The reverse treasury stock method is used for convertible bonds. The Reverse Treasury Stock method is a method for calculating diluted earnings per share. Diluted EPS assumes that all possible dilutive securities, such as stock options, convertible preferred shares, and convertible bonds, have been converted into common shares.
To avoid overstating the amount of common shares that would be outstanding, the treasury stock method is used to calculate the diluted EPS. The treasury stock method treats the proceeds from the conversion of convertible securities as if they were used to buy back common stock at the current market price.
Therefore, the treasury stock method is used to estimate the dilutive effects of convertible securities that are out of the money. Hence, the correct option is D, Convertible bonds.
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Preferred stock Preferred stock is sometimes referred to as "debt in disguise". Comment on the similarities between preferred stock and debt. What are the similarities between common and preferred stock? (Minimum 150 words)
Preferred stock and debt are known to have certain similarities, and this is why the former is sometimes referred to as "debt in disguise". One of the most significant similarities between the two is the fact that both do not usually come with voting rights.
However, they are different in the sense that holders of preferred stock are sometimes given voting rights on a limited basis. Another similarity is that both preferred stock and debt usually have a fixed rate of return, and they both have a set maturity date.There are also similarities between common and preferred stock, and they include the following:Ownership: Holders of both common and preferred stock are owners of the company that issued them.
Dividends: Both common and preferred stockholders are entitled to dividends, though the amounts might differ depending on the company's preference.Transferability: Common and preferred stockholders are free to buy or sell their shares in the stock market or any other trading platform.
Limited Liability: Both classes of stockholders have limited liability, meaning that their losses cannot exceed the amount of their initial investment.Conclusion:In conclusion, preferred stock and debt have some similarities, including limited or no voting rights, fixed rate of return, and a set maturity date. However, common and preferred stock have more similarities, including ownership, dividends, transferability, and limited liability.
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. In early 2018, Abercrombie & Fitch (ANF) had a book equity of $1250 million, a price per share of $22.48 and 68.4 million shares outstanding. At the same time, The GAP had a book equity of $3140 million, a share price of $31.74 and 389 million shares outstanding. 7 marks
a. What is the market-to-book ratio of each of these retailers?
b. What conclusions can you draw by comparing the two ratios?
Market-to-book ratio is a metric that compares a company's market value to its book value. This metric is calculated by dividing the company's market capitalization by its book equity.
Market-to-book ratio (ANF) = Market Capitalization / Book Equity
Market-to-book ratio (ANF) = [Share price * Outstanding shares] / Book Equity
Market-to-book ratio (ANF) = [$22.48 * 68.4 million] / $1250 million
Market-to-book ratio (ANF) = 1.23
Market-to-book ratio (GAP) = Market Capitalization / Book Equity
Market-to-book ratio (GAP) = [Share price * Outstanding shares] / Book Equity
Market-to-book ratio (GAP) = [$31.74 * 389 million] / $3140 million
Market-to-book ratio (GAP) = 3.92By comparing the two ratios, we can conclude that the GAP is trading at a premium to its book value, whereas ANF is trading at a discount to its book value.
We can also deduce that the GAP is considered to be a more valuable company by investors than ANF, which may be attributed to differences in growth prospects, profitability, and other factors. The market-to-book ratio can be used by investors to evaluate whether a company's shares are overvalued or undervalued relative to its book value.
The ratio can also be used to compare the valuations of companies within the same industry or sector.
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A retail company TGT has sales of $1,120,000 and total costs δ ff $955,000, including depreciation and interest expenses. The average tax rate is 27% Total assets are valued at $570,000 and total equity at $244,000. What comes closest to the profit margin? A> 15% B> 21% C> 11% D> 49%
Profit margin is the ratio of net income after taxes to net sales. It measures the percentage of each dollar of sales that is available to the company after it pays all its expenses. So, option C) 11% comes closest to the profit margin.
Profit margin is calculated as follows:
Profit margin = Net income after taxes ÷ Net sales
TGT's profit margin would be calculated as follows:
Net sales = $1,120,000
Total costs = $955,000
Tax rate = 27%
Net income after taxes = Net income before taxes - Taxes
Net income before taxes = Net sales - Total costs
Net income before taxes = $1,120,000 - $955,000
Net income before taxes = $165,000
Taxes = 0.27 × Net income before taxes
Taxes = 0.27 × $165,000
Taxes = $44,550
Net income after taxes = Net income before taxes - Taxes
Net income after taxes = $165,000 - $44,550
Net income after taxes = $120,450
Profit margin = Net income after taxes ÷ Net sales
Profit margin = $120,450 ÷ $1,120,000
Profit margin = 0.1075 or 10.75%
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When you were reviewing the TRIP Project, it was apparent that the Project Manager was not managing the costs. Please instruct the project manager on the following:
Why it is important to manage costs in a project
Pitfalls that project managers run into
How to monitor and track projects from a cost viewpoint
How to identify and address budget variances
Create a status report
Cost management is essential for the success of any project. The TRIP Project Manager needs to understand the significance of managing the cost to ensure that the project stays within budget. Project managers often run into pitfalls that can cause them to overlook cost management. This article will provide guidance on why cost management is critical, common pitfalls, and how to monitor and track projects from a cost viewpoint.
Cost management is essential because it allows a project manager to plan, organize, and allocate resources to stay within budget and prevent overspending. It helps the project manager to make informed decisions that align with the project objectives. Cost management also enables project managers to predict future expenses and provide a more accurate budget forecast, which helps in securing future funding.Pitfalls that project managers run intoCost management is a vital aspect of project management that project managers often overlook.
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When applying NPV, If an asset's future net cash flows yleld a positive net present value, then a company should Invest. True or False
Previous question
True. When applying Net Present Value (NPV) analysis, if the future net cash flows of an asset result in a positive NPV, it indicates that the present value of the cash inflows exceeds the present value of the cash outflows.
In such a case, investing in the asset is considered favorable and financially beneficial. A positive NPV suggests that the investment is expected to generate more value than the cost of capital, providing a potential return on investment. Therefore, a company should typically choose to invest in projects or assets that yield a positive net present value. Net Present Value (NPV) is a financial metric used to assess the profitability and viability of an investment or project. It takes into account the time value of money by discounting future cash flows to their present value. NPV is calculated by subtracting the initial investment cost from the present value of expected future cash inflows. A positive NPV indicates that the investment is expected to generate more value than the cost of capital, representing a financially favorable opportunity. Conversely, a negative NPV suggests that the investment may not meet the desired return threshold. NPV is widely used in financial decision-making to evaluate investment opportunities and compare alternative projects.
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which of the following taxpayers should expect to receive a form 1099k for Gig employee economic activity in 2022 Peter earned $225 and had seven transactions as shared ride driver in 2022 Alex earned $383 and had 10 transactions as food delivery driver for an online app mellow earn 575 and had 20 transactions is a shared ride driver for the last 6 months or 2022 Robin earned 625 with 45 transaction delivery groceries through a popular online app in 2022
Gig economy workers are classified as self-employed independent contractors. Independent contractors are not employees; therefore, they are not given a W-2 from their employer.
However, independent contractors or self-employed individuals may receive a Form 1099-MISC, depending on the amount of income they earned from a particular source. Form 1099-MISC is the income tax form used to report income earned by independent contractors, which includes gig workers.Peter earned $225 with seven transactions as a shared ride driver in 2022.
He will not receive a Form 1099-K because he did not exceed the minimum threshold requirement. Alex earned $383 with ten transactions as a food delivery driver for an online app. He will not receive a Form 1099-K because he did not exceed the minimum threshold requirement.Mellow earned $575 with 20 transactions as a shared ride driver for the last 6 months of 2022. Mellow will not receive a Form 1099-K because they did not exceed the minimum threshold requirement.Robin earned $625 with 45 transaction delivering groceries through a popular online app in 2022.
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formula assume sid is paid $20/hour to teach economics and that his disutility of effort at this job is $8/hour. he works 20 hours a week. if he loses his job, he will be unemployed for 13 weeks. what is his total unemployment rent assuming he would not receive any unemployment benefit if he were fired?
Based on the concept of income calculation and the available information, Sid's total unemployment rent would be $5,200 assuming he would not receive any unemployment benefits if he were fired.
What is Unemployment benefits?Unemployment benefits is a term that is used to describe temporary income when an individual loses his job through a fault not associated with him.
Generally, unemployment benefits somewhat replace lost earnings and help people pay expenses while looking for new work.
In this case,
To calculate Sid's total unemployment rent, we need to find the distinction between his income while working and his income while unemployed.
Income while working:
Sid is paid $20/hour to teach economics and works for 20 hours a week.
His income per week while working = $20/hour * 20 hours/week = $400/week
Income while unemployed:
If Sid loses his job, he will be unemployed for 13 weeks.
Given that he does not receive any unemployment benefits, his income per week while unemployed will be $0/week.
Total unemployment rent = (Income while working - Income while unemployed) * Number of weeks unemployed
=> ($400/week - $0/week) * 13 weeks
=> $400/week * 13 weeks
=> $5,200
Hence, in this case, it is concluded that Sid's total unemployment rent would be $5,200 if he does not receive any unemployment benefits if he were fired.
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A company desires to sell a sufficient quantity of products to earn a profit of $540000. If the unit sales price is $16, unit variable cost is $12, and total fixed costs are $800000, how many units must be sold to earn net income of $540000 ? 335000 units 467500 units 233750 units 185000 units
To earn net income of $540000, the company must sell 335000 units.
Given that a company desires to sell a sufficient quantity of products to earn a profit of $540000 and unit sales price is $16, unit variable cost is $12, and total fixed costs are $800000.
To calculate how many units must be sold to earn net income of $540000, we use the formula below;
Net Income = (Unit Sales Price × Quantity Sold) - [(Unit Variable Cost × Quantity Sold) + Total Fixed Costs]
Where; Net Income = $540000
Unit Sales Price = $16
Unit Variable Cost = $12
Total Fixed Costs = $800000
Quantity Sold = ?
We can now substitute the values in the formula as shown below; $540000 = ($16 × Quantity Sold) - [($12 × Quantity Sold) + $800000]
Simplify by removing the brackets; $540000 = $16 × Quantity Sold - $12 × Quantity Sold - $800000
Simplify further; $540000 = $4 × Quantity Sold - $800000Add $800000 to both sides; $540000 + $800000 = $4 × Quantity Sold
Rearrange the formula; $1340000 = $4 × Quantity Sold
Divide both sides by $4; $1340000 ÷ $4 = Quantity Sold
Quantity Sold = 335000 units
Therefore, to earn net income of $540000, the company must sell 335000 units.
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Future Value of an Annuity for Various Compounding Periods Find the future values of the following ordinary annuities. FV of $200 each 6 months for 10 years at a nominal rate of 12%, compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent. $ FV of $100 each 3 months for 10 years at a nominal rate of 12%, compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent. $ The annuities described in parts a and b have the same amount of money paid into them during the 10-year period, and both earn interest at the same nominal rate, yet the annuity in part b earns more than the one in part a over the 10 years. Why does this occur?
a) FV of $200 each 6 months for 10 years at a nominal rate of 12%, compounded semiannually
Time (n) = 10 years = 20 semiannual periods
FV can be calculated using the formula given below;
FV = P [{(1 + r/m)^(m*n) - 1} / (r/m)]
Substitute the given values in the formula;
FV = $200 [{(1 + 0.12/2)^(2*10) - 1} / (0.12/2)]FV = $7,878.57
The Future value of the given ordinary annuity is $7,878.57 (approx).
b) FV of $100 each 3 months for 10 years at a nominal rate of 12%, compounded quarterly
Time (n) = 10 years = 40 quarterly periods
FV can be calculated using the formula given below;
FV = P [{(1 + r/m)^(m*n) - 1} / (r/m)]Substitute the given values in the formula;
FV = $100 [{(1 + 0.12/4)^(4*10) - 1} / (0.12/4)]FV = $8,073.51
The Future value of the given ordinary annuity is $8,073.51 (approx).
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Answer succinctly (in no more than 150 words each) three of the following four questions. All answers must be written in complete sentences. Do a word count and indicate the number of words after each answer. Question A1. Explain the difference between covered and uncovered interest parity. Question A2. What are the benefits, in terms of the efficiency of financial intermediation, provided by banking globalisation? Question A3. Explain the financial trilemma. How can regulatory wars be avoided? Provide an example involving international agreements. Question A4. Explain how budget deficits may create a negative cross-border externality which, in turn, may hamper international fiscal policy coordination.
Covered interest parity refers to the situation where there is no arbitrage opportunity arising from differences in interest rates across two or more countries, after accounting for forward exchange rates.
Uncovered interest parity is a condition under which expected returns on assets are equalized across countries.
However, it does not involve any accounting for forward exchange rates.
Covered interest parity is more relevant for investors and is a source of exchange rate fluctuations in the short term.
It assumes a world with efficient markets, perfect capital mobility, and the absence of transaction costs.
Global banking allows investors and borrowers to interact in more ways than before.
This is beneficial to the economy because it reduces transaction costs and helps mitigate information asymmetries.
Banks can match borrowers with suitable lenders and provide liquidity to the economy, increasing the efficiency of financial intermediation.
It also allows banks to diversify their portfolios, spread risks and improve returns to shareholders.
However, banking globalization is also accompanied by increased risks,
which need to be regulated and managed effectively.
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Susanti Berhad is considering a project which requires an investment of RM500,000. The project sales forecast under a normal economic scenario for the next 10 years is 20,000 units per annum. The selling price per unit is RM20. The labor costs per unit are RM8 and the material costs per unit are RM4. The fixed costs are RM50,000 per annum (relevant) and the project does not require any additional working capital. The projected project is for 10 years, and the cost of capital is 11.7%. From the above information you are required to answer the following questions. a. Calculate the Net Present Value for this project. b. Based on your calculation in part (a), perform a sensitivity analysis on the selling price, labor cost, material cost and fixed cost. c. Interpret your findings in part (b).
a. Net Present Value for the project.The formula for calculating
NPV = (-I) + (CF1 / (1+r)) + (CF2 / (1+r)2) + (CF3 / (1+r)3) +… + (CFn / (1+r)n)
Where,CF = Cash flowI = Investmentn = the period in year of the projectr = the required rate of return, which is 11.7%
Here, the project is for 10 years and the initial investment is RM500,000. The management should take into consideration the impact of these factors when making decisions related to this project.
Therefore,Cash flow = (Unit Price × Quantity Sold) - (Labor cost × Quantity Sold) - (Material cost × Quantity Sold) - Fixed cost= [(RM20 × 20,000) - (RM8 × 20,000) - (RM4 × 20,000) - RM50,000] = RM190,000I = RM500,000n = 10 yearsr = 11.7%NPV = (-500,000) + (190,000 / (1+0.117)1) + (190,000 / (1+0.117)2) + (190,000 / (1+0.117)3) + … + (190,000 / (1+0.117)10) = (-500,000) + 142,857.14 + 113,793.09 + 90,297.15 + … + 22,566.26= RM222,406.98b.
b)
Sensitivity analysis on the following factors:
Sensitivity analysis is performed on the following factors:• Selling price• Labor cost• Material cost• Fixed cost
We will determine the impact of changes in these factors on the NPV of the project.
Selling price (SP) is increased by 5%, 10% and 20% from the original SP.
The new prices are SP+5%, SP+10% and SP+20% respectively.
Labor cost (LC) is increased by 5%, 10% and 20% from the original LC.
The new labor costs are LC+5%, LC+10% and LC+20% respectively.
Material cost (MC) is increased by 5%, 10% and 20% from the original MC.
The new material costs are MC+5%, MC+10% and MC+20% respectively.
Fixed cost (FC) is increased by 5%, 10% and 20% from the original FC.
The new fixed costs are FC+5%, FC+10% and FC+20% respectively.
Selling Price Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -SP + 5% 219,023.03 -3,383.95 -1.5SP + 10% 215,639.09 -6,767.89 -3SP + 20% 208,871.20 -13,535.78 -6.1Labor Cost Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -LC + 5% 211,286.06 -11,120.92 -5LC + 10% 200,165.13 -22,241.85 -10LC + 20% 178,367.27 -44,039.71 -19.8Material Cost Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -MC + 5% 213,412.73 -8,994.25 -4.1MC + 10% 204,418.49 -17,988.49 -8.1MC + 20% 186,429.99 -35,976.99 -16.2Fixed Cost Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -FC + 5% 217,184.92 -5,222.06 -2.3FC + 10% 211,962.87 -10,444.11 -4.7FC + 20% 201,518.76 -20,888.22 -9.4c.
c)
Interpretation of Findings,The findings of the sensitivity analysis indicate that the Net Present Value (NPV) of the project is sensitive to changes in the selling price, labor cost, material cost and fixed cost. When the selling price, labor cost, material cost, and fixed cost increases, the NPV decreases.The result shows that, if the selling price increases by 20%, it will reduce the NPV by 6.1%. If labor cost increases by 20%, it will reduce the NPV by 19.8%. If the material cost increases by 20%, it will reduce the NPV by 16.2%.If the fixed cost increases by 20%, it will reduce the NPV by 9.4%.Therefore, the management should take into consideration the impact of these factors when making decisions related to this project.
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At year-end 2019, Wallace Landscaping’s total assets were $1.53 million, and its accounts payable were $330,000. Sales, which in 2019 were $2.1 million, are expected to increase by 30% in 2020. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $590,000 in 2019, and retained earnings were $300,000. Wallace has arranged to sell $150,000 of new common stock in 2020 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2020. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 3%, and 50% of earnings will be paid out as dividends.
What was Wallace's total long-term debt in 2019? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar.
What were Wallace's total liabilities in 2019? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar.
How much new long-term debt financing will be needed in 2020? (Hint: AFN - New stock = New long-term debt.) Do not round intermediate calculations.
The total long-term debt in 2019 for Wallace Landscaping cannot be determined with the information given.
The question provides data on total assets, accounts payable, common stock, and retained earnings, but it does not specify the amount of long-term debt.
To calculate the total liabilities in 2019, we need to consider the accounting equation: Assets = Liabilities + Equity. We are given the total assets ($1.53 million) and the common stock ($590,000) and retained earnings ($300,000). To find the total liabilities, we subtract the equity from the total assets:
Liabilities = Assets - Equity
Liabilities = $1,530,000 - ($590,000 + $300,000)
Liabilities = $1,530,000 - $890,000
Liabilities = $640,000
Therefore, Wallace's total liabilities in 2019 were $640,000.
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under macrs, an asset which originally cost $10,000 is being depreciated using a 5 year normal recovery period. what is the depreciation expense in year 3?
Under MACRS, an asset which originally cost $10,000 is depreciate being using a 5-year normal recovery period. The depreciation expense in year 3 is given below. The Modified Accelerated Cost Recovery System (MACRS) is a cost recovery method that is used to depreciate assets.
It is mainly used in tax law in the United States. MACRS allows taxpayers to claim larger deductions for assets that have a shorter recovery period, thereby reducing their taxable income. For an asset with a recovery period of five years, the depreciation percentage rates for the first three years are 20%, 32%, and 19.2%, respectively.
Thus, the depreciation expense for year 3 is calculated as follows; Depreciation expense in year 1 = $10,000 x 20% = $2,000Depreciation expense in year 2 = ($10,000 - $2,000) x 32% = $2,560Depreciation expense in year 3 = ($10,000 - $2,000 - $2,560) x 19.2% = $1,213.44Therefore, the depreciation expense for year 3 is $1,213.44.
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1. How you value the stock/ETF
2. Fundamental approach to analyze the company/ETF: industry outlook, company financial performance
3. Company news and its outlook or ETF updates
4. Risks
5. What kind of lessons you learnt from trading this stock/ETF
Valuing stocks/ETFs involves assessing their intrinsic worth. Fundamental analysis examines industry outlook and financial performance. Monitoring news/outlook and understanding risks are important. Lessons include diversification, research, discipline, and continuous learning.
1. Valuing a stock or ETF involves assessing its intrinsic value based on various factors such as earnings, cash flows, dividends, growth prospects, and market conditions. Common valuation methods include discounted cash flow analysis, price-to-earnings ratio, price-to-book ratio, and comparative analysis with peers.
2. The fundamental approach to analyzing a company or ETF involves studying the industry outlook to understand market dynamics, competitive landscape, and growth potential. Evaluating the company's financial performance involves examining its financial statements, profitability, debt levels, management effectiveness, and competitive advantages.
3. Staying updated on company news and outlook is important to monitor any significant developments, such as new product launches, partnerships, acquisitions, or regulatory changes that could impact the stock or ETF. For ETFs, it's important to track any updates related to underlying assets, index changes, or expense ratios.
4. Assessing and understanding the risks associated with a stock or ETF is crucial. Risks can include market volatility, economic conditions, industry-specific risks, regulatory changes, geopolitical events, and company-specific risks. Evaluating and managing these risks is essential for informed decision-making and risk mitigation strategies.
5. Lessons learned from trading stock or ETF can vary for each individual. It could involve understanding the importance of diversification, setting realistic expectations, managing emotions, conducting thorough research, staying disciplined, and continuously learning from both successes and failures. Reflecting on past trades can help identify strengths, weaknesses, and areas for improvement in future investment decisions.
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You are preparing a free cash flow analysis for Jensen Corporation. The net working capital charge for year three of a five-year cash flow proforma is derived from? A. The difference in net working capital between year two and year one B. The difference in current assets between year two and year one C. The difference in net working capital between year three and year two D. Current assets in year four less current liabilities in year three
The answer to the question is-C. "The difference in net working capital between year three and year two."
What does it entail?The net working capital charge for year three of a five-year cash flow proforma is derived from the difference in net working capital between year three and year two.
Free cash flow is defined as the cash available after expenditures required to keep a business working (Capital Expenditures).
Companies use free cash flow to estimate cash flow available to shareholders, reduce debt, and make new investments.
How to calculate the free cash flow?
Free cash flow is calculated as:
Free Cash Flow = Operating Cash Flow - Capital Expenditures
Where,
Operating Cash Flow = EBIT + Depreciation - Taxes
What is net working capital?
Net working capital is the amount by which current assets exceed current liabilities. It's an important financial metric used to assess a company's short-term liquidity.
It represents the cash that a business may spend on operations or investments if it is in good financial condition.
Hence, option c. is correct.
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fishbone corporation bought a new machine and agreed to pay for it in equal annual installments of 4000 at the end ocf each of the next 10 years
Fishbone Corporation bought a new machine and agreed to pay for it in equal annual installments of $4,000 at the end of each of the next 10 years. Assuming that a prevailing interest rate of 8% applies to this contract, $28,527.21 Fishbone record as the cost of the machine.
Given information
PV = present valuePMT = payment amountr = interest raten = number of periodsPMT = $4,000r = 8%n = 10The following formula can be used to determine the present value of the cash payments using the information provided:
PV = PMT x [1 - (1 / (1 + r)n)] / r
PV = $4,000 x [1 - (1 / (1 + 0.08)10)] / 0.08
PV = $28,527.21
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Your question is incomplete, but most probably the full question was.
Fishbone Corporation bought a new machine and agreed to pay for it in equal annual installments of $4,000 at the end of each of the next 10 years. Assuming that a prevailing interest rate of 8% applies to this contract, how much should Fishbone record as the cost of the machine?
The capital structure for the CR Corporation includes bonds valued at $5,500 and common stock valued at $11,000. If CR has an after-tax cost of debt of 8%, and a cost of common stock of 12%, what is its WACC? A. 9.3% B. 12.7% C. 13.3% D. 10.7%
The capital structure for the CR Corporation includes bonds valued at $5,500 and common stock valued at $11,000. The correct answer is D. 10.7%.
The formula for WACC is:
[tex]$$WACC=\frac{E}{V} R_e + \frac{D}{V} R_d (1-T_c)$$[/tex]
where E is the value of the equity, V is the total value of capital (equity + debt), D is the value of the debt, R_e is the cost of equity, R_d is the cost of debt, and T_c is the corporate tax rate.
To find the WACC, we need to calculate the proportion of debt and equity in the capital structure.
The proportion of debt is:
[tex]$$D/V=\frac{5,500}{5,500+11,000}[/tex]
[tex]=\frac{1}{3}$$[/tex]
The proportion of equity is:
[tex]$$E/V=\frac{11,000}{5,500+11,000}[/tex]
[tex]=\frac{2}{3}$$[/tex]
Now we can plug in the given values and calculate the WACC:
[tex]$$WACC=\frac{2}{3} \times 12\% + \frac{1}{3} \times 8\% \times (1-0\%)$$[/tex]
[tex]$$WACC=8\%$$[/tex]
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Problem 1 (17 pts) Jake and Jhenna are considering buying 200 shares of stock ABC each. ABC stock is currently selling for $75. Jake wants to buy the 200ABC stocks using $9,000 of his own money and borrowing the remainder amount of the purchase from her broker. Jake's broker will be charging him 10% on the margin loan. Jhenna wants to buy the 200ABC stocks by paying the full amount of the purchase from her own money. a. How much money does Jhenna need to pay in order to purchase the 200ABC stocks? (1pt) b. How much money does Jake need to borrow from his broker in order to purchase the 200ABC stocks? (1pt) c. What is Jake's initial margin ratio? d. If the stock price declines immediately to $60, what will be Jake's new margin ratio? e. Given that the minimum margin requirement is a 30% margin ratio. What is the maximum level that stock ABC price can drop into without triggering a margin call? f. Assume that after one year stock ABC price is equal to $100 and stock ABC did not pay any dividend during the year. What will be Jake's return? g. Assume that after one year stock ABC price is equal to $100 and stock ABC did not pay any dividend during the year. What will be Jhenna's return? h. Assume that after one year stock ABC price is equal to $50 and stock ABC did not pay any dividend during the year. What will be Jake's return? i. Assume that after one year stock ABC price is equal to $50 and stock ABC did not pay any dividend during the year. What will be Jhenna's return? j. Whose position is riskier, Jake's or Jhenna's? (1pt)
a. Jhenna wants to buy the 200ABC stocks by paying the full amount of the purchase from her own money. Thus, the amount Jhenna needs to pay to purchase the 200ABC stocks is 200*75 = <200*
75=15000>15,000.
Answer: 15,000
b. Jake wants to buy 200 shares of ABC stocks using 9,000 of his own money and borrowing the remainder amount from his broker. Thus, Jake will need to borrow an amount of 15,000-9,000=6,000 from his broker to buy the 200ABC stocks.
Answer: 6,000
c. Jake's initial investment= 9,000; Amount borrowed= 6,000.
The total amount invested by Jake is 9,000+6,000=15,000.
Thus, Jake's initial margin ratio is (Initial Investment/Total value of Stock)*100 = (9000/15000)
*100 = 60%.
Answer: 60%
d. If the stock price declines immediately to 60, the value of Jake's investment will decrease to 200*60 = 12,000.
The amount borrowed by Jake remains the same (6,000).
Thus, Jake's new margin ratio is (Total value of the investment/Amount borrowed)*100= (12,000/6,000)
*100= 200%.
Answer: 200%.
e. Given that the minimum margin requirement is a 30% margin ratio, the maximum level that stock ABC price can drop to without triggering a margin call is when the Margin loan (Amount borrowed) = (Minimum Margin requirement/100)*
Total value of stocks bought.
Thus, the maximum level the stock ABC price can drop to without triggering a margin call is (0.3*Total Value of ABC stocks bought - 9,000)/(200 stocks) = 37.5 per stock.
Answer: 37.5
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Workplace Mental Health In 2021: How Can Leaders Build Enduring Change?
The crises, challenges, and trauma of 2020 and 2021 have put mental health front-andcenter for employers like never before. But will this period represent a fundamental turning p workplace mental health? Can we usher in enduring change that not only addresses the COVID-19 pandemic, but outlasts it? These questions are on the minds of business and HR mental health experts, and, perhaps most importantly, employees, who are reexamining why and how they want to work.
Responding to Tragedy and Trauma in the Workplace
Employers know that stress and trauma can each have a negative impact on mental health, especially given the traumatic events of the past 18 months. However, while stress can be managed, trauma is distinct and requires a heightened level of care and support. Because people dealing with trauma can often feel helpless, employers are increasingly directing mental health resources to proactively support these employees. A trauma-informed workplace has a plan in place to facilitate employees' healing and resilience as they navigate crisis and recovery.
Framing Workplace Mental Health as a Source of Positivity
Workplace mental health is often presented in terms of risk or negative consequences. By contrast physical wellness is often depicted in terms of being an overall healthier and higher functioning individual. What would it mean to apply this positive framework to mental health? Instead of reacting to mental health and wellbeing with an acute or diagnostic approach, leaders should take a holistic view that frames the need for preventative care in a positive manner. Leaders can change the conversation around mental health in the workplace by ensuring employees can easily access resources and services and putting a positive frame on why they should proactively seek out these resources, even if they are not currently experiencing mental health challenges. Explain two (2) ways globalization are at play from the case study above.
Explain two (2) ways globalization are at play from the case study above.
The two ways globalization is at play from the case study above are as follows:1. Diversity of the WorkforceThe first way globalization is at play from the case study above is the diversity of the workforce. The global workforce is diverse, and this can present a challenge to leaders.
It is essential that leaders address the diverse needs of their employees and tailor their approach to meet these needs. A company can have employees from various parts of the world, and the culture, beliefs, and practices of these employees may differ from one another. In such a scenario, the leader needs to ensure that the mental health resources and services they provide are accessible and relevant to all employees.
2. Mental Health Stigma and Awareness : The second way globalization is at play from the case study above is the mental health stigma and awareness. Globalization has brought mental health stigma and awareness to the forefront. In the past, mental health was not considered a priority, and employees who had mental health issues were often stigmatized and discriminated against.
With globalization, there has been an increase in awareness of the importance of mental health, and employees are now more aware of their rights and the resources available to them. As a result, leaders need to ensure that their approach to mental health is proactive, and they put a positive frame on why employees should proactively seek out these resources.
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2. Indicate whether the following statements are true or false. If the statement is false explain why.
a) You must report income from tips.
b) Only a student can claim a credit for tuition fees.
c) If you invest money in an RRSP, you will never have to pay taxes on this amount.
d) If you pay for child care, you can claim this amount on your return to lower the amount you owe in taxes.
If you earn tips while working, you must report them on your tax return as income.
Students or their spouses or common-law partners can claim a credit for tuition fees.
While the amount of the RRSP contribution is deductible from the current year's income, the money invested will eventually be taxed when it is withdrawn.
To lower the amount of taxes owed, eligible expenses for child care can be claimed on the tax return.
A brief explanation for each of the given statements is as follows:
If you work and earn tips, they are taxable income and must be reported on your tax return.
Tips include any money, gift or benefit received for a service you provide.
If you are an employer, you must also report the tips your employees receive.
Individuals who pay tuition fees for themselves, their spouse, or common-law partner, or their children or grandchildren, can claim a tax credit for tuition fees paid.
While the amount of the RRSP contribution is deductible from the current year's income, the money invested will eventually be taxed when it is withdrawn.
The withdrawal is known as the RRSP's maturity or withdrawal.
To lower the amount of taxes owed, eligible expenses for child care can be claimed on the tax return.
These include payments to a daycare, babysitter, or nanny, among other things.
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Suppose the labour market is summarised as: Demand: P=100−Q Supply: P=Q The government imposes a minimum wage. However, consumers (firms) are unsurprisingly unhappy with the increase in wages and are negotiating with labour unions to return to the equilibrium wage. The union will agree to this if fitms offer a lump sum transfer to producers (workers) equivalent to the maximum firms are willing to give, $1069.5. How much was the minimum wage? a. $97 b. $81 c. $73 d. $87
The minimum wage is $81. Therefore, the correct option is b. $81.
Given below is the table illustrating the equilibrium wage:
Equilibrium wage P=$50
Wage increase 1 P=$60
Wage increase 2 P=$70
Wage increase 3 P=$80
Wage increase 4 P=$90
Wage increase 5 P=$100
From the table above, it is clear that the equilibrium wage is $50. It is important to note that the equilibrium wage is at the intersection of the demand and supply curves. Now, the government imposes a minimum wage. The effect of this will be as follows:The supply curve will remain the same.
The demand curve will not change if the minimum wage is less than or equal to the equilibrium wage. If it is more than the equilibrium wage, the demand curve will shift to the left.The minimum wage is equivalent to the wage increase that makes the demand curve tangent to the supply curve.
From the table above, we see that this occurs when P=$81.
Hence, the minimum wage is $81. Therefore, the correct option is b. $81.
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Fire sprinkler protection systems must be inspected, tested, and regularly maintained in California. Assume 8% of inspected fire sprinklers must be repaired or replaced upon inspection. A random sample of four hundred fire sprinklers in a large manufacturing facility are inspected. What is the (approximate) probability that more than 50 fire sprinklers will need to be repaired or replaced?
The probability that more than 50 fire sprinklers will need to be repaired or replaced is 0.0006.
The probability that more than 50 fire sprinklers will need to be repaired or replaced is 0.0008. To approximate this probability using the normal distribution, we can calculate the mean value as 32 (which is 8% of 400), and the standard deviation (σ) as the square root of npq, which is the square root of 31.36, resulting in 5.6.
Next, we can calculate the Z-score by subtracting the mean (32) from the desired value (50) and dividing it by the standard deviation (5.6), giving us a Z-score of 3.21.
The probability that less than or equal to 50 sprinklers are faulty is equivalent to the probability that the Z-score is less than or equal to 3.21. This probability can be obtained from the z-table and is approximately 0.9994.
To find the probability that more than 50 fire sprinklers will need to be repaired or replaced, we take the complement of this probability, which is 1 - 0.9994 = 0.0006.
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Which 2 payroll reports show employee adjusted gross wages for a specific paycheck? Payrolldetails Payroll Summary Payroll Summary by Employee Total Payroll Cost Total Pay
The two payroll reports that show employee adjusted gross wages for a specific paycheck are the Payroll Details report and the Payroll Summary by Employee report.
1. The Payroll Details report: This report provides a detailed breakdown of the payroll information for each employee, including their adjusted gross wages for a specific paycheck. It lists individual earnings, deductions, and taxes for each employee, allowing you to review the components that contribute to their adjusted gross wages.
2. The Payroll Summary by Employee report: This report summarizes the payroll information for each employee, including their adjusted gross wages for a specific paycheck. It provides a consolidated view of earnings, deductions, and taxes for each employee, making it easier to compare and analyze the adjusted gross wages across different pay periods.
3. Payroll Summary report: The Payroll Summary report typically provides a summary of payroll information for a specific pay period, but it may not specifically show adjusted gross wages for individual employees. This report usually presents a high-level overview of total wages, deductions, taxes, and net pay for the entire payroll.
4. Total Payroll Cost report: The Total Payroll Cost report focuses on the overall cost of payroll for a specific period, including all employees. While it provides valuable insights into the total cost of wages, taxes, and deductions, it may not show adjusted gross wages for individual employees on a specific paycheck.
In conclusion, if you want to see employee-adjusted gross wages for a specific paycheck, the Payroll Details report and the Payroll Summary by Employee report are the two reports that would provide you with the necessary information.
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Suppose the monetary policy curve is given by r = 1.5% +0.75 π, and the IS curve is Y = 13 - 100r.
a. Calculate an expression for the aggregate demand curve.
b. Calculate aggregate output when the inflation rate is 2%, 3%, and 4%.
c. Draw graphs of the IS. MP, and AD curves, labelling the points in the appropriate graphs from part (b) above.
a. Aggregate demand is a relationship between the overall demand for goods and services and the price level in the economy.
It gives the total output that will be purchased at different price levels. We can calculate the expression for the aggregate demand curve by combining the IS and MP curves, that is by substituting the expression for r in the IS equation with the given MP curve.
r = 1.5% + 0.75πY = 13 - 100r = 13 - 100(1.5% + 0.75π)Y = 13 - 150% - 75πY = - 37 - 75π
Aggregate demand curve is AD = -37 - 75π.
b. Aggregate output (Y) can be calculated when the inflation rate (π) is 2%, 3%, and 4% by substituting the values of π in the aggregate demand curve.
AD(π = 2%) = -37 - 75(2%) = -38.5AD(π = 3%) = -37 - 75(3%) = -39.25AD(π = 4%) = -37 - 75(4%) = -40
Aggregate output when the inflation rate is 2% is -38.5.
Aggregate output when the inflation rate is 3% is -39.25.
Aggregate output when the inflation rate is 4% is -40.c.
The graphs of IS, MP, and AD curves with labeled points are shown below:
IS Curve: Graph of the IS curve
MP Curve:
Graph of the MP curve
AD Curve:
Graph of the AD curve
In the AD curve, the inflation rate (π) is on the horizontal axis, and the aggregate output (Y) is on the vertical axis. The labeled points (2%, -38.5), (3%, -39.25), and (4%, -40) are plotted on the AD curve.
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For all branches, explain and then give examples that show your
understanding of the topic
What are the differences between needs and demands In
addition, add: 5 Needs – examples | 8 Demands -
ex
Needs and demands are two terms that are often used interchangeably, however, they have different meanings. Needs are the basic necessities of life that are essential for survival, while demands refer to the wants or desires of individuals which may or may not be necessary for survival.
Needs are the basic requirements for human survival, while demands are the wants or desires that an individual seeks to satisfy. The following are five examples of needs: Food and water: These are the most basic needs for human survival. Without food and water, humans cannot survive.
Shelter: Shelter is necessary to protect individuals from the elements and provide them with a place to rest. Clothing: Clothing is needed to protect the body from the elements and maintain modesty. Healthcare: Medical attention is necessary to maintain good health.
Education: Education is necessary to acquire knowledge and skills and secure employment. Eight examples of demands are: Mobile phones: These are devices that are used to communicate with others and access the internet.
Internet: The internet is used to access information, communicate with others, and conduct business.
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For 2020, Ross Corporation had pretax ordinary income of $506,000 and sold for $146,000 an asset purchased previously for $124,000. Calculate the tax liability for the company.
The tax liability this year is $_______
Given, Pretax ordinary income of Ross Corporation for 2020 is $506,000. Ross Corporation sold an asset purchased previously for $124,000 at $146,000.Therefore, the tax liability for the company is $4,620.
Let's calculate the gain on the sale of an asset.Gain = Selling price - Purchase price = $146,000 - $124,000 = $22,000The taxable gain is $22,000. The tax liability for the company can be calculated as follows:Tax liability = Taxable gain × Tax rate= $22,000 × 21% (Assuming tax rate is 21%)Therefore, the tax liability for the company is $4,620.I have provided an answer to your question in 100 words.
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On March 1, 2018, Fresh Corp. declared a dividend of $3,000. The record date is March 20, 2018, and the payment date is April 1, 2018. The journal entry required on April 1, 2018, will include which of the following entries? (Select all that apply.) Check all that apply. Credit cash $3,000. Debit retained earnings $3,000. Debit dividends payable $3,000. Credit dividends payable $3,000. Debit cash $3,000.
The correct entries for the journal entry on April 1, 2018, are:
- Credit cash $3,000
- Debit retained earnings $3,000
- Credit dividends payable $3,000
The journal entry required on April 1, 2018, will include the following entries:
1. Credit cash $3,000: This entry reflects the payment of the declared dividend. The company is reducing its cash balance by $3,000.
2. Debit retained earnings $3,000: This entry decreases the retained earnings account by $3,000. Retained earnings represent the accumulated profits of the company that have not been distributed as dividends.
3. Credit dividends payable $3,000: This entry reduces the dividends payable account by $3,000. Dividends payable is a liability account that represents the amount of dividends declared by the company but not yet paid to the shareholders.
Therefore, the correct entries for the journal entry on April 1, 2018, are:
- Credit cash $3,000
- Debit retained earnings $3,000
- Credit dividends payable $3,000
The other options (debit dividends payable $3,000 and debit cash $3,000) are not included in the correct journal entry for April 1, 2018. The debit dividends payable entry would be recorded on the declaration date, and the debit cash entry would be recorded on the payment date.
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Martinez Products needs to prepare their year-end financial statements. On December 31,2024 , the balance in Accounts Receivable was $660,000. An aging analysis of the accounts receivable indicated that $16,000 of the accounts receivable is expected to be uncollectible. Prepare the adjusting entries to record estimated bad debt expense using the percentage of receivables approach for each independent assumption: i) Allowance for Doubtful Accounts has a credit balance of $3,100 before adjustment.
ii) ii) Allowance for Doubtful Accounts has a debit balance of $710 before adjustment.
Determine the carrying amount of the accounts receivable at December 31,2024 , after the required adjustments under each assumption.
i) Assuming Allowance for Doubtful Accounts has a credit balance of $3,100 before adjustment:
To record the estimated bad debt expense, we will use the percentage of receivables approach. Let's assume the estimated uncollectible percentage is 2% of the total accounts receivable.
1. Calculate the estimated bad debt expense:
Estimated bad debt expense = Total accounts receivable * Estimated uncollectible percentage
Estimated bad debt expense = $660,000 * 2% = $13,200
2. Determine the necessary adjustment to the Allowance for Doubtful Accounts:
Adjustment to Allowance for Doubtful Accounts = Estimated bad debt expense - Existing credit balance
Adjustment to Allowance for Doubtful Accounts = $13,200 - $3,100 = $10,100 (credit)
3. Make the adjusting entry:
Allowance for Doubtful Accounts - Credit: $10,100
Bad Debt Expense - Debit: $10,100
After the adjustment, the Allowance for Doubtful Accounts will have a credit balance of $10,100, and the carrying amount of accounts receivable will be reduced by that amount.
ii) Assuming Allowance for Doubtful Accounts has a debit balance of $710 before adjustment:
In this case, the Allowance for Doubtful Accounts has a debit balance, which indicates that it is insufficient to cover the estimated bad debts.
1. Calculate the estimated bad debt expense using the percentage of receivables approach as before:
Estimated bad debt expense = Total accounts receivable * Estimated uncollectible percentage
Estimated bad debt expense = $660,000 * 2% = $13,200
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Why are last-minute airplane tickets so expensive? Why are last-minute Broadway show tickets so cheap?
Last-minute airplane tickets are more expensive than regular ones due to the uncertainty involved in such purchases.
As the time of departure approaches, the airline becomes increasingly uncertain about the ability of the plane to fill up, and it begins to raise the price of the remaining seats to try and recoup its costs.
Broadway show tickets, on the other hand, tend to be cheaper at the last minute due to the competitive nature of the industry. If a show has not sold out, the producers may choose to reduce the price of remaining tickets in order to attract more customers and fill the seats.
Overall, while there are several factors that contribute to the price differences between last-minute airplane tickets and Broadway show tickets, the primary factor is the level of uncertainty involved in each purchase. Airlines must raise prices to offset this uncertainty, while Broadway producers can afford to lower prices to generate interest and sell more tickets.
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By 1812 the widespread cotton was now a major production in the United States. The people began to make use of the process called textile and farming moved to a powerful force of over a billion pounds a year and slave labor increased dramatically over time.
b.
The nineteenth-century unfolded, and more and more farm families began engaging in commercial rather than subsistence agriculture, producing surplus crops and livestock to sell to distant markets. Americans were forced to look to themselves for the finished goods and manufactured items they needed such as cotton mills.
c.
The first textile mills and shoe factories and mines began to be developed in the United States. Americans, men, and women worked according to a whistle or a foreman or a manager who told them when to get up when to go to work, when to finish and how much time they might have for lunch rather than getting up and going to work on the farms at their own schedules
In 19th century in the United States witnessed the rise of cotton production, the growth of commercial agriculture, and the development of industrial establishments.
In the 19th century, the United States experienced significant changes in its economy and workforce. The widespread cultivation of cotton became a major production, driven by advancements in textile manufacturing.
This led to a significant increase in farming productivity, with over a billion pounds of cotton being produced annually. However, this growth was heavily reliant on slave labor, which saw a dramatic increase during this time.
As the century progressed, more farm families shifted from subsistence agriculture to commercial farming. They began producing surplus crops and livestock to sell in distant markets.
This transition towards commercial agriculture meant that Americans had to rely on themselves for finished goods and manufactured items, such as textiles. Consequently, the United States saw the development of textile mills, shoe factories, and mines.
With the rise of these industrial establishments, a new work culture emerged. Workers, both men, and women, were employed in factories and mines, working under the supervision of foremen or managers.
They followed strict schedules dictated by whistles and were told when to start, finish, and even how much time they could take for lunch. This marked a shift from the more flexible schedules of agricultural work on farms.
Overall, the 19th century in the United States witnessed the rise of cotton production, the growth of commercial agriculture, and the development of industrial establishments, which brought about significant changes in the economy and work practices of Americans.
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