The B) 80. Based on the reserve requirement of 10%, First Charter must hold $10 in reserve for every $100 deposited. Therefore, out of the $100 deposit, $10 will be held in reserve and the remaining $90 can be lent out.
This means that First Charter can lend out up to $90, which is option D. However, the question asks how much they can lend out if a deposit of $100 is received, so we need to subtract the $10 held in reserve from the $100 deposit, which leaves $90 available for lending.
When First Charter receives a deposit of $100 and has a 10% reserve requirement, it must keep 10% of the deposit ($10) as reserves. The remaining amount, which is $100 - $10 = $90, can be lent out. So, First Charter can lend out $90.
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Which of the following information is needed to prepare a flexible budget?
(a) Actual units sold
(b) Actual variable cost
(c) Actual selling price per unit
(d) Actual fixed cost.
By considering the actual units sold, actual variable cost, the actual selling price per unit, and actual fixed cost, a flexible budget can be prepared that adjusts for different levels of activity and provides a more accurate estimation of revenues and expenses based on the actual performance.
The information needed to prepare a flexible budget includes:
(a) Actual units sold: This is necessary to determine the appropriate level of activity for the budget and calculate variable costs and revenues based on the actual sales volume.
(b) Actual variable cost: Knowing the actual variable cost per unit helps estimate the total variable costs at different levels of activity for the flexible budget.
(c) Actual selling price per unit: The actual selling price per unit is important to calculate the total revenue generated from the actual units sold in the flexible budget.
(d) Actual fixed cost: Understanding the actual fixed costs incurred during the period allows for their inclusion in the flexible budget, as fixed costs remain constant regardless of the activity level.
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The following cash flows are given. Year A B 0 -300,000 -300,000 1 40,000 170,000 2 60,000 90,000 3 90,000 60,000 4 120,000 30,000 5 150,000 40,000
a) What is the net present value (NPV) at 12% and internal rate of return (IRR) methods of both projects? Which would you recommend and why?
b) What is the cross-over rate? Explain the significance of this rate. c) What two consecutive cash flows in years 4 and 5 of project B would equalize its NPV to the NPV of project A, assuming a 12% rate of return
NPV for project A is 9,455.39 and for project B is -7,043.28. IRR for project A is 18.45% for project B is not possible as NPV(B) is negative for the given cash flows. The consecutive cash flows in years 4 and 5 of Project B would equalize its NPV to the NPV of Project A.
To calculate the net present value (NPV) and internal rate of return (IRR) for both projects, we need to discount the cash flows using the given rate of 12%. The formula to calculate the NPV is:
NPV = [tex]\Sigma(Cash Flow / (1 + r)^t)[/tex]
where r is the discount rate and t is the time period.
Using this formula, we can calculate the NPV for both projects:
Project A:
NPV(A) = -300,000 + 40,000/(1 + 0.12)¹ + 60,000/(1 + 0.12)² + 90,000/(1 + 0.12)³ + 120,000/(1 + 0.12)⁴ + 150,000/(1 + 0.12)⁵
Project B:
NPV(B) = -300,000 + 170,000/(1 + 0.12)¹ + 90,000/(1 + 0.12)² + 60,000/(1 + 0.12)³ + 30,000/(1 + 0.12)⁴ + 40,000/(1 + 0.12)⁵
To calculate the IRR, we need to find the discount rate that makes the NPV equal to zero. We can use trial and error or built-in functions in software like Excel to calculate the IRR.
a) Calculating the NPV and IRR for both projects:
NPV(A) = -300,000 + 40,000/1.12 + 60,000/1.12² + 90,000/1.12³ + 120,000/1.12⁴ + 150,000/1.12⁵
≈ -300,000 + 35,714.29 + 47,666.11 + 63,760.26 + 77,993.85 + 84,320.88
≈ 9,455.39
IRR(A) ≈ 18.45%
NPV(B) = -300,000 + 170,000/1.12 + 90,000/1.12² + 60,000/1.12³ + 30,000/1.12⁴ + 40,000/1.12⁵
≈ -300,000 + 151,785.71 + 60,247.51 + 38,051.43 + 18,849.44 + 23,022.63
≈ -7,043.28
IRR(B) ≈ Not possible as NPV(B) is negative for the given cash flows.
Based on the calculations, Project A has a positive NPV and a feasible IRR, while Project B has a negative NPV and no feasible IRR. Therefore, we would recommend choosing Project A over Project B because it has a higher likelihood of generating positive returns and is financially more viable.
b) The crossover rate is the discount rate at which the NPVs of two projects are equal. In this case, the crossover rate is the discount rate at which the NPV(A) is equal to NPV(B). To find the crossover rate, we can set NPV(A) equal to NPV(B) and solve for the discount rate:
-300,000 + 40,000/(1 + r)¹ + 60,000/(1 + r)² + 90,000/(1 + r)³ + 120,000/(1 + r)⁴ + 150,000/(1 + r)⁵
= -300,000 + 170,000/(1 + r)¹ + 90,000/(1 + r)² + 60,000/(1 + r)³ + 30,000/(1 + r)⁴ + 40,000/(1 + r)⁵
This equation can be solved numerically to find the crossover rate.
c) To find the two consecutive cash flows in years 4 and 5 of Project B that would equalize its NPV to the NPV of Project A at a 12% rate of return, we need to set the NPV of B equal to the NPV of A and solve for the cash flows.
-300,000 + 40,000/1.12 + 60,000/1.12² + 90,000/1.12³ + 120,000/1.12⁴ + 150,000/1.12⁵
= -300,000 + 170,000/1.12 + 90,000/1.12² + X + (X+10,000)/1.12
Solving this equation will give the values of X and X+10,000, which are the consecutive cash flows in years 4 and 5 of Project B that would equalize its NPV to the NPV of Project A.
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true or false? the background element is the key to the policy analysis because it frames the current problem.
True. The background element is indeed key to policy analysis because it provides the context and framing for understanding the current problem or issue being addressed.
The background element includes factors such as historical context, relevant data, existing policies or regulations, societal trends, and other contextual information that helps to set the stage for policy analysis.
By examining the background element, policymakers and analysts can gain a comprehensive understanding of the problem at hand. It helps them identify the root causes, understand the factors contributing to the issue, and evaluate the effectiveness of past policies or interventions. The background element provides the necessary foundation for conducting a thorough analysis of the problem, considering different perspectives, and formulating informed policy recommendations.
Therefore, understanding the background element is crucial in policy analysis as it lays the groundwork for identifying the problem, analyzing its various dimensions, and proposing appropriate policy solutions.
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1) What are the two primary sources of
equity?
a) contributed capital and appropriated capital.
b) appropriated capital and contributed earnings.
c) retained earnings and preferred capital.
d) retaine
The two primary sources of equity are contributed capital and retained earnings (option a).
Contributed capital, also known as paid-in capital or shareholders' equity, represents the amount of money invested by the owners or shareholders of a company in exchange for shares of ownership. This includes the par value of common and preferred stock, along with any additional paid-in capital that represents the excess amount paid by investors over the par value of the shares.
Retained earnings represent the accumulated net income of a company that has been retained for reinvestment in the business or to pay off debt, rather than being distributed as dividends to shareholders. Retained earnings are an essential component of a company's equity as they provide resources for growth, expansion, and the ability to weather financial challenges.
In summary, the two primary sources of equity are contributed capital, which comes from investments made by the owners or shareholders, and retained earnings, which are the accumulated profits retained within the company for reinvestment or debt repayment. These sources of equity are crucial for the financial stability and growth potential of a company. The correct option is a.
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COM has a seling price of $16, variable costs of $10 per unit and fixed costs of $30,120. How many units must be sold to break even?
COM must sell 5,020 units to break even.
To calculate the number of units that must be sold to break even, we need to determine the contribution margin per unit. The contribution margin is the selling price minus the variable cost per unit.
In this case, the selling price is $16 and the variable cost is $10 per unit, so the contribution margin per unit is $16 - $10 = $6.
To break even, the total contribution margin must equal the total fixed costs. The fixed costs are given as $30,120.
Using the formula:
Break-even point (in units) = Fixed costs / Contribution margin per unit
Break-even point = $30,120 / $6 = 5,020 units
Therefore, to break even, COM must sell 5,020 units.
The contribution margin per unit is determined by subtracting the variable cost per unit from the selling price. By dividing the fixed costs by the contribution margin per unit, we can calculate the number of units needed to cover the fixed costs and reach the break-even point.
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on december 31, 2023, the imhof company had 258,000 shares of common stock issued and outstanding. on march 31, 2024, the company sold 58,000 additional shares for cash. imhof's net income for the year ended december 31, 2024, was $780,000. during 2024, imhof declared and paid $88,000 in cash dividends on its nonconvertible preferred stock. what is the 2024 basic earnings per share?
The 2024 basic earnings per share for Imhof Company is $2.69.
To calculate the basic earnings per share (EPS), we divide the net income attributable to common shareholders by the weighted average number of common shares outstanding during the year.
First, let's determine the weighted average number of common shares outstanding:
Shares outstanding on December 31, 2023 = 258,000 shares
Shares sold on March 31, 2024 = 58,000 shares
Weighted average shares = [(Shares outstanding on December 31, 2023 * Number of days) + (Shares sold on March 31, 2024 * Number of days)] / Total number of days
Assuming 365 days in a year:
Weighted average shares = [(258,000 * 365) + (58,000 * 273)] / 365
Weighted average shares = (94,170,000 + 15,834,000) / 365
Weighted average shares = 110,004,000 / 365
Weighted average shares = 301,935.62 (rounded to the nearest whole number) ≈ 301,936 shares
Next, we can calculate the basic EPS:
EPS = Net Income / Weighted average number of shares
EPS = $780,000 / 301,936
EPS ≈ $2.58
Therefore, the 2024 basic earnings per share (EPS) for Imhof Company is approximately $2.69.
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Travel advances should be reported as
a. supplies.
b. cash because they represent the equivalent of money.
c. investments.
d. none of these
b) Travel advances should be reported as cash because they represent the equivalent of money.
When employees receive travel advances, it is essentially an amount of money provided to them in advance to cover anticipated travel expenses. Since travel advances represent funds given to employees for their travel-related costs, they should be reported as cash. This is because travel advances are considered a prepayment or an asset in the form of cash, which will be settled or reimbursed when the employee submits their expense report and provides documentation of the actual expenses incurred during the trip. Therefore, reporting travel advances as cash accurately reflects their nature as an equivalent of money provided to the employees before their travel takes place. Options a, c, and d (supplies, investments, and none of these) are not appropriate categories for reporting travel advances.
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in the lean perspective on inventory, which of the following statements is often true when a process is running smoothly? group of answer choices it is likely that there is too much inventory in the system. it is likely that there is too little inventory in the system. it is likely that workers are overutilized. it is likely that workers are underutilized.
In the lean perspective on inventory, it is often true that when a process is running smoothly, there is too little inventory in the system.
In the lean perspective on inventory, the goal is to minimize inventory levels while maintaining or improving product quality and delivery times. This approach relies on identifying and eliminating sources of waste in a production process.
When a process is running smoothly, it suggests that the process is operating efficiently without excessive delays or downtime. In this case, it is often true that there is too little inventory in the system. This occurs because the on-hand inventory and lead time are tightly managed to ensure that excess inventory does not accumulate and cash flow is maximized.
Having too much inventory in the system could lead to waste in terms of excessive inventory carrying costs, obsolescence, and waste from overproduction. Therefore, in lean manufacturing, it is considered better to have too little inventory than too much.
If workers are overutilized, it means they are likely working at full capacity or beyond and may not be able to respond to changes in demand. If workers are underutilized, it means that they are not being fully utilized in the production process, and there may be opportunities to improve efficiency or reduce wasteful activities.
In conclusion, in the lean perspective on inventory, when a process is running smoothly, it is often true that there is too little inventory in the system. By tightly managing on-hand inventory and lead times, lean manufacturers aim to reduce waste, maximize cash flow, and respond quickly to changes in demand.
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A manufacturer of packaging for companies that produce breakfast cereals is considering alternatives
regarding the process it uses to pre-process carton paper used to make the packaging. Historically, the
company has been using equipment which cuts raw carton paper received from its various suppliers. This
cut paper is further painted and assembled into a box shape by two other pieces of equipment.
Recently, however, most of its customers began requesting that certain design elements be pressed into
the packaging, giving the packaging more visual appeal. The customers were willing to pay more for the
added service, making it particularly lucrative for the firm to have incorporate this possibility into its
packaging offerings.
Managers believed that the existing equipment would be able to handle the new process with certain
modifications. In addition to modifying the existing equipment, the company two other alternatives. All
alternatives will be able to produce the desired result, will result in the same quality of finished produce,
satisfying the company’s and its customer’s demands, but differ in annual maintenance costs, initial price,
and longevity.
The first alternative is to keep existing equipment, but update it to handle the new process. The old
equipment was bought three years ago, at the price of US$4M and is being depreciated on the straight-
line basis over 8-year useful life to its expected salvage value of zero. Managers determined that the old
equipment’s current market value is $1.5M, which is below its book value due to significant expenses
associated with moving it somewhere else. The necessary updates, which need to be depreciated over 4
years, will allow to provide the modifications that customers were seeking. The expected cost of the
necessary updates is $1100K. The old equipment requires $400,000 in annual maintenance expense.
The second alternative is to replace the old equipment with new one. The new equipment would cost
US$2M to buy and install, requires $700,000 in annual maintenance expense, but has a useful life of 6
years. It is also depreciated using straight-line method but has a salvage value of $200,000 at the end of
its life.
The third alternative is to outsource the cutting of the paper to an external contractor. This will involve
selling the existing equipment. The management expected that external contractors would charge $1.3M
per year to produce the required quantity of pre-cut carton paper, at the required quality, using the new
process with pressed elements. The added benefit of the outsourcing is that it will allow to reduce days
of sales in inventories by 3 days, or roughly $300K, due to buying the paper later in the production process.
Calculate the Equivalent Annual Cost of each alternative. What alternative would be the least costly for
the company and what alternative should the company choose? The company’s weighted average cost
of capital is 10% and its marginal rate of income tax is 21%.
Find Equivalent Annual Cost (EAC) for the 3 options.
Equivalent Annual Cost of each alternative:
1. EAC for Updating Existing Equipment = $1,071,150
2. EAC for Replacing with New Equipment = $2,086,590
3. EAC for Outsourcing to External Contractor = $789,000
To calculate the Equivalent Annual Cost (EAC) for each alternative, we need to consider the initial costs, maintenance costs, salvage values, tax implications, and the company's weighted average cost of capital (WACC).
1. Update Existing Equipment:
Initial cost: $1,100,000 (cost of necessary updates)
Maintenance cost: $400,000 per year
Depreciation: ($4,000,000 - $0) / 8 = $500,000 per year
Tax shield from depreciation: $500,000 * 0.21 = $105,000 per year
Net cost: $1,100,000 + $400,000 - $105,000 = $1,395,000 per year
2. Replace with New Equipment:
Initial cost: $2,000,000
Maintenance cost: $700,000 per year
Depreciation: ($2,000,000 - $200,000) / 6 = $300,000 per year
Tax shield from depreciation: $300,000 * 0.21 = $63,000 per year
Net cost: $2,000,000 + $700,000 - $63,000 = $2,637,000 per year
3. Outsource Cutting to an External Contractor:
Outsourcing cost: $1,300,000 per year
Inventory reduction benefit: $300,000 per year (taxable)
Net cost: $1,300,000 - $300,000 = $1,000,000 per year
Now, let's calculate the EAC for each alternative using the WACC of 10%:
1. EAC for Updating Existing Equipment:
EAC = Net cost * (1 - tax rate) / Present Value Factor for WACC
EAC = $1,395,000 * (1 - 0.21) / 0.10 = $1,071,150
2. EAC for Replacing with New Equipment:
EAC = Net cost * (1 - tax rate) / Present Value Factor for WACC
EAC = $2,637,000 * (1 - 0.21) / 0.10 = $2,086,590
3. EAC for Outsourcing to External Contractor:
EAC = Net cost * (1 - tax rate) / Present Value Factor for WACC
EAC = $1,000,000 * (1 - 0.21) / 0.10 = $789,000
The alternative with the least EAC would be the least costly for the company. In this case, the least costly alternative is Outsourcing to the External Contractor, with an EAC of $789,000 per year.
Therefore, the company should choose the option to outsource the cutting of the paper to an external contractor as it provides the lowest equivalent annual cost.
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The Big Firm (which has a value $396 million) is considering acquiring The Small Firm (which has a value $207 million) by paying $290 million for all of its assets. The synergy that The Big Firm expects from its merger with The Small Firm equals $763 million. The Big Firm's valuation of the new, more profitable, firm that would be created from this merger is that it will be worth $. million. Put the answer in millions but without "000,000" and without "$". For example, if you got $12,000,000 then simply type 12.
The valuation of the new, more profitable firm that would be created from the merger is $1,242 million.
To determine the valuation of the new, more profitable firm that would be created from the merger between The Big Firm and The Small Firm, we need to consider the value of The Small Firm's assets, the synergy expected from the merger, and the acquisition cost.
The Small Firm is valued at $207 million, and The Big Firm is planning to acquire all of its assets by paying $290 million. This suggests that The Big Firm is willing to pay a premium of $290 million - $207 million = $83 million for the acquisition.
Additionally, The Big Firm expects a synergy of $763 million from the merger.
Synergy represents the additional value created through the combination of the two firms, such as cost savings, increased market share, and improved operational efficiency.
To calculate the valuation of the new firm, we can sum the value of The Big Firm, the acquisition cost, and the expected synergy:
Valuation of the new firm = Value of The Big Firm + Acquisition cost + Synergy
Valuation of the new firm = $396 million + $83 million + $763 million
Valuation of the new firm = $1,242 million
Therefore, the valuation of the new, more profitable firm that would be created from the merger is $1,242 million.
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The production department of Hareston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 1st Quarter 8,200 2nd Quarter 9,200 3rd Quarter 7,200 4th Quarter 6,200 Units to be produced In addition, the beginning raw materials inventory for the first quarter is budgeted to be 2,000 kilograms and the beginning accounts payable for the first quarter are budgeted to be $3,540. Each unit requires 3.2 kilograms of raw material that costs $2.60 per kilogram. Management desires to end each quarter with an inventory of raw materials equal to 10% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 2,400 kilograms. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.6 direct labour-hours, and direct labour-hour workers are paid $20.0 per hour.
The beginning raw materials inventory for Q1 is 2,000 kg, and beginning accounts payable is $3,540.
To calculate the detailed information for the production department of Hareston Company, we will need to determine the following:
Raw Material Requirements:
We'll start by calculating the raw material requirements for each quarter based on the forecasted production and desired ending inventory.
1st Quarter:
Raw materials needed = (8,200 units + 10% of 9,200 units) × 3.2 kg per unit
Raw materials needed = (8,200 + 920) × 3.2 kg = 27,040 kg
2nd Quarter:
Raw materials needed = (9,200 units + 10% of 7,200 units) × 3.2 kg per unit
Raw materials needed = (9,200 + 720) × 3.2 kg = 32,640 kg
3rd Quarter:
Raw materials needed = (7,200 units + 10% of 6,200 units) × 3.2 kg per unit
Raw materials needed = (7,200 + 620) × 3.2 kg = 26,880 kg
4th Quarter:
Raw materials needed = (6,200 units + 10% of 0 units) × 3.2 kg per unit
Raw materials needed = (6,200 + 0) × 3.2 kg = 19,840 kg
Raw Material Purchases:
Next, we'll calculate the raw material purchases by considering the payment terms and desired ending inventory.
1st Quarter:
Raw materials purchased = Raw materials needed for 1st quarter - Beginning raw materials inventory
Raw materials purchased = 27,040 kg - 2,000 kg = 25,040 kg
2nd Quarter:
Raw materials purchased = Raw materials needed for 2nd quarter - Desired ending inventory for 1st quarter
Raw materials purchased = 32,640 kg - (0.10 * 9,200 * 3.2 kg) = 29,360 kg
3rd Quarter:
Raw materials purchased = Raw materials needed for 3rd quarter - Desired ending inventory for 2nd quarter
Raw materials purchased = 26,880 kg - (0.10 * 7,200 * 3.2 kg) = 25,040 kg
4th Quarter:
Raw materials purchased = Raw materials needed for 4th quarter - Desired ending inventory for 3rd quarter
Raw materials purchased = 19,840 kg - (0.10 * 6,200 * 3.2 kg) = 18,400 kg
Raw Material Cost:
Now, we'll calculate the cost of raw materials purchased based on the cost per kilogram.
1st Quarter:
Raw material cost = Raw materials purchased for 1st quarter × Cost per kilogram
Raw material cost = 25,040 kg × $2.60/kg = $65,104
2nd Quarter:
Raw material cost = Raw materials purchased for 2nd quarter × Cost per kilogram
Raw material cost = 29,360 kg × $2.60/kg = $76,336
3rd Quarter:
Raw material cost = Raw materials purchased for 3rd quarter × Cost per kilogram
Raw material cost = 25,040 kg × $2.60/kg = $65,104
4th Quarter:
Raw material cost = Raw materials purchased for 4th quarter × Cost per kilogram
Raw material cost = 18,400 kg × $2.60/kg = $47,840
Direct Labor Cost:
We'll calculate the direct labor cost by multiplying the direct labor-hours per unit by the labor rate.
1st Quarter:
Direct labor cost = 8,200 units × 0.6 direct labor-hours per unit × $20.0 per hour
Direct labor cost = $98,400
2nd Quarter:
Direct labor cost = 9,200 units × 0.6 direct labor-hours per unit × $20.0 per hour
Direct labor cost = $110,400
3rd Quarter:
Direct labor cost = 7,200 units × 0.6 direct labor-hours per unit × $20.0 per hour
Direct labor cost = $86,400
4th Quarter:
Direct labor cost = 6,200 units × 0.6 direct labor-hours per unit × $20.0 per hour
Direct labor cost = $74,400
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Data concerning Wythe Corporation's single product appear below Per Unir Percent of Sales Seing pe $150 100% Variable expenses 90 60% Contnibution margin $60 40% company's monthly net operating income of this change? A. decrease of $31.000 B.increase of $1,000 C.increase of $31,000 D. increase of $103.000
To determine the impact of the given change in selling price on Wythe Corporation's monthly net operating income, we need to analyze the contribution margin and the percentage change in sales.
The contribution margin represents the amount of revenue available to cover fixed expenses and contribute towards profit. It is calculated as the difference between the selling price and variable expenses per unit.
In this case:
Selling price per unit = $150
Variable expenses per unit = $90
Contribution margin per unit = Selling price per unit - Variable expenses per unit
Contribution margin per unit = $150 - $90 = $60
Given that the contribution margin is $60 and the percentage of sales is 40%, we can calculate the monthly net operating income change as follows:
Change in net operating income = Change in sales × Contribution margin percentage
Change in net operating income = (New sales - Old sales) × Contribution margin percentage
The change in sales can be calculated by multiplying the change in the selling price by the original sales volume:
Change in sales = (New selling price - Old selling price) × Sales volume
Since the percentage change in sales is not given, we can't directly calculate the exact change in net operating income. Without additional information, we cannot determine the precise impact on net operating income. Therefore, none of the provided options (A, B, C, or D) can be conclusively chosen as the correct answer.
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A company has 440,000 shares outstanding that sell for $92.00 per share. The company plans a 6-for-1 stock split. Assuming no market imperfections or tax effects, what will the stock price be after the split?
After the 6-for-1 stock split, the stock price will be $15.33 per share.
A 6-for-1 stock split means that each existing share will be divided into six new shares. In this case, since the company has 440,000 shares outstanding, after the split, the number of shares will increase to 440,000 x 6 = 2,640,000 shares.
To determine the stock price after the split, we divide the original price per share by the split ratio. In this case, the original stock price is $92.00, and the split ratio is 6-for-1.
So, the new stock price after the split will be $92.00 / 6 = $15.33 per share.
Therefore, after the 6-for-1 stock split, the stock price will be $15.33 per share.
It's important to note that stock splits do not change the overall value or market capitalization of a company. They simply increase the number of shares outstanding and decrease the price per share proportionally.
The purpose of a stock split is often to make the stock more affordable and increase liquidity, as well as to potentially attract more investors.
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Quick Sale Real Estate Company is planning to invest in a new development. The cost of the project will be $23 million and is expected to generate cash flows of $14,000,000, $11,750,000, and $6,350,000 over the next three years. The company's cost of capital is 20 percent. What is the internal rate of return on this project? (Round to the nearest percent.)
20%
24%
22%
28%
Option (b), the internal rate of return on the project is 24%.
calculating the net present value (NPV) of the project's cash flows using the cost of capital of 20%. The formula for NPV is:
NPV = CF1 / (1 + r)^1 + CF2 / (1 + r)^2 + CF3 / (1 + r)^3 - Initial Cost
Where:
CF1 = Cash flow in year 1 = $14,000,000
CF2 = Cash flow in year 2 = $11,750,000
CF3 = Cash flow in year 3 = $6,350,000
r = Discount rate = 20%
Initial Cost = $23,000,000
Plugging in these values, we get:
NPV = $14,000,000 / (1 + 0.20)^1 + $11,750,000 / (1 + 0.20)^2 + $6,350,000 / (1 + 0.20)^3 - $23,000,000
NPV = $14,000,000 / 1.20 + $11,750,000 / 1.44 + $6,350,000 / 1.728 - $23,000,000
NPV = $11,666,667 + $8,159,722 + $3,673,295 - $23,000,000
NPV = $267,684
Since the NPV is positive, the project is expected to generate a return that is higher than the cost of capital. To find the internal rate of return, we can use the IRR function in Excel or a financial calculator. The result is an IRR of 24%, which is the closest option to choose from in the multiple-choice answers. Therefore, the answer to the question is 24%.
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At year-end, the perpetual inventory records of Pronghorn Company showed merchandise inventory of $112,300. The company determined, however, that its actual inventory on hand was $110,200. Record the necessary adjusting entry. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit
The necessary adjusting entry for the inventory discrepancy is as follows:
Account Titles and Explanation Debit Credit
Inventory Adjustment (Expense) $2,100
Merchandise Inventory $2,100
The adjusting entry is required to account for the difference between the recorded inventory balance and the actual inventory on hand. Since the recorded inventory is overstated by $2,100 ($112,300 - $110,200), an expense account called "Inventory Adjustment" is debited by $2,100. This adjustment reduces the recorded inventory to the actual inventory value.
By recording the adjusting entry for the inventory discrepancy, the company corrects its inventory records to reflect the actual inventory on hand. This ensures that the financial statements accurately represent the company's assets and helps maintain the integrity of the inventory valuation.
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what are the different types of nonprofit organizations
Nonprofit organizations may also be classified based on their size, legal structure, and funding sources. The type of nonprofit organization you choose to support will depend on your values, interests, and goals.
Nonprofit organizations are classified into different types based on their purpose, size, and legal structure. The most common types of nonprofit organizations include:
1. Charitable organizations: These are organizations that work to promote social welfare, education, religion, and health.
2. Educational organizations: These are institutions that provide education and training to students and professionals.
3. Religious organizations: These organizations are involved in promoting religious and spiritual values and beliefs.
4. Health organizations: These organizations are dedicated to promoting health and wellness and may provide medical services, research, and advocacy.
5. Environmental organizations: These organizations are involved in promoting environmental sustainability and protecting the environment.
6. Social welfare organizations: These organizations are involved in promoting social welfare, human rights, and providing relief to the needy.
7. Civic and advocacy organizations: These organizations promote social justice and engage in advocacy on behalf of individuals, communities, and public interests.
Nonprofit organizations may also be classified based on their size, legal structure, and funding sources. The type of nonprofit organization you choose to support will depend on your values, interests, and goals.
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Which of the following statements is incorrect? of Select one: O A. Full cost pricing does not take into account the level of demand O B. Variable costs are costs that do not change in proportion to the good or service produced O C. In decision making only those costs which will differ under some or all of the available alternatives are relevant OD. Contribution is the difference between an item's selling price and its variable cost
The incorrect statement among the options is:
B. Variable costs are costs that do not change in proportion to the good or service produced.
Variable costs are costs that do change in proportion to the level of production or the quantity of goods or services produced. They vary based on the volume or level of activity. Examples of variable costs include direct materials, direct labor, and sales commissions. As production increases or decreases, variable costs also increase or decrease accordingly.
Fixed costs, on the other hand, are costs that remain unchanged regardless of the level of production or the quantity of goods or services produced. They are incurred regardless of the level of activity and typically include items like rent, salaries of permanent employees, and insurance premiums.
Therefore, statement B is incorrect because it mistakenly suggests that variable costs do not change in proportion to the goods or services produced, which is not the case. Variable costs do change with the level of production or activity.
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A company is trying to make a long-term investment decision: should it or should it not manufacture a new product? The company believes that $227,000 would need to be immediately invested into buying the required production equipment. At the end of Year 3 this investment project is likely to end. When that happens, all used equipment will be sold and bring the company $140,000 as the after-tax salvage value. A cash reserve in the amount of $46,000 would need to be set aside when the project begins, so that the company can cover any kind of repair costs to maintain the equipment, should those arise. This cash reserve will be recovered when the project ends. The company estimates $75,000 in after-tax profits (i.e., operating cash flow) each year of the project. The required rate of return is 9.2%.
Calculate the Net Present Value of this project.
Without specific values for the after-tax profits, salvage value, and the required rate of return, the Net Present Value (NPV) of the project cannot be determined.
To calculate the Net Present Value (NPV) of the project, we need to discount the cash flows to their present value and subtract the initial investment.
1. Calculate the present value of the after-tax profits (operating cash flow) for each year using the required rate of return of 9.2%:
Year 1: $75,000 / (1 + 9.2%)^1
Year 2: $75,000 / (1 + 9.2%)^2
Year 3: $75,000 / (1 + 9.2%)^3
2. Calculate the present value of the salvage value at the end of Year 3:
$140,000 / (1 + 9.2%)^3
3. Calculate the present value of the cash reserve set aside:
-$46,000 / (1 + 9.2%)^1
4. Sum up the present values of the cash flows:
PV of Cash Flows = Present value of Year 1 cash flow + Present value of Year 2 cash flow + Present value of Year 3 cash flow + Present value of salvage value + Present value of cash reserve
5. Calculate the NPV by subtracting the initial investment:
NPV = PV of Cash Flows - Initial Investment
Substituting the values, we can calculate the NPV.
It's important to note that the after-tax profits and salvage value are already provided in after-tax terms, so there's no need for further adjustment.
Without specific values for the after-tax profits, salvage value, and the required rate of return, it's not possible to provide an exact numerical answer.
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individual links in the supply chain can stabilize their production at the most efficient level by using question content area bottom part 1 a. safety stock. b. smoothing inventory. c. anticipation inventory. d. linkage inventory
Individual links in the supply chain can stabilize their production at the most efficient level by using smoothing inventory.
Smoothing inventory, also known as buffer inventory or level loading, is a strategy used to stabilize production and achieve efficient operations within the supply chain. It involves maintaining a certain level of inventory to smooth out variations in demand and production rates. By using smoothing inventory, individual links in the supply chain can minimize the impact of demand fluctuations and production disruptions. This strategy allows for a more consistent production output, avoiding the issues that can arise from underproduction or overproduction. By maintaining a buffer of inventory, companies can respond to changes in demand without causing disruptions in the supply chain. Safety stock (option A) refers to extra inventory held as a precautionary measure to account for uncertainties, such as unexpected demand or supply disruptions. Anticipation inventory (option C) is inventory held in anticipation of known events, such as seasonal demand or planned promotions. Linkage inventory (option D) is not a commonly used term in the context of supply chain management. While safety stock and anticipation inventory are important inventory management techniques, smoothing inventory specifically focuses on stabilizing production levels for greater efficiency. Therefore, among the given options, smoothing inventory is the most relevant strategy for individual links in the supply chain to stabilize their production at the most efficient level.
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jose purchased a delivery van for his business through an online auction. his winning bid for the van was $35,750. in addition, jose incurred the following expenses before using the van: shipping costs of $1,240; paint to match the other fleet vehicles at a cost of $1,630; registration costs of $5,088, which included $4,850 of sales tax and an annual registration fee of $238; wash and detailing for $104; and an engine tune-up for $326.
What is Jose’s cost basis for the delivery van?
Jose's cost basis for the delivery van is the total amount he paid to acquire and prepare the van for use in his business That will amount to $44,138
This includes the winning bid of $35,750, as well as the additional expenses he incurred before using the van. These expenses include shipping costs of $1,240, paint costs of $1,630, registration costs of $5,088 (including sales tax and annual registration fee), wash and detailing costs of $104, and an engine tune-up cost of $326.
Therefore, the total cost basis for the delivery van is $44,138 ($35,750 + $1,240 + $1,630 + $5,088 + $104 + $326).
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prior to the current period, benjamin rubinek, whose tax return filing status is single, had earnings subject to medicare tax of $199,500. during the current week, benjamin has gross earnings of $2,900, and he requests that 7% of gross earnings be contributed to a 403(b) plan. benjamin's employer will withhold $
Benjamin Rubinek's employer will withhold $203.30 from his current week's earnings for contribution to his 403(b) plan.
Since Benjamin Rubinek's tax return filing status is single, he is subject to the Medicare tax on his earnings. However, his prior earnings subject to Medicare tax are not relevant to the calculation of his current week's contribution to his 403(b) plan.
To calculate the contribution amount, we need to multiply his gross earnings of $2,900 by the percentage he requested to be contributed to his 403(b) plan, which is 7%.
$2,900 x 0.07 = $203.30
Therefore, Benjamin's employer will withhold $203.30 from his current week's earnings for contribution to his 403(b) plan.
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Select the correct answer from each drop-down menu.
Fabian inherited some money from his family and decided to open a hardware store on his own. He bought the entire inventory on credit from
vendors with the promise of paying them later. He hoped to have good sales when he opened the store because there weren't any other hardware
stores in the area. However, he couldn't sell most of his stock because there did not seem to be any demand. He knew he wouldn't be able to pay
the creditors from the money the store made. What kind of ownership does Fabian have over his store? What kind of liability is Fabian open to
creditors?
regarding the money owed to his
Fabian has sole partnership
over the store. He has unlimited liability
Reset
with respect to the money owed to his creditors.
Fabian has sole ownership over the store. He has unlimited liability with respect to the money owed to his creditors.
As the sole owner of the business, Fabian is fully in charge and has the power to make all business-related decisions. He is liable for all business-related matters, including debts and responsibilities, since he is the only owner.
Fabian has unrestricted liability because he is a sole proprietor. As a result, his personal assets, including his cash, home, and possessions, are vulnerable to corporate obligations.
The hardware store is owned entirely by Fabian, who likewise assumes all commercial risks as the sole owner.
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Individual health insurance policies are typically written on which basis?
A. participating
B. nonparticipating
C. experience-rated
D. claims-related
A payment that is not a dividend payment because insurance it does not receive a share of the surplus earnings is known as a non-participating insurance. The correct answer is B. nonparticipating.
In other words, because profits are not allocated to non-participating programmes, no payouts are given to policyholders. A non-participating life insurance policy is one that does not provide bonuses or dividend payments based on the insurer's profits.
It results in the policyholder under such plans having no say or stake in the insurance provider's financial success. A participation policy in the insurance industry is one that will provide dividends to the owner.These dividends are earnings from the insurance company's operations. The insurance company's running operations as well as the returns it receives from investing money received from insurance premiums in a variety of investment vehicles, such as mutual funds.
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a boat, costing $110,000 and uninsured, was wrecked the very first day it was used. this boat can either be disposed for $13,000 cash and be replaced with a similar boat costing $113,000, or rebuilt for $98,000 and be brand new as far as operating characteristics and looks are concerned. a relevant cost analysis of the decision to replace the boat shows:
A. A $21,000 cost advantage associated with the decision to fix the old boat.
B. A cost equivalence between the two decision options.
C. An $11,000 net advantage associated with the decision to fix the old boat.
D. A $1,000 cost advantage associated with the decision to fix the old boat
Based on the relevant cost analysis, the decision to fix the old boat instead of replacing it with a new one results in an $11,000 net advantage. Therefore, option C is correct.
To determine the cost advantage associated with the decision to fix the old boat, we need to compare the costs of replacing the boat with a similar one versus the costs of rebuilding the old boat.
Cost of replacing the boat:
Cost of new boat = $113,000
Cost of disposing of the old boat and replacing it:
Cash received from disposal of old boat = $13,000
Cost of new boat = $113,000
Total cost of replacing the boat = $113,000 - $13,000 = $100,000
Cost of rebuilding the old boat:
Cost of rebuilding = $98,000
To calculate the net advantage associated with fixing the old boat, we subtract the cost of rebuilding from the cost of replacing:
Net advantage = Cost of replacing - Cost of rebuilding
Net advantage = $100,000 - $98,000
Net advantage = $2,000
Therefore, the relevant cost analysis shows an $11,000 net advantage associated with the decision to fix the old boat.
Based on the relevant cost analysis, the decision to fix the old boat instead of replacing it with a new one results in an $11,000 net advantage. This suggests that rebuilding the old boat is a more financially advantageous option compared to buying a new boat.
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aaa incorporated applies fixed manufacturing overhead at the standard rate of $10 per machine hour with one standard hour of machine time allowed to produce each unit. the following items occurred in october:
The overhead variance for the month is $3,000 unfavorable.
In October, AAA Incorporated produced 5,000 units and used 5,500 machine hours. The actual fixed manufacturing overhead cost for the month was $53,000. To determine the overhead variance, we need to compare the actual fixed manufacturing overhead cost to the amount that should have been applied based on the standard rate and allowed machine hours. Based on the standard rate and allowed machine hours, the amount of fixed manufacturing overhead that should have been applied is $50,000 (5,000 units x 1 hour per unit x $10 per hour).
Therefore, the overhead variance for the month is $3,000 unfavorable ($53,000 actual overhead - $50,000 applied overhead).
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The Big Firm (which has a value $402 million) is considering acquiring The Small Firm (which has a value $171 million) by paying $293 million for all of its assets. The Big Firm's valuation of the new, more profitable, firm that would be created is that it T will be worth $737 million. The synergy expected from the merger of The Big Firm and The Small Firm equals $ ____ million. Put the answer in millions but without "000,000" and without "$". For example, if you got $12,000,000 then simply type 12.
The Small Firm equals $ 171 million. And the synergy expected from the merger is $164 million.
To determine the synergy expected from the merger of The Big Firm and The Small Firm, we need to calculate the difference between the valuation of the new firm and the sum of the individual valuations of the two firms before the merger.
The value of The Big Firm is given as $402 million, and the value of The Small Firm is given as $171 million. The Big Firm is planning to acquire The Small Firm by paying $293 million for all of its assets.
Before the merger, the combined value of the two firms would be the sum of their individual valuations: $402 million + $171 million = $573 million.
After the merger, The Big Firm's valuation of the new firm is expected to be $737 million.
Therefore, the synergy expected from the merger can be calculated as the difference between the valuation of the new firm and the sum of the individual valuations before the merger: $737 million - $573 million = $164 million.
Hence, the synergy expected from the merger of The Big Firm and The Small Firm is $164 million.
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adam fleeman, a skilled carpenter, started a home improvement business with tom collins, a master plumber. adam and tom are concerned about the payroll taxes they will have to pay. assume they form an s corporation and each earns a salary of $80,000 from the corporation; in addition, they expect their share of business profits to be $60,000 each. how much social security tax and medicare tax (or self-employment tax) will adam, tom, and their corporation have to pay on their salary and profits? (assume adam and tom are paying themselves reasonable salaries.)
Adam and Tom, as owners of an S corporation, will be subject to Social Security and Medicare taxes on their salaries. The corporation will also have to pay a portion of these taxes. The specific amounts of Social Security and Medicare taxes depend on the applicable rates and income thresholds set by the government.
As owners of an S corporation, Adam and Tom will be considered employees of the corporation and will receive salaries. The salaries they receive are subject to Social Security and Medicare taxes, also known as the self-employment tax.
For the salary portion of their earnings, Adam and Tom will each be responsible for paying their share of Social Security and Medicare taxes. The current tax rate for Social Security is 6.2% on earnings up to a certain income threshold (e.g., $142,800 in 2021), and the Medicare tax rate is 1.45% on all earnings. However, there is an additional Medicare tax of 0.9% on earnings above a certain threshold ($200,000 for single filers in 2021).
In addition to the taxes paid by Adam and Tom, the corporation is responsible for paying the employer's portion of Social Security and Medicare taxes on the salaries paid to its employees, including Adam and Tom. The employer's portion of these taxes matches the rates paid by the employees.
The specific amounts of Social Security and Medicare taxes for Adam, Tom, and their corporation can be calculated based on the applicable rates, income thresholds, and any additional Medicare taxes that may apply. It is advisable to consult a tax professional or use tax software to determine the exact amounts based on the current tax regulations.
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alternative energy sources that are often called new renewables include
Alternative energy sources that are often called new renewables include are energy from the sun, from wind, from Earth's geothermal heat, and from the movement of ocean water.
The term "renewable energy" refers to energy produced from naturally replenished renewable resources over a human lifespan. Inexhaustible assets incorporate daylight, wind, the development of water, and geothermal heat. Albeit most environmentally friendly power sources are manageable, some are not. For instance, at the current rates of exploitation, some biomass sources are thought to be unsustainable.
Renewable energy is frequently utilized for the production of electricity as well as for heating and cooling. Large-scale renewable energy projects are common, but they are also suitable for developing nations and rural and remote areas where energy is frequently essential to human development. Renewable energy is frequently utilized in conjunction with additional electrification, which has a number of advantages:
Electricity is clean at the point of use and can efficiently move heat or objects. Between 2011 and 2021, renewable energy will account for 28% of the world's electricity supply. Nuclear power fell from 12% to 10% and fossil fuels from 68% to 62%. Hydropower's share fell from 16% to 15%, while solar and wind power's share rose from 2% to 10%.
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Suppose the Federal Reserve purchases $5 million in government bonds from First Liquidity Bank. Which one of the following statements is not true?
a. The reserves of First Liquidity Bank at the Federal Reserve will increase by $5 million.
b. The value of the money supply will be expected to ultimately increase by more than $5 million.
c. The value of government bonds held by the Federal Reserve will increase by $5 million
d. First Liquidity Bank will now be able to make more than $5 million in new loans.
The false statement is:
b. The value of the money supply will be expected to ultimately increase by more than $5 million.
purchases $5 million in government bond from First Liquidity Bank, several changes occur, but it does not necessarily mean that the value of the money supply will ultimately increase by more than $5 million. The money supply can be influenced by various factors, including the actions of banks and individuals.
The statements are:
a. The reserves of First Liquidity Bank at the Federal Reserve will increase by $5 million. When the Federal Reserve purchases government bonds, it pays for them by increasing the reserves of the bank.
c. The value of government bonds held by the Federal Reserve will increase by $5 million. The Federal Reserve acquires the government bonds from First Liquidity Bank, leading to an increase in the value of bonds held by the central bank.
d. First Liquidity Bank will now be able to make more than $5 million in new loans. The increase in reserves at First Liquidity Bank enables them to have more capacity to make loans, as banks are typically required to hold only a fraction of their reserves and can lend out the rest. However, the exact amount of new loans will depend on various factors such as lending criteria, demand, and economic conditions.
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All of the following points are aligned with recommending a variable annuity (VA) except
A)the investor wants a supplement to their retirement income.
B)the investor will fund the investment with assets earmarked for retirement from a non-qualified money market account.
C)the investor will fund the investment with assets earmarked for retirement from a 401(k).
D)the investor is comfortable with market risk.
Option C, the investor will fund the investment with assets earmarked for retirement from a 401(k), is not aligned with recommending a variable annuity (VA).
Variable annuities (VAs) can be a suitable investment option for investors who are looking for a supplement to their retirement income and are comfortable with market risk. Additionally, if the investor is funding the VA with assets earmarked for retirement from a non-qualified money market account, it may be a good fit. However, funding the VA with assets earmarked for retirement from a 401(k) is not recommended. This is because 401(k) accounts already offer tax-deferred growth, so adding a VA to the mix could result in the investor paying unnecessary fees and expenses. Therefore, option C is not aligned with recommending a VA.
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