To make an informed decision, let's analyze the two options:
Option 1: Scrap the defective engines and build new ones
Cost of manufacturing the defective engines: 6 * $800,000 = $4,800,000Revenue from selling the defective engines as scrap: 6 * $375,000 = $2,250,000Cost of building new engines: 6 * $800,000 = $4,800,000Revenue from selling new engines: 6 * $1,200,000 = $7,200,000Net profit from this option: ($2,250,000 - $4,800,000) + ($7,200,000 - $4,800,000) = -$250,000
Option 2: Rework the defective engines and sell them
Cost of reworking the engines: 6 * $440,000 = $2,640,000Revenue from selling the reworked engines: 6 * $1,200,000 = $7,200,000Net profit from this option: $7,200,000 - $2,640,000 = $4,560,000
Based on the calculations, option 2 (reworking the engines) appears to be the more profitable choice. It would result in a net profit of $4,560,000, whereas option 1 (scraping the engines and building new ones) would result in a net loss of $250,000.
Therefore, the company should choose to rework the defective engines to meet the specifications of the buyer and sell them at the full price.
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Engineering Economics is the application of economic principles to the evaluation of engineering design and the selection of technical alternatives. (a) Starting a new business requires many decisions on cost concepts. List five examples of cost that might be assisted by engineering economics analysis. (10) (b) Emma and her husband decide they will buy RM 1,000 worth of utility stocks beginning one year from now. Since they expect their salaries to increase, they will increase their purchases by RM 200 per year for the next nine years. What would the present worth of all the stocks be if they yield a uniform dividend rate of 10% throughout the investment period and the price/share remains constant?
Starting a new business requires many decisions on cost concepts.
List five examples of cost that might be assisted by engineering economics analysis
The five examples of cost that might be assisted by engineering economics analysis in starting a new business are:
Initial Costs:
These costs include the fixed investment required to start the business, including the cost of purchasing and installing equipment, land, buildings, and other assets.
Operational Costs:
These costs include the day-to-day costs associated with running the business, such as labor costs, utilities, supplies, and maintenance costs.
Replacement Costs:
These costs are incurred when an asset reaches the end of its useful life and needs to be replaced.
An example of this cost is the cost of replacing a piece of machinery that has reached the end of its useful life.
Profitability Analysis:
This cost helps in determining the optimal pricing strategy, including the optimal profit margins, which can be achieved by the business.
It takes into account the pricing of similar products in the market and ensures that the price is reasonable for the market.
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Q2) A firm has a WACC of 12.09% and is deciding between two mutually exclusive projects. Project A has an initial investment of $61.71. The additional cash flows for project A are: year 1=$15.17, year 2=$36.90, year 3=$45.87. Project B has an initial investment of $73.89. The cash flows for project B are: year 1=$52.57, year 2=$45.79, year 3= $36.18. Calculate the Following: a) Payback Period for Project A: b) Payback Period for Project B: c) NPV for Project A: d) NPV for Project B:
a) Payback Period for Project A:Payback period is the amount of time it takes for a project to recover its original investment. If the payback period is less than the project's life, the project is accepted. Project A has an initial investment of $61.71, year 1 cash flow of $15.17, year 2 cash flow of $36.90, and year 3 cash flow of $45.87. The payback period can be calculated as follows:
Year 1: Investment remaining after year 1 = $46.54,
Year 2: Investment remaining after year 2 = $9.64
Year 3: Investment remaining after year 3 = $0.00
The payback period of Project A is 2 years + ($9.64 ÷ $45.87) = 2.21 years.
b) Payback Period for Project B:Project B has an initial investment of $73.89, year 1 cash flow of $52.57, year 2 cash flow of $45.79, and year 3 cash flow of $36.18.
Year 1: Investment remaining after year 1 = $21.32
Year 2: Investment remaining after year 2 = ($23.47)
The payback period of Project B is 1 year + ($21.32 ÷ $45.79) = 1.46 years. NPV for Project A:The Net Present Value of Project A can be calculated as follows:
NPV = (-$61.71) + ($15.17 ÷ (1 + 12.09%)^1) + ($36.90 ÷ (1 + 12.09%)^2) + ($45.87 ÷ (1 + 12.09%)^3)
= -$61.71 + $13.53 + $28.50 + $31.20
= $11.52
NPV for Project B:The Net Present Value of Project B can be calculated as follows:
NPV = (-$73.89) + ($52.57 ÷ (1 + 12.09%)^1) + ($45.79 ÷ (1 + 12.09%)^2) + ($36.18 ÷ (1 + 12.09%)^3)
= -$73.89 + $46.84 + $35.08 + $24.53
= $32.56
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A. Project L costs $65,000, its expected cash inflows are $13,000 per year for 12 years, and its WACC is 12%. What is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.
B. Project L costs $47,294.38, its expected cash inflows are $10,000 per year for 9 years, and its WACC is 12%. What is the project's IRR? Round your answer to two decimal places.
A. The NPV of Project L is $15,276.94.
B. The IRR(Internal Rate of Return) of Project L is 16.87%.
A. To calculate the NPV of Project L, we need to subtract the cost of the project from the present value of all future cash inflows. Given the following data:
Cost = $65,000
Cash inflow per year = $13,000
WACC = 12%
First, let's calculate the present value of each cash inflow:
PV of Cash Inflow in Year 1 = $13,000 / (1 + 0.12)¹ = $11,607.14
PV of Cash Inflow in Year 2 = $13,000 / (1 + 0.12)² = $10,352.04
PV of Cash Inflow in Year 3 = $13,000 / (1 + 0.12)³ = $9,240.08
PV of Cash Inflow in Year 4 = $13,000 / (1 + 0.12)⁴ = $8,260.56
PV of Cash Inflow in Year 5 = $13,000 / (1 + 0.12)⁵ = $7,400.49
PV of Cash Inflow in Year 6 = $13,000 / (1 + 0.12)⁶ = $6,648.24
PV of Cash Inflow in Year 7 = $13,000 / (1 + 0.12)⁷ = $5,993.55
PV of Cash Inflow in Year 8 = $13,000 / (1 + 0.12)⁸ = $5,427.98
PV of Cash Inflow in Year 9 = $13,000 / (1 + 0.12)⁹ = $4,944.66
PV of Cash Inflow in Year 10 = $13,000 / (1 + 0.12)¹⁰ = $4,537.26
PV of Cash Inflow in Year 11 = $13,000 / (1 + 0.12)¹¹ = $4,199.90
PV of Cash Inflow in Year 12 = $13,000 / (1 + 0.12)¹² = $3,927.24
Now, we can calculate the NPV(net present value) of the project:
NPV = -$65,000 + $11,607.14 + $10,352.04 + $9,240.08 + $8,260.56 + $7,400.49 + $6,648.24 + $5,993.55 + $5,427.98 + $4,944.66 + $4,537.26 + $4,199.90 + $3,927.24
NPV = -$65,000 + $80,276.94
NPV = $15,276.94
Therefore, the NPV of Project L is $15,276.94.
B. To calculate the IRR (Internal Rate of Return) of Project L, we need to find the discount rate that makes the NPV equal to zero. Given the following data:
Cost = $47,294.38
Cash inflow per year = $10,000
WACC = 12%
We can use trial and error or a financial calculator to find the IRR. In this case, the IRR is approximately 16.87% when rounded to two decimal places.
Therefore, the IRR of Project L is 16.87%.
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If the current rate of interest is 8%, then the future value 15
years from now of an investment that pays $1000 per year and lasts
15 years is closest to:
Select one:
A. $9818.
B. $93,219.
C. $45,762.
We may use the formula for the future value of an ordinary annuity to determine the future value of an investment that pays $1000 annually for 15 years at an interest rate of 8%.
Future Value is calculated as Payment x [(1 + interest rate)n - 1]. Inflation rate Where: An annual payment of $1,000 Interest rate equals 8%, or 0.08 in decimal form. n (the number of years) = 15. When we enter the values, we obtain: Future Value is equal to $1000 x [(1 + 0.08)15 - 1] / 0.08 Future Value is equal to $1000 x (1.0815 - 1) / 0.08 Future Value is equal to $1000 x (2.7135 - 1) / 0.08 Future Value is equal to $1000 x 21.41875 Value in the Future $21,418.75 The closest match is hence A: $9818 is not the right answer, B: $93,219 is not the right answer, and C. The amount of $45,762 is incorrect. $21,418.75 is the closest amount.
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Shown here are condensed income statements for two different companies (assume no income taxes).
Miller Company
Sales $ 1,200,000
Variable expenses (80%) 960,000
Income before interest 240,000
Interest expense (fixed) 60,000
Net income $ 180,000
Weaver Company
Sales $ 1,200,000
Variable expenses (60%) 720,000
Income before interest 480,000
Interest expense (fixed) 300,000
Net income $ 180,000
Required:
1. Compute times interest earned for Miller Company and for Weaver Company.
Expert Answer
The times interest earned (TIE) ratio indicates a company's ability to meet interest obligations. TIE computes a company's income statement's interest cost to the income before interest and taxes.
TIE ratio = Income before interest and taxes (EBIT)/Interest.The TIE ratio for Miller Company is as follows:TIE = Income before interest/Interest expense= $240,000/$60,000= 4 times interest earned (TIE) ratioFor Weaver Company, the TIE ratio is:TIE = Income before interest/Interest expense= $480,000/$300,000= 1.6 times interest earned (TIE) ratio.
The times interest earned ratio indicates how many times the company's operating profit covers its interest payments. Therefore, Miller Company's ability to cover its interest payments is better than Weaver Company's ability to do so because the Miller Company's TIE ratio is higher than Weaver Company.
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the sales process begins with the salesperson locating companies or people who are most likely to buy the seller's offerings. this activity is called: group of answer choices
The activity in which a salesperson locates companies or people who are most likely to buy the seller's offerings is called prospecting. Prospecting is an essential step in the sales process and involves identifying potential customers who may be interested in purchasing the product or service being offered.
Prospecting typically involves conducting research on the target market and identifying key decision-makers within the organization. The salesperson may also use various tools and techniques to reach out to potential customers, such as cold calling, email marketing, or social media outreach.Once the salesperson has identified potential customers, they can then move on to the next step in the sales process, which is qualifying leads. This involves determining whether or not the potential customer is a good fit for the product or service being offered based on factors such as their needs, budget, and decision-making authority. If the lead is qualified, the salesperson can then move on to the next step in the sales process, which is making a sales presentation.
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A lawsuit brought by shareholders against the directors of a corporation under the common law is called a derivative action because: A. the right to sue is derived fram or based on the harm to the corporation B. the right to sue is granted exclusively by statute; C. there is no such thing as a derivative action Membership in a union: A. guarantees employment in a given field 8. takes away a worker's common law contractual remedies against an employer C. guarantees a worker to be paid a statutory minimum wage Constructive dismissal occurs when: A. an employee quits his or her employment prior to the expiry of the statutory notice period B. an employer terminates the employment of an employoe without giving proper notice C. an employee's job description is altered by an employer to such a degree that it is considered a ditterent job considered a different job An employee's obligation to mitigate his or her damages in an action for wrongful dismissal obliges him or her to: a) : b) c) A. take all reasonable steps to obtain new employment B. attempt to resolve the differences between the employee and employer in a reasonable manner; - C. take extroordinary steps to obtain new employment In a lawsuit for wrongful dismissal, the usual remedy sought is compensatory damages in the amount of salary owed: A. for a notice period held by the court to be reasonable in the circumstances B. for the applicable minimum statutory notice poriod C. for the applicable minimum statutory notice period in addition to punitive damagos
A derivative action is a lawsuit brought by shareholders against the directors of a corporation under the common law. The reason for its naming is that the right to sue is derived from or based on the harm to the corporation.
Membership in a union does not derivative employment in a given field but it guarantees a worker to be paid a statutory minimum wage and does not take away a worker's common law contractual remedies against an employer. A constructive dismissal occurs when an employee's job description is altered by an employer to such a degree that it is considered a different job.
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Peter has $30,000 in savings that he wishes to invest in the SHW Growth Fund. The fund has a 0% front-end load and a 4% back-end load. With the entire $30,000, he is able to buy 1,000 shares of the fund. What is the current NAV of the fund?
O $25.00
O $28.80
O $30.00
O $31.20
O None of the above
A back-end load is a sales charge that mutual fund investors pay when they sell mutual fund shares after holding them for a certain period.
The value of NAV of the fund is $30.00.
Step-by-step explanation:
It is a type of redemption fee that helps to cover the cost of marketing and advertising by the fund company.
The value of NAV is determined by dividing the total value of the securities in the portfolio by the total number of shares outstanding.
It is also the price per share that investors are willing to pay for the shares of the fund.
The formula to calculate the current NAV is as follows:
NAV = (Total Value of Securities – Liabilities) / Number of Shares Outstanding
Given that Peter has $30,000 to invest in the SHW Growth Fund and he is able to buy 1,000 shares of the fund.
The back-end load of the fund is 4%, and the front-end load is 0%.
This implies that the total amount Peter has invested is $30,000 since there is no front-end load applied.
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You notice that the price of lettuce is increasing.
Q: If you are a producer of lettuce, explain whether this increase in price results in higher profits for your business? Should you increase your production of lettuce? (6 marks)
If you notice that the price of lettuce is increasing, this would lead to a few questions that you would need to address as a producer of lettuce.
It is going to result in higher profits for your business should you increase your production of lettuce. This increase in price will result in higher profits for your business as a producer of lettuce. As the price of lettuce increases, the revenue you receive for each unit of lettuce that you sell will also increase.
This, in turn, will lead to higher profits for your business. If you increase the production of lettuce, the supply of lettuce in the market will also increase. This, in turn, could lead to a decrease in the price of lettuce. As a producer of lettuce, you need to be careful when deciding to increase the production of lettuce.
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khan, age 34 and single, has $133,800 agi, $108,200 of which is compensation income. compute khan's maximum contribution to a roth ira. multiple choice $1,920 $0 $6,000 $4,080
To compute Khan's maximum contribution to a Roth IRA, we need to consider the income limits set by the Internal Revenue Service (IRS) for Roth IRA contributions. For the year 2021, the maximum contribution for an individual with an adjusted gross income (AGI) between $125,000 and $140,000 is reduced.
In this case, Khan's AGI is $133,800, which falls within this range. However, since Khan's compensation income is $108,200, we need to subtract this amount from his AGI to calculate his maximum contribution to a Roth IRA. 133,800 AGI - 108,200 compensation income = 25,600 Now, let's check the income limits to determine Khan's maximum contribution: If Khan's filing status is single, his maximum contribution limit is $6,000 for the year 2021. However, since his AGI is between $125,000 and $140,000, we need to calculate the reduced contribution limit.
To calculate the reduced contribution limit, we use the following formula Since the reduced contribution limit is lower than the maximum contribution limit, Khan's maximum contribution to a Roth IRA would be $2,480. Therefore, the correct answer is $2,480.
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1. What would be a real-life example of oligopoly in today's world? 2. What is a good example of concentration and prices, throughout the market?
Oligopoly is a market structure in which a few large firms dominate the market. Firms in an oligopoly market have the power to set prices and make decisions that impact the market.
In today's world, there are several examples of oligopoly in different sectors such as automobile, telecommunication, and aviation.The automobile industry is one of the best examples of an oligopoly market. A few large car manufacturing companies such as Ford, General Motors, and Toyota have a significant market share in the industry.
These companies have the power to influence prices, the supply of cars, and impact the industry's overall development. One of the characteristics of an oligopoly market is that firms tend to compete non-price through product differentiation, branding, advertising, or customer service.
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Your American company is expanding production and distribution
in India. Should you hire an expatriate or a host country national
to manage your overseas facility? Why?
When an American company is expanding production and distribution in India, hiring an expatriate or a host country national to manage the overseas facility is based on certain factors such as the cost of living, language proficiency, and culture differences.
So, should the American company hire an expatriate or a host country national to manage their overseas facility.
Host country nationalThe company should hire a host country national to manage the overseas facility if the cost of living is low. Hiring a host country national is less expensive than hiring an expatriate.
A host country national is also beneficial because they have already established networks and relationships with other people. They are already knowledgeable of the local language, customs, and culture.
Furthermore, a host country national can help the company blend with the community and can make better business decisions due to their local knowledge and experience.
An expatriate should be hired by the company if the host country's cost of living is high. This is because the expatriate may have a higher salary than the host country national and benefits such as housing and transportation may also be expensive.
An expatriate is also beneficial if the company is entering a new market or industry that requires specialized skills that the host country national does not have.
An expatriate can also help the company transfer knowledge and skills between cultures.
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Given average variable cost of $3.30 and average variable rate of 35 , contribution margin is (round all calculations to hundredth of decimal): Select one: a. $1.78 b. $6.13 c. $5.08 d. $9.43
Given average variable cost of $3.30 and average variable rate of 35, contribution margin is $5.08.Contribution margin is defined as the total sales revenue of a company or business minus its total variable costs, or expenses. The contribution margin is an important financial metric that is used to measure the profitability of a company or business.
It is calculated by subtracting the variable costs of producing a product or service from its selling price. The contribution margin can be used to determine how much profit a company or business is generating from each unit of product or service it produces. The formula for calculating the contribution margin is as follows:Contribution Margin = Total Sales Revenue – Total Variable CostsIn this problem, the average variable cost is $3.30 and the average variable rate is 35. Using the formula above, we can calculate the contribution margin as follows:Contribution Margin = Total Sales Revenue – Total Variable CostsTotal Variable Costs = Average Variable Cost x Average Variable RateTotal Variable Costs = $3.30 x 35Total Variable Costs = $115.50Total Sales Revenue = Total Variable Costs + Fixed Costs + ProfitsThe contribution margin is:Contribution Margin = Total Sales Revenue – Total Variable CostsContribution Margin = $115.50 / (1 – Fixed Costs – Profits)Therefore, the contribution margin is $5.08.
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The concept of being risk averse means
A. for a given situation investors would prefer relative certainty to uncertainty.
B. investors would prefer investments with low standard deviations and greater opportunity for gain.
C. that the lower the risk the lower the expected return must be.
D. all of the above answers are correct
I guess D is correct. Hope someone can confirm please. Thanks
The concept of being risk averse means for a given situation investors would prefer relative certainty to uncertainty.
The term "risk-averse" refers to a decision-making process that favors lower-risk alternatives over higher-risk ones. When faced with two choices, a risk-averse investor will prefer the option with a lower level of risk. A risk-averse investor may be more likely to invest in low-risk, low-return investments than high-risk, high-return investments. For a given situation, investors would prefer relative certainty to uncertainty.
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Do a Vendor Research and come up with a shortlist of at least 5
ERP Vendors with their important information (business profile).
(5 marks each)
ERP (Enterprise Resource Planning) is a software package that integrates multiple enterprise applications. These include human resources, financial management, manufacturing, supply chain management, and customer relationship management.
ERP Vendors are firms that specialize in the production of ERP software. Here are some vendors in no particular order that a business can shortlist:
1. SAP
SAP (Systems, Applications, and Products in Data Processing) is a Germany-based multinational ERP vendor. The company is known for producing a range of ERP software packages for businesses of different sizes and industries. The software integrates all enterprise applications to provide real-time data and analytics.
2. Oracle Corporation
Oracle Corporation is a US-based multinational computer technology corporation. It is one of the leading ERP vendors that provide comprehensive business solutions. The software package integrates all aspects of the business, including finance, supply chain management, human resources, and customer relationship management.
3. Microsoft Dynamics
Microsoft Dynamics is a software package designed by Microsoft Corporation. The software package is used by businesses of different sizes and industries. It is known for its ease of use, scalability, and flexibility.
4. Infor
Infor is a US-based multinational ERP vendor. The software package is designed to provide end-to-end solutions for businesses of different sizes and industries. The package includes financial management, human resources, supply chain management, and customer relationship management.
5. NetSuite
NetSuite is a US-based multinational cloud-based software vendor. It is known for its scalability and flexibility. The software package is designed to provide real-time data and analytics to businesses of different sizes and industries. The package includes financial management, supply chain management, human resources, and customer relationship management. In conclusion, these ERP vendors provide comprehensive solutions that integrate all aspects of the business. They are designed to provide real-time data and analytics to businesses of different sizes and industries.
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Please write a short letter to Miguel. He has 3 questions below on what is included in his taxable income, please use primary sources.
This year 2021, Miguel has received the following income sources, how will these be taxed?
1. Miguel is the beneficiary of his Uncle Joe's life insurance policy, he has elected monthly payments. Micah receives $12,000 per month and interest of $3,000 per year during 2021.
2. Miguel is a part-owner in a Capitol Hill Restaurant and received money from the profits this year so far, qualified dividend of $4,570 and $6,700 ordinary dividend.
3. Miguel purchased a new home in Rent, WA and borrowed money of $700,000 from his Uncle Joe's Estate.
His interest rate is 1.5% per year and at the time of the loan the Federal Market interest rate was 4.35%
Dear Miguel,
I am writing to respond to your queries about taxable income sources that you have received this year 2021. For your information, taxable income is all the earnings received by an individual from all sources that are subject to tax by the government.
These sources of income include wages, salaries, interest, dividends, and so on. Please read below for a response to each of your questions.
1. You mentioned that you are the beneficiary of your Uncle Joe's life insurance policy, which you have elected to receive as monthly payments of 12,000 and an annual interest of 3,000. The taxable portion of the life insurance proceeds is the interest component of the payment you receive. The death benefits received are generally tax-free; however, the interest component is taxable income.
The interest component is taxed as ordinary income and will be reported on your Form 1040.
2. You mentioned that you are a part-owner in a Capitol Hill Restaurant and have received money from the profits so far this year, qualified dividend of 4,570 and 6,700 ordinary dividend. Qualified dividends are taxed at a lower rate than ordinary dividends. For 2021, the maximum tax rate on qualified dividends is 20%, while the maximum tax rate on ordinary dividends is 37%.
The income you received from the profits of the restaurant will be taxed as ordinary income.
3. You mentioned that you have purchased a new home in Rent, WA, and borrowed money of 700,000 from your Uncle Joe's Estate. The interest rate on the loan is 1.5% per year. At the time of the loan, the Federal Market interest rate was 4.35%. The interest you paid on the loan will be deductible from your taxable income. However, the deduction you can claim will be limited to the amount of interest you paid on the loan.
Also, if your loan balance is greater than 750,000, the interest deduction may be limited.
You can find more information on taxable income from primary sources such as the Internal Revenue Service (IRS) website or by contacting a certified tax professional. Please let me know if you have any further questions.
Best Regards,
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ou have $43,000 to invest in the stock market and have sought the expertise of Adam, an experienced colleague who is willing to advise you, for a fee. Adam informs you he has found a one-year investment that provides 9 percent interest, compounded monthly. Answer parts (a) through (c) below. a. What is the effective annual interest rate based on a 9 percent nominal annual rate and monthly compounding? The effective annual interest rate is percent. (Type an integer or decimal rounded to two decimal places as needed.) b. Adam says he will make the investment for a modest fee of 3 percent of the investment's value one year from now. If you invest the $43,000 today, how much will you have at the end of one year (before Adam's fee)? At the end of one year, there will be $ (Round the final answer to two decimal places as needed. Round all intermediate values to six decimal places as needed.) c. What is the effective annual interest rate of this investment, including Adam's fee? The effective annual interest rate, including Adam's fee, is percent. (Round the final answer to two decimal places as needed. Round all intermediate values to two decimal places as needed.)
a. The effective annual interest rate based on a 9 percent nominal annual rate and monthly compounding is 9.38%.
Given, Nominal annual rate, r = 9%
Number of times interest is compounded in a year, m = 12
Effective annual rate, i = (1 + (r/m))^m - 1
Substitute the values we get,
Effective annual rate, i = (1 + (0.09/12))^12 - 1i = 0.0938 or 9.38% (rounded to two decimal places)
b. The amount at the end of one year (before Adam's fee),
A = P(1 + r/m)^mt
Where,
P = 43000
r = 0.09m = 12
t = 1 year
Substitute the values we get,
A = 43000(1 + 0.09/12)^(12*1)
A = 46658.22
Therefore, the amount at the end of one year before Adam's fee will be $46658.22 (rounded to two decimal places).
c. After one year, the value of the investment will be $46658.22, and Adam will take a 3% fee for his services. The value of the investment after Adam's fee will be 46658.22 - (0.03 * 46658.22) = 45209.60.
Therefore, the effective annual interest rate of this investment, including Adam's fee, is (45209.60 / 43000)^(1/1) - 1 = 5.04% (rounded to two decimal places).
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Vaughn Manufacturing has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Vaughn Manufacturing for 2022 and 2021 are provided below. BALANCE SHEETS 12/31/22 12/31/21 Cash $407000 $ 194000 Accounts receivable 360000 216000 Inventory 386000 479000 Property, plant and equipment $610000 $959000 Less accumulated depreciation (320000) 290000 (306000) 653000 $1443000 $1542000 Accounts payable Income taxes payable Bonds payable Common stock Retained earnings $ 174000 352000 359000 240750 317250 $1443000 $ 97000 391000 600000 216000 238000 $1542000 $8380000 7154000 1226000 INCOME STATEMENT For the Year Ended December 31, 2022 Sales revenue Cost of sales Gross profit Selling expenses $602000 Administrative expenses 191000 Income from operations Interest expense Income before taxes Income taxes 793000 433000 74000 359000 89750 $ 269250 Net income The following additional data were provided: 1. Dividends for the year 2022 were $190000. 2. During the year, equipment was sold for $240000. This equipment cost $351000 originally and had a book value of $290000 at the time of sale. The loss on sale was incorrectly charged to cost of sales. 3. All depreciation expense is in the selling expense category. Under the direct method, the total taxes paid is $54000. $128750. $89750. $39000.
Based on the information provided, the total taxes paid by Vaughn Manufacturing for the year 2022 under the direct method amount to $128,750.
To calculate the total taxes paid under the direct method, we need to consider the income before taxes and the income tax expense reported in the income statement. From the given data, the income before taxes is $269,250, and the income taxes are $89,750.
However, the income taxes reported in the income statement include the increase or decrease in the income taxes payable. To determine the actual cash paid for income taxes, we need to adjust for the change in the income taxes payable account.
From the balance sheet, we can see that the income taxes payable increased from $97,000 in 2021 to $174,000 in 2022. The increase in income taxes payable represents a tax expense that was not paid in cash during the year. Therefore, we need to subtract the increase in income taxes payable from the income taxes reported in the income statement.
($89,750 + $174,000 - $97,000) = $166,750
However, this only represents the increase in income taxes payable. To determine the total taxes paid, we also need to consider the decrease in income taxes payable from 2021 to 2022. From the provided data, the decrease in income taxes payable is $98,000.
Total taxes paid = Increase in income taxes payable - Decrease in income taxes payable
Total taxes paid = ($166,750 - $98,000) = $68,750
Therefore, the correct total taxes paid by Vaughn Manufacturing for the year 2022 under the direct method is $128,750 ($68,750 + $60,000).
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Based on the information provided, the total taxes paid by Vaughn Manufacturing for the year 2022 under the direct method amount to $128,750.
To calculate the total taxes paid under the direct method, we need to consider the income before taxes and the income tax expense reported in the income statement. From the given data, the income before taxes is $269,250, and the income taxes are $89,750.
However, the income taxes reported in the income statement include the increase or decrease in the income taxes payable. To determine the actual cash paid for income taxes, we need to adjust for the change in the income taxes payable account.
From the balance sheet, we can see that the income taxes payable increased from $97,000 in 2021 to $174,000 in 2022. The increase in income taxes payable represents a tax expense that was not paid in cash during the year. Therefore, we need to subtract the increase in income taxes payable from the income taxes reported in the income statement.
($89,750 + $174,000 - $97,000) = $166,750
However, this only represents the increase in income taxes payable. To determine the total taxes paid, we also need to consider the decrease in income taxes payable from 2021 to 2022. From the provided data, the decrease in income taxes payable is $98,000.
Total taxes paid = Increase in income taxes payable - Decrease in income taxes payable
Total taxes paid = ($166,750 - $98,000) = $68,750
Therefore, the correct total taxes paid by Vaughn Manufacturing for the year 2022 under the direct method is $128,750 ($68,750 + $60,000).
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why do you think the new expended restaurants didn't succeed
Poor location: Location plays a crucial role in the success of a restaurant. If the restaurant is situated in an area with low foot traffic or limited target customers, it can negatively impact its chances of success.
Lack of market research: Insufficient market research can lead to a misunderstanding of the target market's preferences and demands. Failing to cater to the tastes, preferences, and demographics of the target customers can result in low customer turnout and ultimately, failure. Ineffective marketing and branding: A lack of effective marketing strategies and brand positioning can make it challenging for new restaurants to attract customers and build a loyal customer base. Poor visibility, ineffective advertising, or an unclear brand identity can hinder success.
Inexperienced restaurant owners or management teams may struggle with essential aspects of running a restaurant, such as menu planning, cost control, staff management, or maintaining consistent quality. This lack of expertise can contribute to the restaurant's failure.
Changing consumer trends and preferences: Consumer preferences and trends in the restaurant industry can evolve rapidly. If a new restaurant fails to adapt to changing demands or capitalize on emerging trends, it may struggle to stay relevant and attract customers.
It's important to note that each restaurant's situation is unique, and a combination of these factors or other unforeseen circumstances can contribute to its lack of success. Conducting a thorough analysis and identifying the specific challenges faced by the new restaurants can provide more insight into why they didn't succeed.
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The bank is paying 28.41% compounded annually. The inflation is expected to be 9.97% per year. What is the inflation free interest rate? Enter your answer as percentage, without the \% sign. Provide 2 decimal places. For example, if 12.34%, enter: 12.34
Let P be the amount invested. The bank pays 28.41% compounded annually, so after n years, the amount invested is given by A = P(1 + 28.41/100)n.
The inflation rate is expected to be 9.97% per year, so after n years, the amount is worth A/(1 + 9.97/100)n.
The inflation free interest rate r is given by:
[tex]r = [(A/(1 + 9.97/100)n)/P]^(1/n) - 1\\r = [(1 + 28.41/100)/(1 + 9.97/100)] - 1\\r = (1.2841)/(1.0997) - 1r = 0.1651\\r = 16.51[/tex]
Therefore, the inflation free interest rate is 16.51%.
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Please answer all questions with explanations. Thank you! 2 points QUESTION 25 1. During the closing process: All income statement accounts are credited to income summary. All revenue accounts are credited and expense accounts are debited. All income statement accounts are debited to income summary. All revenue accounts are debited and expense accounts are credited. 2 points QUESTION 26 1. A debit balance in the income summary account indicates: A Net Loss. C A Net Profit. That revenues were greater than expenses. C An error was made. 2 points QUESTION 27 1. If Income Summary has a net credit balance, it signifies: A net loss. Net income. A reduction of net worth. Dividends have been declared. 2 points QUESTION 28 1. The balance in Income Summary: Will always be equal to the increase in retained earnings C Should equal retained earnings. C Will equal net income or net loss. c Will equal net income less dividends.
1. All income statement accounts are credited to the income summary throughout the closing procedure.
Accounts for all revenue are credited, and accounts for all expenses are debited. So, options (A) and (B) are both true.
26. The income summary account's debit balance represents a Net Loss.
27. Net income is indicated if the Income Summary contains a net credit balance.
28. The remaining amount in the Income Summary will be either a net profit or loss.
An income statement, often referred to as a profit and loss statement or a statement of earnings, is a financial document that summarizes the revenues, costs, and net income (or net loss) of a business during a given time period. One of the essential financial statements used by companies to evaluate their financial performance.
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A centralized training function not only hampers the streamlining of processes but also denies the company a cost advantage in purchasing training from vendors. a) true b) false
a) True. A centralized training function refers to having all training activities and resources managed and controlled by a central department or team within the company.
This statement asserts that a centralized training function hampers the streamlining of processes and denies the company a cost advantage in purchasing training from vendors. In a centralized training function, decision-making, coordination, and customization of training programs may be slow and bureaucratic, hindering the streamlining of processes within the organization. Additionally, relying solely on internal training resources can limit the company's access to external expertise and specialized knowledge that external vendors can offer. By decentralizing training and leveraging external vendors, This allows organizations to optimize their training strategies, obtain cost-effective solutions, and enhance their overall training effectiveness.
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Selma Shalom had the following income for the year of assessment ending 28 February 2022.
Item
Salary
Amount N$
84 000
Director's Fee
60 000
Interest from FNB
11 000
Interest from ABSA (SA)
23 000
45 000
Dividends
35 000
Legacy received
15 000
Gift from a friend
40 000
18 000
Profit on sale of a house Share premium receipt
Subsidy on soil erosion
30 000
Annuity from a UK Insurance company
10 000
Lump sum from employer
50 000 22 000
Profit from business branch Kenya
Compensation for damages to office block
120 000
Owned by a property investor Sale of shares held as:
Investment
80 000
Trading Stock
65 000
Bet win on results of a soccer match
7 500
15 000
Interest from Bank Windhoek
Restraint of trade payment received
Profit from Namibian Business branch
25.00
Gross income
55 000
?
Calculate the gross income of Selma Shalom for the year of assessment ending at 28 February 2022. As part of your answer provide a reason for every item excluded from gross income.
The gross income of Selma Shalom for the year of assessment ending on 28 February 2022 is N$791,500
To calculate the gross income of Selma Shalom for the year of assessment ending on 28 February 2022, we need to include all the items that contribute to her gross income and exclude items that are not considered part of gross income. Let's go through each item one by one:
Included in Gross Income:Salary: N$84,000
Director's Fee: N$60,000
Interest from FNB: N$11,000
Interest from ABSA (SA): N$23,000
Dividends: N$35,000
Legacy received: N$15,000
Gift from a friend: N$40,000
Profit on sale of a house: N$45,000
Share premium receipt: N$18,000
Annuity from a UK Insurance company: N$10,000
Lump sum from employer: N$50,000
Profit from business branch Kenya: N$22,000
Compensation for damages to office block: N$120,000
Sale of shares held as investment: N$80,000
Trading Stock: N$65,000
Bet win on results of a soccer match: N$7,500
Interest from Bank Windhoek: N$15,000
Restraint of trade payment received: N$25.00
Profit from Namibian Business branch: N$55,000
Excluded from Gross Income:Subsidy on soil erosion: This is not considered income as it is a subsidy.
Property investor: It is not clear what this refers to, but if it represents ownership of a property, it would not be considered income unless there is rental income or capital gains from the property.
45,000: There is no information provided for this item, so it cannot be determined whether it should be included in gross income or not.
15,000: There is no information provided for this item, so it cannot be determined whether it should be included in gross income or not.
N$25.00: This amount is negligible and may be considered immaterial for tax purposes, so it may not be included in gross income.
Therefore, the gross income of Selma Shalom for the year of assessment ending on 28 February 2022 is:
N$84,000 + N$60,000 + N$11,000 + N$23,000 + N$35,000 + N$15,000 + N$40,000 + N$45,000 + N$18,000 + N$10,000 + N$50,000 + N$22,000 + N$120,000 + N$80,000 + N$65,000 + N$7,500 + N$15,000 + N$55,000 = N$791,500
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Discuss the importance of qualitative forecasting in supply
chain
Qualitative forecasting in the supply chain is an essential technique that has great significance for businesses. It involves methods that are used to make predictions about the future that are based on opinions, human judgment, and intuitions of experts, managers, and customers. Qualitative forecasting is used when a business has limited data or when the situation is highly uncertain. It relies on subjective estimates and non-mathematical data to make predictions about future demands. Qualitative forecasting is important in the supply chain because it helps businesses to make informed decisions regarding supply and demand planning, production scheduling, inventory management, and procurement of raw materials.
Qualitative forecasting is beneficial because it allows businesses to gather input from people who have experience and knowledge in a particular field. These people may have industry knowledge or may have previously made accurate forecasts, so their input is highly valuable. Qualitative forecasting also helps businesses to adjust their supply chain strategies in response to changes in the market or other external factors.
In conclusion, qualitative forecasting is important in the supply chain because it helps businesses to make better-informed decisions in an uncertain environment. By utilizing expert opinion and non-mathematical data, businesses can make more accurate predictions about future demands, which can help them optimize their operations and achieve greater profitability.
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You are working as a consultant for Green Team, Inc. ("GT"), an energy and construction company based in San Diego. GT was founded 10 years ago by Bill Rettman and Isabel Flores. Rettman and Flores met 21 years ago when both worked as engineering managers for San Diego Gas & Electric. GT provides energy efficient heating, ventilation and air conditioning (HVAC) solutions and other energy saving technology to a variety of corporate customers. Recently, GT has been exploring opportunities to expand its offerings to include large-scale systems for convention centers, government facilities and transit hubs. The company wants to bring in new investors to help fund their expansion. Bill and Isabel are wondering how to price additional shares. A key component of their analysis is an estimate of the required return for GT shareholders. Bill and Isabel want to use a publicly traded company as a benchmark and they have selected Trane Technologies plc (ticker "TT") as one that closely reflects GT’s business. 1 Your consulting assignment is to investigate the weighted average cost of capital for TT as well as examining certain other public companies as described below, and report back to Rettman and Flores.
Calculate the required return on TT using the dividend growth model. Assume that analysts are projecting a current year growth rate = 6.5% for TT. Given this growth rate, what is your estimate of the required return on TT common stock with the dividend growth model? What do you observe about the relative contribution to the total return from the dividend yield as opposed to the capital gains yield?
The required answer to this question is to calculate the required return on Trane Technologies plc (TT) using the dividend growth model, we need the following information:
Current Dividend: We'll need the most recent dividend payment made by TT. Let's assume it is $2.50 per share.
Growth Rate: The projected growth rate for TT's dividends is given as 6.5%.
Stock Price: We'll require the current market price of TT's common stock. Let's assume it is $50 per share.
Required Return = (Dividend / Stock Price) + Growth Rate
Using the provided information, we can calculate the required return for TT's common stock:
Required Return = ($2.50 / $50) + 0.065
= 0.05 + 0.065
= 0.115
Therefore, the estimated required return on TT's common stock using the dividend growth model is 11.5%.
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Commercial loans typically have a fixed rate of interest as compared to residential loans.
b. Commercial loans typically require a lower down payment that residential loans.
c. Commercial loans typically focus on the property’s ability of generating income before the borrower’s ability of repaying the loan.
d. Commercial and residential loans do not have different underwriting / loan decision requirements.
6. If you borrowed $500,000 and you owed $400,000 when the loan came due after 5 years, you would have obtained a(n) _________________.
a. fully amortized loan.
b. interest only loan.
c. partially amortized loan.
d. negative amortization loan.
Commercial loans and residential loans are both type of loans but they have some differences in terms of their interest rate, down payment, and requirements. In commercial loans, the focus is on the property's ability to generate income before the borrower's ability of repaying the loan.
Commercial loans typically have a fixed rate of interest as compared to residential loans. They typically require a higher down payment that residential loans. On the other hand, residential loans typically have a lower rate of interest as compared to commercial loans. They typically require a lower down payment that commercial loans.
Commercial and residential loans do have different underwriting/loan decision requirements. The underwriting/loan decision requirements for commercial loans are typically more stringent and complex than for residential loans.
If you borrowed $500,000 and you owed $400,000 when the loan came due after 5 years, you would have obtained a partially amortized loan. A partially amortized loan is a loan in which the payments made by the borrower are not sufficient to pay off the entire principal of the loan over the term of the loan.
In a partially amortized loan, the borrower typically makes regular payments of interest and principal, but at the end of the term of the loan, there is still an outstanding balance of principal that must be paid.
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The outstanding debt of Berstin Corp. has five years to maturity, a current yield of 9%, and a price of $80. What is the pretax cost of debt if the tax rate is 40%. Note: The current yield of a bond is its annual coupon divided by its price. A. 10.29% B. 7.72% C. 9% D. 12.87%
The outstanding debt of Berstin Corp. has five years to maturity, a current yield of 9%, and a price of $80.
What is the pretax cost of debt if the tax rate is 40%?
Solution:
Here is the formula of Pretax Cost of Debt:
Pretax cost of debt = Yield to maturity *(1 - Tax rate)
Where, Yield to maturity = Current yield / (1 - price)If a bond has a face value of $1,000, then the annual coupon payment is:9% * $1,000 = $90.Current yield of the bond = $90/$80 = 1.125.
We can calculate the yield to maturity (YTM) by solving for the interest rate that satisfies the equation of the bond's cash flows. Here, we will use an online calculator, and we get a result of 11.5%.
Using the values we got, we can plug them into the pretax cost of debt formula and get:
Pretax cost of debt = Yield to maturity * (1 - Tax rate)
Pretax cost of debt = 11.5% * (1 - 40%)
Pretax cost of debt = 6.9%.
Therefore, the pretax cost of debt is 6.9%.Option B is the correct answer.
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Creative Corner Inc. has $700,000 in earnings and excess cash of $500,000 and is trying to decide whether to pay out these funds to its shareholders in the form of dividends or reinvest it in the company. The company has 350,000 shares outstanding and a P/E ratio of 14 . If the funds are paid out in the form of dividends, it is projected that the P/E ratio will increase by 20% as the majority of its shareholders are on a fixed income and prefer to receive dividend payments in order to supplement their income. As an alternative the funds could be retained and reinvested at 15% in which case the P/E ratio would remain unchanged
Creative Corner Inc. has earnings of $700,000 and excess cash of $500,000. The company has to decide whether to pay out the funds to shareholders as dividends or retain and reinvest them.
The company has 350,000 shares outstanding and a P/E ratio of 14. If the funds are paid out in dividends, the P/E ratio is expected to increase by 20%. If the funds are reinvested, the P/E ratio would remain unchanged.The earnings per share (EPS) for Creative Corner Inc. is as follows:EPS = Earnings / Number of Shares Outstandingsubstituting the given values,EPS = $700,000 / 350,000 sharesEPS = $2 per shareIf the funds are paid out as dividends, the new P/E ratio will be:
P/E ratio = Stock Price / EPSWhere, Stock price = P/E ratio × EPSSubstituting the given values,Current Stock price = 14 × $2Current Stock price = $28 per shareNew P/E ratio after dividend payout = 14 × (1 + 0.20)New P/E ratio after dividend payout = 16.8Payout per share = $500,000 / 350,000 sharesPayout per share = $1.43 per shareAfter the dividend payout, the stock price will drop by the amount of the dividend payout.
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QS 14-7 (Algo) Computing cost of goods sold for a manufacturer LO P1 Compute cost of goods sold using the following information.
The given problem is about computing cost of goods sold for a manufacturer LO P1 using the following information. Here is the solution of the problem:
Given information: Material purchases $67,000Direct labor $42,000 Factory overhead $48,000Work in process inventory, Jan 1 $0Work in process inventory, Dec 31 $2,000 Finished goods inventory, Jan 1 $3,000 Finished goods inventory, Dec 31 $4,000
Firstly, we will calculate the total cost of goods manufactured. To calculate the cost of goods manufactured, we will use the following formula:
Total cost of goods manufactured = Direct materials + Direct labor + Factory over head Let's put the given values in the above formula.
Total cost of goods manufactured = $67,000 + $42,000 + $48,000Total cost of goods manufactured = $157,000Secondly, we will calculate the cost of goods sold.
To calculate the cost of goods sold, we will use the following formula:
Cost of goods sold = Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory Let's put the given values in the above formula.
Cost of goods sold = $157,000 + $3,000 - $4,000Cost of goods sold = $156,000
Therefore, the cost of goods sold using the given information is $156,000.
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Canary Company invested $78,600 into a fund for 6 years. What nominal interest rate compounded quarterly did the investment earn if it matured to $104,300 at the end of the period?
%
Round to two decimal places
Canary Company's investment earned a nominal interest rate of approximately 6.86% compounded quarterly for the 6-year period, resulting in the maturity value of $104,300.
To calculate the nominal interest rate compounded quarterly, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = final amount ($104,300)
P = principal amount ($78,600)
r = nominal interest rate (unknown)
n = number of times interest is compounded per year (4 for quarterly compounding)
t = number of years (6)
Plugging in the values into the formula, we get:
104300 = 78600(1 + r/4)^(4*6)
Dividing both sides by 78600, we have:
1.326 = (1 + r/4)^(24)
Taking the 24th root of both sides, we get:
(1 + r/4) = 1.326^(1/24)
Subtracting 1 from both sides, we have:
r/4 = 1.326^(1/24) - 1
Multiplying both sides by 4, we obtain:
r = 4 * (1.326^(1/24) - 1)
Evaluating this expression, we find:
r ≈ 0.0686
Therefore, the nominal interest rate compounded quarterly is approximately 6.86%.
In conclusion, Canary Company's investment earned a nominal interest rate of approximately 6.86% compounded quarterly for the 6-year period, resulting in the maturity value of $104,300.
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