You own a portfolio that has a total value of $130,000 and a beta of 1.28. You have another $49,000 to invest and you would like the beta of your portfolio to decrease to 1.18. What does the beta of the new investment have to be in order to accomplish this

Answers

Answer 1

Answer:βB =0.9147=beta of new investment

Explanation:

Total investment= $130,000 + $49,000=  $179,000

Using

Portfolio beta(βp) = wA × βA + wB × βB

Where βp is the portfolio beta coefficient,

wA is the weight of the first investment,

βA is the beta coefficient of first investment;

wB is the weight of the second investment,

βB is the beta coefficient of second investment

but weight of investment is  stock value/ total investment x 100

wA= 130,000/ 179,000X 100=72.63%

WB= 49,000/179,000 X100=27.374%

Portfolio beta(βp) = wA × βA + wB × βB

1.18=(72.63%*1.28)+(27.374% XβB  )  

1.18=0.9296+0.27374βB  

βB i=(1.18-0.9298)/0.27374

βB =0.9147=beta of new investment


Related Questions

On June 1, Kareem sends Fatima an e-mail offering to build her a new garage for $20,000. In his e-mail, Kareem wrote, "acceptance by certified mail is advisable." On June 2 at 8 a.m., Kareem sends Fatima a certified letter attempting to revoke the offer. At 2 p.m. the same day, Fatima mails Kareem a letter via certified mail attempting to accept his offer. Under these circumstances, _____.

Answers

Answer:

B. Fatima's acceptance is effective upon dispatch

Explanation:

The option B is correct as it is mentioned in the question that acceptance by certified mail is advisable that implies if the parties have mail each other than the contract should be accepted

Therefore in the given case, the certified mail is accepted when it is dispatched that results into an acceptance of Fatima i.e tp be effective

Hence, the second option is correct

A company has a fiscal year-end of December 31:_______.

(1) on October 1, $18,000 was paid for a one-year fire insurance policy; (2) on June 30 the company advanced its chief financial officer $16,000; principal and interest at 6% on the note are due in one year; and (3) equipment costing $66,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $13,200 per year. If the adjusting entries were not recorded, would net income be higher or lower and by how much?

Answers

Answer:

Net income would be higher by  $17,220  if the adjusting entries were left unrecorded

Explanation:

The adjusting entries for insurance  prepaid would be to recognize three months of insurance cost as insurance expense i.e $18,000*3/12=$4,500

The adjusting entries for the advance of $16,000 is to recognize interest revenue for six months (from July to December) in the books i.e$16,000*6%*6/12=$480

The depreciation charge would increase expenses by $13,200

The impact of profit is shown below:

insurance expense         ($4,500)

interest revenue                $480

depreciation                   ( $13,200)

total impact                     (17220)

Kerbow Corporation uses part B76 in one of its products. The company's Accounting Department reports the following costs of producing the 12,000 units of the part that are needed every year. An outside supplier has offered to make the part and sell it to the company for $27.40 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $6,000 of these allocated general overhead costs would be avoided. In addition, the space used to produce part B76 could be used to make more of one of the company's other products, generating an additional segment margin of $29,000 per year for that product.A. Prepare a report that shows the effect on the company's total net operating income of buying part B76 from the supplier rather than continuing to make it inside the company.B. Identify which alternative the company should choose and explain why.C. Determine what errors managers may make when considering make or buy decisions and basing the decision solely on the data?

Answers

Answer:

12,000 units

outside supplier offers at $27.40 each = $328,800

current relevant costs:

direct materials $7.20 x 12,000 = $86,400direct labor $7.10 x 12,000 = $85,200variable overhead $3.50 x 12,000 = $42,000 supervisor's salary $4.70 x 12,000 = $56,400total = $270,000

only $6,000 of allocated fixed costs can be avoided

additional revenue from using the freed space $29,000

A. Prepare a report that shows the effect on the company's total net operating income of buying part B76 from the supplier rather than continuing to make it inside the company.

                                         Keep              Buy                   Differential

                                        producing       from vendor     amount

production cost               $270,000                       $0     $270,000

purchase cost                              $0          $328,800     ($328,800)

avoidable costs                           $0             ($6,000)          $6,000

additional revenue                      $0           ($29,000)       $29,000

total                                  $270,000          $293,800      ($23,800)

B. Identify which alternative the company should choose and explain why.

The company should keep producing the part because production costs are lower than buying it from an outside vendor.

C. Determine what errors managers may make when considering make or buy decisions and basing the decision solely on the data?

If we had made this decision based on total production costs, then management would have erroneously chosen to purchase the part from an outside vendor. Total production costs are $28.30 per unit, but almost $5.80 per unit are not avoidable (mostly fixed and general overhead), so the company will incur them no matter what. You have to compare only relevant costs or revenues.

You have been asked by management to explain the variances in costs under your inpatient capitated contract. The following data is provided. Use the following data to calculate the variances.
Budget Actual
Inpatient Costs $12,568,500 $16,618,350
Members 42,000 42,000
Admission Rate 0.070 0.095
Case Mix Index 0.90 0.85
Cost per Case (CMI = 1.0) $4,750 $4,900
Problem 1: What dollar amount of the total variance is attributed to Enrollment Variance?
Problem 2: What dollar effect did the increased admission rate have on cost?
Problem 3: The intensity of care delivered dropped from a budgeted case mix of 0.90 to an actual case mix of 0.85. What dollar effect did this have on actual costs?
Problem 4: Costs per case increased to $4,900 from a budgeted value of $4,750. This increased actual total costs by what amount?
a) $400,000
b) $570,000
c) $970,000
d) $600,000
e) cannot calculate with given information

Answers

Find the given attachment

An asset is acquired using a noninterest-bearing note payable for $100,000 due in two years. Management records the purchase with a debit to the asset for $100,000 and a credit to notes payable for $100,000. Which of the following statements is correct?A. Management has properly recorded the transaction.B. Management has not considered the present value of the note in recording the asset.C. Management should not record the asset until the note has been paid.D. Management should record the note for more than $100,000 to account for the underlying interest.

Answers

Answer:

The answer is A. Management has properly recorded the transaction.

Explanation:

According to the given data Since the note is non interest bearing, no interest will be paid on the bond.

Therefore, asset will be debited and note payable will be credited by the full amount.

Therefore, the Management has properly recorded the transaction.

The joural entry would be as follows:

                        Debit            Credit

asset              $100,000

note payable                    $100,000

An investor wishes to buy a new issue of U.S. Government agency bonds. You recommend that the customer purchase Federal Home Loan Bank bonds with a 20 year maturity. An investor who purchases the new issue of Federal Home Loan Bank bonds can expect to pay:

Answers

Answer:

The answer is Par

Explanation:

An investor who purchases the new issue can expect to pay Part.

The agency appoints a selling group that sells new issues of agency securities.This selling group is usually made of large banks and broker-dealers. They sell the issue at par to the public. From what was made from the sale, the agency then pays the selling group a selling concession. In contrast, direct U.S. Government obligations are sold through auction

Restaurants do a large volume of business by credit and debit cards. Suppose Spring Garden Salads restaurant had these transactions on January​ 28, 2016​: National Express credit card sales $10,500 ValueCard debit card sales 6,000 Requirements 1. Suppose Spring Garden Salads' processor charges a 3​% fee and deposits sales net of the fee. Journalize these sales transactions for the restaurant. 2. Suppose Spring Garden Salads' processor charges a 3​% fee and deposits sales using the gross method. Journalize these sales transactions for the restaurant.

Answers

Answer and Explanation:

The journal entries are shown below:

1. Processor charges - Credit card expense Dr  ($10,500 × 3%) $315

  Cash Dr  $10,185

                To Sales Revenue $10,500

(Being the credit card expense is recorded)

For recording this we debited the cash and expenses as it increased the asset and expenses  and credited the sales revenue as it also increased the revenue  

Processor charges - debit card expense Dr  ($6,000 × 3%) $180

  Cash Dr  $5,820

                To Sales Revenue $6,000

(Being the debit card expense is recorded)

For recording this we debited the cash and expenses as it increased the asset and expenses  and credited the sales revenue as it also increased the revenue  

2.  Cash Dr  $10,500

          To Sales Revenue $10,500

(Being the cash receipt is recorded)

For recording this we debited the cash as it increased the asset and credited the sales revenue as it also increased the revenue  

Cash Dr  $6,000

          To Sales Revenue $6,000

(Being the cash receipt is recorded)

For recording this we debited the cash as it increased the asset and credited the sales revenue as it also increased the revenue  

Hillsdale is considering two options for comparable computer software. Option A will cost $31,000 plus annual license renewals of $1,800 for three years, which includes technical support. Option B will cost $12,000 with technical support being an add-on charge. The estimated cost of technical support is $4,700 the first year, $3,700 the second year, and $2,700 the third year. Assume the software is purchased and paid for at the beginning of year one, but that technical support is paid for at the end of each year. The discount rate is 10%. Ignore income taxes.Required: Determine which option should be chosen based on present value considerations

Answers

Answer:

Option B

Explanation:

The computation of the present value is shown below:

For Option A

Year Cash flows Discount factor at 10% Present value  

0         -$31,000            1.0000                         -$31,000.00

1         -$1,800            0.9091                          -$1,636.36

2          -$1,800            0.8264                           -$1,487.60

3           -$1,800            0.7513                            -$1,352.37

Total                                                      -$35,476.33

For Option B

Year Cash flows Discount factor at 10% Present value  

0          -$12,000 1.0000                          -$12,000.00

1          -$4,700         0.9091                           -$4,272.73

2           -$3,700         0.8264                           -$3,057.85

3            -$2,700 0.7513                           -$2,028.55

Total                                                       -$21,359.13

As we can see that the present value for option B is less than the option A so the option B should be selected



Completed Per Day

Flower Beds Weeded


Bags of Leaves Raked


Samantha

4


8


Adam

5


25



Samantha and Adam own a gardening business together. They each pull weeds from flower beds and rake up leaves for their neighbors. If each decides to specialize in what they are best at, Samantha will


a.weed and Adam will rake because these are the goods each has a comparative advantage in.


b.rake and Adam will weed because these are the goods each has a comparative advantage in.


c.weed and Adam will rake because these are the goods each has an absolute advantage in.


d.rake and Adam will weed because these are the goods each has an absolute advantage in.

Answers

Answer:

The correct option is A, Samantha weed and Adam will rake because these are the goods each has a comparative advantage in.

Explanation:

The opportunity formula comes handy in this case, which is given below:

opportunity cost formula=what one sacrifices/what one gains

If Samantha were to weed flower beds, opportunity cost is computed thus:

Opportunity cost of Samantha weeding flower beds=8/4= 2 bags of leaves raked

The opportunity of Adam weeding flower beds=25/5 =5 bags of leaves raked.

In a nutshell ,if Samantha weeds flowers they would lose 2 bags of leaves raked while if Adam were to do so same, they would lose 5 bags of leaves raked, conclusively Samantha should weed flower beds since she has lower opportunity, higher comparative advantage

According to the Marketing Concept, a. Companies produce only what customers want. b. A company should produce only basic products. c. Managements primary task is to convince buyers to purchase what we produce. d. Management’s most important task is to keep production costs low. e. ALL OF THE ABOVE. f. NONE OF THE ABOVE

Answers

Answer:

The answer is A

Explanation:

Companies should produce what customers want based on the marketing concept. Companies and customers are dependent on each other. Companies should focus on producing goods which consumers/customers want. These companies should think of what consumers want and the prices they would pay since it is the consumer that creates demand for goods and services that are produced by the company.

Therefore companies should produce only what consumers want else they would produce goods and services with little demand.

Before year-end adjusting entries, Marigold Corp.'s account balances at December 31, 2020, for accounts receivable and the related allowance for uncollectible accounts were $1540000 and $91500, respectively. An aging of accounts receivable indicated that $123000 of the December 31 receivables are expected to be uncollectible. The accounts receivable amount expected to be collected after adjustment is

Answers

Answer:

1,417,000

Explanation:

$123000 of the December 31 receivables is to be subtracted from $1540000 of the related allowance for uncollectible accounts

= $1540000 - $123000

= $1,417,000.

The accounts receivable amount expected to be collected after adjustment is $1,417,000

Kevin owns one share of Acme, Inc. stock. He purchased the stock three years ago for $29. The stock is currently trading for $29.50 per share. The stock has paid the following dividends over the past three years. o Year 1: $1.50 o Year 2: $2.00 o Year 3: $2.50 What is the compounded rate of return (IRR) that Kevin has earned on this investment

Answers

Answer:

Find below the multiple choices:

5.6%.

6.6%.

10.1%.

7.35%

The last option ,7.35% is correct

Explanation:

The excel IRR formula can be very useful in determining the IRR for the investment in stock, the formula is stated thus:

=IRR(values)

the values in the case are the cash flows (inflows and outflows) arranged from the earliest to the latest as shown in the attached spreadsheet.

The computer workstation furniture manufacturing that Santana Rey started in January is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs.
Job 602 Job 603 Job 604
Direct materials $ 1,500 $ 3,200 $ 3,100
Direct labor 1,000 1,520 2,300
Overhead 400 608 920
Job 602 was started in production in May, and these costs were assigned to it in May: direct materials, $400; direct labor, $250; and overhead, $100. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate based on direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. No raw materials are used indirectly in June. (Assume this company’s predetermined overhead rate did not change over these months.)


Required:
1. What is the cost of the raw materials used in June for each of the three jobs and in total?
2. How much total direct labor cost is incurred in June?
3. What predetermined overhead rate is used in June?
4. How much cost is transferred to finished goods inventory in June?

What is the cost of the raw materials used in June for each of the three jobs and in total?

Job 602 Job 603 Job 604 Total
May costs
June costs
Total
What predetermined overhead rate is used in June?

Predetermined overhead rate

How much total direct labor cost is

How much cost is transferred to finished goods inventory in June?

Job Raw Materials Direct Labor Overhead Applied Total Cost Cost transferred to finished goods Costs of Ending WIP
602
603
604
Total
incurred in June?

Job 602 Job 603 Job 604 Total
May costs
June costs
Total

Answers

Answer:

1. Cost of the raw materials $8200

2. Total Direct Labor In June $ 2520

3. Predetermined Overhead Rate 40%

4. Cost transferred to finished goods $ 8978

Costs of Ending WIP $ 6320

Explanation:

1. Cost of the raw materials $8200

Job 602 $ 1500

Job 603 $ 3200

Job 604 $3100

Total May Costs $400

Total Job Costs = Jobs, 602+ 603+ 604= $7800

2. Total Direct Labor In June $ 2520

Job 602 $1000

Job 603 $1520

3. Predetermined Overhead Rate= Overhead Cost/ Direct labor Cost

Job602 = 400/1000 *100= 40%

Job 603= 608/1520 *100 = 40%

4. Cost transferred to finished goods

Job                           602              603            604

Raw Materials $ 1,500+400     $ 3,200       $ 3,100

Direct labor       1,000 +250       1,520          2,300

Overhead Applied 400+100        608             920

Total Cost              3650             5328              6320

Cost transferred to finished goods = 3650 + 5328= 8978

Costs of Ending WIP $ 6320

Completed jobs are sent to finished goods and incomplete job are in the ending work in process inventory.

Masters Corp. issues two bonds with 20-year maturities. Both bonds are callable at $1,050. The first bond is issued at a deep discount with a coupon rate of 4% and a price of $580 to yield 8.4%. The second bond is issued at par value with a coupon rate of 8.75%.
a. What is the yield to maturity of the par bond? Why is it higher than the yield of the discount bond?
b. If you expect rates to fall substantially in the next two years, which bond has the higher expected rate of return?
c. In what sense does the discount bond offer "implicit call protection"?

Answers

Answer:

Explanation:

a)

The YTM of the bond at par value is equals to its coupon rate, 8.75%. Other things being equal, this 4% coupon rate bond will be more eye-catching as the coupon rate is lower than the current market yields, and its price is far below the call price. So, if yields drop, capital gains on the bond will not be restricted by the call price.

b)

If an investor foresees that yields will fall considerably, the 4% bond proposes a better expected return.

c)

Implicit call protection is offered in the sense that any likely fall in yields would not be nearly enough to make the firm consider calling the bond. In this sense, the call feature is almost irrelevant

The State of Idaho issued $2,000,000 of 7% coupon, 20-year semiannual payment, tax-exempt bonds 5 years ago. The bonds had 5 years of call protection, but now the state can call the bonds if it chooses to do so. The call premium would be 5% of the face amount. Today 15-year, 5%, semiannual payment bonds can be sold at par, but flotation costs on this issue would be 2%. What is the net present value of the refunding? Because these are tax-exempt bonds, taxes are not relevant.

Answers

Answer:

$278,606

Explanation:

Calaculation of the net present value of the refunding:

The first step is to calculate call premium :

Call premium= 2,000,000 x 5%

= 100,000

Second step is to calculate the Flotation cost

Flotation cost = 2,000,000 x 2%

= 40,000

Calculation for Old interest = 2,000,000 x (7% / 2) = 70,000

Caluclatio fo New interest = 2,000,000 x (5% / 2) = 50,000

Therefore the Six months savings will be:

20,000 70,000 + 50,000 + 20,000 = 140,000

The PV of savings 30 periods 5% / 2 will be:

20,000 x 20.9303 = 418,606

Therefore the Net Present Value of the refunding will be:

418,606- 140,000

= $278,606

A manufacturer produces 1,000 basketballs each day, which it sells to customers for $30 each. All costs associated with production and sales total $10,000; however, if the manufacturer were to produce one additional basketball per day, total costs would increase to $10,100. From these amounts, we can tell that:________

a. the firm has negative profit.
b. marginal cost equals $100.
c. marginal cost equals $150.
d. marginal cost equals marginal revenue.

Answers

Answer:

b. marginal cost equals $100.

Explanation:

Marginal Cost is the cost of one extra unit produced.

Marginal Cost = $10,100 - $10,000 = $100

Marginal revenue is revenue earned per extra j

Unit sold. Marginal revenue equals price. $30

Marginal cost is greater than marginal revenue

Profit = Total revenue - Total cost = (1,000 × $30) - $10,000 = $20,000

Profit is positive

I hope my answer helps you

Once you have collected data for a message, you’ll need to find a way to organize it. Well-organized messages group similar ideas together, allowing readers to see relationships and follow arguments. You can use two primary techniques for organizing your information: a scratch list and an outline. Answer the question based on the following scratch list.

1. The Boston Hotel
2. High-end linens
3. 600-thread-count sheets
4. Coffeemaker and selected teas
5. Imported beer
6. Fresh-squeezed juices
7. Affordability
8. Food and drink
9. Double-thick bath towels
10. Silk pillowcases
11. Raw silk curtains with gold embellishments
12. $100/night four-star rooms
13. Free snacks, shampoo, and conditioner
14. Free wireless Internet

Which group includes specific supporting detail that could be added to the previous scratch list?

a. High-end linens; free wireless Internet; free snacks, shampoo, and conditioner
b. Safety, comfort, half-price Tuesday
c. Sparkling water, evening wine tasting, four-star hotel restaurant
d. Business messages typically follow either a direct strategy or an indirect strategy. The direct strategy, or frontloading, places the main idea at the beginning of a message.
e. Using a direct opening strategy .
f. An indirect strategy places the main idea after an explanation or reason.

Answers

Answer:

c. Sparkling water, evening wine tasting, four-star hotel restaurant

Explanation:

The scratch list in general includes a series of services that are provided by a Hotel (the Boston Hotel). Because of the items included in the list, it seems that the Hotel is quite fancy.

Numeral c would be a good addition to the scratch list, because it lists items that would fall in place for the type of Hotel being described: sparking water, evening wine tasting, and a the mention of a four-star hotel restaurant.

In the short-run aggregate demand and supply model, one important difference between monetary and fiscal policy is that monetary policy:_______.
a. influences aggregate supply but fiscal policy influences aggregate demand.
b. has shorter lags than fiscal policy, so monetary policy may impact the economy more quickly than fiscal policy.
c. influences aggregate demand but fiscal policy influences aggregate supply.
d. has longer lags than fiscal policy, so fiscal policy may impact the economy more quickly than monetary policy.

Answers

Answer:

a. influences aggregate supply but fiscal policy influences aggregate demand.

Explanation:

Remember, when the term monetary policy is used it refers to policies that are focused on the interest rates as well as the inflation rate, which certainly affects the money supply specifically. However, the fiscal policy is usually channelled towards aggregate demand of the economy.

Thus, it is right to say that one important difference between monetary and fiscal policy is that monetary policy affects aggregate supply but fiscal policy influences aggregate demand.

Sam was injured in an accident, and the insurance company has offered him the choice of $25,000 per year for 15 years, with the first payment being made today, or a lump sum. If a fair return is 7.5%, how large must the lump sum be to leave him as well off financially as with the annuity

Answers

Answer:

The lump sum be of $237,228.84

Explanation:

In order to calculate how large must the lump sum be we would have to use  and calculate the formula of Present value of annuity due as follows:

Present value of annuity due=(1+interest rate)*Annuity[1-(1+interest rate)^-time period]/rate

Present value of annuity due=(1+0.075)*$25,000[1-(1.075)^-15]/0.075

Present value of annuity due=$25,000*9.489153726

Present value of annuity due=$237,228.84(Approx)

The lump sum be of $237,228.84


Levine, Inc., has an ROA of 8.6 percent and a payout ratio of 33 percent.

What is its internal growth rate?

Answers

Answer:

Explanation:

Workings

Internal growth rate is the highest possible growth attained by a business without obtaining outside funding but with its retained earning.

Given information

ROA = 8.6%

Percentage Payout ratio = 33%

Internal growth rate = (ROA * Retention ratio) / 1 - (ROA * Retention ratio)

Retention ratio is the percentage earning that is no paid out in dividends

To calculate the retention ratio , we use the formula

Retention ratio = (1-percentage pay out ratio)

= 1 - 0.33 = 0.67

Substituting retention ratio for 0.67 in the inter growth rate formula

Therefore

Internal growth rate = (0.086*0.67)/1-(0.086*0.67)

0.05762/(1-0.05762) = 0.05762/0.94238

=0.0611

= 6.11%

A company uses a process costing system. Its Welding Department completed and transferred out 100,000 units during the current period. The ending inventory in the Welding Department consists of 30,000 units (75% complete with respect to direct materials and 40% complete with respect to conversion costs). Determine the equivalent units of production for the Welding Department for direct materials and conversion costs assuming the weighted average method.

Answers

Answer and Explanation:

The computation of equivalent units of production for direct materials and conversion costs is shown below:-

                                  Direct material          Conversion

Completed                   100,000                    100,000

Ending Work in progress  

Direct material             22,500

(30,000 × 0.75)

Conversion                                                      12,000

(30,000 × 0.40)

Equivalent Units of

Production                   122,500                          112,000

So, to reach the equivalent units of production of direct material we simply added the completed and transferred out units with direct material and for conversion we added the completed and transferred out units with conversion units.

You just agreed to a deal that will make you the proud new owner of a beautiful new convertible. The car comes with a three-year warranty. Please consider the purchase of the extended warranty which has a purchase price of $1,800, today (the day you purchased your NEW car). The extended warranty covers the 4 years immediately after the three-year warranty expires. You estimate that the yearly expenses that would have been covered by the extended warranty are $400 at the end of the first year of the extension, $500 as the end of the second year of the extension, $600 at the end of the third year of the extension, and $800 at the end of the fourth year of the extension. Assume that money during this time can earn interest at a rate of 7% compounded monthly. Will you decide to buy the warranty? Your formal solutions should include:______.1. The overall goal and/or purpose
2. The given information
3. A time-line for the expected repair costs covered by the warranty
4. The present value for each of the repair costs
5. The present value of the warranty and the expected profit for the warranty company
6. Your conclusion

Answers

Answer:

1. The overall goal and/or purpose

The overall goal of this analysis is to determine if you would actually save money by purchasing the extended warranty.

2. The given information

You can calculate this by determining the present value of the expected repair costs that will be covered by the warranty and determine which is higher; the warranty or the repairs

3. A time-line for the expected repair costs covered by the warranty

initial investment -$1,800cash flow year 4 = $400cash flow year 5 = $500cash flow year 6 = $600cash flow year 7 = $800

4. The present value for each of the repair costs

the discount rate is 7%, so the present value of each repair cost is:

PV cash flow year 4 = $400 / 1.07⁴ = $305PV cash flow year 5 = $500 / 1.07⁵ = $356PV cash flow year 6 = $600 / 1.07⁶ = $400PV cash flow year 7 = $800 / 1.07⁷ = $498total $1,559

5. The present value of the warranty and the expected profit for the warranty company

the present value of the warranty is $1,800, so the car company is making $1,800 - $1,559 = $241 in profits by selling you the warranty

6. Your conclusion

You shouldn't buy the extended warranty (negative NPV)

The Mazzanti Wholesale Food Company's fiscal year-end is June 30. The company issues quarterly financial statements requiring the company to prepare adjusting entries at the end of each quarter. Assume all quarterly adjusting entries were properly recorded. On December 1, 2020, the company paid its annual fire insurance premium of $9,200 for the year beginning December 1 and debited prepaid insurance. On August 31, 2020, the company borrowed $152,500 from a local bank. The note requires principal and interest at 8% to be paid on August 31, 2021. Mazzanti owns a warehouse that it rents to another company. On January 1, 2021, Mazzanti collected $30,400 representing rent for the 2021 calendar year and credited deferred rent revenue. Depreciation on the office building is $22,200 for the fiscal year. Employee salaries for the month of June 2021 $22,000 will be paid on July 20, 2021. Prepare the necessary year-end adjusting entries at the end of June 30, 2021, for the above situations. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answers

Answer:

1.Dr Insurance expense 2,300

Cr Prepaid insurance 2,300

2.Dr Interest expense 3,050

Cr Interest payable 3,050

3.Dr Deferred rent revenue 7,600

Cr Rent revenue 7,600

4.Dr Depreciation expense 5,550

Accumulated

depreciation—building 5,550

5.Dr Salaries and wages expenses 22,000

Cr Salaries and wages payable 22,000

Explanation:

The Mazzanti Wholesale Food Company's Journal entries

1.

Dr Insurance expense 2,300

(9200×3/12 months)

Cr Prepaid insurance 2,300

2.

Dr Interest expense 3,050

(152,500×8%×3/12months )

Cr Interest payable 3,050

3.

Dr Deferred rent revenue 7,600

(30,400×3/12months)

Cr Rent revenue 7,600

4.

Dr Depreciation expense 5,550

(22,200×3/12 months)

Accumulated

depreciation—building 5,550

5.

Dr Salaries and wages expenses 22,000

Cr Salaries and wages payable 22,000

Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $16,600,000 of five-year, 11% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Chin Company receiving cash of $15,989,036. a. Journalize the entries to record the following: Issuance of the bonds. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar.

Answers

Answer:

The answer to the question is as attached  

Explanation:

a. The total credit matches the debit in a total of  $16,600,000

b. Cash $$15989036    

Discount on bonds payable (16600000 -15989036)    $610964

Bonds payable  $16600000

(To record issuance of bonds)  

b) Interest expense 825000+610964= $1435964

Discount on bonds payable 610964/11=  $55542

Cash 16600000*11%*6/12=   $913000‬

(To record discount amortized and interest paid)  

c) Interest expense 825000+55542=  $880542  

Discount on bonds payable 610964/11=   $55542

Cash 16600000*11%*6/12=   $913000  

Sort the items below into two main categories: whether demand for each type of good is relatively elastic or relatively inelastic.
A. Goods that are narrowly defined.
B. Goods on which consumers spend a small share of their budget.
C. Consumers have a long time to adjust to a change in price.
D. Goods that have a large number of available substitutes.
E. Goods that are necessities.

Answers

Answer:

A. Relatively elastic

B. Relatively inelastic

C. Relatively elastic

D. Relatively elastic

E. Relatively inelastic

Explanation:

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes

Demand is inelastic if there's little or no change in quantity demanded when the price of the good changes.

If Consumers have a long time to adjust to a change in price, demand is usually elastic because consumers would have enough time to adjust to price changes. For example, if the price of the good has increased and the consumer has enough time to adjust to the price change, the consumer would have enough time to find cheaper suitable substitutes.

The elasticity of demand for necessities is usually inelastic because consumers have no choice but to buy the product. For example, water is considered a necessity. If the price of a bottle of water increases, consumers have no choice but to consume water so they would keep buying the bottle of water despite the increase in price.

Goods that have many substitutes usually have an elastic demand because the good can be easily replaced with the numerous substitutes available.

Goods on which consumers spend a small share of their budget usually have an inelastic demand. For example, if you earn $500,000 and you usually buy a product for 10 cents and the price increases to 15 cents, you would probably not stop purchasing the product as a result of the price increase since it constitutes a negligible part of your budget.

Goods that are narrowly defined have an elastic demand. For example, there are many substitutes for bread but there are no subsituites for food.

I hope my answer helps you

Maxxie purchased a tract of land for $24,500. Today, the same land is worth $43,800. How many years have passed if the price of the land has increased at an annual rate of 6.4 percent

Answers

Answer:

9.35 years

Explanation:

To find the numbers of years that have passed, you can use the following formula:

n =  ln(FV / IV)/ln(1 + r)

n= number of periods

FV= Future value= $43,800

IV= Initial value= $24,500

r= rate= 6.4%

n=ln(43,800/24,500)/ln(1+0.064)

n= ln1.79/ln1.064

n=0.58/0.062

n= 9.35

According to this, 9.35 years have passed.

A steel company manufactures heavy-duty brackets for the shelving industry. The company has budgeted for the production and sale of 1,000,000 brackets and has no beginning or ending inventory. Relevant operational, revenue, and cost data is as follows: Unit selling price of a bracket $22.50 Direct material required per unit 4 pounds Direct labor required per unit 0.15 hours Cost of material per pound $1.75 Direct labor cost per hour $9.00 Total variable selling costs $2,250,000 Total fixed costs $1,500,000 Based on the data provided, what is the unit contribution margin per bracket

Answers

Answer:

Contribution margin per unit = $11.90

Explanation:

Given:

Total unit sale = 1,000,000

Unit selling price of a bracket = $22.50

Direct material required = 4 pounds per unit  

Direct labor required = 0.15 hours per unit

Cost of material per pound = $1.75

Direct labor cost per hour = $9.00

Total variable selling cost = $2,250,000

Find:

Contribution margin per unit = ?

Computation:

Direct material per unit = 4 pounds per unit × $1.75

Direct material per unit = $7

Direct labor per unit = 0.15 hours per unit × $9.00

Direct labor per unit = $1.35

Variable selling cost per unit = Total variable selling cost / Total unit sale

Variable selling cost per unit = $2,250,000 / 1,000,000

Variable selling cost per unit = $2.25

Contribution margin per unit = Sales per unit - Variable cost per unit

Contribution margin per unit = Sales per unit - [Direct material per unit + Direct labor per unit + Variable selling cost per unit]

Contribution margin per unit = $22.50 - [$7 - $1.35 - $2.25]

Contribution margin per unit = $22.50 - [$10.6]

Contribution margin per unit = $11.90

Billy owns one share of Disney stock. He purchased the share 3 years ago for $15. Disney stock is currently trading for $30 per share. The stock has paid the following dividends over the past three years: year 1, $1.00; year 2, $2.00; year 3, $3.00. What is the compounded rate of return (IRR) that Billy has earned on his investment

Answers

Answer:

35.8%

Explanation:

purchase price 3 years ago $15, so CF₀ = -15

CF₁ = $1

CF₂ = $2

CF₃ = $3 + $30 = $33

using an excel spreadsheet (or you can also a financial calculator), you must determine the internal rate of return (IRR) = 35.8%

the IRR is the interest rate where NPV = 0, or the future cash flows equal the investment amount

The following transactions occurred during the month of June 2018 for the Stridewell Corporation. The company owns and operates a retail shoe store
1. Issued 115,000 shares of common stock in exchange for $575,000 cash.
2. Purchased furniture and fixtures at a cost of $95,000. $38,000 was paid in cash and a note payable was signed for the balance owed
3. Purchased inventory on account at a cost of $230,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $391,000. The cost of the goods sold was $195,500
5. Paid $5,000 in rent on the store building for the month of June
6. Paid $2,640 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018
7. Paid $166,175 on account for the merchandise purchased in 3
8. Collected $78,200 from customers on account.
9. Paid shareholders a cash dividend of $5,750
10. Recorded depreciation expense of $1,900 for the month on the furniture and fixtures
11. Recorded the amount of prepaid insurance that expired for the month.
Required
Prepare journal entries to record each of the transactions and events listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Transaction General Journal Debit Credit 01 Cash 575,000 Common stock 575,000

Answers

Answer:

See the journal entries below.

Explanation:

Tr.    General Journal                           Dr ($)                Cr ($)          

1.       Cash                                          575,000

        Common stock                                                  575,000

        (To record common stock issued for cash.)                          

2.     Furniture and fixtures                 95,000

       Cash                                                                      38,000

       Note payable                                                        57,000

       (To record purchase of furniture and fixtures.)                      

3.     Merchandise inventory            230,000

       Account payable                                                   230,00

      (To record inventory purchased on account.)                          

4a.    Account receivable                   391,000

       Sales                                                                       391,00

       (To record credit sales).                                                          

4b.     Cost of goods sold                  195,500

          Merchandise inventory                                    195,000

         (To record cost of inventory sold.)                                        

5.       Rent expenses                            5,000

         Cash                                                                       5,000

        (To record interest paid for June.)                                        

6.        Prepaid insurance                      2,640

           Cash                                                                      2,640

         (To record prepaid insurance.)                                            

7.        Account payable                       166,175

          Cash                                                                    166,175

     (To record payment for merchandise inventory bought on account.)

8.        Cash                                            78,200

           Account receivable                                          78,200

           (To record cash received from customer.)                            

9.        Dividend paid                                 5,750

           Cash                                                                     5,750

          (To record cash dividend paid.)                                              

10.      Depreciation expenses                  1,900

          Accumulated Dep. - F $ F                                     1,900

         (To record record depreciation expenses for Furniture & F.)  

11.       Insurance expenses (2,640 / 12)      220

          Prepaid insurance                                                   220

          (To record insurance expenses for the month.)                      

Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below: Sales $ 7,500,000 Net operating income $ 600,000 Average operating assets $ 5,000,000 Required: 1. Compute the margin for Alyeska Services Company. 2. Compute the turnover for Alyeska Services Company. (Round your answer to 1 decimal place.) 3. Compute the return on investment (ROI) for Alyeska Services Company. (Do not round intermediate calculations.)

Answers

Answer:

1. The margin for Alyeska Services Company is 0.08

2. The turnover for Alyeska Services Company is 1.50

​  

3. The return on investment for Alyeska Services Company is  12%

Explanation:

1. In order to calculate the margin for Alyeska Services Company we would have to calculate the following:

Margin=Net operating Income /  Sales

Margin=$600,000 /$7,500,000

Margin=0.08

2. In order to calculate the turnover for Alyeska Services Company we would have to calculate the following:

Turnover=  Sales/Average operating assets

Turnover=$7,500,000 /$5,000,000

Turnover=1.50

​  

Turnover of the company is 1.50

3.  In order to calculate the return on investment for Alyeska Services Company we would have to calculate the following:

Return on Investments=  Net operating Income /Average operating Assets

​Return on Investments=$600,000 /$5,000,000

Return on Investments=  12%

The Return on investments is 12%

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