Answer:
The Equitable Life Assurance Society (Equitable Life), founded in 1762, is a life insurance ... Lord Penrose's 2004 Equitable Life Inquiry found that the company had made ... Both types of bonus were allocated at the discretion of the directors in ... between a fixed Guaranteed Annuity Rate (GAR) or the Current Annuity Rate ...
Explanation:
Distribution of benefits and costs
The Senate, the legislature of the fictional country of Romance, is considering legislation that will generate benefits of $25 million and costs of $29 million. For perspective, Romania's population is 60 million.
Passing the legislation is ________, and if everyone in Romange shared equally in both its benefits and its costs, the Senate will vote ________ the legislation.
If the costs of the legislation are concentrated among a few people instead of widespread among the population, those people will be willing to spend up to _________ lobbying the Senate against the legislation. (Note: Assume that the benefits are widespread; therefore, you can ignore them in the calculations of the few who experience the costs.)
The less widely spread are the benefits of the legislation, the _______ is the likelihood of lobbying for the legislation by those who will incur its benefits.
Suppose that, as before, the costs of the legislation are concentrated among a small group, the benefits are very widespread, and the Senate is responsive to lobbying. The likely amount spent on lobbying for the legislation is _______, in which case the Senate will likely vote ___________ the legislation.
Answer:
1) INEFFICIENT As it cost for the society more than the benefit generated.
2) AGAINST Assuming the Senators wants the better for the republic are do not push their own agendas
3) RESOURCES/MONEY/POLITICAL INFLUENCE for as much as 30 millions
Assuming they want to avoid the cost they will try to move the cost to another strata or reject the law. As they want to cut their cost they will not overexpend above the 30,000,000 from the original law.
4) MOST PROBABLY/HIGH CHANCE As the benefit are focused they will root for the legislation and lobby for it
Explanation:
The question is to think how a rational person who wish to do no harm will impact the political system. It is important to assume participant will work within the framework of the society and not push to destroy to avoid the law or push for the law that benefit.
Limber Company uses the weighted-average method in its process costing system. Operating data for the first processing department for the month of June appear below: According to the company's records, the conversion cost in beginning work in process inventory was $15,264 at the beginning of June. Additional conversion costs of $68,208 were incurred in the department during the month. What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)
Limber Company uses the weighted-average method in its process costing system. Operating data for the first processing department for the month of June appear below:
Unit % of completion
Beginning working in progress 18,000 80%
Started into production 81,000
Ending working progress 17,000 * 80%
According to the company's records, the conversion cost in beginning work in process inventory was $15,264 at the beginning of June. Additional conversion costs of $68,208 were incurred in the department during the month. What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)
Answer:
cost per equivalent unit for conversion costs = $0.873
Explanation:
Completed units= opening inventory + started unit - closing inventory
= 18000 + 81,000 - 17,000 = 82 ,000 units
Item units Equivalent unit
Completed units 82,000 100% × 82,000 = 82,000
Production 17,000 80% ×17,000 = 13600
Total equivalent unit 95,600
Cost per equivalent unit= total conversion cost / total equivalent units
= ($15,264 + $68,208)/95,600 units = $0.873
cost per equivalent unit for conversion costs=$0.873
Mike's Service Station performs oil changes for cars. Each oil change has a standard time of 0.4 direct labor hours. The standard direct labor hour rate is $ 19.00 per hour. Data relating to oil changes for the month of September follow: Actual number of oil changes performed 2 comma 400 Actual direct labor hours worked 900 Actual total direct labor cost $ 4 comma 500 What is the labor rate variance for September?
Answer:
Direct labor rate variance= $12,600 favorable
Explanation:
Giving the following information:
The standard direct labor hour rate is $ 19.00 per hour.
Actual direct labor hours worked 900
Actual total direct labor cost $4,500
To calculate the direct labor rate variance, we need to use the following formula:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 4,500/900= $5
Direct labor rate variance= (19 - 5)*900
Direct labor rate variance= $12,600 favorable
The 8.5 percent bond of Fitness Center, Inc has a face value of $1,000, a maturity of 25 years, semiannual interest payments, and a yield to maturity of 12.58 percent. What is the current market price of the bond
Answer:
Price of bond=$691.034
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
Let us assume the bond had a per value of 1000 and also redeemable at par
The value of the bond can be worked out as follows:
Step 1
Calculate the PV of interest payments
semi Annual interest payment
= 8.5% × 1000 × 1/2= 42.5
PV of interest payment
= 42.5 × (1-(1.0629)^(-25×)/0.0629)
=643.6780
Step 2
PV of redemption Value
PV = 1000 × (1-(1.0629)^(-25×2) = 47.35
Step 3
Price of bond
=643.678 + 47.356
=$691.034
Price of bond=$691.034
At the beginning of the year, a company predicts total overhead costs of $770,100. The company applies overhead using machine hours and estimates it will use 1,510 machine hours during the year. What amount of overhead should be applied to Job 65A if that job uses 24 machine hours during January
Answer:
$12,240
Explanation:
For the computation of the amount of overhead first we need to find out the predetermined overhead rate which is shown below:-
Predetermined overhead rate = Overhead cost ÷ Machine hours
= $770,100 ÷ 1,510
= $510
Amount of overhead should be applied to Job 65A = Predetermined overhead rate × Machine hours during January
= $510 × 24
= $12,240
We simply applied the above formula
The money a person receives from a wage or salary or from investments is income, and the assets an individual owns are wealth. Why is wealth considered more significant in social stratification?
a. Wealth is more predictable and is held only by the top 1 percent.
b. Income tends to favor the lower and middle classes, while wealth is the domain of the superrich.
c. Wealth is more predictable and can be used to generate more wealth.
d. Income is more predictable, but only wealth can create capital.
Answer:
The answer is C "Wealth is more predictable and can be used to generate more wealth"
The European System of Central Banks (ESCB) is similar to the Federal Reserve System in that:________
A. the ECB is involved in supervision and regulation of financial institutions.
B. it is structured such that the central banks for each country have a similar role to that of the Federal Reserve banks.
C. it is structured such that the central banks for each country control their own budgets as Federal Reserve banks do.
D. monetary operations are centralized.
Answer:
B. it is structured such that the central banks for each country have a similar role to that of the Federal Reserve banks.
Explanation:
The European System of Central Banks (ESCB) which was established under the Treaty on European Union (TEU).
It comprises of the European Central Bank (ECB) and the national central banks of all the 27 European Union (EU) member states, irrespective of adopting the Euro (£) or not. This has helped the European Union (EU) member states to achieve tight corporations and memorandum of understanding (MOUs) such as TARGET2 (single payment system).
The Federal Reserve System established by the U.S Congress on the 23rd of December, 1913 is the central bank of the United States of America. Generally, it comprises of twelve (12) Federal Reserve Bank regionally across the United States of America.
The European System of Central Banks (ESCB) is similar to the Federal Reserve System in that it is structured such that the central banks for each country have a similar role to that of the Federal Reserve banks.
The roles of these banks are;
1. To provide the countries with safer financial systems.
2. To supervise and regulate the activities of banks and other depository financial institutions.
3. To provide monetary policy across the countries.
4. To maintain flexible financial stability in the member state.
uppose you buy a bond with a coupon of 7.8 percent today for $1,080. The bond has 5 years to maturity. Assume interest payments are reinvested at the original YTM. a. What rate of return do you expect to earn on your investment
Answer:
45.58%
Explanation:
Rate of return is the expected gain or loss on an investment, over a specific time period. It is derived as a percentage of the investment's original value or cost.
ROR = [CV - IV]/ IV × 100
CV is the current value of the investment (value at the end of the investment period)
IV is the initial value of the investment.
Note also, the assumption that interest payments are reinvested.
At the end of year 1, interest payment is $1,164.24
End of year 2 - $1,255.05
End of year 3 - $1,352.95
End of year 4 - $1,458.48
End of year 5 - $1,572.24
[Interest rate - 7.8%]
ROR = (1572.24 - 1080)/1080 × 100
ROR = 45.58%
When a company borrows $150 million during the year and also repays $120 million of debt, the company can disclose the $30 million net amount as excess of borrowings over re-payments in the financing activities section of the statement of cash flows.
A. True
B. False
Answer:
B. False
Explanation:
Cash inflows and outflows for borrowing and repayment of debt are reported separately at gross amounts in the financial activities section of the cash flow statement.
When a company borrows $150 million during the year and also repays $120 million of debt. In this scenario, both amount of transaction (borrowing and repayment) will be reported separately at gross amount in the financial activities section of the cash flow statement.
Cutco product line includes more than 100 choices. Is it realistic to think Cutco can enter global markets with all of its products for each market every time they consider a new market entry?
Answer:
On the balance of probability, they will have issues with brand acceptance. It is therefore not realistic that they can enter the global market with all the products at each point of entry.
Explanation:
The principles of marketing that to many choices may create confusion in the mind of the consumers. The cost of advertising and presenting the over 100 product lines to the new market will most likely sink the company.
The safest thing to do is to go into the markets with its best products in terms of the products with potential for quick acceptance, low competition in the new market and which also ranks high amongst the cash cows.
Cheers!
If VersaLife Corporation issues new debt, then the bond market expects a yield of 7.5%. Preferred stock is trading for $96, has a $100 par value and pays an annual dividend of 8% (the next dividend is due in one year). Common equity has a beta of 1.20, the market risk premium is 5%, and the risk-free rate is 3%. If the firm's tax rate is 40%, what is the weighted average cost of capital
Answer:
7.17%
Explanation:
For determining the weighted average cost of capital first we need to find out the after cost of debt and cost of preferred stock and the cost of common equity which are as follows
Cost of debt is
= Yield × (1 - tax rate)
= 7.5% × (1 - 40%)
= 4.5%
Cost of preferred stock is
= Dividend ÷ price
= 8 ÷ $96
= 8.33%
And, Cost of common equity is
= risk free rate + beta × market risk premium
= 3% + 1.2 × 5%
= 9%
Now the weighted average cost of capital is
WACC = cost of debt × weight of debt + cost of preferred stock × weight of preferred stock + cost of common equity × weight of common equity
= 4.5% × $80 ÷ ($80 + $10 + $110) + 8.33% × $10 ÷ (80 + $10 + $110) + 9% × $110 ÷ ($80 + $10 + $110)
= 7.17%
Oscar owns a building that is destroyed in a hurricane. His adjusted basis in the building before the hurricane is $130,000. His insurance company pays him $140,000 and he immediately invests in a new building at a cost of $142,000. What is Oscar's basis on his new building?
Answer: $132,000
Explanation:
Oscar's new basis on the building will be the basis of the old building plus any additional investment he added.
This is the because there is no gain on the $140,000 he received because it was an Involuntary Conversion amount and he reinvested it into another building within a period of 2 years.
As there is no gain, the building will retain it's original basis but will add any amount outside the involuntary replacement cost of the building.
The Additional basis will be,
= Cost of building - Insurance
= 142,000 - 140,000
= $2,000
The Basis for the new building is,
= 130,000 + 2,000
= $132,000
On January 1, 2018, Dunbar Echo Co. sells a machine for $24,600. The machine was originally purchased on January 1, 2016 for $43,700. The machine was estimated to have a useful life of 5 years and a residual value of $0. Dunbar Echo uses straight-line depreciation. In recording this transaction:_________
a. a loss of $1,620 would be recorded
b. a gain of $1,620 would be recorded
c. a loss of $19,100 would be recorded
d. a gain of $24,600 would be recorded
Answer:
a. a loss of $1,620 would be recorded
Explanation:
The straight line depreciation method charges a constant depreciation through out the estimated useful life of the asset.
Depreciation expense per year = (Cost - Residual value) / Estimated useful life of the asset
Depreciation expense = (43700 - 0) / 5 = $8740
Accumulated depreciation at 1 January 2018 = 8740 * 2 = 17480
Net Book value at 1 January 2018 = 43700 - 17480 = $26220
Gain/ (Loss) on sale = 24600 - 26220 = ($1620) or loss of $1620
Inventory AnalysisThe following data were extracted from the income statement of Keever Inc.: Current Year Previous YearSales $18,500,000 $20,000,000 Beginning inventories 940,000 860,000 Cost of goods sold 9,270,000 10,800,000 Ending inventories 1,120,000 940,000 a. Determine for each year (1) the inventory turnover and (2) the number of days' sales in inventory. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume 365 days a year. Current Year Previous Year1. Inventory turnover 2. Number of days' sales in inventory days daysb. The inventory position of the business has deteriorated . The inventory turnover has decreased , while the number of days' sales in inventory has increased . The sales volume has declined faster than the inventory, resulting in a deteriorating inventory position.
Answer:
(1) the inventory turnover
previous year: 12current year: 9and (2) the number of days' sales in inventory
previous year: 30.4 days
current year: 40.6 days
Inventory turnover decreased while days' sales in inventory increased. This means that the company's inventory position has deteriorated.
Explanation:
Current Year Previous Year
Sales $18,500,000 $20,000,000
Beginning inventories $940,000 $860,000
Cost of goods sold $9,270,000 $10,800,000
Ending inventories $1,120,000 $940,000
inventory turnover = COGS / average inventory:
previous year: $10,800,000 / [($860,000 + $940,000)/2] = 12
current year: $9,270,000 / [($1,120,000 + $940,000)/2] = 9
number of days' sales in inventory = 365 / inventory turnover
previous year: 365 / 12 = 30.4 days
current year: 365 / 9 = 40.6 days
The Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine's base price is $108,000, and it would cost another $12,500 to modify it for special use.The maintenance cost of the machine is RM30,000 per annum.
A. What is the net cost of the machine for capital budgeting purposes?
B. What are the net operating cash flows in Years 1, 2, and 3?
C. What is the terminal year cash flow?
D. If the project's cost of capital is 12 percent, should the machine be purchased?
Missing information:
The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,000. The machine would require an increase in net working capital (inventory) of $5,500. The milling machine would have no effect on revenues, but it is expected to save the firm $44,000 per year in before-tax operating costs, mainly labor. Campbell’s marginal tax rate is 35%
Answer:
A. What is the net cost of the machine for capital budgeting purposes?
machine's base price + cost of modifications + increase in inventory = $108,000 + $12,500 + $5,500 = $126,000B. What are the net operating cash flows in Years 1, 2, and 3?
NCF year 1 = $42,517.75NCF year 2 = $47,578.75NCF year 3 = $34,926.25C. What is the terminal year cash flow?
$50,702.25 + $34,926.25 = $85,628.50D. If the project's cost of capital is 12 percent, should the machine be purchased?
NPV = $10,840.44, since it is positive, then the project should be carried out and the machine should be purchased.Explanation:
net cash flow year 1 = [net savings x (1 - tax rate)] + (depreciation expense x tax rate) = ($44,000 x 65%) + ($39,765 x 35%) = $28,600 + $13,917.75 = $42,517.75
net cash flow year 2 = [net savings x (1 - tax rate)] + (depreciation expense x tax rate) = ($44,000 x 65%) + ($54,225 x 35%) = $28,600 + $18,978.75 = $47,578.75
net cash flow year 3 = [net savings x (1 - tax rate)] + (depreciation expense x tax rate) = ($44,000 x 65%) + ($18,075 x 35%) = $28,600 + $6,326.25 = $34,926.25
terminal cash flow = [sales price - (purchase cost - accumulated depreciation)] x (1 - tax rate) = [$65,000 - ($120,500 - $112,065)] x 0.65 = $50,702.25
Year cash flow
0 -$126,000
1 $42,517.75
2 $47,578.75
3 $85,628.50
discount rate 12%
using an excel spreadsheet, NPV = $10,840.44
A ________ groups cost by behavior; costs are classified as either variable costs or fixed costs. A. contribution margin income statement B. balance sheet C. absorption costing income statement D. traditional income statement
Answer:
A. contribution margin income statement.
Explanation:
This is explained as a tool used critically used in planning and also decision making; it also proves itself to be a pattern or array of showing cost and expenses towards a particular fixed cost or profits. It is been shown to be contribution margin per unit, ratio or contribution margin. Therefore when sales double in cases like this, variable cost is said to do the same too.
It is also said to be different from normal income statement in many different ways which could include:
1). Variable selling are be grouped as product costs.
2). Contribution margin comes to place instead of placing it as gross margin etc.
An Office Manager uses a Periodic Review Inventory System: they check the inventory in the Office Supply Closet once every 10 days, placing an order with their supplier depending on the inventory level in the closet. This week, the manager has counted 220 blue ink pens in the closet. They have already placed an order with a supplier for 600 blue ink pens that should arrive in 3 days. What is the Office Manager's Inventory Position
Answer:
880 blue ink pens
Explanation:
The computation of the inventory position is shown below:
= Current stock counted in the closet + already placed orders with the supplier
where,
Current stock counted in the closet is 220 blue ink pens
And, the already placed orders with the supplier is 600 blue ink pens
Now placing these values to the above formula
So, the inventory position is
= 220 blue ink pens + 600 blue ink pens
= 880 blue ink pens
Inventory management software is a program that helps to keep track of your inventory levels, orders, sales, and delivery.
It may also be used to produce work orders, bills of materials, and some manufacturing paperwork in the production line.
The correct answer is 880 blue ink pens
The following formula for calculating the inventory position:
= Current stock counted in the closet + supplier orders previously placed
where
There are 220 blue ink pens inside the room right now.
In addition, 600 blue ink pens have been ordered from the provider.
Now plug these numbers into the formula above.
As a result, the inventory situation is
220 blue ink pens + 600 blue ink pens = 220 blue ink pens + 600 blue ink pens
= 880 pens having blue ink.
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Cash interest is computed annually when a bond is issued for other than its face value. For a bond issued at a premium, how will this component change under the effective interest method as the bond approaches maturity?
Answer:
Under the effective interest method, as a bond approaches maturity, the interest expense decreases while the amortization of the bond premium increases.
Explanation:
E.g. a company issues $800,000 in 8% bonds when the market rate is 7%, so the bonds price is $856,850 (semiannual coupons are paid).
Journal entry to record the issuance
Dr Cash 856,850
Cr Bonds payable 800,000
Cr Premium on bonds payable 56,850
amortization of bond premium on first coupon payment:
($856,850 x 3.5%) - ($800,000 x 4%) = $29,989.75 - $32,000 = -$2,010.25 ≈ -$2,010
Journal entry to record first coupon payment:
Dr Interest expense 29,990
Dr Premium on bonds payable 2,010
Cr Cash 32,000
amortization of bond premium on second coupon payment:
($854,840 x 3.5%) - ($800,000 x 4%) = $29,919.40 - $32,000 = -$2,080.60 ≈ -$2,081
Journal entry to record second coupon payment:
Dr Interest expense 29,919
Dr Premium on bonds payable 2,081
Cr Cash 32,000
MOSS COMPANY
Selected Balance Sheet Information
December 31, 2017 and 2016
2017 2016
Current assets
Cash $ 91,150 $ 33,300
Accounts receivable 31,500 45,000
Inventory 66,500 55,400
Current liabilities
Accounts payable 43,400 32,200
Income taxes payable 2,700 3,500
MOSS COMPANY
Income Statement
For Year Ended December 31, 2017
Sales $ 549,000
Cost of goods sold 357,600
Gross profit 191,400
Operating expenses
Depreciation expense $ 49,000
Other expenses 128,500 177,500
Income before taxes 13,900
Income taxes expense 8,100
Net income $ 5,800
Use the information above to calculate this company’s cash flows from operating activities using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)
Cash flows from operating activities:
Adjustments to reconcile net income to operating cash flow
0
$0
Answer:
MOSS COMPANY
Cash Flows from Operating Activities
Net income $5,800
Adjustments to net income:
Depreciation expense $49,000Decrease in accounts receivable $13,500Increase in accounts payable $11,200Increase in inventory ($11,100)Decrease in taxes payable ($800) $61,800Net cash flow from operating activities $67,600
Depreciation expense and increase in accounts payable or taxes payable increase the cash flows from operating activities. Also, any decrease in accounts receivable, inventories or prepaid assets increase the cash flow.
The following monthly data are taken from Ramirez Company at July 31: Sales salaries, $660,000; Office salaries, $132,000; Federal income taxes withheld, $198,000; State income taxes withheld, $44,000; Social security taxes withheld, $49,104; Medicare taxes withheld, $11,484; Medical insurance premiums, $16,000; Life insurance premiums, $13,000; Union dues deducted, $10,000; and Salaries subject to unemployment taxes, $68,000. The employee pays 40% of medical and life insurance premiums. Assume that FICA taxes are identical to those on employees and that SUTA taxes are 5.4% and FUTA taxes are 0.6%.
Using the above information, complete the below table and Prepare the journal entries to record accrued payroll and cash payment of the net payroll for July.
Answer:
July 31, 202x, salaries expense
Dr Sales salaries expense 660,000
Dr Office salaries expense 132,000
Dr FICA taxes (OASDI) expense 49,104
Dr FICA taxes (Medicare) expense 11,484
Dr FUTA taxes expense 408
Dr SUTA taxes expense 3,672
Dr Life insurance expense 19,500
Dr Medical insurance expense 24,000
Cr Federal income taxes withheld payable 198,000
Cr State income taxes withheld payable 44,000
Cr Social security taxes withheld payable 49,104
Cr Social security taxes payable 49,104
Cr Medicare taxes withheld payable 11,484
Cr Medicare taxes payable 11,484
Cr Medical insurance premiums payable 40,000
Cr Life insurance premiums payable 32,500
Cr Union dues deducted payable 10,000
Cr FUTA taxes payable 408
Cr SUTA taxes payable 3,672
Cr Salaries payable 450,412
July 31, 2021, payment of salaries payable
Dr Salaries payable 450,412
Cr Cash 450,412
Explanation:
Sales salaries, $660,000;
Office salaries, $132,000;
Federal income taxes withheld, $198,000;
State income taxes withheld, $44,000;
Social security taxes withheld, $49,104;
Medicare taxes withheld, $11,484;
Medical insurance premiums, $16,000;
Life insurance premiums, $13,000;
Union dues deducted, $10,000; and
Salaries subject to unemployment taxes, $68,000.
FUTA = $408SUTA = $3,672Indicate what components of GDP (if any) each of the following transactions would affect. Check all that apply.
a. Uncle Paul pays a domestic contractor for renovating his home.
b. Aunt Jane buys a new house from a local builder.
c. You purchase a box of Belgium chocolate.
d. Ford manufactures a Focus and sells it to Avis, the car rental company.
e. You pay a domestic plumber for fixing a leak in your bathroom.
f. Ford sells a Mustang from its inventory to the Martinez family.
g. California hires workers to repave Highway 101.
h. The federal government sends your grandmother a Social Security check.
1. Consumption
2. Investment
3. Government Purchases
4. Net Exports
Answer and Explanation:
As we know that
Gross domestic product = Consumption + Investment + Government purchase + Net exports
where,
Net exports = Exports - imports
a. Uncle Paul pays a domestic contractor to have his house renovated. = Consumption
b. Aunt Jane buys a new house from a nearby building firm. = Investment
c. You buy chocolate from Belgium in a box. = Consumption & net exports
d. Ford is making a Focus and marketing it to Avis, the car rental company. = Investment
To fix a leak in your bathroom you pay a domestic plumber. = Consumption
e. Ford is selling a Mustang to the Martinez family from its inventory. = Consumption and investment
f. California is hiring people to repave Highway 101. = Government purchase
g. The Federal government is sending a Social Security check to your grandmother. The same is not involved in GDP as it has transfer payment
According to the conditions, Uncle Paul pays a domestic contractor for renovating his home - Consumption. Thus, the correct transactions that affect a-1, b-2, c-1&4, d-2, e-1, f-1&2, g-3, h-No affect.
Utilizing resources to fulfill present needs and desires is referred to as consumption. In contrast, investing is making purchases in order to generate future revenue.
An asset is considered an investment if it is bought or invested in with the intention of increasing financial security and preserving hard-earned income.
Government purchases are things that the federal, state, and municipal governments spend money on.
The difference between a country's exports and imports in dollars over a specific time period is known as net exports.
Therefore, the following transactions with their effect are as follows:
a-1, b-2, c-1&4, d-2, e-1, f-1&2, g-3, h-No affect.
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An investor is considering the purchase of a residential rental property that has an asking price of $400,000. The property has four rental units that are expected to rent for $1,200 each per month. Operating expenses and vacancy allowances are expected to be 45% of gross income. An 5% interest only mortgage loan is available for 5 years at 100% of the purchase price. How much cash income will the investor receive each month of the first year after paying the monthly mortgage payment
Answer:
The answer is $973
Explanation:
Solution
Given that:
A residential rental property asking price = $400,000
Property expected to rent = $1200
Operating expenses expected = 45%
Interest =5%
Mortgage loan available for =5 years
Purchase price =100%
Now, we find out the cash income the investor receive each month of the first year after paying the monthly mortgage payment
Thus
Rental income (1200*4 units)=$4800
Less: operating expenses (4800*45%)=$2160
The Net income per month=$2640
So,
Less:Monthly mortgage interest payment=$1667 [(400000*5%)
=20000/12=1667]
The Cash income =$973
Therefore the investor will receive $973 each month of the first year.
Paladin Furnishings generated $2 million in sales during 2016, and its year-end total assets were $1.7 million. Also, at year-end 2016, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2017, the company estimates that its assets must increase by $0.85 for every $1.00 increase in sales. Paladin's profit margin is 5%, and its retention ratio is 55%. How large of a sales increase can the company achieve without having to raise funds externally
Answer:
The large of a sales increase can the company achieve without having to raise funds externally is $81,784
Explanation:
In order to calculate How large of a sales increase can the company achieve without having to raise funds externally we would have to calculate the following:
sales increase=Sales*growth rate
Sales=$2,000,000
growth rate=(Profit Margin * Retention ratio * Sales) /( Total year end Assets - Accounts payable - Accrued liabilities) - (Profit Margin * Retention ratio * Sales)
growth rate= (0.05 * 0.35 * 2,000,000 ) / (1,700,000 - 200,000 - 100,000) - ( 0.05 * 0.55 x 2,000,000)
growth rate=$55,000/$1,345,000
growth rate=4.089%
Therefore, sales increase=$2,000,000*4.089%
sales increase=$81,784
The large of a sales increase can the company achieve without having to raise funds externally is $81,784
An authentication token is a(n):____________
A) device the size of a credit card that contains access permission data.
B) type of smart card.
C) gadget that displays passcodes.
D) electronic marker attached to a digital authorization file.
Answer:
The correct answer is:
device the size of a credit card that contains access permission data. (A)
Explanation:
An authentication token, also known as a security token is a device used to authorize access to a network service. Tokens use the two-factor authentication method to ensure security of a system. Usually the authentication devices have access pins before access to the main tokens, and tokens are unique sets of numbers that uniquely identifies a user in a service, and they are changed frequently, usually within a 5-minute period.
Problem 14-04 Stock Repurchase A firm has 5 million shares outstanding with a market price of $15 per share. The firm has $15 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm's value of operations after the repurchase
Answer:
$60 million
Explanation:
The computation of the value of operations after the repurchase is shown below:-
Total corporate value = Value of operation + marketable securities
(5 × $15 million) = Value of operation + $15 million
$75 million = Value of operation + $15 million
Value of operation = $75 million - $15 million
= $60 million
We simply applied the above formula so that the firm's value of operations after the repurchase could come
Rivoli Inc. hired you as a consultant to help estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of common from retained earnings?
Answer:
The cost of retained earnings is 11.84%
Explanation:
The discounted cash flow approach or dividend discount model is used to calculate the fair value of the stock based on the present value of the expected future dividends (cash flows) from the stock. The formula to calculate the value of the stock today is,
P0 = D0 * (1+g) / (r - g)
Where,
D0 is the dividend today or the last dividend paidg is the growth rate in dividendsr is the cost of equity or retained earningsAs we already know the D0, P0 and the growth rate in dividends, we can calculate the value of r or the cost of equity by putting in the available values for D0, P0 and g in the formula and solve it.
22.5 = 0.8 * (1+0.08) / (r - 0.08)
22.5 * (r - 0.08) = 0.864
22.5r - 1.8 = 0.864
22.5r = 0.864 + 1.8
r = 2.664 / 22.5
r = 0.1184 or 11.84%
A company had sales last year of $3,000,000. They had operating expenses of $1,600,000. They bought a machine that cost $500,000 that has a life of 10 years and a salvage value of $15,000. Based on MACRS what was their Taxable Income?
Answer:
The answer is $1,350000
Explanation:
Solution
Given that:
Company sales of last year = $3,000,000
Operating expenses = $1,600,000
The purchase of machine = $500,000
Life of machine = 10 years
The salvage value = $15,000
Now,
we find the Taxable income which is given below:
Taxable income = sales - operating expenses - depreciation in year 1
Taxable income = $3,000000 - $1,600000 - 10% * $500,000
Therefore the atxable income is = $1,350000
A divorced woman with 2 young children has a small trust fund that gives her $2,500 a year in income. She collects another $2,500 per year in alimony payments. The woman wishes to make a contribution to an Individual Retirement Account this year. Which statement is true?
Answer: A. No contribution can be made
Explanation:
A firm has a debt-equity ratio of 57 percent, a total asset turnover of 1.12, and a profit margin of 4.9 percent. The total equity is $511,640. What is the amount of the net income
Answer:
$44,083.72
Explanation:
Given:
Debt ratio = 57%
Asset turnover = 1.12
Profit margin = 4.9%
Total equity = $511,640
Find the total debt:
Debt = debt ratio × total equity
= 0.57 * 511640
Debt = $291,634.80
Find the total assets:
Total assets = Total debt + Total equity = $291,634.80 + $511,640
Total assets = $803,274.80
Find total turnover:
Turnover = Total assets * Total asset turnover ratio
= $803,274.80 * 1.12
= $899,667.78
Now find the amout of net income:
Net Income = Turnover * Profit margin
Net Income = $899,667.78 * 4.9%
= $44,083.72
The amount of net income is $44,083.72
g The long-run effect of an increase in household consumption is to raise a. both real output and the price level. b. real output and lower the price level. c. real output and leave the price level unchanged. d. the price level and leave real output unchanged.
Answer:
D). The price level and leave real output unchanged.
Explanation:
The long-run impact of an increase in household consumption is to elevate 'the price-level and leave real output unchanged.' The increased consumption would lead to a rise in demand which will correspond to an increase in out and decrease in unemployment.
As per the long-run self-adjustment mechanism, this shock in the economy will lead to inflation while the increase in Aggregate demand would correspond to an increase in prices and GDP. The inflation would increase the labor charges and therefore, the firms would produce less and it keeps falling until the full employment output is achieved. Thus, the long-run effect would be that GDP returns to its previous state(unchanged) while the prices are still higher. Hence, option D is the correct answer.
