Answer: b. the inventory management should be further examined.
Explanation:
The Quick ratio is calculated by deducting inventory from the current assets and then dividing that amount by current liabilities while the Current ratio is simply dividing the current assets by the current liabilities.
If the Current ratio increased, it means that the company has more current assets per current liabilities from last year. The fact that the quick ratio dropped however, points to most of the current asset increase being the inventory which means that the company is carrying a lot of inventory.
Their management of inventory such that they are carrying such amounts therefore needs to be further examined before a decision is made on their liquidity.
Jamari conducts a business with the following results in 2020: Revenue $20,000 Depreciation on car 3,960 Operating expenses of car 3,100 Rent 6,000 Wages 8,200 Amortization of intangibles 680 Jamari estimates that due to a depressed real estate market, the value of land owned by the business declined by $5,200. a. Calculate the effect of Jamari's business on his AGI. Jamari's business has a of $fill in the blank d33155077fa8faf_2 which is reported on his tax return. b. How would your answer in part (a) change if the activity was a hobby
Answer:
A. Net loss; $1,940; For AGI
B. $20,000 ;$20,000; But Will Not Be Deductible
Explanation:
1. Calculation to determine what Jamari's business has and the amount which is reported on his tax return
Calculation for Net Income / (loss)
Revenue $ 20,000
Less:
Depreciation on Car ($3,960)
Operating Exp of car ($3,100)
Rent ($6,000)
Wages ($8,200)
Amortization of intangible ($ 680) ($21,940)
Net Income / (loss) $ -1,940
($20,000-$21,940)
Therefore Jamari's business has a NET LOSS of $1,940 which is reported FOR AGI (ADJUSTED GROSS INCOME) on his tax return
B . Based on the information given we were that the REVENUE is the amount of $20,000 which means that in a situation where the activity was a hobby Jamari will report $$20,000 as income. Of his expenses, $20,000 are ALLOWED BUT WILL NOT BE DEDUCTIBLE on his tax return.
In 2017, PetSmart agreed to acquire Chewy (a fast-growing pet food and product e-commerce company) for $3.4 billion. PetSmart paid a premium, which can be calculated as the amount by which the price offered for the acquisition of Chewy is more than the Group of answer choices comparable value of similar companies to Chewy within the same market. amount paid as a down payment for Chewy that was to be held in escrow until closing. difference between the amount that was offered for Chewy and the amount that was held in escrow to complete the deal. the market value of Chewy before the acquisition. market value of Chewy's competitors in the geographic locale of the company.
Answer:
PetSmart and Chewy
PetSmart paid a premium, which can be calculated as the amount by which the price offered for the acquisition of Chewy is more than the
comparable value of similar companies to Chewy within the same market.
Explanation:
In accounting, this excess price paid for the assets and liabilities is known as Goodwill. It is specifically referred to as acquired or purchased Goodwill. It is accounted for as an intangible asset. More specifically, goodwill is the excess of the purchase price over the sum of the net fair value of all of the acquired assets and the assumed liabilities in the acquisition process.
In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2020 were as follows. Budget Actual Indirect materials $15,700 $14,800 Indirect labor 21,300 22,100 Utilities 11,100 11,900 Supervision 5,100 5,100 All costs are controllable by the department manager. Prepare a responsibility report for April for the cost center.
Answer:
Indirect materials $900 Favorable
Indirect labor $800 Unfavorable
Utilities $800 Unfavorable
Supervision $0 Neither Favorable Non Unfavorable
Total $700 Unfavorable
Explanation:
Preparation of a responsibility report for April for the cost center.
HANNON COMPANY Assembly Department Manufacturing Overhead Cost Responsibility Report For the Month Ended April 30, 2020
Controllable cost Budget Actual
Indirect materials $15,700- $14,800 =$900 Favorable
Indirect labor 21,300- 22,100 =$800 Unfavorable
Utilities 11,100- 11,900=$800 Unfavorable
Supervision 5,100- 5,100= $0 Neither Favorable Non Unfavorable
Total $53,200-$53,900=$700 Unfavorable
Therefore The responsibility report for April for the cost center will be :
Indirect materials $900 Favorable
Indirect labor $800 Unfavorable
Utilities $800 Unfavorable
Supervision Neither Favorable Non Unfavorable
Total $700 Unfavorable
A company produces two products Product A selts for \$25 variable costs of 15and requires hours produce B for 35; variable costs of $20 and requires 5 machine hours to produce 40, 000mn machine hours are availableThe company can all can make of either Which statement is true?
Answer:
8000 units of product A and 4,800 units of product B should be produced.
Explanation:
Item A sells for $25 yet cost $15 to create. It implies there is a commitment edge of $10 per unit (i.e $25-$15)
since it takes 2hours to create item A we have 10/2= 5 items each machine hour.
$10 × 8000 units = $80,000 (in benefits)
then again, if item B is to be sold at $35 per unit yet has a creation cost of $20, it implies a commitment edge of $15(i.e $35-$20) is implanted in each $35 deal. On the off chance that the organization produces 4,800 units of this item B, it implies that the organization has
$15 × 4,800 units = $72, 000
Since the point of the organization's creation is to make benefit, it is extremely certain that item An ought to be delivered contrasted with item B since it has a higher commitment edge
Brainliest?
Resources do not limit the number of needs and wants people
can
satisfy.
True or False
Answer:
False
Explanation:
Resources absolutely limit what can be accomplished and done. Just think of the timber industry. They want to cut down all trees they can to make a profit, but society needs to preserve natural forests so their cutting is limited.
Answer:
false
Explanation:
resources is a source that is generate form nature. the resources satisfy the wants because is the will no resource like - chair , table, food( that we cook) etc. we can't survive in this world. some examples for reading in school tables, chair are made form wood, which is a source .
Each of the following is a main source of web traffic EXCEPT:
banner ads
radio networks
affiliate networks
word of mouth
Answer:
I think radio networks
Explanation:
why because i never heard them talk about that stuff on the radio sorry if it was wrong
On the worksheet the adjusted balance of a contra asset account would be extended to:
Answer: the Balance Sheet Credit column.
Explanation:
A contra account is simply an asset account which has a credit balance, unlike the normal asset account that typically has a debit balance.
The two main types of contra account include the accumulated depreciation and the allowance for bad debt. We should note that on the worksheet the adjusted balance of a contra asset account would be extended to the credit column of the balance sheet.
There is an investment with the discount rate of 6 %. What should be the present value of the investment if we want to get a net cash flow of $17500;
a) After 1 year
b) After 2 years
c) After 3 years
Answer:
a. $16,509.434
b. $15,574.94
c. $14,693.34
Explanation:
The calculation of the present value for the following cases is
we know that
Present Value = Future Value ÷ (1+ rate of interest)^number of years
a. After one year
= $17,500 ÷ (1 + 0.06)^1
= $16,509.434
b. After 2 years
= $17,500 ÷ (1 + 0.06)^2
= $17,500 ÷ 1.1236
= $15,574.94
c. After 3 years
= $17,500 ÷ (1 + 0.06)^3
= $17,500 ÷ 1.191016
= $14,693.34
Therefore, the present value after one year, 2 years and third year is $16,509.434 ,$15,574.94 and $14,693.34 respectively
Beleaguered State Bank (BSB) holds $500 million in deposits and maintains a reserve ratio of 20 percent. Complete the following T-account for BSB.
Beleaguered State Bank
Assets Liabilities
Reserves million Deposits million
Loans million
Now suppose that BSB's largest depositor withdraws $25 million in cash from her account. BSB decides to restore its reserve ratio by reducing the amount of loans outstanding.
Complete BSB's new T-account after it has taken this action.
Beleaguered State Bank
Assets Liabilities
Reserves million Deposits million
Loans million
Because BSB is cutting back on its loans, other banks will find they have _____________ reserves, causing them to ______________ their loans. Which of the following ways represent an alternative for BSB to return to its original reserve ratio? Check all that apply.
a. Lend money
b. Borrow money from another bank
c. Borrow money from the Fed
d. Attract additional deposits
Answer:
1. See part 1 of the attached excel file for the T-account.
2. See part 2 of the attached excel file for the T-account.
3. Because BSB is cutting back on its loans, other banks will find they have lower reserves, causing them to reduce their loans. Which of the following ways represent an alternative for BSB to return to its original reserve ratio? Check all that apply.
4. The correct options are b. Borrow money from another bank and d. Attract additional deposits.
Explanation:
1. Beleaguered State Bank (BSB) holds $500 million in deposits and maintains a reserve ratio of 20 percent. Complete the following T-account for BSB.
Note: See part 1 of the attached excel file for the T-account.
In the attached excel, the following calculations are made:
Reserves = $500 million * 20% = $100 million
Loans = $500 - $100 = $400
2. Now suppose that BSB's largest depositor withdraws $25 million in cash from her account. BSB decides to restore its reserve ratio by reducing the amount of loans outstanding.
Note: See part 2 of the attached excel file for the T-account.
In the attached excel, the following calculations are made:
Deposits = $500 million - $25 million = $475 million
Reserves = $475 million * 20% = $95 million
Loans = $475 - $95 = $380
3. Because BSB is cutting back on its loans, other banks will find they have lower reserves, causing them to reduce their loans. Which of the following ways represent an alternative for BSB to return to its original reserve ratio? Check all that apply.
4. Which of the following ways represent an alternative for BSB to return to its original reserve ratio? Check all that apply.
The correct options are b. Borrow money from another bank and d. Attract additional deposits.
Egan is very skilled at budgeting his money, he is very patient, he understands how to track his own financial records, and he keeps calm and collected during stressful occasions. In which Finance career would Egan be most successful?
Business Finance Management
Financial Investment Planning
Insurance Services
Banking and Related Services
Answer:
Business Finance Management
Explanation:
Business Finance Management is the best fit for this because of requires a lot of skill in planning and budgeting money.
Answer:
A) Business Finance Management
Explanation:
just took the test
Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year:
Sales Operating Income Total Assests Current Liabilities
Snow Sports $57,00,000 1010,500 4,300,000 450,000
Non- Snow Sport 8500000 1332500 6500,000 750,000
Required:
a. Calculate each division's ROI.
b. Top management has extra funds to invest. Which division will most likely receive those funds? Why?
c. Can you explain why one division's ROI is higher? How could management gain more insight?
Answer:
Sports Company
a. Division's ROI:
SnowSports = 23.5%
Non-SnowSport = 20.5%
b. Naturally, management will invest in Division SnowSports. The company earns more returns on its investment in the division.
c. One division's ROI on investment because it earned more returns from the division when compared with its investment. This shows that SnowSports is more efficient than the other division in the use of resources.
Management can gain more insight by computing the Assets Turnover ratio and the operating leverage.
Explanation:
a) Data and Calculations:
Sales Operating Total Assets Current Liabilities
Income
Snow Sports $5,700,000 1,010,500 4,300,000 450,000
Non- SnowSport 8,500,000 1,332,500 6,500,000 750,000
ROI (Return on Investments) = Operating income/Total assets * 100
Snow Sports = $1,010,500/$4,300,000 * 100 = 23.5%
Non-SnowSport = $1,332,500/$6,500,000 * 100 = 20.5%
he Hudson Corporation has 8,100 obsolete units of a product that are carried in inventory at a manufacturing cost of $162,000. If the units are remachined for $40,900, they could be sold for $73,000. Alternatively, the units could be sold for scrap for $28,100. The alternative that is more desirable and the total relevant costs for that alternative are:
Answer:
It is more profitable to re-process the units. Income will increase by $4,000.
Explanation:
Giving the following formula:
Number of units= 8,100
Re-process the units:
Total cost= $40,900
Selling price= $73,000
Sold as-is:
Selling price= $28,100
We will conduct an incremental analysis, therefore the first manufacturing costs should not be taken into account. They remain constant in both options.
Re process:
Effect on income= 73,000 - 40,900
Effect on income= $32,100 increase
Sold as-is:
Effect on income= $28,100 increase
It is more profitable to re-process the units. Income will increase by $4,000.
RedRaider Corp's common stock has a beta of 0.99. If the risk free rate of return is expected to be 3.03% and the market risk premium is 6.93%, what is the cost of equity for RedRaider Corp's common stock
Answer:
9.89%
Explanation:
On January 8, the end of the first weekly pay period of the year, Regis Company's employees earned $21,760 of office salaries and $60,840 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $12,860 of federal income taxes, $1,360 of medical insurance deductions, and $900 of union dues. No employee earned more than $7,000 in this first period.
Required:
Calculate the amounts for each of these four taxes of Regis Company.
Answer:
FICA-Social security = $5,121.20
FICA-Medicare = $1,197.70
FUTA = $495.60
SUTA = $4,130
Explanation:
Note: The four taxes of Regis Company required to be calculated as follows:
FICA-Social security
FICA-Medicare
FUTA
SUTA
Therefore, we have:
Total earnings = Office salaries + Sales salaries = $21,760 + $60,840 = $82,600
Tax = Total earnings * Tax rate ...................... (1)
Using equation (1), we have:
FICA-Social security = $82,600 * 6.20% = $5,121.20
FICA-Medicare = $82,600 * 1.45% = $1,197.70
FUTA = $82,600 * 0.60% = $495.60
SUTA = $82,600 * 5% = $4,130.00
A change in supply is illustrated by a movement along an existing supply curve
true or false
the correct answer is true.
2 Jodi owns 112 shares of stock selling for $16.20. How many more shares can she purchase after receiving a dividend of $0.80 por share? Round your answer to a whole number.
Answer:
The number of new shares = 6
Explanation:
Dividend is the proportion of profit paid by a company to its shareholder as a form of return on their investment. Another form of return on share investment is the capital gain; which is the difference between the selling price of a share now and its cost when it was purchased.
For Jodi, we need to first calculate the amount of dividends earned on the total shares she owns. And then divide the result by the current purchase price of a share to arrive at the number of shares she can buy more. This is done as follows:
Total dividends = 112× 0.80 = $89.6
Current price of a share = $16.20
THe number of shares that can be purchased= 89.6/16.20=5.5
The number of new shares = 6
In a traditional economy, decisions about which goods are produced are
based on:
O
A. what businesses believe will generate the most profits.
B. what the government decides is important for society.
ОО
C. what the local community has made for generations,
D. what goods are most likely to sell in international markets.
Joyce works hard and puts in many extra hours. For this, she can anticipate a pay raise, a promotion, or an expanded sales territory. However, getting a promotion is most important to Joyce. According to the useful guidelines of the ____ theory, Jim, her manager, must recognize that (1) she is putting in hard work and long hours to obtain a promotion, (2) what motivates Joyce will change over time, and (3) he must clearly show Joyce how to attain the desirable reward.
Answer:
Expectancy theory
Explanation:
Expectancy theory states that when an individual is faced with different choices they will be motivated in a certain way in choosing a particular option based on what they expect to be the result of the choice.
So behaviour is affected by perceived result or consequence of a particular choice.
In the given scenario Joyce works hard and puts in many extra hours, and getting a promotion is most important to Joyce.
So because of her expectations that manager must recognise that:
(1) she is putting in hard work and long hours to obtain a promotion,
(2) what motivates Joyce will change over time (if she does not get the promotion), and
(3) he must clearly show Joyce how to attain the desirable reward.
Factory Overhead Volume Variance Dvorak Company produced 5,100 units of product that required 3.5 standard hours per unit. The standard fixed overhead cost per unit is $2.50 per hour at 18,750 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Answer:
$2,250 Favourable
Explanation:
Calculation to determine the fixed factory overhead volume variance
Fixed factory overhead volume variance=$2.50 × [18,750 hrs. – (5,100 units × 3.5 hrs.)]
Fixed factory overhead volume variance=$2.50×[18,750 hrs. – 17,850 hrs]
Fixed factory overhead volume variance=$2.50×900
Fixed factory overhead volume variance=$2,250 Favourable
Therefore the fixed factory overhead volume variance will be $2,250 Favourable
Which statement is CORRECT? Automatic stabilizers are risky to use and sometimes can get the economy destabilized. Discretionary fiscal policy shows automatic adjustments without any specific effort by policy makers. Discretionary fiscal policy indicates deliberate action by policy makers. Automatic stabilizers indicate deliberate action by policy makers.
Answer:
Discretionary fiscal policy indicates deliberate action by policy makers.
Explanation:
Automatic stabilizers are stabilizers that adjust the economy automatically without the intervention of external agents . examples include progressive tax and transfer payments
In an expansion, progressive tax increases the tax paid and this reduces disposable income
In a contraction, tax paid is reduced and this increases disposable income
Discretionary fiscal policies are deliberate steps taken by the government to stimulate the economy in order to cause the economy to move to full employment and price stability more quickly than it might otherwise.
Discretionary fiscal policies can either be expansionary or contractionary
Expansionary fiscal policy is when the government increases the money supply in the economy either by increasing spending or cutting taxes.
Contractionary fiscal policies is when the government reduces the money supply in the economy either by reducing spending or increasing taxes
Please help me with this question....
Answer:
C. I Believe
Explanation:
All of the following statements about exit in monopolistic competition are true, except: Select the correct answer below: When economic losses induce firms to leave the industry, demand for the original firm decreases. As long as a monopolistic competitive firm is earning positive economic profits, new competitors will continue to enter the market, Even though a monopolistically competitive firm may earn positive economic profits in the short term, the process of new entry will drive down economic profits to zero in the long run. In an environment with monopolistic competition, economic losses induce firms to leave the industry.
Answer:
When economic losses induce firms to leave the industry, demand for the original firm decreases.
Explanation:
A monopolistic competition is when there are many firms selling differentiated products in an industry. A monopoly has characteristics of both a monopoly and a perfect competition. the demand curve is downward sloping. it sets the price for its goods and services.
An example of monopolistic competition are restaurants
When firms are earning positive economic profit, in the long run, firms enter into the industry. This drives economic profit to zero
If firms are earning negative economic profit, in the long run, firms leave the industry. This drives economic profit to zero
in the long run, only normal profit is earned
Consider two perfectly negatively correlated risky securities A and B. A has an expected rate of return of 12% and a standard deviation of 70%. B has an expected rate of return of 8% and a standard deviation of 40%. The global minimum variance portfolio that can be formed with the two securities will earn _____ rate of return.
Answer: 9.45%
Explanation:
To solve this question, we need to know the weights of securities A and B and this will be:
Weight of A = STD of B / (STD of A + STD of B)
= 40% / (70% + 40%)
= 40% / 110%
= 0.4/1.1
= 0.3636
Weight of security A = 0.3636
Weight of security B = 1 - 0.3636 = 0.6364
Then, the rate of return of risk free portfolio will be:
= (Return of A × Weight of A) + (Return of B × Weight of B)
= (12% × 0.3636) + (8% × 0.6364)
= 0.043632 + 0.050912
= 0.094544
= 9.45%
Janet Foster bought a computer and printer at Computerland. The printer had a $900 list price with a $100 trade discount and 2/10, n/30 terms. The computer had a $4,060 list price with a 25% trade discount but no cash discount. On the computer, Computerland offered Janet the choice of (1) paying $160 per month for 17 months with the 18th payment paying the remainder of the balance or (2) paying 8% interest for 18 months in equal payments.
a. Assume Janet could borrow the money for the printer at 8% to take advantage of the cash discount. How much would Janet save? (Use 360 days a year. Round your answer to the nearest cent.) Janet's savings $
b. On the computer, what is the difference in the final payment between choices 1 and 2? (Round your answer to the nearest cent.) Difference final payment
Answer:
Janet Foster
a. Janet could save $12.44 on the printer by borrowing $800 to take advantage of the cash discount.
b. On the computer, the difference in the final payment between choices 1 and 2 is $197.
It is advisable for Janet to choose the first option.
Explanation:
a) Data and Calculations:
Printer:
List price of printer = $900
Trade discount = 100
Purchase cost = $800
Cash discount terms = 2/10, n/30
Cash discount = $16 ($800 * 2%)
Interest on loan to purchase printer = $3.56 ($800 * 8% * 20/360)
Savings if loan is borrowed = $12.44 ($16 - $3.56)
Computer:
List price = $4,060
Trade discount = 25% or $1,015 ($4,060 * 25%)
Purchase cost = $3,045
Payment options:
1) = $160 * 17 months = $2,720
Balance on 18th month 325
Total payment = $3,045
2) = Payment with 8% interest for 18 months equal payment = $180.08
From an online financial calculator:
N (# of periods) 18
I/Y (Interest per year) 8
PV (Present Value) $3,045
FV (Future Value) 0
P/Y (# of periods per year) 12
C/Y (# of times interest compound per year) 12
PMT made at the end of each period
Results
PMT = $180.08
Sum of all periodic payments $3,241.48
Total Interest $196.48
Difference in final payment:
Choice 1 , total payment = $3,045
Choice 2, total payment = $3,242
Difference in final payment = $197
Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2021, options were granted for 75,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2024, and expire December 31, 2025. Each option has a fair value of $1 based on an option pricing model. What is the total compensation cost for this plan
Answer:
the total compensation cost is $75,000
Explanation:
The computation of the total compensation cost for this plan is shown below:
Total compensation cost = option granted × fair value of each option
total compensation cost = 75000 × $1
total compensation cost = $75,000
Here to determined the total compensation cost we simply multiplied the option granted with the fair value of each option so that the correct amount could come
Therefore the total compensation cost is $75,000
Product A consists of two units of Subassembly B, two units of C, and one unit of D. B is composed of four units of E and two units of F. C is made of two units of H and three units of D. H is made of five units of E and two units of G. To produce 100 units of A, determine the numbers of units of B, C, D, E, F, G, and H required using the low-level coded product structure tree.
Level 0 100 units of A
Level 1 units of B
units of C
Level 2 units of F
units of H
units of D
Level 3 units of E
units of G
Answer:
[tex]B = 200\ units[/tex] [tex]C = 200\ units[/tex]
[tex]F = 400\ units[/tex] [tex]H = 400\ units[/tex]
[tex]D = 700\ units[/tex] [tex]E = 2800\ units[/tex]
[tex]G = 800\ units[/tex]
Explanation:
Given
[tex]A = 100\ units[/tex]
See attachment for right presentation of question
Solving (a): The low level coded product structure tree
This is plotted by considering the hierarchy or level of each product item and their corresponding units.
See attachment (2)
Solving (b): The number of units of each.
To do this, we multiply the units of the given product by the number of unit the fall under.
So, we have:
Products B and C are directly under A, so we multiply their units by units of A.
[tex]B = 2 * A = 2 * 100[/tex]
[tex]B = 200\ units[/tex]
[tex]C = 2 * A = 2 * 100[/tex]
[tex]C = 200\ units[/tex]
Product F is directly under B, so we multiply its units by units of B.
[tex]F = 2 * B = 2 * 200[/tex]
[tex]F = 400\ units[/tex]
Product H is directly under C, so
[tex]H = 2 * C = 2 * 200[/tex]
[tex]H = 400\ units[/tex]
Product D has of 3 units of C and 1 unit of A. So:
[tex]D = 3 * C + 1 * A[/tex]
[tex]D = 3 * 200 + 1 * 100[/tex]
[tex]D = 700\ units[/tex]
Product E has of 4 units of B and 5 units of H. So:
[tex]E = 4 * B + 5 * H[/tex]
[tex]E = 4 *200 + 5 * 400[/tex]
[tex]E = 2800\ units[/tex]
Product G has 2 units of H.
So:
[tex]G = 2 * H = 2 * 400[/tex]
[tex]G = 800\ units[/tex]
Jack Hammer invests in a stock that will pay dividends of $2.00 at the end of the first year; $2.20 at the end of the second year; and $2.40 at the end of the third year. Also, he believes that at the end of the third year he will be able to sell the stock for $33. What is the present value of all future benefits if a discount rate of 11 percent is applied
Answer:
$29.47
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
To find the PV using a financial calculator:
Cash flow in year 1 = 2
Cash flow in year 2 = 2.2
Cash flow in year 3 = 2.4 + 33
I = 11
PV = 29.47
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
is an unlevered firm with a total market value of $3,900,000 with 60,000 shares of stock outstanding. The firm has expected EBIT of $220,000 if the economy is normal and $280,000 if the economy booms. The firm is considering a $975,000 bond issue with an attached interest rate of 6 percent. The bond proceeds will be used to repurchase shares. Ignore taxes. What will the earnings per share be after the repurchase if the economy booms
Answer:
Earnings per share= $3.58
Explanation:
Earnings per share(EPS) = Earnings attributable to share/Number of shares
Price per share = $3,900,000/60,000=$65 per share
The units of shares to be re-purchased with debt proceed
= The proceeds from debt/share price
=$975,000/$65= 15,000
The number of shares outstanding after repurchased = 60,000-15,000= 45,000 units
EBIT 220,000
Less interest (6%×975,000) (58,500)
Earnings attributable to shares 151,500
Earnings per share 151,500/45,000 units=$3.58
Earnings per share= $3.58
In 2020, Miranda records net earnings from self-employment of $158,500. She has no other gross income. Determine the amount of Miranda's self-employment tax and her for AGI income tax deduction. In your computations round all amounts to two decimal places. Round your final answers to the nearest dollar. Miranda's self-employment tax is $fill in the blank 1 and sh
Answer:
Miranda's self-employment tax = $21,320
AGI income tax deduction = $10,660
Explanation:
Particulars Amount
Net Earnings from Self Employment $158,500
Taxable Self employment Earnings $146,374.75
(158,500*92.35%)
Social Security Tax ($137,700*12.4%) $17,074.80
Medicare Tax ($146,375*2.9%) $4,244.88
Self employment Tax = Social Security tax + Medicare tax
Self employment Tax = $17,074.80 + $4,244.88
Self employment Tax = 21,320
Taxpayer are allowed a deduction for AGI of 50% of self-employment tax.
= $21,320*50%
= $10,660
At the present time, Perpetualcold Refrigeration Company (PRC) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,329.55 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 35%. If PRC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)
Answer:
Perpetualcold Refrigeration Company (PRC)
The reasonable estimate for PRC's after-tax cost of debt is:
= 0.08.
Explanation:
a) Data and Calculations:
Face value of 15-year noncallable bonds outstanding = $1,000 per bond
Current market price per bond = $1,329.55
Coupon rate of bonds = 12% per annum
Federal-plus-state tax rate = 35%
Cost of new debt = $120 per annum ($1,000 * 12%)
After-tax cost of debt = $120 (100% - 35%)
= $120 * 65%
= $78
= $78/$1,000 = 0.078
= 0.08
b) The cost of PRC's new debt is the calculated rate that the company will pay on its new debt. The major differentiating factor between the cost of debt and the after-tax cost of debt is the deduction of interest expense. In PRC's capital structure decisions, determining the cost of debt, especially the after-tax cost of debt, and comparing it with the cost of equity involve some rigorous financial computations.