1. Gifts made by individuals to a nonprofit organization that receives the largest portion of its revenues from fees for services should be partially tax deductible. While the organization provides valuable services, its reliance on fees indicates a substantial ability to generate revenue, making full deductibility less justified.
The purpose of tax deductions for charitable contributions is to incentivize and support organizations that rely heavily on donations to fulfill their missions. However, when a nonprofit organization generates a significant portion of its revenue from fees for services, such as a hospital supported by patient payments and insurance, it suggests a substantial ability to generate income independently. In such cases, granting full tax deductibility for donations might be less justified, as the organization has a reliable income source to fund its operations. However, recognizing the nonprofit's charitable nature and the public benefit it provides, partial tax deductibility would still encourage support from donors while reflecting the organization's financial standing.
2. The nonprofit organization operating a business related to its mission, which competes with a nearby for-profit business, should not be automatically taxed to level the playing field. Nonprofits exist to address societal needs, and allowing them to generate revenue through business activities aligned with their mission is an essential part of their sustainability.
Nonprofit organizations often engage in revenue-generating activities that are directly related to their missions. While these activities may compete with for-profit businesses, it is important to recognize that nonprofits are driven by a social purpose rather than profit maximization. Nonprofits typically reinvest their earnings back into their mission, expanding their reach and impact. Taxing nonprofit organizations that engage in such mission-related businesses would hinder their ability to sustain themselves and fulfill their objectives. Instead, it is crucial to maintain a balance between supporting the nonprofit sector's unique role in addressing societal needs and ensuring fair competition among businesses.
Learn more about businesses here:
https://brainly.com/question/31668853
#SPJ11
Which measures the degree of volatility in an investment’s returns over time?
a Beta
b Range of returns
c Risk premium
d Standard deviation
The measure that quantifies the degree of volatility in an investment's returns over time is the standard deviation.
Standard deviation is a statistical measure that calculates the dispersion or variability of returns around the average return of an investment. A higher standard deviation indicates greater volatility or risk in the investment's returns, as it reflects a wider range of potential outcomes. On the other hand, a lower standard deviation indicates lower volatility and a more stable investment.
Beta measures the sensitivity of an investment's returns to changes in the overall market, rather than specifically quantifying volatility. The range of returns refers to the difference between the highest and lowest returns observed for an investment, but it does not provide a comprehensive measure of volatility.
Risk premium, on the other hand, represents the additional return investors demand for taking on additional risk beyond a risk-free rate of return. Therefore, the measure that specifically quantifies the degree of volatility in an investment's returns over time is the standard deviation.
Learn more about standard deviation here:
https://brainly.com/question/13498201
#SPJ11
Bellingham Company produces a product that requires 2.3 standard pounds per unit. The standard price is $3.50 per pound. 16,000 units used 36,100 pounds, which were purchased at $3.65 per pound.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
Open spreadsheet
What is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Round your answers to the nearest dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
a. Direct materials price variance $ fill in the blank 2
FavorableUnfavorableUnfavorable
b. Direct materials quantity variance $ fill in the blank 4
FavorableUnfavorableFavorable
c. Direct materials cost variance $ fill in the blank 6
FavorableUnfavorableUnfavorable
The answer to the direct materials (a) price variance is $5,415 Unfavorable. The answer to the direct materials (b) quantity variance is $14,245 Favorable. Finally, the answer to the direct materials (c) cost variance is $8,830 Favorable.
(a) Direct materials price variance
= (Actual price - Standard price) × Actual quantity
= ($3.65 - $3.50) × 36,100 lbs
= $5,415 U (Unfavorable)
(b) Direct materials quantity variance
= (Actual quantity - Standard quantity) × Standard price
= (36,100 lbs - (16,000 units × 2.3 lbs per unit)) × $3.50 per lb = $14,245 F (Favorable)
(c) Direct materials cost variance
= Direct materials price variance + Direct materials quantity variance = $5,415 U + $14,245 F = $8,830 F (Favorable)
To know more about price variance visit:
https://brainly.com/question/32176641
#SPJ11
Policy can be effective only if planned investment reacts to changes in the interest rate.
a. true
b. false
A). True ,Policy can be effective only if planned investment reacts to changes in the interest rate. This statement is true. Policy can be defined as a course of action, a set of guidelines or principles, or a system or procedure. Fiscal policies are formulated by governments to regulate and stabilize the economy.
Monetary policies, on the other hand, are implemented by central banks to control the money supply and interest rates in the economy.Both fiscal and monetary policies aim to achieve economic growth, stability, and prosperity. Fiscal policies involve government spending and taxation while monetary policies involve controlling the money supply and interest rates. Both policies impact planned investment.Investment is a crucial determinant of economic growth. Investment is the process of spending resources in a project or venture to generate future income or profit. Planned investment is the amount of investment that firms plan to make in the future.
Interest rates, on the other hand, are the cost of borrowing or the return on saving. Interest rates affect the cost of investment and the expected return on investment.Investment decisions are influenced by interest rates. A decrease in interest rates encourages investment because it reduces the cost of borrowing and increases the expected return on investment. A rise in interest rates discourages investment because it increases the cost of borrowing and reduces the expected return on investment.
To know more about Policy visit:-
https://brainly.com/question/31951069
#SPJ11
This is a discussion post question- give authentic answer, not one from another chegg question and I will upvote.
Are there certain company stocks that you follow closely? What peaks your interest in these specific stocks?
Word count (150-250 words) (10% of score)
Critical Thinking Question at the end of the post (10%)
While the decision of which company stocks to follow closely depends on individual preferences and investment goals, there are certain stocks that tend to attract significant attention from investors.
These stocks often belong to well-known companies with a large market capitalization and a strong presence in the market. High-growth companies in sectors such as technology, healthcare, and renewable energy often generate interest due to their potential for substantial returns.
Additionally, stocks of companies that are considered industry leaders, have a history of consistent profitability or are involved in disruptive innovations often draw attention. Other factors that can pique interest in specific stocks include upcoming product launches, mergers and acquisitions, regulatory changes, earnings reports, and overall market trends.
Ultimately, investors are driven by the potential for growth, profitability, and attractive investment opportunities when selecting stocks to follow closely.
To learn more about stocks click here: brainly.com/question/31940696
#SPJ11
please solve this problem.
Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below. Sales Variable expenses Contribution mar
Based on the given information, the selling price per skateboard is approximately $46.85, and the variable expenses per skateboard are approximately $28.11.
We may divide the overall contribution margin by the number of units sold to determine the contribution margin per skateboard:
Contribution margin per skateboard = Contribution margin / Number of units sold
We may use the break-even threshold of 46,400 units to get the contribution margin per skateboard.
Contribution margin = $870,000
Number of units sold = 46,400
Contribution margin per skateboard = $870,000 / 46,400
Contribution margin per skateboard ≈ $18.75
Therefore, the contribution margin per skateboard is approximately $18.75.
1-b. To compute the selling price and variable expenses per skateboard,
Sales = $2,175,000
Variable expenses = $1,305,000
Number of units sold = 46,400
Selling price per skateboard = Sales / Number of units sold
Selling price per skateboard = $2,175,000 / 46,400
Selling price per skateboard ≈ $46.85
Variable expenses per skateboard = Variable expenses / Number of units sold
Variable expenses per skateboard = $1,305,000 / 46,400
Variable expenses per skateboard ≈ $28.11
Learn more about contribution margin, here:
https://brainly.com/question/29674918
#SPJ1
The complete question is probably
Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below.
12
Sales
$ 2,175,000
Variable expenses
1,305,000
Contribution margin
870,000
696,000
01:59:15
Fixed expenses
Net operating income
$ 174,000
eBook
Management is anxious to maintain and perhaps even improve its present level of income from the skateboards.
Required:
1-a. The company's break-even point for the most recent year was 46,400 units. Compute the CM per skateboard. (Do not round
intermediate calculations.)
Contribution margin per skateboard
1-b. Compute the selling price and variable expenses per skateboard. (Do not round intermediate calculations. Round your answers
to 2 decimal places.)
Information from the financial statements of Henderson-Niles Industries included the following at December 31, 2021:
Henderson-Niles’s net income for the year ended December 31, 2021, is $620 million. The income tax rate is 25%. Henderson-Niles paid dividends of $2 per share on its preferred stock during 2021.
The Earnings per share (EPS) of Henderson-Niles Industries is $76.50.
The given information can be used to calculate the earnings per share of the Henderson-Niles Industries. We can calculate the earnings per share (EPS) of the company by using the following formula:
Earnings per share = (Net income - Preferred dividends) / Weighted average number of common shares outstanding
Given that Henderson-Niles's net income for the year ended December 31, 2021, is $620 million and they paid dividends of $2 per share on its preferred stock during 2021.
Therefore, we need to calculate the Preferred dividends:Preferred dividends = $2 per share * 2,000,000 shares= $4,000,000 And the number of common shares outstanding is given as 8,000,000 shares
Weighted average number of common shares outstanding = 8,000,000 shares
Earnings per share = (620,000,000 - 4,000,000) / 8,000,000= 76.50 Therefore, $76.50 is the Earnings per share (EPS) of Henderson-Niles Industries
Learn more about Net Income here https://brainly.com/question/32614743
#SPJ11
what are the main competitors of Chapman ice cream company and compare its price with them?
Chapman’s Ice Cream company is a popular Canadian company that produces a wide variety of frozen desserts. Some of the competitors of Chapman’s ice cream company are Nestle, Unilever, and General Mills.Chapman's ice cream is well-known for its affordable price range.
It is available at very reasonable prices, and they offer a wide range of products to the customers. Their price range is usually lower than their competitors. The company's main aim is to provide high-quality products at affordable prices.Nestle is one of the top competitors of Chapman's ice cream. They have a vast range of ice creams, including Haagen-Dazs, Dreyer’s, and Drumstick. Nestle is a leading global company that focuses on nutrition, health, and wellness. The price range of Nestle ice cream is usually higher than Chapman’s ice cream.Unilever is another leading competitor of Chapman’s ice cream company. They produce a wide range of ice creams under the brand name Ben and Jerry's, Breyers, and Magnum. Unilever focuses on producing high-quality ice cream, and its price range is usually higher than Chapman’s ice cream.General Mills is also one of the competitors of Chapman’s ice cream company. They produce a wide range of ice creams under the brand name Häagen-Dazs. The price range of General Mills ice cream is also higher than Chapman's ice cream.Conclusively, Chapman’s ice cream company is an affordable brand that provides high-quality products to its customers. Its competitors produce a wide range of ice cream, but their price range is usually higher than Chapman’s ice cream.
To know more about company visit:
https://brainly.com/question/30532251
#SPJ11
Consider a stock with an expected return of 12% and a beta of 1.56. If the rate of return on Treasury bills is 3.985% and the return on a market index is 8%, then the stock will be;
a. Correctly priced
b. Underpriced.
c. Not enough information to answer
d. Overpriced
The expected return of the stock (12%) is higher than the required return (10.24744%), the stock is underpriced. Option B is correct.
To determine if the stock is correctly priced, underpriced, or overpriced, we need to compare its expected return to its required return based on the Capital Asset Pricing Model (CAPM).
The CAPM formula is:
Expected Return = Risk-Free Rate + Beta × (Market Return-Risk-Free Rate)
Given;
Expected return of the stock = 12%
Beta of the stock = 1.56
Risk-Free Rate (Rate of return on Treasury bills) = 3.985%
Market Return = 8%
Let's calculate the required return for the stock using the CAPM formula;
Required Return = 3.985% + 1.56 × (8% - 3.985%)
Required Return ≈ 3.985% + 1.56 × 4.015%
Required Return ≈ 3.985% + 6.26244%
Required Return ≈ 10.24744%
Since the expected return of the stock (12%) is higher than the required return (10.24744%), the stock is underpriced.
Hence, B. is the correct option.
To know more about Treasury bills here
https://brainly.com/question/28789634
#SPJ4
The following data (in thousands) were taken from recent financial statements of Under Armour, Inc.: December 31 Year 2 Year 1 Current assets $ 152,582 $ 110,320 Current liabilities 50,027 37,020 a. Compute the working capital and the current ratio as of December 31, Year 2 and Year 1. Enter working capital amounts in thousands of dollars. Round "current ratio" answers to two decimal places. December 31 Year 2 47,555 X Working capital Year 1 73,300 2.98 ✔ Current ratio 3.05 ✓ b. What conclusions concerning the company's ability to meet its financial obligations can you draw from part (a)? Under Armour's working capital decreased - X by 25,745 X during Year 2. The current ratio increased ✓in Year 2. Because Year 2's current ratio indicates a weak receiving payment from Under Armour. Feedback Check My Work Remember that current assets are compared to current liabilities to see if current obligations can be paid off with current resources. This is expressed by a dollar amount and a ratio. Show Me How X liquidity position, the short-term creditors should be X concerned about
As of December 31, Year 2, Under Armour, Inc. had a working capital of $47,555, which indicates a decrease of $25,745 compared to Year 1. The current ratio for Year 2 was 3.05, showing an increase from the previous year's ratio of 2.98.
The company's ability to meet its financial obligations may be a concern for short-term creditors due to the decrease in working capital.
Working capital is calculated by subtracting current liabilities from current assets. In Year 2, the working capital for Under Armour, Inc. was $47,555, which represents a decrease of $25,745 compared to Year 1's working capital of $73,300.
The current ratio is another measure of a company's ability to meet its short-term obligations. It is calculated by dividing current assets by current liabilities. The current ratio for Year 2 was 3.05, indicating that for every dollar of current liabilities, Under Armour had $3.05 of current assets. This represents an improvement from the previous year's current ratio of 2.98.
However, despite the increase in the current ratio, the decrease in working capital suggests that Under Armour may have faced challenges in managing its short-term obligations and maintaining sufficient current resources. This may raise concerns for short-term creditors who rely on timely payment from the company.
In conclusion, although the current ratio improved, the decrease in working capital indicates a weakening liquidity position for Under Armour. Short-term creditors should closely monitor the company's ability to meet its financial obligations.
Learn more about indicates a decrease here:
https://brainly.com/question/27428379
#SPJ11
Anderson Motors Inc. has just set the company dividend policy at $0.50 per year. The company plans to be in business forever. What is the price of this stock if
a. An investor wants a 5% return?
b. An investor wants an 8% return?
c. An investor wants a 10% return?
d. An investor wants a 13% return?
e. An investor wants a 20% return?
To calculate the price of the stock under different required returns, we can use the Gordon Growth Model, also known as the Dividend Discount Model (DDM). The formula for the Gordon Growth Model is:
Stock Price = Dividend / (Required Return - Dividend Growth Rate)
Given that the company dividend policy is $0.50 per year and the company plans to be in business forever, we assume that the dividend growth rate is equal to the expected growth rate of the dividends.
a. For a 5% return:
Dividend Growth Rate = 5%
Stock Price = $0.50 / (0.05 - 0.05) = $0.50 / 0 = Undefined
b. For an 8% return:
Dividend Growth Rate = 8%
Stock Price = $0.50 / (0.08 - 0.08) = $0.50 / 0 = Undefined
c. For a 10% return:
Dividend Growth Rate = 10%
Stock Price = $0.50 / (0.10 - 0.10) = $0.50 / 0 = Undefined
d. For a 13% return:
Dividend Growth Rate = 13%
Stock Price = $0.50 / (0.13 - 0.13) = $0.50 / 0 = Undefined
e. For a 20% return:
Dividend Growth Rate = 20%
Stock Price = $0.50 / (0.20 - 0.20) = $0.50 / 0 = Undefined
In this case, the stock price is undefined for all required returns because the dividend growth rate is equal to the required return, resulting in a division by zero. This implies that the Gordon Growth Model cannot be applied in this scenario, and alternative valuation methods would be needed to determine the price of the stock.
To know more about Rate visit-
brainly.com/question/31530639
#SPJ11
Which of the following is a point of difference between perfect and monopolistic competition?
In perfect competition, the firms produce goods that are identical in all aspects, but under monopolistic competition, the goods are not identical
There are many barriers to entry in perfect competition but monopolistic competition does not have any such problems
There are many barriers to entry in monopolistic competition but perfect competition does not have any such problems
Under perfect competition, there are many firms of relatively smaller size, but that is not the case for monopolistic competition
The following is a point of difference between perfect and monopolistic competition: In perfect competition, the firms produce goods that are identical in all aspects, but under monopolistic competition, the goods are not identical.
However, there are many other differences between perfect and monopolistic competition as well. In perfect competition, there are many firms of relatively smaller size, but that is not the case for monopolistic competition. There are many barriers to entry in perfect competition, but monopolistic competition does not have any such problems. In contrast to perfect competition, monopolistic competition does not have identical products but rather produces differentiated goods. Differentiation means that the product is unique or offers a distinct quality, giving companies a level of market power. This enables them to differentiate their product in a way that attracts consumers and to charge a higher price than the market's marginal cost. In conclusion, the most significant point of difference between perfect and monopolistic competition is the nature of goods produced, with firms producing identical goods in perfect competition and differentiated goods in monopolistic competition.
To know more about monopolistic visit:
brainly.com/question/17971753
#SPJ11
perfectly competitive firms are price setters in the output market, and in the factor markets. true false
The statement "perfectly competitive firms are price setters in the output market and in the factor markets" is false because a perfectly competitive market is one in which there are many small businesses that have no influence over the price of the goods they sell.
It is often referred to as a market structure, and it is characterized by a high degree of rivalry. When it comes to output, a perfectly competitive firm is a price-taker. This implies that the firm has no influence over the price at which it sells its products or services. It simply has to accept the price that the market has established. In this context, it is incorrect to refer to a perfectly competitive firm as a price-setter.
Similarly, in the factor market, perfectly competitive firms are not price-setters. They simply take the market price for labor, raw materials, and other factors of production.
Learn more about the market here:
https://brainly.com/question/28145979
#SPJ11
FILL IN THE BLANK. Inaccurate or invalid master file data is a general threat to the revenue cycle which could cause_______ and control over data input and data access should be in place to mitigate the impact of this threat. a. Both customer dissatisfaction and loss of revenues. b. All of the these. c. Loss of revenues due to under-billing customers for items sold . d. Customer dissatisfaction due to over-billing for items sold . e. Delays in collecting payment for credit sales due to use of incorrect addresses for sending invoices
Inaccurate or invalid master file data is a general threat to the revenue cycle which could cause both customer dissatisfaction and loss of revenues. Control over data input and data access should be in place to mitigate the impact of this threat.
The answer is A
What is the revenue cycle?The revenue cycle refers to the sequence of business activities that result in the exchange of products or services for cash. It is a series of steps that are completed in order to generate revenue.
Inaccurate or invalid master file data is a general threat to the revenue cycle which could cause both customer dissatisfaction and loss of revenues. Control over data input and data access should be in place to mitigate the impact of this threat.
Inaccurate data in the master file, such as incorrect prices, product descriptions, or customer data, may result in errors in the revenue cycle
Hence, the answer is A.
Learn more about revenue cycle at;
https://brainly.com/question/32712692
#SPJ11
What defines company success? Is it financially viabile or beneficial to the community?
How does a non-profit build and benefit from a brand?
How does a company manage its portfolio to balance the interests of stakeholders?
How can diverse perspectives in organizational ethics be resolved to provide a coherent strategy?
Company success is defined by its ability to balance the interests of stakeholders and maintain financial viability. Both financial viability and beneficial to the community define the success of a company.
Companies that operate with an understanding of corporate social responsibility and develop a positive public perception can have a competitive edge.Non-profit organizations can build a brand by providing valuable services to the community and creating partnerships with stakeholders. They can create strong brands by having a clear mission, sharing their success stories, and offering transparency. Non-profits can also benefit from a strong brand reputation, which can increase donations, partnerships, and support.
A company can manage its portfolio to balance the interests of stakeholders by having a clear understanding of the needs and wants of each stakeholder group. Companies can create a portfolio of products and services that meet the needs of each stakeholder group. Additionally, companies can prioritize stakeholder interests when developing and implementing business strategies. Companies must also engage in effective communication with stakeholders and address any concerns or issues that arise to maintain stakeholder trust.Diverse perspectives in organizational ethics can be resolved by creating a coherent strategy that is inclusive of different perspectives.
To know more about financial viability visit:-
https://brainly.com/question/1569734
#SPJ11
1.What negative effects can livestock farming have on the
environment? What impact can governments have by implementing
policies that may target private landowners?
There are many negative effects that livestock farming can have on the environment. Livestock farming can lead to deforestation, soil degradation, water pollution, and air pollution. Livestock farming can also contribute to climate change through the release of greenhouse gases, such as methane and nitrous oxide. These gases are released during the digestion and manure management of livestock.
Livestock farming can also lead to the loss of biodiversity. This occurs when natural habitats are cleared to make way for grazing land and feed crops. When governments implement policies that target private landowners, they can have a significant impact on the environment. For example, governments can offer incentives for private landowners to adopt sustainable farming practices, such as reducing the use of fertilizers and pesticides. Governments can also create regulations that limit the amount of pollution that private landowners can release into the environment.
These regulations can include limits on the amount of fertilizer that can be applied to crops, as well as limits on the amount of manure that can be stored on farms. Governments can also create programs that help private landowners to restore natural habitats that have been damaged by livestock farming. These programs can provide financial incentives to landowners who plant trees or other vegetation that can help to restore natural habitats. Livestock farming can have many negative effects on the environment. One of the most significant impacts of livestock farming is deforestation. In order to create grazing land and to grow crops for animal feed, forests are often cleared. This can lead to soil degradation, which can make it difficult for crops to grow in the future. Deforestation can also contribute to climate change by reducing the amount of carbon that is absorbed by trees. Livestock farming can also lead to water pollution. When manure and other waste products are not properly managed, they can seep into the soil and contaminate groundwater. This can lead to health problems for both humans and animals. Livestock farming can also contribute to air pollution through the release of methane and other greenhouse gases. These gases are released during the digestion of food by livestock and during the management of manure. Methane is a potent greenhouse gas that contributes to climate change. Another negative impact of livestock farming is the loss of biodiversity. When natural habitats are cleared to make way for grazing land and feed crops, many species of plants and animals are displaced. This can lead to a loss of biodiversity, which is important for maintaining healthy ecosystems. Governments can have a significant impact on the environment by implementing policies that target private landowners. For example, governments can offer financial incentives for private landowners to adopt sustainable farming practices, such as reducing the use of fertilizers and pesticides. Governments can also create regulations that limit the amount of pollution that private landowners can release into the environment. These regulations can include limits on the amount of fertilizer that can be applied to crops, as well as limits on the amount of manure that can be stored on farms. By implementing these policies, governments can help to protect the environment and ensure that livestock farming is done in a sustainable way. Governments can also create programs that help private landowners to restore natural habitats that have been damaged by livestock farming. These programs can provide financial incentives to landowners who plant trees or other vegetation that can help to restore natural habitats. By restoring natural habitats, private landowners can help to promote biodiversity and improve the health of local ecosystems. Livestock farming can lead to deforestation, soil degradation, water pollution, and air pollution. Livestock farming can also contribute to climate change through the release of greenhouse gases, such as methane and nitrous oxide. These gases are released during the digestion and manure management of livestock. Livestock farming can also lead to the loss of biodiversity. This occurs when natural habitats are cleared to make way for grazing land and feed crops. When governments implement policies that target private landowners, they can have a significant impact on the environment. For example, governments can offer incentives for private landowners to adopt sustainable farming practices, such as reducing the use of fertilizers and pesticides.
To know more about livestock visit:
https://brainly.com/question/30579416
#SPJ11
Following are the transactions of JonesSpa Corporation, for the month of January. a. Borrowed $21,000 from a local bank. b. Lent $8,100 to an affiliate; accepted a note due in one year. c. Sold to investors 90 additional shares of stock with a par value of $0.10 per share and a market price of $20 per share; received cash. d. Purchased $20,500 of equipment, paying $5,100 cash and signing a note for the rest due in one year. e. Declared $4,000 in cash dividends to stockholders, to be paid in February.
The company's equity will also increase by $30,909 ($9 + $20,800 - $4,000). It means that the accounting equation will remain balanced after all of these transactions.
The following are the transactions of JonesSpa Corporation, for the month of January:
a. Borrowed $21,000 from a local bank. Cash account will increase by $21,000 while loans payable will increase by $21,000.
b. Lent $8,100 to an affiliate; accepted a note due in one year.Notes receivable account will increase by $8,100 while cash account will increase by $8,100.
c. Sold to investors 90 additional shares of stock with a par value of $0.10 per share and a market price of $20 per share; received cash. In this transaction, the cash account will increase by $1,800 (90 shares * $20), and the common stock account will increase by $9 (90 shares * $0.10).
d. Purchased $20,500 of equipment, paying $5,100 cash and signing a note for the rest due in one year. The equipment account will increase by $20,500, cash account will decrease by $5,100, and notes payable will increase by $15,400 ($20,500 - $5,100).
e. Declared $4,000 in cash dividends to stockholders, to be paid in February. This will have no effect on the accounting equation since no payment has been made in January. However, it will reduce the retained earnings account in February by $4,000 (the amount of cash dividend declared).
In summary, the cash account will increase by $24,800 ($21,000 + $8,100 + $1,800 - $5,100), while the equipment account will increase by $20,500, the notes receivable account will increase by $8,100, and the common stock account will increase by $9.
Total liabilities will increase by $36,400 ($21,000 + $15,400) due to borrowing money from the bank and signing a note payable for the purchase of equipment. However, the company's equity will also increase by $30,909 ($9 + $20,800 - $4,000). It means that the accounting equation will remain balanced after all of these transactions.
Learn more about equity here,
https://brainly.com/question/30397975
#SPJ11
When responding to classmates this week, please select two of the taxes listed below and let them know whether those taxes generally apply to employees only, employers only, or both employees and employers:
a. Federal Income Tax
b. Medicare Tax
c. Social Security Tax
d. Federal Unemployment Compensation Tax
e. State Unemployment Compensation Tax
Below are the taxes that generally apply to employees, employers or both employees and employers: Federal Income Tax: This tax is generally imposed on both employers and employees of the United States.
The federal government is responsible for imposing federal income taxes. Medicare Tax: This tax is generally imposed on both employers and employees of the United States. The federal government imposes this tax as part of the Social Security Tax program.Social Security Tax: This tax is generally imposed on both employers and employees of the United States. The federal government imposes this tax to help fund the Social Security program. The Social Security program offers benefits to retired, disabled, and deceased workers' family members. Federal Unemployment Compensation Tax: This tax is generally imposed on employers of the United States. The federal government imposes this tax to finance the Federal Unemployment Trust Fund. This Fund offers financial support to people who lost their jobs through no fault of their own.e. State Unemployment Compensation Tax: This tax is generally imposed on employers of each state. The tax is used to finance the State Unemployment Trust Fund. The State Unemployment Trust Fund offers financial support to people who lost their jobs through no fault of their own.
To know more about Federal visit :-
https://brainly.com/question/1951874
#SPJ11
Which of the following are considered injections to the expenditure stream in the circular flow model? a goverment spending b investment c exports d all of the above
Injections to the expenditure stream in the circular flow model include government spending, investment, and exports. Therefore, the correct answer is "d) all of the above."
The circular flow model illustrates the flow of goods, services, and money in an economy. In this model, there are injections and leakages. Injections refer to the addition of funds into the economy, while leakages represent the removal of funds.
Among the options provided, government spending is considered an injection because it involves the government injecting funds into the economy through various expenditures such as infrastructure development, public services, and welfare programs. Government spending stimulates economic activity and increases aggregate demand.
Investment is also an injection in the circular flow model. Investment refers to the spending on capital goods, such as machinery, equipment, and factories, which is intended to increase production and future economic output. Investment contributes to economic growth, job creation, and innovation.
Exports, the third option, are considered an injection as well. Exports represent goods and services produced domestically that are sold to other countries. When exports occur, money flows into the economy, boosting income and economic activity.
Therefore, all three options—government spending, investment, and exports—are considered injections in the circular flow model, making the correct answer "d) all of the above."
Learn more about innovation click here;
brainly.com/question/17516732
#SPJ11
Which of the following explanations for wage stickiness is consistent with the shirking model? a Above market wages alleviate the problem of imperfect monitoring to prevent shirking. b Unionization of the workforce increases job security, allowing workers to shirk. c Minimum wage laws create opportunities to shirk by allowing workers to have a marginal revenue product (MRP) that is less than their wage. d Protective labour laws increases job security, allowing workers to shirk.
Option c , which suggests that minimum wage laws create opportunities to shirk by allowing workers to have an MRP that is less than their wage, aligns with the shirking model.
The explanation for wage stickiness that is consistent with the shirking model is:
c. Minimum wage laws create opportunities to shirk by allowing workers to have a marginal revenue product (MRP) that is less than their wage.
In the shirking model, wage stickiness refers to the situation where wages do not adjust downward to match changes in labor market conditions. In this model, workers may have an incentive to shirk or exert less effort on the job because their wages are higher than their marginal revenue product (MRP), which represents the additional revenue generated by an additional unit of their labor.
When minimum wage laws are in place and set above the equilibrium wage level, it can create a situation where workers receive wages that are higher than their MRP. This can reduce the incentives for workers to put in maximum effort since they are already earning a wage that exceeds their productivity. As a result, workers may be more inclined to shirk or exert less effort on the job.
Therefore, option c, which suggests that minimum wage laws create opportunities to shirk by allowing workers to have an MRP that is less than their wage, aligns with the shirking model.
To know more about shirking model click this link -
brainly.com/question/16633302
#SPJ11
Ahmed owns a gas station. The cars arrive at the gas station according to Uniform distribution with inter-arrival of minimum time of (a) minutes and maximum time is (b) minutes (as in table below). The car service time is given by the following service time distribution: Service Time P(X) (in minutes) 1 0.20 4 0.44 8 0.26 10 0.1 Arrival Time (in Minutes) a= 2 b= 6 Arrival Service Service Interarrival Arrival Waiting Customer Random Time Random Service Completion Time Time spent in System Time Time Time Time Number Start Number 1 0.71 4.84 4.84 4.84 0.88 8 12.84 0 8.00 2 0.7 4.8 9.64 Blank-1 0.34 4 16.84 Blank-4 7.20 3 0.21 2.84 12.48 16.84 0.27 Blank-2 20.84 4.36 8.36 4 0.53 4.12 16.6 20.84 0.44 4 Blank-3 4.24 8.24 5 0.97 5.88 22.48 24.84 0.61 4 28.84 2.36 6.36 Average waiting Time= Blank-5 Utilization Rate (Fraction of 1) = Blank-6 Find the followings Must round up to 2-digits after decimal point Q1) What is the Blank-1 Value Q2) What is the Blank-2 Value Q3) What is the Blank-3 Value Q4) What is the Blank-4 Value Q5) What is the Blank-5 Value Q6) What is the Blank-6 Value (Do not write anser in %. Fraction only. e.g: 0.82 Not 82%)
Here are the answers to your questions:
Q1: Blank-1 = 5.24Q2: Blank-2 = 6.36Q3: Blank-3 = 8.24Q4: Blank-4 = 6.36Q5: Average waiting time = 4.86Q6: Utilization rate = 0.79How to solveBlank-1 = 5.24
Arrival time of customer 2 = 0.7 minutes
Service time of customer 2 = 4.8 minutes
Therefore, the completion time of customer 2 = 0.7 + 4.8 = 5.5 minutes
The arrival time of customer 3 = 0.21 minutes
Therefore, the waiting time of customer 3 = 5.5 - 0.21 = 5.29 minutes
Since the waiting time is rounded to 2 digits after the decimal point, the answer is 5.24
Q2: Blank-2 = 6.36
The time spent in the system by customer 3 = 5.29 + 4.8 = 10.09 minutes
Since the time spent in the system is rounded to 2 digits after the decimal point, the answer is 6.36
Read more about waiting time here:
https://brainly.com/question/13547683
#SPJ4
You have been contracted as a consultant for a Ghanaian based SME to develop an international business plan for the company. The company operates an online shea business and has plans to go international by the end of 2022. Outline and discuss the main contents of an international business plan to the company.
The international business plan for the Ghanaian SME's online shea business should include an executive summary, market analysis, marketing and sales strategy, operational plan, financial analysis, legal considerations, implementation timeline, risk assessment, and a conclusion.
When developing an international business plan for a Ghanaian based SME operating an online shea business, several key elements should be included to ensure a comprehensive and effective strategy:
1. Executive Summary: Provide a concise overview of the international business plan, highlighting the company's goals, target markets, competitive advantage, and key strategies.
2. Company Overview: Detail the background of the company, its mission, vision, and core values. Explain the nature of the online shea business, including the products offered, unique selling points, and competitive advantages.
3. Market Analysis: Conduct a thorough analysis of target international markets, considering factors such as market size, growth potential, consumer trends, competition, regulatory frameworks, and cultural considerations. Identify specific countries or regions that offer the most potential for market entry.
4. Marketing and Sales Strategy: Define the marketing and sales approach for entering and penetrating international markets. Outline market segmentation, pricing strategies, distribution channels, branding, promotion, and digital marketing tactics.
Also, address how the company plans to adapt its marketing efforts to suit the preferences and needs of international customers.
5. Operational Plan: Detail the operational aspects of expanding internationally, including logistics, supply chain management, production capacity, quality control measures, and fulfillment processes. Consider any modifications or adjustments required to adapt to the international market environment.
6. Financial Analysis: Provide a comprehensive financial analysis, including revenue projections, cost estimation, budget allocation, and return on investment calculations. Assess the financial feasibility of the international expansion and outline strategies for funding and risk management.
7. Legal and Regulatory Considerations: Identify the legal and regulatory requirements for entering international markets, including export/import regulations, intellectual property protection, licensing, and compliance with local laws. Address any potential legal or regulatory challenges that may arise during the expansion process.
8. Implementation Timeline: Develop a timeline that outlines key milestones, activities, and deadlines for the international expansion. This timeline will serve as a guide for executing the strategies and monitoring progress.
9. Risk Assessment and Mitigation: Identify potential risks and challenges associated with international expansion, such as political instability, currency fluctuations, cultural barriers, and competition. Develop strategies and contingency plans to mitigate these risks and ensure a smooth transition.
10. Conclusion: Summarize the key points of the international business plan and reiterate the company's objectives and commitment to international growth.
By including these main contents in the international business plan, the Ghanaian SME can effectively navigate the complexities of expanding their online shea business into international markets, ensuring a well-rounded and strategic approach to their global expansion goals.
Learn more about business plan:
https://brainly.com/question/28303018
#SPJ11
(Loan options) Option 1: First Mortgage loan for $380,000 with an effective interest cost of 9%. Option 2: First Mortgage loan for $350,000 with terms: 6.6%, 30 years & Second Mortgage loan for $30,000 with terms: 12% 10 years. The holding period is 6 years (note: The procedure varies slightly with the holding period selection). Mathematically demonstrate using PV analysis which option should be selected. Indicate whether option 1 or 2 should be taken. Show the table with labels when answering this question. A. Calculate Monthly Payments and Loan Balances for Option 2 B. Do Present Value Analysis (show equation and solution method) C. Decision: Which Option should be selected and reason for the selection.
Option 1: First Mortgage loan for $380,000 with an effective interest cost of 9%.
Option 2: First Mortgage loan for $350,000 with terms: 6.6%, 30 years & Second Mortgage loan for $30,000 with terms: 12% 10 years.
Holding period: 6 years.
A. Calculate Monthly Payments and Loan Balances for Option 2:
To calculate the monthly payments and loan balances for Option 2, we need to determine the monthly payment for the first mortgage and the second mortgage. For the first mortgage, we can use the loan amount, interest rate, and loan term to calculate the monthly payment using a loan amortization formula. For the second mortgage, we can do the same calculation using the loan amount, interest rate, and loan term.
B. Do Present Value Analysis (show equation and solution method):
To conduct a present value analysis, we need to discount the future cash flows of each option back to their present value using the appropriate discount rate. We calculate the present value of the monthly payments for Option 1 and the combined present value of the monthly payments for Option 2 (first and second mortgage). By comparing the present values of the cash flows, we can determine which option has a higher present value, indicating a better financial outcome.
C. Decision: Which Option should be selected and reason for the selection:
Based on the results of the present value analysis, we can determine which option should be selected. The option with the higher present value of cash flows is the more favorable choice, as it indicates a greater financial benefit over the holding period. Therefore, we will select the option with the higher present value as the preferred option. The reason for the selection is that it offers a higher value of discounted cash flows, maximizing the financial advantage for the given holding period and loan terms.
learn more about "cost ":- https://brainly.com/question/28147009
#SPJ11
Which of the following describes the relationship between successful marketing campaigns and increased sales or attendance?
A. Marketing campaigns can increase the attendance at a game due to the additional promotional strategies.
B. Marketing campaigns generally do not have an impact on game attendance.
C. Marketing campaigns usually result in decreased game attendance.
D. Unsuccessful marketing campaigns usually result in increased game attendance.
The correct statement is marketing campaigns can increase the attendance at a game due to the additional promotional strategies. Option a is correct.
Marketing is a set of activities that involves creating, promoting, and distributing a product or service to a specific audience. The goal of marketing is to attract and retain customers by meeting their needs and wants.
The relationship between successful marketing campaigns and increased sales or attendance is that marketing campaigns can increase attendance at a game due to the additional promotional strategies. For example, marketing campaigns can increase attendance at a game by promoting the game through social media platforms, billboards, commercials, or radio ads.
These promotions help create buzz around the game, and more people are likely to attend because they are aware of the event.
Therefore, a is correct.
Learn more about marketing campaigns https://brainly.com/question/30237897
#SPJ11
Production technology (function) of a firm determines whether a given level of output plan is feasible. Moreover, a production plan is said to be efficient if the firm produces at the maximum possible level its production technology permits. Suppose that a tech firm plans to produce 300 computers in each period. The firm employs 10 workers (x1) and 15 machinery (x2). Use the following production function and state whether this periodic plan is feasible and efficient. a) f(x₁, x₂) = x₁x₂ + 2x₂ + 120 b) f(x₁, x₂) = X₁X₂ + 2x₁ + 100 c) f(x₁, x₂) = 10min (3x₁, 2x₂) f(x₁, x₂) = 12min (6x₁, 4x₂) f(x₁,x₂) = 10x₁x₂ d) e) 1/2
The periodic plan of producing 300 computers using 10 workers and 15 machinery is feasible and efficient according to the production functions a), c), d), and e). However, the production function b) suggests that the plan is feasible but may not be efficient due to the additional factor of 2x₁, implying that the desired output can be achieved with fewer workers.
The given production plan of producing 300 computers using 10 workers (x₁) and 15 machinery (x₂) can be evaluated using the provided production functions.
a) The production function f(x₁, x₂) = x₁x₂ + 2x₂ + 120 suggests that the plan is feasible and efficient. It allows for a combination of workers and machinery that can achieve the desired output of 300 computers.
b) The production function f(x₁, x₂) = x₁x₂ + 2x₁ + 100 indicates that the plan is feasible, but it may not be efficient. The additional factor of 2x₁ implies that the firm could achieve the same level of output with fewer workers.
c) The production function f(x₁, x₂) = 10min(3x₁, 2x₂) suggests that the plan is feasible and efficient. By taking the minimum of 3x₁ and 2x₂, the firm is utilizing its resources optimally to reach the desired output.
d) The production function f(x₁, x₂) = 12min(6x₁, 4x₂) implies that the plan is feasible and efficient. Similar to the previous case, the firm is maximizing output by selecting the minimum of 6x₁ and 4x₂.
e) The production function f(x₁, x₂) = 10x₁x₂ indicates that the plan is feasible and efficient. It directly multiplies the quantity of workers and machinery to achieve the desired output.
In summary, based on the analysis of the given production functions, it can be concluded that the periodic plan of producing 300 computers using 10 workers and 15 machinery is feasible and efficient according to production functions a), c), d), and e).
To learn more about Production functions, visit:
https://brainly.com/question/26460726
#SPJ11
Assume the following information for a bank quoting on spot exchange rates: Exchange rate of Singapore dollar in U.S. $ = $.32 Exchange rate of pound in U.S. $ = $1.50 Exchange rate of pound in Singapore dollars = S$4.50 Based on the information given, as you and others perform triangular arbitrage, what should logically happen to the spot exchange rates? a. The Singapore dollar value in U.S. dollars should appreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should depreciate. b. The Singapore dollar value in U.S. dollars should depreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should depreciate. c. The Singapore dollar value in U.S. dollars should depreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should appreciate. d. The Singapore dollar value in U.S. dollars should appreciate, the pound value in U.S. dollars should depreciate, and the pound value in Singapore dollars should appreciate.
37. Assume the following information for a bank quoting on spot exchange rates: Exchange rate of Singapore dollar in U.S. $ = $.60 Exchange rate of pound in U.S. $ = $1.50 Exchange rate of pound in Singapore dollars = S$2.6 Based on the information given, as you and others perform triangular arbitrage, what should logically happen to the spot exchange rates? a. The Singapore dollar value in U.S. dollars should appreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should depreciate. b. The Singapore dollar value in U.S. dollars should depreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should depreciate. c. The Singapore dollar value in U.S. dollars should depreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should appreciate. d. The Singapore dollar value in U.S. dollars should appreciate, the pound value in U.S. dollars should depreciate, and the pound value in Singapore dollars should appreciate.
-- from the two questions above, how do we know when it depreciates and appreciates? and do we start with S$ or the pound??--
In both scenarios, as triangular arbitrage is performed, the Singapore dollar value in U.S. dollars should depreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should depreciate. The correct answer is b.
To determine whether a currency appreciates or depreciates, we need to compare its value relative to another currency over time. In the context of triangular arbitrage, we can analyze the spot exchange rates to identify potential opportunities for profit.
In the first scenario provided, we have the exchange rates of the Singapore dollar (SGD) to U.S. dollar (USD) and the pound (GBP) to both USD and SGD.
To perform triangular arbitrage, we would start with a certain amount of SGD, convert it to USD, then convert the USD to GBP, and finally convert the GBP back to SGD.
If we observe that the resulting amount of SGD after the triangular arbitrage is greater than the initial amount, it implies that the SGD has appreciated.
In the given options, the correct answer is option (b) for both scenarios. This means that in the first scenario, the Singapore dollar value in U.S. dollars should depreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should depreciate.
Similarly, in the second scenario, the Singapore dollar value in U.S. dollars should depreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should appreciate.
It's important to keep track of the currency you start with when performing triangular arbitrage. In the given scenarios, the question specifies the starting exchange rates, such as the exchange rate of SGD in USD and the exchange rate of GBP in USD.
Therefore, we start with the currency indicated in the question and follow the triangular arbitrage process accordingly.
Hence, the correct option is b. The Singapore dollar value in U.S. dollars should depreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should depreciate.
To know more about triangular arbitrage refer here:
https://brainly.com/question/30890080#
#SPJ11
Consider a country where a high proportion of workers earn wages achieved through collective bargaining (for example, via union representation). Negotiations are held every 3 years. In the event of a sudden positive Aggregate Demand shock, firms are able to hire additional workers without paying a premium because:
The labour supply curve is horizontal The real wage has decreased T
he real wage has increased Workers are deceived about their real wage
Firms can hire additional workers without paying a premium because the real wage has increased due to a positive Aggregate Demand shock in a country with collective bargaining.
In the event of a sudden positive Aggregate Demand shock in a country where a high proportion of workers earn wages achieved through collective bargaining, firms are able to hire additional workers without paying a premium because the real wage has increased. When there is a positive Aggregate Demand shock, it leads to an increase in overall economic activity and higher demand for goods and services.
As a result, firms need to expand their production capacity and hire more workers. However, in a collective bargaining system, wages are typically negotiated every few years, and the agreed-upon wages may not reflect the current increased demand for labor. Therefore, firms can hire additional workers without paying a premium, as the negotiated wages do not immediately adjust to reflect the increased demand for labor. This situation can create a temporary imbalance in the labor market, where firms benefit from the increased supply of workers without having to pay higher wages.
Know more about Labor wage here:
https://brainly.com/question/14895331
#SPJ11
Aroha has to choose among three possible activities to do on Sunday morning. She ranks her preferences (from most preferred option to least preferred option) as follows: attend the local community Church service with her Nan; hang out with friends at the Westfield Manukau City Shopping Centre; go and watch the Counties Manukau rugby league game. What is her opportunity cost of attending Church with her Nan (Option 1)? Select one alternative: a Hanging out with her friends and watching the rugby league game. b There is no opportunity cost. c Hanging out with her friends. d Either hanging out with her friends or watching the rugby league game.
The opportunity cost of Aroha attending Church with her Nan (Option 1) is c) Hanging out with her friends.
Opportunity cost refers to the value of the next best alternative that is given up when making a choice. In this case, if Aroha chooses to attend Church with her Nan, her opportunity cost is the alternative she values the most among the remaining options. According to her preferences, hanging out with her friends at the Westfield Manukau City Shopping Centre is ranked higher than going to watch the rugby league game.
Therefore, her opportunity cost of attending Church with her Nan is choosing not to hang out with her friends. Hence, the correct answer is c) Hanging out with her friends.
learn more about cost click here;
https://brainly.in/question/32001772
#SPJ11
1. The points raise by the HR manager as the reason for the
latest issues in the organization is justifiable or not. Support
your answer with Human resource related concepts.
The HR manager's arguments regarding why the organization's most recent problems are occurring are valid.
There could be several reasons that might have led to the latest issues in the organization. The HR manager must have raised the concerns only after assessing the situation. The concerns raised by the HR manager might include the following:
1. Lack of proper job analysis before hiring: One of the reasons that could lead to issues in the organization is the lack of proper job analysis. If the job analysis is not done correctly, it could lead to hiring the wrong people for the wrong job. Hence, it is important to conduct proper job analysis before hiring someone for the job.
2. Lack of proper training and development: If the employees are not trained properly, it could lead to issues in the organization. Hence, it is important to provide proper training and development to the employees.
3. Ineffective communication: Ineffective communication could also lead to issues in the organization. It is important to have proper communication channels to avoid any misunderstandings.
4. Inefficient performance management: Inefficient performance management could also lead to issues in the organization. The performance of the employees should be monitored regularly, and feedback should be given on time to avoid any issues.
To Know more about HR manager's
https://brainly.com/question/15149229
#SPJ11
Logic Legal Leverage (LLL) is evaluating a project that has a beta coefficient equal to 1.7. The risk-free rate is 2 percent and the market risk premium is 5 percent. The project, which requires an Investment of $425,000, will generate $136,000 in after-tax operating cash flows for the next four years. Should LLL purchase the project? Do not round Intermediate calculations. Round your answer to the nearest cent. Use a minus sign to enter a negative value, if any. The project -Seed be purchased because the net present value, that is $ is
To determine whether LLL should purchase the project, we need to calculate the net present value (NPV) of the project. The NPV is the present value of the cash flows generated by the project, minus the initial investment.
First, we calculate the discount rate using the beta coefficient, risk-free rate, and market risk premium. The discount rate is equal to the risk-free rate plus the product of the beta coefficient and the market risk premium:
Discount rate = Risk-free rate + (Beta coefficient * Market risk premium)
= 2% + (1.7 * 5%)
= 2% + 8.5%
= 10.5%
Next, we calculate the present value of the after-tax operating cash flows for the next four years using the discount rate. Since the cash flows are given after taxes, we can use them directly without further adjustment:
PV of cash flows = CF1 / (1 + Discount rate)^1 + CF2 / (1 + Discount rate)^2 + CF3 / (1 + Discount rate)^3 + CF4 / (1 + Discount rate)^4
= $136,000 / (1 + 10.5%)^1 + $136,000 / (1 + 10.5%)^2 + $136,000 / (1 + 10.5%)^3 + $136,000 / (1 + 10.5%)^4
≈ $105,492.41
Finally, we calculate the NPV by subtracting the initial investment from the present value of cash flows:
NPV = PV of cash flows - Initial investment
= $105,492.41 - $425,000
≈ -$319,507.59
The negative NPV indicates that the project is expected to generate a loss, which suggests that LLL should not purchase the project. The NPV is approximately -$319,507.59.
Learn more about net present value (NPV) here:
https://brainly.com/question/31609122
#SPJ11
EPS and Debt-to-Equity Your corporation is currently all-equity financed with 400,000 shares of common stock selling for $31 a share. Currently your firm generates $5,000,000 in EBIT annually and has a 29% dividend payout ratio. Your firm's tax rate is 20%. a. What is your firm's current earnings per share and dividend per share? b. Your firm is considering financing an expansion with a bond issue of $7,500,000 that will pay 6.1% annually in interest. If the expansion increases your firm's EBIT to $7,500,000, what will be your firm's new debt-to-equity ratio, EPS, and dividend per share? c. If the expansion is instead financed with an issue of new stock, what will be your firm's new EPS and dividend per share?
a. Current EPS: $8.875; Current dividend per share: $2.5725. b. New debt-to-equity ratio: 2.654; New EPS: $13.3125; New dividend per share: $3.859125. c. New EPS: $10.65; New dividend per share: $3.0885.
a. To calculate the current earnings per share (EPS) and dividend per share, we need to consider the current earnings before interest and taxes (EBIT), the dividend payout ratio, and the number of shares.
1. Current EBIT: $5,000,000
2. Dividend payout ratio: 29% (0.29)
3. Number of shares: 400,000
a. Current EPS:
EPS = EBIT × (1 - Dividend payout ratio) / Number of shares
= $5,000,000 × (1 - 0.29) / 400,000
= $3,550,000 / 400,000
= $8.875
b. Current dividend per share:
Dividend per share = EPS × Dividend payout ratio
= $8.875 × 0.29
= $2.5725
Therefore, the current EPS is $8.875 per share, and the current dividend per share is $2.5725.
b. If the firm finances the expansion with a bond issue of $7,500,000 at a 6.1% interest rate, and the new EBIT becomes $7,500,000, we can calculate the new debt-to-equity ratio, EPS, and dividend per share.
1. New EBIT: $7,500,000
b. New debt-to-equity ratio:
Debt-to-equity ratio = Debt / Equity
= $7,500,000 / ($5,000,000 - Dividends)
= $7,500,000 / ($5,000,000 - ($7,500,000 × 0.29))
= $7,500,000 / ($5,000,000 - $2,175,000)
= $7,500,000 / $2,825,000
≈ 2.654
c. New EPS:
EPS = EBIT × (1 - Dividend payout ratio) / Number of shares
= $7,500,000 × (1 - 0.29) / 400,000
= $5,325,000 / 400,000
= $13.3125
d. New dividend per share:
Dividend per share = EPS × Dividend payout ratio
= $13.3125 × 0.29
= $3.859125
Therefore, the new debt-to-equity ratio is approximately 2.654, the new EPS is $13.3125 per share, and the new dividend per share is $3.859125.
c. If the expansion is financed with an issue of new stock, the number of shares will increase, and the debt-to-equity ratio will be zero. We can calculate the new EPS and dividend per share.
1. New number of shares: Let's assume the expansion issue adds 100,000 new shares.
c. New EPS:
EPS = EBIT × (1 - Dividend payout ratio) / Number of shares
= $7,500,000 × (1 - 0.29) / (400,000 + 100,000)
= $5,325,000 / 500,000
= $10.65
d. New dividend per share:
Dividend per share = EPS × Dividend payout ratio
= $10.65 × 0.29
≈ $3.0885
Therefore, if the expansion is financed with an issue of new stock, the new EPS is $10.65 per share.
Learn more about debt-to-equity ratio here :-
https://brainly.com/question/28391877
#SPJ11
