Answer:
A. Economic order quantity= 319
B. Annual holding costs= 3,669
C. Annual ordering costs= 3,669
D. 154
Explanation:
a) Calculation for the economic order quantity
Using this formula
Economic order quantity=√2*Demand*Cost order/Annual holding cost
Let plug in the formula
Economic order quantity=√2*15,400*76/23
Economic order quantity=√2,340,800/23
Economic order quantity=√101,774
Economic order quantity= 319
b) Calculation for annual holding costs
Using this formula
Annual holding costs=Economic order quantity/2*Annual holding cost
Let plug in the formula
Annual holding costs=319/2*23
Annual holding costs= 3,669
c) Calculation for the annual ordering costs
Using this formula
Annual ordering costs=Demand/Economic order quantity*Cost order
Let plug in the formula
Annual ordering costs=15,400/319*76
Annual ordering costs= 3,669
d) Calculation for reorder point
Using this formula
Reorder point=Demand/Numbers of days the company operate per year*Lead time
Let plug in the formula
Reorder point=15,400/300 days per year*3
Reorder point= 154
Hollister Company amended its defined benefit pension plan at the beginning of 2020 and recognized prior service cost of $1,700,000.
The company has collected the following additional information for the year 2020:
Service cost $400,000
Interest on the PBO 190,000
Amortization of prior service cost 170,000
Actual and expected return on plan assets 110,000
Plan funding was $700,000
Benefit payments to retirees totaled $390,000
The net increase to the PBO for 2020 is:_________.
a. $ 770,000.
b. $ 1,900,000.
c. $ 1,730,000.
d. $ 650,000.
Answer: b. $ 1,900,000
Explanation:
The Net Increase in PBO can be calculated by the formula;
= Prior service cost + Service cost + Interest on the PBO - Benefits paid
= 1,700,000 + 400,000 + 190,000 - 390,000
= $1,900,000
Equipment costing $17,500 with an estimated salvage value of $1,180 and an estimated life of 4 years was purchased on October 31, 2019. Using the straight-line depreciation method, what is the amount of depreciation expense to be recorded at December 31, 2019?
Answer:
the depreciation expense recorded is $680
Explanation:
The computation of the depreciation expense under the straight-line method is shown below:
= (Purchase cost - residual value) ÷ (estimated life)
= ($17,500 - $1,180) ÷ ( 4 years)
= $4,080
Now the 2 months depreciation is i.e. from November to December
= $4,080 × 2 months ÷ 12 months
= $680
Hence, the depreciation expense recorded is $680
Ivanhoe, Inc. estimates the cost of its physical inventory at March 31 for use in an interim financial statement. The rate of markup on cost is 20%. The following account balances are available: Inventory, March 1 $540000 Purchases 420000 Purchase returns 10000 Sales during March 720000 The estimate of the cost of inventory at March 31 would be
Answer:
$350,000
Explanation:
Cost of goods sold = $720,000 / 1.20
Cost of goods sold = $600,000
Estimated cost of inventory = Inventory, March 1 + (Purchases - Purchases Return) - Cost of goods sold
Estimated cost of inventory = $540,000 + ($420,000 - $10,000) - $600,000
Estimated cost of inventory = $540,000 + $410,000 - $600,000
Estimated cost of inventory = $350,000
When the bond sells at par, the implicit €/$ exchange rate at maturity of a Euro/U.S. dollar dual currency bond that pays $651.25 at maturity per €1,000, is:________ A) €1.54/$1.00. B) €1.22/$1.00. C) €1.79/$1.00. D) €1/$1.00.
Answer:
€1.54/$1.00
Explanation:
When the bond sells at par, the implicit €/$ exchange rate pays €651.25 at maturity per €1000
651.25/1000= 1/x
Cross multiply
651.25x = 1000
x= 1000/651.25
x= 1.54
Hence the implicit exchange rate is €1.54/$1.00
The EU regulates taxes on Internet sales and the amount of pollution differently than the U.S. government. U.S. companies doing business in the EU:A. Are required to comply with EU regulations only if their main headquarters are located within the European Union B. Must pay taxes to the EU when conducting all business globally if they wish to do any business in the EU. C. Must comply with EU regulations when doing business in the European Union only D. Are never required to comply with EU regulations as long as they are headquartered in the United States E. Have the option to conduct business under either EU or U.S. regulations
Answer: C. Must comply with EU regulations when doing business in the European Union only.
Explanation:
European Union tax and pollution laws are meant to bind only the area in the EU and not other areas. For instance, a Nebraska state law that is not law in other parts of the country only covers Nebraska and so can only be enforced there.
The same logic goes for the EU. Their laws are only applicable if you are in their area of control. This means that U.S. companies doing business in the EU must comply with EU regulations when doing business in the EU only.
The demand curve for a monopolist differs from the demand curve faced by a competitive firm because the demand curve for: A. a monopolist lies below its marginal revenue curve. B. a monopolist is the market demand curve. C. a competitive firm is inelastic. D. a competitive firm lies above its marginal revenue curve.
Answer:
B. a monopolist is the market demand curve
Explanation:
As we know that the under monopoly market the firm and the industry are similar to each other also the monopolist determined the price due to this he is a price taker and price maker and the curve of the demand would be downward that shifted from left to right
Therefore in the given situation, the option B is correct
And the rest of the options are wrong
Which company is most easily able to outsource its operations and have its good or service produced in another country
Answer:
d. Queen’s Quilts
Explanation:
Options are "Hannah’s Hair Salons, Busker Baseball Team , Darling Dentistry , Penelope’s Fresh Pretzels , Queen’s Quilts"
a. Salons, Dentistry : these are services which cannot be outsourced partly or fully.
b. Baseball team: It is a sports team which cannot operate partly in another country.
c. Pretzels: These are freshly baked pastries or food items which needs to be made fresh , so cannot be outsourced.
d. Quilts: These are textile which can be produced in countries having cheap labor .
Last month the balance on your credit account was $785. Your new balance is $540. What percent of your total balance did you pay?
Answer:
31.21%
Explanation:
The balance last month was $785
The new balance is $540
It means a payment of $785- $540 was made
=$785 - $540
=$245
As a percentage
=$245/$785 x 100
=0.3121 x 100
=31.21%
Answer: 31%
Explanation: I just got it right
Why is it relevant that finance tends to attract large amounts of money?
Explanation:
An organization to be successful in the long term and competitive in the market, needs financial capital to carry out its activities, for this they open the company's capital to investors, who are the capital holders willing to inject capital into the company and receive dividends business, thus becoming a partner of that company.
It is essential that companies attract investors willing to inject a large amount into the business, as this benefits both, since a company with larger amounts of assets will produce more, have its obligations up to date and remain better positioned in the market.
To attract investors to a company, it is necessary that the company has a good reputation in the market and there is a favorable negotiation process, where there is a demonstration of results and the opportunity that the investor will have to invest his money in an organization that will generate profits.
The following is a list of prices for zero-coupon bonds of various maturities. a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. (Do not round intermediate calculations. Round your answers to two decimal places.) YTM Maturity (Years) Price of Bond 920.90 $ 912.97 $ 826.62 $ 785.62 b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. (Do not round intermediate calculations. Round your answers to two decimal places.) Maturity (years) Price of Bond $ 920.90 912.97 826.62 785.62 Forward Rate Maturity (Years) Price of Bond $ 912.97 $ 826.62 $ 785.62
Answer:
a. Calculation of the yield to maturity for a bond with a maturity years
Yield to Maturity = [(Face value/Bond price)^(1/Time period)] - 1
i. One year = (1000/920.90) - 1 = 0.0858942339 = 8.59%
ii. Two year = (1000/912.97)^(1/2) - 1 = 0.04657835011 = 4.66%
iii. Three year = (1000/826.62)^(1/3) - 1 = 0.06552758403 = 6.55%
iv. Four year = (1000/785.62)^(1/4) - 1 = 0.06217693669 = 6.22%
b. Calculation of the forward rate
Forward rate = [(1 + Next year YTM)^Period / (1+Previous year YTM)^Period} - 1
i. Second year = (1+4.66%)^2/(1+8.59%) - 1 = 0.00872231328 = 0.87%
ii. Third year = (1+6.55%)^2/(1+4.66%) - 1 = 0.08474130517 = 8.47%
iii. Fourth year = (1+6.22%)^2/(1+6.55%) - 1 = 0.05891022055 = 5.89%
The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a perfectly competitive firm that produces novelty ear buds in a competitive market. The market price of ear buds is $6.00 per pair. Buddies Production CostsQuantity of Ear Buds MC ATC ($) ($)5 - 80 2 515 2.45 4.1520 3.55 425 4 430 5.5 4.2535 6 4.540 8.5 5A. If Buddies wants to maximize its profits, how many pairs of ear buds should it produce?B. At the profit-maximizing quantity, what is the total cost of producing ear buds?C. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?D. If the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?E. Buddies earns a normal profit whena. marginal cost equals average cost at the minimum of average cost.b. marginal cost equals average cost.c. marginal cost equals marginal revenue at the minimum of marginal cost.d. average cost equals average revenue at the minimum of average cost.
Answer and Explanation:
The computation is shown below:
a. The number of pairs of ear buds that should be produced for maximizing the profits is
As we know that
MR = MC
Q = 35
And also the price is equal to the MC
Hence, the quantity that should be produced would be 35
b). The total cost of producing ear buds for maximizing the profit is
As we know that
TC = ATC × Q
= 4.5 × 35
= $157.5
c. The weekly profit is
As we know that
Profit = TR - TC
= (P - ATC) × Q
= (6 - 4.5) × 35
= $52.5
d) The weekly profit is
Profit= (5.5 - 4.25) × 30
= $37.5
e. The normal profit could be earned at the time when the marginal cost is equivalent to the average cost that contains the minimum
Hence, the option a is correct
The next dividend payment by Skippy, Inc., will be $2.95 per share. The dividends are anticipated to maintain a growth rate of 4.8 percent, forever. If the stock currently sells for $53.10 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
10.35%
Explanation:
The next dividend payment for skippy incorporation is $2.95
The growth rate is 4.8%
The stock currently sells for $53.10
Therefore the required return can be calculated as follows
R= 2.95 /53.10 + 4.8/100
= 0.0555 + 0.048
= 0.1035 × 100
= 10.35%
Answer:
Explanation:
Dividend Yield =$0.50$2.95×100=16.9%.
The Dell Corporation borrowed â$ at â% interest perâ year, which must be repaid in equal EOY amountsâ (including both interest andâ principal) over the next years. How much must Dell repay at the end of eachâ year? How much of the total amount repaid isâ interest?
Answer:
A. $2,098,000 per year
B. $2,588,000
Explanation:
A. Calculation for How much must Dell repay at the end of each year
First step is to calculate (A/P, 7%, 6 )which will give us (0.2098)
Now let Calculate the amount to repay
Amount to repay= $10,000,000 (A/P, 7%, 6)
Amount to repay= $10,000,000 (0.2098)
Amount to repay = $2,098,000 per year
Therefore the amount that Dell will repay at the end of each year will be $2,098,000 per year
2. Calculation for How much of the total amount repaid is interest
Total interest repaid = ($2,098,000*6 years)− $10,000,000
Total interest repaid=$12,588,000-$10,000,000
Total interest repaid= $2,588,000
Therefore the total amount repaid interest will be $2,588,000
Which option, within the Word Options dialog box, allows users to add the Auto Text function to the Ribbon?
The customize ribbons option in Word Options dialog box, allows users to add the Auto Text function to the Ribbon.
What is Auto Text function ?To save portions of a Word document for later use, utilize AutoText. For example, you could retain a convenient collection of headers and footers or build a library of sentences for business letters. Everything a Word document can contain, including formatted text, images, and fields, can be stored in an AutoText entry.
You can quickly speed up document creation using AutoText by adding predetermined text to your project.
In your Office applications, you can create and organize tabs and commands in the ribbon however you choose. Show or conceal the ribbon. Select the at the ribbon's right edge to make it invisible. Choose a tab to reveal the ribbon.
To learn more about customize ribbons
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A company’s marketing executives should assess the __________ in terms of a general analysis of a business problem or opportunity the company is facing.a. business situationb. 5Cs
c. STP
d. ARA
Answer:
a is your answer
Explanation:
Why is it important now for HR management to transform from being primarily administrative and operational to becoming more of an overall strategic contributor to the organization?
How have you seen this implemented in your workplace/former workplace?
Explanation:
Human resource management is increasingly relevant for a company to be successful, competitive and well positioned in the market. It is correct to affirm that it is important that HR ceases to be basically administrative and operational to become a general strategic contributor in a company due to the fact that management is going through a phase in which organizations have well-defined social and environmental responsibilities most demanded in a competitive and globalized world.
Therefore, the valorization of human capital in an organization is increasingly essential and strategic, because through professionals satisfied with their working conditions, well trained and motivated, the objectives are achieved more effectively, there is a greater attraction of quality professionals, greater innovation, greater productivity, continuous improvement of processes and the creation and maintenance of an organizational culture focused on ethical and collaborative practices in order to achieve organizational objectives.
Issued common stock to owners in exchange for $26,000 cash. Purchased $6,500 of equipment, paying $1,950 cash and signing a promissory note for $4,550. Received $11,700 in cash for consulting services performed in January. Purchased $1,950 of supplies on account; all of the supplies were used in January. Provided consulting services on account in the amount of $20,800. Paid $975 on account. Paid $3,900 to employees for work performed during January. Received a bill for utilities for January of $4,400; the bill remains unpaid. What is the amount of total revenue to be reported on the income statement for the month of January
Answer:
Explanation:
2333
Production possibilities frontiers usually curve out and away from the origin. The implication of this curvature is that:_________
a. the opportunity cost of producing a good stays the same regardless of how much of that good is produced.
b. the opportunity cost of producing a good goes down as more of that good is produced.
c. some resources are better at producing one good while other resources are better at producing alternative goods.
d. technological change is present.
e. as resources are used to produce one good, fewer resources are available to produce another good.
Answer:
The right response is Option C (Some resources..............goods).
Explanation:
It should be remembered whether PPF seems to be concave to something like the root, representing growing opportunity costs, in other words whenever one starts going down upon this PPF, the inventory cost between one item which requires to be substituted improves throughout addition maximize enhance the production of both of these commodities. The program is given when continuous and along output prospect boundary.Some other options offered are not relevant to the case described. So the solution here was the right one.
Why should the people on the RA team be different from the people responsible for correcting deficiencies?a. to avoid potential losses.
b. to increase profitability.
c. to avoid conflicts of interest.
d. to increase survivability.
Answer:
The correct answer is the option C: To avoid conflicts of interest.
Explanation:
To begin with, the term of risk assesstment refers to the process of identifying and analyzing possible future threats that may cause harm to the individuals or the assets of the company and from there on to evalute possible solutions to those situation that the company does not want to. Moreover, the risk manager is the one who should take care of those aspects and therefore that an RA team is the one that is being under his commands and should focus on the fact of identifying and analyzing the problems as well as evaluating instead of correcting some of those deficiencies and therefore that they need to have a different mind in the theme because they need to avoid conflicts of interest with the other team that is responsible from correcting.
The optimal method of production is the one that:
A.
maximizes output regardless of cost.
B.
minimizes the normal rate of return
C.
maximizes inputs.
D.
minimizes cost.
Answer:
D minimizes the cost
Explanation:
the production method that minimizes cost for a given level of output.
JebCo has a $600,000 mortgage payable. The mortgage has a 4% interest rate. JebCo's monthly payments are $4,546. (Round all answers to the nearest dollar). a. Prepare the journal entry to record the first monthly payment on June 30, 2020? 6/30/2020 b. What is the Principal Balance of the Mortgage after the second monthly payment?
Answer:
a.
6/30/2020
Dr. Interest Expense ______ $2,000
Dr. Mortgage Loan Payable _ $2,546
Cr. Cash ________________ $4,546
b.
The Principal Balance of the mortgage is $594,899.51
Explanation:
As the monthly payment of $4,546 includes the principal and interest payment as well. First we need to determine the interest payment and then the residual value of the payment will be assigned to the principal payment.
a.
First Monthly payment
Interest payment = $600,000 x 4% x 1/12 = $2,000
Pricipal Payment = Monthly payment - Interest payment = $4,546 - $2,000 = $2,546
Balance of mortgage after payment = $600,000 - $2,546 = $597,454
Second Monthly payment
Interest payment = $597,454 x 4% x 1/12 = $1,991.51
Pricipal Payment = Monthly payment - Interest payment = $4,546 - $1,991.51 = $2,554.49
Balance of mortgage after payment = $597,454 - $2,554.49 = $594,899.51
Runnerz Inc.,a leading manufacturing and retail company that designs and develops footwear and apparel,has signed a contract with a particular courier service for managing the delivery process.The courier service is required to deliver goods from the factory to the warehouse,to customers,and also to collect customer payments for the goods.This is a typical example of a(n)________.
A) non-equity strategic alliance
B) turnkey operation
C) greenfield investment
D) international licensing agreement
Answer:
A) non-equity strategic alliance
Explanation:
From the question, we are informed about, Runnerz Inc., which is a leading manufacturing and retail company that designs and develops footwear and apparel,has signed a contract with a particular courier service for managing the delivery process.The courier service is required to deliver goods from the factory to the warehouse,to customers,and also to collect customer payments for the goods. In this case we can regard this as a typical example of a non-equity strategic alliance.
Non-equity strategic alliance can be explained as when there is contractual relationship is signed by two independent companies to gather their resources as well as their capabilities even though there is no separate entity or sharing equity. Most of the business alliances are fond of this type of agreement.
A share of common just paid a dividend of $1.00. If the expected long-run growth rate for this stock is 5.4%, and if investors' required rate of return is 13.9%, what is the stock price?
a) $11.04
b) $12.40
c) $13.76
d) $15.00
e) $9.42
Answer:
The correct option is b) $12.40.
Explanation:
The stock price can be calculated using the Gordon growth model (GGM) formula that assumes that dividend growth rate will be stable in the long run. The formula is given as follows:
P = d / (r - g) ……………………………………… (1)
Where;
P = Stock price = ?
d = next year dividend = Dividend just paid * (1 + Dividend growth rate) = $1.00 * (1 + 0.054) = $1.00 * 1.054 = $1.054
r = required rate of return = 13.9% = 0.139
g = dividend constant growth forever = 5.4%, or 0.054
Substituting the values into equation (1), we have:
P = $1.054 / (0.139 - 0.054)
P = $1.054 / 0.085
P = $12.40
Therefore, the stock price $12.40. That is, the correct option is b) $12.40.
Escalation bias refers to the situation in which:_______. a. investors put more money into a failure rather than into a success. b. investors tend to follow the herd. c. investors have a propensity to sell winners too soon and hang on to losers too long. d. investors ignore bad news and overemphasize good news. e. investors are all noise traders.
Answer:
a. investors put more money into a failure rather than into a success.
Explanation:
The escalation bias is a part of behavioral finance. In this the investor is not accepting their mistake if they had done any kind of mistake. Rather accepting it they put more money in the asset that performed poorly also at the same time the bad news is ignored by them, they only focused to invest more and more in the stocks
hence, the correct option is a
One of your team members is struggling with preparation of balance sheet and he needs your assistance in completing it. He has come up with following missing information. You are required to complete this Balance sheet.
Assets Liabilities & Equity
Cash $ 100,000 Current Liabilities
Receivables Long Term Debt
Inventory Total Debt
Plant Common Equity $ 600,000
Total Assets Total Claims
Additional Information:
Current Ratio is 2.5 ; Average Collection Period is 54 days ; Total Debt to Total Assets 40 percent ; Total Asset Turnover is 2 ; Inventory Turnover 5.
Answer:
Balance sheet
Cash $100,000 Current Liabilities $320,000
Receivables $300,000 Long Term Debt $80,000
Inventory $400,000 Total Debt $400,000
Plant $200,000 Common Equity $600,000
Total Assets $1,000,000 Total Claims $1,000,000
Explanation:
a) Total Debt to Total Assets 40 percent:
This means that Equity = 60% (100 - 40%)
If Equity is 60% = $600,000, total claims or assets will be equal to $600,000/60% = $1,000,000
Therefore, total debt = $400,000 (40% of $1,000,000)
b) Total Asset Turnover is 2:
If total assets = $1,000,000 and the total asset turnover is 2 or Turnover/Assets = 2, where total assets = $1,000,000,
Therefore, Turnover = $2,000,000 ($1,000,000 * 2)
c) Inventory Turnover is 5:
Inventory Turnover = Turnover/Inventory = 5
= $2,000,000/Inventory = 5
Inventory = $2,000,000/5 = $400,000
d) Average Collection Period is 54 days:
= Accounts Receivable/Sales x 365 = 54
Accounts Receivable = $2,000,000/365 * 54 = $296,000 or approximately $300,000
Current assets:
Cash = $100,000
Receivables $300,000
Inventory = $400,000
Total = $800,000
e) Current liabilities = Current assets/2.5
= $800,000/2.5
= $320,000
f) Plant = Total assets - current assets
= $1,000,000 - $800,000
= $200,000
g) Long term debt = Total debt - Current liabilities
= $400,000 - $320,000
= $80,000
Jefferson Company has sales of $300,000 and cost of goods available for sale of $270,000. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:________.A. $60,000B. $180,000C. $30,000D. $90,000E. $120,000
Answer:
A. $60,000
Explanation
Calculation for what the estimated cost of the ending inventory under the gross profit method would be
First step is to calculate the Gross profit
Gross profit= $300,000 *30%
Gross profit= $90,000
Second Step is to calculate the cost of goods sold
Cost of goods sold=$300,000-$90,000
Cost of goods sold= $210,000
Last step is to calculate the estimated cost of the ending inventory under the gross profit method
Using this formula
Estimated cost of the ending inventory=
Cost of goods available for sale- Cost of goods sold
Let plug in the formula
Estimated cost of the ending inventory=$270,000-$210,000
Estimated cost of the ending inventory=$60,000
Therefore the estimated cost of the ending inventory under the gross profit method would be $60,000
Calculate current assets Sales Revenue $25,000 Accounts Payable $1,200 Accounts Receivable $2,600 Inventory $3,200 Supplies $300 Cost of Goods Sold $16,000 Notes Payable (due in 2 years) $24,000 Equipment $40,000 Accumulated Depreciation $12,000 Land $30,000 Unearned Revenue $1,100 Taxes Payable $1,400 Prepaid Rent (3 months) $2,100 Cash $5,200
Answer: $13,400
Explanation:
Current Assets are those that will be used up in a year and in this question are;
= Accounts Receivable + Inventory + Supplies + Prepaid rent + Cash
= 2,600 + 3,200 + 300 + 2,100 + 5,200
= $13,400
On June 8, Williams Company issued an $87,600, 9%, 120-day note payable to Brown Industries. Assuming a 360-day year, what is the maturity value of the note?
Assume you have a 1-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10 years. The first is a zero-coupon bond that pays $1,000 at maturity. The second has an 6.2% coupon rate and pays the $62 coupon once per year. The third has a 7.2% coupon rate and pays the $72 coupon once per year.
a. If all three bonds are now priced to yield 7% to maturity, what are their prices?
b. If you expect their yields to maturity to be 7% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
c. If you expect their yields to maturity to be 6% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
Answer:
a. If all three bonds are now priced to yield 7% to maturity, what are their prices?
zero coupon bond = $1,000 / (1 + 7%)¹⁰ = $508.35
6.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)¹⁰ = $508.35
PV of coupon payments = $62 x 7.0236 (PV annuity factor, 7%, 10 periods) = $435.46
market price = $943.81
7.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)¹⁰ = $508.35
PV of coupon payments = $72 x 7.0236 (PV annuity factor, 7%, 10 periods) = $505.70
market price = $1,014.05
b. If you expect their yields to maturity to be 7% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
zero coupon bond = $1,000 / (1 + 7%)⁹ = $543.93
before tax holding period return = ($543.93 - $508.35) / $508.35 = 7%
after tax HPR = 7% x 0.8 = 5.6%
6.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)⁹ = $543.93
PV of coupon payments = $62 x 6.5152 (PV annuity factor, 7%, 10 periods) = $403.94
market price = $947.87
before tax holding period return = ($947.87 - $943.81 + $62) / $943.81 = 7%
after tax HPR:
($4.06 x 0.8) / $943.81 = 0.34%
($62 x 0.7) / $943.81 = 4.60%
total = 4.94%
7.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)⁹ = $543.93
PV of coupon payments = $72 x 6.5152 (PV annuity factor, 7%, 10 periods) = $469.09
market price = $1,013.02
before tax holding period return = ($1,013.02 - $1,014.05 + $72) / $1,014.05 = 7%
after tax HPR:
(-$1.03 x 0.8) / $1,014.05 = -0.08%
($72 x 0.7) / $1,014.05 = 4.97%
total = 4.89%
c. If you expect their yields to maturity to be 6% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
zero coupon bond = $1,000 / (1 + 6%)⁹ = $591.90
before tax holding period return = ($591.90 - $508.35) / $508.35 = 16.44%
after tax HPR = 16.44% x 0.8 = 13.15%
6.2% coupon bond:
PV of face value = $1,000 / (1 + 6%)⁹ = $591.90
PV of coupon payments = $62 x 6.8017 (PV annuity factor, 6%, 10 periods) = $421.71
market price = $1,013.61
before tax holding period return = ($1,013.61 - $943.81 + $62) / $943.81 = 13.96%
after tax HPR:
($69.80 x 0.8) / $943.81 = 5.92%
($62 x 0.7) / $943.81 = 4.60%
total = 10.52%
7.2% coupon bond:
PV of face value = $1,000 / (1 + 6%)⁹ = $591.90
PV of coupon payments = $72 x 6.8017 (PV annuity factor, 6%, 10 periods) = $489.72
market price = $1,081.62
before tax holding period return = ($1,081.62 - $1,014.05 + $72) / $1,014.05 = 13.76%
after tax HPR:
($67.57 x 0.8) / $1,014.05 = 5.33%
($72 x 0.7) / $1,014.05 = 4.97%
total = 10.30%
Preparing an income and expense statement helps in answering the question, "Where does all my money go?" This statement takes __________and ___________subtracts to determine an individual's or a family's cash surplus or deficit situation.
Correct question read;
"This statement takes __________and subtracts_________ to determine an individual's or a family's cash surplus or deficit situation.
Answer:
note of income; the expenses
Explanation:
Remember, the income and expense statement as the name implies is a financial statement that takes note of all incomes into a financial account and then subtracting identified expenses from the income to determine if there was a loss or profit.
By following this method, one ultimately would be able to answer the question, "Where does all my money go?".