Harold has a gross income of $3,230 from the purchase of life insurance by Sundown, Inc.
The gross income that Harold has from the purchase of the life insurance by Sundown, Inc. is $270.
Premium = $1.08 annually per $1,000 of protection
For the coverage of $250,000, the premium = 1.08 × (250/1,000) = $270
Insurance cost to the company = $3,500
Therefore, the Gross income of Harold from the purchase of the life insurance by Sundown, Inc. is calculated as follows:
Gross income = Insurance coverage cost - premium= $3,500 - $270= $3,230
Therefore, Harold has a gross income of $3,230 from the purchase of the life insurance by Sundown, Inc.
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Explain in detail offering examples of uses of cost accounting for business purposes.
Cost accounting plays a crucial role in various business purposes. It aids in the costing of products, cost control and reduction, pricing decisions, budgeting and forecasting, and performance evaluation.
By providing detailed cost information, businesses can make informed decisions and improve their financial management.
Costing of Products: Cost accounting helps businesses determine the cost of manufacturing or producing their products. It involves analyzing direct costs (such as raw materials and labor) and indirect costs (such as overhead expenses) to allocate them to specific products. This information is vital for pricing decisions and evaluating the profitability of different products.
Cost Control and Reduction: Cost accounting enables businesses to identify areas of high cost and implement cost control measures. By monitoring and analyzing cost variances, businesses can identify inefficiencies, waste, or areas where costs can be reduced. This helps in optimizing resources, improving productivity, and increasing profitability.
Pricing Decisions: Cost accounting provides the necessary information to determine appropriate pricing strategies. By understanding the cost structure and considering factors like market demand and competition, businesses can set prices that ensure profitability while remaining competitive in the market.
Budgeting and Forecasting: Cost accounting plays a significant role in budgeting and forecasting processes. By analyzing historical cost data and considering future business projections, businesses can estimate costs, plan budgets, and set financial targets. This helps in resource allocation, identifying potential cost overruns, and making strategic decisions to achieve financial goals.
Performance Evaluation: Cost accounting provides a basis for evaluating the performance of various departments, products, or projects. By comparing actual costs with budgeted or standard costs, businesses can assess performance, identify cost variances, and take corrective actions if necessary. This aids in monitoring efficiency, identifying areas for improvement, and enhancing overall organizational performance.
Decision Making: Cost accounting information is vital for making informed business decisions. Whether it's evaluating make-or-buy decisions, introducing new products, or expanding operations, cost accounting helps assess the financial impact and feasibility of different options. It provides data on costs, revenues, and profitability, enabling businesses to make strategic and financially sound decisions.
By utilizing cost accounting techniques and information, businesses can enhance their financial management, optimize costs, improve decision-making processes, and ultimately achieve their financial goals.
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Refer to your text Chapter 13, page 271. Examine exhibit 13.3 Example Aggregate Planning Variables and Revenue/Cost Implications. Which of the following are likely a viable option when increased production is predictable? Note: Consider seasonal demands (i.e., holidays, summer work). This is a Multiple Answer Question
A. Inventory
B. Workforce
C. Production Rate
D. Demand Management
The option "D. Demand Management" is not directly related to increasing production but focuses on managing and influencing customer demand.
When increased production is predictable, multiple options can be viable. The likely viable options are:
A. Inventory: Increasing inventory levels can help meet the anticipated higher demand during periods of increased production. By stocking up on goods or products in advance, a business can ensure that it has an adequate supply to meet customer needs.
B. Workforce: Hiring additional workers or adjusting work schedules can help accommodate the increased production requirements. This allows for the necessary manpower to handle the higher workload efficiently.
C. Production Rate: Increasing the production rate by optimizing processes, introducing automation, or streamlining operations can help meet the predicted rise in demand. This ensures that the business can produce goods or provide services at a faster pace without compromising quality.
The option "D. Demand Management" is not directly related to increasing production but focuses on managing and influencing customer demand. While it may be relevant to consider demand management strategies during periods of increased production, it is not specifically a means to address the production increase itself.
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Which of the following are likely a viable option when increased production is predictable? Note: Consider seasonal demands (i.e., holidays, summer work). This is a Multiple Answer Question
A. Inventory
B. Workforce
C. Production Rate
D. Demand Management
A decision must be made between two different machines, A and B. The machines will produce the same product, but only one type of machine (either A or B) will be purchased. The company estimates that the selling price per unit for the product will be $45. The variable cost of production per unit if machine A is selected is believed to be $9. The variable cost of production if machine B is selected is believed to be $18. The fixed cost of machine A is $11,070,000, and the fixed cost of machine B is $2,916,000.
a. The break-even quantity is ___________________ units if machine A is selected. (Enter your response as a whole number.)
The break-even quantity, if machine A is selected, is 307,500 units.
The break-even quantity, in units, can be calculated by dividing the fixed cost by the difference between the selling price per unit and the variable cost per unit. In this case, if machine A is selected, the fixed cost is $11,070,000, the selling price per unit is $45, and the variable cost per unit is $9.
Break-even quantity = Fixed cost / (Selling price per unit - Variable cost per unit)
Break-even quantity= $11,070,000 / ($45 - $9)
Break-even quantity= $11,070,000 / $36
Break-even quantity= 307,500 units
Therefore, the break-even quantity, in units, if machine A is selected is 307,500 units.
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Which of the following statements is correct about sustainability accounting? Sustainability accounting has been in existence since 1592. Sustainability accounting tracks a company's "green" score. Sustainability accounting is a subset of GAAP applied only to socially responsible companies Sustainability accounting aims to provide managers a broad set of information to meet the needs of multiple stakeholders.
Sustainability accounting aims to provide managers a broad set of information to meet the needs of multiple stakeholders. This statement is correct. Sustainability accounting is a branch of accounting that focuses on measuring, reporting, and analyzing the economic, environmental, and social impacts of an organization. It provides information beyond traditional financial accounting measures and takes into account the organization's sustainability performance and practices.
Sustainability accounting has gained significant importance in recent years as businesses recognize the need to integrate environmental and social considerations into their decision-making processes. It helps organizations assess their impact on the environment, society, and economy, allowing them to identify areas for improvement and make more informed decisions that align with sustainable practices.
By providing a broader set of information, sustainability accounting enables managers to consider the interests of various stakeholders, including investors, employees, customers, communities, and the environment. It goes beyond financial performance and incorporates non-financial indicators such as carbon emissions, energy consumption, social responsibility, and ethical practices. This holistic approach supports better decision-making that takes into account the long-term viability and resilience of the organization in a changing business landscape.
In summary, sustainability accounting aims to provide managers with a broad set of information to meet the needs of multiple stakeholders. It goes beyond financial measures and focuses on measuring and reporting on the economic, environmental, and social impacts of an organization, helping businesses make informed decisions that align with sustainability goals.
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Carver Incorporated purchased a building and the land on which the building is situated for a total cost of $700,000 cash. The land was appraised at $320,000 and the building at $480,000.
Required
d. Record the purchase in general journal format.
Journal entry for the purchase of a building and land by Carver Incorporated is given below:Debit: Building $480,000Debit: Land $320,000Credit: Cash $700,000Explanation:Carver Incorporated has purchased a building and land for a total cost of $700,000 cash.
The land has an appraised value of $320,000, and the building has an appraised value of $480,000.The purchase of a building and land will be recorded in the general journal of Carver Incorporated as follows:Debit: Building $480,000Debit: Land $320,000Credit: Cash $700,000The building and land will be recorded on the balance sheet as fixed assets.
The total amount of fixed assets will be $800,000, which is equal to the sum of the value of the building and land.The journal entry will increase the value of the building and land by $700,000. The cash account will be credited for the same amount as it is an outflow of cash for the company.
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You have just won the lottery. You will receive a first payment of $500,000 today and you will receive a total of 25 annual payments with each payment 5% larger than the previous payment. Alternatively, you can have a single lump sum payment today. If you expect you can earn 7.5% on your money, how big does the lump sum payment have to be for you to prefer that option?
The calculation of the lump sum payment required to prefer that option depends on the specific values of the 25 annual payments and cannot be determined without those values.
To determine the lump sum payment needed for you to prefer that option, we need to compare the present value of the 25 annual payments with the lump sum option. We will calculate the present value of the 25 payments using the formula for the present value of an annuity.
The first payment is $500,000, and each subsequent payment is 5% larger than the previous payment. The interest rate you can earn is 7.5%. The formula to calculate the present value of an annuity is:
Present Value = Payment / (1 + interest rate)^n + Payment / (1 + interest rate)^(n-1) + ... + Payment / (1 + interest rate)
where:
Payment = amount of each payment
Interest Rate = annual interest rate
n = number of payments
Using the formula, we can calculate the present value of the 25 annual payments as follows:
Present Value = $500,000 / (1 + 0.075)^1 + $525,000 / (1 + 0.075)^2 + $551,250 / (1 + 0.075)^3 + ... + Payment / (1 + 0.075)^25
To calculate the present value of the lump sum payment, we can use the formula for the present value of a single sum:
Present Value = Lump Sum Payment / (1 + interest rate)^n
We need to find the lump sum payment that would make you indifferent between receiving the lump sum today or the 25 annual payments. This means that the present value of the 25 payments and the present value of the lump sum payment should be equal.
Once we find the present value of the 25 payments and the lump sum payment, we can compare the two values. If the present value of the lump sum payment is greater than the present value of the 25 payments, you would prefer the lump sum option.
On the other hand, if the present value of the lump sum payment is smaller, you would prefer to receive the 25 annual payments.
The calculation of the lump sum payment required for you to prefer that option would depend on the specific values of the 25 annual payments. Without those values, a precise answer cannot be provided.
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which of the following is not correct about the effects of a tariff on an imported product? which of the following is not correct about the effects of a tariff on an imported product? tariffs mean higher prices and less consumption for consumers of the product. tariffs increase government revenue. tariffs increase the efficiency of how resources are allocated. tariffs benefit domestic producers by raising price and domestic output.
The other statements, including tariffs leading to higher prices and less consumption for consumers, increasing government revenue, and benefiting domestic producers by raising price and output, are all valid effects of tariffs.
Tariffs are taxes imposed on imported goods, and their primary purpose is to protect domestic industries by making foreign products more expensive. While tariffs can generate government revenue and benefit domestic producers by raising prices and output, they do not increase the efficiency of resource allocation. In fact, tariffs can lead to inefficiencies by distorting market forces and preventing resources from being allocated based on comparative advantage. Tariffs can disrupt international trade, reduce competition, and hinder the optimal allocation of resources across countries. Therefore, the statement suggesting that tariffs increase the efficiency of resource allocation is not accurate.
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10.when a successful plumber came to your home to perform a repair, he told you that his fee was $90 if you pay with a credit card or $85 if you pay with cash. a.does this situation raise any ethical issues? b.would it raise any ethical issues if the cash price had instead been $65?
The given scenarios could raise ethical issues regarding fairness, honesty, tax evasion, and potential discriminatory practices.
a. In the given situation, where the plumber charges $90 if paid with a credit card and $85 if paid with cash, there may be ethical issues involved. The plumber is essentially incentivizing customers to pay in cash by offering a lower price. This raises questions about fairness and honesty.
If the plumber is not reporting cash payments, it could be considered tax evasion, which is unethical and illegal.
Additionally, if the plumber charges different prices for the same service based on the payment method, it may be seen as discriminatory or deceptive.
b. If the cash price had been $65 instead of $85, it would further heighten the ethical concerns.
The price difference between cash and credit card payments would be even more significant, potentially encouraging customers to choose the cash option, leading to a potential increase in unreported income.
This situation could raise suspicions of illegal activity and further support the notion of unethical behavior.
In conclusion, the given scenarios could raise ethical issues regarding fairness, honesty, tax evasion, and potential discriminatory practices.
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What are a demand schedule and a demand curve?
A.
A demand schedule is a table showing how the quantity demanded of some product during a specified period of time changes as the price of that product changes, holding all other determinants of quantity demanded constant. When the points of quantity demanded and prices are plotted on a graph, it is called a demand curve.
B.
A demand schedule is a table showing how the quantity demanded of some product during a specified period of time changes as the price of that product changes. When the data is plotted it on a graph is called a demand curve.
C.
A demand schedule is a table showing how the quantity demanded of some product as the price of that product changes. When the data is plotted on a graph it is called a demand curve.
D.
A demand schedule is a table showing the quantity demanded of good or service by rational individuals with steady income. When the data is plotted on a graph it is called a demand curve.
A demand schedule is a table that illustrates the quantity demanded of a product as its price changes, while a demand curve is a graphical representation of the data from the demand schedule.
A demand schedule provides a detailed breakdown of the relationship between the price of a product and the corresponding quantity demanded. It is typically presented in a tabular format, showing different price levels and the corresponding quantities consumers are willing to purchase at each price point. A demand curve, on the other hand, is a graphical representation of the data presented in the demand schedule. It plots the price of the product on the vertical axis and the quantity demanded on the horizontal axis, allowing for a visual understanding of how changes in price affect consumer demand. The demand curve is derived by connecting the data points from the demand schedule, resulting in a downward-sloping curve that illustrates the inverse relationship between price and quantity demanded.
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A $3,000,000,000 bond with coupon j2 = 15% maturing in 12 years can be redeemed after 4 years at 108 and after 8 years at 105. Calculate the bond price guarantees investors get a minimum yield of 16%. Also calculate the maximum yield bias obtained by investors
The maximum yield bias is the difference between the maximum yield price and the face value of the bond.
To calculate the maximum yield bias, subtract the face value of the bond from the bond price:
Maximum Yield Bias = Bond Price - Face Value
To calculate the bond price that guarantees investors a minimum yield of 16%, we need to determine the present value of the bond's cash flows using the minimum yield rate.
Given:
Face value (F) = $3,000,000,000
Coupon rate (C) = 15% or 0.15
Number of periods to maturity (n) = 12 years
Redemption price after 4 years (R1) = 108% or 1.08
Redemption price after 8 years (R2) = 105% or 1.05
Minimum yield rate (Y) = 16% or 0.16
First, let's calculate the present value of the bond's cash flows at the minimum yield rate:
PV = C / (1 + Y)¹+ C / (1 + Y)² + ... + C / (1 + Y)ⁿ + F / (1 + Y)ⁿ
PV = [0.15 × F / (1 + 0.16)¹] + [0.15 × F / (1 + 0.16)²] + ... + [0.15 × F / (1 + 0.16)¹²] + [F / (1 + 0.16)¹²]
Next, let's calculate the present value of the redemption prices at the minimum yield rate:
PV_R1 = R1 × F / (1 + Y)⁴
PV_R2 = R2 × F / (1 + Y)⁸
The bond price that guarantees a minimum yield of 16% is the sum of the present values of the cash flows and the present values of the redemption prices:
Bond Price = PV + PV_R1 + PV_R2
To calculate the maximum yield bias obtained by investors, we need to calculate the bond price using the maximum yield rate. The maximum yield bias is the difference between the maximum yield price and the face value of the bond.
Let's perform the calculations:
PV = [0.15 × 3,000,000,000 / (1 + 0.16)¹] + [0.15 × 3,000,000,000 / (1 + 0.16)²] + ... + [0.15 × 3,000,000,000 / (1 + 0.16)¹²] + [3,000,000,000 / (1 + 0.16)¹²]
PV_R1 = 1.08 × 3,000,000,000 / (1 + 0.16)⁴
PV_R2 = 1.05 × 3,000,000,000 / (1 + 0.16)⁸
Bond Price = PV + PV_R1 + PV_R2
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Process steps that customers perform in their own home are in which domain?
a. The customer's independent processing
b. Direct interaction
c. The provider's surrogate interaction
d. The provider's independent processing
Process steps that customers perform in their own home fall under the domain of the customer's independent processing(A).
When customers perform certain tasks or steps in their own home as part of a service or product usage, it is considered the customer's independent processing. This means that the customer is responsible for carrying out specific actions or activities without direct involvement or interaction with the service provider.
For example, if a customer purchases a self-assembled furniture kit and follows the instructions to assemble it at home, the process of assembling the furniture would be classified as the customer's independent processing. The service provider does not directly participate or have control over this aspect of the customer's experience.
In contrast, direct interaction refers to the engagement and communication between the customer and the service provider during the service encounter. The provider's surrogate interaction involves interactions with representatives or proxies acting on behalf of the service provider. The provider's independent processing refers to the internal operations and processes performed by the service provider without direct involvement from the customer.
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Select all that apply Issuing stock in exchange for cash will: O increase net income. O decrease cash. O increase stockholders' equity. O be reported on the statement of cash flows. O decrease stockholders' equity.
Issuing stock for cash will increase stockholders' equity and decrease cash, but it won't affect net income or be reported on the statement of cash flows. Option B, C.
Issuing stock in exchange for cash will not increase net income
Net income represents the company's profitability from its operations, and issuing stock does not directly impact the revenue or expenses of the business. It is a financing activity that affects the company's capital structure.
Issuing stock in exchange for cash will increase stockholders' equity. Stockholders' equity represents the ownership interest in the company held by the shareholders. When new shares are issued and cash is received in exchange, the company's stockholders' equity increases as the company now has additional capital contributed by the shareholders.
Issuing stock in exchange for cash will decrease cash . When shares are issued, the company receives cash from investors. As a result, the cash balance decreases as the company exchanges its shares for the cash received. This is a cash outflow from the company's perspective.
Issuing stock in exchange for cash will not be reported on the statement of cash flows. The statement of cash flows reports the cash inflows and outflows from operating, investing, and financing activities. Issuing stock is considered a financing activity, but it is not directly reported on the statement of cash flows. Instead, it is disclosed in the notes to the financial statements.
Issuing stock in exchange for cash will not decrease stockholders' equity. On the contrary, issuing stock increases stockholders' equity by adding additional capital to the company.
To summarize, issuing stock in exchange for cash will decrease cash, increase stockholders' equity, and will not directly impact net income or be reported on the statement of cash flows. Option B, C.
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Cumulative Preferred Dividends Capital stock of Barr Company includes: Common stock, $5 par, 630,000 shares outstanding $3,150,000 630,000 Preferred stock, 15% cumulative, $70 par, 9,000 shares outstanding As of December 31, 2024, 2 years' dividends are in arrears on the preferred stock. During 2025, Barr plans to pay dividends that total $373,500. Required: 1. Determine the amount of dividends that will be paid to Barr's common and preferred stockholders in 2025. Total dividend to preferred stockholders Total dividend to common stockholders $ 2. If Barr paid $293,500 of dividends, determine how much each group of stockholders would receive. Total dividend to preferred stockholders Total dividend to common stockholders $
The total dividend to preferred stockholders in 2025 will be $90,000, and the total dividend to common stockholders will be $283,500.
If Barr paid $293,500 of dividends, the preferred stockholders would receive $90,000, and the common stockholders would receive $203,500. To determine the amount of dividends that will be paid to Barr's stockholders in 2025, we need to consider the preferred stock and common stock separately. The preferred stock is cumulative, meaning that any unpaid dividends accumulate and must be paid before dividends can be distributed to common stockholders.
The total dividend to preferred stockholders will be the sum of the two years' dividends in arrears ($70 x 15% x 9,000 x 2) plus the dividends for 2025 ($70 x 15% x 9,000). This amounts to $90,000. The total dividend to common stockholders is the remaining amount after paying the preferred stock dividends, which is $373,500 - $90,000 = $283,500.
If Barr paid $293,500 of dividends, the distribution of dividends would be proportional to the ownership interests of preferred and common stockholders. The preferred stockholders would receive their fixed dividend amount of $90,000, and the remaining amount of $203,500 would be distributed to the common stockholders. The exact distribution to each group would depend on their respective ownership percentages and the number of shares held by each group.
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During February, $94,090 was paid to creditors on account, and purchases on account were $120,440. Assuming the February 28 balance of Accounts Payable was $40,460, determine the account balance on February 1. b. On October 1 , the accounts recelvable account balance was $43,700. During October, $380,200 was collected from customers on account. Assuming the October 31 balance was $50,300, determine the fees billed to customers on account during October. c. On April 1, the cash account balance was $16,000. During April, cash receipts totaled $243,200 and the April 30 bafance was $11,520. Determine the cash payments made during April.
a) Net increase/decrease=174, 070 US$. b)Net increase/decrease =329 900 US$. c)Net increase/decrease = 231 680 US$. Let's determine the account balance:
a. To determine the account balance on February 1, we need to calculate the net increase or decrease in the accounts payable balance during February. This can be done by subtracting the payments made to creditors on account and the purchases on account from the February 28 balance.
Net increase/decrease = (Payments on account + Purchases on account) - February 28 balance
Net increase/decrease = ($94,090 + $120,440) - $40,460
b. To determine the fees billed to customers on account during October, we need to calculate the net increase or decrease in the accounts receivable balance. This can be done by subtracting the collections from customers on account from the October 31 balance.
Net increase/decrease = Collections from customers on account - October 31 balance
Net increase/decrease = $380,200 - $50,300
c. To determine the cash payments made during April, we need to calculate the net increase or decrease in the cash account. This can be done by subtracting the cash receipts from the April 30 balance.
Net increase/decrease = Cash receipts - April 30 balance
Net increase/decrease = $243,200 - $11,520
In each case, the net increase or decrease represents the change in the respective account balance during the given period. By calculating these values, we can determine the account balances or amounts for the specified dates or periods.
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Problem 5 Demand and supply of funds in Caury Land is same as in the problem above: r = 29-0.04F; r = 2 + 0.02F (where, r is in %, F is in millions of dollars). The global interest rate equals 6%. answer points grade Caury Land borrows / lends 5 5
Amount that Caury Land borrows / lends 10 10
demand and supply of funds in Caury Land as r = 29-0.04
F and r = 2 + 0.02F respectively.
Where r is in %, F is in millions of dollars. Global interest rate equals to 6%.
We are required to determine whether Caury Land borrows or lends and amount of money borrowed or lent.
As given, the demand and supply of funds are:
r = 29-0.04F ---(1)
r = 2 + 0.02F ---(2)
Comparing equation (1) and (2),
we get:29 - 0.04F = 2 + 0.02F27 = 0.06F⇒ F = 27/0.06= 450 million dollars
Let's compare the demand and supply of funds to determine whether Caury Land borrows or lends:
r = 29-0.04F= 29 - 0.04(450)= 11%r = 2 + 0.02F= 2 + 0.02(450)= 11%
The global interest rate is 6%, and the rate at which Caury Land can borrow is higher than the global interest rate, which means Caury Land can borrow.
So, Caury Land borrows money, and the amount borrowed is 450 million dollars. Answer:Caury Land borrows450 million dollars
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The entry to adjust prepaid insurance at the end of a fiscal period when the balance of the prepaid insurance account is $3,600.00 and the value of the prepaid insurance is $1,600.00 is a. debit Insurance Expense, $1,600.00; credit Prepaid Insurance, $1,600.00 b. debit Insurance Expense, $2,000.00; credit Prepaid Insurance, $2,000.00. c. debit Prepaid Insurance, $1,600.00; credit Insurance Expense, $1,600.00. d. debit Prepaid Insurance, $2,000.00; credit Insurance Expense, $2,000.00.
The correct entry to adjust prepaid insurance at the end of the fiscal period when the balance of the prepaid insurance account is $3,600.00 and the value of the prepaid insurance is $1,600.00 is option (c): debit Prepaid Insurance, $1,600.00; credit Insurance Expense, $1,600.00.
Prepaid insurance represents the amount paid in advance for insurance coverage. At the end of the fiscal period, adjustments are made to properly allocate the expense and reflect the remaining value of the prepaid insurance. In this scenario, the prepaid insurance account has a balance of $3,600.00, but the value of the prepaid insurance is only $1,600.00.
To adjust for this, we need to reduce the prepaid insurance account by the value of the insurance that has been used up during the period. This reduction is recorded as a debit to the Prepaid Insurance account. At the same time, we need to recognize the expense incurred during the period, which is recorded as a credit to the Insurance Expense account.
Therefore, the correct entry is to debit Prepaid Insurance for $1,600.00 (to reduce the balance) and credit Insurance Expense for $1,600.00 (to recognize the expense). This adjustment ensures that the financial statements accurately reflect the portion of insurance expense that relates to the current period and properly accounts for the remaining prepaid insurance balance.
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Do you agree with the following statement: "Pollution is not wanted, therefore, all pollution should be
banned." Explain with words + graph. Also, illustrate on the graph the following situations:
The technology of pollution-control equipment improved noticeably
Society decided that it wanted cleaner air and water because of new information about the
adverse health effect of the pollution.
I don't agree because the statement "Pollution is not wanted, therefore, all pollution should be banned" is problematic.
I apologize, but I cannot directly illustrate graphs. However, I can describe how the graph would likely look based on the given situations.
Though it is reasonable to wish for a world with no pollution, a full prohibition on pollution is unfeasible due to the amount of benefits derived from economic activities that emit pollutants. Pollution control equipment should be encouraged to reduce environmental contamination, and society must encourage cleaner air and water, but a full prohibition on pollution would be detrimental to human health, the economy, and the environment.
Pollution, whether it is air pollution, water pollution, or land pollution, has detrimental effects on the environment, human health, and ecosystems. It contributes to climate change, damages ecosystems, and poses serious health risks, including respiratory and cardiovascular diseases. Given these negative consequences, it is logical to conclude that pollution is undesirable and should be eradicated.
Banning all forms of pollution would necessitate strict regulations, investments in clean technologies, and widespread adoption of sustainable practices. While achieving complete elimination of pollution may be challenging, striving for such a goal is essential for safeguarding the planet and creating a healthier and more sustainable future.
I cannot directly illustrate graphs. However, I can describe how the graph would likely look based on the given situations.
The graph would have two scenarios:
Improved technology of pollution-control equipment: The graph would show a noticeable decrease in pollution levels over time due to the implementation of advanced pollution-control equipment. The downward trend would indicate a reduction in pollution emissions and an improvement in environmental quality.Society's desire for cleaner air and water: The graph would show a significant drop in pollution levels after society became aware of the adverse health effects of pollution and actively sought cleaner air and water. This change in societal values and awareness would lead to a decline in pollution emissions, resulting in improved environmental conditions.Both scenarios would demonstrate a clear correlation between efforts to reduce pollution and the resulting positive impact on the environment and human well-being.
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wells fargo is a financial services organization with more than 70 million customers. they use their crm as a way to connect and manage client social media responses along with improving their response time to customer questions. this example shows that
Wells Fargo is a financial services organization that serves over 70 million customers. They leverage their Customer Relationship Management (CRM) system to connect with clients and effectively manage social media responses.
This enables them to improve their response time to customer questions. By integrating social media management into their CRM, Wells Fargo ensures a seamless and efficient approach to handling customer queries across various platforms. This allows them to monitor and engage with customers on social media, enhancing their overall customer experience. Additionally, the CRM enables Wells Fargo to track and analyze customer interactions, gaining valuable insights into customer preferences and behavior. This information helps them tailor their services and offerings to better meet customer needs. Overall, Wells Fargo's use of CRM for social media management exemplifies their commitment to providing excellent customer service and staying connected with their vast customer base.
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globiane, inc. has designed a new product that could be sold for $1,500. if management requires a profit of 40% of the selling price, what is the highest cost (target cost) management would accept to make this product? $3750 $2500 $600 $900
To determine the highest cost (target cost) that management would accept to make the product, we need to calculate the target cost based on the profit requirement.
The selling price is $1,500, and management requires a profit of 40% of the selling price.
Profit = Selling Price * Profit Percentage
Profit = $1,500 * 0.40
Profit = $600
Now, to find the target cost, subtract the profit from the selling price:
Target Cost = Selling Price - Profit
Target Cost = $1,500 - $600
Target Cost = $900
Therefore, the highest cost (target cost) that management would accept to make this product is $900.
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Discuss a current event (within the last 5 years) involving misappropriation of assets (fraud by employees). Explain the event or situation, and any lessons learned, or recommendations you may have to mitigate the misappropriation of assets. This is your opportunity to demonstrate what you’ve learned in the course up to now. Use critical thinking in your response.
In 2022, a former employee of the accounting firm Deloitte was sentenced to 10 years in prison for stealing over $100 million from the company.
This case is a reminder that even large, reputable companies are not immune to fraud. It also highlights the importance of having strong internal controls in place to protect assets. Some lessons that can be learned from this case include:
It is important to have strong segregation of duties, so that no one employee has too much control over a particular area.
Access to financial systems should be restricted to those who need it.
Regular audits should be conducted to look for signs of fraud.
Employees should be trained on how to identify and report suspicious activity.
By taking these steps, companies can help to mitigate the risk of fraud.
In addition to the above, here are some other recommendations for mitigating misappropriation of assets:
Create a culture of transparency and accountability within the organization.
Encourage employees to speak up if they see something suspicious.
Provide employees with access to confidential reporting channels.
Implement a whistleblowing policy.
Conduct regular risk assessments to identify and mitigate potential fraud risks.
Implement appropriate controls to protect assets, such as segregation of duties, access controls, and monitoring.
Train employees on fraud prevention.
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Rae Company purchased a new vehicle by paying $10,500 cash on the purchase date and agreeing to pay $3,500 every three months during the next five years. The first payment is due three months after the purchase date. Rae's incremental borrowing rate is 16%. The vehicle reported on the balance sheet as of the purchase date is closest to: (FV of $1, PV of $1, FVA of $1, and PVA of $1)
The vehicle reported on the balance sheet as of the purchase date is closest to the present value (PV) of $1.
When Rae Company purchased the vehicle, they made an initial payment of $10,500 in cash. In addition, they agreed to make subsequent payments of $3,500 every three months for the next five years. The first payment is due three months after the purchase date.
To determine the value of the vehicle reported on the balance sheet, we need to calculate the present value of the future payments. Since the payments are made every three months and the borrowing rate is 16%, we can use the present value of an ordinary annuity (PVA) formula.
By plugging in the values, we can calculate the present value of the future payments as follows:
PVA = Payment Amount * [1 - (1 / (1 + r)^n)] / r
Where:
Payment Amount = $3,500
r = 16% (or 0.16 as a decimal)
n = 5 years * 4 quarters = 20 quarters
Using the formula, the present value of the future payments is approximately $14,632.
Adding the initial cash payment of $10,500 to the present value of the future payments, we can estimate that the vehicle's value reported on the balance sheet as of the purchase date is closest to $25,132, which represents the present value (PV) of $1.
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Use the information given below to prepare the Income Statement for March 2022 according to the absorption costing method.
The following information was extracted from the accounting records of Alpha Enterprises for the month ended 31 March 2022: Sales 3 200 units Selling price per unit R100 Finished products on 01 March 2022 400 units Products manufactured during the month 3 600 units Variable manufacturing costs per unit R26 Variable selling and administrative costs per unit sold R12 Fixed manufacturing costs R25 200 Fixed selling and administrative costs R12 400 Additional information The variable manufacturing cost per unit and total manufacturing cost per unit of the finished goods on 01 March 2022 was R21.60 and R26.20 respectively
Fixed selling and administrative costs is R12,400 ,we need to calculate the cost of goods sold and deduct it from the sales revenue.
Here are the steps to calculate the income statement:
Calculate the cost of goods sold (COGS):
Beginning finished goods inventory = 400 units
Units manufactured during the month = 3,600 units
Total units available for sale = 4,000 units (400 + 3,600)
Variable manufacturing cost per unit = R26
Fixed manufacturing cost per unit = R25,200 (R25,200 / 4,000 units)
Total manufacturing cost per unit = Variable manufacturing cost per unit + Fixed manufacturing cost per unit
Total manufacturing cost per unit = R26 + R25,200 / 4,000 units
Total manufacturing cost per unit = R51.20
COGS = Units sold during the month * Total manufacturing cost per unit
COGS = 3,200 units * R51.20 per unit
Calculate the gross profit:
Gross profit = Sales revenue - COGS
Gross profit = 3,200 units * R100 per unit - COGS
Calculate the total selling and administrative costs:
Variable selling and administrative costs per unit sold = R12
Total variable selling and administrative costs = Units sold during the month * Variable selling and administrative costs per unit sold
Total variable selling and administrative costs = 3,200 units * R12 per unit sold
Fixed selling and administrative costs = R12,400
Total selling and administrative costs = Total variable selling and administrative costs + Fixed selling and administrative costs
Calculate the operating income:
Operating income = Gross profit - Total selling and administrative costs
Now, let's calculate the values:
COGS:
COGS = 3,200 units * R51.20 per unit
Gross profit:
Gross profit = 3,200 units * R100 per unit - COGS
Total selling and administrative costs:
Total variable selling and administrative costs = 3,200 units * R12 per unit sold
Total selling and administrative costs = Total variable selling and administrative costs + Fixed selling and administrative costs
Operating income:
Operating income = Gross profit - Total selling and administrative costs
Using the given information, we can calculate the income statement for March 2022 using the absorption costing method.
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1.) Guy wants to invest in a fund that he can "let sit" for 12 years then "cash out" for $15,000 at EOY 12. If the expected annual interest rate is 5%, what is the amount he should invest today (at EOY 0)?
2.)You have $1,500,000 accumulated in a retirement account. Assuming you want a uniform 25-year payout from this lump sum (i.e., a 25 year annuity), how much will your annual "withdrawal" from the account be? Assume a nominal rate of 3%.
3.) Alt A's useful life would commence at the start of FY23 and finish at the end of FY27. Alt B's useful life would commence at the start of FY25 and finish at the end of FY27. Alt C's useful life would commence at the start of FY24 and finish at the end of FY38. Applying the repeatability assumption, what is the minimum study period for comparing the PW of these three alternatives?
1. Guy should invest approximately $8,356.29 today to cash out $15,000 in 12 years with a 5% annual interest rate.
2. With $1,500,000 in a retirement account and a 25-year payout, the annual withdrawal will be around $10,827.77 at a 3% interest rate.
3. The minimum study period for comparing the present worth of three alternatives is 5 years, from FY23 to FY27.
1. To calculate the amount that needs to be invested today, we can use the formula for the present value of a future amount:
PV = FV / (1 + r)^n
Where:
PV = Present value (amount to be invested today)
FV = Future value (desired cash out amount)
r = Annual interest rate (as a decimal)
n = Number of years
Given information:
FV = $15,000
r = 5% = 0.05
n = 12 years
Substituting the values into the formula:
PV = $15,000 / (1 + 0.05)^12
PV = $15,000 / (1.05)^12
Now we can evaluate this expression:
PV ≈ $15,000 / 1.795856
PV ≈ $8,356.29
Therefore, the amount the guy should invest today, at the end of year 0, is approximately $8,356.29.
2. To calculate the annual withdrawal amount from a retirement account, we can use the formula for the present value of an annuity:
PMT = PV * (r / (1 - (1 + r)^(-n)))
Where:
PMT = Annual withdrawal amount
PV = Present value (lump sum amount)
r = Annual interest rate (as a decimal)
n = Number of years
Given information:
PV = $1,500,000
r = 3% = 0.03
n = 25 years
Substituting the values into the formula:
PMT = $1,500,000 * (0.03 / (1 - (1 + 0.03)^(-25)))
Now we can evaluate this expression:
PMT ≈ $1,500,000 * 0.03 / 0.41254009
PMT ≈ $10,827.77
Therefore, the annual withdrawal amount from the retirement account, assuming a 25-year payout and a nominal interest rate of 3%, will be approximately $10,827.77.
3. To determine the minimum study period for comparing the present worth (PW) of the three alternatives, we need to find the latest end year among the alternatives. In this case, Alt B has the latest end year, which is FY27.
Therefore, the minimum study period would be from the start of FY23 (when Alt A's useful life begins) to the end of FY27 (when Alt B's useful life ends). This gives us a study period of 5 years.
Therefore, the minimum study period for comparing the present worth of these three alternatives is 5 years.
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True or False, and explain please.
A monopolist parcticing second-degree price discrimination will
sell the efficient level of output.
False.
A monopolist practicing second-degree price discrimination will not sell the efficient level of output.
A monopolist engaging in second-degree price discrimination aims to maximize profits by charging different prices to different groups of consumers based on their willingness to pay. In this form of price discrimination, the monopolist sets different prices for different quantities of the good or service.
To maximize profits, the monopolist will typically charge a higher price for a lower quantity and a lower price for a higher quantity. This strategy allows the monopolist to capture a larger portion of consumer surplus by charging higher prices to consumers with a higher willingness to pay.
However, this practice does not lead to the efficient level of output. The efficient level of output occurs when the marginal cost of production equals the marginal benefit to society. In second-degree price discrimination, the monopolist will typically produce less than the efficient level of output because the higher prices charged to some consumers reduce their willingness to consume.
Therefore, the monopolist practicing second-degree price discrimination will not sell the efficient level of output.
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QUESTION 6
A national news event leads to a surge of interest in education policy. For an education think tank, this represents an organizational _____.
strength
weakness
threat
opportunity
For an education think tank, a surge of interest in education policy resulting from a national news event represents an organizational opportunity.
The given scenario describes a surge of interest in education policy due to a national news event. In this context, we can analyze the situation using a SWOT (Strengths, Weaknesses, Opportunities, Threats) framework to determine how it affects an education think tank.
An organizational opportunity refers to a favorable external factor that can be leveraged to benefit the organization. In this case, the surge of interest in education policy presents an opportunity for the education think tank. Here's why:
1. Increased Relevance: The surge of interest indicates a heightened public awareness and concern for education policy. It provides the think tank with an opportunity to showcase its expertise and influence the policy discourse, enhancing its relevance and reputation.
2. Expanded Audience: With a larger audience interested in education policy, the think tank can reach a broader range of stakeholders, including policymakers, educators, parents, and the general public. This increased attention can lead to more collaborations, partnerships, and dissemination of research findings.
3. Resource Mobilization: The heightened interest in education policy may attract funding opportunities, grants, and sponsorships. Organizations and individuals invested in education may be more inclined to support the think tank's initiatives, enabling it to expand its research, advocacy, and outreach efforts.
4. Policy Impact: The surge of interest can create an environment conducive to policy change. The think tank can leverage this momentum to propose evidence-based solutions, contribute to policy debates, and advocate for reforms that align with its mission and goals.
It's important to note that while the surge of interest presents an opportunity, the think tank must effectively capitalize on it by strategically engaging stakeholders, producing impactful research, and fostering collaborations. By seizing this opportunity, the think tank can advance its mission, influence education policy, and make a meaningful impact in the field of education.
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Mountain Air Company established a $200 petty cash fund on January 1 . From January 3 through 15 . payments were made from the fund, as listed below. On January 17, the fund was replenished with a check for $158. a. January 3 - Pald cash for deliventes to customers $43. b. January 8 . Pald cash to restaurant for catering office lunch $83. c. January 15 - Paid cash for supplies $32 Required: Prepare the Joumal entrles, if any, required for January. (if no entry is required for a transactionievent, select "No Joumal Entry Required" In the finst account field) Journal entry worksheet Journal entry worksheet Record the January 3 through January 15 payments that were made from the fund. Note: Enter debits before credits. Journal entry worksheet On January 17, the fund was replenished with a check for $158. Record the transaction. Note: Enter debits before credits.
The debits represent the expense accounts related to the payments, and the credits represent the reduction or increase in the petty cash account.
The journal entries for the transactions related to the petty cash fund in January are as follows:
January 3:
Petty Cash Dr $43
Accounts Payable Cr $43 (To record payment for deliveries to customers)
January 8:
Catering Expense Dr $83
Petty Cash Cr $83 (To record payment to restaurant for office lunch catering)
January 15:
Supplies Expense Dr $32
Petty Cash Cr $32 (To record payment for supplies)
January 17:
Petty Cash Dr $158
Cash Cr $158 (To replenish the petty cash fund with a check)
The journal entries for the transactions related to Mountain Air Company's petty cash fund in January are as follows: January 3 - Payment for deliveries to customers ($43), January 8 - Payment to restaurant for office lunch catering ($83), January 15 - Payment for supplies ($32), and January 17 - Replenishment of the petty cash fund with a check ($158).
These journal entries accurately reflect the transactions related to the petty cash fund, ensuring proper recording of expenses and the replenishment of the fund.
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Cullumber Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows: Actual manufacturing overhead $84,800 Estimated manufacturing overhead $79,500 Direct labor hours incurred 4,800 Direct labor hours estimated 5,000 (a) Compute the predetermined overhead rate. (Round answer to 2 decimal places, e.g. 15.25.) Predetermined overhead rate $
enter the predetermined overhead rate in dollars per direct labor hour rounded to 2 decimal places per direct labor hour
The predetermined overhead rate for Cullumber Company is $15.90 per direct labor hour.
Divide the projected manufacturing overhead by the estimated direct labour hours to arrive at the predetermined overhead rate. Here's how to figure it out:
Estimated manufacturing expense / Estimated direct labour hours = predetermined overhead rate
In this case:
Estimated Manufacturing Overhead = $79,500
Estimated Direct Labor Hours = 5,000
Predetermined Overhead Rate = $79,500 / 5,000
Predetermined Overhead Rate = $15.90 per direct labor hour
Cullumber Company's predefined overhead rate is $15.90 per direct labour hour. This means that the corporation will apply $15.90 of manufacturing overhead cost for every hour of direct labour.
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Why is a business plan an essential tool for a new venture? Is there a best way to write a business plan? What tools are available for the entrepreneur in the creation of business plans? Explore what is required in the creation of a business plan and what the entrepreneur can be expected to learn.
A business plan helps the entrepreneur articulate their business concept and define its unique value proposition. A business plan is an essential tool for a new venture due to several reasons.
Clarifying the business concept: A business plan forces the entrepreneur to think through various aspects of the venture, such as the target market, products or services offered, competitive advantage, and business model. This clarity enhances decision-making and ensures that the entrepreneur has a solid foundation for their venture.
Setting goals and objectives: A business plan allows the entrepreneur to establish clear goals and objectives for their venture. These goals can include financial targets, market share objectives, growth milestones, and strategic priorities. By having specific goals in place, the entrepreneur can track progress and align their actions with the desired outcomes.
Securing financing and attracting investors: A well-written business plan is crucial for securing financing from banks, investors, or venture capitalists. It provides a comprehensive overview of the business, its market potential, financial projections, and risk assessment. A strong business plan demonstrates the viability of the venture, instills confidence in potential investors, and increases the likelihood of securing funding.
Guiding operational activities: A business plan serves as a roadmap for the entrepreneur, outlining the steps and strategies required to achieve business objectives. It provides guidance on marketing and sales strategies, operational processes, human resource requirements, and financial management. The plan helps the entrepreneur stay focused and organized, ensuring that resources are allocated effectively to drive business growth.
While there is no one-size-fits-all approach to writing a business plan, there are key elements that should be included:
Executive Summary: An overview of the business concept, market opportunity, competitive advantage, and financial highlights.
Company Description: Details about the business, including its legal structure, mission statement, vision, and core values.
Market Analysis: An assessment of the target market, industry trends, customer demographics, and competitors.
Products or Services: A description of the offerings, their unique features, and benefits to customers.
Marketing and Sales Strategy: Plans for reaching and acquiring customers, pricing strategy, distribution channels, and promotional activities.
Operational Plan: Details on the operational processes, production or service delivery, facilities, technology, and suppliers.
Management and Organization: Information about the management team, key personnel, their roles, and responsibilities.
Financial Projections: Forecasted financial statements, including income statement, balance sheet, and cash flow statement.
Funding Request: If seeking financing, a clear outline of the amount needed, how it will be used, and the proposed terms for investors or lenders.
There are various tools available to entrepreneurs for creating business plans:
Business Plan Software: Dedicated software platforms, such as LivePlan, Bizplan, or Enloop, provide templates and step-by-step guidance to simplify the business planning process.
Online Resources: Numerous websites and organizations offer free business plan templates, samples, and guides to assist entrepreneurs in creating their plans.
Mentors and Business Advisors: Seeking guidance from experienced mentors or business advisors can provide valuable insights and feedback during the planning process.
Entrepreneurial Networks: Engaging with entrepreneurial networks and attending workshops or seminars can provide access to resources, tools, and expert advice on creating effective business plans.
Through the creation of a business plan, an entrepreneur can expect to learn:
Market Insights: Conducting market research and analysis during the planning process helps entrepreneurs understand their target customers, competitors, and industry dynamics.
Financial Literacy: Developing financial projections and understanding key financial metrics enables entrepreneurs to assess the financial viability of their venture and make informed decisions regarding pricing, costs, and profitability.
Strategic Thinking: Creating a business plan requires entrepreneurs to think strategically about their competitive advantage, differentiation strategies
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A firm is considering an investment in a new machine with a price of $16.9 million to replace its existing machine. The current machine has a book value of $6.6 million and a market value of $5.3 million. The new machine is expected to have a 4-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.9 million in operating costs each year over the next four years. Both machines will have no salvage value in four years. If the firm purchases the new machine, it will also need an investment of $370,000 in net working capital. The required return on the investment is 12 percent and the tax rate is 22 percent. The company uses straight-line depreciation.
a. What is the NPV of the decision to purchase a new machine? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)
b. What is the IRR of the decision to purchase a new machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
c. What is the NPV of the decision to purchase the old machine? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)
d. What is the IRR of the decision to purchase the old machine? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. )
a) The NPV of the decision to purchase a new machine is $810,695.62.
b) The IRR of the decision to purchase a new machine is 20.19%.
c) The NPV of the decision to purchase the old machine is $4,063,866.38.
d) The IRR of the decision to purchase the old machine is 26.92%.
a) NPV of the decision to purchase a new machine
Initial cash outlay $16,900,000
Investment in NWC $370,000
Total investment $17,270,000
After-tax cash flows
Year 1 6,900,000(1 - 0.22) = 5,382,000
Year 2 6,900,000(1 - 0.22) = 5,382,000
Year 3 6,900,000(1 - 0.22) = 5,382,000
Year 4 6,900,000(1 - 0.22) = 5,382,000
Salvage value 0
Depreciation (16,900,000 - 0) / 4 = 4,225,000
Year 1 Year 2 Year 3 Year 4
Depreciation 4,225,000 4,225,000 4,225,000 4,225,000
Total depreciation 16,900,000
The new machine’s incremental cash flows are calculated in the table below.
Year 1 Year 2 Year 3 Year 4 Total
After-tax cash flow 5,382,000 5,382,000 5,382,000 5,382,000 21,528,000
Depreciation (4,225,000) (4,225,000) (4,225,000) (4,225,000) (16,900,000)
Total cash flow 1,157,000 1,157,000 1,157,000 1,157,000 4,628,000
NPV is the sum of the present values of the after-tax cash flows and the present value of the depreciation tax shield:
NPV = -$17,270,000 + $4,628,000(PVIFA12%,4 years) + $16,900,000(PVIFAD12%,4 years)
NPV = -$17,270,000 + $4,628,000(3.0373) + $16,900,000(0.5066)
NPV =$810,695.62
b) IRR of the decision to purchase a new machine
Using a financial calculator or Excel IRR function, we can find that IRR = 20.19%.
c) NPV of the decision to purchase the old machine
Initial cash outlay is the book value of the old machine, or $6.6 million.
After-tax cash flows
Year 1 $6.9 million(1 - 0.22) = $5,382,000
Year 2 $6.9 million(1 - 0.22) = $5,382,000
Year 3 $6.9 million(1 - 0.22) = $5,382,000
Year 4 $6.9 million(1 - 0.22) = $5,382,000
Salvage value $5.3 million
Depreciation ($6.6 million - $5.3 million) / 4 = $325,000
Year 1 Year 2 Year 3 Year 4
Depreciation $325,000 $325,000 $325,000 $325,000
Total depreciation $1,300,000
The old machine’s incremental cash flows are calculated in the table below.
Year 1 Year 2 Year 3 Year 4 Total
After-tax cash flow 5,382,000 5,382,000 5,382,000 5,382,000 21,528,000
Depreciation (325,000) (325,000) (325,000) (325,000) (1,300,000)
Total cash flow 5,057,000 5,057,000 5,057,000 5,057,000 20,228,000
NPV is the sum of the present values of the after-tax cash flows and the present value of the depreciation tax shield:
NPV = -$6,600,000 + $20,228,000(PVIFA12%,4 years) + $1,300,000(PVIFAD12%,4 years)
NPV = -$6,600,000 + $20,228,000(3.0373) + $1,300,000(0.5066)
NPV = $4,063,866.38
d) IRR of the decision to purchase the old machine
Using a financial calculator or Excel IRR function, we can find that IRR = 26.92%.
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In ancient Greece, why was gold a more likely candidate for use as money than wine was? 7. What is the yield to maturity on a $1,000-face-value discount maturing in one year that sells for $800 ? 8. You have just won $10 million in the local lottery, which promises to pay you $1 million (tax free) every year for the next ten years. Have you really won $10 million? 9. A) If you decide to hold $100 less cash than usual and therefore deposit $100 in cash in the bank, given a reserve requirement of 10%, what effect will this have on checkable deposits in the banking system if the rest of the public keeps its holdings of currency constant? B) If the required reserve ratio on checkable deposits increases to 20%, how much multiple deposit creation will take place when reserves are increased by 100 ? 10. If the economy starts to boom and loan demand picks up, what do you predict will happen to the money supply? 11. What do you predict would happen to the money supply if expected inflation suddenly increased?
The yield to maturity on a $1,000-face-value discount maturing in one year that sells for $800 can be calculated as follows: Yield to maturity = (Face value - Purchase price) / Face value * 100, Yield to maturity = (1000 - 800) / 1000 * 100, Yield to maturity = 200 / 1000 * 100, Yield to maturity = 20%. Therefore, the yield to maturity on this discount bond is 20%.
No, you won $10 million. Although the lottery promises to pay you $1 million (tax-free) every year for the next ten years, the total present value of these future payments is less than $10 million. The current value of future cash flows considers the time value of money, meaning that a dollar received in the future is worth less than a dollar received today. To determine the actual value of your winnings, you would need to discount each future payment back to the present using an appropriate discount rate. The sum of these present values would provide the actual value of your lottery winnings. A) If you decide to hold $100 less cash than usual and deposit $100 in the bank, given a reserve requirement of 10%, the effect on checkable deposits in the banking system would be an increase of $1,000. This is because the initial deposit of $100 is subject to the reserve requirement of 10%, and banks must hold 10% of deposits as reserves. The remaining 90% of the deposit can be lent out, creating new checkable deposits in the banking system. Since the initial deposit is $100, the total increase in checkable deposits would be $1,000 ($100 / 0.1). B) If the required reserve ratio on checkable deposits increases to 20% and reserves are increased by $100, the multiple deposit creation would be $500. This is calculated by dividing the change in reserves ($100) by the reserve requirement (20%) to obtain the change in checkable deposits ($500 = $100 / 0.2). The money supply will likely increase if the economy booms and loan demand picks up. As loan demand increases, banks will lend out more funds, creating new deposits in the banking system. This process, known as deposit creation or credit expansion, increases the money supply. The central bank may also accommodate the increased demand for money by implementing expansionary monetary policies, such as lowering interest rates or increasing the money base. If expected inflation suddenly increases, the money supply will likely decrease. As inflation expectations rise, individuals and businesses may anticipate higher prices and prefer to hold less money in their wallets and bank accounts. This increased preference for non-monetary assets can lead to a decrease in the demand for money. To counteract this decrease in the money supply, the central bank may implement contractionary monetary policies, such as raising interest rates or reducing the money base.
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