Answer:
The money side aside in order to meet this future increase in the cost of living for 25 years is $429,060
Explanation:
Solution
Given that:
The first year retirement benefit is = $60,000
Expected increase of cost of living at an annual rate = 5%
Savings earn account = 7%
Now,
We find the the pension current worth
P₁ = $60,000 (P/A, i, n)
= $60,000 (P/A 7%, 25)
$60,000 (11.654)
= 699, 254
Thus,
we compute the current worth of cost of living by applying the factor of geometric series.
P₂ = $60,000 (P/A, g,i, n)
= $60,000 (P/A, 5% 7%, 25)
= $60,000 [ 1-(1+0.05)^25 + (1+0.07)^-25/0.07 -0.05]
= $60,000 (1 - 0.6239/0.02)
=$60,000 (0.3761/0.02)
= $22,566/0.02 =$1,128,300
Now, we calculate the money that will be saved
Which is $1,128,300 - $699,254
= $429,060
Suppose we changed the units of the tuition variable, so that the new tuition variable is now simply measured in dollars rather than in thousands of dollars. What would happen to the correlation between tuition (in dollars) and number of applicants?
Answer:
The correlation would stay the same, because chainging the measure from thousands of dollars to simply dollars only modifies the nominal values of tuition.
For example, instead of having tuition cost 300 thousand dollars, now it costs 300,000 dollars. The real value, that is to say, the real cost, is the same, and the correlation between applicants and the cost of tuition depends on the real value, not on the nominal value.
Dextra Computing sells merchandise for $6,000 cash on September 30 (cost of merchandise is $3,900). Dextra collects 5% sales tax.
1. Record the entry for the $6,000 sale and its sales tax.
2. Record the entry that shows Dextra sending the sales tax on this sale to the government on October 15.
3. Record the cost of Sept. 30th sales.
4. Record the entry that shows the remittance of the 5% tax on this sale to the state government on October 15.
5. Record the cash sales and 3% sales tax.
Answer:
1.
Sept - 30
DR Cash $6,300
CR Sales $6,000
CR Sales Tax $300
(To record Cash sales and Tax Payable)
Working
Sales Tax = 6,000 * 5%
= $300
2.
Oct - 15
DR Sales Tax Payable $300
CR Cash $300
(To record remittance of Sales Tax to the State Government)
3.
Sept - 30
DR Cost of Goods Sold $3,900
CR Merchandise Inventory $3,900
(To transfer inventory to Cost of Goods sold)
4. Repeat question for question 2.
5. Repeat question for question 1.
1. Dr. Cash $6300
Cr. Sales $6000
Cr. Sales tax $300
(Being the cash sales and tax payable recorded.)
2. Oct 15
Dr. Sales Tax Payable $300
Cr. Cash $300
(Being remittance of Sales Tax to the State Government is recorded)
Sept. 30
Dr. Cost of Goods Sold $3,900
Cr. Merchandise Inventory $3,900
(Being transfer of inventory to Cost of Goods sold is recorded)
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Dawn Manufacturing’s records show a journal entry was made debiting Work in Process Inventory and crediting Raw Materials Inventory for $100. The journal entry was made to record which of the following events? 1. Direct materials were placed into production 2. A materials requisition slip was prepared and approved A : 1 only B : 1 and 2 C : 2 only D : Neither 1 nor 2
Answer:
The correct answer is option (B) 1 and 2
Explanation:
Solution
The journal entry for Direct materials were set into production or materials requisition slip was approved or prepared.
JOURNAL ENTRY FOR DAWN MANUFACTURING RECORDS
Debit ($) Credit ($)
Work in Process Inventory 100
The raw Material Inventory 100
Therefore from the journal stated above the entry was made to record direct materials and materials requisition slip prepared
The option B is the right choice.
Just as depository institutions differ from non-depository Institutions, there are also differences between the structure and activities of, and the financial products and services provided by, various depository institutions. Read the following statements and indicate which, if any, are true.
A) Mutual savings Banks and credit unions are similar in that both are owned by their depositors, who share in their profits.
B) Demand deposit accounts created by commercial banks are usually called checking accounts or negotiable order of withdrawal (NOW) accounts, while those created by Credit unions are called share draft accounts
C) Members of both credit unions and mutual savings banks share a common bond or affiliation
Answer: A. True
B. True
C. False
Explanation:
A. Both Mutual Savings Banks and Credit Unions are owned by the their depositors. Credit Unions are owned and operated by members for the purpose of creating banking services for themselves at a cheaper cost.
Mutual Savings Banks are also owned by members who felt that traditional banks did not favour them.
B. Demand Deposit accounts exist in both commercial banks and Credit Unions but with different names. In Commercial banks they are known as Checking accounts for the most part but Credit Unions call them Share Draft Accounts and members of the Union can use these accounts by writing drafts like Commercial banks allow cheques.
C. While Credit Unions were formed usually for people in the same organisations or people with a common bond, Mutual Savings Banks were generally meant to uplift the lower economic classes so they did not share a common bond as Credit Union members do.
Titan Mining Corporation has 8.5 million shares of common stock outstanding, 250,000 shares of 5% preferred stock outstanding, and 135,000 7.5% semi-annual bonds outstanding, with a par value of $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.25, the preferred stock currently sells for $91 per share, and the bonds have 15 years to maturity and sell for 114% of par. The market return is 11.5%, and T bills are yielding 4%. Titan Mining’s tax rate is 35%. a. What is the firm’s market value capital structure? b. If the company is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows?
Answer and Explanation:
The computation of firm’s market value capital structure and the Weighted average cost of capital is shown with the help of spreadsheet. Kindly find it below
The formulas that we use in spreadsheet is shown below:-
WACC = Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of common stock)
As per question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
The market rate of return - risk free rate of return = market risk premium
The formulas that we use in spreadsheet is shown below:-
WACC = Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of common stock)
According to the question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
Here,
The market rate of return - risk free rate of return = market risk premium
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A company produces a single product. Variable production costs are $12.30 per unit and variable selling and administrative expenses are $3.30 per unit. Fixed manufacturing overhead totals $39,000 and fixed selling and administration expenses total $43,000. Assuming a beginning inventory of zero, production of 4,300 units and sales of 3,750 units, the dollar value of the ending inventory under variable costing would be:
Answer:
Ending inventory= $6,765
Explanation:
Giving the following information:
Variable production costs are $12.30 per unit
Assuming a beginning inventory of zero, production of 4,300 units, and sales of 3,750 units.
The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead) to calculate production costs.
Units in ending inventory= 550
Ending inventory= 12.3*550= $6,765
Assume Time Warner shares have a market capitalization of $40 billion. The company is expected to pay a dividend of $0.25 per share and each share trades for $40. The growth rate in dividends is expected to be 7% per year. Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 9%. If the firmʹs tax rate is 40%, what is the WACC?
Answer:
6.83%
Explanation:
For the computation of WACC first we need to follow some steps which is shown below:-
Step 1
Price = Dividend ÷ Cost of equity - Growth rate
= $40 = $0.25 ÷ (Cost of equity - 0.07)
Cost of equity = 7.625 %
Step 2
Cost of Debt
After cost of debt = Yield × (1 - Tax)
= 0.09 × ( 1 - 0.40)
= 5.40%
and finally,
WACC = (Cost of debt × Weight of debt) + (Cost of equity × Weight of equity)
= (5.40% × $20 ÷ $60) + (7.625% × $40 ÷ $60)
= 0.018 + 0.050833333
= 6.883333333
or
= 6.83%
Activists believe that ________. it takes a very long time to reach the long run frictions to the self-correcting mechanism of markets prevent prices and wages from being very flexible Keynes was right with his statement "in the long-run, we are all dead" all of the above none of the above
Answer: All of the above
Explanation:
The Long run is a period of time where all the factors of production of a firm are variable. For example, a firm can establish a bigger factory. It takes a longer period of time than the short run.
John Maynard Keynes also believed that in the long run, we are all dead. Also, an economy will self-correct because shocks matter in the short run and not the long run. The self-correction mechanism talks about price adjustment. When there is a shock, prices will adjust and the economy will be brought back to the long-run equilibrium.
Answer:
All of the above.
Explanation:
Activism is used in both politically and also in academic research. Its usage academically means only the willingness of a judge to strike down the action of a certain branch of government or to overturn a judicial precedent, with no implied judgment as to whether the activist decision is correct or not.
Therefore in the scenario above, activism totally believes that it takes a very long time to reach the long run. Their research also welcomes that frictions to the self-correcting mechanism of markets prevent prices and wages from being very flexible. And aslo that Keynes was right with his statement "in the long-run, we are all dead".
Kirby just inherited $250,000. He would like to hire a financial advisor to provide financial advice and to manage the inheritance. Kirby has interviewed two potential advisors. The first person indicated that he would not charge for his advice but would charge a 4.50% commission on any mutual funds purchased when managing the $250,000. The second person indicated that she would charge $2,500 to write a financial plan and 1% of any asset she manages. Which advisor should Kirby choose if he wants the $250,000 managed and is interested in minimizing his upfront expenses?
Answer:
First person
Explanation:
A city assesses property owners $50 million to extend sewer lines to their neighborhood. By year-end, however, it has not begun construction of the new lines and has not collected any of the assessments. It accounts for its wastewater services in an enterprise fund. What should the government do in its year-end enterprise fund financial statements:
Answer:
Recognize the assessments as assessments receivable and revenue.
Explanation:
Practically, this will result in a receivable in the reserve fund, if the amounts are not received when due.
This could be seen when an/a corporation may decide on the amount of an assessment years before the cash is been used.
But cannot really obtain the revenue at the time of the decision, since the corporation can change its decision up until the day the amount is due. Also there are no specific parties being assessed, until the owner on record is known on the day the assessment is due, also the assessment should be recognized as revenue of the reserve fund when due.
LCH is a leading electronics company that produces and markets its own brand of desktop and laptop computers, for both individual consumers and businesses. During the planning process, LCH conducts a ________, which profiles all interactions customers in the target market may have with LCH, its computers, and its services.
Answer:
Communication audit
Explanation:
Communication audit is done to determine how effective communication tools are. It also profers solutions on how to improve on an organisation's communication infrastructure.
Apart from improving internal processes it is used to determine the best way to communicate to the external world.
In this scenario a communication audit is done to measure an external party (the customer) and their interaction with LCH, it's computers, and services.
Knowledge gained can better imporve products and services provided to the customer by LCH
Answer:
Communication audit
Explanation:
A communications audit can be described as a process that is employed to identify the the strength and weakness of the internal and external communication of an organization.
The aims of communication of audit are to obtain level of information the target market has about the company, have the knowledge of past communication practices, the extent of efficiency and effectiveness of the current communication, and the determination of the best communication technique to employ in the future.
Therefore, a communication audit is conducted to profiles all interactions customers in the target market may have with LCH, its computers, and its services.
Most companies are unlikely to intentionally provide shoddy, harmful, or unsafe products because _______. A. they want to develop long-term relationships with customers B. it costs more to provide quality products C. they know that customers will shrug off errors for a while D. they won't face liability lawsuits and expensive awards for damages E. they are confident they can appease consumer groups and regulators
Answer:
Most companies are unlikely to intentionally provide shoddy, harmful, or unsafe products because they want to develop long-term relationships with customers.
Option: (A)
Explanation:
The merit of a company is determined by the end consumers based on the quality of the products that the company manufactures.Though other factors like timely delivery of the product, the soundness of the distribution channel put to work by the company, a prompt feedback system, etc., are also important for developing long-term relationships with customers, they do not play a role as significant as the 'quality' of the product. Only if the quality of the product delivered by the company is unparalleled, it is subject to gain the trust of its customers and build better relationships with them.The majority of companies deliberately provide damaging or inferior products because:
A). They want to develop long-term relationships with customers.
Several companies intentionally deliver poor-quality products to the customers and the key reason behind this is that they aim to develop long-term associations with the customers. They do it by providing effective customer support to the customers and opportunities for home pick-up exchange or return of the product without any additional charges. This helps them develop customers' trust in their company which will help open the gateway for more future orders from them.Thus, option A is the correct answer.
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The City of South Dundee budget for the fiscal year ended June 30, 2017, included an appropriation for the police department in the amount of $8,700,000. During the month of July 2017, the following transactions occurred (in summary):
Purchase orders were issued in the amount of $520,000.
Of the $520,000 in purchase orders, $480,000 were filled, with invoices amounting to $478,000.
Salaries, not encumbered, amounted to $287,000.
A budget appropriations reduction in the amount of $50,000 was approved by the city council.
Prepare an appropriations, expenditures and encumbrances ledger for the police department for the month of July. (Credit amounts should be indicated by a minus sign.)
Answer and Explanation:
The preparation of the appropriations, expenditures and encumbrances ledger for the police department for the month of July is presented below:
City of South Dundee
Appropriations, expenditures and encumbrances ledger
General fund
Month of July, 2017
Trans Reference Appropriations encumbrances expenditures unexpended appropriation balances
1. Budget -$8,700,000
-$8,700,000
2. Purchased order $520,000
-$8,180,000
3. Invoice issued -$480,000 $478,000
-$8,182,000
4. Payrolls $287,000
-$7,895,000
5. Budget revision $50,000
-$7,845,000
Total -$8,650,000 $40,000 $765,000
-$7,845,000
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:________.
Direct labor-hours required to support estimated production 95,000
Machine-hours required to support estimated production 47,500
Fixed manufacturing overhead cost $ 266,000
Variable manufacturing overhead cost per direct labor-hour $ 2.60
Variable manufacturing overhead cost per machine-hour $ 5.20
During the year, Job 550 was started and completed. The following information is available with respect to this job:________.
Direct materials $ 273
Direct labor cost $ 237
Direct labor-hours 15
Machine-hours 5
Required:
1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:_______.
a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
2. Assume that Landen's controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:________.
a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 5507 (Round your intermediate calculations to 2 decimal places. Round your "Predetermined Overhead Rato" answers to 2 decimal places and all other answers to the nearest whole dollar.)
1. Direct labor hours:
a. Predetermined overhead rate per DLH
b. Total manufacturing cost of Job 650
c. Selling price
2. Machine hours:
a. Predetermined overhead rate per MH
b. Total manufacturing cost of Job 660
c. Selling price
Answer:
Instructions are below.
Explanation:
Giving the following information:
Direct labor-hours required to support estimated production 95,000
Machine-hours required to support estimated production 47,500
Fixed manufacturing overhead cost $ 266,000
Variable manufacturing overhead cost per direct labor-hour $ 2.60
Variable manufacturing overhead cost per machine-hour $ 5.20
Job 550:
Direct materials $ 273
Direct labor cost $ 237
Direct labor-hours 15
Machine-hours 5
1) a. First, we need to calculate the predetermined overhead rate based on direct labor hours:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (266,000/95,000) + 2.6
Predetermined manufacturing overhead rate= $5.4 per direct labor hour
b. Total manufacturing cost= direct material + direct labor + allocated overhead
Total manufacturing cost= 273 + 237 + 5.4*15
Total manufacturing cost= $591
c. Selling price= 591*2= $1,182
2) a.
Predetermined manufacturing overhead rate= (266,000/47,500) + 5.2
Predetermined manufacturing overhead rate= $10.8 per machine hour
b. Total manufacturing cost= direct material + direct labor + allocated overhead
Total manufacturing cost= 273 + 237 + 10.8*5
Total manufacturing cost= $564
c. Selling price= 564*2= $1,128
Gamma, Inc. has struggled for industry dominance with Ardent, Inc. its main competitor, for years. Gamma has gathered and analyzed large amounts of competitive intelligence about Ardent. It has observed as much of the firm’s internal functioning and technology as it can legally, yet Gamma cannot understand why Ardent has a competitive advantage over it. The source of Ardent’s success is:
Answer:
Casual Ambiguity
Explanation:
Based on the information provided within the question it is most likely that the source of Ardent's success is Casual Ambiguity. This refers to the situation where it is nearly impossible to relate the effects of something to its initial states or causes. Such as Ardent's ability to acquire so much success or a competitive advantage over its competitors. This also occurs with the development of the prices of shares, options, futures, and similar products on exchanges
Materials used by Square Yard Products Inc. in producing Division 3's product are currently purchased from outside suppliers at a cost of $5.00 per unit. However, the same materials are available from Division 6. Division 6 has unused capacity and can produce the materials needed by Division 3 at a variable cost of $3.00 per unit. A transfer price of $3.20 per unit is established, and 40,000 units of material are transferred, with no reduction in Division 6's current sales.
How much would Division 3's income from operations increase?
a. $150,000
b. $50,000
c. $32,000
d. $72,000
How much would Division 6's income from operations increase?
a. $8,000
b. $15,000
c. $80,000
d. $150,000
How much would Square Yard Products total income from operations increase?
a. $32,000
b. $112,000
c. $80,000
d. $150,000
Answer:
(1) option (d) $72,000 (2) option (a)$8,000 (3) option (c)$80,000
Explanation:
Solution
Given:
Now,
(1) The total cost to be paid to the supplier outside is given below:
= 40,000 units x $5 per unit
= $200,000
The price of transfer to be paid to Division 6 is given as:
= 40,000 units x $3.20 per = $128,000
Therefore, the increase in income from operations for Division C is = $200,000 - $128,000 = = $72,000
(2) The income increase from operations is defined below:
Additional Sales x Contribution Per Unit
Thus,
The per unit contribution = Transfer Price – Variable Cost
= $3.20 - $3 = $0.20 per unit
Hence,
The income increase from operations for Division 6 is given as:
= 40,000 units x $0.20 per unit = $8,000
(3) Now,
The Increase of Income from operations for Division C and the Increase in income from operations for Division 6 becomes,
= $72,000 + $8000 = $80,000
Sponsored by five U.S. financial organizations, ___________ is a nonprofit organization that was established in 1985 to identify factors that contributed to fraudulent financial reporting.
Answer:
The Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Explanation:
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is sponsored by five U.S. financial organizations. It is a non-profit organization that was established in 1985 to identify factors that contributed to fraudulent financial reporting, as well as internal control and guidance on enterprise risk management, business ethics, financial reports and business risk management.
The five (5) U.S financial organizations that sponsored COSO are;
1. Institute of Management Accountants (IMA).
2. American Accounting Association (AAA).
3. American Institute of Certified Public Accountants (AICPA).
4. Institute of Internal Auditors (IIA).
5. Financial Executives International (FEI).
A7X Corp. just paid a dividend of $1.70 per share. The dividends are expected to grow at 20 percent for the next eight years and then level off to a growth rate of 5 percent indefinitely. If the required return is 15 percent, what is the price of the stock today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$41.64
Explanation:
The computation of the price of the stock today is shown below
Price of stock today = Dividend per share × (1 + growth rate)^n ÷ (1 + required rate of return)^n + Dividend per share × (1 + growth rate)^n ÷ (1 + required rate of return)^n + Dividend per share × (1 + growth rate)^n ÷ (1 + required rate of return)^n + Dividend per share × (1 + growth rate)^n ÷ (1 + required rate of return)^n + Dividend per share × (1 + growth rate)^n ÷ (1 + required rate of return)^n + Dividend per share × (1 + growth rate)^n ÷ (1 + required rate of return)^n + Dividend per share × (1 + growth rate)^n ÷ (1 + required rate of return)^n + Dividend per share × (1 + growth rate)^n ÷ (1 + required rate of return)^n + Dividend per share × (1 + growth rate)^n × 1 + decreased growth rate ÷ (required rate of return - decreased in growth rate) ÷ (1 + required rate of return)^n
= ($1.70 × 1.2 ÷ 1.15) + ($1.70 × 1.2^2 ÷ 1.15^2) + $1.70 × 1.2^3 ÷ 1.15^3) + $1.70 × 1.2^4 ÷ 1.15^4) + ($1.70 × 1.2^5 ÷ 1.15^5) + ($1.70 × 1.2^6 ÷ 1.15^6) + ($1.70 × 1.2^7 ÷ 1.15^7) + ($1.70 × 1.2^8 ÷ 1.15^8) + (1.70*1.2^8*1.05 ÷ (15% - 5%)) ÷ 1.15^8)
= $41.64
We simply applied the above formula
The N represents the time period
The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $3.20 per case. Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer. What is the economic order quantity for Stein beer?
Answer:
20 Cases
Explanation:
Economic order quantity which is also known as (EOQ) can be defined as the order quantity a company or an organisation should tend to purchase or buy in order to minimize their inventory costs.
Example of this inventory costs are:
Holding costs
Shortage costs
Order costs.
Calculation for the economic order quantity for Stein beer will be:
Numbers of cases × Numbers of days
4 cases× 5 days
= 20 cases
Therefore the economic order quantity for Stein beer will be: 20 cases every five days because the Orders often arrived three days from the time they are placed.
"At the end of its third year of operations, the Sandifer Manufacturing Co. had $ 4,597,000 in revenues, $ 3,399,000 in cost of goods sold, $ 448,000 in operating expenses which included depreciation expense of $ 157,000, and a tax liability equal to 34 percent of the firm's taxable income. What is the net income of the firm for the year?"
Answer:
Net Income $ 495,000
Explanation:
The net income represent the amount that would be left after all expenses have been deducted from all the sales revenue.
$
Sales revenue 4,597,000
Cost of goods sold (3,399,000)
Gross profit 1,198,000
Operating expenses (448,000)
Profit before taxes 750,000
Taxes (34%×750,000) (255,000)
Net Income 495,000
First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City Bank pays 7 percent interest compounded annually. If you made a $73,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years
Answer:
$ 15,217.52
Explanation:
The future amount in the account nine years' time is computed using the future value formula below:
FV=PV*(1+r)^n
PV is the amount of deposit of $73,000
r is the rate compound rate of interest of 7%
n is the length of time of deposit which is 9 years
FV=$73,000*(1+7%)^9=$ 134,207.52
Amount earned=interest=FV-PV=$ 134,207.52-$73,000.00=$ 61,207.52
The first bank interest is computed thus:
I=PRT
P is $73,000
R is the rate of 7%
T is 9 years
I=$73,000*7%*9=$45,990
The difference between the two interest amounts=$ 61,207.52-$ 45,990.00 =$ 15,217.52
You can earn $12,088.06 more money from Second City Bank account at the end of 9 years compared to your First City Bank account.
To calculate the difference in earnings between the two banks, we need to compare the interest earned over 9 years with a $73,000 deposit.
First City Bank:
The interest is calculated using simple interest, so the annual interest earned would be: 7% of $73,000 = $5,110
Since it is simple interest, the interest earned remains constant each year, so the total interest earned over 9 years would be: $5,110 x 9 = $45,990
Second City Bank:
The interest is compounded annually, so we can use the formula for compound interest:
A = [tex]P(1 + r/n)^(n*t)[/tex]
In this case, the principal (P) is $73,000, the annual interest rate (r) is 7% (or 0.07), the interest is compounded annually (n = 1), and the time period (t) is 9 years.
A =[tex]$73,000(1 + 0.07/1)^(1*9)[/tex]
A ≈ $131,078.06
The interest earned would be the difference between the final amount and the initial deposit:
Interest earned = $131,078.06 - $73,000 = $58,078.06
Therefore, you would earn $58,078.06 - $45,990 = $12,088.06
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One difference between a monopoly and a competitive firm is that A. a monopoly faces a downward sloping demand curve. B. a monopoly is a price taker. C. a monopoly maximizes profit by setting marginal revenue equal to marginal cost. D. None of the above.
Answer:
A. a monopoly faces a downward sloping demand curve.
Explanation:
In business, it is seen to occur because they have no competition, monopolists have no incentive to improve their products. A lot of their focus is instead placed on maintaining monopolistic conditions through bribing their way and other tactics that dissuade competitors from entering the market.
Demand curve slopes downward, this is said to decreases with each unit of production beyond the profit maximizing quantity and in the eyes of the monopolist, cash is lost with each additional unit been produced, causing marginal cost exceeds marginal revenue. This causes the restricted output and higher costs that characterize products produced by monopolists.
Because the demand curve slopes downward, marginal revenue decreases with each unit of production beyond the profit maximizing quantity. Thus, the monopolist loses money with each additional unit produced, as marginal cost exceeds marginal revenue.
If tea and coffee are substitute goods, which of the following is likely to occur if the price of coffee has increased?
A. The demand curve for tea shifts to the right.
B. A rightward or downward movement along the demand curve for tea.
C. The supply curve for coffee shifts to the right.
D. The demand curve for coffee shifts to the right.
Answer:
A. The demand curve for tea shifts to the right
Explanation:
Demand is defined as the measure of sensitivity of quantity demanded is a group with changes in price.
However when there is an increase or decrease in demand as a result of other factors except for price it is called shift in demand.
In the given scenario if the price of coffee increases, it will result in less amount of coffee being demanded. People will look for a substitute (tea).
Demand for tea will increase as a result of shift of the demand curve for real to the right.
This is illustrated in the attached diagram.
Answer:
A. The demand curve for tea shifts to the right.
Explanation:
In the above condition where tea and coffee are substitute goods amongst themselves, it is easily to explain according to the supply and demand theories that when price of coffee increases, the demand curve for tea shifts to the right.
It can be easily seen that a relation showing the amounts of a commodity
there is an increase or decrease in demand as a result of other factors that buyers purchase at alternative prices during a given period of time, and the fact that these goods are substituted against each other made it possible.
Sellers allow customers to use credit cards for all of the following reasons except: Multiple Choice To be able to charge more due to fees and interest. To increase total sales volume. To avoid having to evaluate a customer's credit standing for each sale. To speed up receipt of cash from the credit sale. To lessen the risk of extending credit to customers who cannot pay.
Answer:
To be able to charge more due to fees and interest.
Explanation:
I believe this is the answer because the aim of a business is to gain as much profit as possible and to provide quality products. So by allowing customers to use credit cards, you are gaining more money from charging fees and interest.
To be willing to charge more than that to cover penalties and charges.
Because accepting credit cards allows sellers to get payments at around a similar time as credit selling. As a result, the vendor could indeed insistence on charging more owing to interest payments.Even though all of the other possibilities are correct, the one in which they seek to impose higher charges is false.
Thus the above response i.e., "option a" is correct.
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The ABC Corporation is considering introducing a new product, which will require buying new equipment for a monthly payment of $5,000. Each unit produced can be sold for $20.00. ABC incurs a variable cost of $10.00 per unit. Suppose that ABC would like to realize a monthly profit of $50,000. How many units must they sell each month to realize this profit?
Answer:
5500 units per month must be sold to earn the required profit
Explanation:
The target profit is the amount of profit that a business wants to earn. To calculate the target profit, we can use the break even analysis and include the factor for target profit under its formula and calculate the units and the dollar sales needed to earn the target profit.
In this case, the target profit is $50000 per month.
The break even in units = Fixed cost / contribution margin per unit
Contribution margin per unit = selling price per unit - variable cost per unit
To calculate units required for target profit, we will add the target profit to the fixed cost and divide by the contribution margin per unit
Target profit units = (fixed cost + target profit) / Contribution margin per unit
So,
Contribution margin per unit = 20 - 10 = $10 per unit
Target profit units = (5000 + 50000) / 10
Target profit units = 5500 units per month
Marginal​ cost-benefit analysis and the goal of the firm   Ken​ Allen, capital budgeting analyst for Bally​Gears, Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics used on the heavy truck gear line will produce total benefits of 568,000​(in today's​ dollars) over the next 5 years. The existing robotics would produce benefits of 446,000 (also in​ today's dollars) over that same time period. An initial cash investment of $227,200 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $73,000. Show how Ken will apply marginal​ cost-benefit analysis techniques to determine the​ following:
a.  The marginal​ (added) benefits of the proposed new robotics.
b.  The marginal​ (added) cost of the proposed new robotics.
c.  The net benefit of the proposed new robotics.  
d.  What should Ken recommend that the company​do? Why?
e.  What factors besides the costs and benefits should be considered before the final decision is​ made?
Answer:
a.The marginal (added) benefits of the proposed new robotics.
$195,000
b. The marginal (added) cost of the proposed new robotics.
-$227,200c. The net benefit of the proposed new robotics.
loss = -$32,200d. What should Ken recommend that the company do? Why?
Based only on this analysis, the company should keep the old robotics. The new robotics are too expensive and do not generate enough benefits.e. What factors besides the costs and benefits should be considered before the final decision is made?
increases in efficiency and reductions in manufacturing time.Explanation:
Marginal cost benefit analysis refers to analyzing the additional benefits of a new project or activity compared to the benefits generated by an alternative project or activity.
In this case, both alternative should be evaluated as follows:
alternative 1 alternative 2 marginal
keep robotics change robotics benefits
revenue (in $446,000 $568,000 $122,000
today's $)
required invest. $0 -$227,200 -$227,200
old robotics $0 $73,000 $73,000
sales value
marginal benefits / losses -$32,200
At a total cost of $6,300,000, Herrera Corporation acquired 195,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 750,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $928,000 for the current period. 2. A cash dividend of $0.26 per common share is paid by Tran Corp. during the current period. B. Why is the equity method appropriate for the Tran Corp. investment
Answer:
1)
Journal entry to record the investment in Tran. Corp.
Dr Investment in Tran Corp 6,300,000
Cr Cash 6,300,000
Journal entry to record distributed dividends
Dr Cash 50,700
Cr Investment in Tran Corp 50,700
under the equity method, distributed dividends reduce the investment account
Journal entry to record Tran. Corp.'s net income
Dr Investment in Tran Corp 241,280
Cr Revenue from investment in Tran. Corp. 241,280
since Herrera owns 26% of Tran Corp.'s stock, then 26% of its net income increases the investment account
B)
The equity method is appropriate when a company owns 20% or more of another company or exercises significant influence in the decisions of the other company.
For each part below, write a short essay (around 8 sentences) to provide arguments for and/or against the claim presented in that part: (a) (10 points) ”Governments should not try to regulate or interfere with free markets as any such behaviour is bound to cause inefficiency.” (b) (10 points) ”Price mechanism is an effective tool that can be used to achieve efficient provision of public goods.”
Explanation:
a) A free market would allow the laws of demand and supply to flourish; prices of commodities will be set by manufacturers based on demand. However, Government regulations which interfere with the free market is going to result in feeling the pain of monopoly.
b) Indeed, the price mechanism when controlled by the government can result in efficient provision of public goods.
One such example of a public good ls PMS (premium motor spirit) used as petrol in most vehicles. Controlling the price of petrol by the government in most cases helps avoid excessive charges from petrol stations per pump price.
Consider the same scenario as in the previous question: On March 31, 2015, Cars, Inc. owes Preston Devices, one of its suppliers, $25,000 for previous purchases. During April 2015, Preston sells Cars devices with a sales price of $10,000 and a cost to Preston of $8,000. During April, Cars pays Preston $12,000 against the amount owed to Preston. If Preston had no other sales and records no other collections from customers during the month of April, the operating section of Preston's indirect method statement of cash flows for April will show the following de-accrual adjustments to net income:
a. Subtract change in accounts receivable; add change in inventory.b. Add change in accounts receivable; subtract change in inventoryc. Add change in accounts receivable; add change in inventory.d. Subtract change in accounts receivable; subtract change in inventory.
Answer:
Explanation:
On March 31, 2015, Cars, Inc. owes Preston Devices, one of its suppliers, $25,000 for previous purchases. During April 2015, Preston sells Cars devices with a sales price of $10,000 and a cost to Preston of $8,000. During April, Cars pays Preston $12,000 against the amount owed to Preston.
Decrease in Accounts Receivable = 12000-10000 = $2000
Decrease in Inventory = $8000
Decrease in Accounts Receivable and decrease in inventory are added to net income under indirect method statement of cash flows
Therefore the answer is Add change in accounts receivable; add change in inventory.Between April 2011 and April 2016, the price of a U.S. postage stamp increased from $0.41 to $0.46. The price of a U.S. postage stamp has increased approximately ________ in terms of Indian rupees and ________ in terms of Chinese yuan.
Answer:
The price of a U.S. postage stamp has increased approximately 63% in terms of Indian rupees and 10% in terms of Chinese yuan.
Explanation:
the exchange rate between the US dollar and the Indian rupee:
April 2011 = 45.54 Indian rupees per dollar x $0.41 = 18.67 Indian rupees
April 2016 = 66.16 Indian rupees per dollar x $0.46 = 30.43 Indian rupees
change in Indian rupees = (30.43 - 18.67) / 18.67 = 63%
the exchange rate between the US dollar and the Chinese yuan:
April 2011 = 6.61 Chinese yuan per dollar x $0.41 = 2.71 Chinese yuan
April 2016 = 6.48 Chinese yuan per dollar x $0.46 = 2.98 Chinese yuan
change in Chinese yuan = (2.98 - 2.71) / 2.71 = 10%
