The income to Liz and Doug can be allocated assuming that they live in a. California
Doug's salary: $41,000
Liz's salary: $55,000
Rent on apartments purchased by Liz: $8,000
Dividends on stock inherited by Doug: $1,900
Interest on savings account funded by Liz: $2,400
Because community property rules are in effect in California, income produced during the marriage is often regarded as community property and is shared equally between the parties in the event of a divorce.
Calculating total income received before the divorce-
= $41,000 + $55,000 + $8,000 + $1,900 + $2,400
= $108,300
Therefore,
Liz's share: $108,300 / 2 = $54,150
Doug's share: $108,300 / 2 = $54,150
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Klay and Jaylen have preferences over basketballs (b) and MuscleMilk (m). Klay’s preferences can be described by Uk(bk,mk) = bk^1/5 mk^4/5 and Jaylens’s preferences can be described by Uj(bj,mj) = bj^4/5 mj^1/5 . Klay has an endowment of 10 basketballs and 20 bottles of MuscleMilk while Jaylen has 20 basketballs and 10 bottles of MuscleMilk.
(a) Solve for the contract curve in this economy and plot it in an Edgeworth Box with basketballs on the horizontal axis and Klay’s origin at the bottom right. Once you’ve derived the Edgeworth Box, feel free to use Desmos or another graphic calculator to plot the function.
(b) Solve for the competitive equilibrium price ratio and each individual’s final consumption. Show this outcome and the endowment point in your Edgeworth Box. Which consumer is a net supplier of basketballs? Of MuscleMilk? Reminder: you can choose one good and set that good’s price equal to $1. Generally, it’s easier if you choose the y-axis good, so in this case pm = $1. Then solve for the price of basketballs relative to the price of MuscleMilk.
(c) Verify that the allocation obtained in the competitive equilibrium is on the contract curve by plugging your solutions from part (b) into what you found in part (a). At this competitive equilibrium, what is each consumer’s marginal rate of substitution?
(d) Klay tears a ligament in his knee and is no longer able to enjoy basketballs. Suppose new preferences are summarized by the utility functions Uk = mk for Klay and Uj = min(bj,mj) for Jaylen. Is the original allocation Pareto efficient? Why or why not?
(a) The contract curve is the locus of efficient allocations and can be plotted in the Edgeworth Box.
(b) The competitive equilibrium price ratio is the ratio of prices that equates the marginal rate of substitution for both individuals, and each individual's final consumption can be determined accordingly.
(c) To verify if the allocation is on the contract curve, substitute the solutions from (b) into the utility functions and check if the sum of utilities is maximized.
(d) The original allocation may not be Pareto efficient if Klay's new preferences and Jaylen's new preferences differ significantly from their original preferences.
(a) To find the contract curve, we need to solve for the allocation that maximizes the sum of utilities for Klay and Jaylen, subject to their individual endowments. The utility maximization problem can be stated as follows:
Maximize: U = Uk(bk, mk) + Uj(bj, mj)
Subject to: bk + bj = 10 (Klay's endowment of basketballs)
mk + mj = 20 (Klay's endowment of MuscleMilk)
bk + mk = 20 (Jaylen's endowment of basketballs)
bj + mj = 10 (Jaylen's endowment of MuscleMilk)
Solving this problem will give us the contract curve.
(b) To find the competitive equilibrium, we need to determine the price ratio that equates the marginal rate of substitution (MRS) for both individuals. Since we are given the utility functions, we can calculate the MRS for each consumer and equate them.
MRS for Klay = ∂Uk/∂bk / ∂Uk/∂mk = (1/5) (bk/mk)[tex]^{-4/5}[/tex]
MRS for Jaylen = ∂Uj/∂bj / ∂Uj/∂mj = (1/5) (bj/mj)[tex]^{-4/5}[/tex]
Setting the MRS for Klay equal to the MRS for Jaylen and solving for the price ratio will give us the competitive equilibrium price ratio. Then we can determine the final consumption for each individual.
(c) To verify that the allocation obtained in the competitive equilibrium is on the contract curve, we substitute the solutions from part (b) into the utility functions of Klay and Jaylen and check if the sum of their utilities is maximized.
The marginal rate of substitution for each consumer can be calculated using the partial derivatives of their utility functions.
(d) If Klay's new preferences are summarized by the utility function Uk = mk and Jaylen's new preferences are summarized by the utility function Uj = min(bj, mj), we need to determine if the original allocation is Pareto efficient.
Pareto efficiency means that it is not possible to make one individual better off without making the other worse off. We would need to compare the utilities of both consumers before and after the change in preferences to determine if the original allocation is still Pareto efficient.
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Show that the equation of exchange and the quantity theory of money have same results. After this, mention some similarities and differences between these two. What type of relationship exists between K and V in the models above?
The equation of exchange and the quantity theory of money arrive at similar results by demonstrating the relationship between the money supply, price level, and economic output.The relationship between the capital stock (K) and the velocity of money (V) is not directly incorporated in these models, but changes in the capital stock can indirectly impact the velocity of money.
The equation of exchange and the quantity theory of money both arrive at similar results but approach the analysis from slightly different perspectives. The equation of exchange, formulated by Irving Fisher, states that the total money supply (M) multiplied by the velocity of money (V) equals the price level (P) multiplied by the real output of goods and services (Q). Mathematically, it can be represented as M * V = P * Q.
Similarities:
Both theories consider the relationship between the money supply and the price level.
They suggest that changes in the money supply have an impact on the economy.
Differences:
The equation of exchange incorporates the velocity of money, which represents the rate at which money circulates in the economy, while the quantity theory of money does not explicitly incorporate velocity.
The equation of exchange emphasizes the broader relationship between money, output, and prices, while the quantity theory of money specifically focuses on the impact of the money supply on prices.
Regarding the relationship between K (capital stock) and V (velocity of money) in these models, it is important to note that they are not directly related in the equations themselves. The equation of exchange and the quantity theory of money do not incorporate the capital stock explicitly. However, it is worth mentioning that the capital stock can indirectly affect the velocity of money.
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Read the passage. What department does Marnle work in? What is her profession?
Marnee works in a university's department. She used to be a Math teacher, now she advises other teachers on selecting text books and
making lesson plans. She no longer teaches.
Marnee works in the____
department. She is an)_____
1)option. A Administration B Support C Faulty 2) option A Academic dean B Superintendent of schools C Curriculum developer
Answer:
1.She is an administration
2. Works as a Curriculum developer
Which of the following situations best describes a business combination to be accounted for as a statutory merger?
a. Both companies in a combination continue to operate as separate but related, legal entities.
b. Only one of the combining companies survives and the other loses its separate identity.
c. Two companies combine to form a new third company, and the original two companies are dissolved.
d. One company transfers assets to another company it has created.
Only one of the combining companies survives and the other loses its separate identity. describes a business combination to be accounted for as a statutory merger. The correct option is B
A statutory merger refers to a business combination whereby only one of the combining companies survives, and the other loses its separate identity. In other words, one of the two companies combines with and is absorbed by the other company, which continues to operate as a single entity after the combination.
In the case of a statutory merger, the surviving company records the assets and liabilities of the combined companies, including any goodwill that might have arisen in the combination. The resulting entity is also responsible for any contingent liabilities and warranties that may exist at the time of the merger.
The purpose of a merger is to combine resources, expertise, and operations to achieve economies of scale, diversify business activities, and improve overall performance. Companies that participate in a statutory merger must follow Generally Accepted Accounting Principles (GAAP) to account for the combination accurately. The correct option is B
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If the production function features increasing returns to scale producing a higher (3 Marks) quantity (a) reduces the variable cost of production (b) reduces the fixed cost of production (c) reduces the average cost of production (d) All answers are correct
Reduces the average cost of production. If the production function features increasing returns to scale producing a higher quantity, it reduces the average cost of production.What is the production function.
The correct answer is option (d)
The production function depicts the relationship between the amount of output generated by a company and the quantity of inputs utilized to produce that output. It is the relationship between a firm's production process and the physical factors of production (inputs) employed.What are increasing returns to scale When all inputs increase by a certain percentage, a company's output increases by a larger percentage if it exhibits increasing returns to scale.
This refers to the property that a production function exhibits when there is an increase in the amount of capital and labor employed per unit of output.What is average cost of production? Average cost of production is a crucial concept in the study of microeconomics that refers to the total cost per unit of output. It is calculated by dividing total cost (fixed cost plus variable cost) by the total number of goods produced (quantity). Hence, if the production function features increasing returns to scale producing a higher quantity, it reduces the average cost of production.
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Discuss the following:
Flora Tucker, a Hispanic female, applied for a sales position
with Ames Department Stores in Seattle. After completing her
application, she was asked to take a math test and a g
Flora Tucker, a Hispanic female, applied for a sales position with Ames Department Stores in Seattle.
After completing her application, she was asked to take a math test and a general intelligence test, both of which she passed with flying colors. However, Flora never received a call for an interview and learned that the job was awarded to a less-qualified white male. Flora Tucker, a Hispanic female, applied for a sales position with Ames Department Stores in Seattle. After completing her application, she was asked to take a math test and a general intelligence test, both of which she passed with flying colors. However, Flora never received a call for an interview and learned that the job was awarded to a less-qualified white male.Flora was a victim of employment discrimination based on her race and gender. Her qualifications for the sales position should have been the only determining factor in whether she was offered an interview. However, the actions of Ames Department Stores were unfair and discriminatory. This type of behavior is unacceptable and has no place in our society.Employment discrimination is illegal, and Flora Tucker has a right to file a complaint with the Equal Employment Opportunity Commission (EEOC).
The EEOC was created to investigate claims of discrimination and enforce laws that prohibit discrimination based on race, gender, age, disability, and other protected characteristics. The EEOC may require Ames Department Stores to provide Flora with an opportunity to interview for the sales position or offer her compensation for the discrimination she faced. In the future, employers must remember that equal opportunity employment is the right of every American, regardless of race or gender.
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how bias forecasting can help to miminize uncertainity of predictions although time series calculations given result for the next year forecasting demand but company not relay on the forecasting. is there any tool and method that can help uncertainty on demand such as bias forecasting method , i so ?f how can help bias to minimize uncertainty for predictions result?
Bias forecasting can help to minimize uncertainty of predictions in demand planning by identifying and adjusting biases present in the demand forecast.
Bias is defined as the deviation of actual values from the expected values. This can occur due to various factors such as errors in data collection or inappropriate models used for forecasting. Biases can be either positive or negative and can lead to overestimation or underestimation of demand.
The Bias Forecasting Method analyzes the forecasted values and compares them with the actual values to identify the biases present. Once the biases have been identified, adjustments are made to the forecasting model to reduce their impact and improve the accuracy of the forecast. This helps to minimize the uncertainty in the demand forecast and allows companies to make more informed decisions.
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One of the changes that have occurred in a business environment
over the last five decades is that ________.
Multiple Choice
a code of ethics has developed from a quality-measurement
document to a d
One of the changes that have occurred in a business environment over the last five decades is that a code of ethics.
Code ethics has developed from a quality-measurement document to a document that acknowledges the responsibility of a corporation to all stakeholders in the community, including employees, shareholders, and the general public. Earlier, the primary responsibility of a corporation was to produce high-quality goods and services that satisfied the customer.
Corporate responsibility was limited to a narrow set of activities that protected the financial interests of shareholders. In addition, there was no regulatory framework to check and balance corporations' activities. Corporate behavior was driven by the market, which meant that they were free to operate within the law, and it was up to the customers to decide whether they wanted to do business with them or not.
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Marginal Revenue Suppose a monopolistically competitive firm sells a particular brand of jeans.The quantities of jeans sold per day at various prices are shown in the table telow .Output 0 Pricel ITotal Rovenue Marginal Revenue $90.00 $o 75.00 75 $75 60.00 120 45.00 135 30.00 120 15.00 [75 2 4
Based on the information provided, we have the following data for the monopolistically competitive firm selling jeans:
Output: 0
Price: $90.00
Total Revenue: $0.00
Marginal Revenue: N/A (not applicable)
Output: 1
Price: $75.00
Total Revenue: $75.00
Marginal Revenue: $75.00
Output: 2
Price: $60.00
Total Revenue: $120.00
Marginal Revenue: $45.00
Output: 3
Price: $45.00
Total Revenue: $135.00
Marginal Revenue: $15.00
Output: 4
Price: $30.00
Total Revenue: $120.00
Marginal Revenue: -$15.00
Output: 5
Price: $15.00
Total Revenue: $75.00
Marginal Revenue: -$45.00
From the data, we can observe that the marginal revenue decreases as the quantity of jeans sold increases. This is because the firm in a monopolistically competitive market has downward-sloping demand curves, which means it has to lower the price to sell additional units.
However, it's worth noting that there seems to be a mistake in the given table for the marginal revenue at an output of 5. It shows a marginal revenue of -$45.00, which is not possible. Marginal revenue should be calculated as the change in total revenue resulting from selling one additional unit. In this case, if the total revenue at an output of 4 is $120.00 and the total revenue at an output of 5 is $75.00, the marginal revenue should be the difference between these two values, which is -$45.00. However, the marginal revenue should not be negative, as it represents the additional revenue earned from selling one more unit.
To properly analyze the marginal revenue, we need accurate data for all the quantities and prices in the given table.
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short answer ( three paragraphs )
Hershey's Versus M&Ms: The War of the Bite-Size Milk Chocolates Read the following scenario and answer the related question below: Consumers have various associations for brands such as M&Ms and Hersh
Consumers have various associations for brands such as M&Ms and Hershey's.
When it comes to the war between these bite-size milk chocolates, both brands have distinct characteristics that resonate with different consumer preferences.
M&Ms, known for their vibrant candy shells and various flavors, often evoke feelings of fun, playfulness, and nostalgia. On the other hand, Hershey's, with its classic and rich milk chocolate, carries a sense of tradition, comfort, and familiarity.
The question arises: what drives consumers to choose between M&Ms and Hershey's? The answer lies in the unique brand associations and individual preferences.
Some consumers may be drawn to M&Ms for their colorful and playful nature, while others may prefer the nostalgic factor and comforting taste of Hershey's. Factors such as packaging, marketing campaigns, and personal experiences can also influence consumer decisions.
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please fast
++xO B 16 Question Completion Statu Question The following comparative balance sheet is given for Extern Co Dec 31, 2021 Dec 31,2020 Cab $351,000 $58,500 News Receivable 72,000 63,000 81,000 121,500 S
Based on the given comparative balance sheet for Extern Co as of December 31, 2021, and December 31, 2020, analyzing the changes in the listed assets:
Cash: The cash balance increased from $58,500 in 2020 to $351,000 in 2021. This significant increase indicates improved liquidity or additional cash inflows during the year.Notes Receivable: The notes receivable increased from $63,000 in 2020 to $72,000 in 2021. This suggests that Extern Co has received additional promissory notes or has collected on existing ones.Supplies & Inventory: No specific information is provided about supplies and inventory in the given data.Prepaid Expense: No specific information is provided about prepaid expenses in the given data.Long-term Investments: No specific information is provided about long-term investments in the given data.Machines and Tools: No specific information is provided about machines and tools in the given data.It can be inferred that Extern Co experienced a substantial increase in cash and a moderate increase in notes receivable from 2020 to 2021. Without further details on the other assets, it is challenging to determine the overall changes and trends in Extern Co's asset composition.For more such questions on balance sheet
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The independence of central banks is desirable, discuss the advantages and disadvantages of this independence.
Central bank independence brings benefits such as reduced political influence, greater credibility, and price stability, it also presents challenges such as a lack of accountability, potential lack of responsiveness, and concerns over unelected officials.
The independence of central banks is desirable as it helps them to maintain stability and ensure that monetary policy decisions are made based on economic conditions rather than political considerations. However, there are also advantages and disadvantages of central bank independence.
Advantages of central bank independence include 1. Reduced political influence: Central banks that are independent of political influence can make monetary policy decisions that are more objective and less subject to the pressures of politicians and special interest groups. 2. Greater credibility: Independent central banks are seen as more credible by financial markets and investors, which can lead to greater trust and confidence in the economy. 3. Price stability: Independent central banks are better able to maintain price stability, which can help to reduce inflationary pressures and support economic growth.
Disadvantages of central bank independence include: 1. Lack of accountability: Independent central banks may be less accountable to the public and elected officials, which can lead to a lack of transparency and public scrutiny. 2. Lack of responsiveness: Central banks that are too independent may be less responsive to changes in the economy or the needs of the public, which can lead to slower economic growth and higher unemployment. 3. Unelected officials: The officials who make monetary policy decisions in independent central banks are often unelected, which can raise questions about the legitimacy of their decisions.
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21. suppose a firm has a single investment project, 1 and it is considering an additional project, 2. The projects have the following net present values, standard deviations, and correlation coefficients: Project Expected NPV ($) Standard Deviation ($) Correlation coefficient 12,000 14,000 1.00 12 8,000 6,000 1.00 1 and 2 0.40 What is the NPV of the portfolio? What is the standard deviation of the portfolio?
The standard deviation of the portfolio is approximately $16,303.48.
To calculate the NPV of the portfolio, we need to consider the correlation between the two projects. The formula for the NPV of a portfolio is as follows:
NPV Portfolio = NPV Project 1 + NPV Project 2 + 2 * (Standard Deviation Project 1) * (Standard Deviation Project 2) * (Correlation Coefficient)
Given the data provided, we can substitute the values into the formula:
NPV Project 1 = $12,000
NPV Project 2 = $8,000
Standard Deviation Project 1 = $14,000
Standard Deviation Project 2 = $6,000
Correlation Coefficient = 0.40
NPV Portfolio = $12,000 + $8,000 + 2 * ($14,000) * ($6,000) * (0.40)
Now, let's calculate the NPV of the portfolio:
NPV Portfolio = $12,000 + $8,000 + 2 * ($14,000) * ($6,000) * (0.40)
= $12,000 + $8,000 + 2 * $84,000 * 0.40
= $12,000 + $8,000 + $67,200
= $87,200
Therefore, the NPV of the portfolio is $87,200.
To calculate the standard deviation of the portfolio, we'll use the following formula:
Standard Deviation Portfolio[tex]= \sqrt((SDP 1)^2 + (SDP 2)^2 + 2 * (SDP1) * (SDP 2) *[/tex] (Correlation Coefficient))
Substituting the values:
Standard Deviation Project 1 = $14,000
Standard Deviation Project 2 = $6,000
Correlation Coefficient = 0.40
Standard Deviation Portfolio = [tex]\sqrt(($14,000)^2 + ($6,000)^2 + 2 * ($14,000) * ($6,000) * (0.40))[/tex]
Now, let's calculate the standard deviation of the portfolio:
Standard Deviation Portfolio = [tex]\sqrt(($14,000)^2 + ($6,000)^2 + 2 * ($14,000) * ($6,000) * (0.40))[/tex]
= √($196,000,000 + $36,000,000 + $33,600,000)
= √($265,600,000)
= $16,303.48
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Which of the following is not a factor that can shift the short-run aggregate supply curve? o changes in the wage rate O changes in the price of non-labor inputs such as oil o changes in labor productivity O a severe drought which extensively damages grain crops none of the above
The factor that cannot shift the short-run aggregate supply curve is a severe drought that extensively damages grain crops.
The short-run aggregate supply curve shows the relationship between the price level and the quantity of real GDP that businesses are willing and able to produce, holding other determinants of aggregate supply constant. The determinants of short-run aggregate supply include factors that can shift the short-run aggregate supply curve.
The changes in the wage rate, the price of non-labor inputs such as oil, and labor productivity can shift the short-run aggregate supply curve. An increase in the wage rate raises the production costs of firms, which reduces their profits and induces them to decrease the quantity of output supplied at each price level.
Similarly, an increase in the price of non-labor inputs such as oil raises the production costs of firms, which reduces their profits and induces them to decrease the quantity of output supplied at each price level, thereby shifting the short-run aggregate supply curve to the left.
On the other hand, an increase in labor productivity reduces the production costs of firms, which increases their profits and induces them to increase the quantity of output supplied at each price level, thereby shifting the short-run aggregate supply curve to the right.
However, a severe drought that extensively damages grain crops has no effect on the production costs of firms and does not change the quantity of output that they are willing and able to supply at each price level. Therefore, it does not shift the short-run aggregate supply curve.
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Training designed to introduce new employees to their jobs and the company, and to familiarize them with policies, procedures, culture, and the like is known as:
Training is designed to introduce new employees to their jobs and the company. and to familiarize them with policies, procedures, culture, and the like is known as Orientation. Option C is the correct answer.
A newly recruited employee can get acclimated to working and adjusting to the organization through an orientation training session. In order to ensure that employees quickly acclimate to the workplace and their coworkers, orientation training, which plays a crucial role in corporate recruiting procedures, is quite important. Option C is the correct answer.
Employees obtain a deeper understanding of the organizational culture through orientation training. Employees who have the chance to interact with and get to know their bosses and coworkers during this training process also learn a lot about the workplace during this process. Employees that get orientation training go through the adaptation stage more rapidly as they grow used to the workplace and their coworkers.
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The complete question is, "Training is designed to introduce new employees to their jobs and the company. and to familiarize them with policies, procedures, culture, and the like is known as
A. Diversity
B. Team
C. Orientation
D. Performance
E. Management"
helpppp
Moving to another question will save this response. Question 2 of 161 estion 2 1 points Mariam, Sabah and Fatima are partners with capital balances of $40,000, $60,000 and $50,000 respectively. They f
Afrah's capital balance would be $10,000, as stated in the information provided. Therefore, the correct answer is C) $10,000.
Afrah's capital balance would be $10,000. This is determined by multiplying Afrah's contribution of $10,000 by her equity share of 25%. Since Afrah is joining as a new partner, her capital balance is based on the amount she brings into the partnership and the agreed-upon percentage of ownership.To calculate Afrah's capital balance, we multiply $10,000 by 25% (or 0.25), which gives us $2,500. However, it is important to note that Afrah's capital balance is not limited to her contribution alone. It represents her ownership stake in the partnership and will be adjusted accordingly based on the partnership's profits, losses, and additional contributions.Therefore, the correct answer is C) $10,000, reflecting Afrah's initial capital contribution and equity share in the partnership.
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Question:
Mariam, Sabah and Fatima are partners with capital balances of $40,000, $60,000 and $50,000 respectively. They find that Afrah, a new partner, is a talented engineer with an experience useful for the company. Afrah accepts joining them as a new partner and ready to contribute $ 10,000 for an equity share of 25%. Afrah's capital balance would be:
A) $2,500.
B) $37,500.
C) $10,000.
D) $40,000.
Salem Company manufactures and trades frames weddings, and other special events. Abdulla, the controller, is responsible for preparing Salem s master budget and has accumulated the following information for 2018:
2018
January
February
March
April
May
Estimated sales in units
10,000
14,000
7,000
8,000
8,000
Selling price
$54.00
$50.50
$50.50
$50.50
$50.50
Direct manufacturing labor-hours per unit
2.0
2.0
1.5
1.5
1.5
Wage per direct manufacturing labor-hour
$13.00
$13.00
$13.00
$14.00
$14.00
In addition to wages, direct manufacturing labor-related costs include pension contributions of $0.60 per hour, worker’s compensation insurance of $0.30 per hour, employee medical insurance of $0.40 per hour, and Social Security taxes. Assume that as of January 1, 2018, the Social Security tax rates are 7.5% for employers and 7.5% for employees. The cost of employee benefits paid by Salem on its employees is treated as a direct manufacturing labor cost.
Salem has a labor contract that calls for a wage increase to $18 per hour on April 1, 2018. New laborsaving machinery has been installed and will be fully operational by March 1, 2018. Salem expects to have 21,500 frames on hand at December 31, 2018, and it has a policy of carrying an end-of-month inventory of 100% of the following month’s sales plus 50% of the second following month’s sales.
Salem Company's master budget for 2018 is prepared by incorporating the given information on estimated sales, selling price, direct manufacturing labor-hours per unit, wage rates, labor-related costs, labor contract changes, machinery installation, and inventory policy.
How can the production budget and direct manufacturing labor budget be prepared for Salem Company in 2018?To prepare the production budget for Salem Company in 2018, we need to estimate the number of units to be produced each month based on the projected sales. The estimated sales in units for each month are given, so we can use this information to determine the production needs. The production budget ensures that the company has sufficient inventory to meet customer demand.
To prepare the direct manufacturing labor budget, we need to determine the labor-hours required for each unit of production and the related labor costs. The direct manufacturing labor-hours per unit and the wage per direct manufacturing labor-hour are provided. We also need to consider additional labor-related costs such as pension contributions, worker's compensation insurance, employee medical insurance, and Social Security taxes.
By multiplying the estimated sales in units by the labor-hours per unit, we can calculate the total labor-hours required each month. Then, by multiplying the labor-hours by the wage per direct manufacturing labor-hour and adding the additional labor-related costs, we can determine the total direct manufacturing labor costs for each month.
The production budget and direct manufacturing labor budget provide valuable information for planning and controlling the company's manufacturing activities, ensuring adequate resources are allocated and labor costs are managed effectively.
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After all assets are sold and liabilities are settled, the
partnership of Bina and Niren is liquidated. Capital balances are
$30,000 for Bina and $20,000 for Niren. Cash distributed is
$50,000. The tr
When a partnership is dissolved, the liquidation process is the process by which its assets are sold and the proceeds are used to settle the partnership's debts and obligations. Bina will receive 60% of $50,000, or $30,000, while Niren will receive 40% of $50,000, or $20,000.
When a partnership is dissolved, the liquidation process is the process by which its assets are sold and the proceeds are used to settle the partnership's debts and obligations. If there are any assets remaining after all liabilities have been settled, they are then distributed among the partners in accordance with their capital account balances. After the assets have been sold and the liabilities settled, Bina and Niren's partnership is dissolved. Bina has a capital balance of $30,000, and Niren has a capital balance of $20,000. The cash that has been distributed is $50,000. As a result, we must divide the $50,000 in cash among the partners in accordance with their capital account balances. The total capital balances of Bina and Niren are $30,000 and $20,000, respectively. The sum of their capital balances is $50,000, which is also the same as the amount of cash distributed. As a result, each partner's percentage of the total capital balance will be used to determine their share of the cash distributed.To calculate the percentage of the total capital balance that each partner has, we add their individual capital balance to the total capital balance and divide by the total capital balance. The formula is as follows: Bina's percentage = (Bina's capital balance / Total capital balance) * 100% = (30,000 / 50,000) * 100% = 60%Niren's percentage = (Niren's capital balance / Total capital balance) * 100% = (20,000 / 50,000) * 100% = 40%The cash distributed will be divided between Bina and Niren based on their respective percentages of the total capital balance. As a result, Bina will receive 60% of $50,000, or $30,000, while Niren will receive 40% of $50,000, or $20,000. This means that after the liquidation process, Bina will receive a total of $60,000 ($30,000 in cash and $30,000 in capital), while Niren will receive a total of $40,000 ($20,000 in cash and $20,000 in capital).For more such questions on partnership, click on:
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Neveready Flashlights Inc. needs $374,000 to take a cash discount of 2/19, net 73. A banker will loan the money for 54 days at an interest cost of $11,300.
a. What is the effective rate on the bank loan? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Effective rate of interest %
b. How much would it cost (in percentage terms) if the firm did not take the cash discount but paid the bill in 73 days instead of 19 days? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Cost of not taking a cash discount %
c. Should the firm borrow the money to take the discount? Yes / No
d. If the banker requires a 20 percent compensating balance, how much must the firm borrow to end up with the $374,000? % Amount to be borrowed
e-1. What would be the effective interest rate in part d if the interest charge for 54 days were $11,700? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Effective rate of interest
e-2. Should the firm borrow with the 20 percent compensating balance requirement? (The firm has no funds to count against the compensating balance requirement.) Yes / No
a. Effective rate of interest = 13.1%
b. Cost of not taking a cash discount = 13.6%
c. The firm should borrow the money to take the discount.
d. Amount to be borrowed = $465,000
e-1. Effective rate of interest = 13.5%
e-2. The firm should not borrow with the 20% compensating balance requirement.
A shorter and more to-the-point summary of the responses:The bank loan possesses an interest rate of 13. 1% that is deemed efficient.
The cost of not taking the cash discount is 13.6%.
The firm should borrow the money to take the discount.
The firm must borrow $465,000 to end up with $374,000 after the compensating balance requirement.
The effective rate of interest with the compensating balance requirement is 13.5%.
The firm should not borrow with the compensating balance requirement.
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6) How do you think development of computer technology will effect AVC and AFC in an average sector? How do you think the value of AVC relative to AFC is affected by development of computer technology? Explain your answer. 7) How is short run and long run in producers theory defined? 8) In 20th Century companies increasingly begin to make more advertisements, which has increased their fixed costs. Assuming variable costs of these companies stayed the same, how would this development affect the production level at which short run average total costs are minimum. 9) Give an example of a sector where you think the returns to scale is increasing. Explain your answer. (You don't need to know all technical details of the sector you choose. A reasonable explanation based on your observation of the sector would be enough, as long as your answer is also consistent with the definition of returns to scale.) 10) How will increase in quantity produced affect the costs of a company in the short run and in the long run? Explain your answer. Show the effect of increase in cost also on a graph.
6) The development of computer technology is likely to have an impact on both Average Variable Cost (AVC) and Average Fixed Cost (AFC) in an average sector. Here's how it can affect them:
AVC: The development of computer technology can potentially reduce variable costs by increasing automation, streamlining processes, and improving efficiency. This can lead to a decrease in the cost of labor and other variable inputs, resulting in a decrease in AVC.AFC: On the other hand, the development of computer technology may not have a direct impact on fixed costs. AFC represents the fixed costs per unit of output, such as rent, depreciation, and other overhead expenses. While computer technology may lead to increased investments in technology infrastructure and software, which can be considered fixed costs, the overall impact on AFC would depend on the magnitude of these investments relative to the total fixed costs.The relationship between AVC and AFC can be influenced by the development of computer technology. If the reduction in AVC due to technology advancements is substantial, it may lead to a relatively smaller difference between AVC and AFC. In other words, the value of AVC may be closer to AFC, indicating a more efficient utilization of resources. However, the specific impact on the relative value of AVC and AFC would depend on the magnitude of cost reductions and the composition of fixed and variable costs in the sector.
7) In producer theory, the short run refers to a period of time during which at least one input is fixed and cannot be varied. It is characterized by a limited ability to adjust production levels and capacity. In the short run, a producer can only change variable inputs (e.g., labor, raw materials) to adapt to changes in output demand.
8) Increased advertising by companies, leading to higher fixed costs, would not directly affect the level of output at which short-run average total costs (SRATC) are minimum. In the short run, fixed costs are considered sunk costs, meaning they cannot be adjusted in response to changes in output levels. Therefore, changes in fixed costs, such as those associated with advertising, would not impact the level of output that minimizes SRATC.
9) An example of a sector where returns to scale are increasing is the software development industry. In this sector, as the scale of production increases, the benefits and efficiencies gained from economies of scale become more significant.
Software development involves high initial costs for research and development, infrastructure setup, and acquiring specialized talent. However, once the software is developed, additional copies can be produced at a relatively low cost. This results in decreasing average costs as production scales up.Furthermore, as software products gain wider adoption and market share, there are opportunities for network effects and complementary products or services to emerge, leading to further economies of scale. This can include benefits such as shared infrastructure costs, increased bargaining power with suppliers, and enhanced distribution channels.Overall, the software development sector exemplifies increasing returns to scale due to the significant upfront investments, low marginal costs of production, and potential network effects that can arise as production scales up.
10) The effect of an increase in the quantity produced on a company's costs depends on whether it is in the short run or the long run:
Short Run: In the short run, where some inputs are fixed, an increase in the quantity produced would generally lead to a higher level of variable costs. This is because the fixed inputs, such as capital or specialized equipment, cannot be immediately adjusted. As a result, the company may need to increase the usage of variable inputs, such as labor or raw materials, to produce more output, which would incur additional costs.Long Run: In the long run, where all inputs can be adjusted, an increase in the quantity produced can have a different impact on costs. With the ability to adjust all inputs, the company can optimize its production processes, achieve economies of scale, and potentially reduce average costs. This means that the cost per unit of output may decrease as the quantity produced increases in the long run.About SoftwareSoftware is a specific term for data that is formatted and stored digitally, including computer programs, documentation, and various information that can be read and written by a computer. In other words, part of a computer system that is intangible.
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Auerbach Inc. issued 6% bonds on October 1, 2021. The bonds have a maturity date of September 30, 2031 and a face value of $275 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2022. The effective interest rate established by the market was 8%.
Assuming that Auerbach issued the bonds for $237,627,473, what interest expense would it recognize in its 2021 income statement? Rudyard Corporation had 210,000 shares of common stock and 21,000 shares of 6%, $100 par convertible preferred stock outstanding during the year. Net income for the year was $510,000 and dividends were paid to both common and preferred shareholders. Rudyard's effective tax rate is 25%.
What is Rudyard's basic EPS?
When Rudyard's effective tax rate is 25% then, Rudyard's basic EPS is $1.99.
Interest expense of Auerbach Inc. in its 2021 income statement is $1,708,980.
Step 1: The selling price of bonds (6% coupon rate) is $237,627,473.
Selling price = Present value of principal + Present value of interest
Payment on September 30, 2021 = $275 million × 6% × 3/12
= $5,062,500
Present value of the principal at 8% effective interest rate for 10 years:
FV = $275,000,000;
n = 10;
r = 4% (8%/2); semiannual interest periods.
PV = $275,000,000 × 0.553675
= $152,511,895.83
Present value of the interest at 8% effective interest rate:
PV = $5,062,500 × 8.55925
= $43,372,306.25
Selling price = $152,511,895.83 + $43,372,306.25
= $195,884,202.08
Step 2: Discount on bonds = $237,627,473 – $195,884,202.08
= $41,743,270.92
Bond carrying amount (Book value) as on December 31, 2021 = $195,884,202.08 + $1,302,828.55 (Interest expense for 3 months)
= $197,187,030.63
Interest expense for full year = 8% × $197,187,030.63
= $15,774,962.45
Interest expense for 3 months (Oct 1 to Dec 31) = $15,774,962.45 × 3/12
= $3,943,740.61
Interest expense of Auerbach Inc. in its 2021 income statement is $3,943,740.61.
The basic EPS of Rudyard Corporation is $1.99.Stockholders equity calculation:
Common stock: 210,000 shares × $5 par value per share = $1,050,000
Preferred stock: 21,000 shares × $100 par value per share = $2,100,000
Additional paid-in capital on preferred stock = 21,000 shares × ($120 - $100) per share
= $420,000
Total stockholders' equity = $3,570,000
Basic EPS calculation: Net income available for common stockholders = $510,000 × (1 - 6%)
= $478,200
Preferred dividends = 21,000 shares × $100 par value × 6%
= $126,000
Net income available for common shareholders after preferred dividends = $352,200
Number of shares for calculating Basic EPS = 210,000
Basic EPS = $352,200 ÷ 210,000 shares
= $1.68
Income tax rate = 25%
Effective tax rate = 25%
Income before tax = $510,000
Tax = $127,500
Net income = $382,500
Basic EPS = $382,500 ÷ 210,000 shares
= $1.82
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Sara, a 20-year-old girl, wants to save $3 a day for her retirement. Every day she places $3 in a drawer. At the end of each year, she invests the accumulated savings totaled $1.095 in a brokerage account with an expected annual return of 12%. If she keeps saving in this manner, how much (approximately) will she have accumulated at age 65?* A) $14,425,461 B) $1,487,261 C) $78,897 D) $39,521 E) None of the above
The answer is A) $14,425,461. The explanation is that Sara saves $3 every day, which amounts to $1,095 per year (365 days x $3).
She invests this amount at an expected annual return of 12%. Assuming she starts at age 20 and continues until age 65, she will have 45 years of saving and investing.
To calculate the accumulated amount, we can use the future value formula: FV = PV x (1 + r)^n, where FV is the future value, PV is the present value (initial investment), r is the interest rate, and n is the number of compounding periods. In this case, the present value is $1,095, the interest rate is 12% (or 0.12), and the number of compounding periods is 45.
Plugging these values into the formula, we get FV = $1,095 x (1 + 0.12)^45 ≈ $14,425,461. Therefore, Sara will accumulate approximately $14,425,461 by the time she reaches age 65 if she continues saving and investing in this manner.
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An apartment was purchased for $ 500,000.00, 10% of which was a down payment and the remainder financed for 20 years at an effective annual rate 7.85%, with equal monthly payments.
Calculate the total
The total cost of the apartment, including the down payment and monthly mortgage payments over 20 years, is approximately $770,391.04.
What is the total cost of the apartment, including the down payment and monthly mortgage payments over 20 years, assuming a purchase price of $500,000.00 with a 10% down payment and financing at an effective annual rate of 7.85%?To calculate the total cost of the apartment, we need to consider the down payment and the monthly mortgage payments over the 20-year period.
The down payment is 10% of the purchase price, which is $500,000 * 0.10 = $50,000.To calculate the monthly mortgage payment, we need to use the formula for the present value of an annuity.
The principal amount financed is $500,000 - $50,000 = $450,000.The effective annual interest rate of 7.85% needs to be converted to a monthly interest rate by dividing it by 12 (months) and converting it to a decimal: 7.85% / 12 / 100 = 0.00654.
The number of monthly payments over 20 years is 20 ˣ 12 = 240.Using the formula for the present value of an annuity, the monthly mortgage payment (PMT) can be calculated as:
PMT = (Principal ˣ Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Payments))
PMT = ($450,000 ˣ 0.00654) / (1 - (1 + 0.00654)⁻²⁴⁰)PMT ≈ $3,209.96To calculate the total cost, we need to multiply the monthly mortgage payment by the number of payments over the 20-year period:
Total Cost = Monthly Mortgage Payment ˣ Number of PaymentsTotal Cost = $3,209.96 ˣ 240Total Cost ≈ $770,391.04Therefore, the total cost of the apartment, including the down payment and monthly mortgage payments over 20 years, is approximately $770,391.04.
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Which of the following would NOT be listed on the face of a bond?
A) The coupon interest rate
B) The maturity date
C) The market price of the bond
D) The coupon payment to be made
E) The name of the issuer
The market price of the bond would NOT be listed on the face of a bond. The correct option is C.
The face of a bond typically includes important information about the bond, such as the coupon interest rate, the maturity date, the coupon payment to be made, and the name of the issuer. These details are essential for bondholders to understand the terms and characteristics of the bond.
However, the market price of the bond, which represents the current trading value of the bond in the secondary market, is not typically listed on the face of the bond. The market price can vary based on supply and demand dynamics and other factors, and it is subject to change over time. Bondholders would need to refer to market data or consult financial platforms to determine the current market price of a bond.
The correct option is C.
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section 4 Question 29 of 75. Tinsley Cash (29) is filing as a single taxpayer. She is self-employed as a life coach and reporting a net profit from her sole proprietorship. Tinsley's partially completed Schedule SE, Self-Employment Tax, is shown below. Using the information provided, compute the amount of Tinsley's deduction for one-half of her self-employment tax. (Answer choices are below the image.) you ATENE One $318 3840 hela Com 1 Andr Mama hurch derson of thank and M 14 Ma 1 Wages us zyment Tax mà ja sam se p es ge 62% 78% rabat bur ganda De Mupy 121 Sutem 17 Ener employee i Hantam Openalt and also www. to mp cludeden ee K Melymer May 2 Self-payment Add fa 1001 PartOptional Methods To Figure Net Farm Opal Me VENE UNA MA Self-Employment Tax e fr and oppos 1362 1630 Auto-576- Schedule 2014 toe, ew your tas Ex -] 24 4 3-CED 40 13 2021 Padren 17 xxxxxxxxxxxxx tat 142400 bet um 1841
To determine the amount of Tinsley's deduction for one-half of her self-employment tax, we need to consider the self-employment tax she owes. Employment taxes are federal and state taxes deducted from employee paychecks by employers, including Social Security and Medicare taxes. However, self-employed individuals, like Tinsley, are responsible for paying these taxes themselves.
The self-employment tax is calculated at a rate of 15.3% on the individual's net profit.
To compute Tinsley's self-employment tax liability, we multiply her net profit of $1,842 by 15.3% to obtain $282.01.
The deduction for one-half of the self-employment tax is determined by taking 50% of the self-employment tax amount. Therefore, Tinsley's deduction for one-half of her self-employment tax is $141.00.
In summary, Tinsley's self-employment tax liability is $282.01, and her deduction for one-half of this tax amounts to $141.00.
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Develop a POULTRY CHICKEN FARMING business plan to be submitted to a lending institution so that you can borrow funds to start your small business. You are required to write an OPERATIONS of a POULTRY CHICKEN FARMING which will convince the lender that your business is highly viable in Australia.
In an operation plan following things are included- introduction, business description, business model, market analysis, operation plan, financial plan .
To write an operations plan of a Poultry Chicken Farming business, the following should be included:
1. Introduction- A poultry farming business is an agribusiness that focuses on raising domesticated birds such as turkeys, ducks, quails, geese, and chickens. The primary purpose of a poultry farming business is to breed and produce meat and eggs for the market.
2. Business Description- The poultry farming business is an essential industry that is needed globally because people consume poultry products daily. Poultry farming businesses also create employment and contribute to the economic development of the community.
3. Business Model- The business model of a poultry farming business is to breed and produce meat and eggs for sale. The business can operate as a sole proprietorship, partnership, or corporation. The target customers for poultry products are butcheries, restaurants, hotels, supermarkets, and households.
4. Market Analysis- A market analysis helps determine the demand and supply of poultry products in the market. The market for poultry products is vast, and the demand is high because people consume poultry products daily. The market is segmented into different categories, such as butcheries, restaurants, hotels, supermarkets, and households.
5. Operations Plan -The operations plan outlines how the poultry farming business will operate and produce poultry products.
The plan includes the following:
Location: The poultry farm will be located in a rural area with enough land to accommodate the birds. The location should be accessible to the market and have a reliable source of water and electricity.
Facilities: The facilities on the farm will include a hatchery, brooding house, grow-out house, and processing plant. The hatchery is where the eggs will be hatched, and the brooding house is where the chicks will be raised for six weeks. The grow-out house is where the birds will be raised until they are ready for the market, and the processing plant is where the birds will be slaughtered and packaged.
Equipment: The equipment on the farm will include incubators, feeders, drinkers, cages, and processing equipment.
Labor: The labor on the farm will include a farm manager, assistant manager, farm workers, and processing staff.
6. Financial Plan- The financial plan outlines how much capital the business needs to start and operate and how the business will generate revenue.
The financial plan includes the following:
Capital: The poultry farming business needs capital to buy land, equipment, and birds. The capital can be sourced from a bank loan, personal savings, or investment.
Revenue: The revenue of the poultry farming business comes from the sale of poultry products. The business needs to have a pricing strategy that will attract customers and generate profits.
Expenses: The expenses of the poultry farming business include labor, feed, utilities, and maintenance. The business needs to have a budget that will cover all expenses and generate profits.
Conclusion The operations plan of the poultry farming business outlines how the business will operate and produce poultry products. The plan convinces the lender that the business is viable and has a high potential for success.
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Financial statement analysis would include
Select one:
a. calculating ratios
b. looking at relationships with the financial statements
c. comparing results with industry benchmarks
d. all of the above
The answer is (d) all of the above. Financial statement analysis is an examination of an entity's financial statements to extract significant information
This is because financial statement analysis would include calculating ratios, looking at relationships with the financial statements and comparing results with industry benchmarks. Financial statement analysis is an examination of an entity's financial statements to extract significant information. It is used to evaluate the financial health of a business. Financial statement analysis may be used to determine if a company's financial statements contain red flags that should be investigated. The analysis includes a review of income statements, balance sheets, and statements of cash flows. In this analysis, ratios, such as liquidity ratios and profitability ratios, are calculated. Ratios reveal trends and provide a more detailed picture of a company's financial health. Financial statement analysis entails examining an entity's financial statements to extract significant information. It is utilized to assess a company's financial well-being. This analysis may be utilized to determine whether a company's financial statements contain red flags that should be investigated. The analysis includes a review of the income statement, balance sheet, and statement of cash flows. In this analysis, ratios such as liquidity ratios and profitability ratios are calculated.
Ratios are a critical aspect of financial statement analysis. They provide a more detailed picture of a company's financial health. Ratios reveal trends and provide additional insight into a company's financial health. Financial ratios may be divided into categories such as liquidity ratios, profitability ratios, and activity ratios. These ratios show how a company is performing in various areas. A financial statement analysis may be used to assist an entity in making important decisions such as whether to invest in a company or whether to extend credit to a customer. Financial statement analysis includes calculating ratios, looking at relationships with the financial statements, and comparing results with industry benchmarks. Financial statement analysis is used to evaluate the financial health of a company. Ratios are crucial in financial statement analysis, as they provide a more detailed picture of a company's financial health. Financial statement analysis may be used to assist a company in making important decisions such as whether to invest in a company or whether to extend credit to a customer.
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jaden (single) has a traditional ira to which he has made only deductible contributions. at the end of 2022, jaden is 74 years old. jaden's required minimum distribution (rmd) from his ira for 2022 is $7,400. before considering the rmd, jaden's agi is $124,000. jaden does not itemize deductions. required: what is jaden's agi if jaden receives the rmd and donates the $7,400 distribution proceeds to a qualifying charity? what is jaden's agi if jaden directs the ira trustee to transfer the $7,400 distribution directly to a qualifying charity as a qualified charitable donation (qcd)? true or false. based on the information provided, jaden's taxable income is the same whether he makes a qcd or not. explain.
1. Jaden's AGI would be $95,000 if he receives the RMD and donates the $5,000 distribution to charity.
2. Jaden's AGI would remain at $100,000 if he directs the $5,000 RMD distribution directly to a qualifying charity as a QCD.
1. If Jaden receives the RMD of $5,000 and donates the distribution proceeds to a qualifying charity, the amount of the distribution will be excluded from Jaden's income for tax purposes. Therefore, Jaden's AGI will decrease by $5,000, resulting in an adjusted AGI of $95,000. This exclusion is allowed under the Qualified Charitable Distribution (QCD) provision for traditional IRAs for individuals who are 70½ or older.
2. If Jaden directs the IRA trustee to transfer the $5,000 distribution directly to a qualifying charity as a qualified charitable donation (QCD), the distribution will not be included in Jaden's income. Consequently, Jaden's AGI will not be affected by the $5,000 distribution. Therefore, Jaden's AGI will remain at $100,000, as the distribution will not be included in his taxable income due to the QCD provision. This allows Jaden to reduce his taxable income while supporting a charitable cause directly from his IRA.
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The complete question is:
Jaden (single) has a traditional IRA to which he has made only deductible contributions. At the end of 2022, Jaden is 74 years old. Jaden's required minimum distribution (RMD) from his IRA for 2022 is $5,000. Before considering the RMD, Jaden's AGI is $100,000. Jaden does not itemize deductions.
Required:
1. What is Jaden's AGI if Jaden receives the RMD and donates the $5,000 distribution proceeds to a qualifying charity?
2. What is Jaden's AGI if Jaden directs the IRA trustee to transfer the $5,000 distribution directly to a qualifying charity as a qualified charitable donation (QCD)?
WACC: Determine the weighted average cost of capital for a firm given the following information: (10 pts.) A corporation has 20,000 bonds outstanding with a 8% annual coupon rate, 12 years to maturity, a $1,000 face value, and a $1,100 market price. Assume semiannual coupon payments. The company's 60,000 shares of preferred stock pay a $1.50 annual dividend, and sell for $20 per share. The company's 1,200,000 shares of common stock sell for $25 per share and have a beta of 1.15. The risk-free rate is 3%, and the market return is 13%. Assuming a 21% tax rate, what is the company's WACC? WACC = (E/V) x R4+ (P/V) x Rp + (D/V) x R. (1-T)
To calculate the weighted average cost of capital (WACC), we need to determine the cost of each component of the company's capital structure and weight them according to their respective proportions.
Given:
Bonds:
Number of bonds (N) = 20,000
Annual coupon rate (C) = 8% (coupon payment as a percentage of face value)
Years to maturity (T) = 12 years
Face value (F) = $1,000
Market price (P) = $1,100
Preferred Stock:
Number of shares (N) = 60,000
Dividend per share (D) = $1.50
Market price (P) = $20
Common Stock:
Number of shares (N) = 1,200,000
Market price (P) = $25
Beta (β) = 1.15
Risk-free rate (Rf) = 3%
Market return (Rm) = 13%
Tax rate (T) = 21%
First, we calculate the cost of debt:
Coupon payment per bond (C) = 8% * $1,000 / 2 = $40 (since it is a semiannual coupon payment)
Current yield to maturity (YTM) = ($40 / $1,100) * 2 = 0.0727 or 7.27%
After-tax cost of debt (Rd) = YTM * (1 - Tax rate) = 0.0727 * (1 - 0.21) = 0.0575 or 5.75%
Next, we calculate the cost of preferred stock:
Dividend per share (D) = $1.50
Market price per share (P) = $20
Cost of preferred stock (Rp) = D / P = $1.50 / $20 = 0.075 or 7.5%
Finally, we calculate the cost of equity using the Capital Asset Pricing Model (CAPM):
Risk-free rate (Rf) = 3%
Market return (Rm) = 13%
Beta (β) = 1.15
Cost of equity (Re) = Rf + β * (Rm - Rf) = 0.03 + 1.15 * (0.13 - 0.03) = 0.1245 or 12.45%
Now we can calculate the WACC:
Weight of debt (D/V) = (20,000 * $1,000) / ($20 * 60,000 + $25 * 1,200,000 + $20 * 60,000) = 0.115
Weight of preferred stock (P/V) = ($20 * 60,000) / ($20 * 60,000 + $25 * 1,200,000 + $20 * 60,000) = 0.022
Weight of common stock (E/V) = ($25 * 1,200,000) / ($20 * 60,000 + $25 * 1,200,000 + $20 * 60,000) = 0.863
WACC = (E/V) * Re + (P/V) * Rp + (D/V) * Rd * (1 - T)
WACC = 0.863 * 0.1245 + 0.022 * 0.075 + 0.115 * 0.0575 * (1 - 0.21)
WACC ≈ 0.107 + 0.002 + 0.0523
WACC ≈ 0.1613 or 16.13%
Therefore, the company's weighted
average cost of capital (WACC) is approximately 16.13%.
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QUESTION FIVE Juma and Jenala each carry on business as wholesalers of the same product. Their respective accounts for the year ended 31 December 2020 are as follows: Juma Jenala к к к K Sales 144,
Both Juma and Jenala are wholesalers of the same product, but it can be concluded that Jenala has performed better in terms of generating higher sales and profits for the year ended 31 December 2020.
Juma and Jenala are wholesalers dealing in the same product. Their respective accounts for the year ended 31 December 2020 are as follows:
Juma:
Sales: $144,000
Cost of goods sold: $96,000
Gross profit: $48,000
Expenses: $23,000
Net profit: $25,000
Jenala:
Sales: $190,000
Cost of goods sold: $130,000
Gross profit: $60,000
Expenses: $25,000
Net profit: $35,000
From the above table, the following observations can be made:
Jenala has a higher sales figure of $190,000 compared to Juma's sales of $144,000.
Jenala also has a higher cost of goods sold amounting to $130,000 compared to Juma's cost of goods sold of $96,000, which is expected given Jenala's higher sales.
Jenala's gross profit is also higher at $60,000, while Juma's gross profit is $48,000.
However, Jenala's expenses are also higher at $25,000 compared to Juma's expenses of $23,000.
As a result, Jenala has a higher net profit of $35,000 compared to Juma's net profit of $25,000.
Based on these figures, it can be concluded that although both Juma and Jenala are wholesalers of the same product, Jenala has performed better in terms of generating higher sales and profits for the year ended 31 December 2020.
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