The internal rate of return : (mark all that applies) does not need a required rate to calculate. rule states that a typical investment project with an IRR that is less than the required rate of return should be accepted. is the more sound decision rule when dealing with mutually exclusive projects is the rate that causes the net present value of a project to exactly equal zero. can effectively be used to analyze all investment scenarios.

Answers

Answer 1

Answer:

does not need a required rate to calculate

is the rate at which npv is zero

Explanation:

Internal rate of return is an example of capital budgeting method

Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested.

Projects with the IRR greater than the discount rate should be accepted. It means that it is profitable.

Projects with more than one negative cash flow are unsuitable for calculating with IRR. This is because it can lead to multiple IRR, Thus, it not suitable for analysing all investment scenarios.

The net present value is the most preferred capital budgeting method

Other capital budgeting methods includes

1. profitability index = 1 + (NPV / Initial investment)  

2. Accounting rate of return = Average net income / Average book value  

3. Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows

4. Net present value is the present value of after-tax cash flows from an investment less the amount invested.  


Related Questions

Khalid, who is single, reports the following items for 2020: Salary $40,000 Interest income on U.S. Treasury bonds 8,000 Loss on theft of securities (60,000) Interest income on New York state bonds 12,000 What is Khalid's NOL for 2020

Answers

Answer:

Particulars                  Amount

Salary                          $40,000

Interest expenses      $8,000

AGI                              $48,000

Less:

Itemized deduction    ($60,000)

Personal exemption   ($3,950)

Taxable Income          ($15,950)

Taxable Income          ($15,950)

Personal exemption   ($3,950)

Net Operating Loss    $12,000

Note: Interest on New York state bonds of $12,000 is an exemption

Black Oil Company considered building a service station in a new location. The owners and their accountants decided that this was the profitable thing to do. However, soon after they made this decision, both the interest rate and the cost of building the station changed. In which case do these changes both make it less likely that they will now build the station?

Answers

Answer: An increase in the Interest rates and the cost of building the station

Explanation:

Before setting out to do business, most companies and investors calculate the cost of setting up the business and what they stand to gain when the business does well and when it doesn't. Most of these analysis are done when the business is being put into consideration. When there is a change in cost of any of the items put into consideration, the business would either be carried out or cancelled. What could discourage the Black oil company would be either an increase in interest rates or cost of building the station.

Holder Manufacturing had $125,000 of net income in 2015 when the selling price per unit was $100, the variable costs per unit were $70, and the fixed costs were $475,000. Management expects per unit data and total fixed costs to remain the same in 2016. The president of Holder Manufacturing is under pressure from stockholders to increase net income by $60,000 in 2016.
Instructions
A) Compute the number of units sold in 2015.
B) Compute the number of units that would have to be sold in 2016 to reach the stockholders' desired profit level.
C) Assume that Holder Manufacturing sells the same number of units in 2016 as it did in 2015. What would the selling price have to be in order to reach the stockholders' desired profit level.

Answers

Answer:

Holder Manufacturing

A. The number of units sold in 2015 is:

= 20,000 units

B. The number of units that would have to be sold in 2016 to reach the stockholders' desired profit level is:

= 22,000 units

C. The selling price to reach the stockholders' desired profit level, assuming that Holder Manufacturing sells the same number of units in 2016 as it did in 2015 is:

= $103 per unit.

Explanation:

a) Data and Calculations:

Net income in 2015 = $125,000

Selling price per unit = $100

Variable costs per unit = $70

Contribution per unit = $30

Fixed costs = $475,000

Number of units sold in 2015:

Contribution margin = Net income + Fixed costs

= $125,000 + $475,000 = $600,000

Number of units sold = $600,000/$30 = 20,000 units

For 2016:

Contribution margin = $660,000 ($600,000 + $60,000)

Number of units to be sold = 22,000

If units sold in 2016 = 20,000, selling price would be:

Contribution would be = $33 ($660,000/20,000)

Selling price = Variable cost + Contribution margin per unit

= $70 + $33 = $103

Your retirement fund consists of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 0.65. Suppose you sell one of the stocks with a beta of 1.0 for $7,500 and use the proceeds to buy another stock whose beta is 2.25. Calculate your portfolio's new beta. Do not round intermediate calculations. Round your answer to two decimal places.

Answers

Answer:

0.7125

Explanation:

Calculation to determine your portfolio's new beta.

First step is to calculate the Increase in beta as a result of net sales

Increase in beta as a result of net sales=2.25-1

Increase in beta as a result of net sales=1.25

Hence:

increase/stock=1.25/20=0.0625

Now let calculate the new beta

New beta=0.65+0.0625

New beta=0.7125

Therefore your portfolio's new beta will be 0.7125

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $341,900 and direct labor hours would be 48,900. Actual manufacturing overhead costs incurred were $307,800, and actual direct labor hours were 52,800. What is the predetermined overhead rate per direct labor hour

Answers

Answer:

See below

Explanation:

With regards to the above, the predetermined overhead rate is computed below.

Predetermined overhead rate = Estimated factory overhead cost / Estimated direct labor hours

Given that;

Estimated factory overhead cost = $341,900

Estimated direct labor hours = 48,900

Therefore,

Predetermined overhead rate per direct labor hour

= $341,000 / 48,900

= $6.97 per direct labor hour

Skysong, Inc. sells office equipment on July 31, 2022, for $17,400 cash. The office equipment originally cost $72,400 and as of January 1, 2022, had accumulated depreciation of $42,300. Depreciation for the first 7 months of 2022 is $5,250. Prepare the journal entries to (a) update depreciation to July 31, 2022, and (b) record the sale of the equipment.

Answers

Answer:

(a) update depreciation to July 31, 2022

Debit : Depreciation expense  $5,250

Credit : Accumulated depreciation $5,250

(b) record the sale of the equipment.

Debit : Accumulated depreciation $47,550

Debit : Cash $17,400

Debit : Profit and Loss $7,450

Credit : Cost $72,400

Explanation:

Accumulated Depreciation is the total depreciation charged on the asset during its tie in use in the business Accumulated depreciation is $47,550 ($42,300 + $5,250 ).

The Sale has resulted in a loss of $7,450 ($72,400 - $17400 - $47,550)

Decision Case F:2-1 Your friend, Dean McChesney, requested that you advise him on the effects that certain transactions will have on his business, A-Plus Travel Planners. Time is short, so you cannot journalize the transactions. Instead, you must analyze the transactions without a journal. McChesney will continue the business only if he can expect to earn a monthly net income of $6,000. The business completed the following transactions during June:
A. McChesney deposited $10,000 cash in a business bank account to start the compan The company issued common stock to McChesney.
B. Paid $300 cash for office supplies.
C. Incurred advertising expense on account, $700.
D. Paid the following cash expenses: administrative assistant's salary, $1,400: office tent, $1,000.
E. Earned service revenue on account, $8,800.
F. Collected cash from customers on account, $1,200.

Answers

Answer:

A-Plus Travel Planners

Analysis of transactions:

A. Cash $10,000 (Increase Assets) Common Stock $10,000 (Increase Equity)

B. Office Supplies $300 (Decrease Profit) Cash $300 (Decrease Assets)

C. Advertising expense $700 (Decrease Profit) Cash $700 (Decrease Assets)

D. Salary expense $1,400 (Decrease Profit) Rent Expense $1,000 (Decrease Profit) Cash $2,400 (Decrease Assets)

E. Accounts Receivable $8,800 (Increase Assets) Service Revenue $8,800 (Increase Profit)

F. Cash $1,200 (Increase Assets) Accounts Receivable $1,200 (Decrease Assets)

Explanation:

a) Data and Calculations:

Expected net income = $6,000

Service Revenue        $8,800

Expenses:

Office Supplies $300

Advertising         700

Admin. Salary   1,400

Rent                  1,000 $3,400

Net income                $5,400

Expected profit           6,000

Required improvement $600

b) To achieve profit target of $6,000 under the current revenue profile, A-Plus Travel Planners must decrease expenses by at least $600.  Alternatively, it can increase its revenue by the same amount, while maintaining its costs at current level.

Purchase Transactions and T AccountsUsing T accounts for Cash, Accounts Payable, Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight-In, enter the following purchase transactions. Identify each transaction with its corresponding letter. Post the transactions in the given order.
Purchase of merchandise with cash.
a. Merchandise is purchased for cash, $1,500.
b. Merchandise listed at $3,500, less a trade discount of 15%, is purchased for cash.

Answers

Answer:

Dr                                                     Cash a/c                                                  Cr

                                                                                Purchases(a)                $1,500

                                                                                Purchases(b)                $2,975

Dr                                                     Purchases a/c                                             Cr

Cash(a)                                $1,500

Cash(b)                                $2,975

The above are the entries in the Cash and Purchases accounts.

The purchases are credited to the cash account and debited to the purchases.

b. Merchandise = 3,500 * ( 1 - 15% discount)

= $2,975

The point where total expenses equals total income​

Answers

Answer:

Break Point

Explanation:

EDGE 2021 :D !

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:

Direct materials: 5 pounds at $8.00 per pound $40.00
Direct labor: 2 hours at $14 per hour 28.00
Variable overhead: 2 hours at $5 per hour 10.00
Total standard cost per unit $78.00

The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs:

a. Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
b. Direct laborers worked 55,000 hours at a rate of $15.00 per hour.
c. Total variable manufacturing overhead for the month was $280,500.

Required:
a. What raw materials cost would be included in the company's planning budget for March?
b. What raw materials cost would be included in the company's flexible budget for March?
c. What is the materials price variance for March?

Answers

Answer:

Results are below.

Explanation:

Giving the following information:

Direct materials: 5 pounds at $8.00 per pound $40.00

The planning budget for March was based on producing and selling 25,000 units.

a)

The material cost included in the planning budget is the standard cost multiplied for the budgeted production.

Direct material requiered= 25,000*5= 100,000 pounds

Standard cost per pound= $5

Direct material budget= 100,000*5= $500,000

b)

The raw material's flexible budget adapts to the actual production level.

Direct material flexible budget= standard cost*actual material used in production

Direct material flexible budget= 5*160,000

Direct material flexible budget= $800,000

c)

To calculate the direct material price variance, we need to use the following formula:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (5 - 7.5)*160,000

Direct material price variance= $400,000 unfavorable

The following selected transactions were completed by Fasteners Inc. Co., a supplier of buttons and zippers for clothing:

20Y3
Nov. 21. Received from McKenna Outer Wear Co., on account, a $96,000, 60-day, 3% note dated November 21 in settlement of a past due account.
Dec. 31. Recorded an adjusting entry for accrued interest on the note of November 21. 20Y4
Jan. 20. Received payment of note and interest from McKenna Outer Wear Co.

Required:
Journalize the entries to record the transactions.

Answers

Answer:

1. Nov-21

Dr Notes receivable $96,000

Cr Accounts receivable-McKenna Outer Wear Co. $96,000

2. Dec-31

Dr Interest receivable $320

Cr Interest revenue $ 320

3 Jan-20

Dr Cash $96,480

Cr Note Receivable $96,000

Cr Interest receivable $160

Cr Interest receivable $320

Explanation:

Preparation of the journal entries

1. Nov-21

Dr Notes receivable $96,000

Cr Accounts receivable-McKenna Outer Wear Co. $96,000

(To record note received)

2. Dec-31

Dr Interest receivable $320

($96,000*3%*40/2/360)

Cr Interest revenue $ 320

(To record Interest accrued till Dec 31)

3 Jan-20

Dr Cash $96,480

($96,000+$160+$320)

Cr Note Receivable $96,000

Cr Interest receivable $160

($96,000*3%*20/2/360)

Cr Interest receivable $320 ($96,000*3%*40/2/360)

(To record payment received of note and interest)

The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota. Her story begins with her long sea voyage from Sweden. The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20, and a matching one for the doll owner is an additional $38. Buy both together and the price is only $50. A hand-painted wooden bed and trunk for Kristen are available for $213. Shipping costs vary with the price of the merchandise ordered. Refer to the American Girl Doll. What is the revenue to American Girl if it sells 20 basic Kristen doll and books

Answers

90-74.95= 45 mommy got fooled

Alpha Company owns 80 percent of the voting stock of Beta Company. Alpha and Beta reported the following account information from their year-end separate financial records: Alpha Beta Inventory $95,000 $88,000 Sales Revenue 800,000 300,000 Cost of Goods Sold 600,000 180,000 During the current year, Alpha sold inventory to Beta for $100,000. As of year end, Beta had resold only 60 percent of these intra-entity purchases. Alpha sells inventory to Beta at the same markup it uses for all of its customers. What is the total for consolidated inventory

Answers

Answer:

$173,000

Explanation:

The computation of the total consolidated inventory is shown below:

But before that following calculations need to be done

Percentage profits that Alpha charge to other customers is

= ($800,000 - $600,000) ÷ $800,000

= 25% of sales

Stock held at year end is

= $100,000 × 40%

= $40,000

Profit involved in stock is

= $40,000 × 25%

= $10,000

Now the stock of beta is  

= $88,000 - $10,000

= $78,000

And finally, the Total for consolidated inventory is

= $95,000 + $78,000

= $173,000

Portia owns and manages a sporting apparel company. Consider the given average cost (AC), average variable cost (AVC), and marginal cost (MC) curves for track suits. All but the MC curve have been placed incorrectly. Portia knows that the minimum average cost for a track suit is $7 and the minimum of average variable cost is $5.

Required:
Draw the AC and AVC curves so that they are consistent with the marginal cost curve.

Answers

Answer:

AVC curve will be below the AC curve

Explanation:

As we know,

[tex]AC = AFC + AVC[/tex]

This means that Average cost is the sum of average fixed cost and Average variable cost. Thus it can be shown that AC curve will be above the AVC curve.

Also we know that MC curve is upward sloping.

Thus, the MC curve will cut the AVC curve first and it will be to the right of the point where the MC curve cuts the AC curve.

So the curve must look like,

ABG
Question 14
Some fast-food restaurants sell only chicken, others sell only tacos and burritos, and still others sell only hamburgers. This is an example of the economic concept of
investment
А
B
business cycles
C
specialization
D
elasticity

Answers

Answer:

i think it is eaither  b or c

Explanation:

Answer: C- specialization

Explanation:

A companies gross profit or gross margin was $83,750 and its net sales were $347,800 it’s gross margin ratio is

Answers

Answer:

Gross Margin Ratio = 0.240799 or 24.0799%

Explanation:

Gross profit margin ratio or gross margin ratio is a financial ratio that expresses the gross profit of a company as a percentage of its total revenue. The gross profit is the difference between the total revenue and the cost of goods sold. The gross margin ratio can be calculated as follows,

Gross Margin Ratio = Gross Profit / Total Revenue

Gross Margin Ratio = 83750 / 347800

Gross Margin Ratio = 0.240799 or 24.0799%

North Inc. is a calendar-year C corporation, accrual-basis taxpayer. At the end of year 1, North accrued and deducted the following bonuses for certain employees for financial accounting purposes. $7,500 for Lisa Tanaka, a 30 percent shareholder. $10,000 for Jared Zabaski, a 35 percent shareholder. $12,500 for Helen Talanian, a 20 percent shareholder. $5,000 for Steve Nielson, a 0 percent shareholder. Unless stated otherwise, assume these shareholders are unrelated. How much of the accrued bonuses can North Inc. deduct in year 1 under the following alternative scenarios? (Leave no answer blank. Enter zero if applicable. Input all amounts as positive values.) a. North paid the bonuses to the employees on March 1 of year 2.

Answers

Answer:

North can deduct $35,000 for the accrued bonuses ($7,500 + $10,000 + $12,500 + $5,000)

Explanation:

The corporation has until the middle of March to deduct any bonuses handed out that correspond to past performance. After this 2¹/₂ month period is over, the bonuses must be deducted during the next accounting period.

Albert purchased a tract of land for $140,000 in 2017 when he heard that a new highway was going to be constructed through the property and that the land would soon be worth $200,000. Highway engineers surveyed the property and indicated that he would probably get $180,000. The highway project was abandoned in 2020 and the value of the land fell to $100,000. What is the amount of loss Albert can claim in 2020

Answers

Answer:

The amount of loss that Albert can claim in 2020 is limited to:

= $3,000.

Explanation:

a) Data and Calculations:

2017 Purchase cost of the tract of land = $140,000

Speculated price of the land = $200,000

Highway engineers-determined value = $180,000

2020 Value of the land after the project was abandoned = $100,000

The total amount of capital loss = $40,000 ($140,000 - $100,000)

The total amount of capital loss that Albert can claim in any tax year is limited to $3,000.  The remaining amount of the capitalloss that he incurred in 2020 will be carried forward.

At the end of 2019, Wildhorse Co. has accounts receivable of $731,300 and an allowance for doubtful accounts of $65,400. On January 24, 2020, the company learns that its receivable from Megan Gray is not collectible, and management authorizes a write-off of $6,900. On March 4, 2020, Wildhorse Co. receives payment of $6,900 in full from Megan Gray. Prepare the journal entries to record this transaction.

Answers

Answer and Explanation:

The journal entry to record the transaction is shown below:

Accounts receivable $6,900  

       To allowance for doubtful accounts $6,900

(Being reversing the write off is recorded)  

Here account receivable is debited as it increased the assets and credited the allowance as it decreased the assets  

Cash $6,900

           To Accounts receivable $6,900

(Being cash collection from write off account is recorded)

Here the cash is debited as it decreased the assets and credited the account receivable as it decreased the assets

For the U.S. soft drink market, of the 300 million people in the U.S., 80% of the population is the maximum number of consuming units. The average soft drink consumer buys 365 soft drinks a year at an average price of $0.98 per drink. What is the annual market potential of soft drink in dollar value

Answers

Answer:

Annual market potential = $85,848 millions

Explanation:

The annual market potential is the expected sales value for the soft drink product  for a year should the maximum number of potential consumers purchase the product at the average price.

Annual market potential = Average price × No of consuming unit × consumption rate per annum

Maximum number of consuming unit = 80%× 300 million =240 million

Consumption rate per buyer per annum = 365

Average price = $0.98

Annual market potential ($) = 0.98× 240× 365 =$85,848 millions

Annual market potential = $85,848 millions

Excess reserves A. are loans made at above market interest rates. B. are the deposits that banks do not use to make loans. C. are reserves banks keep to meet the reserve requirement. D. are reserves banks keep above the legal requirement. Suppose the required reserve ratio is ​% and a bank has the following balance​ sheet: Assets Liabilities Reserves ​$ Deposits ​$ Loans ​$ This bank keeps required reserves of ​$ nothing and excess reserves of ​$ nothing. ​(Enter your responses as​ integers.)

Answers

Answer and Explanation:

The excess reserves are the reserves banks that maintain more the legal requirement. It shows the difference between the required reserve and the actual reserve  

Hence, the last option is correct

Now the required reserve is

= ($11,000 × 11%)

= $1,210

And, the excess reserve is

= $2,200 - $1,210

= $990

Hence, the same would be relevant

Answer each questions.


1. Do internet search enhance our knowledge in animal/fish raising?

2. Search in the internet a picture that demonstrates a skill in harvesting/capturing animal/fish?. Paste the picture below.​

Answers

Answer:

Yes it does because it helps us to be aware on the things that we should know on how to raise the animals with care.

Explanation:

Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1, 20X7. On December 31, 20X8, Mortar received $370,000 from Granite for equipment Mortar had purchased on January 1, 20X5, for $400,000 and had been depreciating it over 10 Years and no salvage value. After the sale, the equipment is expected to have a 5-year useful life and no salvage value. Both companies depreciate equipment on a straight-line basis. Based on the preceding information, in the preparation of elimination entries related to the equipment transfer for the 20X8 consolidated financial statements, the debit adjustment to equipment would be: Group of answer choices

Answers

Answer:

The debit adjustment to equipment would be $30,000.

Explanation:

Amount received for the equipment by Mortar from Granite - $370,000

Purchase price of the equipment = $400,000

Debit adjustment to equipment = Purchase price of the equipment - Amount received for the equipment by Mortar from Granite = $400,000 - $370,000 = $30,000

Therefore, the debit adjustment to equipment would be $30,000.

Walnut has forecast sales for the next three months as follows: July 4,900 units, August 6,900 units, September 8,000 units. Walnut's policy is to have an ending inventory of 50% of the next month's sales needs on hand. July 1 inventory is projected to be 2,200 units. Selling and administrative costs are budgeted to be $20,000 per month plus $9 per unit sold. What are budgeted selling and administrative expenses for July

Answers

Answer:

the budgeted selling and administrative expenses for July is $64,100

Explanation:

The computation of the budgeted selling and administrative expenses for July is shown below:

= Budgeted selling & admin cost + (per unit sold × July units)

= $20,000 + ($9 × 4,900 units)

= $20,000 + $44,100

= $64,100

hence, the budgeted selling and administrative expenses for July is $64,100

We simply applied the above formula

PepsiCo, Inc. (PEP), the parent company of Frito-LayTM snack foods and Pepsi beverages, had the following current assets and current liabilities at the end of two recent years: Year 2 (in millions) Year 1 (in millions) Cash and cash equivalents $ 9,096 $ 6,134 Short-term investments, at cost 2,913 2,592 Accounts and notes receivable, net 6,437 6,651 Inventories 2,720 3,143 Prepaid expenses and other current assets 1,865 2,143 Short-term obligations (liabilities) 4,071 5,076 Accounts payable and other current liabilities 13,507 13,016 a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place.

Answers

Answer:

Current ratio

Year 1 = 1.3

Year 2 = 1.1

Quick ratio

Year 1 = 1.0

Year 2 = 0.8

Explanation:

Current ratio is the ration of a company's current assets to the current liabilities while the quick ratio is similar to the current asset except that the prepaid expenses and inventories are excluded from the determination of the assets.

Current assets

Year 1 = 9,096 + 2,913 + 6,437 + 2,720 + 1,865

= $ 23,031.00

Year 2 =  6,134 + 2,592 + 6,651 + 3,143 + 2,143

= $ 20,663.00

Current Liabilities

Year 1 = 4,071 + 13,507

= $ 17,578.00

Year 2 = 5,076 + 13,016

= $ 18,092.00

Current ratio

Year 1 = $ 23,031.00/$ 17,578.00

= 1.3 ( to 1 decimal place)

Year 2 = $ 20,663.00/$ 18,092.00

= 1.1 to 1 decimal place

Quick ratio

Year 1

= (23,031.00 - 2,720 - 1,865)/ 17,578.00

= 1.0 to 1 decimal place

Year 2

= (20,663.00 - 3,143 - 2,143)

= 0.8 to 1 decimal place

Suppose an American business owner purchases chocolates from Belgium in order to sell them in her shops. This would be entered as a ____________ item under the ___________________ section of the U.S. current account. Consider the goods and services balance. According to the table, the United States is running a trade ____________ .
The current account balance suggests that U.S. current account transactions (exports and imports of goods and services, as well as inflow and outflow of investment income and transfers) created outpayments of foreign currencies from the United States that were __________________the inpayments of foreign currencies to the United States.

Any surplus or deficit in one account must be offset by deficits or surpluses in other balance-of-payments accounts. Because the current account is in ____________ , the excess of foreign currency held by Americans must either be loaned to foreigners or used to buy foreign stocks or bonds. All of these transactions are then recorded in the _______________account. Since any imbalance in one account automatically leads to an equal, but opposite, imbalance in the other, the balance of payments is always _____________

Answers

Answer:

Debit

U.S. merchandise imports

Surplus

equal to

Surplus

current

zero

Explanation:

The trade deficit or surplus is based on the exports and imports of the country. When the imports are higher than exports then there will be trade deficit in the current account. In the given scenario the case is other way round, here imports are less than exports which suggests that there is a trade surplus which is offset by other accounts and balance of payment turn out to be zero.

The Argentine peso was fixed through a currency board at Ps1.00/$ throughout the 1990s. In January 2002 the Argentine peso was floated. On January 29, 2003 it was trading at Ps3.20/$. During that one year period Argentina's inflation rate was 20% on an annualized basis. Inflation in the United States during that same period was 2.2% annualized.

Required:
a. What should have been the exchange rate in January 2003 if PPP held?
b. By what percentage was the Argentine peso undervalued on an annualized basis?
c. What were the probable causes of undervaluation?

Answers

Answer:

1. 1.17416 peso/$

2. -63.30%

Explanation:

1. The exchange rate in January if PPP is held

1.00 = exchange rate

20 % = inflation in Argentina

0.22% = us inflation

1.00(1+0.20)/(1+0.022)

= 1.00x1.20/1.022

= 1.17416 pesos/$

B. Percentage by which pesos was devalued

(PPP/actual exchange rate)-1

= 1.17416/3.20 -1

= 0.366925-1

= -0.6330

= -63.30%

C. At 20 % we can see that inflation is really high in Argentina which is probably the reason for the undervaluation. But the truth is inflation alone cannot be held responsible. Severe crisis in Argentinas balance of payment is partly responsible

Jackson Company has two service departments (S1 and S2) and two producing departments (A and B). Department S1 serves Departments S2, A, and B in the following percentages, respectively: 15%, 25%, and 60%. Department S2 serves Departments S1, A, and B in the following percentages, respectively: 0%, 70%, and 30%. Direct department costs for S1, S2, A, and B are $200,000, $16,000, $210,000, and $185,000, respectively. If Jackson uses the step method of allocating service department costs beginning with Department S1, what is the total amount of cost that will be allocated from S2 to Department A?

Answers

Answer:

The total amount of cost that will be allocated from S2 to Department A is $32,200.

Explanation:

This can be calculated as follows:

Cost allocated from Department S1 to Department S2 = Direct department costs of Department S1 * Percentage of service to Department S2 = $200,000 * 15% = $30,000

Total Direct department costs for S2 = Direct department costs for S2 + Cost allocated from Department S1 to Department S2 = $16,000 + $30,000 = $46,000

Cost allocated from Department S2 to Department SA = Total direct department costs for S2 * Percentage of service to Department A = $46,000 * 70% = $32,200

Therefore, the total amount of cost that will be allocated from S2 to Department A is $32,200.

Ann Jones uses a dry-cleaning machine in her business, and it was partially destroyed by firE. At the time of the fire, the adjusted basis was $20,000 and its fair market value was $18,000. The adjusted basis after the fire is $10,000 and the fair market value after the casualty is $10,000. How much is the casualty loss

Answers

Answer:

the casualty loss is $8,000

Explanation:

The computation of the casualty loss is given below:

Lower of

= Adjusted basis or decline in FMV

= $10,000 or ($18,000 - $10,000)

= $10,000 or $8,000

= $8,000

hence, the casualty loss is $8,000

The same would be considered and relevant

The other values would be ignored

What types of decision need to be made by groups?

Answers

Trust, responsibility, and hardworking.
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