Problem 11-5 Sensitivity Analysis and Break-Even [LO1, 3]We are evaluating a project that costs $583,800, has a six-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 90,000 units per year. Price per unit is $41, variable cost per unit is $27, and fixed costs are $695,000 per year. The tax rate is 25 percent, and we require a return of 9 percent on this project. a-1.Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a-2.What is the degree of operating leverage at the accounting break-even point

Answers

Answer 1

Answer:

It was nice... friend.

Explanation:


Related Questions

The first step in the marketing process is ________. A. understanding the marketplace and customer needs and wants B. constructing an integrated marketing program that delivers superior value C. building profitable relationships and creating customer delight D. capturing value from customers to create profits and customer equity E. designing a customer-driven marketing strategy

Answers

Explanation:

Do you just need to fill in the blanks or what

Transactions Concrete Consulting Co. has the following accounts in its ledger: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Jason Payne, Capital; Jason Payne, Drawing; Fees Earned; Rent Expense; Advertising Expense; Utilities Expense; Miscellaneous Expense.

Transactions:
Oct. 1 Paid rent for the month, $2,800.
3 Paid advertising expense, $525.
5 Paid cash for supplies, $1,250.
6 Purchased office equipment on account, $9,300.
10 Received cash from customers on account, $16,600.
15 Paid creditors on account, $3,720.
27 Paid cash for miscellaneous expenses, $590.
30 Paid telephone bill (utility expense) for the month, $275.
31 Fees earned and billed to customers for the month, $50,160.
31 Paid electricity bill (utility expense) for the month, $830.
31 Withdrew cash for personal use, $1,700.

Journalize the following selected transactions for October 2019.

Answers

Answer:

Oct 1

Rent expense Dr. $2800

Cash Cr. $2800

(To record entry for payment of rent for month)

Oct 3

Advertising expenses Dr. $525

Cash Cr. $525

(To record entry for Advertising expenses)

Oct 5

Supplies Dr. $1250  

Cash Cr. $1250

(To record entry for purchase of supplies)

Oct 6

Office equipment Dr. $9300

Accounts Payable Cr. $9300

(To record purchase of office equipment on account)

Oct 10

Cash Dr. $16600

Accounts Receivable Cr. $16600

(To record cash received from customers on account)

Oct 15

Accounts payable Dr. $3720

Cash Cr. $3720

(To record payment made to creditors)

Oct 27

Miscellaneous expenses  Dr. $590

Cash Cr. $590

(To record repair expense of office equipment)

Oct 30

Telephone expense Dr. $275

Cash Cr. $275

(To record payment made for telephone bill)

Oct 31

Accounts receivables Dr. $50160

Service fees Cr. $50160

(To record fees earned )

Oct 31

Utility expense Dr.  $830  

Cash CR $830

(To record payment made for electricity bill)

Oct 31

Personal use Dr. $1700

Cash Cr. $1700

(To record payment of dividend)

Scott wanted to start a lawn cutting service but needed to purchase a lawnmower. Sherif gave Scott $30 in exchange for company revenue. What does Sherif now have in Scott's company?

A.) Rebate.
B.) Investment.
C.) Stock.
D.) Bond.

Answers

Answer:

C.) Stock.

Explanation:

Since in the question it is mentioned that scott wanted to begin the lawn cutting service but required to buy the lawnmower.Here sherif given $30 in exchange for the revenue of the company.

So according to the given options, the option c should be selected as the sherif has the stock by which the revenue would be exchanged

Therefore option c is correct

Answer:

The answer is C. Stock. ❤️

Kevin Jones, of Elon, North Carolina, is single and recently graduated from law school. He is employed and earns $9,000 per month, an awesome salary for someone only 26 years old. He also has $1,600 withheld for federal income tax, $520 for state income taxes, $690 for Medicare and Social Security taxes, and $220 for health insurance every month. Kevin has outstanding student loans of almost $80,000 on which he pays about $950 per month and a 0% loan on an auto loan payment of $300 on a Ford Fusion Hybrid he purchased new during law school. He is considering taking out a loan to buy a Kawasaki motorcycle.

Required:
a. What is kevins debt payments to disposable income ratio?
b. Based on your answer to part (a), how would you advise kevin about his plan.

Answers

Answer:

Kevin Jones

a. Kevin's debt payments to disposable income ratio = 21%

b. The first question that Kevin should ask himself is whether he actually requires the Kawasaki motorcycle and for what purpose.  Since he is already paying for a new auto that he purchased during law school, Kevin should try to limit his expenses to enable him save money for retirement.  He has enough debts now.  He should consider paying off his loans or rather investing some reasonable savings.  The earlier he does, the better for him.

Explanation:

a) Data and Calculations:

Monthly salary = $9,000

Monthly Deductions:

Federal income tax withheld =       $1,600

State income taxes =                           520

Medicare & Social Security taxes =    690

Health insurance =                              220

Total deductions =                         $3,030

Monthly Disposable income = $5,970 ($9,000 - $3,030)

Debt payments:

Outstanding student loans = $80,000

Monthly repayment of student loans = $950

Auto loan = $300

Total monthly debt payments = $1,250

Debt payments to Disposable income ratio = $1,250/$5,970 = 0.209

= 21%

Suppose a company is currently manufacturing 39 smartphones per day. The variable cost is $120 per smartphone with daily fixed costs totaling $684. What is the least number of smartphones that need to be produced each day in order to sell the smartphones for $132 each and earn a profit? radioImage a) 55 radioImage b) 53 radioImage

Answers

Answer:

57 smartphones per day

Explanation:

contribution margin per each smartphone = $132 - $120 = $12

total daily fixed costs = $684

break even point in units = total fixed costs / contribution margin per unit = $684 / $12 = 57 smartphones per day

break even in $ = 57 x $132 = $7,524 total daily sales

Macy Corporation's relevant range of activity is 8,400 units to 17,000 units. When it produces and sells 12,700 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 5.55 Direct labor $ 4.00 Variable manufacturing overhead $ 2.00 Fixed manufacturing overhead $ 3.60 Fixed selling expense $ 1.30 Fixed administrative expense $ 0.60 Sales commissions $ 1.25 Variable administrative expense $ 0.50 If the selling price is $32.50 per unit, the contribution margin per unit sold is closest to: Multiple Choice $19.20 $22.95 $11.55 $7.35

Answers

Answer:

Contribution margin per unit= $19.2

Explanation:

The contribution margin is calculated as follow:

Contribution margin per unit= selling price - total unitary variable cost

Direct materials $5.55

Direct labor $4.00

Variable manufacturing overhead $2.00

Sales commissions $1.25

Variable administrative expense $0.50

Total variable cost per unit= $13.3

Contribution margin per unit= 32.5 - 13.3

Contribution margin per unit= $19.2

A bachelors degree in which of the following areas is a good choice for an arts an communication manager?
A. business
B. art history
C. theater

Answers

Answer: A) Business.

I hope this helped :)

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $354,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 4% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $1,400 before adjustment

Answers

Answer:

Dr Bad Debt Expense $12,760

Cr Allowance for Doubtful Accounts $12,760

Explanation:

Based on the information given the adjusting journal entry that Tanning Company will make if the Allowance for Doubtful Accounts has a credit balance of the amount of $1,400 before adjustment will be :

Dr Bad Debt Expense $12,760

Cr Allowance for Doubtful Accounts $12,760

[(4%*$354,000)-$1,400]

Which of the following best describes the front-end function of a cloud computing network?

Answers

Answer:

the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server

Explanation:

Presented below are various account balances of K.D. Lang Inc.

a. Unamortized premium on bonds payable, of which $3,000 will be amortized during the next year.
b. Bank loans payable of a winery, due March 10, 2024. (The product requires aging for 5 years before sale.)
c. Serial bonds payable, $1,000,000, of which $200,000 are due each July 31.
d. Amounts withheld from employees' wages for income taxes.
e. Notes payable due January 15, 2023.
f. Credit balances in customers' accounts arising from returns and allowances after collection in full of account.
g. Bonds payable of $2,000,000 maturing June 30, 2021.
h. Overdraft of $1,000 in a bank account. (No other balances are carried at this bank.)
i. Deposits made by customers who have ordered goods.

Required:
Indicate whether each of the items above should be classified on December 31, 2024, as a current liability, a long-term liability, or under some other classification.

Answers

Answer:

a. Unamortized premium on bonds payable, of which $3,000 will be amortized during the next year.

Indication: Unamortized premium is a contra liability account and amortization is an expense account

b. Bank loans payable of a winery, due March 10, 2024. (The product requires aging for 5 years before sale.)

Indication: Long Term Liability

c. Serial bonds payable, $1,000,000, of which $200,000 are due each July 31.

Indication: 800000, Long term liability and 200000 current liability

d. Amounts withheld from employees' wages for income taxes.

Indication: Current Liability

e. Notes payable due January 15, 2023.

Indication: Long Term Liability

f. Credit balances in customers' accounts arising from returns and allowances after collection in full of account.

Indication: Account Receivable i

g. Bonds payable of $2,000,000 maturing June 30, 2021.

Indication: Current Liability

h. Overdraft of $1,000 in a bank account. (No other balances are carried at this bank.

Indication: Current Liability

i. Deposits made by customers who have ordered goods.

Indication: Current Liability

Golden Eagle Company prepares monthly financial statements for its bank. The November 30 and December 31 adjusted trial balances include the following account information:

30-Nov 31-Dec
debit    credit debit credit
supplies $2,000 $3,500
prepaid Insurance $8,000 $6,000
salaries payable $11,000 $16,000
unearned revenue $3,000 $1,500

The following information also is known:
a. Purchases of supplies during December total $3,500.
b. Supplies on hand at the end of December equal $3,000.
c. No insurance payments are made in December.
d. Insurance cost is $1,500 per month.
e. November salaries payable of $10,000 were paid to employees in December. Additional salaries for December owed at the end of the year are $15,000. On November 1, a tenant paid Golden Eagle $3,000 in advance rent for the period November through January, and Deferred Revenue was credited for the entire amount.

Required:
Show the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and unearned revenue on December 31.

Answers

Answer:

Golden Eagle Company

Adjusting Journal Entries:

a. Debit Supplies $3,500

Credit Cash $3,500

To record the purchase of supplies during December.

b. Debit Supplies Expense $2,500

Credit Supplies $2,500

To record the used supplies for the month.

d. Debit Insurance Expense $1,500

Credit Prepaid Insurance $1,500

To record expired insurance expense for the month.

e. Debit Salaries Payable $10,000

Credit Cash $10,000

To record the payment of salary arrears.

f. Debit Salaries Expense $15,000

Credit Salaries Payable $15,000

To record unpaid salaries for the month.

g. Debit Unearned Revenue $1,000

Credit Earned Revenue $1,000

To record earned revenue for the month.

Explanation:

a) Data and Calculations:

Golden Eagle Company

Adjusted Trial Balances as of November 30 and December 31 (Partial):

                                      30-Nov             31-Dec

                                 Debit  Credit     Debit   Credit

supplies                  $2,000             $3,500

prepaid Insurance $8,000              $6,000

salaries payable               $11,000               $16,000

unearned revenue           $3,000                 $1,500

Adjusting Entries for Supplies, Prepaid Insurance, Salaries Payable and Unearned Revenue on December 31:

a. Supplies $3,500 Cash $3,500

b. Supplies Expense $2,500 Supplies $2,500

d. Insurance Expense $1,500 Prepaid Insurance $1,500

e. Salaries Payable $10,000 Cash $10,000

f. Salaries Expense $15,000 Salaries Payable $15,000

g. Unearned Revenue $1,000 Earned Revenue $1,000

After graduating college, you receive $10,000 and decide to put it in a high yield saving account. The account earns 0.50% compounded quarterly. a) (8 points) What is the effective annual interest rate? b) (7 points) If you leave your initial investment of $10,000 in the account without any withdrawals what would you expect the value of the account to be after 4 years?

Answers

Answer:

a)

The effective annual interest rate is 0.5009%

b)

I will expect $10,201.88 the value of the account after 4 years

Explanation:

a)

Use the following formula to calculate the effective annual interest rate

Effective annual Interest rate = ( ( 1 + Interest rate / Compounding period per year )^Compounding period per year ) - 1

Where

Interest rate = 0.50%

Compounding period per year = 4 quarters in a year

Placing values in the formula

Effective annual Interest rate = ( ( 1 + 0.5% / 4 )^4 ) - 1 = 0.005009 = 0.5009%

b)

Use the following formula to calculate the value after 4 years

Value after 4 years = Current Investment x ( 1 + Periodic Interest rate )^numbers of period

Where

Current Investment = $10,000

Periodic Interest rate = 0.50% / 4 = 0.125%

Numbers of period = Compounding Periods per year x Numbers of years = 4 quarters per year x 4 years = 16 quarters

Placing values in the formula

Value after 4 years = $10,000 x ( 1 + 0.125% )^16

Value after 4 years = $10,201.88

Problem 3 (Current Liability Entries and Adjustments) Described below are certain transactions of Edwardson Corporation. The company uses the periodic inventory system: 1. On February 2, the corporation purchased goods from Martin Company for $70,000 subject to cash discount terms of 2/10, n/30. Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice was paid on February 26. 2. On April 1, the corporation bought a truck for $50,000 from General Motors Company, paying $4,000 in cash and signing a 1-year, 12% note for the balance of the purchase price. 3. On May 1, the corporation borrowed $83,000 from Chicago National Bank by signing a $92,000 zerointerest-bearing note due 1 year from May 1. 4. On August 1, the board of directors declared a $300,000 cash dividend that was payable on September 10 to stockholders of record on August 31. Instructions (a) Make all the journal entries necessary to record the transactions above using appropriate dates. (b) Edwardson Corporation's year-end is December 31. Assuming that no adjusting entries relative to the transactions above have been recorded, prepare any adjusting journal entries concerning interest that are necessary to present fair financial statements at December 31. Assume straight-line amortization of discounts.

Answers

Answer:

1. February 2

Dr Purchases68,600

Cr Account payable 68,600

February 26

Dr Account payable 68,600

Dr Purchase Discount loss 1,400

Cr Cash 70,000

December 31

No adjustment necessary

2. April 1

Dr Trucks 50,000

Cr Cash 4,000

Cr Note payable 46,000

December 31

Dr Interest expenese 4,140

Cr Interest Payable 4,140

3. May 1

Dr Cash 83,000

Dr Discount on notes payable 9,000

Cr Notes payable 92,000

December 31

Dr Interest expense 6,000

Cr Discount on notes payable 6,000

4. Aug 1

Dr Dividend $300,000

Cr Dividend payable $300,000

Sept 10

Dr Dividend payable$300,000

Cr Cash $300,000

December 31

No adjustment necessary

Explanation:

Preparation of the journal entries

1. February 2

Dr Purchases68,600

[$70,000 * (100%-2%)]

Cr Account payable 68,600

February 26

Dr Account payable 68,600

Dr Purchase Discount loss 1,400

(70,000-68,600)

Cr Cash 70,000

December 31

No adjustment necessary

2. April 1

Dr Trucks 50,000

Cr Cash 4,000

Cr Note payable 46,000

(50,000-4,000)

December 31

Dr Interest expenese 4,140

Cr Interest Payable 4,140

($46,000* 12% * 9/12 = $4,140)

3. May 1

Dr Cash 83,000

Dr Discount on notes payable 9,000

Cr Notes payable 92,000

December 31

Dr Interest expense 6,000

Cr Discount on notes payable 6,000

($9,000 * 8/12 (STRAIGHT-LINE) = $6,000)

4. Aug 1

Dr Dividend $300,000

Cr Dividend payable $300,000

Sept 10

Dr Dividend payable$300,000

Cr Cash $300,000

December 31

No adjustment necessary

This information relates to McCall Real Estate Agency.
Oct. 1 Stockholders invest $31,930 in exchange for common stock of the corporation.
2 Hires an administrative assistant at an annual salary of $30,600.
3 Buys office furniture for $3,850, on account.
6 Sells a house and lot for E. C. Roads; commissions due from Roads, $10,770 (not paid by Roads at this time).
10 Receives cash of $155 as commission for acting as rental agent renting an apartment.
27 Pays $690 on account for the office furniture purchased on October 3.
30 Pays the administrative assistant $2,550 in salary for October.
Journalize the transactions. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Cr amount is entered. Do not indent manually.

Answers

Answer:

Oct. 1 Stockholders invest $31,930 in exchange for common stock of the corporation.

Dr Cash 31,930

    Cr Common stock 31,930

Oct. 2 Hires an administrative assistant at an annual salary of $30,600.No journal entry

Oct. 3 Buys office furniture for $3,850, on account.

Dr Furniture 3,850

    Cr Accounts payable 3,850

Oct. 6 Sells a house and lot for E. C. Roads; commissions due from Roads, $10,770 (not paid by Roads at this time).

Dr Accounts receivable 10,770

    Cr Service revenue 10,770

Oct. 10 Receives cash of $155 as commission for acting as rental agent renting an apartment.

Dr Cash 155

    Cr Service revenue 155

Oct. 27 Pays $690 on account for the office furniture purchased on October 3.

Dr Accounts payable 690

    Cr Cash 690

Oct. 30 Pays the administrative assistant $2,550 in salary for October.

Dr Wages expense 2,550

    Cr Cash 2,550

Papa John’s is one of the fastest-growing pizza delivery and carry-out restaurant chains in the country. Presented here are selected income statement and balance sheet amounts (dollars in thousands). Current Year Prior Year Net sales $ 1,242,087 $ 1,242,087 Net income 51,796 22,735 Average shareholders' equity 121,445 134,536 Average total assets 390,143 397,728 Required: 1. Compute ROA for the current and prior years. (Round your answers to 3 decimal places.)

Answers

Answer and Explanation:

The computation of the return on assets for the current and prior years are as follows:

As we know that

Return on assets = Net income ÷ average total assets

For current year

= $1,242,087 ÷ $390,143

= 3.184

And, for the prior year

= $1,242,087 ÷ $397,728

= 3.123

Consider Cowboys Stadium, a large football stadium that can seat approximately 80,000 people (and hold over 100,000 people), located in Arlington, Texas.
If the Super Bowl, the game that determines pro football's champion team for the year, is played in Cowboys Stadium, the quantity of parking spots demanded will far exceed capacity. On a typical game day in the regular season, the quantity of parking spots demanded will only slightly exceed capacity. For smaller events, less than half of the parking spots are typically filled. Assume the marginal cost of providing another parking spot, once the parking lot has already been built, is $0 up to capacity.
In the following table, match each event to the most likely pricing strategy per parking spot.
Pricing Strategy Regular Season Game Super Bowl Small Event
$180 per spot ? ? ?
$4 per spot ? ? ?
$60 per spot ? ? ?

Answers

Answer:

180 dollar per spot is matched to the super bowl

4 dollar per spot is matched to small events

60 dollars per spot is matches to regular season game

Explanation:

the principle used in answering this question is that greater demand increases price. so large events would have greater demands for parking sots and hence reduced supply and greater prices.

first of all for the super bowl season the demands for parking spots are high, so that the demands are higher than the supply, so price should be highest here at $180 per spot.

secondly, for small events, the question says that less than half of the parking spots are filled, this means that the demand for parking spots is lower than the supply , so the price would be cheaper and therefore the lowest. The appropriate price would be $4 per spot.

lastly for regular season events, quantity demanded is only a little more than supply. they are almost equal. so the price should be the 60 dollars per spot as it is the second highest amount for the parking spots.

On December 31, Fighting Okra Cooking Services reports the following revenues and expenses.

Service revenue $77,000
Postage expense 1,600
Legal fees expense 2,500
Rent expense 10,800
Salaries expense 26,000
Supplies expense 15,500

In addition, the balance of common stock at the beginning of the year was $300,000, and the balance of retained earnings was $36,000. During the year, the company issued additional shares of common stock for $27,000 and paid dividends of $14,000.

Required:
a. Prepare an income statement.
b. Prepare a statement of stockholders' equity.

Answers

Answer:

See below

Explanation:

A. Income statement

Service revenue

$77,000

Less:

Postage expenses

$1,600

Legal fees expense

$2,500

Rent expense

$10,800

Salaries expense

$26,000

Supplies expense

$15,500

Net income

$20,600

B. Statement of stockholder equity

This is computed as

= Total assets - Total liabilities

= Retained earnings $36,00 + Dividends $14,000 + Net income $20,600 - $300,000

When British regulators were forced to suspend the license of a flu vaccine plant in Liverpool operated by the Chiron Corporation due to concerns over bacterial contamination. As a result, the number of flu vaccines available in the United States market decreased by 48 million doses. This was nearly half of the total supply of vaccines in the market.
a) use a supply and demand diagram to illustrate the impact of this event on the market to vaccines in the United States. What impact will this have on the equilibrium price and equilibrium quantity in the U.S. vaccine market?
b) What impact will this have on producer and consumer surplus? Briefly explain

Answers

Explanation:

The answer to this question is contained in the attachment. The graph has been used to explain the solution.

A. As license got suspended price rose to p1 as quantity fell from q to q1.

So quantity decreased and price rose.

B. The area market csps, D ands cs were consumer surpluses , after the decrease in amount of vaccines in the market, consumer surplus decreased to area cs, csps became part of producer surplus. Triangle d is the deadweight loss caused by fall in quantity.

Ps and d' are initial producer surplus. Producer surplus after decrease in vaccine can be seen in ps and csps. D' is the dead weight loss as price decreases.

Sandia Inc. wants to acquire a $360,000 computer-controlled printing press. If owned, the press would be depreciated on a straight-line basis over 10 years to a book salvage value of $0. The actual cash salvage value is expected to be $25,000 at the end of 10 years. If purchased, Sandia will incur annual maintenance expenses of $3,000. These expenses would not be incurred if the press is leased. If the press is purchased, Sandia could borrow the needed funds at an annual pre-tax interest rate of 10%. The lease rate would be $48,000 per year, payable at the beginning of each year. If Sandia has an after-tax cost of capital of 12% and a marginal tax rate of 40%, what is the net advantage to leasing? a. $37,737 b. $65,543 c. $60,713 d. $57,173

Answers

Answer:

a. $37,737

Explanation:

Present value of Cost of Buying = The Cost of Press + [(Post Tax annual maintenance expenses - Annual Depreciation Tax shield)*PVIFA (6%,10)] - [Post tax Salvage Value*PVIF (12%,10)]

PV of Cost of Buying = 360000 + (3000*(1-40%)-360000/10*40%)*7.360 - 25000*(1-40%) * 0.322

PV of Cost of Buying = $262,434

Present value of Cost of Leasing = Post tax Lease Payment at the Beginning *(1+PVIFA(6%,9))

PV of Cost of Leasing = $48000*(1-40%)*(1+6.802)

PV of Cost of Leasing = $224,697

Net advantage to leasing = PV of Cost of Buying - PV of Cost of Leasing

Net advantage to leasing = $262,434 - $224,697

Net advantage to leasing = $37,737

Classified Balance Sheet The following accounts appear in an adjusted trial balance of Kangaroo Consulting. Indicate whether each account would be reported in the current asset; property, plant, and equipment; current liability; long-term liability; or stockholders' equity section of the December 31, 2015, balance sheet of Kangaroo Consulting.
1. Accounts Payable
2. Accounts Receivable
3. Accumulated Depreciation—Building
4. Cash
5. Common Stock
6. Note Payable (due in ten years)
7. Supplies
8. Wages Payable

Answers

Answer:

current asset

4. Cash2. Accounts Receivable7. Supplies

property, plant, and equipment

3. Accumulated Depreciation: Building

Contra asset account that decreases the carrying value of fixed assets.

current liability

1. Accounts Payable8. Wages Payable

They have to be paid within the following accounting period.

long-term liability

6. Note Payable (due in ten years)

Has to be paid in more than 1 year.

stockholders' equity section

5. Common Stock

What would be the consequences if managers of a firm evaluated a project based on its actual dollar cash flows, but used a real rate to discount the cash flows? Would the project be more likely to be accepted, or more likely to be rejected? What kind of error could be committed? Please provide an example of how a project evaluation was affected by inflation considerations, either from your own experience, or do some online search for examples.

Answers

Answer:

Real rate of returns are lower than nominal rates of return, therefore, using a real discount rate would overestimate a project's net present value. This could result in unprofitable projects being accepted because the NPV was erroneously calculated. If you want to use a real discount rate, you must first convert cash flows to real dollars.

For example, nominal discount rate is 10%, inflation rate is 5%, real discount rate is 5%.

Initial outlay $100

NCF year 1 = $40

NCF year 2 = $40

NCF year 3 = $40

Using the real discount rate, the NPV = $8.93

Using the nominal discount rate, the NPV = -$0.53

. [3] Suppose you are considering buying a gold deposit. It will cost $1 million per year to construct a mine so that gold can be extracted. The construction period lasts 3 years. In the fourth year, production starts. Each year the mine operates, it will yield a net return (total revenue minus total cost) of $5,000, 000. Gold can be extracted for 6 years. Interested rates are 5%. a. What is the present value of the total net return (total benefit)

Answers

Answer:

The present value of the total net return (total benefit) is $21,922,868.23

Explanation:

As the yearly net return is a form of annuity cash flow.

To calculate the present value of the total net return we will use the following formula

First we need to determine the present value of net return at the end of year 3, then we will discount further to calculate the present value at year 0

Present value of net return at the end of year 3 = Yearly net return x ( 1 - ( 1 + Interest rate )^-Number of extraction years ) / Interest rate

Where

Yearly net return = $5,000,000

Interest rate = 5%

Number of extraction years = 6 years

Present value of net return at the end of year 3 = ?

Placing values in the formula

Present value of net return at the end of year 3 = $5,000,000 x ( 1 - ( 1 + 5% )^-6 ) / 5%

Present value of net return at the end of year 3 = $5,000,000 x 5.0756921

Present value of net return at the end of year 3 = $25,378,460.34

Now we need to discount the value further to calculate the present value at year 0

Present value of net return at the end of year 0 = Present value of net return at the end of year / ( 1 + Interest rate  ) ^numbers of year

Present value of net return at the end of year 0 = $25,378,460.34 / ( 1 + 5% )^3

Present value of net return at the end of year 0 = $21,922,868.23

A company’s January 1, 2014 balance sheet reported total assets of $120,000 and total liabilities of $40,000. During January 2014, the following transactions occurred: (A) the company issued stock and collected cash totaling $30,000; (B) the company paid an account payable of $6,000; (C) the company purchased supplies for $1,000 with cash; (D) the company purchased land for $60,000 paying $10,000 with cash and signing a note payable for the balance. What is total stockholders’ equity after the transactions above?

A. $30,000.

B. $110,000.

C. $80,000.

D. $194,000.

Answers

Answer:

B. $110,000

Explanation:

Calculation for the total stockholders equity

First step is to calculate the Beginning equity

Beginning equity = $120,000 − $40,000

Beginning equity = $80,000.

Now let calculate the stockholders' equity

Stockholders' equity = $80,000 + $30,000

Stockholders' equity = $110,000

Therefore the total stockholders equity will be $110,000

Which benefit of market research does this example convey?
Jennifer works as a marketing manager for her company. Over the last year, she and her staff conducted many telephone and focus group
surveys, as well as interviews, to collect market research data from the company's existing customers. In the process, the research team
interacted with many customers and established a good rapport with them. This helped the business reap the benefits of

Answers

Answer:

customer loyalty

Explanation:

 

Customer loyalty: Through market research, a business communicates with its consumers. Consumers can give opinions and express grievances through the market research process. Such interaction can help a business establish a strong rapport with its consumers, which leads to customer loyalty.

Answer:

Costumer Loyalty

Explanation:

I took this exact test:

Type the correct answer in the box. Spell all words correctly.

Which benefit of market research does this example convey?

Jennifer works as a marketing manager for her company. Over the last year, she and her staff conducted many telephone and focus group surveys, as well as interviews, to collect market research data from the company’s existing customers. In the process, the research team interacted with many customers and established a good rapport with them. This helped the business reap the benefits of BLANK

A company has a contract with the president that it has just hired. According to the contract a one-time payment of $24,800,000 will be paid to the president when he completes his first 9 years of service. For this purpose, the company would like to set aside equal amounts of money, once each year, in order to cover this anticipated large expense. The company can earn 8 percent on these amounts of money. How much will it need to set aside each year

Answers

Answer:

$1,985,976.79

Explanation:

The formula for finding the amount is :

A = FV/ annuity factor

Annuity factor = {[(1+r)^n] - 1} / r  

FV = Future value = $24,800,000

A = Amount

R = interest rate = 8%

N = number of years  = 9

Annuity factor = (1.08^9 - 1 ) / 0.08 = 12.487558

$24,800,000 / 12.487558  = $1,985,976.79

General Product Inc. distributed 100 million coupons in 2021. The coupons are redeemable for 30 cents each. General anticipates that 70% of the coupons will be redeemed. The coupons expire on December 31, 2022. There were 45 million coupons redeemed in 2021 and 30 million redeemed in 2022. General recognizes coupon promotion expense in the period coupons are issued. What was General's coupon promotion expense in 2021

Answers

Answer:

$21million

Explanation:

Calculation for What was General's coupon promotion expense in 2021

Using this formula

2021 General's coupon promotion expense= Distributed coupons × Redeemable × % redeemed

Let plug in the formula

2021 General's coupon promotion expense= 100million × $0.30 × 70%

2021 General's coupon promotion expense= $21million

Therefore 2021 General's coupon promotion expense will be $21million

Sagon Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $97,000 and the total of the credits to the account was $67,000. Which of the following statements is true?
A. Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $75,000.
B. Actual manufacturing overhead incurred during the month was $56,000.
C. Manufacturing overhead applied to Work in Process for the month was $75,000.
D. Manufacturing overhead for the month was underapplied by $19,000.

Answers

Answer:

Manufacturing overhead for the month was underapplied by $30,000.

Explanation:

Since it is given that

The debit to the manufacturing overhead is $97,000

And, the total credit is $67,000

So, the remaining amount would be

= $97,000 - $67,000

= $30,000

This $30,000 represent the underapplied overhead

This is the correct answer but the same is not provided in the given options

Blaine Air Transport Service, Inc., providing air delivery service for businesses, has been in operation for three years. The following transactions occurred in February: February 1 Paid $250 for rent of hangar space in February. February 2 Purchased fuel costing $580 on account for the next flight to Dallas. February 4 Received customer payment of $860 to ship several items to Philadelphia next month. February 7 Flew cargo from Denver to Dallas; the customer paid $840 for the air transport. February 10 Paid $170 for an advertisement in the local paper to run on February 19. February 14 Paid pilot $2,500 in wages for flying in January (recorded as expense in January). February 18 Flew cargo for two customers from Dallas to Albuquerque for $4,100; one customer paid $1,600 cash and the other asked to be billed. February 25 Purchased on account $2,460 in spare parts for the planes. February 27 Declared a $130 cash dividend to be paid in March.

Required:
Prepare journal entries for each transaction. Be sure to categorize each account as an asset (A), liability (L), stockholders

Answers

Answer:

Following are the journal entries for each transaction:

Explanation:

Date                                       Account-title                     Dr.         Cr.

February 1                             expense of rent                    250  

                                                           Cash                                         250

February 2                              expense of fuel                   580  

                                                  Payable Accounts                         580

February 4                                     Cash                           860  

                                                Unearned income                          860

February  7                                         Cash                   840  

                                                     Transport income                          840

February 10                               Advertising expense     170  

                                                              Cash                                   170

February 14                                  Payable Wages            2500  

                                                                Cash                                2500

February 18                                          Cash                    1800  

                                        Accounts receivable (4100-1600)               2500  

                                                    Transport income                         4100

February 25                                      Supplies                    2460  

                                                       Payable Accounts                          2460

February  27                      Retained earnings/ Cash dividend 130  

                                                        Dividends payable                   130

Swinnerton Clothing Company's balance sheet showed total current assets of $3,300, all of which were required in operations. Its current liabilities consisted of $575 of accounts payable, $300 of 6% short-term notes payable to the bank, and $145 of accrued wages and taxes. What was its net operating working capital that was financed by investors? Select the correct answer. a. $2,573 b. $2,570 c. $2,580 d. $2,577 e. $2,566

Answers

Answer:

c. $2,580

Explanation:

Calculation for What was its net operating working capital that was financed by investors

Current assets $3,300

Less Accounts payable ($575)

Less Accrued wages and taxes ($145)

Net operating working capital $2,580

($3,300-$575-$145)

Therefore What was its net operating working capital that was financed by investors will be $2,580

ProTech began business at the start of the current year. The company planned to produce 40,000 units, and actual production conformed to expectations. Sales totaled 37,000 units at $42 each. Costs incurred were:

Variable manufacturing overhead per unit
$
19
Fixed manufacturing overhead
240,000
Variable selling and administrative cost per unit
7
Fixed selling and administrative cost per unit
140,000
If there were no variances, the company's absorption-costing income would be ___________

Answers

Answer:

Net operating profit= $230,000

Explanation:

The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

First, we need to calculate the unitary cost:

Unitary production cost= 19 + (240,000/40,000)

Unitary production cost= $25

Now, the income statement:

Sales= 37,000*42= 1,554,000

COGS= (37,000*25)= (925,000)

Gross profit= 629,000

Total selling and administrative cost= (7*37,000) + 140,000= (399,000)

Net operating profit= $230,000

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