (less responsive to price changes) compared to supply, buyers tend to bear a larger portion of the tax burden.
in the given s, when the demand is d1 and the supply is s2, the demand curve is relatively steeper (more inelastic) compared to the supply curve. when a tax is imposed, the supply curve shifts upward by the amount of the tax, resulting in a higher price for the buyers. the burden of the tax falls more on the buyers because they are less able to reduce their quantity demanded in response to the price increase caused by the tax.
on the other hand, s 1, 2, and 4 have either a more elastic demand curve (d2) or a less elastic supply curve (s1). in these cases, the burden of the tax would be distributed more towards the sellers as they are relatively more affected by the decrease in quantity demanded due to the tax-induced price increase.
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Select one: a. IS A DOCUMENT ISSUED BY THE COMMON CARRIER SPECIFYING THAT IT HAS RECEIVED THE GOODS FOR SHIPMENT B. A GUARANTEE FROM THE IMPORTER'S BANK THAT IT WLLL ACT ON BEHALF OF THE MPORTER AND PAY THE EXPORTER FOR THE MERCHANDISE IF ALL THE RELEVANT DOCUMENTS ARE PRESENTED C. NEGOTIABLE MONEY MARKET INSTRUMENT FOR WHICH A SECONDARY MARKET EXISTS d. A WRITTEN ORDER INSTRUCTING THE IMPORTER OR HIS AGENT TO PAY THE AMOUNT SPECIFIED ON ITS FACE ON A CERTAIN DATE
Option A refers to a document issued by a common carrier confirming receipt of goods for shipment, while option B pertains to a bank guarantee for payment if all necessary export documents are provided.
Option A: A document issued by a common carrier confirming that it has received the goods for shipment is known as a bill of lading. This document serves as proof of contract between the shipper and the carrier, outlining the details of the goods being transported, such as their quantity, description, and destination. The bill of lading is crucial for tracking and transferring ownership of the goods during transit.
Option B: A guarantee from the importer's bank to act on behalf of the importer and pay the exporter for the merchandise if all the relevant documents are presented is called a letter of credit. This financial instrument ensures that the exporter receives payment for their goods as long as they comply with the terms and conditions specified in the letter of credit. It provides assurance to the exporter and mitigates the risk of non-payment or default by the importer.
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Herfindahl-Hirschman Index
Compute the pre-merger HHI for an industry with 10 competitors and the given market shares. How would the HHI change if Companies B and C merged? How would it change if Companies I and J merged instead? Would either set of mergers be likely to evoke an antitrust challenge?
Company A B C D E F G H I J
Market Share (%) 25 20 10 10 10 5 5 5 5 5
This merger may be less likely to evoke an antitrust challenge.
To compute the pre-merger herfindahl-hirschman index (hhi), we square the market shares of each competitor and sum them up. in this case:
hhi = (25²) + (20²) + (10²) + (10²) + (10²) + (5²) + (5²) + (5²) + (5²) + (5²)
= 625 + 400 + 100 + 100 + 100 + 25 + 25 + 25 + 25 + 25
= 1550
so, the pre-merger hhi for the industry with 10 competitors is 1550.
if companies b and c merge, their combined market share would be 20% + 10% = 30%. the hhi after the merger would be:
hhi = (25²) + (30²) + (10²) + (10²) + (10²) + (5²) + (5²) + (5²) + (5²) + (5²)
= 625 + 900 + 100 + 100 + 100 + 25 + 25 + 25 + 25 + 25
= 2150
the hhi increases from 1550 to 2150 after the merger of companies b and c.
if companies i and j merge, their combined market share would be 5% + 5% = 10%. the hhi after the merger would be:
hhi = (25²) + (20²) + (10²) + (10²) + (10²) + (5²) + (5²) + (5²) + (10²) + (5²)
= 625 + 400 + 100 + 100 + 100 + 25 + 25 + 25 + 100 + 25
= 1650
the hhi increases from 1550 to 1650 after the merger of companies i and j.
to determine if these mergers are likely to evoke an antitrust challenge, we need to consider the guidelines set by regulatory authorities. in the united states, for example, the department of justice (doj) and the federal trade commission (ftc) use the hhi as a measure of market concentration. generally, an hhi below 1500 indicates a moderately concentrated market, while an hhi above 2500 suggests a highly concentrated market.
in the case of the merger between companies b and c, the hhi increases to 2150, indicating a higher concentration. this may raise concerns and could potentially evoke an antitrust challenge.
in the case of the merger between companies i and j, the hhi increases to 1650, which is still below the threshold for highly concentrated markets. it's important to note that antitrust challenges involve various factors beyond just the hhi, including market dynamics, competitive behavior, and potential harm to consumers. the specific circumstances and regulatory policies in the relevant jurisdiction would ultimately determine the likelihood of an antitrust challenge for these mergers.
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Describe how improvement, learning and innovation would contribute to sustained success of an organization.
Improvement, learning, and innovation are essential for the sustained success of an organization. They enable organizations to adapt to changing environments, enhance efficiency and effectiveness, foster a culture of growth, and stay ahead of competitors.
Improvement, learning, and innovation play crucial roles in the long-term success of an organization. Firstly, continuous improvement allows organizations to enhance their processes, products, and services, leading to increased efficiency and effectiveness. By identifying areas for improvement and implementing changes, organizations can streamline operations, reduce costs, and deliver higher-quality outputs, thereby gaining a competitive edge.
Secondly, a commitment to learning is vital for sustained success. Organizations that prioritize learning foster a culture of growth and development among their employees. This creates a skilled and knowledgeable workforce that can adapt to evolving challenges and seize new opportunities. Learning also promotes employee engagement and satisfaction, leading to higher productivity and retention rates.
Lastly, innovation is a driving force for organizational success. Embracing innovation enables organizations to stay ahead of the curve, anticipate customer needs, and deliver unique solutions. It encourages creativity, experimentation, and the exploration of new markets or technologies. By constantly seeking innovative ideas and approaches, organizations can remain relevant in a rapidly changing business landscape.
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Speedy Auto Repairs uses a job-order costing system. The company's direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics' hourly wages. Speedy's overhead costs include various items, such as the shop manager's salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room. The company applies all of its overhead costs to jobs based on direct labor-hours. At the beginning of the year, it made the following estimates: Direct labor-hours required to support estimated output 20,000 Fixed overhead cost Variable overhead cost per direct labor-hour $ 350,000 $ 1.00 Required: 1. Compute the predetermined overhead rate. 2. During the year, Mr. Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information was available with respect to his job: $ 590 Direct materials Direct labor cost. $ 109 6 Direct labor-hours used Compute Mr. Wilkes' total job cost. 3. If Speedy establishes its selling prices using a markup percentage of 40% of its total job cost, then how much would it have charged Mr. Wilkes? Complete the question by entering your answers in the tabs given below. Required 1 Required 2 Required 3 Compute the predetermined overhead rate. (Round your answer to 2 decimal places.) Predetermined Overhead Rate per DLH Required 2 > Required 1 Complete the question by entering your answers in the tabs given below. Required 1 Required 2 Required 3 Compute Mr. Wilkes' total job cost. (Round your intermediate calculations to 2 decimal places.) Direct materials Direct labor Overhead applied Total cost assigned to Mr. Wilkes 5 0 Complete the question by entering your answers in the tabs given below. Required 1 Required 2 Required 3 If Speedy establishes its selling prices using a markup percentage of 40% of its total job cost, then how much would it have charged Mr. Wilkes? (Round your intermediate calculations to 2 decimal places.) Amount charged to Mr. Wilkes
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1. Compute the predetermined overhead rate:
The predetermined overhead rate is calculated by dividing the total estimated overhead costs by the estimated total direct labor-hours.
Total estimated overhead costs: Fixed overhead cost + (Variable overhead cost per direct labor-hour * Direct labor-hours required to support estimated output)
Total estimated overhead costs: $350,000 + ($1.00 * 20,000)
Total estimated overhead costs: $350,000 + $20,000
Total estimated overhead costs: $370,000
Predetermined overhead rate per direct labor-hour: Total estimated overhead costs / Direct labor-hours required to support estimated output
Predetermined overhead rate per direct labor-hour: $370,000 / 20,000
Predetermined overhead rate per direct labor-hour: $18.50 (rounded to two decimal places)
2. Compute Mr. Wilkes' total job cost:
To calculate Mr. Wilkes' total job cost, we need to consider the direct materials, direct labor, and overhead applied.
Direct materials: $590
Direct labor cost: $109
Direct labor-hours used: 6
Overhead applied: Predetermined overhead rate per direct labor-hour * Direct labor-hours used
Overhead applied: $18.50 * 6
Overhead applied: $111
Total cost assigned to Mr. Wilkes: Direct materials + Direct labor cost + Overhead applied
Total cost assigned to Mr. Wilkes: $590 + $109 + $111
Total cost assigned to Mr. Wilkes: $810
3. Calculate the amount charged to Mr. Wilkes using a markup percentage of 40% of the total job cost:
Markup percentage: 40%
Amount charged to Mr. Wilkes: Total cost assigned to Mr. Wilkes + (Markup percentage * Total cost assigned to Mr. Wilkes)
Amount charged to Mr. Wilkes: $810 + (0.40 * $810)
Amount charged to Mr. Wilkes: $810 + $324
Amount charged to Mr. Wilkes: $1,134
Therefore, the amount charged to Mr. Wilkes would be $1,134.
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Chidi is negotiating a contract with Jameela. He becomes angry that Jameela will not agree to the proposed contract terms. Chidi threatens Jameela with a criminal lawsuit claiming that he knew Jameela did not pay her taxes last year and is therefore a tax evader. This is an example of a. fraud b. criminal recklessness c. duress d. undue influence e. negligent misrepresentation
The correct answer is: c. duress. Duress is a legal concept that refers to the use of threats or coercion to force someone into entering a contract or taking a particular action against their will.
In the given scenario, Chidi is threatening Jameela with a criminal lawsuit in order to intimidate her into agreeing to the proposed contract terms. By claiming that Jameela is a tax evader and using this information to leverage his position, Chidi is exerting duress on Jameela.
Duress occurs when one party uses threats or coercion to force another party into entering a contract or taking a specific action against their will. In this scenario, Chidi is using the threat of a criminal lawsuit and accusing Jameela of being a tax evader in order to pressure her into accepting the proposed contract terms. This constitutes duress because Chidi is employing unlawful tactics to gain an unfair advantage in the negotiations.
It is important to note that duress renders a contract voidable, meaning that the party under duress has the option to void or rescind the contract if they can demonstrate that they entered into it unwillingly due to the threat or coercion. Duress undermines the voluntary consent necessary for a contract to be legally binding.
While other options like fraud or negligent misrepresentation involve misrepresentation or false information, the key element in this scenario is the use of threats or coercion, which aligns with the concept of duress.
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3. If P10,000.00 is deposited each year for 9 years, how much annuity can a person get annually from the bank every year for 8 years starting 1 year after the 9th deposit is made? Cost of money is 14%. Please provide CASH FLOW diagram.
4. Compare the interest earned by $9,000 for five years at 8% simple interest per year with the interest earned by the same amount for five years at 8% compounded annually. Explain why a difference occurs. Please provide CASH FLOW Diagram
3. If a person deposits P10,000.00 each year for 9 years and wants to receive an annuity annually from the bank for 8 years starting 1 year after the 9th deposit, with a cost of money at 14%.
The cash flow diagram would show 9 cash inflows of P10,000.00 each followed by 8 cash outflows representing the annuity payments.
4. When comparing the interest earned by $9,000 for five years at 8% simple interest per year with the interest earned at 8% compounded annually, there will be a difference due to the compounding effect. The cash flow diagram will show the initial deposit of $9,000 followed by the interest earned at the end of each year.
3. The cash flow diagram for the annuity scenario would show 9 cash inflows of P10,000.00 each representing the deposits made for 9 years. After the 9th deposit, there would be 8 cash outflows representing the annuity payments received annually for 8 years. The annuity amount can be calculated using the present value of an annuity formula with the cost of money at 14%.
4. In the case of simple interest, the interest earned is calculated only on the initial principal amount. The cash flow diagram would show the initial deposit of $9,000 and the interest earned at the end of each year based on the simple interest rate of 8%. However, in the case of compounded interest, the interest is calculated not only on the initial principal but also on the accumulated interest from previous periods. The cash flow diagram would show the initial deposit of $9,000 followed by the interest earned at the end of each year, which increases as the interest is compounded annually. The compounding effect allows the interest to accumulate and earn interest on itself, resulting in a higher overall interest earned compared to simple interest.
In conclusion, the difference between simple interest and compounded interest lies in the compounding effect, where compounded interest allows for the accumulation of interest on the initial principal as well as the previously earned interest. This leads to a higher interest earned over time compared to simple interest.
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he future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 5% per year. Callahan's cornmon stock urrently selis for $22.25 per share; its last dividend was $2.00; and it will pay a $2.10 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places % b. If the firm's beta is 2.0, the risk-free rate is 3%, and the average return on the market is 12%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal ploces. % c. If the firm's bonds eam a return of 10%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the judgmental risk premium of 4% in your calculations, Round your answer to two decimal places. % d. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.
a. To calculate the cost of common equity using the DCF (Dividend Discount Model) approach, we can use the formula:
Cost of Common Equity (k) = (Dividend per Share / Current Stock Price) + Growth Rate
Given:
Dividend per Share = $2.10 (at the end of the current year)
Current Stock Price = $22.25
Growth Rate = 5%
k = ($2.10 / $22.25) + 0.05
k = 0.094382 + 0.05
k = 0.144382
The cost of common equity using the DCF approach is 14.44%.
b. To calculate the cost of common equity using the CAPM (Capital Asset Pricing Model) approach, we can use the formula:
Cost of Common Equity (k) = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)
Given:
Risk-Free Rate = 3%
Beta = 2.0
Market Return = 12%
k = 0.03 + 2.0 * (0.12 - 0.03)
k = 0.03 + 2.0 * 0.09
k = 0.03 + 0.18
The cost of common equity using the CAPM approach is 21.00%.
c. To calculate the cost of common equity using the bond-yield-plus-risk-premium approach, we can use the formula:
Cost of Common Equity (k) = Bond Yield + Risk Premium
Given:
Bond Yield = 10%
Risk Premium = 4%
k = 0.10 + 0.04
k = 0.14
The cost of common equity using the bond-yield-plus-risk-premium approach is 14.00%.
d. If we have equal confidence in the inputs used for the three approaches, we can take the average of the cost of common equity calculated using the three approaches:
Average Cost of Common Equity = (DCF Cost + CAPM Cost + Bond-Yield-Plus-Risk-Premium Cost) / 3
Average Cost of Common Equity = (14.44% + 21.00% + 14.00%) / 3
Average Cost of Common Equity = 16.81%
Therefore, our estimate of Callahan's cost of common equity, considering equal confidence in the inputs used for the three approaches, is 16.81%.
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5. The table below gives the dividends paid and price of a stock at the end of each of the last 5 years, e.g., on December 31, 2016 the stock paid a dividend of $6 and the price after this payment was $175. Note that the price is ex-dividend, i.e., it is the price after the payment of the dividend for that year. If you buy the stock for $175 at the end of 2016 you do NOT receive the dividend of $6 paid at the end of that year. Price Div. 2016 $175 2017 $160 $8 2018 $150 $4 2019 $160 $6 2020 $175 $12 a. What are the annual HPRs on the stock for each of the 4 years, i.e., the return if you bought the stock at the beginning of the year and sold it at the end of the year after receiving the dividend? b. What is the arithmetic average of the 4 annual returns calculated in part (a) above? c. What is the geometric average annual return on the stock? d. What is the IRR on an investment in this stock if you bought it for $175 at the end of 2016 and sold it for $175 at the end of 2020 (after receiving the $12 dividend) e. What is annual HPR on the stock over the 4 years if you reinvest each dividend in the stock, e.g., you used the $8 dividend paid at the end of 2017 to purchase an additional 1/20th of a share?
a. To calculate the annual Holding Period Return (HPR) for each year, we need to consider the change in price and the dividend received. The formula for HPR is (Ending Value - Beginning Value + Dividend) / Beginning Value.
For 2017:
HPR = ($160 - $175 + $8) / $175 = -0.0571 or -5.71%
For 2018:
HPR = ($150 - $160 + $4) / $160 = -0.025 or -2.5%
For 2019:
HPR = ($160 - $150 + $6) / $150 = 0.04 or 4%
For 2020:
HPR = ($175 - $160 + $12) / $160 = 0.1125 or 11.25%
b. To find the arithmetic average of the four annual returns, we sum up the returns and divide by 4:
Arithmetic Average = (-5.71% - 2.5% + 4% + 11.25%) / 4 = 1.26%
c. To calculate the geometric average annual return, we need to multiply the annual returns together and then take the fourth root:
Geometric Average = (1 - 0.0571) * (1 - 0.025) * (1 + 0.04) * (1 + 0.1125)^(1/4) - 1 = 2.03%
d. To find the Internal Rate of Return (IRR) on the investment, we consider the cash flows of buying the stock for $175 and selling it for $175 after receiving the $12 dividend. We solve for the rate that equates the present value of cash flows to zero:
IRR = 11.9%
e. If we reinvest each dividend in the stock, the calculation becomes more complex. We would need to determine the additional shares purchased with each dividend and account for the changing number of shares owned. Given the limitation of the response length, it is not feasible to provide a detailed calculation within the 150-word limit. However, reinvesting dividends can lead to a higher total return over the investment period, as the dividends compound over time, leading to increased share ownership and potential capital gains.
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State true or false and justify your answer:
Asset utilization ratios describe how capital is being utilized to buy assets.
True - Asset utilization ratios describe how capital is being utilized to buy assets.
Asset utilization ratios, such as the asset turnover ratio, are financial metrics that assess how efficiently a company utilizes its capital to acquire and utilize assets.
These ratios provide insights into the company's ability to generate revenue from its asset base.
A higher asset turnover ratio indicates better utilization of capital to generate sales, while a lower ratio may suggest inefficiencies in asset management.
Therefore, asset utilization ratios do indeed describe how capital is being utilized to buy and utilize assets.
By monitoring these ratios, investors and analysts can evaluate the effectiveness of a company's asset utilization and its impact on overall financial performance.
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ABC Company has set the following standards for the production of one case of Zesty Pretzels:
Usage Cost
Direct Materials .9 pounds $5 per pound
Direct Labor .4 hours $15 per hour
Variable Overhead .4 hours $5 per hour
Actual information recorded by ABC Company for the month of March is below:
Purchased 7,000 pounds at a cost of $31,500
Used 5,616 pounds to make 5,200 good units
Paid $32,214 for 2,184 hours of labor.
Actual variable OH costs were $11,600.
The materials price variance for March is:
a. $3,500 unfavorable c. $3,420 unfavorable
b. $3,500 favorable d. $3,420 favorable
The material quantity variance for March is:
a. $11,600 unfavorable c. $4,680 unfavorable
b. $11,600 favorable d. $4,680 favorable
The labor rate variance for March is:
a. $546 unfavorable c. $1,014 unfavorable
b. $546 favorable d. $1,014 favorable
The labor efficiency variance for March is:
a. $1,560 unfavorable c. $9,240 unfavorable
b. $1,560 favorable d. $9,240 favorable
The materials price variance can be calculated as follows: Actual cost of materials = 7,000 pounds * $5 per pound = $35,000
Standard cost of materials = 5,616 pounds * $5 per pound = $28,080
Materials price variance = Actual cost of materials - Standard cost of materials
= $35,000 - $28,080
= $6,920 unfavorable
Therefore, the materials price variance for March is $6,920 unfavorable (option c).
The materials quantity variance can be calculated as follows:
Standard quantity of materials = 5,200 units * 0.9 pounds per unit = 4,680 pounds
Materials quantity variance = Standard quantity of materials - Actual quantity of materials
= 4,680 pounds - 5,616 pounds
= $936 unfavorable
Therefore, the materials quantity variance for March is $936 unfavorable (option d).
The labor rate variance can be calculated as follows:
Actual cost of labor = $32,214
Standard cost of labor = 2,184 hours * $15 per hour = $32,760
Labor rate variance = Actual cost of labor - Standard cost of labor
= $32,214 - $32,760
= $546 unfavorable
Therefore, the labor rate variance for March is $546 unfavorable (option a).
The labor efficiency variance can be calculated as follows:
Standard hours allowed = 5,200 units * 0.4 hours per unit = 2,080 hours
Labor efficiency variance = Standard hours allowed - Actual hours
= 2,080 hours - 2,184 hours
= $104 unfavorable
Therefore, the labor efficiency variance for March is $104 unfavorable (option b).
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Under the terms of an interest-rate swap, a financial institution has agreed to pay 6% APR Semi-Annual and receive LIBOR APR Semi-Annual on a notional principal of $100 million with payments exchanged every six months. The swap has remaining life of 16 months. Two months ago, six-month LIBOR was 5.5% APR. The current term structure of interest rates is flat so LIBOR for all maturities is 5.21% CCAR. a) Value the swap using therorward Rate Method. b) What has happened to the relevant interest rates since the swap was initiated? Is the FI paying or receiving the floating rate? Has the value of the swap increased or decreased? c) What payment must he FI make to the counterparty in order to exit the swap? Or what payment must he FI make today (along with offsetting forward rate agreements) to offset the swap?
a) To value the swap, calculate the present value of fixed and floating cash flows using forward rates. b) The FI is paying a higher floating rate, and the value of the swap has decreased due to lower interest rates. c) The payment to exit the swap depends on the present value of remaining cash flows and prevailing interest rates.
a) To value the swap using the Forward Rate Method, we need to calculate the forward rates for the remaining life of the swap. Since the term structure is flat, the forward rates will be the same as the current LIBOR rate.
The LIBOR rate for the remaining life of the swap is 5.21% CCAR,
which is equivalent to 5.21%/2 = 2.605% per six-month period.
The fixed rate of the swap is 6% APR Semi-Annual, which is equivalent to 6%/2 = 3% per six-month period.
Using these rates, we can calculate the present value of the fixed and floating cash flows exchanged in the swap to determine its value.
b) Since the current LIBOR rate (5.21%) is lower than the rate at the initiation of the swap (5.5%), the FI is paying a higher floating rate than it would receive if the swap was entered into today. The value of the swap has decreased because the fixed rate is higher than the current market rate.
c) To exit the swap, the FI would need to make a payment to the counterparty to compensate for the remaining cash flows. The specific amount would depend on the present value of the remaining fixed and floating cash flows and the prevailing interest rates at the time of exiting the swap.
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Running for Africa Inc. (RF A) was established in 2005 as a non-profit corporation with a December 31st year-end. Rejean Chiasson was a director starting in January 2008 and legally ceased to be a director in December 2010. In 2010, RF A began earning profits by operating local running races. On January 30, 2013, RFA received a Notice of Assessment for unpaid employee source withholdings, HST, and income tax for the 2009 and/or 2010 taxation years. Which of the following statements regarding the Rejean' s liability is correct?
A). Rejean will not be held liable for the unpaid income tax because directors are not liable for income taxes.
B). Rejean will not be held liable for any of the amounts because the liability of directors does not extend to non-profit corporations.
C). Rejean will be held liable for only the unpaid income tax because he was a director for the years in question. Rejean will be held liable for only the employee source withholdings and HST because he was a director for the years in question.
C). Rejean will be held liable for only the unpaid income tax because he was a director for the years in question.
According to the information provided, Rejean Chiasson served as a director for RF A from January 2008 to December 2010. In 2013, RF A received a Notice of Assessment for unpaid employee source withholdings, HST, and income tax for the 2009 and/or 2010 taxation years.
Under Canadian law, directors of corporations can be held personally liable for certain debts and obligations of the corporation, including unpaid income tax. The liability of directors extends to both for-profit and non-profit corporations. Therefore, Rejean can be held personally liable for the unpaid income tax for the years in question, as he was a director during that period.
However, it is important to note that the liability of directors for employee source withholdings and HST may vary depending on the specific circumstances and applicable laws. Without additional information, it cannot be definitively stated that Rejean will be held liable for these amounts.
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(20 Points) Metropolis has been planning to develop a new warning system to make Superman aware of significant dangers. The installation of the system costs more than what their budget allows so the mayor decides to issue a 25-year bond to finance the project. Each bond has a face value of $1,000 and it promises a coupon rate of 5%, which will be paid semi-annually. a. (4 Points) Calculate the price of this bond if the Yield to Maturity (YTM) is 6.0% pa. b. (10 Points) Let's assume you bought this bond on the date of issue. Right after receiving the fourth coupon payment (i.e., two years later), you decided to sell the bond. Exactly on that date, the YTM decreased to 5.2%. Under these circumstances, what is your holding period return? c. (6 Points) What is the percentage change in the price on the day of selling this bond (due to YTM change)? (Please submit your answer in three decimals such as 15.233% )
a. The price of the bond, with a Yield to Maturity (YTM) of 6.0% pa, is $942.17. b. The holding period return, considering a decrease in YTM from 6.0% to 5.2% after receiving the fourth coupon payment, is 6.105%. c. The percentage change in the price of the bond on the day of selling, due to the YTM change, is -0.811%.
a. To calculate the price of the bond, we can use the formula for the present value of bond cash flows. The bond pays semi-annual coupons, so we have a total of 50 coupon payments (25 years * 2). The coupon payment is $1,000 * 5% / 2 = $25. The YTM is 6.0% pa, which translates to a semi-annual yield of 6.0% / 2 = 3.0%. Using these values in the formula, we find that the price of the bond is $942.17.
b. The holding period return can be calculated by considering the change in the bond price and the coupon payments received. After two years, the bond has made four coupon payments. The YTM has decreased to 5.2%, which translates to a semi-annual yield of 5.2% / 2 = 2.6%. Using this new yield in the formula, we can calculate the new bond price after two years, which is $985.37. The total coupon payments received over two years are 4 * $25 = $100. The holding period return is calculated as the sum of coupon payments received plus the change in bond price, divided by the initial investment, expressed as a percentage: (100 + (985.37 - 942.17)) / 942.17 * 100 = 6.105%.
c. The percentage change in the price of the bond on the day of selling, due to the change in YTM, can be calculated as the difference between the new bond price after two years ($985.37) and the initial price ($942.17), divided by the initial price, expressed as a percentage: (985.37 - 942.17) / 942.17 * 100 = -0.811%. The negative sign indicates a decrease in the bond price due to the decrease in YTM.
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b) Capital budgeting projects are classified into various categories. Describe this statement.
Capital budgeting projects are categorized into different groups based on various criteria to facilitate decision-making and resource allocation.
Capital budgeting projects refer to investment decisions that involve allocating funds to long-term projects with the aim of generating future cash flows and enhancing the value of the company. These projects are classified into different categories to assist in evaluating and prioritizing investment opportunities.
One common classification criterion is the nature of the project, which can include expansion projects, replacement projects, or new product development projects. Expansion projects involve expanding existing operations, such as increasing production capacity or opening new branches. Replacement projects involve replacing outdated or inefficient assets with newer ones. New product development projects focus on developing and introducing new products or services to the market.
Another classification criterion is the risk level associated with the project. Projects can be classified as high-risk or low-risk based on factors such as market uncertainty, technological complexity, or regulatory challenges. High-risk projects often offer higher potential returns but also come with increased uncertainty and potential losses. Low-risk projects, on the other hand, have a more predictable outcome and are relatively stable.
Projects can also be classified based on their strategic importance to the organization. Some projects may align closely with the company's long-term objectives and core competencies, while others may be considered peripheral or tangential to the main business activities.
By categorizing capital budgeting projects, companies can effectively evaluate and compare investment opportunities within each category. This classification allows decision-makers to allocate resources, prioritize projects, and align them with the organization's overall strategic goals and risk tolerance. It provides a structured framework for making informed investment decisions and optimizing the allocation of limited resources.
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Assume you are planning to invest $4,985 each year for six years and will earn 10 percent per year. Determine the future value of this annuity due problem if your first $4,985 is invested now. (Round answer to 0 decimal places.) Future value________.
The future value of this annuity due problem if your first $4,985 is invested now is $38,539.05.
In order to determine the future value of this annuity due problem, we need to follow these steps:
Calculation of Future Value of Ordinary Annuity
As the first payment of $4,985 is made now, it is an annuity due.
So, we need to calculate the future value of an annuity due.
Future value of ordinary annuity = [tex]\[\text{PMT}\times\frac{(1+r)^n-1}{r}\][/tex]
Here, PMT = Payment = $4,985r = Rate of Interest = 10% = 0.10 (As rate of interest is given in percentage, we need to divide it by 100 to use it in the formula) n = Number of payments = 6
Calculation of Future Value of Annuity Due
As the first payment is made now, we need to multiply the future value of ordinary annuity by (1 + r).Therefore, Future Value of Annuity Due = Future Value of Ordinary Annuity x (1 + r)Future Value of Annuity Due= [tex]\[\text{PMT}\times\frac{(1+r)^n-1}{r}\times(1+r)\][/tex]
Substituting the values, we get:
Future Value of Annuity Due = $4,985 x [({(1 + 0.1) ^ 6 - 1} / 0.1) x (1 + 0.1)]
Future Value of Annuity Due = $4,985 x (7.360104) x (1.1)
Future Value of Annuity Due = $38,539.05
Hence, the future value of this annuity due problem if your first $4,985 is invested now is $38,539.05.
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the tactic of varying price over time is suitable for assets
The tactic of varying prices over time is suitable for assets with fluctuating demand or perishable nature.
Varying the price over time, often referred to as dynamic pricing or price discrimination, is a tactic commonly employed for assets that exhibit fluctuating demand or have a perishable nature. This strategy involves adjusting prices based on factors such as demand levels, market conditions, time of day, seasonality, or inventory levels. By dynamically changing prices, businesses can optimize revenue and maximize their profitability. This approach is particularly applicable to assets or products with limited shelf life, such as airline tickets, hotel rooms, concert tickets, or perishable goods. By adjusting prices in response to changing market conditions, businesses can balance supply and demand, increase sales during low-demand periods, and capture additional revenue during peak-demand periods. Dynamic pricing allows businesses to optimize their pricing strategies based on real-time data and market dynamics, ensuring they can effectively respond to changing customer preferences and market conditions.
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Jerry the Squirrel is investing for retirement. He plans on setting aside money each year for the next 10 years in the hopes of having $2,800,000 in his account in 35 years. If the Forest Bank is offering an interest rate of 8%, how much must Jerry deposit each year? Draw a cash flow diagram.
Jerry needs to deposit $420,448.48 each year for the next 10 years to have $2,800,000 in 35 years at an interest rate of 8%.
To calculate the amount Jerry needs to set aside each year, we can use the formula for the present value of an annuity: PV = PMT x [(1 - (1 + r)^(-n)) / r]
where PV is the present value, PMT is the amount of the annual payments, r is the interest rate, and n is the number of periods.
In this case, we want to find the PMT, so we can rearrange the formula to solve for it:
PMT = PV x [r / (1 - (1 + r)^(-n))]
We are given that Jerry wants to have $2,800,000 in his account in 35 years, so the PV is $2,800,000. The interest rate is 8%, or 0.08 as a decimal. Jerry will be making 10 payments, so n is 10.
Plugging these values into the formula, we get:
PMT = $2,800,000 x [0.08 / (1 - (1 + 0.08)^(-10))]
PMT = $2,800,000 x [0.08 / (1 - 0.46715)]
PMT = $2,800,000 x [0.08 / 0.53285]
PMT = $2,800,000 x 0.15016
PMT = $420,448.48
Therefore, Jerry needs to deposit $420,448.48 each year for the next 10 years in order to have $2,800,000 in his account in 35 years.
Here is a cash flow diagram to illustrate the payments and the final payout:
Year 0: [ $0 ]
Year 1: [ $420,448.48 ]
Year 2: [ $420,448.48 ]
Year 3: [ $420,448.48 ]
Year 4: [ $420,448.48 ]
Year 5: [ $420,448.48 ]
Year 6: [ $420,448.48 ]
Year 7: [ $420,448.48 ]
Year 8: [ $420,448.48 ]
Year 9: [ $420,448.48 ]
Year 10: [ $420,448.48 ]
Year 35: [ $2,800,000 ]
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The stockholders' equity of Gaulin Company at the start of the current year follows: Common stock $5 par value 500,000 shares authorized 350,000 shares issued and outstanding $1750,000
Paid-in-capital in excess of par value ¬$800,000
Retained earning 634,000
During the current year, the following transactions occurted: Jan. 5 Issued 10.000 shares of common stock for $13 cash per share. Jan. 18 Repurchased 4,000 shares of common stock at $16 cash per share Mar. 12 sold one-fourth of the treasury shares acquired january 18 for $19 cash per share. July 17 Sold 500 shares of treasury stock for $14 cash per share. Oct. 1 Issued 5,000 shares of 8%,$25 par value preferred stock for $36 cash per share. This is the first issuance of preferred shares from the 50,000 authorized preferred shares. (a) Use the financial statement effects template to indicate the effects of each transaction (b) Prepare the current year stockholders' equity section of the balance sheet assuming that the company reports net income of $76, 900 for the year
(a) The financial statement effects of each transaction are as follows:
Jan. 5: Issued 10,000 shares of common stock for $13 cash per share.
- Increase in cash: $130,000
- Increase in common stock: $50,000
- Increase in paid-in capital in excess of par value: $80,000
Jan. 18: Repurchased 4,000 shares of common stock at $16 cash per share.
- Decrease in cash: $64,000
- Decrease in common stock: $0
- Decrease in paid-in capital in excess of par value: $0
- Increase in treasury stock: $64,000
Mar. 12: Sold one-fourth of the treasury shares acquired January 18 for $19 cash per share.
- Increase in cash: $4,000
- Decrease in treasury stock: $16,000
- Increase in retained earnings: $12,000
July 17: Sold 500 shares of treasury stock for $14 cash per share.
- Increase in cash: $7,000
- Decrease in treasury stock: $7,000
Oct. 1: Issued 5,000 shares of 8%, $25 par value preferred stock for $36 cash per share.
- Increase in cash: $180,000
- Increase in preferred stock: $125,000
- Increase in paid-in capital in excess of par value: $55,000
(b) The current year stockholders' equity section of the balance sheet is as follows:
Common Stock:
- Par value: $5 per share
- Authorized shares: 500,000
- Issued shares: 350,000
- Outstanding shares: 350,000
- Total common stock: $1,750,000
Paid-in Capital in Excess of Par Value: $800,000
Preferred Stock:
- Par value: $25 per share
- Authorized shares: 50,000
- Issued shares: 5,000
- Total preferred stock: $125,000
Retained Earnings: $634,000
Net Income: $76,900
Total Stockholders' Equity: $3,385,900
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A collection of securities is called a: portfolio. conglomerate. basket. Any of these choices are correct A company can raise money to purchase assets by: using money earned. borrowing money (issuing bonds). issuing stock. issuing bonds \& stock. all of the above.
A collection of securities is called a portfolio. A company can raise money to purchase assets by using money earned, borrowing money, and issuing stock. Therefore, the correct answer is "all of the above."
A collection of securities, such as stocks, bonds, and other financial instruments, held by an individual or an institution, is referred to as a portfolio. This term is commonly used in the field of finance to describe the collection of investments or assets owned by an investor or a financial institution.
When a company needs to raise money to purchase assets or fund its operations, it has several options. Firstly, the company can use its own funds generated from its operations, also known as retained earnings or money earned. This can come from the profits generated by the company's business activities.
Secondly, the company can borrow money by issuing bonds. Bonds are debt instruments through which companies or governments borrow money from investors with a promise to repay the principal amount along with interest over a specified period.
Thirdly, the company can raise money by issuing stock, which represents ownership in the company. By selling shares of stock, the company can raise capital from investors who become shareholders and have a stake in the company's ownership and future profits.
In some cases, companies may choose to utilize a combination of these methods, issuing both bonds and stock to raise the necessary funds for their operations or acquisitions.
Therefore, the correct answer is that a company can raise money to purchase assets by using money earned, borrowing money (issuing bonds), and issuing stock.
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Lighthouse Corporation's accumulated depreciation-equipment account increased by $3,800 while $2,500 of patent amortization was recognized between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $2,900 from the sale of investments. Reconcile a net income of $43,200 to net cash flow from operating activities.
To reconcile net income to net cash flow from operating activities, we need to make adjustments for non-cash expenses and gains/losses and consider changes in non-cash current assets and liabilities.
In this case, we have the following information:
The increase in accumulated depreciation-equipment account: $3,800. This is a non-cash expense.
Patent amortization: $2,500. This is also a non-cash expense.
Gain from the sale of investments: $2,900. This is a non-operating gain and needs to be removed.
To reconcile net income of $43,200, we perform the following calculations:
Net Income
Non-cash expenses (depreciation and amortization): $3,800 + $2,500 = $6,300
Non-operating gain (sale of investments): $2,900
= Adjusted net income: $43,200 + $6,300 - $2,900 = $46,600
Since we are reconciling to net cash flow from operating activities, we need to consider changes in non-cash current assets and liabilities. If there were no changes in those accounts during the year, then the net cash flow from operating activities would also be $46,600. However, if there were changes, we would need more information to calculate the specific impact on cash flows.
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