Answer:
P0 = $11.968577 rounded off to $11.97
Explanation:
The dividend discount model (DDM) can be used to calculate the price of the stock today. DDM calculates the price of a stock based on the present value of the expected future dividends from the stock. The formula for price today under DDM is,
P0 = D1 / (1+r) + D2 / (1+r)^2 + ... + Dn / (1+r)^n + [(Dn * (1+g) / (r - g)) / (1+r)^n]
Where,
D1, D2, ... , Dn is the dividend expected in Year 1,2 and so on g is the constant growth rate in dividends r is the discount rate or required rate of return
P0 = 0.37 / (1+0.09) + 0.42 / (1+0.09)^2 + 0.57 / (1+0.09)^3 +
0.87 / (1+0.09)^4 + [(0.87 * (1+0.028) / (0.09 - 0.028)) / (1+0.09)^4]
P0 = $11.968577 rounded off to $11.97
Hyper Color Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Selling price per unit Variable manufacturing costs per unit Variable selling and administrative expenses per unit Fixed manufacturing overhead (in total) Fixed selling and administrative expenses (in total) Units produced during the year Units sold during year Using absorption costing, what is operating income for last year? (Round any intermediary calculations to the nearest whole dollar.)
Answer: $24,000
Explanation:
Operating income under absorption costing:
= Sales - Cost of goods sold - Selling and admin expenses
Cost of goods sold = Variable production cost + Fixed production cost
= (61 * 1,000 units sold) + (32,000 / 1,500 units produced * 1,000 units sold)
= $82,333
Selling and admin expenses:
= Variable + Fixed
= (6 * 1,000) + 8,000
= $14,000
Operating income = (120 * 1,000) - 82,333 - 14,000
= $23,667
= $24,000
Suppose you are the money manager of a $5.21 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 320,000 1.50 B 780,000 (0.50) C 1,260,000 1.25 D 2,850,000 0.75 If the market's required rate of return is 10% and the risk-free rate is 5%, what is the fund's required rate of return
Answer: 8.65%
Explanation:
First find the weights of the stocks:
Total = 320,000 + 780,000 + 1,260,000 + 2,850,000
= $5,210,000
Stock A:
= 320,000 / 5,210,000
= 6.14%
Stock B:
= 780,000 / 5,210,000
= 14.97%
Stock C:
= 1,260,000 / 5,210,000
= 24.18%
Stock D:
= 2,850,000 / 5,210,000
= 54.70%
Then calculate Portfolio Beta.
Portfolio beta = (6.14% * 1.50) + (14.97% * - 0.5) + (24.18% * 1.25) + (54.72% * 0.75)
= 0.7299
Required rate of return using Capital Asset Pricing Model (CAPM)
= Risk free rate + Beta * (Market return - risk free rate)
= 5% + 0.7299 * (10% - 5%)
= 8.65%
The following is the ending balances of accounts at June 30, 2021, for Excell Company.
Account Title Debits Credits
Cash $ 93,000
Short-term investments 75,000
Accounts receivable (net) 290,000
Prepaid expenses (for the next 12 months) 42,000
Land 85,000
Buildings 330,000
Accumulated depreciation—buildings $ 165,000
Equipment 270,000
Accumulated depreciation—equipment 125,000
Accounts payable 178,000
Accrued liabilities 50,000
Notes payable 110,000
Mortgage payable 240,000
Common stock 150,000
Retained earnings 167,000
Totals $ 1,185,000 $ 1,185,000
Additional information:
The short-term investments account includes $23,000 in U.S. treasury bills purchased in May. The bills mature in July, 2021.
The accounts receivable account consists of the following:
a. Amounts owed by customers $ 232,000
b. Allowance for uncollectible accounts—trade customers (18,000 )
c. Nontrade notes receivable (due in three years) 70,000
d. Interest receivable on notes (due in four months) 6,000
Total $ 290,000
The notes payable account consists of two notes of $55,000 each. One note is due on September 30, 2021, and the other is due on November 30, 2022.
The mortgage payable is a loan payable to the bank in semiannual installments of $4,800 each plus interest. The next payment is due on October 31, 2021. Interest has been properly accrued and is included in accrued expenses.
Eight hundred thousand shares of no par common stock are authorized, of which 300,000 shares have been issued and are outstanding.
The land account includes $55,000 representing the cost of the land on which the company's office building resides. The remaining $30,000 is the cost of land that the company is holding for investment purposes.
Answer:
Total Assets $895,000
Total liabilities and stockholders'equity $895,000
Explanation:
Preparation of a classified balance sheet for the Excell Company at June 30, 2021
EXCELL COMPANY Balance Sheet At June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents $116,000
($93,000+$23,000)
Short-term investments $52,000
($75,000-$23,000)
Accounts receivable, net of allowance for uncollectible accounts $214,000
($232,000-$18,000)
Interest receivable $6,000
Prepaid expenses $42,000
Total current assets $430,000
($116,000+$52,000+$214,000+$6,000+$42,000)
Investments:
Note receivable $70,000
Land held for sale $30,000
$100,000
($70,000+$30,000)
Property, plant, and equipment:
Land $55,000
Buildings $330,000
Equipment $270,000
($55,000+$330,000+$270,000)
$655,000
Less: Accumulated depreciation ($290,000)
Net property, plant, and equipment $365,000
($655,000-$290,000)
TOTAL ASSETS $895,000
($430,000+$100,000+$365,000)
LIABILITIES AND STOCKHOLDERS'S EQUITY
Current liabilities:
Accounts payable $178,000
Accrued expenses $50,000
Note payable $55,000
Current maturities of long-term debt $9,600
(4800*2)
Total current liabilities $292,600
($178,000+$50,000+$55,000+$9,600)
Long-term liabilities:
Note payable $55,000
Mortgage payable $230,400
($240,000-$9,600)
Total long-term liabilities $285,400
($55,000+$230,400)
Shareholders’ equity:
Common stock, no par value; 800,000 shares
authorized; 300,000 shares issued and outstanding $150,000
Retained earnings $167,000
Total shareholders ’equity $317,000
($150,000+$167,000)
TOTAL LIABILITIES AND STOCKHOLDERS'S EQUITY $895,000
($292,600+$285,400+$317,000)
Therefore the classified balance sheet for the Excell Company at June 30, 2021 will be :
Total Assets $895,000
Total liabilities and stockholders'equity $895,000
Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $40,000 and $61,000, respectively. The company expects to collect 30% of its credit sales in the month of the sale, 60% in the following month, and 10% is deemed uncollectible. What amount of cash collections from credit sales would the company include in its cash budget for the second month
Answer:
Total cash collection= $42,300
Explanation:
Giving the following information:
Sales:
First month= $40,000
Second month= $61,000
The company expects to collect 30% of its credit sales in the month of the sale, 60% in the following month.
Cash collection Second month:
Cash collection credit sales from the second month= (61,000*0.3)= 18,300
Cash collection credit sales from the first month= (40,000*0.6)= 24,000
Total cash collection= $42,300
Decide whether each of the following is frictional, structural, or cyclical unemployment:
a. The economy gets worse, so General Motors shuts down a factory for four months, laying off workers. cyclical structural frictional
b. General Motors lays off 5,000 workers and replaces them with robots. The workers start looking for jobs outside the auto industry. cyclical structural frictional
c. About 10 workers per month at a General Motors plant quit their jobs because they want to live in another town. They start searching for work in the new town.
Answer and Explanation:
The classification is as follows:
a. Cyclical unemployment
Since the economy got worse and the factory would be shut down for 4 months so this represent that the economy would go into recession
b. Structural unemployment
As General motors would lays off 5,000 workes and wants to subsitute with robots so here there is a mismatch of the skills & characteristics according to the job requirements
c. Frictional unemployment
Frictional unemployment is classify as a short-term unemployment that occurred for matching the workers with the available jobs
Marigold Corp. incurs the following costs to produce 10100 units of a subcomponent: Direct materials $8484 Direct labor 11413 Variable overhead 12726 Fixed overhead 16200 An outside supplier has offered to sell Marigold the subcomponent for $2.85 a unit. If Marigold could avoid $3000 of fixed overhead by accepting the offer, net income would increase (decrease) by $838. $(3364). $6838. $(5929).
Answer:
The effect on net income is an increase by $6838.
Explanation:
Analysis of Accepting Special Offer
Savings :
Direct materials $8,484
Direct labor $11,413
Variable overhead $12,726
Fixed Overheads $3,000 $35,623
Total Savings
Costs :
Purchase Price ( $2.85 x 10,100 units) ($28,785)
Effect on Net Income $6,838
Note : We have considered the avoidable component of fixed costs in this calculation. Ignore common fixed costs (unavoidable) since they are irrelevant for decision making.
Conclusion :
The effect on net income is an increase by $6838.
How does communication take place in the United States?
Answer:
Communication is the act of giving, receiving, and sharing information in other words, talking or writing, and listening or reading. Good communicators listen carefully, speak or write clearly, and respect different opinions.
Explanation:
have a nice day T_T
Item4 3 points eBookHintPrintReferencesItem 4 Spotter Corporation reported the following for June in its periodic inventory records. Date Description Units Unit Cost Total Cost June 1 Beginning 12 $ 8 $ 96 11 Purchase 38 9 342 24 Purchase 20 11 220 30 Ending 24 Required: Calculate the cost of ending inventory and the cost of goods sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost methods.
Answer:
a. FIFO
cost of ending inventory = $256
cost of goods sold = $402
b. LIFO
cost of ending inventory = $204
cost of goods sold = $454
c. Weighted average cost
cost of ending inventory = $225.60
cost of goods sold = $432.40
Explanation:
Periodic method means cost of sales and inventory balance are determined at the end of the period.
Step 1 : Units Sold
Units Sold = Units available for Sale - Units in Inventory
= (12 + 38 + 20) - 24
= 46
Step 2 : FIFO
FIFO assumes that the units to arrive first, will be sold first.
cost of ending inventory = 20 x $11 + 4 x $9 = $256
cost of goods sold = 12 x $8 x 34 x $9 = $402
Step 3 : LIFO
LIFO assumes that the units to arrive last, will be sold first.
cost of ending inventory = 12 x $9 + 12 x $8 = $204
cost of goods sold = 20 x $11 x 26 x $9 = $454
Step 4 : Weighted average cost
Weighted average cost method calculates a new unit cost with every purchase made. this unit cost is then used to calculated cost of sale and ending inventory.
Unit Cost = Total Costs ÷ Units available for sale
= (12 x $8 + 38 x $9 + 20 x $11 ) ÷ (12 + 38 + 20)
= $9.40
cost of ending inventory = Units in Inventory x Unit Cost
= 24 x $9.40
= $225.60
cost of goods sold = Units Sold x Unit Cost
= 46 x $9.40
= $432.40
a company acquired a truck for 130,000 residual value was estimated to be $20,000 the truck can be driven for 50,000 miles or a useful life of four years. Actual usage of the truck was recorded as 10,000 miles for the first year. What is the amount of depreciation expesne for the first year calculated by the double
Answer:
$65,000
Explanation:
Depreciation Expense = 2 x SLDP x BVSLDP
where,
SLDP = 100 ÷ 4 = 25 %
BVSLDP = $130,000 (FIRST YEAR)
therefore,
Depreciation Expense = 2 x 25 % x $130,000 = $65,000
Consider the following situations. What is the effect on consumption for each of the four scenarios? Either move the consumption function when appropriate or move the point along the consumption function to illustrate the impact of each scenario. You should move only the point or only the line in each part of the question. a. The federal government raises taxes. Consumption Income b. Housing prices increase. Consumption Income c. Consumer incomes rise. Consumption Income d. Consumer expectations of their future income plummet. Consumption Income
Answer:
Hello the graphs related to your question is missing attached below are the graphs
answer: attached below
Explanation:
a) Federal government raises taxes : this will reduce the disposable income of employees hence there will be a shift downwards
b) Housing prices increase; this will lead to a shift upwards
c) Consumer income increases will cause a movement upwards along the curve
d) consumer expectations of their future income plummet will cause a downward shift in the curve
Use Annual Cost Analysis to determine whether Alternative A or B should be chosen. The analysis period is 5 years. Assume an interest rate of 6% per year, compounded annually Alternative A Alternative B Initial Cost 2800 6580 Annual Benefit 450 940 Salvage Value 500 1375 Useful Life (yrs) 5 5 Group of answer choices Alternative A should be chosen, because its initial cost is lower than Alternative B's Alternative A should be chosen, because its equivalent annual cost is $252.15 lower than Alternative B's Alternative B should be chosen, because its annual benefit is higher than Alternative A's Alternative B should be chosen, because its equivalent annual cost is $252.15 higher than Alternative A's
Answer:
A should be chosen, because its equivalent annual cost is $252.15 lower than Alternative B's.
Explanation:
a) Data and Calculations:
Interest rate = 6% per year
Alternative A Alternative B
Initial Cost 2800 6580
Annual Benefit 450 940
Salvage Value 500 1375
Useful Life (yrs) 5 5
Annuity factor = 4.212 for 5 years at 6%.
Present value factor = 0.747 for 5 years at 6%.
Alternative A Alternative B
Present value of
annual benefits $1,895.40 $3,959.28
PV of salvage value 373.50 1,027.12
Total present value
of benefits $2,268.90 $4,986.40
Initial Cost 2,800 6,580
Net present value $531.10 $1,593.60
The equivalent annual cost
= NPV/PV annuity factor
($531.10/4.212) ($1,593.60/4.212)
Equivalent annual cost $126.09 $378.35
Difference:
Alternative B = $378.35
Alternative A = $126.09
Difference = $252.26
Harrelson Company manufactures pizza sauce through two production departments: Cooking and Canning. In each process, materials and conversion costs are incurred evenly throughout the process. For the month of April, the work in process accounts show the following debits.
Cooking Canning
Beginning work in process $0 $4,710
Materials 22,030 10,200
Labor 8,740 8,020
Overhead 32,760 28,340
Costs transferred in 55,850
ournalize the April transactions.
Answer and Explanation:
The journal entries are shown below:
On April 30
WIP-cooking Dr $22,030
WIP- Canning $10,200
To Raw material inventory $32,230
(Being material used is recorded)
WIP-cooking Dr $8,740
WIP- Canning $8,020
To Factory labor $16,760
(Being assigned of factory labor to production is recorded)
WIP-cooking Dr $32,760
WIP- Canning $28,340
To Manufacturing overhead $61,100
(Being assigned of overhead to production is recorded)
WIP Canning $55,850
To WIP cooking $55,850
(being cost transferred in recorded)
One of the three basic coordination tasks an economy has to face is . In a free-market system, the preceding question is answered by: The price mechanism Input-output analysis Central planning
Available options for question 1.
A. Distribution
B. Location of production
C. Timing of production
D. Reason for production
Answer:
1. Distribution
2. Central planning
Explanation:
One of the three basic coordination tasks an economy has to face is DISTRIBUTION.
In a free-market system, the preceding question is answered by CENTRAL PLANNING
This is evident in the fact that T
The three combination tasks of any economy are:
1) how to utilize its resources efficiently
2) which of the possible combinations of goods to produce
3) how much of the total output of each good to distribute
Hence, the preceding question of DISTRIBUTION, which is "which of the possible combinations of goods to produce." is answered by CENTRAL PLANNING.
This is because Central Planning is the government's effort to determine and combine possible goods to produce to enhance national economic growth.
Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart receive an annual guaranteed payment of $10,000 to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses: Sales revenue $ 340,000 Interest income 3,300 Long-term capital gains 1,200 Cost of goods sold (120,000 ) Employee wages (75,000 ) Depreciation expense (28,000 ) Guaranteed payments (20,000 ) Miscellaneous expenses (4,500 ) Overall net income $ 97,000 (Leave no answer blank. Enter zero if applicable.) b. How will Firewalker allocate ordinary business income and separately stated items to its partners
Question Completion:
a.Given Firewalker’s operating results, how much ordinary business income (loss) and what separately stated items [including the partners’ self-employment earnings (loss) will it report on its return for the year?
Answer:
Firewalker General Partnership
a) In its return for the year, the partnership will report an ordinary business income of $117,000. It will also report the guaranteed payments and share of remaining profits as allocated below.
b) Allocation of business income:
Jhumpa Stewart Kelly Total
Guaranteed payments $10,000 $10,000 $20,000
Share of profit 32,333 32,333 $32,334 97,000
Total business income $117,000
Explanation:
a) Data and Calculations:
Share of profits and loss:
Jhumpa = 1/3
Steward = 1/3
Kelly = 1/3
Income Statement for the year:
Sales revenue $ 340,000
Cost of goods sold (120,000)
Gross profit $220,000
Interest income 3,300
Long-term capital gains 1,200
Income $224,500
Employee wages (75,000)
Depreciation expense (28,000)
Miscellaneous expenses (4,500)
Net income $117,000
Appropriation Section:
Net income $117,000
Guaranteed payments (20,000)
Shareable income $97,000
Allocation of business income:
Jhumpa Stewart Kelly Total
Guaranteed payments $10,000 $10,000 $20,000
Share of profit 32,333 32,333 $32,334 97,000
Total business income $117,000
Rowan Co. purchases 200 common shares (40%) of JBI Corp. as a long-term investment for $600,000 cash on July 1. JBI Corp. paid $12,500 in total cash dividends on November 1 and reported net income of $250,000 for the year. (1) - (3) Prepare Rowan's entries to record the purchase of JBI shares, the receipt of its share of JBI dividends and the December 31 year-end adjustment for its share of JBI net income.
Answer:
1. Jul-01
Dr Investment in JBI Corp $ 600,000
Cr Cash $ 600,000
2. Nov-01
Dr Cash $ 5,000
Cr Investment in JBI Corp $ 5,000
3. Dec-31
Dr Investment in JBI Corp $ 100,000
Cr Investment revenue $ 100,000
Explanation:
1. Preparation of Rowan's entries to record the purchase of JBI shares
Jul-01
Dr Investment in JBI Corp $ 600,000
Cr Cash $ 600,000
[To record investment in common shares of JBI Corporation]
2. Preparation of Rowan's entries to record the receipt of its share of JBI dividends
Nov-01
Dr Cash [12,500*40%] $ 5,000
Cr Investment in JBI Corp $ 5,000
[To record receipt of dividends]
3. Preparation of Rowan's entries to record the December 31 year-end adjustment for its share of JBI net income
Dec-31
Dr Investment in JBI Corp [$250,000*40%] $ 100,000
Cr Investment revenue $ 100,000
[To record share of net income for the year]
Two-Stage ABC for Manufacturing: Reassigning Costs to Cost Objectives National Technology, LTD. has developed the following activity cost information for its manufacturing activities:
Activity Activity Cost
Machine setup $75.00 per batch
Movement 22.00 per batch
0.10 per pound
Drilling 3.00 per hole
Welding 6.00 per inch
Shaping 32.00 per hour
Assembly 18.00 per hour
Inspection 2.00 per unit
Filling an order for a batch of 50 fireplace inserts that weighed 150 pounds each required the following:
Three batch moves .
Two sets of inspections .
Drilling five holes in each unit
Completing 80 inches of welds on each unit .
Thirty minutes of shaping for each unit .
One hour of assembly per unit
Determine the activity cost of converting the raw materials into 50 fireplace inserts
Fireplace Inserts
Activity Cost
Set-up $
Movement
Batch 60V
Weight
Inspection
Drilling
Welding
Shaping
Assembly
Total
Answer:
$27,541
Explanation:
Calculation to Determine the activity cost
Activity Cost
Set-up $75.00
Movement:
Batch 60V $66
(Three batch moves *22.00 per batch)
Weight $750
(150 pounds*0.10 per pound*50)
Inspection $200
(Two sets of inspections*50*2.00 per unit)
Drilling $750
(3.00 per hole*five holes in each unit*50)
Welding $24,000
(6.00 per inch*80*50)
Shaping $800
(32.00 per hour*(30 minutes/60)*50)
Assembly $900
(18.00 per hour*1*50)
Total $27,541
Therefore the activity cost is $27,541
Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Calculate the adjusted cash balance per books on May 31. Cash balance per books, 5/31 $4,022 Deposits in transit 248 Notes receivable and interest collected by bank 746 Bank charge for check printing 28 Outstanding checks 1,754 NSF check 164 a.$4,576 b.$994 c.$3,098 d.$2,516
Answer: a.$4,576
Explanation:
Sometimes the cash balance according to the books is not the same as the cash in the bank account and this is due to some transactions not being recorded by either the bank or the firm.
Adjusted cash balance per books = Unadjusted cash balance + Note receivable and interest collected by bank - Bank charge for check printing - NSF Check
= 4,022 + 746 - 28 - 164
= $4,576
On April 1, Townsley Company sold merchandise with a selling price of $10,000 on account to Trout Company, with terms 3/10, n/30. On April 5, Trout Company returned merchandise with a selling price of $1,000. Trout Company paid the amount due on April 9. What journal entry did Townsley Company prepare on April 9 assuming the gross method is used
Answer and Explanation:
The journal entry is shown below:
Cash $8,730
Sales Discount ($9,000 × 3%) $270
To Accounts receivable $9,000 ($10,000 - $1,000)
Here cash and sales discount is debited as it increased the assets and discount while on the other hand the account receivable should be credited as it reduced the assets
An investment has the following characteristics: ATIRRP: After-tax IRR on total investment in the property: 9.0% BTIRRE: Before-tax IRR on equity invested: 17% BTIRRP: Before-tax IRR on total investment in the property: 12% t: Marginal tax rate: 0.40 What would be the break-even interest rate (BEIR), at which the use of leverage is neither favorable nor unfavorable
Answer:
15%
Explanation:
Calculation to determine would be the break-even interest rate (BEIR)
Using this formula
Break-even interest rate (BEIR)= After tax IRR on total investment / (1- Tax rate)
Let plug in the formula
Break-even interest rate (BEIR)=9% / (1-0.40)
Break-even interest rate (BEIR)=9%/0.60
Break-even interest rate (BEIR)= 15%
Therefore would be the break-even interest rate (BEIR), at which the use of leverage is neither favorable nor unfavorable is 15%
Assume that a business has $50000 of current assets and $40000 of current liabilities. What is the company’s current ratio?
Answer:
The company's current ratio is 1.25.
Explanation:
The current ratio is calculated by dividing the current assets by the current liabilities:
current assets=$50000
current liabilities=$40000
current ratio=$50000/$40000
current ratio=1.25
According to this, the answer is that the company's current ratio is 1.25.
The following information is available for Pioneer Company:
Sales price per unit is $100. November and December, sales were budgeted at 2,920 and 3,510 units, respectively. Variable costs are 11 percent of sales (6 percent commission, 3 percent advertising, 2 percent shipping). Fixed costs per month are sales salaries, $5,300; office salaries, $2,700; depreciation, $2,900; building rent, $4,000; insurance, $1,500; and utilities, $700..
Required:
Determine Pioneer's budgeted selling and administrative expenses for November and December.
Answer:
15
Explanation:
Miramar Industries manufactures two products, A and B. The manufacturing operation involves three overhead activities - production setup, material handling, and general factory activities. Miramar uses activity-based costing to allocate overhead to products. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities:
Activity Cost Activity Base
Production Setup $250,000 Number of setups
Material Handling $150,000 Number of parts
General Overhead $80,000 Number of direct labor hours
Each productâs total activity in each of the three areas are as follows:
Product A Product B
Number of setups 100 300
Number of parts 40,000 20,000
Number of direct labor hours 9,000 12,000
What is the activity rate for General Overhead?
A. $4.00 per direct labor hour
B. $3.81 per direct labor hour
C. $6.71 per direct labor hour
D. $4.20 per direct labor hour
Answer:
General overhead= $3.81 per direct labor hour
Explanation:
Given the following information:
General Overhead $80,000 Number of direct labor hours
Number of direct labor hours 9,000 12,000= 21,000
To calculate the activity rate, we need to use the following formula:
Activity rate= estimated costs / total amount of allocation rate
General Overhead= 80,000 / 21,000
General overhead= $3.81 per direct labor hour
Suppose that you are considering the development of a residential subdivision. The development will require you to spend $300,000 today to acquire the land. You will also have to spend $750,000 in both years 1 and 2 in order to build the houses. You expect to make $1.5 million in year 3 and $2 million in year 4 from sales of the completed homes. What is the internal rate of return of this project
Answer:
32.52%
Explanation:
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
IRR can be calculated with a financial calculator
Cash flow in year 0 = $-300,000.
Cash flow in year 1 and 2 = $-750,000
Cash flow in year 3 = $1.5 million
Cash flow in year 4 = $2 million
IRR = 32.52%
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
What method can help to avoid typos when writing a function that includes a range?
Answer:
clicking and dragging to select the range
Compare and contrast the three most common types of healthcare indemnity plans.
Leading up to the signing of a contract with an integration clause, a buyer sent an e-mail to the seller of a beautiful, new $45,000 boat asking, "You provide financing, right?" The seller responded, "Yes, of course." The contract, which the parties signed yesterday, said nothing about financing. Right after signing, the seller said, "OK, let's get you set up with financing!" He then ran the buyer's credit, which was not good. The buyer was not approved for financing through the seller's only source. The buyer believes that he, therefore, is not liable for the cost of the boat. Is the buyer correct?
Answer: No, because of the integration clause
Explanation:
Based on the information given, the buyer isn't correct as a result of the integration clause.
The integration clause, is a clause in a written contract that stipulates that a particular contract is complete and that the parties involved agreed to the contract and it's final.
This contract supersedes every other informal understandings and all other oral agreements relating as well. Therefore, the buyer is liable for the cost of the boat.
7. You are considering the possibility of replacing an existing machine that has a book value of $500,000, a remaining depreciable life of five years, and a salvage value of $300,000. The replacement machine will cost $2 million and have a ten-year life. Assuming that you use straight-line depreciation and that neither machine will have any salvage value at the end of the next ten years, how much would you need to save each year to make the change (the tax rate is 40 percent)
Answer:
$221344.48
Explanation:
Book value of existing machine = $500,000
remaining depreciable life = 5 years
salvage value = $300,000
cost of replacement machine = $2 million
depreciable life = 10 years
Tax rate = 40 %
Difference in the cost of new machine and salvage value of existing machine
= 2,000,000 - 300,000 = $1,700,000
Calculate the depreciation tax benefit of new machine = ( 500,000 / 5 ) * 0.4 = $40,000
next calculate the present value of this tax benefit
= $40000,PVAF(1.10,5years)^5 ------- ( 1 )
where the Annuity of 5 years at 10% = 1/(1.10)5 = 3.7907)
Insert value into equation 1 (to calculate the present value of the tax benefit
= 40000*3.79078676 = $1,51,631.47 ( present value of tax benefit )
Determine the Annual depreciation tax advantage of the new machine
= (2,000,000/10)*0.40 = $80,000
Determine present value of this annuity
= $80,000,PVAF(1.10,10years)^10 ------ ( 2 )
where the Annuity of 5 years at 10% = 1/(1.10)^10 ) = 6.144567
Insert value into equation2 ( to calculate the present value of this annuity )
= 80000 * 6.144567 = $491565.36
Therefore the Net cost of the new machine will be
= $491565.36 - $151631.47 - $1,700,000 = $1,360,066
Annual savings on the new machine in 10 years
= 1,360,066 / 6.144567 = $221344.48
TPW, a calendar year taxpayer, sold land with a $549,000 tax basis for $820,000 in February. The purchaser paid $89,000 cash at closing and gave TPW an interest-bearing note for the $731,000 remaining price. In August, TPW received a $60,550 payment from the purchaser consisting of a $36,550 principal payment and a $24,000 interest payment. Assume that TPW uses the installment sale method of accounting.
a. Compute the difference between TPW's book and tax income resulting from the installment sale method.
b. Is this difference favorable or unfavorable?
c. Using a 21 percent tax rate, compute PTR's deferred tax asset or liability (identify which) resulting from the book/tax difference.
Complete this question by entering your answers in the tabs below.
Required A Required B Required C
Compute the difference between TPW's book and tax income resulting from the installment sale method. (Round gross profit percentage to 2 decimal places, and intermediate calculations to the nearest whole dollar amount.)
Book/tax difference
Answer:
a. Difference between book income and tax income = $229,505.73
b. The difference between book income and tax income is favorable.
c. Deferred tax liability = $48,196.20
Explanation:
a. Compute the difference between TPW's book and tax income resulting from the installment sale method.
This can be computed as follows:
Amount realized on sale of land = Cash paid by purchaser + Value of interest- bearing note given by the purchaser = $89,000 + $731,000 = $820,000
Adjusted tax basis in land = $549,000
Book income = Amount realized on sale of land - adjusted tax basis in hand = $820,000 - $549,000 = $271,000
Gross profit percent = Book income / Amount realized on sale of land = $271,000 / $820,000 = 0.3305, or 33.05%
Cash received on sale of land = Cash paid by purchaser + Principal payment received in August = $89,000 + $36,550 = $125,550
Tax income =Cash received on sale of land * Gross profit percent = $125,550 * 33.05% = $41,494.28
Difference between book income and tax income = Book income - Tax income = $271,000 - $41,494.28 = $229,505.73
b. Is this difference favorable or unfavorable?
Since the book income greater than the tax income, this implies that the difference between book income and tax income is favorable.
c. Using a 21 percent tax rate, compute PTR's deferred tax asset or liability (identify which) resulting from the book/tax difference.
Deferred tax liability = Difference between book income and tax income * 21% = $229,505.73 * 21% = $48,196.20
Organizations with low turnover and satisfied employees tend to perform better. On the other side of the coin, organizations have to act when an employee's performance consistently falls short. Based on these concepts, organizations may distinguish between involuntary and voluntary turnover, recognize their effects on the organization, develop measures to encourage top performers to stay, and develop ways to manage the separation process fairly. Any organization wants to retain good performers and encourage or force low-performing employees to leave. There are two types of employee turnover. Involuntary turnover occurs when the employer requires employees to leave, often when they would prefer to stay. This action may potentially result in lawsuits and violence. Voluntary turnover occurs when employees initiate the turnover, often when the organization would prefer to keep them. These employees may retire or leave to work with different organizations. Both types of turnovers are costly because of subsequent needs to recruit, hire, and train replacements.
Roll over each of the following items, read the statements, and place them in the appropriate columnin the chart. Each category has three statements.
1. Any reason
2. Workplace violence
3. Better job
4. Retirement
5. Refusing
6. Violating
7. Promise
8. Careers
9. Employee layoff
A. Voluntary Turnover
B. Involuntary Turnover
C. Employee at Will Doctrine
Answer:
Answer is explained in the explanation section below.
Explanation:
Voluntary Turnover:
Better Job: If an employee is offered a better job, he may choose to quit his current position.
Careers: If an employee is career-oriented and wishes to pursue higher education, he will willingly leave his employment.
Retirement: When an employee reaches the legal working age, he retires, which is referred to as voluntary retirement.
Involuntary Turnover:
Workplace Violence: An employer may decide to fire an employee who engages in workplace violence. This is what is known as spontaneous turnover.
Violating: If an employee is found to be in breach of the company's rules, he will be dismissed, resulting in involuntary turnover.
Employee layoffs: Forced turnover occurs when a company's employees are laid off in large numbers.
Employment at-will doctrine:
For some reason: This allows the employer to fire an employee for any cause.
Promise: Neither the employer nor the employee has made any commitments to each other.
Refusing to state the reason for the employee's termination: If the employer refuses to state the reason for the employee's termination,
Swifty Company's financial information is presented below. Sales Revenue $ p?Cost of Goods Sold 536000 Sales Returns and Allowances 37000 Gross Profit p?Net Sales 868000 The missing amounts above are: Sales Revenue Gross Profit a. $905000 $332,000 b. $832,000 $332,000 c. $ 905,000 $416,000 d. $832,000 $416,000
Answer:
The correct answer is A.
Explanation:
The gross profit is calculated by deducting from net sales the cost of goods sold:
Gross profit= net sales - COGS
Gross profit= 868,000 - 536,000
Gross profit= $332,000
Now, the sales revenues are the sales before returns and allowances. Therefore, we need to add them to the net sales:
Sales revenue= 868,000 + 37,000
Sales revenues= $905,000