Purpose of Assignment The purpose of this assignment is for students to employ capital budgeting techniques using time value of money concepts to determine the acceptability of large dollar value assets. Assignment Steps Scenario: A firm has projected free cash flows of $575,000 for Year 1, $625,000 for Year 2, and 650,000 for Year 3, $725,000 for Year 4, and 850,000 for Year 5. The projected terminal value at the end of Year 5 is $6,000,000. The firm's Weighted Average cost of Capital (WACC) is 12.5%. Create a Microsoft® Excel® document to determine the Discounted Cash Flow (DCF) value of the firm based on the information provided above. Recommend acceptance of this project using net present value criteria using a Microsoft® Word® document. Include up to what level of initial investment you would accept the project? Why? Give a complete explanation of up to 350 words. Display your calculations. Coursehero

Answers

Answer 1

Answer:

Present Value 5,715,331.32

We are going to accept the project only if the initial investment is at 5,715,331 or below in order to achieve the return to support the cost of capital structure of the company

Accepting a project with a higher cost will not generate enought cashflow to sustain the patyment of debt and the return expected from the stockholders therefore, will generate a economic result and investor will leave the company for other which can sustain their desired return.

Explanation:

We are going to discount the yearly cash-flow at the given rate of 12.50%

then, the terminal value which is the present value of the future period will also be discounted at this rate.

The sum of all this will be the present value of the firm.

[tex]\left[\begin{array}{ccc}$Year&$Cash Flow&$Discounted\\1&575000&511111.11\\2&625000&493827.16\\3&650000&456515.77\\4&725000&452613.93\\5&850000&471689.61\\$terminal&6000000&3329573.74\\Present&Value&5715331.32\\\end{array}\right][/tex]

The formula we use the present value of a lump sum:

[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]

We are going to accept the project only if the initial investment is at 5,715,331 or below in order to achieve the return to support the cost of capital estructure of the company


Related Questions

15) A market is defined as A) a physical place where people buy only goods. B) a physical place where people buy both goods and services. C) a store where people buy physical goods. D) any arrangement that brings buyers and sellers together. E) a place where one good is bartered for another.

Answers

Answer:

D) any arrangement that brings buyers and sellers together.

Explanation:

In earlier times before now a market has a specific way of defining it. But due to recent advancement in technology, it can be described or defined to be any arrangement that brings buyers and sellers together.

The power of online presence totally altered the initial marker definitions the world know as any physical place where these buyers and sellers meet to do their tradings or businesses or a place where goods are bartered for another. Therefore any arrangement, be it via mail, sms, codes, online stores, video meetings etc are all forms of market places.

Karen Bartlett was given a generic version of Sulindac, an anti-inflammatory drug. The result was that she developed toxic epidermal necrolysis, a disease that disfigured and blinded her. She brought suit alleging that there were warnings that should have been put on the generic version of the drug because issues with the skin infections were being reported. However, the manufacturer to Sulindac did not have FDA approval to place the warning on the product. The jury awarded Ms. Bartlett $21 million, and the generic manufacturer appealed the decision. Which of the following theories would be the best approach for the generic manufacturer to take in order to have the verdict reversed?

a. the commerce clause
b. substantive due process
c. preemption
d. due process because of the excessive size of the verdict

Answers

Answer:

option c: Preemption

Explanation:

preemption can simply be defined as the rule of law that proclaims the federal law and the constitution as the supreme law in all the land so therefore if there is a case  whereby there is a conflict between a federal and a state law, the federal law will be in absolute control and this will render the state law to be void.

there are two  primary occasion that will warrant preemption  they are where clearly, federal law preempts state or local law, and  also where preemption is implied.  different kind of preemption can also be said to be express preemption, implied preemption, field preemption, conflict preemption and frustration of purpose preemption.

Granite Construction Company is considering selling excess machinery with a book value of $328,100 (original cost of $449,200 less accumulated depreciation of $121,100) for $222,800, less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $217,860 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company’s costs of repairs, insurance, and property tax expenses are expected to be $16,708.
Required:
A. Prepare a differential analysis, dated November 7 to determine whether Granite should lease (Alternative 1) or sell (Alternative 2) the machinery.
B. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain.

Answers

Answer:

A)

book value = $328,100

net selling cost = $222,800 - 6% = $209,432

net lease revenue = $217,860 - $16,708 = $201,152

                                Granite Construction

                                 Differential analysis

                                        November 7

                                     Alternative 1      Alternative 2     Differential

                                     SELL                  LEASE               amount    

Revenue from sales     $222,800         $0                      $222,800

- sales expenses             ($3,368)         $0                         ($3,368)

Revenue from lease     $0                     $217,860           ($217,860)

- lease expenses          $0                      ($16,708)              $16,708

total                               $209,432         $201,152                $8,280

B) Granite Construction should sell the equipment since it will earn $8,280 more than leasing it, and that without considering the value of money in time (discount rate on lease revenue).

"ART Company just paid a dividend of $2.00. The dividend is expected to grow by 10% this year, 9% in year two and 6% in year three. Then, beginning in year four, the dividend will begin growing at a constant rate of 4%. With a required return of 10%, what is the stock worth today

Answers

Answer:

The stock is worth $38.99 per share today

Explanation:

We can calculate the value of the stock using the dividend discount model approach (DDM). The DDM values the stock based on the present value of the expected future dividends from the stock. To calculate the price of the stock today, we simply discount back all the future expected dividends and terminal value (calculated when the growth rate in dividends become constant) to their present value using the required rate of return as the discount factor.

The value of ART company's stock today will be,

P0 or V0 = 2 * (1+0.1) / (1+0.1)  + 2 * (1+0.1)*(1+0.09) / (1+0.1)^2  +  

2 * (1+0.1)*(1+0.09)*(1+0.06) / (1+0.1)^3  +  

[( 2 * (1+0.1)*(1+0.09)*(1+0.06)*(1+0.04)) / (0.1 - 0.04)] / (1+0.1)^3

P0 or V0 = $38.9939 rounded off to $38.99

Robinson Company purchased Franklin Company at a price of $2,500,000. The fair market value of the net assets purchased equals $1,800,000. 1. What is the amount of goodwill that Robinson records at the purchase date? 2. Does Robinson amortize goodwill at year-end? 3. Robinson believes that its employees provide superior customer service, and through their efforts, Robinson believes it has created $900,000 of goodwill. Should Robinson Company record this goodwill?

Answers

Answer:

Explanation:

Goodwill is defined as the excess in amount of the purchase price of a company over the fair value at acquisition.It is intangible in nature , meaning it can not be physically separated from the other assets. Example are patent , brand name , good employee relation.

1.

Goodwill calculation

Purchase price - $2,500,000

Fair value -          $1,800,000

Goodwill -               $700,000        

2.

No

Under the IAS 36, impairment of assets , goodwill is not amortized but annually tested for impairment as amortization is applicable to intangible assets with a definite useful life while intangible assets with indefinite useful life are annually tested for impairment to evaluate a loss in value experienced.

3

No

Under IAS 38 , Internally generated goodwill are not recognized as no related cost is incurred towards achieving a future benefit

Every year, the U.S. Census Bureau conducts an income survey of about 60,000 American families carefully selected to represent the whole population. The data collected help to measure income inequality in the economy. Which of the following causes the census data to inaccurately measure income inequality?
a) Very few people move from one income quintile to another over the years.
b) Higher-income families tend to have more persons to support.
c) In-kind transfers do not add to people's incomes but are counted as income.

Answers

Answer:

c) In-kind transfers do not add to people's incomes but are counted as income.

Explanation:

In the given scenario the aim of the census is to measure income inequality in the population selected.

If however the amount of income earned by individuals is not estimated accurately the results of the study will be inaccurate.

In kind transfers are usually goods and services that a person gets for free of at a reduced rate. They are not considered to be income.

When in kind transfers are counted as income and do not actually add up to income, we cannot get a true picture of income of participants of the income survey.

People who have low income but high in kind transfers will be considered high income earners which is not true.

Lansing, Inc., provided the following data for its two producing departments: Molding Polishing Total Estimated overhead $400,000 $80,000 $480,000 Direct labor hours (expected and actual): Form A 1,000 5,000 6,000 Form B 4,000 15,000 19,000 Total 5,000 20,000 25,000 Machine hours: Form A 3,500 3,000 6,500 Form B 1,500 2,000 3,500 Total 5,000 5,000 10,000 Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 30,000 units of Form A produced and sold and 50,000 of Form B. Required:
1. Calculate the overhead rates for each department.
2. Using departmental rates, assign overhead to the two products and calculate the overhead cost per unit. How does this compare with the plantwide rate unit cost, using direct labor hours?
3. What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form B and the direct labor hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates, and compare with the plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?

Answers

Answer:

1. Form A$80 per machine hour

Form B $4 per direct labor hour

2.Form A from $3.84 to $10.00

Form B from $7.30 to $3.60

3. Form A Unit overhead cost $ 3.87

Form B Unit overhead cost $ 7.28

Explanation:

Lansing, Inc

1. Overhead rates for each department will be;

Molding

$400,000/5,000

= $80 per machine hour

Polishing

$80,000/20,000

= $4 per direct labor hour

2. The overhead assignment:

Form A

($80 ×3,500) + ($4 ×5,000)

$280,000+$20,000

=$300,000

Form B

($80 ×1,500) + ($4 ×15,000)

$120,000+$20,000

=$180,000

Total applied overhead $300,000 and $180,000

Units of production Form A :

300,000÷30,000

=Unit overhead cost $10.00

Units of production Form B

180,000÷50,000

= Unit overhead cost $3.60

Plantwide rate Will be :

$480,000/25,000

= $19.20 per direct labor hour

Form A overhead cost in units will be:

$19.20 ×6,000/30,000

$19.20×0.2

$3.84

Form B overhead cost in unit will be :

$19.20 ×19,000/50,000

$19.20×0.38

$7.296 approximately $7.30

The plantwide rate for Form A

$3.84 to $10.00

The plantwide rate for Form B

$7.30 to $3.60

3. Overhead assignment:

Form A

($80 ×1,200) + ($4 ×5,000)

=$96,000+$20,000

=$116,000

Form B

($80 ×3,800) + ($4 ×15,000)

=$304,000 +$60,000

=$364,000

Total applied overhead

Form A $116,000

Form B $364,000

Units of production

Form A

$116,000 ÷ 30,000

=Unit overhead cost $ 3.87

Form B

$364,000÷ 50,000

Unit overhead cost $ 7.28

When compared to the plantwide unit overhead costs the cost will be $0.03 more higher for Form A and $0.02 less for Form B.

Which means that departmental rates may not cause a change in the assignments because It will depends on the complexity of each product and the way in which the resource demands are been made in each of the department.

NewTech Incorporated management plans on paying the company's first dividend of $2.00 three years from today (D3 = $2.00) on its' common stock. After year three the dividend is expected to grow at a constant rate of 5% thereafter. As an investor with a required rate of return of 15%, what would you pay for NewTech common stock today?

Answers

Answer:

Stock price today = $13.807

Explanation:

According to the dividend valuation model , the current price of a stock is the present value of the expected future dividends discounted at the required rate of return

This principle can be applied as follows:

The value of cash flow the stock today is the present value of the future cash flow discounted at the required rate of return

Step 1 : Compute the PV in year 3 of future dividend

PV = D× (1+g)/r-g

D- div in year 3, g- growth rate, r-required rate of return

PV in year 3 = 2× (1.05)/0.15-0.05

                   = 21

Step 2: PV in year in year 0

PV = PV in year 3 × (1+r)^(-n)

r-rate of return- 15%, n- number of years- 3

    =  21 × 1.15^(-3)

    =13.80784088

Stock price today = $13.807

Suppose that an issuing bank pays on documents that are conforming to the requirements of the letter of credit, but the seller has shipped worthless goods to the buyer. Which of the following statements, if any, are true?

a. As long as the documents strickly comply with the letter of credit requirements, the bank will not have to reimburse the buyer
b. If there is fraud in the transaction, the bank will have to reinburse the buyer and seek its remedies against the seller
c. The strick compliance insulates the bank from liability, since it assures the bank that the underlying contract between the buyer and seller is entirely independent from the letter of credit contract
d. A and B

Answers

Answer:

the answer C

Explanation:

As long as the documents strickly comply with the letter of credit requirements, the bank will not have to reimburse the buyer

b. If there is fraud in the transaction, the bank will have to reinburse the buyer and seek its remedies against the seller

c. The strick compliance insulates the bank from liability, since it assures the bank that the underlying contract between the buyer and seller is entirely independent from the letter of credit contract

The owner of a small firm has just purchased a personal computer, which she expects will serve her for the next two years. The owner has been told that she "must" buy a surge suppressor to provide protection for her new hardware against possible surges or variations in the electrical current, which have the capacity to damage the computer. The amount of damage to the computer depends on the strength of the surge. It has been estimated that there is a 3% chance of incurring 350 dollar damage, 5% chance of incurring 250 dollar damage, and 12% chance of incurring 100 dollar damage from a surge within the next two years. An inexpensive suppressor, which would provide protection for only one surge, can be purchased. How much should the owner be willing to pay if she makes decisions on the basis of expected value

Answers

Answer:

$35

Explanation:

The computation of the expected value is shown below;

As we know that  

= Estimated chance of damage percentage × dollar damage + Estimated chance of damage percentage × dollar damage + Estimated chance of damage percentage × dollar damage

= 3% × $350 + 5% × $250 + 12% × $100

= $10.5 + $12.5 + $12

= $35

We simply multiplied the estimated chance of damage percentage with the dollar damage and then added the other two so that the expected value could arrive

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: Location FC (annual) VC (per unit) Atlanta $ 80,000 $ 20 Phoenix $ 140,000 $ 16 If the annual demand will be 20,000 units, what would be the cost advantage of the better location? HINT: Compare the total costs Select one: a. 40000 b. 20000 c. 460000 d. 60000

Answers

Answer:

Cost Advantage of different locations:

b. $20,000

Phoenix certainly had a cost advantage over Atlanta and based on this factor, it should be chosen for the new plant instead of any other city.

Explanation:

a) Total Costs of different locations:

                        Atlanta       Phoenix

Fixed Cost      $80,000     $140,000

Variable cost  400,000      320,000

Total Costs  $480,000    $460,000

b) Variable costs

                                   Atlanta       Phoenix

Annual Demand        20,000        20,000

Variable cost/unit        $20              $16

Total variable cost  $400,000  $320,000

c) Cost Advantage is the competitive edge which location (or company) can have over another through reduced production or marketing costs or both so that it can offer cheaper prices or use excess profits to bolster promotion or distribution.   In this case, the comparison is on the total cost, which is made of variable and fixed costs.

The following data have been recorded for recently completed Job 323 on its job cost sheet. Direct materials cost was $2,063. A total of 33 direct labor-hours and 234 machine-hours were worked on the job. The direct labor wage rate is $18 per labor-hour. The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $24 per machine-hour. The total cost for the job on its job cost sheet would be:

Answers

Answer:

$8,723

Explanation:

Calculation for total cost for the job on its job cost sheet

Direct materials 2,063

Direct labor (33 hours × $18 per hour) 594

Manufacturing overhead (234 hours × $24 per hour) 5,616

Total manufacturing cost for job 8,273

An investor is deciding whether to build a retail store. If she invests in the store and it is successful, she expects a return of $100,000 in the first year. If the store is not successful, she will suffer a loss of $80,000. She guesses that the probability that the store will be a success is 0.6. To remove some of the uncertainty from this decision, the investor tries to establish more information, but this market research will cost $20,000. If she spends this money, she will have more confidence in her investment. There is a 0.6 probability that this information will be favorable; if it is, the likelihood that the store will be a success increases to 0.9. If the information is not favorable, the likelihood that the store will be a success reduces to only 0.2. Of course, she can elect to do nothing.
A) Draw the associated decision tree.
B) What do you recommend?
C) How much is the information worth?
Replace all the monetary values with the following utilities
Monetary Value Utility
$100,000 1.00
$80,000 0.40
$0 0.20
-$20,000 0.10
-$80,000 0.05
-$100,000 0.00
A) What do you recommend, based on expected utility?
B) Is the investor a risk soeker or a risk avoider?

Answers

Answer:

Explanation:

Given that,

expects a return of $100,000 in the first year

loss of $80,000

probability that the store will be a success is 0.6

research will cost $20,000

0.6 probability that this information will be favorable

store will be a success increases to 0.9

store will be a success reduces to only 0.2

a) Decision tree is attached

EMV= (payoff of first outcome) * (probability of first outcome) +  (payoff of second outcome) * (probability of second outcome) +  (payoff of third outcome) * (probability of third outcome)

EMV(node 1) = EMV(new store)

= ($100,000 * 0.6) + (-80,000 * 0.4)

=$28,000

EMV (node 2) = EMV (no store)

= $0

EMV (node 3) = EMV ( new store and favourable research)

= ($100,000 * 0.9) + (-80,000 * 0.1)

=$82,000

EMV (node 4) = EMV ( no store and favourable research)

= $0

EMV (node 5) = EMV ( new store and unfavourable research)

= ($100,000 * 0.2) + (-80,000 * 0.8)

= -$44,000

EMV (node 6) = EMV ( no new store and unfavourable research)

= $0

B) Here we compare EMV of not conducting the market research ans EMV of conducting the market research and the maximum EMV shall be taken for decision making

Here the EMV of conducting the market research is higher than not conducting

Hence, the investor can go to market research test. If result is positive, she can invest in the store, if negative she can stop the proposal.

Compute ending merchandise​ inventory, cost of goods​sold, and gross profit using the​ (1) FIFO inventory costing​method, (2) LIFO inventory costing​ method, and​ (3) weighted-average inventory costing method.​ (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest​ dollar.)
Begin by determining ending merchandise inventory and cost of goods sold under each of the three methods.
Requirement 1.
FIFO
Plus:
Less:
Cost of goods sold
Requirement 2.
LIFO
Requirement 3.
Weighted-Average

Answers

Additional Information:

June.1 Beginning merchandise inventory 17 units at $15each

      12  Purchase                                          5 units at $19each

      20 Sale                                                 14 units at $37each

     24  Purchase                                         11 units at $23each

     29  Sale                                                 13 units at $37each

Answer:

a) Ending Merchandise Inventory and Cost of Goods Sold under FIFO:

Beginning Inventory,  17 units at $15each   $255

Plus Purchases:

 June 12  Purchase, 5 units at $19each         95

 June 24 Purchase, 11 units at $23each      253

Cost of Goods Available for Sale              $603

Less Ending Inventory                                  138

Cost of Goods Sold                                  $465

b) Ending Merchandise Inventory and Cost of Goods Sold under LIFO:

Beginning Inventory,  17 units at $15each   $255

Plus Purchases:

 June 12  Purchase, 5 units at $19each         95

 June 24 Purchase, 11 units at $23each      253

Cost of Goods Available for Sale                $603

Less Ending Inventory                                      90

Cost of Goods Sold                                      $513

c) Ending Merchandise Inventory and Cost of Goods Sold under Weighted Average:

Beginning Inventory,  17 units at $15each   $255

Plus Purchases:

 June 12  Purchase, 5 units at $19each         95

 June 24 Purchase, 11 units at $23each      253

Cost of Goods Available for Sale                $603

Less Ending Inventory                                    109.62

Cost of Goods Sold                                    $493.38

2. Ending Inventory = 6 units (17 units + 5 - 14 + 11 - 13)

                                         FIFO                    LIFO             Weighted Average

Ending Inventory value = $23 *6 = $138;  $15 *6 = $90;  $18.27 *6 = $109.62

Weighted Average = Cost of Goods Available for Sale / Quantity Available for Sale = $603/33 = $18.27 per unit

Explanation:

FIFO: First In, First Out:  This is a method of costing inventory which assumes that goods remaining in stock are those that were brought in last.  This means that goods are sold out according to the time they are bought, with earlier bought goods being sold before later bought goods.

LIFO: Last In, First Out:  This costing method assumes that goods that are sold are those that were bought later leaving those bought earlier to remain in stock.  The entity using this method exhausts the last quantity bought before selling the earlier quantities.

Weighted Average: This is another technique which weighs the averages of the cost of inventory before determining the value of inventory.  The weighted average method divides the cost of the goods available for sale by the number of those units still on the shelf.  The result is the weighted average cost per unit, which can be used to assign a cost to both the ending inventory and the cost of goods sold.

Required Information
The following information applies to the questions displayed below) Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $13. At the start of January 2018, VGC's income statement accounts had zero balances and its balance sheet account balances were as follows:________.
Cash $1,600,000
Accounts Receivable 174,000
Supplies 15,100
Equipment 930,000
Buildings 510,000
Land 2,050,000
Accounts Payable 113,000
Deferred Revenue 74,800
Notes Payable (due 2025) 94,800
Common Stock 2,500,000
Retained Earnings 2,498,100
In addition to the above accounts, VGC's chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense. The following transactions occurred during the January month:________.
A. Received $57,750 cash from customers on 1/1 for subscriptions that had already been earned in 2017.
B. Purchased 10 new computer servers for $41,500 on 1/2; paid $11,500 cash and signed a three-year note for the remainder owed.
C. Paid $14,300 for an Internet advertisement run on 1/3.
D. On January 4, purchased and received $5,300 of supplies on account.
E. Received $150,000 cash on 1/5 from customers for service revenue earned in January.
F. Paid $5,300 cash to a supplier on January 6.
G. On January 7, sold 19,900 subscriptions at $13 each for services provided during January. Half was collected in cash and half was sold on account.
H. Paid $380,000 in wages to employees on 1/30 for work done in January.
I. On January 31, received an electric and gas utility bill for $6,260 for January utility services. The bill will be paid in February.

Answers

Answer:

Cash             57,750 debit

   Account receivables 57,750 credit

--------------------------------------------

Equipment  41,500 debit

 cash                  11,500 credit

 note payable  30,000 credit

--------------------------------------------

Advertising Expense  14,300 debit

             cash                 14,300 credit

--------------------------------------------

supplies   5,300 debit

   account payables 5,300 credit

------------------------------------------

cash     150,000 debit

      service revenue 150,000 credit

-------------------------------------------

account payables   5,300 debit

      cash                         5,300 credit

---------------------------------------------

cash                           129,350 debit

account receivables 129,350 debit

          services revenue        258,700 credit

---------------------------------------------

wages expense 380,000 debit

    cash                       380,000 credit

--------------------------------------------

utilities expense       6,260 debit

     account payable     6,260 credit

Explanation:

To make thge jounral entries we must follow the basic principles:

debit = credit

and one value per account

Is important to comment that A state the income has been earned so we deduct from account recievables

then. we again receive cash for service earned

In none ofthe case we are doing the recognition of hte deferred revenue so this, stays untouched.

G) 19,900 x $13 each = $258,700

half cash-half credit : 258,700 / 2 = 129,350

Hi-Tech, Inc., reports net income of $65.0 million. Included in that number are depreciation expense of $5.5 million and a loss on the sale of equipment of $1.5 million. Records reveal increases in accounts receivable, accounts payable, and inventory of $2.5 million, $3.5 million, and $4.5 million, respectively. What are Hi-Tech's net cash flows from operating activities?

Answers

Answer:

Net Cash Flows from operating activities is $68.5 million.

Explanation:

The indirect Method would be used here because all we will find the cash expenses and revenues that were converted into within the year and are reported in the income statement by calculating the increase and decrease in the current assets and current liabilities. Here we will also eliminate the non cash expense effects by adding them back.

The net cash flows from operating activities can be calculated using the following method:

                                                                 Millions

1. Net Income                                                65

Add Non Cash Deductions

2. Depreciation                                             5.5

3. Loss on sale of Equipment                       1.5

Add / (Less) the increase or

decrease in current Assets or

liabilities

4. Increase in Trade Receivables                (2.5)

5. Increase in Trade Payables                      3.5

6. Increase in inventory                               (4.5)

Net Cash Flows from operating activities $68.5

The separate components highlight several features of return on investment not revealed by a single calculation:a.The importance of investment turnover as a key to income is stressed.b.The importance of revenues is explicitly recognized.c.The important components are expressed as ratios or percentages instead of dollarfigures. This form of expression often enhances comparability of different divisions,businesses, and time periods.d.The breakdown stresses the possibility of trading off investment turnover for incomeas a percentage of revenues so as to increase the average ROI at a given level ofoutput

Answers

Answer:

The options (a) (b) and (c) is correct.

Explanation:

From the question stated the features that highlights the return of investment is listed as follows.

The significance of investment turnover as a key to income is stressedThe importance import of revenues is explicitly recognizedThe significant components are expressed as ratios or percentages instead of dollar figures.

Hence, the last option is not correct.

Lehi City has designated an internal service fund as the single fund to account for its self-insurance activities. Most of the insured activities such as the police department, fire department, and general government functions are accounted for in the General Fund. What is the maximum amount that can be charged to expenditure in the General Fund related to the self-insurance activities

Answers

Answer: c)The actuarially determined amount necessary to cover claims, expenditures, and catastrophic losses.

Explanation:

The Expenditure on the account related to self - insurance activities  refers to the amounts that will be deducted from the fund for anything insurance related.

The insurance is meant to cover the claims and unlikely events of catastrophies. Therefore when those things do occur it will be deducted from the service fund to cover those things.

Those along with expenses incurred to maintain the fund will be considered expenses and that is the maximum amounts that can be deducted from the fund.

Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance.
Accounts Payable $ 26,800
Accounts Receivable 17,200
Accumulated Depreciation—
Equipment 68,000
Cash 8,000
Common Stock 35,000
Cost of Goods Sold 614,300
Freight-Out 6,200
Equipment 157,000
Depreciation Expense 13,500
Dividends 12,000
Gain on Disposal of Plant Assets 2,000
Income Tax Expense 10,000
Insurance Expense 9,000
Interest Expense 5,000
Inventory 26,200
Notes Payable 43,500
Prepaid Insurance 6,000
Advertising Expense 33,500
Rent Expense 34,000
Retained Earnings 14,200
Salaries and Wages Expense 117,000
Sales Revenue 904,000
Salaries and Wages Payable 6,000
Sales Returns and Allowances 20,000
Utilities Expense 10,600

Answers

Answer:

                Wolford Department Store

                     Income Statement

      For the Year Ended November 30,2017

Sales Revenue                                      $904,000

Sales Returns and Allowances             ($20,000 )

Net Sales                                               $884,000

Cost of Goods Sold                              ($614,300)

Gross profit                                           $269,700

Operating expenses:

Wages Expense $117,000 Advertising Expense $33,500 Rent Expense $34,000 Depreciation Expense $13,500 Insurance Expense $9,000 Utilities Expense $10,600Freight-Out $6,200

Total operating expenses                   ($223,800)

Income from operations                         $45,900

Other revenues:

Gain on Disposal of Plant Assets            $2,000  

Other expenses:

Interest Expense                                     ($5,000 )

Income before income taxes                 $42,900

Income Tax Expense                             ($10,000)

Net income after taxes                         $32,900

                Wolford Department Store

                         Balance Sheet

      For the Year Ended November 30,2017

Assets:

Cash $8,000

Accounts Receivable $17,200

Prepaid Insurance $6,000

Inventory $26,200

Equipment $157,000

Accumulated Depreciation - Equipment (68,000)

Total Assets: $146,400

Liabilities and Stockholders' Equity:

Accounts Payable $26,800

Wages Payable $6,000

Notes Payable $43,500

Common Stock $35,000

Retained Earnings $35,100

Total Liabilities and Stockholders' Equity: $146,400

                Wolford Department Store

           Statement of Retained Earnings

      For the Year Ended November 30,2017

Retained earnings at the beginning of the period: $14,200

Net income after taxes:                                             $32,900

Dividends                                                                  ($12,000)

Retained earnings at he end of the period:           $35,100

a. The Wolford Department Store's Multi-level Income Statement, Balance Sheet, and Statement of Retained Earnings as of November 30, 2017 are as follows:

Wolford Department Store

Income Statement

For the Year Ended November 30,2017

Sales Revenue                                      $904,000

Sales Returns and Allowances             ($20,000)

Net Sales                                              $884,000

Cost of Goods Sold                              ($614,300)

Gross profit                                          $269,700

Operating expenses:

Wages Expense                $117,000

Advertising Expense           33,500

Rent Expense                      34,000

Depreciation Expense        13,500

Insurance Expense              9,000

Utilities Expense                10,600

Freight-out                          6,200

Total operating expenses                 ($223,800)

Income from operations                         $45,900

Other revenues:

Gain from Disposal of Plant Assets         $2,000  

Other expenses:

Interest Expense                                     ($5,000)

Income before Income Taxes              $42,900

Income Tax Expense                             ($10,000)

Net Income After Taxes                       $32,900

Wolford Department Store

Balance Sheet

As of November 30,2017

Assets:

Current Assets:

Cash                                                                         $8,000

Accounts Receivable                                               17,200

Prepaid Insurance                                                    6,000

Inventory                                                                 26,200

Current assets                                                     $57,400

Long-term assets:

Equipment                           $157,000

Accumulated Depreciation  (68,000)               $89,000

Total Assets                                                      $146,400

Liabilities and Stockholders' Equity:

Current Liabilities:

Accounts Payable                                             $26,800

Wages Payable                                                     6,000

Current liabilities                                            $32,800

Long-term liabilities  

Notes Payable                                                $43,500

Total liabilities                                                $76,300

Equity:

Common Stock                                              $35,000

Retained Earnings                                            35,100

Total Equity                                                    $70,100

Total Liabilities & Stockholders' Equity  $146,400

Wolford Department Store

Statement of Retained Earnings

As of November 30,2017

Retained earnings 1 Dec. 2016         $14,200

Net income after taxes                       32,900

Dividends                                         ($12,000)

Retained earnings, Nov. 30, 2017 $35,100

b) The profitability ratios are computed as follows:

1. Profit Margin = (Net Income/Net Sales x 100)

= $32,900/$884,000 x 100

= 3.72%

2. Gross Profit rate = Gross Profit/Net Sales x 100)

= $269,700/$884,000 x 100

= 30.51%

c. If the net sales increases by 15%, the Net sales = $1,016,600 ($884,000 x 1.15)

If Gross profit increases by $40,443, the Gross profit = $310,143 ($269,700 + $40,443)

If Expenses increase by $58,600, the total operating Expenses = $282,400 ($223,800 + $58,600)

Revised Net Income:

Gross Profit                                              $310,143

Total operating expenses                     (282,400)

Income from operations                          $27,743

Other revenues:

Gain from Disposal of Plant Assets         $2,000  

Other expenses:

Interest Expense                                     ($5,000)

Income before Income Taxes               $24,743

Income Tax Expense                            ($10,000)

Net Income After Taxes                        $14,743

b) The profitability ratios are computed as follows:

1. Profit Margin = (Net Income/Net Sales x 100)

= $14,743/$1,016,600 x 100

= 1.45%

2. Gross Profit rate = Gross Profit/Net Sales x 100)

= $310,143/$1,016,600 x 100

= 30.51%

d. With the proposed changes, the gross profit rate remains the same (without any impact) because the net sales increased by the same rate (15%) as the cost of goods sold and the gross profit.

However, the net income reduced drastically, especially with the income tax remaining the same amount.

Thus, without the income tax effect, there is no merit in this proposal as it reduced the net income margin from 3.72% to 1.45%.

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Presented below is an aging schedule for Bryan Company. Number of Days Past Due Customer Total Not Yet Due 1-30 31-60 61-90 Over 90 Aneesh $ 24,000 $ 9,000 $15,000 Bird 30,000 $ 30,000 Cope 50,000 5,000 5,000 $40,000 DeSpears 38,000 $38,000 Others 120,000 72,000 35,000 13,000 $262,000 $107,000 $49,000 $28,000 $40,000 $38,000 Estimated percentage uncollectible 3% 7% 12% 24% 60% Total estimated bad debts $ 42,400 $ 3,210 $3,430 $3,360 $ 9,600 $22,800 At December 31, 2016, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $8,000.Journalize the adjusting of bad debit at December 31 2016.

Answers

Answer and Explanation:

The adjusting journal entry is shown below:

On Dec 2016

Bad debt expense Dr ($42,400 - $8,000)  $34,400

          To Allowance for doubtful debts $34,400

(Being the bad debt expense is recorded)

For recording this we debited the bad debt expense as it increased the expenses and credited the allowance for doubtful debts as it reduced the assets

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,900 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:

Answers

Answer:

Allowance for Doubtful Accounts   $2,900

            To Accounts Receivable $2,900

(Being the written off amount is recorded)

Explanation:

The journal entry to record the write off of the account using allowance method is shown below:

On May 3

Allowance for Doubtful Accounts   $2,900

            To Accounts Receivable $2,900

(Being the written off amount is recorded)

For recording this we debited the allowance for doubtful accounts as it reduced the allowance and credited the account receivable as it decreased the assets so that the proper recording of the given transaction could be done

On January 1, Valuation Allowance for Available-for-Sale Investments had a zero balance. On December 31, the cost of the available-for-sale securities was $252,000, and the fair value was $258,890. Prepare the adjusting entry to record the unrealized gain or loss on available-for-sale investments on December 31. Refer to the Chart of Accounts for exact wording of account titles.

Answers

Answer:

Dr  Valuation Allowance for Available-for-Sale Investments  $6890

Cr  unrealized gain/(loss) on AFS investments                                        $6890

Explanation:

The unrealized  gain or loss on the available-for-sale securities is the difference between its cost of $252,000 and the fair value of $258,890 on 31st December.

Gain/(loss)=$258,890-$252,000=$6890  unrealized gain

The amount would be credited to unrealized gain/(loss) on AFS investments while Valuation Allowance for Available-for-Sale Investments would be debited with the same amount

The expected average rate of return for a proposed investment of $800,000 in a fixed asset with a useful life of four years, straight-line depreciation, no residual value, and an expected total net income of $360,000 for the four years is

Answers

Answer:

22.5%

Explanation:

For computation of return on investment first we need to find out the average investment and average income per year which is shown below:-

Average investment = Proposed investment ÷ Average

= $800,000 ÷ 2

= $400,000

Now, the Average income per year = Expected total net income ÷ Number of year

= $360,000 ÷ 4

= $90,000

Return on investment = Average income per year ÷ Average investment

= $90,000 ÷ $400,000

= 0.225

or

= 22.5%

Raising Canes is a restaurant located primarily in the south and the owner is interested in expanding nationwide. Name and describe the various types of research suppliers and discuss which type could meet his need for finding the best locations in new markets.?

Answers

Answer:

- syndicate research service

- limited research service

- standardized research

- custom research

Explanation:

Note, Raising canes ones to expand nationwide, which of course is a monumental task.

- The syndicated research supplier using is already established standards for the research in exchange for a fee.

- Standardized research supplier is willing to meet the needs of clients by directing strategies best fitted to find suitable retail locations. It is the best type of research service to meet this client’s needs.

- Limited-service research are suppliers that are limited in their scope of operations such as data warehousing, or data processing.

What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary.

Answers

Answer:

$340,000

Explanation:

Statement of cash flow ( year-end December 31, 2012)

Operating activities Cashflow

Net Income                         = $5,000,000

Add back: Depreciation     = $440,000

Net cashflow                      = $5,440,000

Investing activities Cashflow

Cash paid for machinery   = ($5,400,000)

Net cashflow                      = ($5,400,000)

Financing activities Cashflow

Cash receipt from issuing long term debt  =$1,000,000

Cash paid for dividends                               =(800,000)

Net cashflow                                                 =$200,000

Net increase              = ($5,440,000-$5,400,000+$200,000)

Net increase in cash = $240,000

Opening balance as at 1 Jan 2012    =$100,000

Closing balance as at 31 Dec 2012    =($100,000+$240,000) = $340,000

CarsonWentz Company uses a job-order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year, manufacturing overhead and direct labor-hours were estimated at $88,000 and 16,000 hours respectively, for the year. In June, job #315 was completed. Materials costs on the job totaled $1,590 and labor costs totaled $2,340 at $6.50 per hour. At the end of the year, it was determined that the company worked 15,300 direct labor-hours for the year, and incurred $86,750 in actual manufacturing overhead cos

Answers

Answer:

Instructions are below.

Explanation:

Giving the following information:

Estimated manufacturing overhead= $88,000

Estimated direct labor-hours= 16,000

Job 315:

Materials costs on the job totaled $1,590 and labor costs totaled $2,340 at $6.50 per hour.

At the end of the year, it was determined that the company worked 15,300 direct labor-hours for the year, and incurred $86,750 in actual manufacturing overhead costs.

With the information provided, we can calculate the total cost of Job 315 and the amount of under/over allocated overhead.

First, we need to determine the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 88,000/16,000= $5.5 per direct labor hour

Job 315:

Direct labor hours= 2,340/6.5= 360 hours

Total cost= 1,590 + 2,340 + 5.5*360= $5,910

Now, to calculate the over/under allocation, first, we need to allocate overhead for the whole company.

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 5.5*15,300= $84,150

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 86,750 - 84,150= $2,600 underallocated

Wattan Company reports beginning inventory of 10 units at $60 each. Every week for four weeks it purchases an additional 10 units at respective costs of $61, $62, $65, and $70 per unit for weeks 1 through 4. Compute the cost of goods available for sale and the units available for sale for this four-week period. Assume that no sales occur during those four weeks.

Answers

Answer:

Activity Units    Units cost      Cost of Goods     Available

Beginning Inventory        10   $60.00   $600

1st week purchase           10   $61.00    610

2nd week purchase        10   $62.00   620

3rd week purchase         10   $65.00   650

4th week purchase         10   $70.00   700

Units available for sale 50

Cost of goods available for sale $3,180

Explanation:

We can compute the cost of goods available for sale and the units available for sale for this four-week period by assuming that no sales occur during those four weeks

Activity Units Unit Cost Cost of Goods Available

Beginning Inventory 10 60 600

1st Week purchase 10 61 610

2nd Week purchase 10 62 620

3rd Week purchase 10 65 650

4th Week purchase 10 70 700

Units available for sale 50    

Cost of goods available for sale  3180

Thus, in the above it is shown the computing of the cost of goods available for sale and the units available for sale for this four-week period by assuming that no sales occur during those four weeks.

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Which of the following is NOT a pitfall an organization should avoid in strategic planning? Involving all managers rather than delegating planning to a "planner" Failing to communicate the plan to employees Failing to create a collaborative climate supportive of change Top managers not actively supporting the strategic-planning process Doing strategic planning only to satisfy accreditation or regulatory requirements

Answers

Answer:

Involving all managers rather than delegating planning to a "planner"

Explanation:

Strategic planning is a process of establishing the direction of a business. It assesses where the business is and where it is going. And the action plan needed to get to it's goal.

Delegating planning to a planner rather than involving all managers is an identified pitfall in strategic planning.

This is why Involving all managers rather than delegating planning to a "planner" is the correct answer since we are required to identify a non pitfall by the question.

Sandhill Company reports the following operating results for the month of August: sales $382,500 (units 5,100), variable costs $245,000, and fixed costs $98,000. Management is considering the following independent courses of action to increase net income.
1. Increase selling price by 16% with no change in total variable costs or units sold.
2. Reduce variable costs to 59% of sales.
Compute the net income to be earned under each alternative.
1. Net Income
$enter a dollar amount
2. Net Income
$enter a dollar amount
Which course of action will produce the higher net income? select an option

Answers

Answer:

Results are below.

Explanation:

Giving the following information:

Sales $382,500 (units 5,100 $75 per unit)

variable costs $245,000 (48.04 per unit)

fixed costs $98,000.

Option 1:

Increase selling price by 16%.

New selling price= 75*1.16= 87

Sales= 5,100*87= 443,700

variable costs= (245,000)

fixed costs= (98,000)

Net income= 100,700

2. Reduce variable costs to 59% of sales.

Contribution margin= (382,500*0.41)= 156,825

fixed costs= (98,000)

Net income= 58,825

The most profitable option is the first one.

If 4 million kegs of beer are sold, , which means that: It would be fairer for society to devote fewer resources to the production of beer. It would be fairer for society to devote more resources to the production of beer. Society is currently devoting the efficient quantity of resources to the production of beer. It would be more efficient for society to devote more resources to the production of beer. If 12 million kegs of beer are sold, , which means that: It would be fairer for society to devote more resources to the production of beer. Society is currently devoting the efficient amount of resources to the production of beer. It would be fairer for society to devote fewer resources to the production of beer. It would be more efficient for society to devote fewer resources to the production of beer. The efficient allocation of resources would result in the production of kegs of beer.

Answers

Answer:

1. It would be more efficient for society to devote more resources to the production of beer.

2. Society is currently devoting the efficient amount of resources to the production of beer.

Explanation:

1. If 4 million kegs of beer are sold, the marginal benefit exceeds marginal cost which means that: the society values this quantity of kegs of beer and would be more beneficial and efficient if the society devote more resources to beer production.

2. If 12 million kegs of beer are sold, where marginal cost equal marginal benefit, it means that this is a good point in which shows an efficient allocation of resources to beer production because the marginal cost of the resources is equal to the marginal benefit of each keg of beer.

If 4 million kegs of beers are sold, marginal benefit exceeds the marginal cost, which means that :

It would be more efficient for society to devote more resources to the production of beers.

Reason :

the advantage of an additional unit of producing a good is more than the cost of producing it.hence it is good to produce more where marginal benefit equals marginal cost.

If 12 million kegs of beers are sold, marginal cost exceeds the marginal benefit, which means that :

It would be more efficient for society to devote fewer resources to the production of beers.

Reason :

the advantage of an additional unit of producing a good is less than the cost of producing it.hence it is good to produce less where marginal benefit equals marginal cost.

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Entry for Jobs Completed; Cost of Unfinished Jobs The following account appears in the ledger prior to recognizing the jobs completed in January: Work in Process Balance, January 1 $10,100 Direct materials 82,110 Direct labor 88,580 Factory overhead 46,560 Jobs finished during January are summarized as follows: Job 210 $40,920 Job 224 $47,740 Job 216 25,010 Job 230 84,120 a. Journalize the entry to record the jobs completed. If an amount box does not require an entry, leave it blank. b. Determine the cost of the unfinished jobs at January 31. $ Why is the lynching of Josefa Segovia important to understand?Who was Mariano Samaniego? What were some of his accomplishments? Why was he an important person for Mexicans in Arizona? Find the area of a circle with radius, r = 17cm.Give your answer rounded to 3 SF. (SF means Significant figures) 2x + 12 = -2(4-2x)X=10X=-10X=-5X=5 The cost to rent a moving truck is a flat fee of $25 plus $0.60 per mile. The equation c = 25 + 0.6m models the cost, c, in dollars for the number of miles, m, traveled in the truck. Identify the independent and dependent variables. The is the independent variable. The is the dependent variable. foul (taste) is Define as? I feel like its the first and last Can someone help me with this question?It's geometry.Will mark you as brainliest if answer is correct. Distance between (-6,8) and (-3,9) Question Workspace Exhibit 3-5 Supply for Tucker's Cola Data Quantity supplied per week (millions of gallons) Price per gallon 6 $3.00 5 2.50 4 2.00 3 1.50 2 1.00 1 .50 Exhibit 3-5 shows the supply schedule for Tucker's Cola. Suppose there are four additional suppliers of cola in the market. When the price per gallon of cola is $1.50, the first supplier is willing to sell 10 million gallons, the second supplier is willing to sell 2 million gallons, the third supplier is willing to sell 5 million gallons, and the fourth supplier is willing to sell 0 gallons. The market quantity supplied of cola when the price is $1.50 is Ancient Egypt had a social hierarchy. If the hierarchy had five levels, with the pharaoh at the top, at which level werefarmers and herders?O the second tier, immediately below the pharaohO the third (middle) tierO the fourth tiero the fifth (bottom) tier 18. Use an inequality symbol (,=, s) to compare -3 +7_-10 - 2A. sB.>C. =D. Which would be used to solve this equation? Check all that apply. p/3=12 subtracting 3 from both sides of the equation multiplying both sides of the equation by 3 dividing both sides of the equation by 3 substituting 4 for p to check the solutionsubstituting 36 for p to check the solution Choose a bank in your community and ask for the forms that you need to fill out in order to open a checking account and a savings account. You may be able to get the forms from the bank branch or to download them from the banks website. Fill out both forms. Then, for each account type, describe the following requirements:- the information the bank wants - the documentation required to support the information you provided- the agreement youre entering into with the bank by signing the form(for finance class) Does Layeville's punishment fit his crime? Why or why not? Cells in the body use oxygenfor cellular respiration. Which is the result of cellular respiration?ATP is produced, and carbon dioxide (CO2) is released.ATP is consumed, and carbon dioxide (CO2) is released.ATP is consumed, and carbon dioxide (CO2) is absorbed.ATP is produced, and carbon dioxide (CO) is absorbed. An exponential growth function has an asymptote of y = 3. Which might have occurred in the original function to permit the range to include negative numbers? please help i dont know how to answer this A 3-column table with 4 rows. The first column is labeled Currency and entries Canadian dollar, Euro, Japanese yen, Indian rupee. The second column is labeled U S D/1 Unit and entries 0.97071, 1.35261, 0.01007, 0.01594. The third column is labeled Units/1 U S D and entries 1.03069, 0.73935, 99.90487, 62.72053.Mitchell travels from the US to Canada, where he exchanges 150 US dollars for Canadian dollars. He then spends 20 Canadian dollars, returns to the US, and exchanges the remaining money back to US dollars. How many US dollars does Mitchell have remaining?129.46130.00130.66134.59 Mis primos son de Cuba. Son __________. cubana cubano cubanas cubanos