Answer:
Non-controlling interest in Bell's net income = $136,923
Explanation:
Given:
Prescott Corp. owned 90% of Bell Inc.
Bell Inc. owned 10% Prescott Corp
Computation:
Total income of Prescott Corp = $266,000 + 90% of Bell Inc income......Eq1
Total income of Bell Inc = $98,000 + 10% of Prescott Corp income...........Eq2
From Eq1 and Eq2
Total income of Prescott Corp = $266,000 + 90%($98,000 + 10% of Prescott Corp income)
Total income of Prescott Corp = $266,000 + $88,200 + 0.09 Prescott Corp income
Total income of Prescott Corp - 0.09 Prescott Corp income = $354,200
0.91 Prescott Corp income = $354,200
Prescott Corp income = $389,230.769
Prescott Corp income = $389,231
Non-controlling interest in Bell's net income = $98,000 + 10% of Prescott Corp income
Non-controlling interest in Bell's net income = $98,000 + 10%($389,231)
Non-controlling interest in Bell's net income = $98,000 + $38,923
Non-controlling interest in Bell's net income = $136,923
What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?
Answer:
The value of bond is $837.213, the bond is a discount bond
Explanation:
Solution
Given that
The Rate of return is 13% which is higher than the coupon rate.
What this suggest is that the investors anticipates a return that is higher when compared to return supplied by bonds. thus, the bond value we decrease and it becomes a discount bond.
Now,
The bond value is given below:
Bond value = [Coupon rate in year 1 / ( 1 + Investor return )1 + Coupon rate in year 2 / ( 1 + Investor return )2 + Coupon rate in year n / ( 1 + Investor return )n ] + Par value / ( 1 + investor return )n
Thus,
= [ $100 / (1 + 0.13)1 + $100 / ( 1 + 0.13)2... $100 / ( 1 + 0.13)10 ] + $1000 / ( 1 + 0.13 )10
= $542.62 + 294.58
= $837.21
Value of bond will be = $837.213
SI International had a FCFE of $122.1M last year and has 12.43M shares outstanding. SI's required return on equity is 11.3%, and WACC is 9.8%. If FCFE is expected to grow at 7.0% forever, the intrinsic value of SI's shares is Multiple Choice $14.76. $244.43. $108.00. $68.29.
Answer:
The value per share = $375.379
Explanation:
The intrinsic value of shares is the present value of the Free cash flow to equity (FFCE) discounted at cost of equity.
Total value of equity= FCFE× (1+g)/(r-g)
Total Value of equity= 122.1 × (1.07)/(0.113-0.07)= 3038.302326
The value per share = Total Value of company /Number of shares
= $3038.302326 / 12.43 units
= $244.43 per unit
As a student in the Principles of Management class of Ama Ghana University, you are expected to have experiential knowledge so that you can be able to solve real life business problems after graduation. To achieve this objective, the 2020 class has been divided into ten groups; and each team works in a management capacity with ten management consulting companies in the Greater Accra Region. San Consulting - the firm that your group works with is a project management company that is into Real Estate construction and management consulting. This firm which has twenty years’ experience in this business is the first choice for all individuals and companies that want quality service. You have on the contrary, observed that many of the management practices have not developed precipitously as situations in the business environment warrant. The accountant confirmed this by saying in the last general meeting that a certain percentage of San’s profit margin is being lost because of this situation. She gave the example that the surveying department spent eight labor hours generating data that had been generated two weeks ago by another unit. Due to the fact that the surveying department did not know that the data had already been created, a substantial effort was wasted and this has been a recurrent problem. In addition, the increase in demand of the services of San’s Consulting has placed significant pressures on the five managers whose duties are not clearly defined. For instance, you have observed that any of these managers perform duties in the operations department as well as any other unit within the firm. They are not able to perform all the functions required of them due to the ineffectiveness of the organizational structure. You and the members of your group are expected to write a report to the top-level management team regarding your analysis of the situation in the firm.
1. Explain which of the four main management functions is/are not operating as it/they should within the firm? 3 Marks
2. What recommendations will you make in your report that will help assure that this situation or similar one would not happen again? 4 Marks
3. Assume that the top-level management team has accepted your recommendations, how can their effectiveness be evaluated three months after implementation? 4 Marks
4. Discuss the organizational structure currently used by San’s Consulting and would you recommend the continuous use of this structure? If yes or no, present the factors (4) that influenced your decision regarding the right organizational structure for San’s Consulting. 5 Marks
5. Identify and discuss the main problems that the firm is likely to experience (i) if the current structure is continued or (ii) if a new structure is implemented. 5 Marks
Answer:
The organization structure is not clearly defined, Managers are performing duties in various departments at a time.
Explanation:
San Consulting is one of the finest consulting firm in the Greater Accra Region. The firm is always a first choice for individuals who want to pursue their career in business. The Organizational structure of San Consulting is not clearly defined. San's profits are falling because management practices are not according to the other competitive organizations. The managers working at San are facing excess workload and pressure for their work. Their job descriptions is not clearly defined and they are forced to work in multiple departments at the same time due to which they are losing focus on their own work.
Questions 1: Planning, organizing, leading and controlling
Question 2: The organizational structure needs to be set and every employee should have their defined job role so they are able to complete work with efficiency.
Question 3: The profits of San consulting will rise as there will be less duplication of work and every employee will be able to focus on their own task and will work with efficiency.
Question 4: Matrix. The matrix organizational structure is not suited in this organization. The right organizational structure for San consulting will be Functional Structure.
Question 5: (i) The profits for San Consulting will decline
(ii) The profit will rise because employee will focus more on their specific tasks.
1B. Yes agree. The managers need to focus on the external environment as well to identify the opportunities and threats present which can stimulate changes for the organization.
If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:
Answer:
Increase of $30,000
Explanation:
Increase in Company asset- Increase in liabilities
Increase in Company asset =$55,000
Increase in liabilities =$25,000
Hence:
$55,000 -$25,000
=$30,000
Therefore the change in equity of the company must have an increase of $30,000
Janice plans to save $80 a month, starting today, for 20 years. Kate plans to save $80 a month for 20 years, starting one month from today. Both Janice and Kate expect to earn an average return of 5.5 percent on their savings. At the end of the 20 years, Janice will have approximately ________ more than Janice.
a. $66.67
b. $159.73
c. $78.14
d. $0
e. $189.12
Answer: b. $159.73
Explanation: At the end of the twenty years, Janice would have approximately $159.73 more than Kate. To solve for this, we calculate the future value of the money saved over the time period for both Janice and Kate, and then take the difference to arrive at the correct answer.
Future Value for Janice = $80 ×{[1 + (.055 / 12)]^240 - 1} / (.055 / 12) × [1 + (.055 / 12)] = $35,009.92
Future Value for Kate = $80 ×{[1 + (.055 / 12)]^240 - 1} / (.055 / 12) = $34,850.19
Difference = $35,009.92 - $34,850.19 = $159.73
Operating data for Bramble Corp. are presented below.
2020 2019
Sales revenue $730,000 $650,000
Cost of goods sold 480,340 473,850
Selling expenses 105,850 84,500
Administrative expenses 50,370 52,000
Income tax expense 29,930 26,650
Net income 63,510 13,000
Prepare a schedule showing a vertical analysis for 2020 and 2019.
(Round percentages to 1 decimal place, e.g. 12.1%.)
BRAMBLE CORP. Condensed Income Statement For the Years Ended December 31 2020 2019 Amount Percent Amount Percent
Sales $730,000 % $650,000 %
Cost of goods sold 480,340 % 473,850 %
Gross profit 249,660 % 176,150 %
Selling expenses 105,850 % 84,500 %
Administrative expenses 50,370 % 52,000 %
Total operating expenses 156,220 % 136,500 %
Income before income taxes 93,440 % 39,650 %
Income tax expense 29,930 % 26,650 %
Net income $ 63,510 % $ 13,000 %
Answer:
Explanation:
Vertical analysis of financial statement entails the expression of each line of the financial statement as a percentage of a base figure for analysis and evaluation purpose.
In this case , the sales revenue is used as the base figure
Vertical analysis of Bramble corp . Income statement for 2020 / 2019
Item 2020 % 2019 %
Sales revenue 730,000 100 650,000 100
Cost of goods 480,340 65.8 473,850 72.9
Gross profit 249,660 34.2 176,150 27.1
Selling expenses 105,850 14.5 84,500 13.0
Admin Expenses 50,370 6.9 52,000 8
Operating Expenses 156,220 21.4 136,500 21
Income before tax 93,440 12.8 39,650 6.1
Income tax Expenses 29,930 4.1 26,650 4.1
Net Income 63,510 8.7 13,000 2
Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely be greater in the:a) first year after it is imposed than in the eighth year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year. b) first year after it is imposed than in the eighth year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. c) eighth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year. d) eighth year after it is imposed than in the first year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year.
Answer:
c) eighth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year.
Explanation:
Tax increases the price of a good.
Dead weight loss is reduction in efficiency as a result of taxation.
Demand and supply is usually less elastic in the short run when compared to the long run. I the short run, consumers and producers don't have enough time to search for suitable substitutes.
So in the short run, there would be little or no change in demand or supply but in the long run, consumers would be able to search for more subsituites so the deadweight loss would be greater.
I hope my answer helps you
Patterson Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $545,000, a 7-year life, and $150,000 salvage value. The increase in cash flow each year of the equipment's life would be as follows:
Year 1 $ 99,000
Year 2 $ 91,000
Year 3 $ 89,000
Year 4 $ 78,000
Year 5 $ 75,000
Year 6 $ 70,000
Year 7 $ 64,000What is the payback period?
Answer:
6.67 years
Explanation:
Payback period calculates the amount of the time it takes to recover the amount invested in a project from its cumulative cash flows
Amount invested = $-545,000
Total cash flows = $502,000
In the first year, $-545,000 + $99,000 = $-446,000 is recovered.
In the second year, $-446,000 + 91,000 = $-355,000 is recovered
In the third year , $-355,000 + $89,000 = $-266,000 is recovered
In the fourth year, $-266,000 + $78,000 = $-188,000 is recovered
In the fifth year, $-188,000 + $75,000 = $-113,000 is recovered
In the sixth year, $-113,000 + $70,000 = -43,000 is recovered
I'm the 7th year, -43,000 + 64,000 = $21,000 is recovered
The total amount in recovered between the 6th and 7th year.
Pay back period = 6 years + 43,000 / 64,000 = 6.67 years
I hope my answer helps you
Fashion Jewelers uses the perpetual inventory system. On April 2, Fashion sold goods with a cost of $5,500 for $14,000 with terms of 4/15, n/30. On April 4, the customer reported damaged goods and Fashion granted a $2,000 sales allowance. On April 10, Fashion received the payment for the sale. Give the journal entry that will be recorded on April 10 by Fashion.
A. Cash 11,520 Accounts Receivable 11,520
B. Cash 12,000 Accounts Receivable 12,000
C. Accounts Receivable 12,000 Sales 12,000
D. Cash 12,000 Sales Discount 480 Accounts Receivable 11,520
Answer: Cash 11,520 Sales Discount 480 Accounts Receivable 12,000
Explanation:
Fashion Jewellers sold goods for $14,000.
Out of this $14,000, damaged goods were returned which caused Fashion Jewellers to reduce the figure by $2,000 by way of a sales allowance.
The figure is now,
= 14,000 - 2,000
= $12,000
This $12,000 is subject to a trade term of 4/15, n30 which means that as long as the amount is paid in 15 days, a 4% discount is applicable. If the balance is not paid in 15 days however, it should be paid in 30 days.
Fashion house received the payment within the discount period so the good is liable to a 4% reduction.
= 12,000 * 4%
= $480
That means that only,
= 12,000 - 480
= $11,520 was paid as balance in cash
The proper entry on April 10 is therefore,
DR Cash $11,520
DR Sales Discount $480
CR Accounts Receivable $12,000
Sales discount is an expense and Expenses are debited when they increase.
The options do not have this answer but it is correct.
Answer:
Cash 11,520 Dr. Sales Discount 480 Dr Accounts Receivable 12,000 Cr
Explanation:
Fashion Jewelers
Perpetual inventory system
Sales $ 14000
Sales Allowance $ 2000
Sales Discounts 4% of $12000 ( 14000- 2000) = $ 480
Net Sales = $ 12000- $ 480= $ 11520
The journal entry that will be recorded on April 10 by Fashion.
Cash $11520 Dr
Sales Discount $ 480 Dr
Accounts Receivable $12000 Cr
Sales discount is an expense account and is debited. Accounts Receivable will be credited with the full amount.
For Swifty Corporation, the predetermined overhead rate is 70% of direct labor cost. During the month, $600000 of factory labor costs are incurred of which $210000 is indirect labor. Actual overhead incurred was $370000. The amount of overhead debited to Work in Process Inventory should be:
Answer:
The amount of overhead debited to Work in Process Inventory is $273,000
Explanation:
Solution
Given that:
The predetermined overhead rate for Swiftly Corporation is = 70%
Factory labor cost incurred is =$600000
Indirect labor = $210000
The actual overhead incurred = $370000
Now
We solve for the amount of overhead debited to Work in Process Inventory which is calculated as follows:
The amount of overhead debited to Work in Process Inventory = (Factory labor cost - Indirect labor cost) * the overhead rate
= ($600000 -$ 210000) * 70%
= $390,000 * 70%
= $273,000
Gundy Corporation produces area rugs. The following per unit cost information is available: direct materials $19, direct labor $6, variable manufacturing overhead $3, fixed manufacturing overhead $6, variable selling and administrative expenses $3, and fixed selling and administrative expenses $7. Using a 35% markup on total per unit cost, compute the target selling price.
Answer:
59.4
Explanation:
Gundy Corporation target selling price
Particular Amount($)
Direct material 19
Direct labor 6
Variable manufacturing overhead 3
Fixed manufacturing overhead 6
Variable selling and administrative expenses 3
Fixed selling and administrative expenses 7
Total cost 44
Add : Profit(35% ×44) 15.4
Target selling price per unit 59.4
(44+15.4)
Answer:
Selling price= $59.4
Explanation:
Giving the following information:
direct materials $19
direct labor $6
variable manufacturing overhead $3
fixed manufacturing overhead $6
variable selling and administrative expenses $3
fixed selling and administrative expenses $7
Mark-up= 35% on total per-unit cost
First, we need to calculate the total unitary cost:
Total unitary cost= 19 + 6 + 3 + 6 + 3 + 7= $44
Now, the selling price:
Selling price= 44*1.35= $59.4
"An individual owns a bicycle repair business as a sole proprietorship. He does not make a lot of money, but he does have $5,000 available for investment this year. The BEST recommendation for this individual is to make a $5,000 contribution to a(n):"
Answer:
Roth IRA
Explanation:
Based on the information provided in this scenario it can be said that the individual's best option would be to make a $5,000 contribution to a Roth IRA fund. This is a retirement fund that can be will provide will continue to grow exponentially throughout the years and the individual can withdraw that money when they turn 60 years old. At this point the money is completely tax free.
Retail companies try to find a. the least profitable method of transferring goods from warehouses to stores. b. the least costly method of transferring goods from warehouses to stores. c. the most costly method of transferring goods from warehouses to stores. d. the largest number of goods to transfer from warehouses to stores.
Answer:
b. the least costly method of transferring goods from warehouses to stores.
Explanation:
The retail company should find the most efficient and cost effective means of transportation.
The the least profitable and most costly method of transferring goods from warehouses to stores would reduce the profit margins of retail stores and the stores would want to maximise profit.
Automobiles are often leased, and there are several terms unique to auto leases. Suppose you are considering leasing a car. The price you and the dealer agree on for the car is $27,600. This is the base capitalized cost. Other costs that may be added to the capitalized cost price include the acquisition (bank) fee, insurance, or extended warranty. Assume these costs are $1,050. Capitalized cost reductions include any down payment, credit for a trade-in, or dealer rebate. Assume you make a down payment of $3,000 and there is no trade-in or rebate. If you drive 12,000 miles per year, the lease-end residual value for this car will be $17,000 after three years.The lease or "money" factor, which is the interest rate on the loan, is the APR of the loan divided by 2,400. The lease factor the dealer quotes you is .00265. The monthly lease payment consists of three parts: A depreciation fee, a finance fee, and sales tax. The depreciation fee is the net capitalization cost minus the residual value, divided by the term of the lease. The net capitalization cost is the cost of the car minus any cost reductions plus any additional costs. The finance fee is the net capitalization cost plus the residual, times the money factor, and the monthly sales tax is the depreciation payment plus the finance fee, times the tax rate.
a. What APR is the dealer quoting you? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. What is your monthly lease payment for a 36-month lease if the sales tax is 7 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
a. 6.36%
b. $378.02
Explanation:
a. The computation of Annual percentage rate is shown below:-
Annual percentage rate = Lease factor × 2,400
= 0.00265 × 2,400
= 6.36%
b. For computation of monthly lease payment first we need to find out the depreciation charge, finance charge and tax which is shown below:-
Depreciation charge = (Base cost + Other cost - Down payment - Residual value) ÷ Number of lease payment
= ($27,600 + $1,050 - $3,000 - $17,000) ÷ 36
= $8,650 ÷ 36
= $240.27
Finance charge = (Base cost + Other cost - Down payment - Residual value) × Lease factor
= ($27,600 + $1,050 - $3,000 - $17,000) × 0.00265
= $42,650 × 0.00265
= $113.0225
now,
Tax = (Depreciation charge + Finance charge) × Tax rate
= ($240.27 + $113.0225) × 7%
= $353.2925 × 7%
= $24.73
Monthly Lease payment = Depreciation charge + Finance charge + Tax
= $240.27 + $113.0225 + $24.73
= $378.02
Suppose an economy is initially operating at long-run equilibrium when there is an increase in consumer optimism about the economy. Everything else held constant, the immediate impact of this shock will be a(n) ______ in the aggregate price level, a(n) ______ in real GDP.
Answer:
The correct option is Increase and Decrease respectively
Explanation:
You just inherited some money, and a broker offers to sell you an annuity that pays $4,300 at the end of each year for 20 years. You could earn 5% on your money in other investments with equal risk. What is the most you should pay for the annuity
Answer:
hhhhhhhhhhhhhhmmmmmmmmmmmmm
Explanation:
How individuals interview start conversations ?
Answer:
How I start it
Explanation:
I normally start by thanking them and I always have questions prepared before the interview. I then go down the list of questions and if they answer something that makes me think of the question I will ask it really quick.
A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 5 workers, who together produced an average of 100 carts per hour. Workers receive $16 per hour, and machine cost was $30 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by $10 per hour while output increased by 5 carts per hour.
a. Compute the multifactor productivity(MFP) (labor plus equipment) under the Prior to buying the new equipment. (Round to 4 decimal places)b. Compute the % growth in productivity between the Prior and after buying the new equipment. (Round to 2 decimal places)
Answer:
multifactor productivity before new equipment = 0.91 units per dollar
multifactor productivity after new equipment = 1.01 units per dollar
% change in productivity = 10.99% increase
Explanation:
before:
5 workers x $16 per hour = $80 per hour
machine cost $30 per hour
100 carts per hour
multifactor productivity = units of output / (units of labor + units of capital) = 100 / ($80 + $30) = 100 / $110 = 0.91 units per dollar
after:
4 workers x $16 per hour = $64 per hour
machine cost $40 per hour
105 carts per hour
multifactor productivity = units of output / (units of labor + units of capital) = 105 / ($64 + $40) = 105 / $104 = 1.01 units per dollar
% change in productivity = (1.01 - 0.91) / 0.91 = 10.99% increase
Multifactor productivity measures how many units can be produced with $1 of inputs from two or more factors of production.
1. Cash balance per bank, July 31, $7,428.
2. July bank service charge not recorded by the depositor $58.
3. Cash balance per books, July 31, $7,364.
4. Deposits in transit, July 31, $2,600.
5. Note for $2,000 collected for Lohse in July by the bank, plus interest $36. The collection has not been recorded by the company, and no interest has been accrued.
6. Outstanding checks, July 31, $686.
Prepare a bank reconciliation at July 31, 2010
Answer:
8a
3
+27b
3
+64c
3
−72abc
Joy Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 25 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 30 percent in the month after the sale, and the remaining 20 percent two months after the sale. Gross sales for the quarter are projected as follows: January $20,000 February $10,000 March $40,000 Joy's expected cash collections for March would be:
Answer:
$30,250
Explanation:
The computation of expected cash collections for March is shown below:-
Particulars January February March
Gross sales $20,000 $10,000 $40,000
Cash sales (25%) $5,000 $2,500 $10,000
Credit sales $15,000 $7,500 $30,000
To reach credit sales we simply deduct the cash sales from gross sales.
Particulars March
Collections from:
March cash sales $10,000
Credit sales for:
January $3,000 ($15,000 × 20%)
February $2,250 ($7,500 × 30%)
March $15,000 ($30,000 x 50%)
Total collections $30,250
To reach total collection we simply added the march cash sales and Credit sales of Jan, Feb and March.
“For those brave enough to act effectively now to stabilise and protect your business and maintain liquidity, opportunity will come.” Explain whether the Statement of Cash Flows is able to illustrate the ‘liquidity’ of an entity to its users and provide ONE recommendation how companies can maintain liquidity during this pandemic.
Answer: The answer is given below
Explanation:
The cash flow statement is a vital aspect of the financial statement that is provided by every organization as it is useful in knowing helps the cash flows from investing, operating, and the financing activities. The cash flow statement is useful in understanding the movement of cash for the year, vital when making business decisions and also helps to measure liquidity of a company.
During the current pandemic that has stalled productive activities at most organizations, maintaining liquidity is very vital. One way of maintaining liquidity during this period is for a firm to have enough cash that will be necessary to maintain and keep the business running. Thia can be done by reviewing the current assets of the firm and looking at those that can be converted to cash and used on immediate basis. Also, in case the firm has marketable securities, such firm can sell the securities on order to maintain liquidity.
Haffner Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Units in beginning work in process inventory 500 Materials costs $ 7,800 Conversion costs $ 9,100 Percent complete with respect to materials 85 % Percent complete with respect to conversion 55 % Units started into production during the month 7,000 Units transferred to the next department during the month 6,100 Materials costs added during the month $ 102,700 Conversion costs added during the month $ 184,400 Ending work in process inventory: Units in ending work in process inventory 1,400 Percent complete with respect to materials 60 % Percent complete with respect to conversion 50 % What are the equivalent units for materials for the month in the first processing department
Answer:
Equivalent units for materials in beginning work process is 6,940 units Equivalent units for conversion in ending work process is 6,800 units
Explanation:
Beginning work process:
Equivalent units for materials = 6,100 + (1,400 × 60%) = 6,940 units Cost per equivalent unit for materials = ($7,800 + $102,700) ÷ 6,940 = 15.92
Ending work process:
Equivalent units for conversion = 6,100 + (1400 × 50%) = 6,800 units
Cost per equivalent unit for materials = ($9,100 + $184,000) ÷ 6800 = 28.40
Cost of ending work in process = (1,400 × 60%) × 15.92219 +(1400 × 50%) × 28.39706
= 33,253 (Rounded off)
John has a portfolio consisting of equal proportions of 5 securities. Susan also has a portfolio of the same five securities but the weights of each security are not equal. Which of the statements below MUST be TRUE?
a) Because Susan has an unequal distribution of securities, her portfolio beta must be greater than John's.
b) Because Susan has an unequal distribution of securities, her portfolio beta must be less than John's.
c) Without additional information, we cannot be certain whose portfolio beta is greater.
d) Because the portfolios contain the same securities, the beta of each portfolio must be the same.
Answer:
c) Without additional information, we cannot be certain whose portfolio beta is greater.
Explanation:
When comparing portfolios of the same security composition but different weights we need to know the beta of each security in order to make a valid comparism between the two securities.
Beta is defined as a measure of the volatility of a security compared to the whole market. It considers the systemic risk and the expected returns from a security or portfolio.
In determining beta we compare against a particular benchmark.
Since more information is not given on the securities and their weights in the two portfolios we cannot determine which one has a higher beta.
For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:
Question not attempted.
McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
1 20Y2 20Y1
2 Sales $16,800,000.00 $15,000,000.00
3 Cost of goods sold 11,500,000.00 10,000,000.00
4 Gross profit $5,300,000.00 $5,000,000.00
5 Selling expenses $1,770,000.00 $1,500,000.00
6 Administrative
expenses 1,220,000.00 1,000,000.00
7 Total operating
expenses $2,990,000.00 $2,500,000.00
8 Income from
operations $2,310,000.00 $2,500,000.00
9 Other income 256,950.00 225,000.00
10 Income before
income tax $2,566,950.00 $2,725,000.00
11 Income tax expense 1,413,000.00 1,500,000.00
12 Net income $1,153,950.00 $1,225,000.00
1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Use the minus sign to indicate an amount or percent decrease. If required, round percentages to one decimal place.
2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in (1).
Answer: The answers have been provided below
Explanation:
a. A comparative income statement with horizontal analysis for the two-year period, while using 20Y1 as the base year have been analysed and attached. In the picture attached, the increase or decrease in the amount was gotten from the year 20Y2 and 20Y1.
For example for sales,
Sales 20Y2 = $16,800,000.00
Sales 20Y1 = $15,000,000.00
Amount = $16,800,000.00 - $15,000,000.00 = $1,800,000
Percentage increase = ($1,800,000 ÷ $15,000,000)× 100 = 12%
The same method was applicable to every other figures.
b. We can see that the sales for year 20y2 rose by 12% even though the net income has a negative value of -5.8%.
We can see that there is also a rise in operating expenses of the firm at a higher rate than the increase in the sales rate of the company. The income from operation also reduced by 7.6%. These are some of the reasons which led to the negative net income.
Marcy and Liz developed a new jewelry design. They were fortunate to get the attention of a large online retailer who was willing to fund the production of the jewelry abroad, as long as the designers agreed to sell their design through its outlets for the first two years. The retailer was asking the designers to agree to __________________. exclusive distribution intensive distribution multi-level distribution selective distribu
Answer:
exclusive distribution
Explanation:
The exclusive distribution refers to the agreement between the distributor and the manufactured stated that the manufactured will only sell the products and services to the distributor only no other person is involved in this agreement. There is a binding agreement between the manufactured and distributor
So according to the given situation, it is mentioned that the designers ready to sell their designs for the first two years to the retailers which shown that there is an exclusive distribution
In order to have money for their son's college education, a young couple started a savings plan into which they made intermittent deposits. They started the account with a deposit of $3,000 (in year zero) and then added $5,000 in years two, five, six, and added $6,000 in year nine and ten. What is the amount they had in the account in year ten if they earned interest at 15% per year
Answer:
$59,129.00
Explanation:
The formula for the future value is P(1+i)^n
P= 3000, 5000, 6000
i= 15%
n= 2,3,6,9,10
FV= 3000 x 1.15^10 + 5000 x 1.15^8 + 5000 x 1.15^5 + 5000 x 1.15^4 + 6000 x 1.15^ 1 + 6000 x 1.15^0
FV= 3000 X 4.045 + 5000 X 3.059 + 5000 X 2.011 + 5000 x 1.749 + 6000 x 1.15 + 6000 X 0
Fv= 12135 + 15294 + 10055 + 8745 + 6900 + 6000
FV = $59,129.00
Pharoah Company had checks outstanding totaling $42200 on its May bank reconciliation. In June, Pharoah Company issued checks totaling $263900. The June bank statement shows that $196400 in checks cleared the bank in June. A check from one of Pharoah Company's customers in the amount of $2000 was also returned marked "NSF." The amount of outstanding checks on Pharoah Company's June bank reconciliation should be
Answer:
$109,700
Explanation:
Pharoah Company Outstanding checks on bank reconciliation:
Formula for Outstanding checks on bank reconciliation will be:
Outstanding checks on bank reconciliation = Total checks outstanding+Checks issued during month -checks cleared during the month
Hence,
= $42,200+$263,900-$196,400
= $109,700
Therefore the amount of outstanding checks on Pharoah Company's bank reconciliation should be $109,700
HomeGrown Company is a chain of grocery stores that are similar to indoor farmer's markets, providing fresh, local produce, meats, and dairy products to consumers in urban areas. HomeGrown is considering opening several stores in a new city, and has proposals from three contractors (Alpha, Beta, and Gamma companies) who would like to provide buildings for the new stores.The amount of expected revenue from the stores will depend on the design of the contractor. For example, if HomeGrown decides on a more open floor plan, with less shelf space for products, revenue would be lower overall. However, if HomeGrown decides on a very crowded floor plan, it may lose customers who appreciate a more open feel.As the project manager for HomeGrown, you are responsible for deciding which if any of the proposals to accept. HomeGrown's minimum acceptable rate of return is 20%. You receive the following data from the three contractors:Proposal Type of Floor Plan Investment if Selected Residual ValueAlpha Very open, like an indoor farmer’s market $1,472,000 $0.00Beta Standard grocery shelving and layout, minimal aisle space $5,678,900 $0.00Gamma Mix of open areas and shelving areas $2,525,960 $0.00You have calculated estimates of annual cash flows and average annual income from customers for each of the three contractors' plans. You believe that the annual cash flows will be equal for each of the 10 years for which you are preparing your capital investment analysis. Your conclusions are presented below.Proposal Estimated Average Annual Income Estimated Average (after depreciation) Annual Cash FlowAlpha $302,054 $351,145Beta $272,019 $475,608Gamma $626,564 $704,490You begin by trying to eliminate any proposals that are not yielding the company’s minimum required rate of return of 20%. Complete the table below, and decide whether Alpha, Beta, and/or Gamma should be eliminated because the average rate of return of their project is less than the company's minimum required rate of return.Complete the table below. Enter the average rates of return as percentages rounded to two decimal places.Proposal Annual Income Average InvestmentAverage Rate of ReturnAccept or Reject? Estimated AverageAlpha Accept Beta Reject Gamma Accept
Answer:
HomeGrown Company
Return on Investment Analysis:
Proposal Alpha Beta Gamma
Annual Income Average $351,145 $475,608 $704,490
Investment Average $302,054 $272,019 $626,564
Return on Investment $49,091 $203,589 $77,926
Average Rate of Return 0.16 0.75 0.12
Expected Rate of Return 20% 20% 20%
Accept/Reject Reject Accept Reject
Decision: Eliminate Alpha and Gamma, accept Beta based
Explanation:
a) The Required Rate of Return (RRR) of an investment is the minimum return an investor will accept for making an investment. It is the compensation expressed in percentage for a given level of risk associated with the investment. The RRR is used to analyze the profitability of potential investment projects. Once, this rate is determined, it will be compared with the Return on Investment to decide if the investment can be made or eliminated.
b) The Return on Investment (ROI) is a financial performance measure which evaluates the efficiency of an investment or compares the efficiency of a number of different investments. The ROI calculation is obtained dividing the benefit (or return) of an investment by the cost of the investment. The result is expressed as a percentage or a ratio.
Consider a no-load mutual fund with $528 million in assets and 16 million shares at the start of the year and with $578 million in assets and 17 million shares at the end of the year. During the year investors have received income distributions of $3 per share and capital gain distributions of $0.45 per share. Assuming that the fund carries no debt, and that the total expense ratio is 2%, what is the rate of return on the fund
Answer:
11.42%
Explanation:
NAV0= Mutual fund in asset/ Share
$528 million/ 16 million shares
=33
NAV1=578-578(0.02)/17
=578-11.56/17
=566.44/17
=33.32
Hence:
Return NAV1-NAV0+Received Income distribution +Capital gain distribution /NAVO
NAV0=33
NAV1=33.32
Received Income distribution = 3
Capital gain distribution= 0.45
33.32-33+3+0.45/33
=3.77/33
=0.1143×100
=11.42%
What is one of the negative effects of globalization?
