Answer:
a.5 year plan will be chosen.
b.Immediately must be chosen
c.Immediately must be chosen
Explanation:
Present value of inflows = cash inflow / (1+r)^n
a. 0 % per year
Present value of inflows = $140,000 / (1)⁵
Present value of inflows = $140,000
5 year plan will be chosen.
b. 8 % per year
Present value of inflows = $140,000 / (1.08) ⁵
Present value of inflows = $140,000 / 1.469328
Present value of inflows = $95,281.6526
Immediately must be chosen
c. 20 % per year?
Present value of inflows = $140,000 / (1.20) ⁵
Present value of inflows = $140,000 / 2.48832
Present value of inflows = $56,262.8601
Immediately must be chosen
Compuvac Company has just completed its first pass forecast using the projected balance sheet method. need a total of 13,050,00 The firm has determined that it needs $4 million in new debt which can be sold at par with a 10% annual coupon. Additionally, the firm will sell 500,000 shares of new common equity at $18.10 per share. Next year's expected dividend is $0.24 per share. 40% tax rate. Given this information, what is the incremental change in AFN for Compuvac going from the first pass to the second pass?
Answer:
Incremental change in AFB would be $ 480,000
Explanation:
(a) Debt = $ 4,000,000
Interest on debt = 10%
Therefore, Interest outgo on debt = 10% of Debt
=10% of $4,000,000
=$ 400,000
(b) Dividend payable = $0.48 per share(given)
No of shares = 500,000 (given)
Therefore, Outgo on account of dividend = $ 0.48 /share * no of shares
=$0.48 * 500,000
=$240,000
(c) Given, that tax in second would be $160,000 lesser. i.e., outgo would actually be lesser to that extent
Therefore, incremental AFN = (a)+(b)-(c) = $ 400,000 + $ 240,000 - $160,000 = $480,000
Incremental change in AFB would be $480,000
In September 2008, the IRS changed tax laws to allow banks to utilize the tax loss carryforwards of banks they acquire to shield their future income from taxes (prior law restricted the ability of acquirers to use these credits). Suppose Fargo Bank acquires Covia Bank and with it acquires $ 74$74 billion in tax loss carryforwards. If Fargo Bank is expected to generate taxable income of $ 10$10 billion per year in the future, and its tax rate is 30 %30%, what is the present value of these acquired tax loss carryforwards given a cost of capital of 8 %8%?
Answer:
The present value of these acquired tax loss is $15.81 billion
Explanation:
We can shield $ 10 billion for the next 7 years and $4 billion in the 8th year
Given the tax rate = 30%
Years 1 - 7, tax savings = $ 3 billion
Year 8, tax savings = $1.2 billion
Present value (PV) = 3 × [tex]\frac{1}{0.08} \{1-\frac{1}{1.08^7} \}[/tex] + [tex]\frac{1.2}{1.08^8}[/tex]
= 3 × 12.5(1-0.58) + 0.648
= 3 × 5.25 + 0.648
= 15.75 + 0.648
= $ 15.81 billion
Therefore, the present value of these acquired tax loss is $15.81 billion
Tiberius Manufacturing is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $ 11 comma 600 comma 000 $ 480 comma 000 Useful life 5 years 5 years Estimated annual net cash inflows for 5 years $ 2 comma 320 comma 000 $ 95 comma 000 Residual value $ 54 comma 000 $ 24 comma 000 Depreciation method Straightminusline Straightminusline Required rate of return 14% 14% Calculate the accounting rate of return for Proposal Y. (Round any intermediate calculations and your final answer to two decimal places.)
Answer:
1.51%
Explanation:
The computation of the accounting rate of return is shown below:
Accounting rate of return = Average annual profit ÷ average investment
where,
Average annual profit is
= Estimated annual net cash inflows for 5 years - annual depreciation
= $95,000 - ($480,000 - $24,000) ÷ 5 years
= $95,000 - $91,200
= $3,800
And, the average annual investment is
= (Initial Investment + Scrap Value) ÷ 2
= ($480,000 + $24,000) ÷ 2
= $252,000
Now placing these values to the above formula
So, the accounting rate of return is
= $3,800 ÷ $252,000
= 1.51%
Exhibit 9-4 Refer to Exhibit 9-4. Assume the economy is self-regulating and currently is in long-run equilibrium with the price level equal to P5. If something happens that shifts the AD curve to the AD1 position, the economy will eventually settle down at a long-run equilibrium point of __________. Question 6 options: P5, Q3. P4, Q4. P3, Q3. P3, Q5. P4, Q2.
Answer:
P3 and Q3The intersection of AD curve and the long-run aggregate supply curve determines the equilibrium real GDP and price level in the long run.This happens at P3 and Q3.
Explanation:
Exhibit 9-4 Refer to Exhibit 9-4.
Assume the economy is self-regulating and currently is in long-run equilibrium with the price level equal to P5.
If something happens that shifts the AD curve to the AD1 position, the economy will eventually settle down at a long-run equilibrium point of __________. Question 6 options: P5, Q3. P4, Q4. P3, Q3. P3, Q5. P4, Q2.
P3 and Q3The intersection of AD curve and the long-run aggregate supply curve determines the equilibrium real GDP and price level in the long run.This happens at P3 and Q3.
According to new trade theory, trade, through its impact on economies of scale, is most likely to reduce the volume of the goods produced. decrease the variety of goods available to consumers. decrease the average costs of goods. inhibit first-mover advantages in all industries. benefit only nations that differ in resource endowments or technology.
Answer:
Option C (Decrease of the average cost of goods) seems to be the right response to the key statement.
Explanation:
NTT seems to be a compilation of business theories for world commerce, considering the role of size distribution rates of return as well as efficiency gains or effects on the network.And as per this theory, in addition to its effect on the economy of scale, trade or exchange is much more probable to reduce the total amount of goods and services.Other possibilities aren't related to something like the scenario in question. So option C seems to be the perfect solution.
Patterson Brothers recently reported an EBITDA of $5.5 million and net income of $1.5 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization
Answer:
Depreciation & amortization = $1 million
Explanation:
The EBITDA is the earning of the company before interest, tax and depreciation and amortization deduction.
To calculate the Net Income from EBITDA, we subtract the charges for depreciation, amortization, interest and taxes.
Thus, net income is,
Net income = EBITDA - Depreciation & amortization - Interest - Tax
The tax is deducted from EBT which is earnings before tax. It is calculated by deducting the depreciation & amortization and interest from EBITDA. Thus, after deducting tax from EBT, we get net income. We can say that if tax is 40% it means that tax is 40% of EBT and net income is the remaining 60% of EBT.
Thus, if 60% of EBT is 1.5 million, then total EBT is,
EBT = 1.5 / 0.6 = $2.5 million
So, tax is = 2.5 * 0.4 = $1 million
Plugging in the values available in the net income formula,
1.5 = 5.5 - Depreciation & amortization - 2 - 1
1.5 + Depreciation & amortization = 5.5 - 3
Depreciation & amortization = 2.5 - 1.5
Depreciation & amortization = $1 million
If company policy changes, should you explain those changes to employees and customers at about the same time? Or should one group before informed before the other group?
Answer:
Employees
Explanation:
The company should explain the changes to the employees first and then the constumers. This way the employees can answer questions regarding the changes better.
Karen is a financial analyst. At work, she uses logic to reason and solve novel financial problems. This is an example of _____. She also has a vast amount of accumulated knowledge about the stock market, accounting software, and economic trends that she draws upon to help her succeed at her job. This is an example of _____.
Answer:
Fluid Intelligence, Crystallized Intelligence
Explanation:
Karen is a financial analyst. At work, she uses logic to reason and solve novel financial problems. This is an example of Fluid Intelligence. She also has a vast amount of accumulated knowledge about the stock market, accounting software, and economic trends that she draws upon to help her succeed at her job. This is an example of Crystallized Intelligence.
Fluid Intelligence is the ability of an individual to be able to reason and solve different problems in very unique and novel situations. On the other hand, Crystallized Intelligence is the ability of the individual to use the previously acquired knowledge from past experiences in order to solve a present problem. Which is what Karen is doing by using her stock market knowledge to solve problems in her job.
The following events pertain to Super Cleaning Company: 1. Acquired $15,600 cash from the issue of common stock. 2. Provided $13,600 of services on account. 3. Provided services for $4,600 cash. 4. Received $3,000 cash in advance for services to be performed in the future. 5. Collected $9,600 cash from the account receivable created in Event 2 6. Paid $5,600 for cash expenses. 7. Performed $1,500 of the services agreed to in Event 4 8. Incurred $2,100 of expenses on account. 9. Paid $1,400 cash in advance for one-year contract to rent office space. Paid $1,750 cash on the account payable created in Event 8. 11. Paid a $2,100 cash dividend to the stockholders. 2. Recognized rent expense for nine months' use of office space acquired in Event 9.
Answer:
Since there is not enough room here to elaborate a horizontal financial statement, I attached an excel spreadsheet. Each of the 12 events corresponds to the events detailed in the question.
Explanation:
Langston Labs has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset. Its assets vary widely in risk, and Langston evaluates low-risk projects with a WACC of 8%, average-risk projects at 10%, and high-risk projects at 12%. The company is considering the following projects:Project Risk Expected ReturnA High 15%B Average 12%C High 11%D Low 9%E Low 6%Which set of projects would maximize shareholder wealth?1) A, B, C, D, and E2) A, B, and C3) A, B, and D4) A and B5) A, B, C, and D
Answer:
3) A, B, and D
Explanation:
WACC for higher risk projects combined with lower risk project will reduce the overall risk exposure. The projects with high risk might also provide high rate of return but volatility will be high for such projects. Those projects are selected which has rate of return higher than WACC. The project A has high risk but its rate of return is 15% which is 3% higher than in its WACC. The project B has average risk with rate of return 12% while the WACC is 10%. The project D should be selected because it has low risk with rate of return 9% which is 1% higher return than the cost of capital.
Chuck, a single taxpayer, earns $69,000 in taxable income and $27,100 in interest from an investment in City of Heflin bonds. (Use the U.S tax rate schedule.) Required: How much federal tax will he owe
Answer: $10,970
Explanation:
I have attached the US Tax rate Schedule to this question.
Note that the Interest Earned from the investment are Tax Free because it is from an Municipal bond and those are tax free.
The only figure to calculate tax on is therefore the income of $69,000.
According to the Schedule. If an individual makes between $40,126 and $85,525, they are to pay $4,617.50 plus 22% of the income over $40,125.
That means then that Chuck's tax rate is,
= 4,617.50 + 22% * ( 69,000 - 40,125)
= 4,617.50 + 22% * 28,875
= $10,970
He owes $10,970 in Federal Taxes
On November 10 of the current year, Flores Mills sold carpet to a customer for $9,000 with credit terms 4/10, n/30. Flores uses the gross method of accounting for cash discounts. What is the correct entry for Flores on November 17, assuming the correct payment was received on that date
Answer:
Dr cash $8,640
Dr sales discount $360
Cr accounts receivable $9,000
Explanation:
First and foremost , it is noteworthy that receiving payment on 17 November means that customer paid within the stipulated discount period of ten days, hence entitled to a 4% discount off the purchase price.
Cash received=$9,000*(1-4%)=$ 8,640.00
Discount allowed=$9,000-$ 8,640=$360
As a result of the above computations, the cash account would be debited with $8,640 while sales discount is debited with $360.
The accounts receivable is debited with the full purchase price of $9,000
E. Preslay Company prepares monthly financial statements and uses the gross profit method to estimate ending inventories. Historically, the company has had a 40% gross profit rate. During June, net sales amounted to $200,000; the beginning inventory on June 1 was $60,000; and the cost of goods purchased during June amounted to $90,000. The estimated cost of E. Preslay Company's inventory on June 30 is
Answer:
$30,000
Explanation:
The computation of the estimated cost of ending inventory is shown below:
As we know that
Cost of goods sold = Beginning inventory + Cost of goods purchased - ending inventory
where,
Cost of goods sold is
= Net Sales - gross profit
= $200,000 - $200,000 × 40%
= $200,000 - $80,000
= $120,000
Beginning inventory is $60,000
Cost of goods purchased is $90,000
So, the ending inventory is
$120,000 = $60,000 + $90,000 - ending inventory
Hence, the ending inventory is $30,000
The cost of goods sold refers to the cost which is directly related to the goods sold or created i.e direct material, direct labor, etc
You are working as a head of Human resource department in an oil company. The high ups of your company asked you to select 12 expatriates to go to work in Iraq. You started working on it, nonetheless, you are concerned about safety issues there. How do you proceed?
Answer:
Obtain latest security information of the location and possible risks.
Contact a good security company of Iraq to provide.
Ensure security insurance for each expatriate.
Create a security guide line for expatraite and train each expatriate.
Ensure safe lodging and transport facilities for all expatriate.
Explanation:
It is important that each expatriate know where they are going and the security issues of that place and what appropraite actions the employer has taken to minimize or mitigate those risks.
On January 1, Year 1, Hart Company issued bonds with a face value of $123,000, a stated rate of interest of 16 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 15 percent at the time the bonds were issued. The bonds sold for $127,123. Hart used the effective interest rate method to amortize the bond premium.
Prepare an amortization table.
Answer:
Find attached amortization table Hart Company bonds.
Explanation:
The amortization schedule starts with cash proceeds received from bondholders of $127,123,then adds interest expense to the cash proceeds using 15% effective interest rat i.e 15%*$127,123 and thereafter deducts interest payment which is 16% of face value i.e 16% *$123,000.
The premium amortization in each year is interest payment minus the interest expense.
Oregon Outfitters issues 2,000 shares of $1 par value common stock at $18 per share. Later in the year, the company decides to repurchase 130 shares at a cost of $19 per share.
(1) Record the original issue of the 2,000 shares,
(2) Record the repurchase of 130 shares, and
(3) Record the entry if Oregon Outfitters reissues the 130 shares of treasury stock at $26 per share. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer: Please refer to Explanation
Explanation:
1.
DR Cash $36,000
CR Common Stock $2,000
CR Paid In capital in Excess of Par $34,000
(To record Issuance of Common Stock)
Workings
Cash = 2,000 shares * $18
= $36,000
Common Stock
= 2,000 * $1 (par value)
= $2,000
Paid In Cap
= Cash - Common Stock
= 36,000 - 2,000
= $34,000
2.
DR Treasury Stock $2,470
CR Cash $2,470
(To record Repurchase of Stock)
Workings
Cash = 130 * 19
= $2,470
3.
DR Cash $3,380
CR Treasury Stock $2,470
CR Paid In Capital in Excess (Treasury Stock) $910
(To record reissuance of Treasury Stock)
Working
Cash = 130 *26
= $3,380
Paid In Capital
= Cash - Treasury Stock
= 3,380 - 2,470
= $910
Required information
[The following information applies to the questions displayed below.)
At the beginning of 2021, Brad's Heating & Air (BHA) has a balance of $25,900 in accounts receivable. Because BHA is a privately owned company, the company has used only the direct write-off method to account for uncollectible accounts. However, at the end of 2021, BHA wishes to obtain a loan at the local bank, which requires the preparation of proper financial statements. This means that BHA now will need to use the allowance method. The following transactions occur during 2021 and 2022.
1. During 2021, install air conditioning systems on account, $189,000.
2. During 2021, collect $184,000 from customers on account.
3. At the end of 2021, estimate that uncollectible accounts total 20% of ending accounts receivable.
4. In 2022, customers' accounts totaling $7,900 are written off as uncollectible.
Required:
Record each transaction using the allowance method.
Answer and Explanation:
The Journal entries are shown below:-
a. Accounts receivable Dr, $189,000
To service revenue $189,000
(Being service provided on the account is recorded)
Here we debited the accounts receivable as it increased the assets and we credited the service revenue as it increased the revenue
b. Cash Dr, $184,000
To Accounts receivable $184,000
(Being collection on accounts is recorded)
Here we debited the cash as it increased the assets and we credited accounts receivable as it decreased the assets
c. Bad debt expenses Dr, $6,180
To Allowance for uncollectible accounts $6,180
(Being estimated uncollectible accounts is recorded)
Here we debited the bad debt expenses as it increased the expense and we credited the allowance for uncollectible accounts as it decreased the asset
Working note
Uncollectible accounts = (Total account - Cash collected) × 20%
= ($25,900 + $189,000) - $184,000 × 20%
= $30,900 × 20%
= $6,180
d. Allowance for uncollectible accounts Dr, $7,900
To Accounts receivable $7,900
(Being write off of actual bad debt is recorded)
Here we debited the allowance for uncollectible accounts as it increase the allowance and we credited the accounts receivable as it decreased the asset
Under _________dividend reinvestment plan, the company gives any cash dividends that investors would have received in a bank, which acts as a trustee. The bank then uses the money to repurchase the company’s existing stock in the stock market. The bank then allocates the shares purchased to the participating stockholders’ accounts on a pro rata basis.
Answer:
Old Stock
Explanation:
The Dividend Reinvestment Plan is a platform where investors or shareholders in a company, reinvest the dividends they gained into more shares sold by the same company, most times without having to pay commissions.
Under the Old stock dividend reinvestment plan, an outside trustee, that is, a member of the board who is not an officer in the company, repurchases the company's existing shares in the stock market and then allocates the shares purchased among the stockholders. They sell the shares at market price. Most times, in order to encourage shareholders participation the company making the repurchase takes care of the commission fees.
The current sections of Pearl Corp.’s balance sheets at December 31, 2021 and 2022, are presented here. Pearl Corp.’s net income for 2022 was $279,400. Depreciation expense was $46,200.
2022 2021
Current assets
Cash $68,200 $97,900
Accounts receivable 93,500 75,900
Inventory 85,800 68,200
Prepaid expenses 18,700 20,900
Total current assets $266,200 $262,900
Current liabilities
Accrued expenses payable $6,600 $17,600
Accounts payable 96,800 79,200
Total current liabilities $103,400 $96,800
Prepare the net cash provided (used) by operating activities section of the company's statement of cash flows for the year ended December 31, 2022 using the indirect method.
Pearl Corp.
Partial Statement of Cash Flows
December 31, 2022
Cash Flows from Operating Activities
Net Income 168,300
Adjustments to reconcile net income to
Net Cash Provided by Operating Activities
Depreciation Expense 29,700
Decrease in Accounts Receivable
Decrease in Inventory
Increase in Prepaid Expenses:
Decrease in Accrued Expenses Payable
Decrease in Accounts Payable
Net Cash Provided by Operating Activities
Answer:
$299,200
Explanation:
Pearl Corp.’s Statement of cash flows
Cash Flows from operating activities:
Net Income 279,400
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation expense $46,200
Accounts Receivables Increase ($17,600)
(93,500 -75,900)
Inventories Increase ($17,600)
(85,800 -68,200)
Prepaid expenses decrease $2,200
(18,700- 20,900)
Accrued Expenses payable decrease($11,000)
($6,600- $17,600)
Accounts Payable increase $17,600
(96,800 - 79,200)
Net Cash provided by Operating Activities $299,200
The total dollar value of bison killed from Huntington Forest is f(b)=42b-1.1b^2, where b is the number of bison killed. The marginal cost of killing bison is 0. What is the optimal bison-killing tax (per bison) to avoid the tragedy of the commons in this forest?
Answer: 20.99
Explanation:
The optimal bison-killing tax is 20.99
Before the optimal bison-killing tax (per bison) is gotten, we had to calculate the optimum amount of killing first which is represented by b.
After b has been gotten, the value of b was 19.1 and this was slotted into the tax in order to get the value of t.
The analysis and explanation has been attached below
Calamata Corporation processes a single material into three separate products A, B, and C. During September, the joint costs of processing were $300,000. Production and sales value information for the month were as follows: Product Units Produced Final Sales Value per Unit Separate Costs A 10,000 $25 $125,000 B 15,000 $30 $250,000 C 12,500 $24 $125,000 What is the constant gross margin percentage for Calamata
Answer:
20%
Explanation:
Gross profit is the net of sales and cost of sales. Gross Profit percentage is the ratio of gross profit to sales expressed as percentage.
Product Units Produced Final Sales Value per Unit Separate Costs
A 10,000 $25 $125,000
B 15,000 $30 $250,000
C 12,500 $24 $125,000
Total 37,500 $500,000
Sales Value
A (10,000 x $25) $250,000
B (15,000 x $30) $450,000
C (12,500 x $24) $300,000
Total Sales Value $1,000,000
Less
Joint Cost ($300,000)
Separable cost ($500,000)
Gross Profit $200,000
Gross Profit Percentage = ( $200,000 / $1,000,000 ) x 100 = 20%
Consider a firm's short-run cost curves. If average total cost is increasing as output rises, then
Select one:
a. total fixed costs must be increasing
b. average variable cost must be increasing,
c. marginal cost must be below average total cost.
d. average fixed costs must be increasing.
e, average total cost is no longer equal to the sum of average variable cost and average fixed cost.
Option (a) total fixed costs must be increasing if the average total cost is increasing as output rises.
What happens to the average fixed cost when production increases in the short term?In the short term, as a company's output increases, its average fixed cost decreases. Fixed costs remain the same regardless of the number of products produced. As performance improves, the fixed cost contribution per unit decreases.
On the short-term curve, much of the initial downslope is due to lower average fixed costs. Increasing the variable input return at low output levels also plays a role, but the slope is due to the decreasing limit variable input return.
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During Year 1, its first year of operations, Galileo Company purchased two available-for-sale investments as follows: Security Shares Purchased Cost Hawking Inc. 590 $20,709 Pavlov Co. 1,600 29,280 Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $42 per share and the Pavlov Co. stock had a market value of $33 per share. Galileo Company had net income of $160,500 and paid no dividends for the year ending December 31, Year 1. All of the available-for-sale investments are classified as current assets. a. Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments.
Answer: Please see below for answer
Explanation:
Security Shares Purchased Cost
Hawking Inc. 590 $20,709
Pavlov Co. 1,600 $ 29,280
total $49,989
In December 31st, the Hawking Inc. stock with market value of $42 per share and the Pavlov Co. stock had a market value of $33
Stock Number of shares market value per share value
Hawking Inc. $42 590 $24,780
Pavlov Co. $33 1600 $52,800
Total value $77,580
Unrealized gain/loss = $77,580- $49,989= $27,591
Galileo Company Balance sheet
Current assets
Available for sale investments at cost $49,989
Allowance available for sale investments $27,591
Available for sale at fair value $77,580
Given the following information, calculate the total annual tax liability of the homeowner market value of property: $537,500; assessed value of property: 60% of the market value, exemptions: $2,500; school district millage rate: 29.25 mills; county and township millage rate: 5.75 mills. a.$7,437.50 b.$11,287.50 c. $11,200.00 d.$188,125.00
Answer:
The total annual tax liability of the homeowner market value of property is $11,200.00 . The right answer is c
Explanation:
According to the given data we have the following:
Market value of property= $5,37,500
Assessed value of property= 60% of the market value
Hence, Assessed value of property =$5,37,500*60% =$3,22,500
Exemption: $2500
Therefore,Assessed value =$3,22,500-$2,500 =$3,20,000
Schol district milleage rate= 29.25Mills
County and township milleage =5.75 Mills
Total rate of Mills =29.25+5.75=35 mills
Therefore, to calculate the total annual tax liability of the homeowner market value of property we would have to use the following formula:
Property tax amount= (Assessed value* Rate of mills/1,000,000)*1,000
Property tax amount= ($320,000*35/1,000,000)*1,000
Property tax amount= $11,200.00
The total annual tax liability of the homeowner market value of property is $11,200.00
Prepare a statement of cash flows. Also assume the following:
a. The owner’s initial investment consists of $38,000 cash and $46,000 in land in exchange for its common stock.
b. The company’s $18,000 equipment purchase is paid in cash.
c. The accounts payable balance of $8,500 consists of the $3,250 office supplies purchase and $5,250 in employee salaries yet to be paid.
d. The company’s rent, telephone, and miscellaneous expenses are paid in cash.
e. No cash has been collected on the $14,000 consulting fees earned.
Answer:
11,360
Explanation:
Ebony Ernst Statement of Cash Flow
Cash flow from operating activities:
Payment towards expenses :
Payment of salary 1,750
Payment of rent 3,550
Payment of telephone expense 760
Payment of misc.expense 580
Total of Cash flow from operating activities 6640
(1750+3550+760+580)
Cash flow from Investing activities:
Purchase of office equipment (18,000)
Cash flow from financing activities:
Cash from common stock 38,000
Cash paid (2,000)
Cash flow from financing activities (38,000-2,000) 36,000
Net cash flow during the year (18,000-6,640)11,360
Beginning balance 0
Year end cash balance 11,360
Southwestern Wear Inc. has the following balance sheet:
Current assets $1,875,000
Accounts payable $375,000
Fixed assets 1,875,000
Notes payable 750,000
Subordinated debentures 750,000
Total debt $1,875,000
Common equity 1,875,000
Total assets $3,750,000
Total liabilities and equity $3,750,000
The trustee’s costs total $281,250, and the firm has no accrued taxes on wages. The debentures are subordinated only to the notes payable. If the firm goes bankrupt and liquidates, how much will each class of investors receive if a total of $2.5 million is received from the sale of the assets?
Answer:
The investors will receive $343,750
Explanation:
In order to calculate the amount each class of investors receive we would have to calulate first the Balance available for Investors as follows:
Balance available for Investors=Total funds received -Trustee’s cost
Balance available for Investors=$2,500,000 -$281,250
Balance available for Investors =$2,218,750
Therefore, Balance available for stock holder=Balance available for Investors-Payment to Accounts payable-Notes Payable-Subordinated debentures
Balance available for stock holder=$2,218,750 - $375,000 -$750,000 - $750,000
Balance available for stock holder= $343,750
The investors will receive $343,750
Suppose that Paolo, an economist from a university in Arizona, and Sharon, an economist from a university in Massachusetts, are arguing over government bailouts. The following dialogue shows an excerpt from their debate:
Sharon: Thanks to recent financial crises, the concept of bailouts is a hot topic for debate among everyone these days.
Paolo: Indeed, it's gotten crazy! A government bailout of severely distressed financial firms is unnecessary because free markets will properly price assets.
Sharon: I don't know about that. Without a bailout of severely distressed financial firms, the economy will experience a deep recession.
The disagreement between these economists is most likely due to _____________________. Despite their differences, with which proposition are two economists chosen at random most likely to agree?
a. Lawyers make up an excessive percentage of elected officials
b. Minimum wage laws do more to harm low-skilled workers than help them.
c. Tariffs and import quotas generally reduce economic welfare.
Answer: 1. Differences in scientific judgements.
2. c. Tariffs and import quotas generally reduce economic welfare.
Explanation:
1. Economists tend to have very varying opinions and this is a well known fact. So much so that even former President Ronald Reagan made jokes about their difference in opinions.
The two Economists in the scenario above, Paolo and Sharon both seem to disagree with each other because they believe that bailouts affect the Economy in different ways. This is most likely due to the scientific judgement that they reached after researching or thinking about the problem from different angles.
2. Despite the differences that Economists have with each other, it is a general belief that Tariffs and Quotas and indeed any hindrance to free trade between countries reduces economic welfare. In the case of Tariffs and Quotas, that reduction in welfare is called a Deadweight loss. You would be hard pressed to find an Economist that supports Quotas and Tariffs.
Aliyah is preparing to expand her IT consulting company. The current market rate for IT professionals is $58,000 per year. Each employee she hires will also require a computer and equipment that costs $6,000 per employee annually. Hiring more employees means that Aliyah can provide consulting services to more clients each year. Each client Aliyah has will pay her $10,000 per year.The number of clients Aliyah can take on is dependent on the number of workers she hires and is depicted in the accompanying table.Use this information to calculate the marginal cost and the marginal benefit of hiring each worker.Number of workers Clients per year0 01 112 203 274 32a. The first worker's marginal cost is $__________.b. The first worker's marginal benefit is $__________.c. The second worker's marginal cost is $__________.d. The second worker's marginal benefit is $__________.e. The third worker's marginal cost is $__________.f. The third worker's marginal benefit is $__________.g. The fourth worker's marginal cost is $__________.h. The fourth worker's marginal benefit is $__________.i. Using the rational rule to maximize her economic surplus, Aliyah should hire _________ workers.
Answer and Explanation:
a. The first worker marginal cost is
= The current market rate for IT professional + computer and equipment costing
= $58,000 + $6,000
= $64,000 per year
b.The marginal benefit per worker for hiring first worker is
= Pay each client × number of clients
= $10,000 × 11 clients
= $110,000
c . The second worker marginal cost is
= The current market rate for IT professional + computer and equipment costing
= $58,000 + $6,000
= $64,000 per year
d The second worker marginal benefit is
= Pay each client × number of clients
= $10,000 × (20 clients - 11 clients)
= $90,000
e The third worker marginal cost is
= The current market rate for IT professional + computer and equipment costing
= $58,000 + $6,000
= $64,000 per year
f. The third worker marginal benefit is
= Pay each client × number of clients
= $10,000 × (27 clients - 20 clients)
= $70,000
g. The fourth worker marginal cost is
= The current market rate for IT professional + computer and equipment costing
= $58,000 + $6,000
= $64,000 per year
h. The fourth worker marginal benefit is
= Pay each client × number of clients
= $10,000 × (32 clients - 27 clients)
= $50,000
I. Aliyah will employ 3 workers, because the extra marginal gain to the worker is greater than the marginal cost. It implies the hiring worker's cost is less than the benefits they receive.
In economics terms, the marginal cost is the cost that is caused by a change in the total cost that arises because of the increase in the quantity produced, and the cost of producing the additional quantity. It is calculated as the change in the cost is divided by the change in quantity.
a. The first worker marginal cost is
= The current market rate for IT professionals + computer and equipment cost
= $58,000 + $6,000
= $64,000 per year
b.The marginal benefit per worker for hiring the first worker is
[tex]= \text{Pay each client} \times \text{number of clients}&= \$10,000 \times 11 \:clients\\&= \$110,000[/tex]
c . The second worker marginal cost is
= The current market rate for IT professionals + computer and equipment cost
= $58,000 + $6,000
= $64,000 per year
d The second worker marginal benefit is
[tex]= \text{Pay each client}\times \text{ number of clients} = \$10,000 \times (20 \:clients - 11\: clients)= \$90,000[/tex]
e The third worker marginal cost is
= The current market rate for IT professionals + computer and equipment cost
= $58,000 + $6,000
= $64,000 per year
f. The third worker marginal benefit is
[tex]=\text{ Pay each client} \times \text{ number of clients} = \$10,000 \times (27 \:clients - 20 \:clients)= \$70,000[/tex]
g. The fourth worker marginal cost is
= The current market rate for IT professionals + computer and equipment cost
= $58,000 + $6,000
= $64,000 per year
h. The fourth worker marginal benefit is
[tex]= \text{Pay each client} \times \text{number of clients} = \$10,000 \times (32\: clients - 27 \:clients)= \$50,000[/tex]
I. Aliyah will employ 3 workers because the extra marginal gain to the worker is greater than the marginal cost. It implies the hiring worker's cost is less than the benefits they receive.
To know more about the marginal cost, refer to the link below:
https://brainly.com/question/20355404
Akwamba made this statement ‘organisations cannot be successful if managers fail to pay attention to the forces in the external environment’. Do you agree or not? Justify using practical examples
Answer:
For a particular organization to be successful it needs to pay attention to forces and external environments, hence I agree
Example a competitor upgrading it Software and hardware will be a force or external attack to another firm whom Had not.
How do Keynesians and classicals differ in their beliefs about how long it takes the economy to reach long-run equilibrium? What implications do these differences in beliefs have for Keynesian and classical views about the usefulness of antirecessionary policies? Classical economists think prices adjust _____ and that antirecessionary policies are _____, whereas Keynesian economists think the opposite.
Answer: Rapidly; Not Necessary
Explanation:
Keynesian Economists are of the believe that the Economy takes a fairly long time to reach a long run Equilibrium while Classical economists believe that it takes a shorter period of time. This has led to both classes of Economists having varying opinions when it comes to the need for Anti-recessionary Policies.
Anti-recessionary policies are implemented by the Government to try to get the economy back to the long run equilibrium as soon as possible and Keynesian Economists support this because the believe that if help is not given, the economy will take too long to adjust on its own. Classical Economists are against this and see no need for such policies because they maintain that the economy adjusts and reaches the Long run equilibrium rapidly meaning that such policies are not necessary and would just be a waste of resources as well as a way for the government to exert more influence on the economy which is another thing they are against as well.
