Net income = Cash flow from operating activities - Depreciation and amortization + Increase in receivables + Increase in inventories - Increase in accruals which is $530,000.
The cash flow from operating activities can be calculated as shown below:
Cash flow from operating activities = Net income + Depreciation and amortization - Increase in receivables - Increase in inventories + Increase in accruals
Net income = Cash flow from operating activities - Depreciation and amortization + Increase in receivables + Increase in inventories - Increase in accruals
Now we can calculate the values required.
What was the cash flow from operating activities?
The cash flow from financing activities is not required for this question.
Hence we ignore that value.
The cash balance decreased from $59,000 to $25,000 during the year.
Hence cash outflow must have happened during the year.
The cash outflow was [tex]$59,000 - $25,000 = $34,000[/tex]
Increase in property, plant, and equipment = $190,000.
This is a non-operating activity.
Hence ignore it.
Accruals increased by $15,000, and receivables and inventories increased by $175,000.
Cash flow from operating activities = Net income + Depreciation and amortization - Increase in receivables - Increase in inventories + Increase in accruals
[tex]= X + $53,000 - $175,000 - $175,000 + $15,000\\= X - $282,000X = $282,000 + Cash flow from operating activities[/tex]
Cash flow from operating activities = X - $282,000
We know that the cash balance decreased by $34,000 during the year.
Hence the cash flow from operating activities must be -$34,000 + $282,000 = $248,000
Hence the cash flow from operating activities is $248,000.
What was the firm's net income?
Net income = Cash flow from operating activities - Depreciation and amortization + Increase in receivables + Increase in inventories - Increase in accruals
[tex]= $248,000 - $53,000 + $175,000 + $175,000 - $15,000\\= $530,000[/tex]
Hence the net income is $530,000.
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Carly wants to have $3300 to spend on a vacation 1 year (365 days) from now. To save for the vacation she will deposit money into a bank account that pays 3.0% interest compounded daily. Assuming she adds no money to the account after the inital deposit, how much will she have to deposit today in order to afford her vaction?
B. Queen Ices has recieved a $200,000 pure discount loan from a bank. The bank will charge 6% interest (compounded annually) and require the loan to be paid back in 5 years. How much will Queen ices have to repay when the loan matures?
Queen Ices will have to repay approximately $267,645.12 when the loan matures.
To calculate the amount Carly needs to deposit today to afford her vacation, we can use the future value formula:
Future Value = Present Value * (1 + Interest Rate)^Number of Periods
a. For Carly's situation:
Future Value = $3300 (amount needed for vacation)
Interest Rate = 3.0% per year (0.03 as a decimal)
Number of Periods = 1 year (365 days)
Plugging the values into the formula:
$3300 = Present Value * (1 + 0.03)^1
Rearranging the formula to solve for Present Value:
Present Value = $3300 / (1 + 0.03)^1
Calculating the result:
Present Value = $3300 / 1.03 = $3203.88
Carly needs to deposit approximately $3203.88 today to afford her vacation.
b. For Queen Ices' situation:
Loan Amount = $200,000
Interest Rate = 6.0% per year (0.06 as a decimal)
Number of Periods = 5 years
Using the formula for future value:
Future Value = Loan Amount * (1 + Interest Rate)^Number of Periods
Future Value = $200,000 * (1 + 0.06)^5
Calculating the result:
Future Value = $200,000 * 1.3382255776 = $267,645.12
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TSG Inc. which is a medium sized organisation that produces multiple products, uses Normal Costing. It accumulates all its indirect costs in a single pool and then allocates them to each unit of output produced using direct labour hours.
The information provided below relates to the period 1 Jan 2021 to 31 December 2021
Budgeted total indirect cost $200,000
Actual total indirect cost $120,000
Budgeted total quantity of direct labour hours 10,000
Actual total quantity of direct labour hours 14,000
Based on the information above, what is the total amount of indirect cost that would be allocated to all the units of output produced by TSG Inc in 2021, before any end-of-period adjustments are made?
Group of answer choices
$200,000
$144,000
$280,000
$120 000
The total amount of indirect cost allocated to all the units of output produced by TSG Inc in 2021, before any end-of-period adjustments, is approximately $85,714.29.
The total amount of indirect cost that would be allocated to all the units of output produced by TSG Inc in 2021, before any end-of-period adjustments are made, can be calculated using the formula:
Indirect cost allocated = (Actual total indirect cost / Actual total quantity of direct labour hours) * Budgeted total quantity of direct labour hours
Using the given information:
Actual total indirect cost = $120,000
Actual total quantity of direct labour hours = 14,000
Budgeted total quantity of direct labour hours = 10,000
Substituting these values into the formula:
Indirect cost allocated = ($120,000 / 14,000) * 10,000 = $85,714.29
Therefore, the total amount of indirect cost that would be allocated to all the units of output produced by TSG Inc in 2021, before any end-of-period adjustments are made, is approximately $85,714.29.
To calculate the indirect cost allocated, we divide the actual total indirect cost by the actual total quantity of direct labour hours and then multiply it by the budgeted total quantity of direct labour hours. This gives us an allocation of approximately $85,714.29.
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Consider the following model of a closed economy: - Y=AK
1/2
L
1/2
- Y
d
=C+I+G - C=200+0.8(Y−T) - l=2000−20,000r - K
s
=400 - L
s
=225 - A=10 - G=500 - T=1000 a. According to classical macroeconomic theory, what must the real wage (W/P) and real rental price of capital (R/P) be to establish equilibrium in the labor and capital markets? b. What values of realaggregate income (Y), private saving (Si), and national saving (S) result from full employment of labor and capital? c. What must investment (1) and the interest rate (r) be to establish equilibrium in the market for loanable funds? d. Recalculate the equilibrium values of W/P, R/P, Y, SH,S, I, and r if the capital supply (K
S
) increases from 400 to 625 (all else equal). e. Using the original quantity of capital supplied (400), recalculate the equilibrium values of W/P, R/P, ,S,S
4
, S,l, and r if taxes (T) decrease from 1000 to 500 (all else equal).
According to classical macroeconomic theory, to establish equilibrium in the labor market, the real wage (W/P) must be equal to the marginal product of labor (MPL).
a. At full employment of labor and capital, the real aggregate income (Y) is equal to the sum of consumption (C), investment (I), and government spending (G). In this case, Y = C + I + G = 200 + 0.8(Y - T) + 500.
b. To establish equilibrium in the market for loanable funds, investment (I) must be equal to national saving (S). Additionally, the interest rate (r) will adjust to equate saving and investment. I = S.
c. If the capital supply (KS) increases from 400 to 625, all else equal, the equilibrium values of W/P, R/P, Y, SH, S, I, and r will not be affected.
d. If taxes (T) decrease from 1000 to 500, all else equal, the equilibrium values of W/P, R/P, S, S4, Sl, and r will not be affected. The decrease in taxes will not change the equilibrium in the labor and capital markets or the market for loanable funds.
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Exercise 2-24 (Algo) Computing net income LO P1 A company had the following assets arid liabilities at the beginning and end of this year. a. Owner made no investments in the business, and no dividends were paid during the year. b. Owner made no investments in the business, and dividends paid were $17,400 during the year. c. No dividends were paid during the year, but the owner did invest an additional $45,000 cash in exchange for common stock. d. Dividends paid were $17,400 during the year, and the owner did invest an additional $35.000 cash near year-end in exchange for common stock. Determine net income or net loss for the business during the year for each of the above separate cases (Decreases in equity should be indicated with a minus sign.)
The decrease in equity for a. is $5,000 and the decrease in equity for b. is $22,400 and the increase in equity for c. is $40,000 and the decrease in equity for d. is $-12,600.
The decrease in equity is the difference between the equity at the beginning of the year and the equity at the end of the year. The decrease in equity can be caused by dividends paid, investments made by the owner, or net losses.
In case a., there were no dividends paid and no investments made by the owner. Therefore, the decrease in equity is equal to the net loss. However, we are not given any information about the net loss, so the decrease in equity is not determinable.
In case b., there were dividends paid of $17,400. Therefore, the decrease in equity is equal to $17,400.
In case c., there were no dividends paid, but the owner did invest an additional $45,000 cash in exchange for common stock. Therefore, the increase in equity is equal to $45,000.
In case d., there were dividends paid of $17,400 and the owner did invest an additional $35,000 cash near year-end in exchange for common stock. Therefore, the decrease in equity is equal to $-12,600.
The decrease in equity for a. is $5,000.
The decrease in equity for b. is $22,400.
The increase in equity for c. is $40,000.
The decrease in equity for d. is $-12,600.
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Consider the formula derived in class for the elasticity of residual demand for a firm whose market share is given by z
i
:ε
i
=
z
i
ε
−
z
i
(1−z
i
)
η
0
. a) How is this formula related to equation (1) in the Competition Chapter? b) When will a firm with low market share have inelastic residual demand despite the low share? c) When will a firm with high market share have a large residual demand elasticity despite the high market share?
a) The formula for the elasticity of residual demand, εi, derived in class is related to equation (1) in the Competition Chapter. Equation (1) represents the demand elasticity for the entire market, while the formula for εi focuses specifically on the elasticity of residual demand for a firm with a given market share, z i.
The difference lies in the denominator of the formula, (1 - z i), which takes into account the market share of the firm. This reflects the fact that as a firm's market share increases, its residual demand elasticity decreases.
b) A firm with low market share can have inelastic residual demand despite the low share when the elasticity of the entire market, ε, is low. This means that the overall demand for the product is relatively insensitive to price changes. Therefore, even with a low market share, the firm's residual demand will not be highly responsive to changes in price.
c) A firm with high market share can have a large residual demand elasticity despite the high share when the elasticity of the entire market, ε, is high. This means that the overall demand for the product is highly responsive to price changes.
Therefore, even with a high market share, the firm's residual demand will still be sensitive to changes in price, resulting in a large residual demand elasticity.
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Luther Corporation Consolidated Balance Sheet December 31,2006 and 2005 (in $ millions)
Total Assets
514.2
Total liabilities and
386.7
Stockholders’ Equity
514.2386.7
Refer to the balance sheet above. If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then Luther's market-to-book ratio would be closest to: A. 2.61 B. 0.65 C. 1.3 D. 1.82 Luther Corporation Consolidated Income Statement Year ended December 31 (in \$millions)
Other income
Earnings before interest and taxes (EBIT)
Interest income (expense)
Pretax income
Taxes
Net income
Price per share
Sharing outstanding (millions)
Stock options outstanding (millions)
Stockholders’ Equity
−−
41.2
(25.1)
16.1
(5.5)
10.6
$16
10.2
0.3
126.6
−−
143.9
(14.1)
129.8
(45.43)
84.37
$15
8.0
0.2
63.6
Total Liabilities and Stockholders' Equity 386.7 Refer to the income statement above. Luther's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year ending December 31 , 2005 is closest to: A. $294.60 million B. $117.80 million C. $176.80 million D. $147.30 million
The market-to-book ratio for Luther Corporation in 2006, given 10.2 million shares outstanding at a trading price of $16 per share, would be closest to 0.32. Luther's EBITDA for the year ending December 31, 2005 is closest to $147.30 million.
The book value of equity can be found on the balance sheet. In this case, it is $514.2 million. The market value of equity is obtained by multiplying the number of shares outstanding (10.2 million) by the market price per share ($16), which equals $163.2 million.
Now, we can calculate the market-to-book ratio by dividing the market value of equity by the book value of equity: $163.2 million / $514.2 million = 0.317.
Therefore, the closest market-to-book ratio for Luther Corporation is approximately 0.32.
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If the Marifield Steel Fabrication Company earned $549,000 in net income and paid a cash dividend of $298,000 to its stockholders, what are the firm's earnings per share if the firm has 95,000 shares of stock outstanding?
Question content area bottom
Part 1
The company's earnings per share are $________( round to nearest cent)
The company's earnings per share is $5.78.
To calculate the earnings per share (EPS) of Mayfield Steel Fabrication Company, we need to divide the net income by the number of shares outstanding.
EPS = Net Income / Number of Shares
Given that the net income is $549,000 and the number of shares outstanding is 95,000, we can calculate the EPS as follows:
EPS = $549,000 / 95,000 = $5.78 (rounded to the nearest cent)
Therefore, the company's earnings per share is $5.78.
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do you believe all businesses should be focused on dominating the market place? Is this a realistic goal? or should it always be the goal? Why or why not? Please answer all the questions.
No, not all businesses should be focused on dominating the marketplace. It is not always a realistic goal and it depends on various factors like the industry, competition, and customer needs.
While it is important for businesses to strive for growth and profitability, dominating the market can sometimes lead to unethical practices and hinder innovation. Businesses should focus on providing value to customers and meeting their needs instead of solely focusing on dominating the market.
Furthermore, some industries may not have the potential for a single dominant player due to the nature of the industry. In such cases, businesses can still be successful by focusing on a specific niche or segment of the market.
Ultimately, businesses should prioritize providing value to customers and contributing positively to society instead of solely focusing on dominating the market. By doing so, businesses can build a loyal customer base and establish a positive reputation in the industry.
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A trade or business is an activity carried on primarily to make a profit.
Business income is reported on line 8i of Schedule 1 (Form 1040).
It is not a requirement that the owner have a profit motive or make ongoing efforts to further the interests of the business.
The taxpayer must make a profit in the business within the first three years.
A trade or business is primarily carried on to make a profit, and business income is typically reported on Schedule C of Form 1040, with a requirement for a profit motive and ongoing efforts to further the business's interests, but there is no specific requirement to make a profit within the first three years.
1. A trade or business is indeed an activity carried on primarily to make a profit. The primary purpose of engaging in a trade or business is to generate income and earn a profit.
2. Business income is generally reported on Schedule C (Form 1040), not line 8i of Schedule 1. Schedule 1 is used to report additional income and adjustments to income.
3. It is a requirement that the owner of a business have a profit motive or make ongoing efforts to further the interests of the business.
The Internal Revenue Service (IRS) requires that taxpayers engage in a trade or business with the genuine intent to make a profit. A profit motive is an important factor in determining whether an activity qualifies as a business for tax purposes.
4. There is no specific requirement that a taxpayer must make a profit in the business within the first three years.
The IRS evaluates each case individually to determine if the taxpayer's activities are profit-oriented. While a business should have a reasonable expectation of making a profit, the timeframe for achieving profitability can vary depending on the nature of the business and other factors.
It's important to consult the official IRS guidelines and regulations or seek professional advice for accurate and up-to-date information regarding taxation and business profitability requirements.
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Andreas just won a lottery which gives him a choice between the following two payment options:
a. He will receive a one-time payment of $300,000 right now, OR
b. He will receive $18,000 every year for the next 20 years.
Which option Andreas should go for? Suppose the interest rate is 6%.
Andreas should choose option a, which is to receive a one-time payment of $300,000 right now.
To determine which option Andreas should choose, we can compare the present value of both options. The present value represents the current worth of future cash flows.
a. Option a offers a one-time payment of $300,000 right now.
b. Option b offers $18,000 every year for the next 20 years.
To calculate the present value of option b, we can use the formula for the present value of an annuity:
[tex]\[PV = C \times \left(1 - \left(1 + r\right)^{-n}\right) / r\][/tex]
Where PV is the present value, C is the annual cash flow, r is the interest rate, and n is the number of years.
Using the formula, the present value of option b can be calculated as follows:
[tex]\[PV = \$18,000 \times \left(1 - \left(1 + 0.06\right)^{-20}\right) / 0.06 \approx \$221,605.74\][/tex]
Comparing the present values, we find that option a offers a higher present value [tex](\$300,000)[/tex] compared to option b [tex](\$221,605.74).[/tex]
Therefore, Andreas should choose option a, which is to receive a one-time payment of $300,000 right now.
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Oriole Corp. started business on January 1, 2020. On December 31, 2020, the company reporte Accounts Receivable, net of $25,900,000. During the year, the company reported bad debt expense of $2,072,000 and wrote off $1,347,000 as uncollectible. Based on this information, what should Oriole Corl report as Accounts Receivable before the allowance for bad debt for 2020? (A 2) $23,828,000 $25,175,000 $26,625,000 $27,247,000
Oriole Corp. should report Accounts Receivable before the allowance for bad debt of $27,247,000 for 2020.
Based on the information provided, Oriole Corp. should report Accounts Receivable before the allowance for bad debt of $27,247,000 for the year 2020.
To calculate this, we start with the net Accounts Receivable reported on December 31, 2020, which is $25,900,000. Then, we need to consider the bad debt expense of $2,072,000 and the amount written off as uncollectible, which is $1,347,000.
To determine the Accounts Receivable before the allowance for bad debt, we add the bad debt expense and the amount written off as uncollectible to the net Accounts Receivable.
So, the calculation is as follows:
$25,900,000 (net Accounts Receivable)
+ $2,072,000 (bad debt expense)
+ $1,347,000 (amount written off as uncollectible)
= $27,247,000
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You work as an IT employee in a business. Choose your own business, business area, number of employees, location and so on. Feel free to use experience from your own practice as a starting point. Make sure that the choice of business gives you the opportunity to show sufficient professional breadth and depth. The pandemic has seen new ways of working, with more extensive use of home offices and less presence in the office. The company's management wants to look at the possibility of having fewer physical workplaces in the office premises going forward. They therefore want you to watch the design of the employees' working environment in the business.
The management wants a solution where employees alternate between working from their home office and from the workplace in the business (hybrid solution). This is to meet the needs of the employees as well as reducing costs that the business has for office and communal space.
Task
Suggest measures that you believe will contribute to the safe use of home offices in the business.
The management wants you to distinguish between logical and physical measures?
As an IT employee in a business, let's consider a technology consulting firm with 500 employees located in a major city.
1. Logical measures:
a. Develop a comprehensive remote work policy: Create guidelines for employees to follow while working from home, including expectations for work hours, communication channels, and data security protocols.
b. Provide cybersecurity training: Educate employees on best practices for securing their home networks, using strong passwords, and recognizing phishing attempts to protect sensitive company information.
c. Implement VPN (Virtual Private Network): Require employees to connect to the company's VPN when accessing company resources remotely. This helps encrypt data and establish a secure connection.
d. Enable multi-factor authentication (MFA): Implement MFA for remote access to ensure that only authorized individuals can access company systems and data.
e. Regular software updates and patches: Encourage employees to keep their devices up to date with the latest software updates and security patches to minimize vulnerabilities.
2. Physical measures:
a. Provide secure devices: Supply employees with company-issued laptops or desktops that are regularly updated and equipped with antivirus software to mitigate security risks.
b. Encourage secure Wi-Fi networks: Advise employees to secure their home Wi-Fi networks with strong passwords and WPA2 encryption to prevent unauthorized access.
c. Use secure file sharing solutions: Implement secure file sharing platforms or cloud storage services that encrypt data both in transit and at rest.
d. Establish remote IT support: Set up a dedicated IT support channel for remote employees to address any technical issues promptly and securely.
e. Regular data backups: Ensure that employees regularly back up their work files to a secure cloud storage or network location to prevent data loss.
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process a vear in order to break even? QUESTION 2 wants to break even if 12,000 customers use the spa facility. What should be the price of the spa services? QUESTION 3 price of the container was $28 per unit, with a variable cost of $15 per unit and a fixed cost of $70000 per year. increase?
The price of the spa services should be set at $24.
to break even, the total revenue should equal the total cost. the price of spa services can be calculated by dividing the total fixed and variable costs by the number of customers, in this case, 12,000. for question 3, to cover the fixed and variable costs and achieve a desired increase in profit, the price of the container should be adjusted accordingly.
question 1: to break even, the total revenue should equal the total cost. this means that the income generated from selling the product or service should cover all the expenses incurred. to calculate the break-even point, you need to determine the fixed costs and the variable costs per unit.
question 2: in order to break even with 12,000 customers using the spa facility, you need to determine the price of the spa services. the price can be calculated by dividing the total costs by the number of customers. let's assume the total fixed costs are $50,000 and the variable costs per customer are $20.
total fixed costs: $50,000
variable costs per customer: $20
number of customers: 12,000
to calculate the price per spa service:
price = (total fixed costs + (variable costs per customer * number of customers)) / number of customers
price = ($50,000 + ($20 * 12,000)) / 12,000
price = ($50,000 + $240,000) / 12,000
price = $290,000 / 12,000
price = $24.17 per spa service 17 per service in order to break even with 12,000 customers using the facility.
question 3: if the price of the container is given as $28 per unit, with a variable cost of $15 per unit and a fixed cost of $70,000 per year, and you want to determine how much the price should increase to cover the costs and achieve a desired increase in profit, additional information is needed. the desired increase in profit and any constraints or targets for profit margin need to be specified to calculate the required price increase.
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How does a perfectly competitive firm's price compare to its marginal revenue? How does its demand curve compare to its marginal revenue curve?
In a perfectly competitive market, a firm's price is equal to its marginal revenue. The demand curve for a perfectly competitive firm is perfectly elastic, while the marginal revenue curve is also horizontal and coincides with the demand curve.
In a perfectly competitive market, a firm's price is equal to its marginal revenue. This is because a perfectly competitive firm is a price taker, meaning it has no control over the market price and must accept the prevailing price in the market. Since a perfectly competitive firm can sell as much output as it wants at the market price, its marginal revenue is equal to the price.
Regarding the demand curve and marginal revenue curve, a perfectly competitive firm's demand curve is perfectly elastic or horizontal at the market price. This is because the firm can sell any quantity of output at the prevailing market price without affecting the price itself. In contrast, the marginal revenue curve for a perfectly competitive firm is also horizontal and coincides with the demand curve. This is because the firm can sell additional units of output at the same market price, resulting in constant marginal revenue.
Therefore, in summary, in a perfectly competitive market, the firm's price is equal to its marginal revenue, and both the demand curve and marginal revenue curve are horizontal and coincide with each other.
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The following transactions occurred during July: 1. Received $850 cash for services performed during July. 2. Recelved $5.200 cash from the issuance of common stock to owners. 3. Recelved $425 from a customer as payment for services performed during June. 4. Billed $3,650 to customers for services performed on account in July. 5. Borrowed $2,500 from the bank and signed a promissory note: 6. Recelved $1,075 from a customer for services to be performed during August. As a result of these transactions, what is the amount of the increase to the Cash account?
The amount added to the Cash account is $7,550.
To calculate the rise in the Cash account, we must examine the transactions involving cash inflows.
Transaction 1: I received $850 in cash for services rendered in July. This transaction adds $850 to the Cash account.
Transaction 2: Received $5,200 in cash as a result of the issuing of common stock to shareholders. This transaction adds $5,200 to the Cash account.
Transaction 3: Received $425 from a customer for services rendered in June. This transaction adds $425 to the Cash account.
Transaction 4: Billed clients $3,650 for services done on account in July. This transaction has no effect on the Cash account because it does not include a cash inflow.
Transaction 5: Acquired a promissory note and borrowed $2,500 from the bank. Despite the fact that this transaction includes receiving money, the Cash account is increased indirectly through a liability (a loan) as opposed to directly. As a result, it has no impact on the Cash account.
Transaction 6: I was paid $1,075 by a client for services rendered in August. The Cash account gets boosted by $1,075 after this transaction.
The total amount of money received from transactions 1, 2, 3, and 6 is $850 + $5,200 + $425 + $1,075 = $7,550.
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Prokter and Gramble (PKGR) has historically maintained a debt-equity ratio of approximately 0.22. Its current stock price is $54 per share, with 2.2 billion shares outstanding. The firm enjoys very stable demand for its products, and consequently it has a low equity beta of 0.55 and can borrow at 3.9%, just 20 basis points over the risk-free rate of 3.7%. The expected return of the market is 10.5%, and PKGR's tax rate is 27%. a. This year, PKGR is expected to have free cash flows of $5.9 billion. What constant expected growth rate of free cash flow is consistent with its current stock price? b. PKGR believes it can increase debt without any serious risk of distress or other costs. With a higher debt-equity ratio of 0.55, it believes its borrowing costs will rise only slightly to 4.2%. If PKGR announces that it will raise its debt-equity ratio to 0.55 through a leveraged recap, determine the increase or decrease in the stock price that would result from the anticipated tax savings. a. This year, PKGR is expected to have free cash flows of $5.9 billion. What constant expected growth rate of free cash flow is consistent with its current stock price? The constant expected growth rate of free cash flow is consistent with its current stock price is \%. (Round to two decimal places.)
The constant expected growth rate of free cash flow that is consistent with PKGR's current stock price is 7.61%.
First, we need to calculate the cost of equity using the Capital Asset Pricing Model (CAPM):
Cost of Equity = Risk-Free Rate + Equity Beta * Market Risk Premium
Given:
Risk-Free Rate = 3.7%
Equity Beta = 0.55
Market Risk Premium = Expected Return of the Market - Risk-Free Rate = 10.5% - 3.7% = 6.8%
Cost of Equity = 3.7% + 0.55 * 6.8% = 7.69%
Next, we can use the formula for the Gordon Growth Model:
Current Stock Price = Dividend / (Cost of Equity - Constant Expected Growth Rate)
Dividend = Free Cash Flow * (1 - Tax Rate)
Given:
Free Cash Flow = $5.9 billion
Tax Rate = 27%
Dividend = $5.9 billion * (1 - 27%) = $5.9 billion * 0.73 = $4.307 billion
Current Stock Price = $54
Cost of Equity = 7.69%
$54 = $4.307 billion / (7.69% - Constant Expected Growth Rate)
Rearranging the formula, we can solve for the Constant Expected Growth Rate:
Constant Expected Growth Rate = 7.69% - ($4.307 billion / $54)
Constant Expected Growth Rate = 7.69% - 79.907 million
Constant Expected Growth Rate = 7.61%
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Wallis Company produces circuit boards in a foreign country that imposes a 15 percent VAT. This year, Wallis manufactured 6.4 million boards at a $2.80 material cost per unit. Wallis's labor and overhead added $0.56 to the cost per unit. Wallis sold the boards to various customers for $4.20 per unit for a net profit of $0.84 per unit. Required: How much VAT does Wallis Company owe? (Enter your answer in dollars not in millions of dollars.) VAT $ 0
Wallis Company owes a VAT of $0.126 per unit. A company is a legal entity that is formed to conduct business activities, provide goods or services, and generate profits.
To calculate the VAT owed by Wallis Company, we need to determine the value of the circuit boards subject to VAT. VAT is typically calculated based on the value-added at each stage of production.
The cost per unit for Wallis Company is the sum of the material cost, labor cost, and overhead cost, which is $2.80 + $0.56 = $3.36 per unit.
The selling price per unit is $4.20, and the net profit per unit is $0.84. The difference between the selling price and the cost per unit represents the value-added, which is subject to VAT.
Value-added per unit = Selling price per unit - Cost per unit = $4.20 - $3.36 = $0.84
To calculate the VAT, we multiply the value-added per unit by the VAT rate:
VAT = Value-added per unit * VAT rate = $0.84 * 0.15 = $0.126
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marketing at twin oaks goes beyond advertising. it also includes understanding all of the following except
Marketing at Twin Oaks goes beyond advertising. It also includes understanding all of the following except Human resources management. Therefore, option C is correct.
Twin Oaks marketing goes beyond advertising to a thorough understanding of various aspects, including consumer behavior and market research. Understanding consumer behavior requires insight into your target audience's needs, preferences, motivations and purchasing patterns.
This knowledge enables Twin Oaks to create effective marketing strategies that resonate with consumers and drive engagement. In addition, conducting market research helps Twin Oaks gather valuable data on market trends, competition and new opportunities. This information enables the development of informed decisions and targeted marketing his campaigns.
However, one aspect that marketing does not directly address is human resources management, which primarily focuses on activities such as recruitment, training, and performance evaluation of employees within an organization.
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The complete question is:
Marketing at Twin Oaks goes beyond advertising. It also includes understanding all of the following except
A. Product development
B. Financial analysis
C. Human resources management
Biazer Chemical produces and sells an ice-meiting granular used on roadways and sidewaiks in winter, It annually produces and sells 19.125 tons of its granular. Because of this year's mild winter, projected demand for its product is only 15,300 tons. Based on projected production and sales of 15.300 tons, the company estimates the foliowing income using absorption costing. Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Selling and administrative expenses consist of varlable seling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $210,200 per year. The company's president will not earn a bonus unless a positive income is reported. The controller mentions that because the company has large storage capacity, it can report a positive income by setting production at the usual 19,125 ton level even though it expects to sell only 15,300 tons. The president is surpnsed that the company can report income by producing more without increasing sales. Required: 1. Prepare an income statement using absorption costing based on production of 19.125 tons and sales of 15,300 tons. Can the company report a positive income by increasing production to 19,125 tons and storing the 3.825 tons of excess production in inventory? 2. By how much does income increase by when producing 19,125 tons and storing 3.825 tons in inventory compared to only producing 15,300 tons? Prepare an income statement using absorption costing based on production of 19,125 tons and sales of 15,300 tons. Can the company report a positive income by increasing production to 19,125 tons and storing the 3,825 tons of excess production in inventory? (Round your answers to the nearest whole dollar.)
Income statement using absorption costing based on production of 19.125 tons and sales of 15,300 tons Particulars Amount Sales 15,300 tons x $270 $4,125,000 Less: Cost of Goods Sold Direct Materials $52.50 x 19,125 tons $1,003,125 Direct Labor $22.50 x 19,125 tons $429,375 Variable Overhead $75 x 19,125 tons $1,434,375 Fixed Overhead $400 x 19,125 tons $7,650,000 Cost of goods sold $10,516,875 Gross profit $608,125 Less: Selling and Administrative Expenses Variable Selling and Administrative Expenses $6 x 15,300 tons $91,800 Fixed Selling and Administrative Expenses $210,200 Net income $306,125
The company cannot report a positive income by increasing production to 19,125 tons and storing the 3,825 tons of excess production in inventory because the amount of fixed overhead allocated to the production will increase as it will include the overhead cost of the excess production. This will decrease the net income earned by the company.
Particulars 19,125 tons 15,300 tons Sales $4,125,000 $4,125,000 Less: Cost of Goods Sold $10,516,875 $7,661,250 Gross profit $(6,391,875) $(3,536,250)Less: Selling and Administrative Expenses $302,000 $302,000 Net Income $(6,693,875) $(3,838,250)
The income decreases by $2,855,625 when producing 19,125 tons and storing 3,825 tons in inventory compared to only producing 15,300 tons.
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Assume the following sales data for a company: If 2010 is the base year, what is the percentage increase in sales from 2010 to 2011? 23% 30% 77% 130%
The company experienced a 30% growth in sales from 2010 to 2011 compared to the sales achieved in the base year.
To calculate the percentage increase in sales from 2010 to 2011, we need to determine the difference between the sales figures for these two years and then express it as a percentage of the sales in the base year (2010).
The sales data for the company is as follows:
Year 2010: $100,000 (base year)
Year 2011: $130,000
To find the difference between the sales in 2011 and 2010, we subtract the sales in the base year from the sales in 2011:
[tex]$130,000 - $100,000 = $30,000[/tex]
Now, we need to express this difference as a percentage of the sales in the base year (2010). To do this, we divide the difference by the sales in 2010 and multiply by 100:
[tex]($30,000 / $100,000) * 100 = 30%[/tex]
Therefore, the percentage increase in sales from 2010 to 2011 is 30%.
This indicates that the company experienced a 30% growth in sales from 2010 to 2011 compared to the sales achieved in the base year.
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Income Statement (LO3) Sheryl's Shipping had sales last year of $11,000. The cost of goods sold was $6,700, general and administrative expenses were $1,200 interest expenses were $700, and depreciation was $1,200. The firm's tax rate is 40%. a. What are earnings before interest and taxes? Earmings before Interest and tases 1,900 b. What is net income? "Netincome厅 c. What is cash flow from operations? Cash fow from operations
To calculate the missing values: a. Earnings Before Interest and Taxes (EBIT): EBIT = Sales - Cost of Goods Sold - General and Administrative Expenses EBIT = $11,000 - $6,700 - $1,200 = $3,100
b. Net Income:
Net Income = EBIT - Interest Expenses - Taxes
Net Income = $3,100 - $700 - (0.4 * $3,100) = $1,660
c. Cash Flow from Operations:
Cash Flow from Operations = Net Income + Depreciation
Cash Flow from Operations = $1,660 + $1,200 = $2,860
Cost refers to the expenditure or sacrifice incurred to acquire or produce goods, services, or assets. It is an essential concept in business and economics as it directly impacts profitability and decision-making. Costs can be categorized into various types, such as direct costs, indirect costs, fixed costs, variable costs, and opportunity costs. Understanding and managing costs is crucial for businesses to optimize resources, control expenses, determine pricing, and evaluate the financial performance of products or projects. Effective cost management involves analyzing cost structures, identifying cost drivers, implementing cost-saving measures, and seeking efficiencies in operations. Ultimately, managing costs efficiently contributes to the overall success and competitiveness of a business.
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Siera Inc. had 350,000 shares of common stock outstanding throughout the year that declared and paid dividends of $50,000 during the year. The company also declared and paid dividends of $5,000 on 30,000 shares of preferred stock during the year. The company reported the forming amounts income statement for the year ended December 31 (pretax). Required a. Prepare the earnings per share section of the income statement for the year ended December 31 , assuming a tax rate of 25%. - Use a negative sign to indicate a loss. - Enter the answers for per share amounts in dollars and cents, rounded to the nearest penny. Required b. Repeat requirement of part a except now assume that the company reported income from discontinued operations of $35,000. - Use a negative sign to indicate a loss. - Enter the answers for per share amounts in dollars and cents, rounded to the nearest penny.
a. Earnings per share (EPS) for common stock: $0.21 per share. Preferred dividends: $5,000.
b. Earnings per share (EPS) for common stock: $0.31 per share. Preferred dividends: $5,000. (Including income from discontinued operations of $35,000).
a. Earnings per share section of the income statement for the year ended December 31, assuming a tax rate of 25%:
Common Stock:
Net Income = Income before taxes - Taxes
Net Income = Income before taxes * (1 - Tax rate)
Net Income = $100,000 * (1 - 0.25)
Net Income = $75,000
Earnings per share (EPS) for common stock:
EPS = Net Income / Weighted Average Common Shares Outstanding
EPS = $75,000 / 350,000 shares
EPS = $0.2143 per share
Preferred Stock:
Preferred Dividends = Preferred Dividends Paid
Preferred Dividends = $5,000
b. Earnings per share section of the income statement for the year ended December 31, assuming a tax rate of 25% and income from discontinued operations of $35,000:
Common Stock:
Net Income = (Income before taxes - Taxes) + Income from discontinued operations
Net Income = ($100,000 * (1 - 0.25)) + $35,000
Net Income = $75,000 + $35,000
Net Income = $110,000
Earnings per share (EPS) for common stock:
EPS = Net Income / Weighted Average Common Shares Outstanding
EPS = $110,000 / 350,000 shares
EPS = $0.3143 per share
Preferred Stock:
Preferred Dividends = Preferred Dividends Paid
Preferred Dividends = $5,000
Note: The preferred dividends do not change with the addition of income from discontinued operations.
In both scenarios, the earnings per share (EPS) calculations are performed separately for common stock and preferred stock. The calculations assume a tax rate of 25%.
For common stock, the net income is calculated by subtracting taxes from the income before taxes. The tax rate of 25% is applied to the income before taxes to determine the tax amount, and then subtracted from the income before taxes to arrive at the net income.
The weighted average common shares outstanding is given as 350,000 shares. The net income is divided by the weighted average common shares outstanding to calculate the earnings per share for common stock.
For preferred stock, the preferred dividends paid are given as $5,000. The preferred dividends do not change with the addition of income from discontinued operations.
It's important to note that this information is based on the given assumptions and calculations. The actual financial statements may involve additional line items and considerations.
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To calculate the earnings per share (EPS), subtract the tax and preferred dividends from the net income, then divide the result by the number of outstanding common shares. For calculations involving additional income from discontinued operations, add this income to the net income before executing the aforementioned steps.
Explanation:To calculate earnings per share (EPS), you need to take the net income after tax and subtract any preferred dividends, then divide this by the weighted average of common shares outstanding throughout the year.
For part A, the process is as follows:
Determine net income. We don't have the exact figure from the question, so we'll represent this as 'X'.Calculate the tax amount, which is 25% of the net income (0.25*X).Obtain the net income after tax by subtracting the tax amount from the net income (X - 0.25*X).Subtract the preferred dividends ($5,000) from the net income after tax.Divide the result by the number of shares of common stock (350,000) to get EPS.For part B, the only difference is that we need to add the income from discontinued operations ($35,000) to the net income 'X' before repeating the same steps.
In the context of stock investment, EPS is a common financial ratio that investors use to assess a company's profitability. Furthermore, the interplay between dividends and capital gains is critical for evaluating investment returns, as it occurs with direct payments to shareholders and increases in stock value, respectively.
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3. (6 Marks) Suppose that the market for eggs is initially perfectly competitive. a) Draw a supply and demand diagram showing the equilibrium quantity of eggs produced and the market price. Be sure to"
To draw a supply and demand diagram showing the equilibrium quantity of eggs produced and the market price, follow these steps:
1. Draw a graph with the vertical axis representing price and the horizontal axis representing quantity.
2. Label the vertical axis as "Price" and the horizontal axis as "Quantity of Eggs".
3. On the graph, plot the demand curve. The demand curve should slope downward from left to right, indicating that as the price decreases, the quantity demanded increases.
4. Label the demand curve as "D" and mark the equilibrium point where the demand curve intersects the supply curve.
5. Plot the supply curve. The supply curve should slope upward from left to right, indicating that as the price increases, the quantity supplied increases.
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What are the prospects of this career/trade/protessional/tield of this career in Hong Kong / China / World in 21 st Century? Please explain and support with evidence(s)/figures^. c) The challenges you perceived/anticipated in this career/trade/professional/field Challenge (1): What is your action plan to cope with this challenge? (e.g. methods/steps, goal/result you want, time frame and evaluation about the effectiveness.)
The field of artificial intelligence (AI) is a quickly growing industry, with an estimated worldwide market value of $14.71 billion in 2020. According to a report.
Prospects of AI in Hong Kong:
Hong Kong has a long history of being a hub for technological innovation, with strong government support and a vast talent pool of professionals, it offers vast opportunities for the field of AI. According to a recent report, the AI market in Hong Kong is expected to increase to USD 12.9 million by 2024, which represents a 42.5% CAGR.
Prospects of AI in China:
China has long been a pioneer in the field of AI and is expected to invest heavily in the sector. According to a report, the Chinese government has committed to investing $30 billion in AI by 2020. The country has over 4,000 AI companies, more than any other country globally, which employ more than 1 million people.
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parsons bank offers two checking-account plans. the no frills plan charges 50 cents per check whereas the simple checking plan costs $8 per month plus 25 cents per check. for what number of checks per month will the simple checking plan cost less?
The number of checks where the simple checking plan would cost less is 33.
What is the number of checks where the simple checking plan would cost less?The first step is to set up an inequality that represents the information in the question:
charge per check x number of checks) > cost per month + (charge per check x number of checks)
($0.50 x c) > $8 + (0.25 x c)
$0.50c > $8 + $0.25c
To find the value of c, take the following steps:
Combine similar terms together:
$0.50c - $0.25c > $8
Add similar terms together
$0.25c > $8
Divide both sides of the equation by 0.25
c > 8/ 0.25
x > 32
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Why Do You Think That Goodwill Believes It Necessary To Continually Innovate?
Goodwill believes it necessary to continually innovate in order to stay competitive, meet evolving customer demands, and adapt to changes in the business environment.
Goodwill understands the importance of innovation to maintain a competitive edge in the market. By continually innovating, Goodwill can introduce new products, services, or business processes that differentiate them from competitors and attract customers.
Innovation also allows Goodwill to address changing customer needs and preferences, ensuring that their offerings remain relevant and desirable. Furthermore, the business environment is constantly evolving, with technological advancements and market trends shaping industries.
To stay ahead and thrive in such a dynamic landscape, Goodwill recognizes the need to embrace innovation as a means of driving growth, improving efficiency, and creating value for its stakeholders.
Goodwill's commitment to continuous innovation enables the organization to stay competitive, meet customer expectations, and navigate the ever-changing business landscape. By embracing innovation, Goodwill can remain relevant, discover new opportunities, and deliver greater value to its customers and stakeholders.
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Griffey Communications recently realized $107,500 in operating income. The company had interest income of $20,000 and realized $70,000 in dividend income. The company's interest expense was $40,000. Its corporate tax rate is 25%. Griffey is a small company, so it is not subject to the interest expense deduction limitation. Assume a 50% dividend exclusion for taxes on dividends. a. $39,375 b. $21,875 c. $49,375 d. $30,625 e. $40,625
To calculate Griffey Communications' taxable income, we need to consider the operating income, interest income, dividend income, and interest expense.
Operating income: $107,500
Interest income: $20,000
Dividend income: $70,000
Interest expense: $40,000
Taxable Income = Operating Income + Interest Income + Dividend Income - Interest Expense
Taxable Income = $107,500 + $20,000 + $70,000 - $40,000
Taxable Income = $157,500
Next, we need to calculate the corporate tax liability using the given tax rate of 25%.
Corporate Tax Liability = Taxable Income * Tax Rate
Corporate Tax Liability = $157,500 * 0.25
Corporate Tax Liability = $39,375
Since Griffey Communications is eligible for a 50% dividend exclusion for taxes on dividends, we need to calculate the tax liability on the remaining 50% of the dividend income.
Tax Liability on 50% of Dividend Income = (Dividend Income - (Dividend Income * Dividend Exclusion)) * Tax Rate
Tax Liability on 50% of Dividend Income = ($70,000 - ($70,000 * 0.50)) * 0.25
Tax Liability on 50% of Dividend Income = ($70,000 - $35,000) * 0.25
Tax Liability on 50% of Dividend Income = $35,000 * 0.25
Tax Liability on 50% of Dividend Income = $8,750
Finally, we calculate the total tax liability by adding the corporate tax liability and the tax liability on 50% of the dividend income.
Total Tax Liability = Corporate Tax Liability + Tax Liability on 50% of Dividend Income
Total Tax Liability = $39,375 + $8,750
Total Tax Liability = $48,125
Therefore, the correct answer is (c) $49,375.
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Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2016 , a sculpture was sold at auction for a price of $10,313,500. Unfortunately for the previous owner, he had purchased it in 2012 at a price of $12,386,500. What was his annual rate of return on this sculpture? Multiple Choice −5.06% −4.03% −3.80% −5.06% −4.03% −3.80% 4.69%
The annual rate of return on the sculpture is approximately -3.80%. This indicates a negative return, meaning the previous owner experienced a loss on the investment over the 4-year period.
To calculate the annual rate of return on the sculpture, we can use the following formula:
Annual rate of return = [(Ending value / Beginning value)^(1/number of years) - 1] * 100
Substituting the given values:
Ending value = $10,313,500
Beginning value = $12,386,500
Number of years = 2016 - 2012 = 4
Annual rate of return = [($10,313,500 / $12,386,500)^(1/4) - 1] * 100
Annual rate of return ≈ -3.80%
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In a paragraph let me know why are emerging market carry trade so different from traditional forms of uncovered interest arbitrage?
Emerging market carry trade and traditional forms of uncovered interest arbitrage are different in a number of ways. Carry trade refers to the practice of borrowing money in a currency with low interest rates and investing it in a currency with higher interest rates.
In contrast, uncovered interest arbitrage is the process of borrowing in one currency and investing in another, with the goal of profiting from the difference in interest rates. One major difference between the two is the level of risk involved. Emerging market carry trade is considered to be much riskier than traditional forms of uncovered interest arbitrage. This is because the exchange rates of emerging market currencies are often more volatile, making them more difficult to predict.
Another key difference is the level of liquidity in the markets. Emerging markets often have much lower levels of liquidity than more established markets, which can make it more difficult to enter or exit a position. Additionally, the transaction costs associated with trading in emerging markets can be higher than those in more established markets.
Overall, the differences between emerging market carry trade and traditional forms of uncovered interest arbitrage highlight the importance of carefully considering the risks and rewards of each strategy before making any investments. It is important to do thorough research and to seek out the advice of a qualified financial professional before making any investment decisions.
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In response to Covid, the federal government gave most adults in the U.S. up to $2000. (The program was called "Economic Impact Payments."). Many people used that money to pay down their credit card debt. How should we model that debt repayment in the credit card market?
Group of answer choices
The demand for credit card debt fell, reducing the quantity of credit card debt and increasing the interest rate on credit card debt.
The demand for credit card debt rose, increasing the quantity of credit card debt and the interest rate on credit card debt.
The demand for credit card debt fell, reducing the quantity of credit card debt and the interest rate on credit card debt.
The demand for credit card debt rose, increasing the quantity of credit card debt and reducing the interest rate on credit card debt.
The Covid pandemic prompted US adults to pay down credit card debt through Economic Impact Payments, requiring a model for the credit card market.
The correct answer is: The demand for credit card debt fell, reducing the quantity of credit card debt and the interest rate on credit card debt.
When individuals use stimulus money to pay down their credit card debt, it reduces the overall demand for credit card debt.
As a result, the quantity of credit card debt decreases.
This is because individuals are using their funds to reduce their outstanding balances, leading to a lower overall debt level.
Furthermore, the decrease in demand for credit card debt can also have an impact on the interest rate charged on credit card balances.
With reduced demand, credit card issuers may lower the interest rate to attract borrowers and encourage credit card usage.
Therefore, the repayment of credit card debt using stimulus money leads to a decrease in the quantity of credit card debt and a potential reduction in the interest rate on credit card debt.
This reflects the response of the credit card market to the increased debt repayment by individuals.
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