Before all life support systems fail, the five things to bring aboard a space shuttle are oxygen, food, water, fuel cells, and extra sleeping bags.
Which nation owns the space station?This indicates that the countries who own the Space Station—the United States, Russia, the European Partner, Japan, and Canada—are legally liable for the components they supply. The European Partner on the Space Station refers to the European States as a single, homogeneous group.
The space station is closing down for what reason?Many of the pieces of machinery are out-of-date, and structural issues like cracks are starting to show. In order to prepare for eventually deorbiting the Multinational Space Station, the international organizations that work together to manage it have chosen to scale back operations.
To learn more about space shuttle here:
https://brainly.com/question/12152885
#SPJ4
Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (9 pounds at $1.90 per pound) $17.10 Direct labor (4 hours at $10.00 per hour) $40.00 During the month of April, the company manufactures 160 units and incurs the following actual costs. Direct materials purchased and used (2,100 pounds) $4,410 Direct labor (680 hours) $6,664 Compute the total, price, and quantity variances for materials and labor.
Answer:
See below
Explanation:
1. Total materials variance
= (Actual quantity - Actual price) - (Standard quantity × Standard price)
= $4,410 - [(160 × 9) × $1.9]
= $4,140 - $2,736
= $1,404 unfavorable
2. Materials price variance
= (Actual quantity × Actual price) - (Actual quantity × Standard price)
= $4,140 - (2,100 × $1.9)
= $4,140 - $3,990
= $150 unfavorable
3. Materials quantity variance
= (Actual quantity × Standard price) - (Standard quantity × Standard price)
= (2,100 × $1.9) - [(160 × 9) × $1.9]
= $3,990 - $2,736
= $1,254 unfavorable
4. Total labor variance
= (Actual hours × Actual rate) - (Standard hours - Standard rate)
= $6,664 - (160 × 4) × $10
= $6,664 - $6,400
= $264 unfavorable
The balance sheet of Indian River Electronics Corporation as of December 31, 2020, included 11.75% bonds having a face amount of $91.5 million. The bonds had been issued in 2013 and had a remaining discount of $4.5 million at December 31, 2020. On January 1, 2021, Indian River Electronics called the bonds before their scheduled maturity at the call price of 102.
Required: Prepare the journal entry by Indian River Electronics to record the redemption of the bonds at January 1, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
Answer:
January 1, 2021
Bonds Payable $91.5 million Dr
Loss on Redemption-Bonds Payable $6.33 million Dr
Discount on Bonds Payable $4.5 million Cr
Cash $93.33 million Cr
Explanation:
To calculate the loss on redemption of the bonds, we first need to calculate the value at which bonds have been redeemed. The bonds are redeemed at 102 which means they are redeemed at 102% of the face value.
Redemption amount = 91.5 million * 102% = 93.33 million
The bonds have a carrying value on redemption date of,
Carrying value = Face Value - Discount
Carrying value = 91.5 - 4.5 = $87 million
The loss on redemption of bonds is = 93.33 - 87 = $6.33 million
Sybil transfers property with a tax basis of $5,000 and a fair market value of $6,000 to a corporation in exchange for stock with a fair market value of $3,000 and $2,000 cash in a transaction that qualifies as a section 351 transfer. The corporation assumed a liability of $1,000 on the property transferred. What is Sybil's tax basis in the stock received in the exchange?
A) $6,000.
B) $5,000.
C) $4,000.
D) $3,000.
Answer:
D) $3,000
Explanation:
Calculation to calculate determine Sybil's tax basis in the stock received in the exchange
Tax basis $5,000
Add recognized gain $1,000
($6,000-$5,000)
Less boot received ($2,000)
Less liability ($1,000)
Sybil's tax basis $3,000
Therefore Sybil's tax basis in the stock received in the exchange will be $3,000
Boss Company reported the following results for the year ended December 31, 2019, its first year of operations: 2019 Income (per books before income taxes) $ 1,500,000 Taxable income 2,500,000 The disparity between book income and taxable income is attributable to a temporary difference which will reverse in 2019. What should Boss record as a net deferred tax asset or liability for the year ended December 31, 2019, assuming that the enacted tax rates in effect are 40% in 2019 and 35% in 2020
Answer:
$350,000 deferred tax asset.
Explanation:
Calculation to determine What should Boss record as a net deferred tax asset or liability for the year ended December 31, 2019,
Using this formula
December 31, 2019 Net deferred tax asset or liability=Taxable income -2019 Income (per books before income taxes)
Let plug in the formula
December 31, 2019 Net deferred tax asset or liability=(2,500,000 - $ 1,500,000) × 35%
December 31, 2019 Net deferred tax asset or liability= $350,000 deferred tax asset.
Therefore what Boss should record as a net deferred tax asset for the year ended December 31, 2019 is $350,000
Clampett, Incorporated, has been an S corporation since its inception. On July 15, 2021, Clampett, Incorporated, distributed $42,500 to J.D. His basis in his Clampett, Incorporated, stock on January 1, 2021, was $36,000. For 2021, J.D. was allocated $11,800 of ordinary income from Clampett, Incorporated, and no separately stated items. How much capital gain does J.D. recognize related to Clampett, Incorporated, in 2021
Answer:
See bellw
Explanation:
Income of J.D related to Clampett = Ordinary income + Capital gain
Given that
Basis distribution = $42,500
Basis stock = $36,000
Ordinary = $11,800
But Capital gain = Basis distribution - (Basis stock + Ordinary income
= $42,500 - ($36,000 + $11,800)
= $42,500 - $47,800
= - $5,300
Therefore, J.D income related to Clampett
= Ordinary income + Capital gain
= $11,800 - $5,300
= $6,500
The following information is for Hulk Gyms' first year of operations. Amounts are in millions of dollars. The enacted tax rate is 25%. Year Future Taxable Amounts Future Amounts 2021 2022 2023 2024 2025 Total Accounting income $ 124 Temporary difference: Prepaid insurance (28 ) $ 7 $ 7 $ 7 $ 7 $ 28 Taxable income $ 96 Required: Prepare a compound journal entry to record the income tax expense for the year 2021.
Answer:
Explanation:
Year Future Taxable Amounts Future Amounts
2021 2022 2023 2024 2025 Total
Accounting income $124
Temporary difference:
Prepaid insurance (28 ) $7 $7 $7 $7 $28
Taxable income $96
The following information relates to Hatami Company's defined benefit pension plan during the current reporting year:
Plan assets at fair value, January 1 $640,000,000
Expected return on plan assets 54,000,000
Actual return on plan assets 44,000,000
Contributions to the pension fund (end of year) 94,000,000
Amortization of net loss 0
Pension benefits paid (end of year) 36,000,000
Pension expense 64,000,000
Required:
Determine the balance of pension plan assets at fair value on December 31.
Answer: $742,000,000
Explanation:
The balance of pension plan assets at fair value on December 31 will be:
Plan Assets at Fair value, January 1 = $640,000,000
Add: Actual return on plan assets = $44,000,000
Add: Contributions to the pension fund (end of year) = $94,000,000
Less: Pension benefits paid (end of year) = $36,000,000
Plan Assets at Fair value, December 31 = $742,000,000
Jackson Co. (lessee) entered into a 10-year operating lease on January 1, Year 1. Annual lease payments are $30,000, and payments begin December 31, Year 1. The lessee knows that the rate implicit in the lease is 8%, and its incremental borrowing rate is 7%. The useful life of the asset is 20 years. How should Jackson Co. account for the lease in the income statement
Answer: B. lease payments are allocated over the full lease term on a straight line basis and reported as lease expense in the income statement
Explanation:
The options given include:
A. Interest expense for the lease liability and amortization expense for the right to use asset must be reported separately in the income statement.
B. lease payments are allocated over the full lease term on a straight line basis and reported as lease expense in the income statement
C. the incremental borrowing rate is used to calculate the annual interest expense on lease liability
D. interest expense for the lease liability is recognized in full on the commencement dates of lease.
Jackson Co. should account for the lease in the income statement as "lease payments are allocated over the full lease term on a straight line basis and reported as lease expense in the income statement".
Based on the information given, the correct option is B.
Project manager Claire and her team need to minimize project risks. Help them match the step to minimize risk to what each step Involves.
Answer:
Determine which risks goes with prioritizing
Take into consideration goes with identifying
Relate to contingency goes with mitigating
and
Determine the likelihood goes with evaluating
Explanation:
I did the test and got it correct! Hope this helps :) For Edmentum/Plato
Answer:
Determine which risks >>> prioritizing risks
Take into consideration >>> identifying risks
Relate to contingency >>> mitigating risks
Determine the likelihood >>> evaluating risks
Explanation:
Correct on plato
The cashew industry is perfectly competitive and until now each of the identical firms in the industry have been earning zero economic profits while selling ay units of output each (for a combined industry-wide total of qy units) at a market equilibrium price of P1 per unit. An unexpected increase in the demand for cashews raises the market equilibrium price to P2, which creates a situation in which P2 exceeds MC at 91 units of output.
a. If the firms continued producing 91 units each, would their combined output of cashews be too little, too much, or just right to achieve allocative efficiency?
i. Just right
ii. Too much
iii. Too little
b. In the long run, what will happen to the supply of cashews and the price of cashews?
i. The industry's supply of cashews will exceed Q1 and the price of cashews will equal P1.
ii. The industry's supply of cashews will be less than Q1 and the price of cashews will be less than P1.
iii. The industry's supply of cashews will equal Q1 and the price of cashews will equal P2.
iv. The industry's supply of cashews will exceed Q1 and the price of cashews will equal P2.
Answer:
a. iii. Too little
b. i. The industry's supply of cashews will exceed Q1 and the price of cashews will equal P1.
Explanation:
Allocative efficiency refers to the point in production where Marginal Revenue equals Marginal cost. As this is a perfectly competitive market, marginal revenue is the same as price which as shown in the question, exceeds Marginal cost. The firms are therefore producing too little to achieve allocative efficiency and need to produce more to make price and marginal cost equal.
In the long run, the firms will produce more such that supply would exceed the original quantity supplied of Q1. This will lead to the price falling back to P1 as there is now less scarcity.
Kirnon Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,250 client-visits, but its actual level of activity was 3,160 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting: Fixed element per month Variable element per client-visit Revenue - $ 39.10 Personnel expenses $ 35,100 $ 10.30 Medical supplies 1,100 7.10 Occupancy expenses 8,100 1.10 Administrative expenses 5,100 0.20 Total expenses $ 49,400 $ 18.70 The activity variance for net operating income in July would be closest to:
Answer:
$1,836 unfavorable
Explanation:
The computation of the activity variance for net operating income in July is shown below:
net income is
= $39.10 - $18.70
= $20.40
And, the difference in activity is
= 3,250 - 3,160
= 90
Now the activity variance for net operating income is
= $20.40 × $90
= $1,836 unfavorable
The Tradition Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.4 percent per period. Based on the following information, what is the break-even price per unit that should be charged under the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Current Policy New Policy ?
Price per unit $ 93 ?
Cost per unit $ 44 $ 44
Unit sales per month 2,675 2,750
X Answer is complete but not entirely correct.
Break-even price $ 92.87 x
Answer: $93.86
Explanation:
The break even price simply refers to the price that's required to make a normal profit. From the information given, the break even price will be:
= [($93-$44) × 2675)/2750) + 44] × ( 1 + 2.3%)
= [$49 × 2675)/2750)+44] × (1+0.024)
= [(49 × 2675)/2750)+44] × 1.024
= [(131075/2750) + 44] × 1.024
= (47.66 + 44) × 1.024
= 91.66 × 1.024
= $93.86
Therefore, the break even price is $93.86
Effective managers should Question 26 options: convince employees to engage in relationship conflict rather than the other forms of conflict. minimize the relationship conflicts that exist in the organization. remove all forms of conflict from the organization because it saps productivity. increase the amount of conflict among employees.
Answer: remove all forms of conflict from the organization because it saps productivity.
Explanation:
Effective managers are the managers who ensures that the goals of an organization are achieved as they bring out the best in the employees. They motivate employees and in such case, employees trust them.
Effective managers remove all forms of conflict in an organization. They ensure that the employees in an organization gets along well and there unity among them because this is vital to enhance productivity and improve organizational growth.
Save the file in your Marketing 2 folder, and name it with Study, the section number, and your first initial and last name. For example, Jessie Robinson's study questions for Section 1 would be named Study 1 Robinson. Answer the questions for each lesson on the same day that you read the lesson. Save the file before closing it each day. Then turn in your answers to the study questions at the end of the section. Review Lesson 4 of the Course Overview for instructions about turning in your study questions. Section 4 Study Questions (15.0 points) Answer each question fully. Complete sentences are not necessary. Lesson 1 (5.0 points) 1. What is outsourcing
Answer:
Outsourcing is a cost reduction practice where Company A contracts Company B or another party to carry out services or produce goods that Company A used to produce for itself.
It is done when paying Company B to perform the services, is cheaper than performing it themselves which would enable Company A to cut down on costs.
For example, it costs Company A $5 per customer service call if they do it themselves but it would cost $3 per call if they let Company B handle it. Outsourcing is where they pay Company B that $3 to handle the calls and save $2.
When Jake became one of three final candidates for a managerial position with a large medical supply company, the director of the department scheduled a special meeting with him. There, the two talked about the challenging deadlines and heavy travel required of the position, as well as the great compensation and multiple perks. Jake appreciated that the director took time to conduct a(n) _______. Realistic job preview Performance appraisal Behavioral-description interview Situational interview Unstructured interview
Answer:
Realistic job preview
Explanation:
A realistic job preview shows a new employee or existing employees the good and bad aspects of a job in practice.
This prepares the staff for challenges that they will face in their roles.
In the given instance the director told Jake about challenging deadlines and heavy travel required of the position, as well as the great compensation and multiple perks.
This is a realistic job preview
The Smoot-Hawley Act, signed into law in 1930, increased U.S. tariffs to an unprecedented level of 53%, causing a sharp decline in U.S. exports. In 1934, however, changes in the U.S. trade policy enabled U.S. manufacturers to resume business with their foreign distributors. Which of the following is the most likely reason for the increase in U.S. exports after these changes?
A. The president received the authority to negotiate bilateral tariff-reduction agreements with foreign governments.
B. The scientific tariff was introduced, which allowed the president to increase tariff levels if foreign production costs were below those of the United States.
C. Congress was given the authority to approve bilateral trade agreements.
Answer:
A. The president received the authority to negotiate bilateral tariff-reduction agreements with foreign governments.
Explanation:
Since in the given situation it is mentioned that in the year 1934 the change in the trade policy enables the manufactured of U.S to restart their business with the foreign distributors so the reason that would increase the U.S exports would be that the president should received the authority in order to negotiate the agreement with the foreign government with respect to the decrease in the bilaterial tariff
Hence, the option A is corrrect
Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The predetermined overhead rate was: Multiple Choice 5.0%. 12.0%. 20.0%. 500.0%. 16.7%
Answer:
Estimated manufacturing overhead rate= 20%
Explanation:
To calculate the predetermined overhead rate, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
6,000= Estimated manufacturing overhead rate*30,000
Estimated manufacturing overhead rate= 6,000 /30,000
Estimated manufacturing overhead rate= $0.2 per direct labor dollar
As a percentage= (0.2/1)*100= 20%
CarCut Corporation has been employing the Fixed-Order Quantity model to manage the inventory of its best selling 3D printer. The current inventory policy places exactly 60 orders each year. The monthly inventory holding cost is $25 per unit and the setup cost is $50 per order. The demand during lead time is constant, and it takes a lead time of 2 days to receive a shipment. Assume CarCut operates 360 days per year. What is the optimal reorder point in units
Answer: See explanation
Explanation:
The optimal reorder point in units is calculated as the average daily sales unit multiplied by the delivery lead time.
In the question, we're not provided with the annual demand as this is vital in order to know the average daily unit. Therefore, the question is incomplete
The CarCut Corporation's optimal reorder point in units is 208 units.
Data and Calculations:
Number of orders per year = 60 orders
Monthly inventory holding cost = $25 per unit
Setup cost = $50 per order
Number of operating days per year = 360 days
Lead time = 2 days
Number of times for orders per year = 180 (360/2)
Total annual demand = 10,800 (60 x 180)
Optimal reorder point in units = EOQ = square root of (2 x 10,800 x $50)/$25
= 208 units
Learn more: https://brainly.com/question/14214111
Macgregor Company completed its first year of operations on December 31, 2020. Its initial income statement showed that Macgregor had revenues of $192,000 and operating expenses of $78,000. Accounts receivable and accounts payable at year-end were $60,000 and $23,000, respectively. Assume that accounts payable related to operating expenses. Ignore income taxes. Compute net cash provided by operating activities using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Net cash provided by operating activities
Answer:
See nelow
Explanation:
We will start off with the computation of cash receipts from suppliers and cash paid to suppliers
Revenues
$192,000
Less:
Accounts receivables
($60,000)
Cash receipts from customers
$132,000
Operating expenses
$78,000
Less: Accounts payable
($23,000)
Cash paid to suppliers
$55,000
Cash flow from operating activities
Cash receipts from customers
$132,000
Less:
Cash paid to suppliers
($55,000)
Net cash from operating activities
$77,000
Marilee's Electronics uses a periodic inventory system and the average cost retail method to estimate ending inventory and cost of goods sold. The following data is available from the company records for the month of June 2021:
Cost Retail Beginning inventory $ 120,000 $ 146,000 Net purchases 383,000 580,000 Net markups 33,000 Net markdowns 51,000 Net sales 600,000
To the nearest thousand, estimated ending inventory is:_______.
Answer:
$76,680
Explanation:
With regards to the above
Using the cost method
Goods available for sale:
= Beginning inventory + Purchases
= $120,000 + $383,000
= $503,000
Using retail method
Goods available for sale
= Beginning inventory + Purchases + Net markups - Net markdowns
= $146,000 + $580,000 + $33,000 - $51,000
= $708,000
Now, cost to retail ratio
= $503,000 ÷ $708,000
= 0.71
Estimated ending inventory at retail
= Goods available for sale under retail method - Net sales revenue
= $708,000 - $600,000
= $108,000
Therefore, estimated ending inventory = Estimated ending inventory at retail × Cost to retail ratio
= $108,000 × 0.71
= $76,680
Bull'sEye sells gift cards redeemable for Bull'sEye products either in-store or online. During 2018, Bull'sEye sold $2,000,000 of gift cards, and $1,800,000 of the gift cards were redeemed for products. As of December 31, 2018, $150,000 of the remaining gift cards had passed the date at which Bull'sEye concludes that the cards will never be redeemed. How much gift card revenue should Bull'sEye recognize in 2018
Answer:
$1,950,000
Explanation:
Calculation to determine How much gift card revenue should Bull'sEye recognize in 2018
Gift cards redeemed $1,800,000
Add December 31, 2018 Remaining gift $150,000
Revenue Recognized $1,950,000
($1,800,000+$150,000)
Therefore How much gift card revenue should Bull'sEye recognize in 2018 is $1,950,000
The model of competitive markets relies on these three core assumptions:
1. There must be many buyers and sellers—a few players can't dominate the market.
2. Firms must produce an identical product—buyers must regard all sellers' products as equivalent.
3. Firms and resources must be fully mobile, allowing free entry into and exit from the industry.
The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behavior, assume for this problem that a market cannot maintain competition in the long run without free entry.
Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.
The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug.
a. yes,meets all assumptions
B. no,no free entry
C. no, not many sellers
D. No, not an identical product
Answer:
B. No, no free entry
Explanation:
With a patent granted to one pharmaceutical company to produce and sell an experimental AIDs drug, all doors of free entry and exit have been locked against other pharmaceutical companies. This implies that one of the major ideals of a competitive market is violated. Without free entry and exit, there cannot be many sellers, and we cannot discuss about the possibility of firms producing identical products because there is only one drug.
On January 1, 2018, ABC purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000. Assume the truck was totaled in an accident on December 31, 2019. What amount of gain or loss should ABC record on December 31, 2019 (If a loss, put a minus number in front)
Answer:
$38,000 Loss
Explanation:
Calculation to determine What amount of gain or loss should ABC record on December 31, 2019
First step is to calculate the depreciation per year
Depreciation per year =($48,000 − $8,000)/8 years
Depreciation per year= $5,000
Now let determine calculation the book value After two years,
Book value= [$48,000 − ($5,000 × 2 years)]
Book value=$48,000-$10,000
Book value= $38,000 Loss
Therefore the amount of loss that ABC should record on December 31, 2019 is $38,000
3. What do you think has more risk: buying corporate bonds or buying a second house in hopes that housing prices increase?
Answer:
buying a second house
Explanation:
bonds have a high chance of providing returns whereas the housing market is very hard to predict
Last month when Holiday Creations, Inc., sold 41,000 units, total sales were $282,000, total variable expenses were $214,320, and fixed expenses were $36,900. Required: 1. What is the company’s contribution margin (CM) ratio? 2. What is the estimated change in the company’s net operating income if it can increase total sales by $1,700? (Do not round intermediate calculations.)
Answer:
1. Company’s contribution margin (CM) ratio = 24%
2. Estimated change in the company’s net operating income = $408
Explanation:
1. What is the company’s contribution margin (CM) ratio?
Contribution margin (CM) = Total sales - Total variable expenses = $282,000 - $214,320 = $67,680
Contribution margin (CM) ratio = Contribution margin / Total sales = $67,680 / $282,000 = 0.24, or 24%
2. What is the estimated change in the company’s net operating income if it can increase total sales by $1,700? (Do not round intermediate calculations.)
Estimated change in the company’s net operating income = Increase total in sales * Contribution margin (CM) ratio = $1.700 * 24% = $408
Blossom Company has the following inventory data: July 1 Beginning inventory 35 units at $22 $770 7 Purchases 124 units at $24 2976 22 Purchases 18 units at $26 468 $4214 A physical count of merchandise inventory on July 30 reveals that there are 57 units on hand. Using the LIFO inventory method, the amount allocated to ending inventory for July is
Answer:
Ending invenory= $1,298
Explanation:
Giving the following information:
July 1 Beginning inventory 35 units at $22 $770
July 7 Purchases 124 units at $24 $2,976
July 22 Purchases 18 units at $26 $468
A physical count of merchandise inventory on July 30 reveals that there are 57 units on hand.
To calculate the ending inventory using the LIFO (last-in, first-out) method, we need to use the cost of the firsts units incorporated into inventory:
Ending inventory= 35*22 + 22*24
Ending invenory= $1,298
Create a business decision based on the company where you work (can be any company), a small business you hope to own someday or just make something up - then identify, define and explain an incremental cost, opportunity cost and sunk cost. You will need to be somewhat creative in your response.
Respond to this question with 5-7 meaningful sentences (or more - this one could be more)
The correct answer to this open question is the following.
The business decision based on the company where you work would be this. To open a new small branch of the fast-food restaurant as a concession in the municipal stadium.
The incremental cost is the future costs as a result of this business decision. This means that we have to consider extra money on a monthly basis to pay for the rent of the concession booth at the Municipal stadium.
The opportunity cost is that instead of opening our branch in the new downtown mall, we decided to move with the stadium option. Having decided to be at the mall could have allowed us to have more clients on a daily basis, especially on weekends.
The sunk cost is a cost from the past, an historical cost that really is not important in the present time to make a decision. Maybe, just a reference to a case in the past. And that's it.
Here we can refer to a cost when we opened the first location of the restaurant, but it was five years ago. Those were different situations, necessities, and conditions.
Ghost, Inc., has no debt outstanding and a total market value of $240,000. Earnings before interest and taxes, EBIT, are projected to be $32,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 15% higher. If there is a recession, then EBIT will be 30% lower. The company is considering a $80,000 debt issue with an interest rate of 7 percent. The proceeds will be used to repurchase shares of stock. There are currently 15,000 shares outstanding. Ignore taxes for this problem.
a-1. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued.
a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession.
b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization.
b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession.
a-1 Recession EPS $0.97
Normal EPS $1.39
Expansion EPS Z $1.59
a-2 Recession percentage
change in EPS -30.0
Expansion percentage
change in EPS 15.0
b-1 Recession EPS $1.09
Normal EPS 15.00
Expansion EPS
b-2 Recession percentage
change in EPSE -36.36
Expansion percentage
change in EPS 18.18
Answer:
a-1. We have:
Recession EPS = $1.49
Normal EPS = $2.13
Expansion EPS = $2.45
a-2. We have:
Recession percentage change in EPS = -30.00%
Expansion percentage change in EPS = 15.00%
b-1. We have:
Recession EPS = $1.12
Normal EPS = $1.76
Expansion EPS = $2.08
b-2. We have:
Recession percentage change in EPS = -36.36%
Expansion percentage change in EPS = 18.18%
Explanation:
Note: See the attached excel file for the calculations of the EPS and the percentage changes in EPS.
From the attached excel file, we have:
a-1. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued.
Recession EPS = $1.49
Normal EPS = $2.13
Expansion EPS = $2.45
a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession.
Recession percentage change in EPS = -30.00%
Expansion percentage change in EPS = 15.00%
b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization.
Recession EPS = $1.12
Normal EPS = $1.76
Expansion EPS = $2.08
b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession.
Recession percentage change in EPS = -36.36%
Expansion percentage change in EPS = 18.18%
You are given the following information on Parrothead Enterprises:
Debt: 9,300 6.5 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 104.75. These bonds pay interest semiannually and have a par value of $1,000.
Common stock: 240,000 shares of common stock selling for $64.80 per share. The stock has a beta of.93 and will pay a dividend of $3.00 next year. The dividend is expected to grow by 5.3 percent per year indefinitely.
Preferred stock: 8,300 shares of 4.65 percent preferred stock selling at $94.30 per share. The par value is $100 per share.
Market: 11.7 percent expected return, risk-free rate of 3.75 percent, and a 23 percent tax rate.
Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %
Answer:
8.19%
Explanation:
Calculation to determine the company's WACC
First step is to calculate the CAPM rate of equity
Using this formula
CAPM rate of equity = Risk free rate + market risk premium * beta
Let plug in the formula
CAPM rate of equity=3.75%+(11.7%-3.75%)*0.93
CAPM rate of equity=11.14%
Second step is to calculate the DDM rate of equity
Using this formula
DDM rate of equity= Expected dividend next year/Price today + Growth rate
Let plug in the formula
DDM rate of equity=3/64.8+5.3%
DDM rate of equity=9.93%
Third step is to calculate the Cost of equity using this formula
Cost of equity = Average of CAPM and DDM
Let plug in the formula
Cost of equity=(11.14%+9.93%)/2
Cost of equity= 10.54%
Fourth Step is to calculate the Cost of debt (after tax)
Cost of debt (after tax) using financial calculator to compute YTM
PV -1047.5
FV 1000
PMT 1000*6.5%/2 32.5
N 22*2 44
Compute I 3.05%
YTM =3.05%*2 6.10%
Tax rate = 23%
Hence,
Rate of debt (after tax) = 6.1%*(1-23%)
Rate of debt (after tax) = 4.70%
Fifth step is to calculate the Rate of preferred stock using this formula
Rate of preferred stock = Annual dividend/Current price
Let plug in the formula
Rate of preferred stock=4.65/94.3
Rate of preferred stock=4.93
Sixth step is to calculate the Weight
Market value
Source
equity 240000*64.8= 15552000
debt 1047.5*9300= 9741750
preferred stock 8300*94.3=782690
Total 26076440
equity 15552000/26076440= 59.64%
debt 9741750/26076440=37.36%
preferred stock 782690/ 26076440=3.00%
Now let calculate compute WACC
WACC= weight * cost
equity 59.64%*10.54%=6.28%
debt 37.36%* 4.70% =1.76%
preferred stock3.00%*4.93%=0.15%
WACC = 8.19%
(6.28%+1.76%+0.15%)
Therefore the company's WACC is 8.19%
Novak Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2020, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Item D Item E Item F Item G Item H Item I Estimated selling price $151 $139 $120 $113 $139 $113 Cost 95 101 101 101 63 45 Cost to complete 38 38 32 44 38 38 Selling costs 13 23 13 25 13 25 Using the LCNRV rule, determine the proper unit value for balance sheet reporting purposes at December 31, 2020, for each of
Answer:
i belive it is d
Explanation:
i took test