Answer:
A. Department (1-3) = 40%
Department 4 =25%
B. $70,000
Explanation:
A. Calculation for the gross profit percentage for departments 1-3 combined and for department 4.
Using this formula
Gross profit percentage = Gross Profit /Sales
Let plug in the formula
Department (1-3) (360,000/900,000) = 40%
Department 4 (28,000/152,000) =25%
B. Calculation for the effect that would elimination of department 4 have had on total firm net income
First step is to find the Increase(Decrease) in overall net income
Using this formula
Increase(Decrease) in overall net income = Direct expenses - Gross profit
Let plug in the formula
Increase(Decrease) in overall net income= 27,000 - 38,000
Increase(Decrease) in overall net income= (11,000) decrease
Second step is to find the net operating income
Net operating income= 81,000 - 11,000
Net operating income= $70,000
Therefore the firm's net operating income would be $70,000
Honeywag common stock is expected to pay $1.85 in dividends next year, and the market price is projected to be $42.50 per share by year-end. If investors require a rate of return of 11 percent, what is the current value of the stock?
Answer:
Current Price = $39.79275 rounded off to $39.79
Explanation:
Using the constant growth of dividend model, we can calculate the price of the stock at any time. The formula for price today under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
Do is dividend todayg is the growth rater is the required rate of returnAs we have P1, D1 and r available, we can use this to calculate the growth rate in dividends. We will use the following formula to calculate the price today.
Price today = Future price * (1 - g)
First we calculate the growth rate using P1, D1 and r in the constant growth rate formula.
42.5 = 1.85 * (1+g) / (0.11 - g)
42.5 * (0.11 - g) = 1.85 + 1.85g
4.675 - 42.5g = 1.85 + 1.85g
4.675 - 1.85 = 1.85g + 42.5g
2.825 = 44.35g
2.825 / 44.35 = g
g = 0.063697 or 6.3697% rounded off to 0.0637 or 6.37%
Now we calculate the current price of the stock to be,
Current Price = 42.5 * (1 - 0.0637)
Current Price = $39.79275 rounded off to $39.79
The dividend is the amount paid to the shareholders in the form of returns paid for the per number of shares held by the shareholders. The rate of dividend is fixed for preference shareholders, while it depends on the profit earned during the particular period.
The current value of the stock is $39.79
The current value of the stock will be computed by using the dividend growth model.
Computation:
Current value:
[tex]\begin{aligned}\text{Current Stock Value}&=\text{Future Price}\times\left(1-\text{growth rate} \right )\\&=\$42.50\times\left(1-0.0637 \right )\\&=\$39.79\end{aligned}[/tex]
Working Note:
Computation of growth rate:
[tex]\begin{aligned}\text{P0}&=\text{D0}\times\frac{\left(1+\text{g} \right )}{\left(\text{r-g} \right )}\\\$42.50&=\$1.85\times\frac{1+\text{g}}{\left( 0.11-\text{g}\right )}\\\$42.50\times\left( 0.11-\text{g}\right )&=\$1.85+\$1.85\text{g}\\\$4.675+\$42.5\text{g}&=\$1.85+\$1.85\text{g}\\ \$4.675-\$1.85&=\$1.85\text{g}+\$42.50\text{g}\\ \$2.825&=\$44.35\text{g}\\ \frac{\$2.825}{\$44.35}&=\text{g}\\ \text{g}&=0.06369\;\text{or}\;6.37\%\end{aligned}[/tex]
were,
P0 is the market price
D0 is the current dividend
g is the growth rate
r is the required rate of return
To know more about the dividend growth model, refer to the link:
https://brainly.com/question/24044979
Kela Corporation reports net income of $550,000 that includes depreciation expense of $76,000. Also, cash of $53,000 was borrowed on a 4-year note payable. Based on this data, total cash inflows from operating activities are:a) $603,000b) $679,000c) $626,000d) $474,000
Answer:
$626,000
Explanation:
Kela corporation has a net income of $550,000
Depreciation expense is $76,000
Cash is $53,000
Therefore the total cash inflows from operating activities can be calculated as follows
=$550,000 + $76,000
$626,000
Hence the total cash inflow from operating activities is $626,000
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.6% × service years × final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2007 and is expected to retire at the end of 2041 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $90,000 at the end of 2021 and the company's actuary projects her salary to be $240,000 at retirement. The actuary's discount rate is 7%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 2. Estimate by the projected benefits approach the amount of Davenport's annual retirement payments earned as of the end of 2021. 3. What is the company's projected benefit obligation at the end of 2021 with respect to Davenport? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.) 4. If no estimates are changed in the meantime, what will be the company's projected benefit obligation at the end of 2024 (three years later) with respect to Davenport? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.)
Answer:
Kindly check explanation
Explanation:
Given the following :
Annual retirement benefit plan: (1.6% * service years * final years' salary
Year of hire = beginning of 2007
Retiremet year = 2041
Years of service = 35
Required: 2. Estimate by the projected benefits approach the amount of Davenport's annual retirement payments earned as of the end of 2021.
1.6% * service years * final years' salary
Service years = 2021 - beginning of 2007 = 15 years on service
Salary at the end of 2021 = $90000
Hence,
1.6% * 15 * 90000 = $21,600
3. What is the company's projected benefit obligation at the end of 2021 with respect to Davenport?
Period (n) = Retiremet span = 18 years ; rate (r) = 7% ;
Present value of ordinary annuity $1 ; n = 18 ; r = 7% = 10.0591
$21,600 * 10.0591 = $217,276.56
= $217,277
Present value of retirement benefit at the end of 2041
PV factor $1 ; period (2041 - 2021) = 20 ; r = 7% = 0.258
$217,277 * 0.258 = $56,057.466
$56,057
4. If no estimates are changed in the meantime, what will be the company's projected benefit obligation at the end of 2024 (three years later) with respect to Davenport?
1.6% × 18 years × $90000 = $25920
Present value of ordinary annuity $1 ; n = 18 ; r = 7% = 10.0591
$25920 × 10.0591 = $260732
PV factor $1 ; period (2041 - 2021) = 20 - 3 = 17; n = 17 ; r = 7% = 0. 317
$260732 × 0.317 = $82652.044 = $82652
8.Kline and Salomon form the KS Partnership as 50/50 partners. Kline contributes equipment that has a fair market value of $60,000 and an adjusted basis of $45,000. In addition, the equipment is subject to a $10,000 loan that KS Partnership is assuming. What amount represents Kline's initial basis in the partnership
Answer: $40,000
Explanation:
Kline brings in equipment that is worth $60,000 but has a basis of $45,000.
The equipment however is subject to a loan of $10,000.
This loan will have to be deducted from the basis. The partnership however is assuming the loan and Kline is only 50% liable in the partnership so Kline's basis will only be affected by half of the loan.
Basis = 45,000 - 5,000
= $40,000
2. What's a good way to reduce food costs?
A buying items on sale
B making a shopping list and sticking to it
C making sure you go to the store on a full stomach
D all of the above
Which of the following is correct? Group of answer choices Risk-averse people will not hold stock. Diversification cannot reduce firm-specific risk. The larger the percentage of stock in a portfolio, the greater the risk, but the greater the average return. Stock prices are determined by fundamental analysis rather than by supply and demand.
Answer: The larger the percentage of stock in a portfolio, the greater the risk, but the greater the average return.
Explanation:
Stock in general is more risky than most financial instruments but this risk is accompanied with greater returns. This is why it is generally advisable to diversify stock in a portfolio.
As already mentioned, stock is risky but rewarding. It therefore follows that the more stock is in a portfolio, the risker the portfolio but the greater the average return.
Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $1,567,500. The estimated residual value was $82,500. Assume that the estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows: Year Units 1 70,000 2 67,000 3 50,000 4 73,000 5 40,000 Required: 1. Complete a separate depreciation schedule for each of the alternative methods. a. Straight-line. b. Units-of-production. c. Double-declining-balance.
Answer:
See answer below.
Explanation:
The depreciable amount of the machine is computed as follows.
cost - residual value = 1,567,500 - 82,500 = $1,485,000.
Estimated usefule life = 5 years
Question 1
Using the straight line depreciation method, the asset will be depreciated equally every year by [tex]\frac{Total Depreciation}{UsefulLife} =\frac{1,485,000}{5} =297,000[/tex]
Year 1 Depreciation = $297,000
Year 2 Depreciation = $297,000
Year 3 Depreciation = $297,000
Year 4 Depreciation = $297,000
Year 5 Depreciation = $297,000
Question 2
Using the unit of production method, the machine will be depreciated by the ratio of actual usage to estimated production life, until it is fully depreciated.
Year 1 Depreciation = [tex]\frac{Annual Usage}{Estimated Life} *Total Depreciation=\frac{170,000}{300,000} *1,485,000[/tex] = $841,500
Year 2 Depreciation = [tex]\frac{67,000}{300,000} *1,485,000[/tex] = $331,650
Year 3 Depreciation = [tex]\frac{50,000}{300,000} *1,485,000[/tex] = $247,500
Year 4 Depreciation = [tex]Total Depreciation - Accumulated Depreciation=1,485,000-(841,500+331,650+247,500)[/tex]= $64,350
Year 5 Depreciation = 0.
Year 4 computation arose because the computed depreciation using the unit of production method [tex]\frac{73,000}{300,000} *1,485,000=361,350[/tex] would push the computed accumulated depreciation beyond the total depreciation allowed. As such, the residual balance was adopted in year 4.
Question 3
Using the double declining balance method, the machine would be depreciated at twice the depreciation rate of the straight line balance on the reducing balance of the asset, until this method results in a depreciation figure lower than the straight line method.
Depreciation rate = [tex]2*StraightLineRate=2*(\frac{1}{5} )= 2* 0.20=0.40[/tex] = 40%
Year 1 depreciation = [tex]0.40*1,485,000[/tex] = $594,000
Year 2 depreciation = [tex]0.40*(1,485,000-594,000)[/tex] = $356,400
Year 3 depreciation = [tex]\frac{1,485,000-594,000-356,400}{3}[/tex]= $178,200
Year 4 depreciation = [tex]\frac{1,485,000-594,000-356,400}{3}[/tex]= $178,200
Year 5 depreciation = [tex]\frac{1,485,000-594,000-356,400}{3}[/tex]= $178,200.
Because year 3 depreciation using the usual double declining method [tex]0.40*(1,485,000-594,000-356,400)= 213,840[/tex] would result in a figure lower than the straight line depreciation rate (297,000), we used the straight line formula for the depreciation from years 3 to 5.
Lincoln’s landlord has included a clause in the rental contract that makes it possible for him to increase Lincoln’s monthly rent if taxes on the property go up. Which clause was included in the contract?
a. tariffs clause.
b. variable costs clause.
c. escalator clause.
d. elastic demand clause.
e. elevator clause.
Answer:
The appropriate answer is Option c (Escalator clause).
Explanation:
The landlord of Lincoln also put a disclaimer throughout the rental lease which allows him to raise the mortgage payment of Lincoln if property wages increase. The deal had an escalator clause.An Escalator clause would be a clause inside a leasing contract as well as rent disclosure that ensures the improvement in rent sum regardless of the reasons which were not under influence of all the participants. Throughout this situation the taxation on land is raised by that of the government therefore adjustment in taxes wasn't in the jurisdiction of all entities.The other options given aren't connected to just the given case. In such a way that the response above is right.
The slopes of the curve at points A and B (maximum and minimum) are:
A.zero and zero
B. Infinity and zero
C. Zero and 1
D. 1 and zero
Answer:
A.zero and zero
Explanation:
The attached image shows the complete question.
The maximum and minimum points of a curve are points in which the slope equal to zero. The maximum point is the point with the highest value of y and a slope of zero while the minimum point is a point on the curve with lowest value of y and a slope of 0.
The image attached shows point A and point B. Point A is the maximum because it has a slope of 0 and highest value of y. At point B, the curve has a slope of zero with the smallest y-coordinate
Assume Brad has a choice between two deposit accounts. Account WH has an annual percentage rate of 7.35% with interest compounded continuously. Account MW has an annual percentage rate of 7.45% with interest compounded monthly. Which account provides the highest effective annual return?
Answer: Account MW which compounds monthly provides a higher effective rate at 7.71%
Explanation:
Use the Effective Interest rate formula to see which offers the higher return.
Account WH;
Compounded continuously;
= e^(interest rate) - 1
= e^7.35% - 1
= 7.63%
Account MW
Compounded per month
= (( 1 + interest / compounding period) ^ period) - 1
= (( 1 + 7.45%/12) ^ 12) -1
= 7.71%
At LK Corporation, budgeted sales in units for January, February, and March are 15,000, 20,000, and 18,000 units, respectively. If the selling price per unit is $5, what is expected sales revenue for March
Answer:
$90,000
Explanation:
The expected sales revenue for March is computed as
Expected sales revenue in March = budgeted sales in March × Selling price per unit
= 18,000 units × $5
= $90,000
Please note that the information given for January and February are not relevant since we are asked to compute expected sales revenue in March.
Assume that a Parent owns 80 percent of a Subsidiary that has 6 percent preferred stock outstanding with a reported par value of $720,000. Aside from the preferred dividends, no other dividends are paid (i.e., no dividends are paid to the common shareholders). The Parent owns none of the preferred stock. Assume that the Subsidiary reports net income of $117,000. During the year, the Parent company reported $261,000 of (pre-consolidation) income from its own operations (i.e., prior to any equity method adjustments by the Parent company). Compute the amount of consolidated net income attributable to the noncontrolling interest and the amount of net income attributable to the controlling interest.
Answer:
Consolidated net income attributable to the noncontrolling interest $14,760
Consolidated net income attributable to the controlling interest $320,040
Explanation:
Computation of the amount of consolidated net income attributable to the noncontrolling interest and the amount of net income attributable to the controlling interest.
CONSOLIDATED NET INCOME attributable to the noncontrolling interest
First step is to find the Divide amount
Dividend =6% x $720,000
Dividend= $43,200
Second Step is to find the Net Income from Subsidiary
Net Income from Subsidiary= $117,000-$43,200
Net Income from Subsidiary=$73,800
Last step is to calculate consolidated net income attributable to the noncontrolling interest
Noncontrolling interest =$73,800 x 20%
Noncontrolling interest = $14,760
NET INCOME attributable to the controlling interest
First step is to find the controlling interest amount
Controlling interest=80% x $73,800
Controlling interest= $59,040
Last step is to find the Parent company income
Parent company income= $261,000 + $59,040
Parent company income= $320,040
Therefore Consolidated net income attributable to the noncontrolling interest is $14,760 while the Consolidated net income attributable to the controlling interest is $320,040
During 2021, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts: 2019 understated by $ 124,000 2020 overstated by 154,000 WMC uses a periodic inventory system and the FIFO cost method. Required: 1. Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors.
Answer:
WMC Corporation
Misstatement of Ending Inventories:
1. Effect of these errors on Retained Earnings at January 1, 2021:
a) The understated amount by $124,000 in 2019 has self-corrected in 2020 with the Beginning Inventory also understated. So, it has no effect on the Retained Earnings at January 1, 2021.
b) The overstated ending inventories by $154,000 will overstate the Retained Earnings at January 1, 2021 by the same amount. Since it has not self-corrected like (a), the correction will be to reduce the Retained Earnings and reduce the Beginning Inventories by $154,000.
2. Journal Entry:
Debit Retained Earnings $154,000
Credit Beginning Inventories $154,000
To reverse the overstated inventories.
Explanation:
a) Data:
2019 understated by $ 124,000
2020 overstated by 154,000
Inventory system = periodic
Inventory method = FIFO
The June 1 work in process inventory consisted of 5,300 units with $20,680 in materials cost and $17,320 in conversion cost. The June 1 work in process inventory was 100% complete with respect to materials and 60% complete with respect to conversion. During June, 37,800 units were started into production. The June 30 work in process inventory consisted of 8,600 units that were 100% complete with respect to materials and 50% complete with respect to conversion. 11. What is the cost of ending work in process inventory for conversion
Answer:
$22,145
Explanation:
First, calculate the equivalent units of production with respect to conversion costs.
Conversion Costs
Ending Work In Process (8,600 × 50%) = 4,300
Completed and Transferred (34,500 × 100%) = 34,500
Equivalent units of production with respect to conversion costs = 38,800
Then Calculate the total Conversion Costs as follows :
Conversion cost in beginning work in process $ 17,320
Add conversion costs added during the year :
Direct Labor $ 82,500
Overhead $100,000
Total Conversion Cost $199,820
Finally, calculate the cost per equivalent unit for conversion and cost of ending work in process inventory for conversion
Cost per equivalent unit = Total Cost ÷ Total Equivalent Units
Therefore,
Cost per equivalent unit = $199,820 ÷ 38,800
= $5.15
Therefore,
Cost of ending work in process inventory for conversion = 4,300 × $5.15
= $22,145
Hill Industries had sales in 2016 of $6,800,000 and a gross profit of $1,100,000. Management is considering two alternative budget plans to increase its gross profit in 2017.
Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 10% from its 2016 level. Plan B would decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would increase by 100,000 units.
At the end of 2016, Hill has 40,000 units of inventory on hand. If Plan A is accepted, the 2017 ending inventory should be equal to 5% of the 2017 sales. If Plan B is accepted, the ending inventory should be equal to 60,000 units. Each unit produced will cost $1.80 indirect labor, $1.40 indirect materials, and $1.20 in variable overhead. The fixed overhead for 2017 should be $1,000,000.
1. Prepare a sales budget for 2017 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.)
2. Prepare a production budget for 2017 under each plan.
3. Compute the production cost per unit under each plan. (Round answers to 2 decimal places, e.g. 1.25.)
4. Compute the gross profit under each plan.
5. Which plan should be accepted?
Answer:
Results are below.
Explanation:
Giving the following information:
Plan A:
Selling price= $8.4
Sales in units= (6,800,000/8)*0.9= 765,000
Ending inventory should be equal to 5% of the 2017 sales.
Plan B:
Selling price= $7.5
Sales in units= 850,000 + 100,000= 950,000
Ending inventory should be equal to 60,000 units.
Beginning inventory= 40,000 units
Total unitary variable cost= 1.8 + 1.4 + 1.2= $4.4
Total fixed overhead= $1,000,000
a)
Plan A:
Sales in units= (6,800,000/8)*0.9= 765,000
Sales in dollars= 765,000*8.4= $6,426,000
Plan B:
Sales in units= 850,000 + 100,000= 950,000
Sales in dollars= 950,000*7.5= $7,125,000
b) Production= sales + desired ending inventory - beginning inventory
Plan A:
Production= 765,000 + (765,000*0.05) - 40,000
Production= 763,250
Plan B:
Production= 950,000 + 60,000 - 40,000
Production= 970,000
c)
Plan A:
Unitary variable cost= 4.4
Unitary fixed cost= 1,000,000/763,250= 1.31
Total unitary cost= $5.71
Plan B:
Unitary variable cost= 4.4
Unitary fixed cost= 1,000,000/970,000= 1.031
Total unitary cost= $5.43
d) Gross profit= sales - cost of goods sold
Plan A:
Gross profit= 6,426,000 - 765,000*5.71= $2,057,850
Plan B:
Gross profit= 7,125,000 - 950,000*5.43= $1,966,500
e) The best plan is the one with the highest profit. In this case, Plan A is better.
What type of buffer(s) (inventory, time, or capacity) would you expect to find in the following situations? a) A maker of custom cabinets b) A producer of automotive spare parts c) A hospital emergency room d) Wal-Mart e) Amazon f) A government contractor that builds submarines g) A bulk producer of various chemicals h) A maker of lawn mowers for K-mart and Target i) A freeway j) The space shuttle k) A business school
Answer:
a) A maker of custom cabinets ⇒ TIME, generally goods that are custom made take longer to produce and clients are aware of this.
b) A producer of automotive spare parts ⇒ CAPACITY, if more parts are needed, you will have to use spare capacity.
c) A hospital emergency room ⇒ CAPACITY, services cannot be stocked, therefore, the only possible buffer is capacity since they cannot make their patients wait in line (a dead person waiting in line is no longer a patient).
d) Wal-Mart ⇒ INVENTORY, whether a store is a brick and mortar or internet retailer, its cheapest safety stock (buffer) is generally inventory.
e) Amazon ⇒ INVENTORY, whether a store is a brick and mortar or internet retailer, its cheapest safety stock (buffer) is generally inventory.
f) A government contractor that builds submarines ⇒ TIME, submarines are very expensive and it takes years to build them, so a week more wouldn't make a difference.
h) A maker of lawn mowers for K-mart and Target ⇒ INVENTORY, the company probably knows when it is going to sell more, so it can add to its inventory of finished goods just in case.
i) A freeway ⇒ CAPACITY and then TIME, services cannot be stocked, and since it takes years to plan and build a highway or freeway, the only possible initial buffer is capacity. But once full capacity is reached, then the only buffer is time.
j) The space shuttle ⇒ INVENTORY, since you cannot go back to Earth just to get refueled, you must carry extra fuel just in case. The same for the rest of the stuff.
k) A business school ⇒ CAPACITY, services cannot be stocked, and no student will wait a few extra years just to get into the school that they love.
Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed persons is ________ and the new unemployment rate is ________.
Answer:
Results are below.
Explanation:
First, we need to calculate the currently employed people and the unemployment rate:
Employed people= 100,000,000 - 6,000,000= 94,000,000
Unemployment rate= unemployed people / labor force
Unemployment rate= 6,000,000 / 100,000,000
Unemployment rate= 0.06= 6%
Now, the newly employed people and the unemployment rate:
Employed people= 94,000,000 + 300,000 - 200,000
Employed people= 94,100,000
Unemployment rate= 5,900,000 / 100,000,000
Unemployment rate= 0.059 = 5.9%
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Selling price $ 117 Units in beginning inventory 0 Units produced 2,900 Units sold 2,500 Units in ending inventory 400 Variable costs per unit: Direct materials $ 32 Direct labor $ 45 Variable manufacturing overhead $ 2 Variable selling and administrative expense $ 9 Fixed costs: Fixed manufacturing overhead $43,500 Fixed selling and administrative expense $15,000 The total gross margin for the month under absorption costing is:
Answer:
The correct answer is "57,500 ".
Explanation:
Unit product cost
= [tex]32 + 45 + 2 + \frac{43500}{2900}[/tex]
= [tex]94[/tex]
Gross margin = Sales - Cost of Goods Sold
= [tex](2500\times 117) - (2500\times 94)[/tex]
= [tex]292,500-235,000[/tex]
= [tex]57,500[/tex]
Linden, Inc. uses a 5,700 square foot factory space that it rents for $2,800 a month for all its manufacturing activities. Linden has decided to switch to an activity-based costing system, and has identified its activities as follows: Preparation and Setup, Machining, Finishing, and Quality Control. 2,600 square feet of the factory are used for machining, while 1,300 square feet (each) are used for Preparation and Setup and Quality Control. Finishing uses 500 square feet. When assigning indirect costs to each activity, how much factory rent should be assigned to the Preparation and Setup cost pool
Answer:
$639
Explanation:
Rent assigned to preparation and setup = Total rent / Total space * Space used by preparation and setup
= $2,800 / 5,700 * 1,300
= 638.5965
= $639
Therefore, the factory rent that would be assigned to Preparation and Setup cost pool is $639.
The following data is for the coming year. FinCorp's Net Income is reported as $195 million. Depreciation Expense is $20 million, accounts receivable decreased by $20 million, accounts payable decreased by $10 million, and inventories increased by $10 million. The firm's interest expense is $22 million. Assume the tax rate is 35% and the net debt of the firm increases by $3 million. What is the market value of equity if the FCFE is projected to grow at 3% indefinitely and the cost of equity is 11%?
Answer:
Net Income = $195 million
Depreciation Expense = $20 million
Decrease in Accounts receivable = $20 million
Decrease in accounts payable = $10 million,
Increase in inventories = $10 million
Increase in Net debt = $3 million
Increase/Decrease in working capital = Increase in inventory + Decrease in Account payable - Decrease in Account Receivables
= $10 milliion + $10 million - $20 million
= $0 million
Free Cashflow for equity calculation
Net Income $195 million
Add: Depreciation $20 million
Less: Capital expenditure ($0 million)
Less: Increase in working capital ($0 million)
Add: Increase in Net debt $3 million
Free Cash flow for Equity (FCFE) $218 million
Given FCFE growth rate (g) = 3%
Cost if equity (RE) = 11%
Market value of equity (VE) = FCFE / Re - g
Market value of equity = 218 million / 0.11 - 0.03
Market value of equity = 218 million / 0.08
Market value of equity = $2,725 million
Goal-Setting, Expectancy, Reinforcement, and Equity Theory
Goal-Setting, Expectancy, Reinforcement, and Equity Theories all serve Theory Y managers in understanding how employees can be motivated at work. Employees seek interesting and challenging work in a fair work environment that allows for autonomy. There should be a system to engage everyone in the organization in goal setting and implementation as well as an expectation that effort expended will result in a positive outcome and be balanced from one employee to another (given the same work). Managers can also find success in fairness and a reward system that all employees value.
Goal-setting theory is based on the premise that employees are motivated when they are clear about the goals they are working toward. More importantly, they are more likely to engage to attain these goals if they collaborate with management in planning. Management by Objectives (MBO) is the process of discussion, review, and evaluation of goals between a manager and employee. Expectancy theory is based on the premise that the amount of effort employees exert on a specific task depends on their expectations of the outcome. Reinforcement theory states that individuals act to receive rewards and avoid punishment. A manager may attempt to surface good behaviors through rewards and extinguish poor behaviors through punishment. Equity theory zeros in on how employees' perceptions of fairness affect their willingness to perform.
Roll over each employee name to read a scenario. Match the scenario with the respective theory on the left by dragging the employee name to the corresponding theory.
1. Nathaniel has been late so much this month that he was not put on the project he requested to lead.
2. Robert does not want to go into work on his day off because he does not really need the overtime pay and that is the only benefit his boss offered.
3. Angela will be offered the role of team leader if she prepares a year-end profit and loss statement in Excel for the department, but she has not been trained to use Excel.
4. Rebecca's manager gave her a gift card to her favorite restaurant for having the highest value of sales in her department last month.
5. Gwen was glad she could sit down with her boss and plan the best schedule to accomplish her goals and objectives for the first quarter of the year.
6. Ruth found of that Liz is getting paid more per hour for doing the same job! Ruth has been with the company longer and her output is higher.
7. Jason is meeting with his manager to review the list of goals they spelled out last month to see what he has accomplished so far.
8. Daniel gave up his day off to help is boss hoping he would be appointed team leader, but the position was awarded to a co-worker who never helps out on the weekends!
A. Goal-setting
B. Expectancy
C. Reinforcement
D. Equity
Answer:
Goal-Setting, Expectancy, Reinforcement, and Equity Theories
Matching the scenario with respective theories:
A. Goal-setting : Gwen, Jason
B. Expectancy : Robert, Daniel
C. Reinforcement : Angela, Rebecca
D. Equity : Nathaniel, Ruth
Explanation:
Below are summaries of the different theories that can "serve Theory Y managers in understanding how employees can be motivated at work:"
A. Goal-setting Theory = setting clear goals
B. Expectancy Theory = acting based on the expected outcome
C. Reinforcement Theory = acting based on rewards and punishment
D. Equity Theory = willing to perform is based on perceived fairness
Match the scenario:
Part A. Goal-setting: Gwen, Jason
Part B. Expectancy: Robert, Daniel
Part C. Reinforcement: Angela, Rebecca
Part D. Equity: Nathaniel, Ruth
What is Equity?
In finance, equity is the right of assets that may have debts or other liabilities connected to them. Equity is estimated for accounting purposes by subtracting liabilities from the importance of the assets.
Descending are summaries of the different approaches that can "serve Theory Y managers in understanding how employees can be motivated at work:"
When the Goal-Setting, Expectancy, Reinforcement, and also Equity Theories
When the Matching the scenario with respective theories are:
Part A. Goal-setting Theory is = setting clear goals
Part B. Expectancy Theory is = acting based on the expected outcome
Part C. Reinforcement Theory is = acting based on rewards and punishment
Part D. Equity Theory is = willing to perform is based on perceived fairness
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what is acknowledgement
Answer: it means to accept something or recognition
$50 an hour is a
A salary
B commission
C wage
D pension
Answer: C.) Wage
Explanation: A salary is a set cost that is due to you over an agreed amount of time. A commission is a percentage that you get from the original cost. A wage is the income one makes daily, or per hour. A pension is the gradual amount of money being added up during the years one works. Therefore, $50 an hour is a wage.
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According to Nohria, Groysberg, and Lee, within an organization, the primary lever to address the drive to ____ is the reward system.
Answer:
Civillization
Explanation:
If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $6 per direct labor-hour, what is the estimated finished goods inventory balance at the end of July
Answer:
$247,000
Explanation:
The computation of the estimated finished goods inventory balance at the end of July is shown below:-
Unit product cost = 5 × 2.4 + 14 × 2 + 6 × 2
= 52
Now,
Ending finished goods inventory balance = Budgeted unit sales × Ending finished goods inventory percentage × Unit product cost
= 19,000 × 25% × 52
= $247,000
Therefore we have applied the above formula
Holiday Laboratories purchased a high-speed industrial centrifuge at a cost of $470,000. Shipping costs totaled $14,100. Foundation work to house the centrifuge cost $7,700. An additional water line had to be run to the equipment at a cost of $2,600. Labor and testing costs totaled $7,000. Materials used up in testing cost $3,700. (Leave no cells blank. Enter 0 where needed.) a. What is the total cost of the equipment
Answer:Total Cost of equipment=$502,500
Explanation:
Total Cost of equipment= This is gotten by addition of Cost of Purchase +Shipping costs +Foundation work+ Testing expense
=$470,000+$14,100+$7,700+($7,000+$3,700.)
=$502,500
true or false. a factor that can come between the purchase intention and purchase decision is the attitude of others g
Answer:
True
Explanation:
Before a consumer makes a decision to buy a product, several factors can affect him. Two distinct factors are the attitude of others and unexpected situational factors. When the customer notices that a lot of people around him have a negative disposition or opinion about a product, they are likely to be discouraged from buying that product.
This is even more likely to happen if the consumer lacks enough motivation to buy that product. So the attitude of others can affect the buyer's intention which is his motivation and the final decision to purchase that product.
A lot of factors can come between purchase intensions. A factor that can come between the purchase intention and purchase decision is the attitude of others is a true statement.
The more positive a person's attitude toward the a product, the greater their purchase intentions.
Another factor consider is perceived playfulness that also affects purchase intention positively.
The factors that affect a consumer's purchase intention can be said to be product perception, shopping experience, customer service etc.
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eorge and Weezy received $30,200 of Social Security benefits this year ($12,000 for George; $18,200 for Weezy). They also received $5,000 of interest from jointly owned City of Ranburne Bonds and dividend income. What amount of the Social Security benefits must George and Weezy include in their gross income under the following independent situations
Answer:
$0
Explanation:
George and Weezy will not get any amount as social security benefit if they file married joint. The sum of their modified AGI plus the 50% of their social security benefit is [$5,000 + $8,000 + $15,100]. This equals to $28,100 which is below the minimum amount of social security.
Last year Janet purchased a $1,000 face value corporate bond with an 11% annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expected yield to maturity of 12.21%. If Janet sold the bond today for $993.14, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.
Answer:
20.10%
Explanation:
The first task is to compute the bond's purchase price last year which is found using the bond price formula below:
bond price=face value/(1+r)^n+ annual coupon*(1-(1+r)^-n/r
face value=$1000
r=yield to maturity=12.21%
n=number of annual coupons in 15 years=15
annual coupon=face value*coupon rate=$1000*11%=$110
bond price=1000/(1+12.21%)^15+110*(1-(1+12.21%)^-15/12.21%
bond price=1000/(1+12.21%)^15+110*(1-0.177634192 )/12.21%
bond price=$918.50
Rate of return=(price today-initial price+coupon received)/initial price
price today= $993.14
initial price=$918.50
coupon received(for 1 year)=$110
Rate of return=($993.14-$918.50+$110)/$918.50=20.10%
A contractor builds two types of homes. The Carolina requires one lot, $160,000 capital, and 160 worker-days of labor, whereas the Savannah requires one lot, $240,000 capital, and 160 worker-days of labor. The contractor owns 300 lots and has $48,000,000 available capital and 43,200 worker-days of labor. The profit on the Carolina is $80,000 and the profit on the Savannah is $90,000. Find how many of each type of home should be built to maximize profit.
Answer:
the contractor should build 210 Carolina type homes and 60 Savannah type homes
Explanation:
you have to maximize the following equation: 80000C + 90000S
Where:
C = Carolina type homes
S = Savannah type homes
the constraints are:
160000C + 240000S ≤ 48000000
160C + 160S ≤ 43,200
C ≥ 0
S ≥ 0
using solver, the optimal solution is 210C + 60S = $22,200,000