Time to arrive: 45 minutes Arrival Time / Arrival Rate Arrival Rate () = 60/45 = 1.333 customers per hour, or Arrival Rate () = 1/45 customers per minute.
The calculation is as follows:
Time to arrive: 45 minutes, Arrival Time / Arrival Rate, Arrival rate is 14 of a consumer every 15 seconds.
or,
Customer Arrival Rate (lambda) = 60/45 = 1.333 per hour
Service period: thirty minutes, Service Time/Service Rate = 1.
1/30 consumers are served per minute.
or,
Service Rate (mu) equals 60/30, or 2 clients per hour.
(A).Utilization equals Arrival Rate / Service Rate, Utilization equals 1.3332/2
Utilization is equal to 0.6667 or 66.67%
The oil change shop will thus be busy 66.67% of the time.
(B). Let Wq be the average wait time in lime. Wq=\frac{\lambda}{\mu.(\mu-\lambda)}
Wq = 1.333/(2 × 0.6667)W = one hour.
or,
Wq = one hour. The typical consumer waits in line for 60 minutes.
(C).
Let average clients delay equals Lq, Wq x Arrival Rate = Lq
Lq = 1 × 1.33 Lq = 1.3, As a result, 1.3 consumers wait in line on average.
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Consider a variation of the Taylor rule: r,= (0.25)r TAYLOR +(0.75)rt-1, where r is the real interest rate in a quarter, TAYLOR is the interest rate implied by the Taylor rule, and r-1 is the interest rate in the previous quarter. Call this rule TR-S. If rt-1 3 percent and the Taylor rule indicates that the central bank should set TAYLOR to 4 percent, then the TR-S rule dictates that r should be
r must be 3.25 percent according to the TR-S rule. Given the variation of the Taylor rule as;
r,= (0.25)r TAYLOR +(0.75)rt-1, where r is the real interest rate in a quarter, TAYLOR is the interest rate implied by the Taylor rule, and r-1 is the interest rate in the previous quarter. Call this rule TR-S. If rt-1 3 percent and the Taylor rule indicates that the central bank should set TAYLOR to 4 percent, then the TR-S rule dictates that r should be.
The Taylor rule can be given as;
r = r* + 0.5 (p-p*) + 0.5 (y-y*), where r is the real interest rate, r* is the target real interest rate, p is the inflation rate, p* is the inflation target, y is the output gap, and y* is potential output. If we take p = p* = 2 percent and y = y* = 0, then the Taylor rule becomes;
r = r* + 1, which implies that the nominal interest rate equals the inflation target plus the real interest rate. If the central bank follows the Taylor rule, it will adjust the nominal interest rate in response to changes in inflation and output so as to keep the real interest rate at the target level. The TR-S rule is a variation of the Taylor rule that puts more weight on the lagged interest rate and less weight on the implied interest rate. This rule implies that the central bank should respond more slowly to changes in inflation and output, which could lead to a more stable real interest rate over time.
Given the variation of the Taylor rule as;r,= (0.25)r TAYLOR +(0.75)rt-1, where r is the real interest rate in a quarter, TAYLOR is the interest rate implied by the Taylor rule, and r-1 is the interest rate in the previous quarter. Call this rule TR-S. If rt-1 3 percent and the Taylor rule indicates that the central bank should set TAYLOR to 4 percent, then the TR-S rule dictates that r should be:r, = (0.25) x 4 + (0.75) x 3 = 1 + 2.25 = 3.25 percent
Therefore, the TR-S rule dictates that r should be 3.25 percent.
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Alisha invests 5,000 into an account. The e↵ective monthly interest rate is .3% for the first six months, .5% for the next year, and .8% for the next six months. Find the amount Alisha has in the account after two years, and find the average compound monthly interest rate (i.e. the equivalent e↵ective monthly interest rate) for the two year period. Finally, find the average yearly interest rate (i.e. the equivalent e↵ective annual interest rate) for the two year period.
After two years, Alisha will have $5,327.76 in her account. The average compound monthly interest rate for the two-year period is approximately 0.47%. The average yearly interest rate, which represents the equivalent effective annual interest rate, is approximately 5.73%.
To calculate the amount Alisha has in the account after two years, we need to apply the compound interest formula for each time period. In the first six months, the effective monthly interest rate is 0.3%, so the amount becomes $5,000 * (1 + 0.003)^6 = $5,089.15. For the next year, with a 0.5% effective monthly interest rate, the amount becomes $5,089.15 * (1 + 0.005)^12 = $5,228.89. Finally, for the last six months, the effective monthly interest rate is 0.8%, resulting in $5,228.89 * (1 + 0.008)^6 = $5,327.76.
To find the average compound monthly interest rate for the two-year period, we take the geometric mean of the three interest rates: [(1 + 0.003) * (1 + 0.005) * (1 + 0.008)]^(1/3) - 1, which is approximately 0.47%.
To determine the average yearly interest rate, we need to calculate the equivalent effective annual interest rate. The formula for this is (1 + r)^12 - 1 = (1 + 0.0047)^12 - 1, which gives us approximately 5.73%. Therefore, the average yearly interest rate for the two-year period is approximately 5.73%.
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An employee manual may be beneficial to a company owner. State the benefits of an employee manual, and state
any negatives
An employee manual is a document that contains the company's policies, procedures, and expectations. It serves as a reference for employees to follow and also helps the employer to protect their business interests.
The benefits of an employee manual are numerous.Benefits of employee manualAn employee manual provides a consistent standard for all employees and helps ensure that everyone is aware of the company's expectations and policies. It also helps reduce misunderstandings and disputes between employers and employees because everyone is on the same page.
An employee manual can also serve as a legal document that can be used to defend the company in court in case of an employee lawsuit. It provides the employer with the opportunity to include policies regarding discrimination, harassment, and other legal issues.A good employee manual also includes clear procedures for addressing employee grievances, complaints, and disciplinary actions, which can help to resolve conflicts and improve employee relations.
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kyoko wants to consider the safety and security needs of her employees. which of the following organizational conditions would help meet those needs?
Creating a culture of safety and security in the organizational conditions is essential to meeting the needs of employees. By providing a safe working environment, clear policies and procedures, training, regular safety audits, and employee involvement, Kyoko can ensure that her employees feel safe and secure while at work.
The organizational conditions that would help Kyoko meet the safety and security needs of her employees are:
1. Providing a safe working environment: Providing a safe working environment is the most critical factor in meeting the safety and security needs of employees. In addition to being safe from physical harm, employees must also feel emotionally secure.
2. Policies and Procedures: The organization should have policies and procedures in place to ensure that the employees' safety and security needs are met. These policies and procedures should be clearly communicated to all employees to ensure that they are aware of them.
3. Training: Training should be provided to employees on safety and security issues. This should include training on how to handle an emergency situation, how to evacuate the building, and how to respond to a threat.
4. Regular safety audits: Regular safety audits should be conducted to ensure that the safety and security needs of employees are being met. These audits should identify potential hazards and recommend actions to reduce or eliminate them.
5. Employee involvement: Employees should be involved in the safety and security program. This can be done by establishing a safety committee made up of employees from different departments. This committee can review policies and procedures, conduct safety audits, and make recommendations for improvements.
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2 02:55:20 eBook Craftman Inc following information for its main product Selling price per unit Costs per unit (at the normal capacity of 23,000 units): Direct material Direct labour Variable overhead
1. The contribution margin ratio is 47.5% and the break-even sales are $125,000.
2. The margin of safety is $75,000 in dollars and 375 units, and the degree of operating leverage is not applicable at the break-even point.
1. The contribution margin ratio can be calculated by subtracting the variable costs per unit from the selling price per unit, and then dividing the result by the selling price per unit. In this case, the contribution margin ratio is (200 - 105) / 200 = 0.475, or 47.5%.
To calculate the break-even sales, divide the total fixed costs by the contribution margin ratio. In this case, the fixed costs are 50 + 7.5% of sales. We'll need to find the sales amount that makes the contribution margin equal to the fixed costs. Using algebraic equations, we have 0.475 * Sales = 50 + 0.075 * Sales. Solving for Sales, we get Sales = 50 / (0.475 - 0.075) = $125,000.
2. The margin of safety in dollars can be calculated by subtracting the break-even sales from the actual sales. In this case, the margin of safety in dollars is $200,000 - $125,000 = $75,000.
The margin of safety in units can be calculated by dividing the margin of safety in dollars by the selling price per unit. In this case, the margin of safety in units is $75,000 / $200 = 375 units.
The degree of operating leverage can be calculated by dividing the contribution margin by the net operating income. In this case, the contribution margin is (200 - 105) = $95, and the net operating income is $0 (break-even point). Therefore, the degree of operating leverage is not applicable as there is no net operating income at the break-even point.
The complete question must be:
4 Croftsman Company recorded the following information for its main product 10 points Selling price per unit $200 Costs per unit (at the normal capacity of20,000 units) Direct material 50 Direct labour 30 Variable overhead 25 Fixed overhead 50 Sales Commission 7.5 % of sales eBook Print Reterences Required: 1.Compute the contribution margin ratio and break-even sales Contribution margin ratio Breakeven sales eBook Print 2.What is the margin of safety in dollars and units, and the degree of operating leverage Round degree of operating leverage to 2 decimal places.) References Dollars Units Margin of safety
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Reflect on which 5 factors of the 3X3 writing process were most
beneficial for your writing purposes.
The five factors of the 3X3 writing process that were most beneficial for my writing purposes were prewriting, drafting, revising, editing, and proofreading.
Prewriting: This stage allowed me to brainstorm ideas, gather information, and organize my thoughts before starting the actual writing process. It helped me clarify my purpose, identify my target audience, and establish a clear structure for my writing.Drafting: During the drafting stage, I focused on putting my ideas into words and developing the content of my writing. This allowed me to create a rough draft without worrying too much about grammar, style, or word choice. It helped me get my thoughts on paper and build the foundation for further revisions.Revising: The revising stage was crucial for refining and improving my writing. I reviewed my initial draft, assessed its clarity, coherence, and effectiveness, and made necessary revisions to enhance the overall quality of the content. This involved reorganizing paragraphs, clarifying ideas, strengthening arguments, and ensuring a logical flow.Editing: In the editing stage, I focused on refining the language and style of my writing. I paid attention to grammar, punctuation, sentence structure, and word choice. I reviewed each sentence and paragraph to ensure clarity, coherence, and precision. This step helped me eliminate errors and polish the language to make my writing more professional and effective.Proofreading: Proofreading was the final stage where I carefully reviewed my writing for any remaining errors or typos. I checked for spelling mistakes, formatting issues, and inconsistencies. This step allowed me to ensure the accuracy and professionalism of my writing before finalizing it.The five factors of the 3X3 writing process, including prewriting, drafting, revising, editing, and proofreading, were all instrumental in achieving my writing purposes. Prewriting helped me plan and organize my thoughts, drafting allowed me to generate content, revising helped me refine and improve my writing, editing polished the language and style, and proofreading ensured the accuracy and professionalism of the final piece. By following these steps, I was able to produce well-structured, coherent, and error-free written work
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Question Zicco owns a provision shop at Keta. On 31st December, 2020 the following trial balance was extracted from her books: Dr. Cr. GH¢ GHE Capital (1/1/2020) 960,000 Motor van(cost) 680,000 Equipment (cost) 320,000 Accumulated depreciation: Motor van 128,000 Equipment 104,000 Inventory (1/1/2020) Purchases and sales 450,000 Returns 12,000 Carriage outwards Carriage inwards Trade Receivables Trade payables 120,000 Allowance for receivables 16,000 Bad debts Wages and Salaries 270,000 Discounts 88,000 Postage and Stationery Utility Bills 10% Loan 160,800 Rent & Rates Sundry expenses Cash Bank Personal drawings 3,108,800 1520,000 27,000 120,000 48,000 20,400 290,000 60,000 54,000 132,000 128,000 42,000 100,000 239,400 40,000 88,000 3,108,800 The following additional information was made available:
The Income statement for the year ended 31st December 2020 has net income before interest and tax (1,308,400). The Statement of financial position as of 31st December 2020 has Total assets of 801,600 and Total equity and liabilities of 2,180,800.
a) Income Statement for the Year Ended 31st December 2020:
Sales revenue 1,520,000
Less: Sales returns (12,000)
Net sales revenue 1,508,000
Less: Cost of goods sold:
Inventory at 1/1/2020 450,000
Add: Purchases 1,520,000
Less: Inventory at 31/12/2020 (176,000)
Cost of goods sold 1,794,000
Gross profit (286,000)
Less: Operating expenses:
Carriage outwards 20,400
Discounts 88,000
Wages and salaries 270,000
Postage and stationery (accrued) 28,000
Utility bills 10,000
Rent and rates 132,000
Sundry expenses 42,000
Depreciation expense:
Motor van (40% x 680,000) 272,000
Equipment (50% x 320,000) 160,000
Total operating expenses (1,022,400)
Net income before interest and tax (1,308,400)
b) Statement of Financial Position as at 31st December 2020:
Assets:
Motor van (680,000 - 128,000 - 272,000) 280,000
Equipment (320,000 - 104,000 - 160,000) 56,000
Inventory 176,000
Trade receivables (120,000 - 16,000 - 10,000) 94,000
Prepaid rent and rates 25,600
Prepaid postage and stationery 28,000
Cash 42,000
Bank 100,000
Total assets 801,600
Equity and Liabilities:
Capital 960,000
Accumulated depreciation: Motor van (128,000 + 272,000) 400,000
Equipment (104,000 + 160,000) 264,000
Allowance for receivables 10,000
Loan 160,800
Trade payables 54,000
Accrued wages and salaries 132,000
Total equity and liabilities 2,180,800
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Complete Question:
Zicco owns a provision shop at Keta. On 31st December, 2020 the following trial balance was extracted from her books: Dr. Cr. GH¢ GHE Capital (1/1/2020) 960,000 Motor van(cost) 680,000 Equipment (cost) 320,000 Accumulated depreciation: Motor van 128,000 Equipment 104,000 Inventory (1/1/2020) Purchases and sales 450,000 Returns 12,000 Carriage outwards Carriage inwards Trade Receivables Trade payables 120,000 Allowance for receivables 16,000 Bad debts Wages and Salaries 270,000 Discounts 88,000 Postage and Stationery Utility Bills 10% Loan 160,800 Rent & Rates Sundry expenses Cash Bank Personal drawings 3,108,800 1520,000 27,000 120,000 48,000 20,400 290,000 60,000 54,000 132,000 128,000 42,000 100,000 239,400 40,000 88,000 3,108,800
The following additional information was made available:
i) Inventory at 31st December, 2020 was valued at GH¢ 176,000.
ii) Depreciation at the rate of 40% on cost for Motor Van and 50% on Equipment on reducing balance method basis.
iii) An amount of GH¢ 28,000 is accrued in respect of Postage and Stationery at 31st December, 2020.
iv) Allowance for receivables is to be adjusted to GH 10,000 at 31st December, 2020 as a result of improvement in debt recovery efforts.
v) Rent and rates pre-paid amounted to Ghø25,600.
vi) The loan was contracted on 1st January, 2020. Provision should be made for the interest on loan.
Required: a) Prepare the Income statement for the year ended 31st December 2020
b) Prepare the Statement of financial position as at 31st December 2020
Which of the following factors favors concentrating production in a centralized location?
A) Volatility in important exchange rates is expected.
B) The product's value-to-weight ratio is low.
C) Trade barriers are high.
D) The product serves universal needs.
E) Location externalities are not important.
Which of the following factors favors concentrating production in a centralized location? E) Location externalities are not important.
Concentrating production in a centralized location is favored when location externalities are not important. Location externalities refer to the external factors or benefits that are associated with a specific location, such as access to resources, transportation networks, skilled labor, or proximity to markets.
If location externalities are not significant or do not have a substantial impact on production, it becomes more feasible and advantageous to concentrate production in a centralized location. This allows for economies of scale, streamlined logistics, and cost efficiency.
Let's review the other options to understand why they do not favor concentrating production in a centralized location:
A) Volatility in important exchange rates is expected: This factor may favor decentralizing production or diversifying production across multiple locations to mitigate risks associated with exchange rate fluctuations.B) The product's value-to-weight ratio is low: If a product has a low value-to-weight ratio, it may be more cost-effective to produce it closer to the market or in multiple locations to reduce transportation costs.C) Trade barriers are high: High trade barriers may necessitate decentralization or diversification of production to overcome trade restrictions and access different markets.D) The product serves universal needs: If the product serves universal needs, it may be more efficient to have production facilities located near the target markets to ensure timely delivery and better cater to local preferences.In conclusion, the factor that favors concentrating production in a centralized location is when location externalities are not important.
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believe that you are working for a start-up in the industry that you are considering for a career. And your company will be selling an imported service or goods. Share what that service or good will be and which country you think would be best to import from and why. Share what you think might be the biggest challenges in working with companies in that country. max 200 words
One potential challenge is the competitive nature of the US market. It may be challenging to differentiate our software solution and gain market share in a crowded industry.
As an employee of a startup in the technology industry, the service our company will be selling is a cloud-based project management software solution. This software will provide businesses with a centralized platform to plan, track, and collaborate on their projects efficiently.
In terms of importing this service, the country that would be best to consider for import would be the United States. The US has a well-established technology sector, with a high level of expertise and innovation in the field of cloud computing and software development. It is home to many renowned tech companies and has a robust ecosystem of startups and industry events. Importing from the US would allow us to tap into this expertise, access a large market, and benefit from established business networks.
However, there may be challenges in working with companies in the US. One potential challenge is the competitive nature of the US market. It may be challenging to differentiate our software solution and gain market share in a crowded industry. Additionally, navigating legal and regulatory requirements, such as data protection and privacy regulations, can be complex and may require a thorough understanding of US laws. Cultural differences and time zone disparities may also pose communication and collaboration challenges when working with US-based companies.
To overcome these challenges, it would be important to conduct market research and develop a unique value proposition that sets our software apart from competitors. Building strong relationships with local partners and customers, attending industry events, and leveraging digital marketing strategies would help establish a presence in the US market. Seeking legal counsel and ensuring compliance with relevant regulations would also be essential for a smooth operation. Effective communication channels and proactive customer support would help bridge any cultural and time zone gaps, ensuring a positive experience for our clients in the US.
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Over the last year 752 drug doses were administered at the Goodhealth clinic. Quality is measured by the proper dosage as well as the correct drug. In two instances, the incorrect size of pill was given, and in one case, the wrong drug was given. At what sigma level is Goodhealth’s process?
Sigma level indicates the number of standard deviations from the mean or average an acceptable or defective unit lies. The sigma level is used to measure process capability, indicating how well the process is performing. A six-sigma process refers to a process that is performing at a high level of accuracy, with a defect rate of 3.4 defects per million opportunities (DPMO).
Given that the Goodhealth clinic administered 752 drug doses over the past year, in two instances, the incorrect size of pill was administered, and in one case, the wrong drug was given. The clinic’s overall defect rate is (3/752) * 1,000,000 = 3989 DPMO.To determine the sigma level, the defect rate can be converted to sigma level using the six-sigma conversion table.
A defect rate of 3,989 DPMO equals a sigma level of 3.11.The Goodhealth clinic’s process is at a sigma level of 3.11. This means that its process is reasonably stable and predictable. However, it still needs improvement, and management should continue to focus on reducing errors and improving its quality processes.
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You came to know about the idea of insurance and that it works on sharing of losses. However, your father does not agree with you. As discussed in class, explain the idea of sharing of losses to your father. Assume asset to be insured worth Rs 1009000 and a chance of loss to be 19%. (Hint: consider at least two similar assets to prove your point.) 5 Marks
SUBJECT IS RISK AND INSURANCE
Insurance is a way of managing the risk of financial loss. The sharing of losses occurs in insurance. In case of a loss, the insurance company pays a certain amount to the insured.
What happens with it?When there is insurance, the insured pays a premium to the insurance company to cover the risk. The amount of the premium is determined by the potential loss of the item being insured. There are two similar assets that can be taken into account to prove the idea of sharing of losses to your father: a car and a house.
Suppose a car is worth Rs. 5,00,000 and a house is worth Rs. 10,00,000. For both the car and the house, the chance of a loss is 15%. Therefore, the expected loss for the car is Rs. 75,000 and the expected loss for the house is Rs. 1,50,000.The owner of the car or the house might have to pay the entire loss themselves if there is no insurance. This can be difficult for many individuals to handle, and it can lead to serious financial difficulties.
However, if the car and the house are insured, the losses are shared with the insurance company. In the event of a loss, the insurance company pays a portion of the loss. The insured person will only have to pay the amount of the deductible, which is usually a small fraction of the total loss.
Therefore, insurance is a way of managing the risk of financial loss. Insurance companies offer protection against the possibility of loss, and they charge a premium for this protection. In the event of a loss, the insurance company shares the loss with the insured person.
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Managing the Business Enterprise (5 points): "Consider the following statement: In some companies, it is important that the CEO put more emphasis on technical skills than on human relations skills." Do you agree or disagree with the statement? Defend your answer with at least 2 thoughts or facts.
Disagreeing with the statement that CEOs should put more emphasis on technical skills than on human relations skills in some companies, as effective leadership requires a balance of both skill sets to succeed.
I disagree with the statement that CEOs should prioritize technical skills over human relations skills in some companies. Effective leadership requires a balance between technical proficiency and strong human relations skills. Building and managing teams: CEOs are responsible for leading and managing teams of employees. Strong human relations skills, such as effective communication, empathy, and conflict resolution, are crucial for fostering a positive work environment, promoting teamwork, and motivating employees. Technical skills alone may not be sufficient to inspire and engage a workforce.
Stakeholder relationships: CEOs play a critical role in building and maintaining relationships with stakeholders, including customers, investors, suppliers, and the community. Human relations skills are essential for understanding their needs, managing expectations, and creating mutually beneficial partnerships. This aspect of leadership goes beyond technical skills and requires emotional intelligence, negotiation skills, and the ability to connect with people on a personal level.
While technical skills are undoubtedly important for CEOs, they should be complemented by strong human relations skills. The ability to effectively communicate, collaborate, and inspire people is essential for successful leadership and fostering a positive organizational culture. By prioritizing both technical and human relations skills, CEOs can create a well-rounded leadership approach that contributes to the overall success of the company.
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Great Catch Corp.'s true cost of debt is 10% but it is able to borrow $90m for 17 years at a subsidized 9% rate. What is the NPV of debt financing if the firm makes annual interest payments and has to repay the principal at maturity? The tax rate is 30%.
The NPV of debt financing if the firm makes annual interest payments and has to repay the principal at maturity is $96,102,333.98.
It is given that Cost of debt, rd= 10%
Subsidized rate, rs = 9%
Amount borrowed, P = $90m
Period, t = 17 years
Tax rate, T = 30%
The net present value (NPV) of debt financing is the sum of the present value of principal and the present value of annual interest payments.
NPV of debt financing is = (PV of Principal) + (PV of Interest Payment)
The formula to calculate the present value (PV) of a debt is:
PVi = (Ci / (1 + r)i)
Where,
PVi = present value of cash flow in the i-th year
Ci = cash flow in the i-th year
ri = required rate of return or discount rate
i = time period
For Principal repayment, the cash flow is $90m.
Therefore, its present value will be:
PVP = ($90m / (1 + 0.09)17)
PV of Principal = $90m / 7.4501
PV of Principal = $12,086,802.64
For annual interest payment, the cash flow will be the interest payment of the previous year (since the principal will remain constant for each year) for 17 years.
The amount of interest for the first year will be:
PVAI = $90m × 0.09 = $8.1m
The interest payment for the 2nd year will be:
PVAI2 = $90m × 0.09 = $8.1m
The interest payment for the 3rd year will be:
PVAI3 = $90m × 0.09 = $8.1m
And so on until the 17th year.
PVAI17 = $90m × 0.09 = $8.1m
The PV of the cash flow can be calculated as:
PVA = (C × ((1 - (1 + r)-t) / r))
Where,
PVA = present value of annuity
Ci = cash flow in the i-th year
ri = required rate of return or discount rate
i = time period
t = number of years for the cash flow
After calculating for all 17 years, the total PV of Interest Payment is:
PVA = ($8.1m × ((1 - (1 + 0.09)-17) / 0.09))
PV of Interest Payment = $84,015,531.34
Therefore, the net present value of debt financing is:
NPV of Debt = (PV of Principal) + (PV of Interest Payment)
NPV of Debt = $12,086,802.64 + $84,015,531.34
NPV of Debt = $96,102,333.98
Hence, the NPV of debt financing is $96,102,333.98.
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You buy a stock for $73. The following year you sell it at again at $73 plus $8 and you receive a dividend of $8. Your rate of return was:
Give your answer with two decimals and with no $ or %. Note for instance that 10% = 0.1 = 10 should be written as 10.00.
Selling stock at $73 plus $8 again with a dividend of $8 will give a return rate of 21.92%. The rate of return is a measure that indicates the gain or loss on an investment relative to the amount invested. It is typically expressed as a percentage. The rate of return allows investors to assess the profitability and performance of an investment.
To calculate the rate of return, we need to consider the initial investment, final investment value, and any additional income received.
Initial investment: $73
Final investment value: $73 + $8 = $81
Dividend received: $8
Total return = Final investment value + Dividend - Initial investment
Total return = $81 + $8 - $73 = $16
Rate of return = Total return / Initial investment
Rate of return = $16 / $73 = 0.219178 (rounded to 6 decimal places)
Therefore, the rate of return is 0.219178, which is equivalent to 21.92%.
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Francine is a photographer. For years, her business has consisted of joining guided backcountry hiking and skiing tours and providing photographs for the tour clients. However, this business has dried up completely in 2020 due to COVID.
Wanting to make use of her backcountry and photography skills, she starts thinking about going out by herself to take nature photographs to sell to stock agencies. An alternate approach would be to take photos and sell large prints of the photos as art.
For the stock photo option, she does not need to purchase any additional equipment. She will, however, need to pay for the costs of her trips, as they are no longer provided by the guides.
She expects to do 2 trip(s) per week, including time for editing and processing. She knows the costs of going on a trip well from her experience with the guides. Including gas, food, park permits, and other supplies, it will cost $875 per trip.
To estimate how many she photos she will submit to the agencies, she looks at her first year of guided tour photography. On her first trip, she would get about 6 keeper images per trip. By the end of her first year, she was getting 17. She expects to follow the same trend for the photos she submits to the stock agencies.
Once on the stock agency, based on similar landscape photographers she knows, she expects each photo to sell five times per week, with a commission to her (net of all agency fees) of $0.50 per photo.
For the art photo option, Francine will need some additional equipment and supplies.
- A printer for $2,200
- Initial supplies for $500
- Shipping and packaging: $30 per photo sold
- Expected printing costs per sold print: $25 per photo sold
For the fine art photography plan, she intends to create one photograph from each trip, and sell it as a limited edition print. She hopes to sell 1 photo(s) from each trip per month. (e.g. if Francine goes on four trips in July, she creates four photos to sell. She would sell 1 of each that month, for four times 1 of sales. In August, she goes on four more trips, creating four new prints to sell. The August prints each sell 1 copy/copies, and so do the July prints, for a total of eight times 1 sales in August). For sake of simplicity, you can assume all months are only four weeks if you want. Based on similar artists, she thinks she can sell her photos for $323 each.
Francine expects the guiding business to resume in 2021, one year from now, at which point she will return to that line of work.
What are the fixed and variable, and total costs for both options?
Identify two potential trade-offs between the two options? When will Francine break even and what is the payback period for each option? . Draw a cost/revenue chart (figure of profit and loss) for the two options and identify key points or areas on the chart. Estimate Francine’s profit and/or loss for the year for both options. How does marginal cost of producing one more photo in the two options change over time? What is the marginal cost of producing one more photo in the two options at end of year 1? Create a cashflow diagram for the two businesses for year 1, with separately colored printing and shipping, fixed, and trip costs and revenues.
Bonus points for someone who derives generalized equations for cost and revenue curves for these two options.
Based on Francine's first-year experience in guided tour photography, where she started with 6 keeper images per trip and ended with 17, she can estimate that she will submit an increasing number of stock photos to stock agencies over time.
Assuming this trend continues, she can expect to submit approximately 30 keeper images per trip after a year. With each photo selling five times per week on the stock agency and a $0.50 commission per photo, she can earn $75 per week from each trip. Considering the costs of $875 per trip, Francine would need to sell at least 12 photos per trip to cover her expenses. Francine plans to transition from guided tour photography to selling nature photos to stock agencies or as fine art prints. For the stock agency option, she estimates submitting an increasing number of photos based on her previous experience, with each photo expected to sell five times per week. With a commission of $0.50 per photo, she anticipates earning $75 per week from each trip, needing to sell at least 12 photos per trip to cover expenses. For the fine art photography plan, she intends to create limited edition prints from each trip and sell them for $323 each, with additional costs for equipment, supplies, shipping, and printing.
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From reading the financial press you find that the 10 year government bond is trading at a yield of 6.7%, and the return on the market is 11.2%. a. If a share has a beta (B) of 1.2, according to the Capital Asset Price Model (CAPM) what should it be returning? b. If it is actually returning 10.9%, is it over- or under-priced? Why? C. Construct a graph showing the Security Market Line (SML), and plot your results from (a) and (b) on it.
a. If a share has a beta (B) of 1.2, according to the Capital Asset Price Model (CAPM) what should it be returning?Using CAPM, we can calculate the expected return of a share of stock.
The formula for CAPM is:CAPM = RF + β(RM - RF)Where,RF = Risk-free rate of returnβ = Beta of the stockRM = Expected return of the marketSo, let's substitute the values given in the question into the formula:CAPM = 6.7% + 1.2(11.2% - 6.7%)CAPM = 12.3%Therefore, a share with a beta of 1.2 should be returning 12.3%.b. If it is actually returning 10.9%, is it over- or under-priced? Why?If the actual return of the share is less than the expected return, then it is underpriced. In this case, the expected return is 12.3% but the actual return is 10.9%, which means the share is underpriced.C. Construct a graph showing the Security Market Line (SML), and plot your results from (a) and (b) on it.The Security Market Line (SML) is a graphical representation of the CAPM. It shows the relationship between risk (beta) and expected return. The formula for SML is:SML = RF + β(RM - RF)Let's plot the SML with the given data and then plot the results from (a) and (b) on it. The risk-free rate is 6.7%, the expected return of the market is 11.2%, and the beta of the stock is 1.2. The expected return for the stock based on CAPM is 12.3% and the actual return is 10.9%. The graph below shows the SML with the data plotted on it.
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Using MUS, an auditor determined the preliminary sample size for testing inventory valuation to be 15
(using a 100% average misstatement assumption). The population has 4,060 inventory items valued at $3,450,000. The auditor will select the MUS sample from the 4,060 inventory items using systematic sampling. Assuming a random starting point of 127,800, identify the cumulative dollar amounts associated with the first five sample items. How will the auditor determine the physical inventory items associated with each sample dollar?
Begin by identifying the cumulative dollar amounts associated with the first five sample items. How will the auditor determine the physical inventory items associated with each sample dollar?
Cumulative dollar amounts
Random dollar starting point
2nd sample dollar selected
3rd sample dollar selected
4th sample dollar selected
5th sample dollar selected
How will the auditor determine the physical inventory items associated with each sample dollar?
The selection of the first five sample items would be associated with a ..........
The auditors can determine the physical inventory items associated with each sample dollar by using the following steps:
Calculate the sampling interval by dividing the total value of the population by the sample size.
The auditor must randomly choose a starting point, as well as the dollar interval for selecting a sample.
The auditor will use the interval dollar amount to select the next sample dollar.
The auditor must physically check the inventory items linked to each sample dollar to determine whether there is a misstatement.
The auditor must check and correct the sample results.
The auditors can determine the physical inventory items associated with each sample dollar by using the steps mentioned above.
MUS sample selection is used for auditing inventory. MUS is a statistical sampling strategy that helps auditors to decide how many inventory items to test. The formula for determining sample size using MUS is shown below:
n = R × [ (t/AR)2 + 1 ]^-1
For the given question:
Population value = $3,450,000
Preliminary sample size = 15
Therefore,
R = Population value / Preliminary sample size
n = 3450000 / 15n = 230,000 / ARAR = 15 / 4060
AR = 0.00369
t = 3.71 (95% confidence)
Using the formula,
n = R × [ (t/AR)2 + 1 ]^-1n = 0.00369 × [(3.71/1)^2 + 1]^-1n = 15.4 or 16
So, the sample size is 16 inventory items.
The cumulative dollar amounts associated with the first five sample items are shown below:
First, the auditor must determine the sampling interval, which is calculated as follows:
Sampling interval = Total population value / Sample size
Sampling interval = 3,450,000 / 16Sampling interval = $215,625
A random starting point of 127,800 has been chosen, and the first sample dollar selected will be 215,625.
The first five sample items are as follows:
First sample dollar selected = Random starting point = $127,800
Second sample dollar selected = $127,800 + $215,625 = $343,425
Third sample dollar selected = $343,425 + $215,625 = $559,050
Fourth sample dollar selected = $559,050 + $215,625 = $774,675
Fifth sample dollar selected = $774,675 + $215,625 = $990,300
The selection of the first five sample items would be associated with a sampling error or misstatement. The auditor must then verify the items and correct any inaccuracies found.
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Portfolio C is the minimum variance portfolio (MVP).
A more risk-averse investor will prefer portfolios on the left side of the efficient frontier.
Portfolios A, B, and D are attainable, but C is not.
Portfolios on the upper segment above C dominate those on the bottom segment below C.
The statements provided relate to the concepts of portfolio theory and the efficient frontier. Let's break down each statement:
Portfolio C is the minimum variance portfolio (MVP): The minimum variance portfolio is the portfolio with the lowest level of risk or volatility among all possible portfolios. It represents the optimal combination of assets that minimizes the portfolio's overall risk.
A more risk-averse investor will prefer portfolios on the left side of the efficient frontier: The efficient frontier is a graph that plots the risk (standard deviation) of a portfolio against its expected return. Portfolios on the left side of the efficient frontier have lower levels of risk for a given level of return. Risk-averse investors prefer portfolios with lower risk, so they would prefer portfolios on the left side of the efficient frontier.
Portfolios A, B, and D are attainable, but C is not: Attainable portfolios are those that can be constructed using the available assets in the investment universe. If portfolios A, B, and D are attainable, it means they can be created using the available assets, while portfolio C cannot be constructed.
Portfolios on the upper segment above C dominate those on the bottom segment below C: Dominance in this context refers to the comparison of portfolios based on their risk-return characteristics. Portfolios on the upper segment above C have higher expected returns for the same level of risk compared to portfolios on the bottom segment below C. In other words, they offer a better risk-return trade-off.
It's important to note that these statements are general principles based on portfolio theory and the efficient frontier. The specific preferences of an investor may vary based on their individual risk tolerance, investment goals, and other factors.
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Between 1970 and the present, research comparing similar wealthy countries found that increases in the money supply: a had little effect on prices. b caused large increases in real GDP. c caused large decreases in real GDP.
d and increases in the price level were roughly proportional.
Between 1970 and the present, research comparing similar wealthy countries found that increases in the money supply had little effect on prices. This suggests that changes in the money supply did not lead to significant inflationary pressures in these countries during this period.
Studies examining the relationship between money supply and prices have generally shown that the impact of monetary expansion on price levels is not substantial in the long run. Factors such as productivity growth, supply-side shocks, and changes in aggregate demand play more significant roles in determining price levels. While an increase in the money supply can influence economic activity and financial markets, its direct impact on prices has been found to be relatively limited.
Therefore, the research indicates that increases in the money supply during this period did not cause large increases in real GDP (option b) or large decreases in real GDP (option c). Additionally, the research suggests that the relationship between increases in the money supply and the price level was not roughly proportional (option d). The primary finding is that increases in the money supply had little effect on prices (option a).
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Bioware Company reports cost of goods sold of $42,600. Its comparative balance sheet shows that inventory decreased $7,600 and accounts payable increased $5,600. Compute cash payments to suppliers using the direct method.
The cash payments to suppliers for Bioware Company using the direct method would amount to $40,600.
To compute cash payments to suppliers using the direct method, we need to adjust the cost of goods sold (COGS) by changes in inventory and accounts payable.
Cash payments to suppliers can be calculated using the following formula:
Cash payments to suppliers = COGS + Increase in Accounts Payable - Decrease in Inventory
Given the information provided:
COGS = $42,600
Decrease in Inventory = $7,600
Increase in Accounts Payable = $5,600
Using the formula:
Cash payments to suppliers = $42,600 + $5,600 - $7,600
Cash payments to suppliers = $40,600
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The Cybertronics Corporation reported the following information for its Cyclotron Division:
Revenues $2,500,000
Operating costs 1,200,000
Operating assets 1,300,000
Income is defined as operating income. What is the Cyclotron Division's investment turnover ratio? OA. 1.92 B. 0.92 C. 1.08 OD. 2.08
The Cybertronics Corporation reported the following information for its Cyclotron Division:
Revenues $2,200,000
Operating costs 1,600,000
Operating assets 1,500,000
Income is defined as operating income. What is the Cyclotron Division's return on investment? A. 37.5% B. 40% C. 43.8% D. 20%
The investment turnover ratio of the Cyclotron Division is 1.92. Option A is correct. The return on investment (ROI) of the Cyclotron Division in the second scenario is 40%. Option B is correct.
To calculate the investment turnover ratio, you need to divide the revenues by the average operating assets.
Investment Turnover Ratio = Revenues / Average Operating Assets
For the first scenario;
Revenues = $2,500,000
Operating assets = $1,300,000
The average operating assets are not given, so we'll assume it's the same as the operating assets.
Investment Turnover Ratio = $2,500,000 / $1,300,000 = 1.92
Therefore, the investment turnover ratio for the first scenario is 1.92.
For the second scenario;
Revenues = $2,200,000
Operating assets = $1,500,000
Investment Turnover Ratio = $2,200,000 / $1,500,000 = 1.47
Therefore, the investment turnover ratio for the second scenario is 1.47.
So the investment turnover ratio of the Cyclotron Division is 1.92.
Hence, A. is the correct option.
To calculate the return on investment (ROI), you need to divide the operating income by the average operating assets and multiply by 100 to express it as a percentage.
Return on Investment (ROI) = (Operating Income/Average Operating Assets) × 100
For the second scenario;
Operating costs = $1,600,000
Operating Income = Revenues - Operating costs = $2,200,000 - $1,600,000 = $600,000
Return on Investment (ROI) = ($600,000 / $1,500,000) × 100 = 40%
Therefore, the correct answer for the return on investment (ROI) of the Cyclotron Division in the second scenario is 40%.
Hence, B. is the correct option.
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Scenario Analysis: Go back to the sheet of Income Statement. Use the scenario manager to create three scenarios stated below and create a scenario summary, which will be a separate worksheet.
a. You will create 3 different scenarios by changing the product pricing mix in order to determine their impacts to Net Profit.
- The First Scenario is to raise the price of Product B by $5.00. However, this would cause sales of Product B to fall by 800 units and sales of Product C to increase by 700 units. Title the scenario name as Product B Price Change
- The Second Scenario is to raise the price of Product C by $4.00. However, this would cause sales of Product C to fall by 550 units and sales of Product B to increase by 400 units. Title the scenario name as Product C Price Change
- The Third Scenario is to raise the price of both Product B and Product C by $6.00. This would cause sales for Products B and C to both decrease by 350 units each. Title the scenario name as Product B and C Price Changes
b. Create a Scenario summary report, which will become a new and separate worksheet. Make sure the Results Cells include Earnings Before Taxes and Net Profit. Rename this worksheet as Scenario Analysis, and move the sheet to the right of the sheet of Goal Seek.
c. Write up a brief conclusion on your scenario analysis result in the sheet of Scenario Analysis, below the summary report. Which scenario will bring the company the optimum outcome of 2017 sales?
Scenarios by changing the product pricing mix in order to determine their impacts to scenarios by changing the product pricing mix in order to determine their impacts to Net Profit 2 = $88071.62.
Revenue of product A = 6543 × $62.00
Revenue of product A = $405666.00.
COGS of product A= Unit sold × Unit cost
COGS of product A = 6543.00 × $48.00
COGS of product A = $314064.00.
Gross profit = Total Revenue - Total COGS.
Gross profit of Scenario 1 = $1112043.00 -$923151.00
Gross profit of Scenario 1 = $188892.00.
Earning Before Tax= Gross profit-Total Operating expenses.
Earning Before Tax of Scenario 1 = $188892.00 - $209126.18
Earning Before Tax of Scenario 1 = -20234.18.
Net profit = Earning before tax-Tax 25%
Net profit of Scenario 2 = $117428.82- 25% of $117428.82
Net profit of Scenario 2 = $117428.82- $29357.21
Net profit of Scenario 2 = $88071.62.
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Note: the other Net Profit scenario was the as usual calculate.
Whistleblowers who provide information regarding tax law violations are entitled to awards of up to 75% of the total collected proceeds under the Internal Revenue Service (IRS) Whistleblower Reform Law.
True or False
False. Under the Internal Revenue Service (IRS) Whistleblower Program, whistleblowers who provide credible information regarding tax law violations may be eligible for awards.
The percentage of the total collected proceeds that whistleblowers can receive as an award is not fixed at 75%. The actual award amount can vary depending on several factors, including the significance of the information provided and the amount of tax involved.
The IRS Whistleblower Program allows for awards ranging from 15% to 30% of the collected proceeds, subject to certain conditions and limitations. The specific award percentage is determined by the IRS based on various factors.
Therefore, the statement that whistleblowers are entitled to awards of up to 75% of the total collected proceeds under the IRS Whistleblower Reform Law is false.
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A new fertilizer which greatly improves the corn crop yield is being widely used by corn farmers. You accurately predict that this: will shift the supply curve of corn to the left, the equilibrium price of corn will increase, and the quantity demanded of corn will decrease. will shift the supply curve of corn to the left, the equilibrium price of corn will increase, and the demand for corn will fall. will shift the supply curve of corn to the right, the equilibrium price of corn will increase, and the demand for corn will fall. will shift the supply curve of corn to the right, the equilibrium price of corn will decrease, and the quantity demanded of corn will increase.
If a new fertilizer greatly improves the corn crop yield and is being widely used by corn farmers, it will shift the supply curve of corn to the right. This will increase the equilibrium quantity of corn and the equilibrium price of corn will decrease.
The demand for corn will fall and the quantity demanded of corn will increase. The reason why this happens is that with the increased yield of corn, the supply of corn increases, causing a rightward shift in the supply curve. When the supply curve shifts to the right, the equilibrium price of corn will decrease and the equilibrium quantity of corn will increase, as shown in the graph below:
Thus, the correct option is : will shift the supply curve of corn to the right, the equilibrium price of corn will decrease, and the quantity demanded of corn will increase.
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Assume that you are working as an analyst in VNN Investment Bank. The CFO of Meteor Manufacturing Limited (MM Ltd.) has approached VNN for an advice whether MM should refund its existing bonds with a size of $65 million. The bonds were issued 5 years ago with an original maturity of 15 years and annual coupon rate of 12 percent. At the time of issue, the underwriting cost was $5 million. For tax purposes, this underwriting cost is being amortized on a straight-line basis over the 15-year original life of the bonds. The issues are currently callable at a premium of 10 percent. Coupled with the fact that the market interest rates on new 10-year bonds of the same quality have dropped to 10 percent, MM Ltd. is anxious to determine how much the company would save if the old issue could be refunded at the new rate. VNN has assured MM that the underwriting cost of the new issue will be $1 million lower than what it was required for the oldissue at the time of the issuance. This amount, which will be paid upfront, will be amortized on a straight-line basis over the life of the new bonds for tax purposes. The company’s tax rate is 30%. Both VNN and MM’s senior management anticipate that long-term interest rate will be stable at 10 percent.
Your colleague at VNN believes that VNN should advice MM to call the old issue and refund it with the new issue because the new issue has both lower interest rate and lower underwriting costs. Do you think your colleague is correct in their recommendation? Why or why not? As a senior analyst at VNN Investment Bank looking after this case, what recommendation would you make to the CFO of MM Ltd? Provide your analyses with detailed calculations.
As a senior analyst at VNN Investment Bank, I would recommend the CFO of MM Ltd. to call the old bonds and refund them with the new issue.
This recommendation is based on the analysis of the cost savings associated with the refunding and the comparison of the net present value (NPV) of the two options.
To assess the cost savings, we need to calculate the present value of the old and new bonds.
For the old bonds:
Original size: $65 million
Coupon rate: 12%
Years remaining: 10 years (original maturity of 15 years minus 5 years already passed)
Market interest rate: 10%
Underwriting cost: $5 million (amortized over 15 years)
Tax rate: 30%
Using the present value formula for a bond, we can calculate the present value of the remaining payments for the old bonds:
PV_old = Coupon payment x [1 - (1 + Market interest rate)^(-Years remaining)] / Market interest rate + Principal payment / (1 + Market interest rate)^Years remaining
PV_old = $65 million x [1 - (1 + 0.10)^(-10)] / 0.10 + $65 million / (1 + 0.10)^10
PV_old ≈ $51.26 million
For the new bonds:
Size: $65 million
Coupon rate: 10%
Years: 10 years
Market interest rate: 10% (same as old bonds)
Underwriting cost: $4 million (amortized over 10 years, $1 million lower than old issue)
Tax rate: 30%
Using the same present value formula, we can calculate the present value of the payments for the new bonds:
PV_new = Coupon payment x [1 - (1 + Market interest rate)^(-Years)] / Market interest rate + Principal payment / (1 + Market interest rate)^Years
PV_new = $65 million x [1 - (1 + 0.10)^(-10)] / 0.10 + $65 million / (1 + 0.10)^10
PV_new ≈ $51.26 million
By comparing the present values, we can see that PV_old is equal to PV_new, indicating that the cost savings from the refunding are not significant.
However, it's important to consider the underwriting cost savings, which are $4 million for the new issue compared to $5 million for the old issue. These savings are upfront and will be amortized over the life of the new bonds for tax purposes.
Considering the lower underwriting costs and the expectation of stable long-term interest rates, it would be beneficial for MM Ltd. to proceed with the refunding of the old bonds with the new issue. This will result in immediate cost savings and a slightly lower amortized underwriting cost for tax purposes. It also aligns with the expectation of stable interest rates.
Therefore, I agree with my colleague's recommendation to call the old issue and refund it with the new issue.
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QUESTION 23
Using the following data, calculate the Apple's CFFA Cashflow to creditors 67
Dividend paid 400
Net new equity-347
O a. 680
O b. 320
O c. 120
O d. None of the above
The answer options (a, b, c) accurately represent the calculated CFFA of $747. The correct answer is option D: None of the above.
To calculate Apple's Cash Flow to Creditors (CFFA), we need to consider the dividend paid and the net new equity.
CFFA = Dividend Paid - Net New Equity
Given the data provided:
Dividend Paid = $400
Net New Equity = -$347 (negative value indicates a decrease in equity)
CFFA = $400 - (-$347) = $400 + $347 = $747
Therefore, none of the given answer options (a, b, c) accurately represent the calculated CFFA of $747. The correct answer is option D: None of the above.
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Cherokee Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long-term construction contracts during 2015. For tax purposes, the company employs the cost-recovery method and will continue this approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows.
2014
2015
Pretax Income from
Percentage-of-Completion
$780,000
700,000
Cost-Recovery
$610,000
480,000
Difference
$170,000
220
Instructions: (assume a tax rate of 35%)
What entry(ies) are necessary to adjust the accounting records for the change in accounting principle?
When a company changes the accounting method for tax purposes, it should reflect it in the accounts. The following entries would be required for the change in accounting principle:Accounting entry for recognizing deferred tax liability:Deferred Tax Liability Dr. 59,500Income Tax Expense Cr. 59,500(To record Deferred Tax Liability for 2015)Deferred Tax Liability Dr. 85,500Income Tax Expense Cr. 85,500(To record Deferred Tax Liability for 2014)
Accounting entry for adjusting pretax income from percentage-of-completion to the cost-recovery method:Construction in Process Dr. 220,000 Income from Long-Term Contracts Cr. 220,000(To adjust Pretax Income from Percentage-of-Completion to the Cost-Recovery Method)Construction in Process Dr. 160,000 Deferred Tax Liability Cr. 160,000(To recognize the Deferred Tax Liability for the above Journal entry)Hence, the total Deferred Tax Liability is $145,000 (i.e. $85,500 + $59,500).In 100 words:When a company changes the accounting method for tax purposes, it should reflect it in the accounts. Two journal entries will be needed for the change in accounting principle: one to recognize the deferred tax liability, and another to adjust the pre-tax income from percentage-of-completion to the cost-recovery method. The deferred tax liability for 2014 and 2015 is $85,500 and $59,500, respectively.
Construction in Process should be debited for $220,000, and Income from Long-Term Contracts should be credited for $220,000, in order to adjust pretax income from percentage-of-completion to the cost-recovery method. To recognize the deferred tax liability for the journal entry above, Construction in Process should be debited for $160,000, and Deferred Tax Liability should be credited for $160,000.
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When negotiating in ,
one must send a detailed agenda to all participants before the negotiation begins.
True
False
Incremental costs are always: Multiple Choice variable costs. fixed costs sunk costs differential costs
Answer:
Incremental costs are differential costs, which implies that when selecting one alternative over another, incremental costs are the extra costs that will be incurred.
Explanation:
Incremental costs can be defined as the amount that a company's cost increases when there is a change in the activity level, sales volume, or output. Incremental costs can be differentiated from other cost types such as sunk costs and fixed costs. They are relevant in making business decisions.
Differential cost, on the other hand, is the difference between the total costs of two alternative courses of action. Incremental and differential costs are related concepts but they are different from each other. Differential costs help in decision-making between two different options and incremental costs determine the amount of cost increases when output or sales volume increases.
Therefore, the answer to the question is differential costs because incremental costs may be variable, fixed or sunk depending on the activity level or sales volume. The term "always" makes the answer false because it limits the choices to only one category of cost.
Thus, it is incorrect to say that incremental costs are always variable costs as incremental costs can be sunk or fixed costs. For instance, fixed costs such as rent and salaries are incremental costs because they increase when there is a change in the level of output.
In conclusion, incremental costs refer to the increase in total costs when the level of output changes while differential cost refers to the difference in cost between two alternatives.
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Which area accounts for the largest proportion of deaths among low- and middle-income countries?
According to the World Health Organization (WHO), communicable diseases are responsible for the majority of deaths among low- and middle-income countries.
This is particularly true for sub-Saharan Africa, which accounts for the largest proportion of deaths in these countries. so let's delve deeper. Communicable diseases: Communicable diseases are caused by bacteria, viruses, parasites, and fungi, and they are primarily spread through direct or indirect contact.
Non-communicable diseases, also known as chronic diseases, include heart disease, stroke, cancer, diabetes, and chronic respiratory diseases. They are responsible for around 70% of deaths globally and are increasing in prevalence in low- and middle-income countries. Overcrowding and poverty: Overcrowding and poverty are two factors that contribute to the high prevalence of communicable diseases.
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