Explain the role of corporate in economic development of country.

Answers

Answer 1

Answer:

Economic Development

Explanation:

Small business as well as big companies are important drivers of economic growth and prosperity because they provide vital services, goods, and tax revenues that directly benefit the health of the community. Companies also provide opportunities and jobs, boosting the socioeconomic health of the communities where they are located.


Related Questions

PLEASE QUICK HELP 35 POINTS!!!!!!!!!!!!! MC

Answers

Answer:

A.) Paying taxes

Explanation:

People pay taxes and that's what the city they live uses to make new projects like a building or new roads etc.

Answer:

Spending

Explanation:

got a 100 on this

If the Fed sells treasury bonds, what happens? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Financial institutions purchase the bonds, which injecting money into the system and the interest rate falls. b Financial institutions purchase the bonds, increasing their assets which allow them to lend more, reducing the interest rate. c Financial institutions purchase the bonds, which removes money from the system and the interest rate rises. d Financial institutions purchase the bonds, increasing their assets which allow them to lend more, increasing the interest rate.

Answers

Answer:

c Financial institutions purchase the bonds, which removes money from the system and the interest rate rises.

Explanation:

The Fed engages in various strategies to control the amount of money in the economy. On each strategy is the Open Market Operations (OMO) where the Fed regulates cash in circulation by selling or buying of securities.

When the Fed sells treasury bonds they want to mop up cash in the economy and reduce money supply.

As financial institutions purchase the bonds the level of liquidity or cash in the economy reduces.

This will push interest rates up as financial institutions have less cash to lend to customers.


What is the purpose of database normalization in tables?

Answers

Answer:

This includes creating tables and establishing relationships between those tables according to rules designed both to protect the data and to make the database more flexible by eliminating redundancy and inconsistent dependency.

Answer: its A

Explanation:

A property that produces a first year NOI of $80,000 is purchased for $750,000. The NOI is expected stay constant through year 5, and to increase by 15% in the sixth year when some of the leases turn over. The NOI would then stay constant in years 6-10. The resale price in year 10 is expected to be $830,000. What is the net present value of investing in this property based on the 10-year holding period and a required return of 9.5%

Answers

Answer: $115998

Explanation:

Based on the information given, we can calculate the NOI from the 6th year which will be:

= $80,000 × (100% + 15%)

= $80,000 × 115%

= $80,000 × 1.15

= $92,000

Therefore, the net present value of the property based on the 10-year holding period and a discount rate of 9.5% will be:

= 80000(PVAF, 5 year) + 92000[PVAF,(10-5),9.5%] + 830000/(1.095)10-750000

= (80000 × 3.839) + (92000 × 2.439) + (830000 × 0.403) - 750000

= 307120 + 224388 + 334490 - 750000

= 865998 - 750000

= $115998

Therefore, the net present value is $115998

Tanner-UNF Corporation acquired as an investment $260 million of 5% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 7% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $215 million.

Required:
a. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate.
b. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2021, balance sheet.

Answers

Answer:

Tanner-UNF Corporation

a. Journal Entry

July 1, 2021:

Debit Investment in Bonds $260 million

Credit Discount on bonds $60 million

Credit Cash $200 million

To record the acquisition of bonds.

December 31, 2021:

Debit Cash $6.5 million

Debit Discount on bonds $0.5 million

Credit Interest Revenue $7 million

To record cash received from bond investment and amortization of the bond discount for the semi-period.

b. Debit Unrealized Bonds Investment Loss $45 million

Credit Investment in Bonds $45 million

To record the unrealized loss on the investments.

Explanation:

a) Data and Calculations:

July 1, 2021:

Face value of bonds = $260 million

Interest rate = 5%

Market interest rate = 7%

Payment for the bonds = $200 million

Discount on bonds = $60 million

December 31, 2021:

Semi-annual interest cash receipts = $6.5 million ($260m * 2.5%)

Semi-annual interest revenue = $7 million ($200m * 3.5%)

Amortization of bonds discount = $0.5 ($7 million - $6.5 million)

Fair value of bonds = $215 million

On January 1, Year 1, Eureka Company issued $290,000 of 4-year, 5% bonds at face value. The annual cash payment for interest is due on January 1 of each year beginning January 1, Year 2. Based on this information, what is the total amount of liabilities related to these bonds that will be reported on the balance sheet at December 31, Year 1

Answers

Answer:

$304,500

Explanation:

Interest payable on December 31, year 1 = $290,000 * 5%

Interest payable on December 31, year 1 = $14,500

Total amount of liabilities to be reported on the Balance Sheet, year 1:

= $290,000 + $14,500

= $304,500

So, the total amount of liabilities related to these bonds that will be reported on the balance sheet at December 31, Year 1 is $304,500.

The leaders at Hill Corp. execute tasks by assigning complete responsibility to employees and hence, employees are held answerable for their work. The leaders of the firm concentrate on the results of the tasks and not on how the tasks are executed. This manner of achieving goals at Hill Corp. indicates that it has a(n)

Answers

Answer:

Hill Corp.

This manner of achieving goals at Hill Corp. indicates that it has a(n)

accountable culture.

Explanation:

Within an accountable culture, responsibilities are dissolved among management and employees.  The employees are responsible for deciding how the assigned tasks will be carried out.  Based on this high level of trust, employees work hard to exceed expectations.  As a result, organizational conflicts are eliminated, and the workers engage their productive energies to achieve clear-cut objectives that are congruent to the organization's goals.

A wine bar entrepreneur sells cases of her private-label wine for $335 per case.For an annual fee of $300, customers may also choose to enroll in a WineAppreciation Club, which o????ers private tastings and entitles members to buy casesof wine for $200. What is the minimum number of cases a club member need topurchase for the membership to be economically advantageous?

Answers

Answer: 3 cases

Explanation:

The entrepreneur charges $335 per case but members of the Wine Appreciation club can buy the cases for $200 if they pay an annual fee of $300.

The saving made by the members of the club is:

= 335 - 200

= $135 per case

Considering that they spend $300 on fees, the amount of cases that would give them a savings of more than this amount is:

= 300 / 135

= 2.22 cases

= 3 cases (rounded up)

At 3 cases they would make savings of:

= 3 * 135

= $405

This is more than the fee paid.

what are the principles of Csr

Answers

Answer:

there are three basic principles which together comprise all CSR activity. These are: Sustainability; • Accountability; • Transparency.

Explanation:

hope this helps you

The following information should be used to according to the provisions of GAAP (Statement of Cash Flows) and using the following data. Net income $50,000 Provision for bad debts $2,000 Decrease in inventory $1,000 Decrease in accounts payable $2,000 Purchase of new equipment $35,000 Sale of equipment for $10,000 loss $20,000 Depreciation expense $6,000 Repurchase of common stock $13,000 Payment of dividend $4,000 Interest payment $3,000 What is net cash flow from operations

Answers

Answer:

                   

Explanation:

The net cash flow from operations, according to the provisions of GAAP on Statement of Cash Flows, is $77,000.

What is the net cash flow from operations?

The net cash flow from operations shows the ability of a firm to generate cash from its core business activities.

The net cash flow from operations is computed as the net income from the income statement and adjustments to modify net income from an accrual accounting basis to a cash accounting basis.

Data and Calculations:

Net income                                  $50,000

Non-Cash Expenses:

Loss from sale of equipment     $20,000

Provision for bad debts                $2,000

Depreciation expense                 $6,000

Changes in working capital:

Decrease in inventory                 $1,000

Decrease in accounts payable ($2,000)

Cash from operations             $77,000

Thus, the net cash flow from operations, according to the provisions of GAAP on Statement of Cash Flows, is $77,000.

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Use the following information regarding the Newcastle Corporation to prepare a statement of cash flows using the indirect method:
Accounts payable decrease $9,100
Accounts receivable increase 12,740
Wages payable decrease 5,460
Amortization expense 29,120
Cash balance, January 1 54,600
Cash balance, December 31 12,740
Cash paid as dividends 10,920
Cash paid to purchase land 182,000
Cash paid to retire bonds payable at par 136,500
Cash received from issuance of common stock 81,900
Cash received from sale of equipment 21,840
Depreciation expense 70,980
Gain on sale of equipment 25,480
Inventory increase 23,660
Net income 174,720
Prepaid expenses increase 14,560

Answers

Answer and Explanation:

The preparation of the cash flow statement is presented below;

Cash Flows from Operating activities  

Net income $174,720  

Adjustments made

Less: Accounts payable decrease ($9,100)  

Less Accounts receivable increase ($12,740)  

Less: Wages payable decrease ($5,460)  

Add: Amortization expense $29,120  

Add: Depreciation expense $70,980  

Less: Gain on sale of equipment ($25,480)  

Less: Inventory increase ($23,660)  

Less; Prepaid expenses increase ($14,560)  

Net Cash Flows from Operating activities  $183,820

Cash Flows from Investing activities  

Cash paid to purchase land ($182,000)  

Add: Cash received from the sale of equipment $21,840  

Net Cash flows from Investing activities  ($160,160)

Cash Flows from Financing Activities  

Cash paid as dividends ($10,920)  

Less; Cash paid to retire bonds payable at par ($136,500)  

Add: Cash received from the issuance of common stock $81,900  

Net Cash Flows from Financing activities  ($65,520)

Net Increase (Decrease) in Cash  ($41,860)

Add: Cash balance, January 1  $54,600

Cash balance, December 31  $12,740

Safety representatives in each of the six plants of a manufacturing company need to regularly communicate the number and type of health checks and safety incidents occurring in their plant. Each representative has a safety reporting document where he or she notes the type and number of infractions during the previous week. These incidents are well known to other representatives, so there are rarely any surprises. This weekly communication calls for: ______

a. an effective use of lean media.
b. an active corporate grapevine.
c. high emotional contagion in communication.
d. the use of nonverbal communication.
e. increased number of face-to-face meetings.

Answers

Answer:

a. an effective use of lean media.

Explanation:

Since in the question it is mentioned that the representative commuicates regularly with regard to the no and type of health & safety incident arrise in their plant also at the same time they note the type & number of infractions so that these types of incidents should be known to the other representatives as well due to this the chances of any happening would be minimized

So this represent the use of lean media

In a statement of cash flows using the indirect method, an increase in the available-for-sale debt securities account due to an increase in the debt's fair value should be reported as: Group of answer choices A deduction from net income in determining cash flows from operating activities. Not reported. An investing activity. An addition to net income in determining cash flows from operating activities.

Answers

Answer: Not reported.

Explanation:

The Indirect method includes Net income in its calculation but this would not include any increase in Available-For-Sale (AFS) debt securities as these fall under other comprehensive income in the balance sheet.

Most importantly, the indirect method of calculating the cash the company has is for calculating just that, the cash. This means that an increase in the AFS security due to its fair value increasing will bring in no additional cash to the company so it is not reported in the cash flow statement.

You are being asked to consider selling one of your regional divisions to a private equity company. The private equity company has just offered you $1.2 million for the regional division. The division is expected to provide your company net annual cash flows of $175,000 for each of the next 10 years without you having to make any additional investments in the division. Your team has calculated information to help you make your decision, as follows.
A) Your company's WACC is 7.9%
B) Your hurdle rate for this potential sale is 11.2%
C) The Net Present Value of this opportunity to your company using WACC as your discount rate is (-$20,420.78)
D) The likely Net Present Value of the division to the private equity company following the sale is $13,776.23
Which of the following answers is correct given the information provided above?
1) The IRR of the project to your company is between 7.9% and 11.2%
2) The hurdle rate for the private equity company is higher than the hurdle rate for your company
3) The IRR of the project to your company is below 7.9%
4) None of the Above

Answers

Answer:

3) The IRR of the project to your company is below 7.9%

Explanation:

As we can see in the question that at 7.9% wacc, the net present value is -$20,420.78

Since the net present value is in negative that shows that the internal rate of return would be less than 7.9%

So according to the given situation, the option 3 is correct

And, the same is to be considered

The IRR of the project to your company is below 7.9% as when the NPV is negative, IRR should be less than the weighted average cost of capital.

What is IRR?

IRR can be defined as the rate of discount at which the present value of cash flows is equal to the present value of the cash outflows.

When the net present value (NPV) is negative, it means that the discounted cash flows are less than the original investment. Furthermore, the discount rate used exceeds the IRR.

When IRR = Cost of capital, NPV is zero; nevertheless, because NPV is negative, IRR must be less than the weighted average cost of capital.

Hence, Option 3. is the correct answer; The IRR of the project to your company is below 7.9%.

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Balance Sheet
The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.9 million and net plant and equipment equals $2.6 million. It has notes payable of $145,000, long-term debt of $750,000, and total common equity of $1.55 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet. Write out your answers completely. For example, 25 million should be entered as 25,000,000.
a. What is the company's total debt?
b. What is the amount of total liabilities and equity that appears on the firm's balance sheet?
c. What is the balance of current assets on the firm's balance sheet?
d. What is the balance of current liabilities on the firm's balance sheet?
e. What is the amount of accounts payable and accruals on its balance sheet?
f. What is the firm's net operating working capital?
g. What is the firm's net working capital?
h. What is the monetary difference between your answers to part fand g?
What does this difference indicate?

Answers

Solution :

a). Total debt = notes payable + long term debt

                      = 145,000 + 750,000

                     = $ 895,000

b). Total liabilities and equity = total assets

                                                = 2,900,000

c). Current assets = total assets - net plant and equipment

                             = 2,900,000 - 2,600,000

                              =$ 300,000

d). Total current liabilities = total liabilities and equity - total common equity - long term debt

                           = 2,900,000 - 1,550,000 - 750,000

                           = $ 600,000

e). Accounts payable and accruals = total current liabilities - notes payable  

                                                          = 600,000 - 145,000

                                                          = 455,000

f). Net working capital = current asset - current liabilities

                                    = 300,000 - 600,000

                                   = - $300,000

g). Net operating working capital = current assets - accounts payable and accruals

                                  = 300,000 - 455,000

                                 = - $ 155,000

h). The difference between f) and g). represents the balance of notes payable.  

Identifying and Analyzing Financial Statement Effects of Cash Dividends Freid Corp. has outstanding 6,000 shares of $50 par value, 6% preferred stock, and 40,000 shares of $1 par value common stock. The company has $328,000 of retained earnings. At year-end, the company declares and pays the regular $3 per share cash dividend on preferred stock and a $2.20 per share cash dividend on common stock. a. Using the financial statement effects template, illustrate the effects of these two dividend payments.

Answers

Answer:

Assets              =                Liabilities          +               Equity

cash (18,000)                       NA                          Retained earnigns (18,000)

cash (88,000)                      NA                          Retained earnigns (88,000)

Retained earnings is an equity account and any cash dividends paid either to preferred or common stock will decrease cash and retained earnings, remember that both sides must balance.

Using the financial statement effects template, the effects of the two dividend payments by Freid Corp. are as follows:

          Balance Sheet                   Retained Earnings  Cash Flow Statement

          Assets =     Liab. + Equity        

a.       ($18,000) = Liab. + ($18,000)         ($18,000)          ($18,000) FA

b.      ($88,000) = Liab. + ($88,000)      ($88,000)          ($88,000) FA

Data Analysis:

Outstanding shares:

6,000 shares of $50 par value, 6% preferred stock $300,000

40,000 shares of $1 par value, common Stock $40,000

Retained earnings = $328,000

Preferred Stock Dividends = $18,000 ($3 x 6,000)

Common Stock Dividends = $88,000 ($2.20 x 40,000)

Cash = $106,000 ($18,000 + $88,000)

Thus, the effects of the two dividend payments are reductions in the Assets, Equity, and Retained Earnings.  They are also cash outflows under the financing section of the Statement of Cash Flows.

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Which of these is an example of self employment

Answers

Answer:

Which of what?

Explanation:

Ian is a clerical worker. He sorts files, as do the other ten employees in the department. All the employees know that they are supposed to place the files in the exact place when they are finished so that others can find them when they need them. As a rule, the employees should have only one file out at a time. Ian's supervisor notices that Ian has five files on his desk of which one is a file that another employee urgently needs.

Required:
What steps of the coaching model should Ian's supervisor take immediately after describing to Ian his current behavior?

Answers

Answer: Describe desired performance

Explanation:

The step of the coaching model that Ian's supervisor should take immediately after describing to Ian his current behavior is to "describe desired performance".

The desired performance simply refers to the expectations that are expected from Ian by the company. Every organization has goals that they tend to achieve and this can only be done when employees meet the performance that's expected from them.

Coolidge Cola is forecasting the following income statement: Sales $30,000,000 Operating costs excluding depr and amort 20,000,000 EBITDA $10,000,000 Depreciation and amortization 5,000,000 Operating income (EBIT) $ 5,000,000 Interest expense 2,000,000 Taxable income (EBT) $ 3,000,000 Taxes (40%) 1,200,000 Net income $ 1,800,000 Assume that depreciation is Coolidge's only non-cash revenue or expense. Congress is considering a proposal allowing companies to depreciate their equipment at a faster rate. If approved, Coolidge's new depreciation expense would be $8,000,000, although there would be no effect on the economic value of the company's equipment, nor would it affect the company's tax rate, which would remain at 40%. If this proposal were implemented, what would be the company's net cash flow

Answers

Answer:

new net cash flow = $8,000,000

Explanation:

Current net cash flow before any change approved by Congress = net income + deprecaition expense = $1,800,000 + $5,000,000 = $6,800,000

Cash flow after Congress approves change = net income + new depreciation expense:

taxable income = $10,000,000 - $8,000,000 - $2,000,000 = $0

deprecaitione xpense = $8,000,000

new net cash flow = $8,000,000

Say one morning you are considering whether to take UBER or riding the train to work. Both mediums would cost you about $4, but you have already paid in advance for the train (since you pay a flat fee at the beginning of the month). If the UBER would take slightly less time than the train ride, and you are mostly concerned with the time it takes you to get to work, you should:________
a) take the train since you already paid for it
b) take the UBER
c) be indifferent between either modes of transportation
d) find another way to get to work

Answers

Answer:

B

Explanation:

The flat fee paid for the train represents sunk cost. sunk cost is cost that is incurred and cannot be recovered. it should not be considered when making future decisions

You value getting to work early, the Uber is faster, so you should take the uber

Since you are mostly concerned with the time to get to work and less with the cost, you should still a). take the train since you already paid for it.

After all, the time-saving of the UBER ride is slightly less than the train ride, and you have already paid for the train ride.

Based on the tone of the underlying message, the time difference between the train ride and the UBER is not significant for you to lose $4.

Thus, you should only consider the UBER if the time difference is significant and your business at the office may be in jeopardy.

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Diamond Company has three product lines, A, B, and C. The following financial information is available:
Item Product Line A Product Line B Product Line C
Sales $30,000 $45,000 $12,000
Variable costs $18,000 $24,000 $7,500
Contribution margin $12,000 $21,000 $4,500
Fixed costs:
Avoidable $4,500 $9,000 $3,000
Unavoidable $3,000 $4,500 $2,000
Operating income $4,500 $7,500 ($500)
Assuming that Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, operating income for the company will likely:____________.
a. Increase by $7,200.
b. Increase by $3,300.
c. Increase by some other amount.
d. Be unchanged—the two effects cancel each other out.
e. Increase by $4,500.

Answers

Answer:

e. Increase by $4,500.

Explanation:

Analysis of the effect of discontinuing Product Line C

Income :

Rent Income                                                    $6,000

Savings : Fixed Costs - Avoidable                 $3,000

Total Income                                                   $9,000

Costs :

Opportunity Cost - Contribution Margin       $4,500

Total Costs                                                      $4,500

Net Income (Loss)                                           $4,500

therefore,

By discontinuing Product Line C, operating income for the company will likely  Increase by $4,500

Malibu Corporation has monthly fixed costs of $59,000. It sells two products for which it has provided the following information. Sales Price Contribution Margin Product 1 $ 15 $ 9 Product 2 20 4 a. What total monthly sales revenue is required to break even if the relative sales mix is 30 percent for Product 1 and 70 percent for Product 2

Answers

Answer:

$184,375

Explanation:

The computation of the monthly sales revenue that needed to be break even is given below:

Here we assume the sales be x

0.18x + 0.14x = $59,000

0.32x = $59,000

x = $59,000 ÷ 0.32

= $184,375

The 0.18x come from

= ($9) ÷ ($15) × 0.30x

= 0.18x

And, the 0.14x come from

= ($2) ÷ ($20) × 0.70x

= 0.14x

A local partnership is liquidating and is currently reporting the following capital balances: Barley, capital (50% share of all profits and losses) $ 44,000 Carter, capital (30%) 32,000 Desai, capital (20%) (24,000 ) Desai has indicated that a forthcoming contribution will cover the $24,000 deficit. However, the two remaining partners have asked to receive the $52,000 in cash that is currently available. How much of this money should each of the partners receive

Answers

Answer:

Barley $29,000; Carter $23,000 ;Desai $0

Explanation:

Calculation to determine How much of this money should each of the partners receive

PARTNER WITH DEFICIT CAPITAL BALANCE

Barley,Capital(50%) Carter,Capital(30%)

Desai,Capital(20%)

Reported balances $44,000 $32,000 $(24,000)

Potential loss from Desai deficit

(split 5/8:3/8)

($15,000)($9,000) $24,000

Barley (5/8*$24,000=$15,000)

Carter (3/8*$24,000=$9,000)

Desai($15,000)($9,000) =$24,000

Cash distributions $29,000 $23,000 $0

Barley ($44,000-$15,000=$29,000)

Carter, ($32,000-$9,000=$23,000)

Desai($24,000-$24,000=0)

Therefore The amount of the money that each of the partners should receive is :

Barley $29,000; Carter $23,000 ;Desai $0

Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it purchases and installs on behalf of its clients. The firm’s direct labor includes salaries of consultants that work at the client’s job site, and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office supplies that are consumed serving clients.
Tech Solutions computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 72,500 direct labor-hours would be required for the period’s estimated level of client service. The company also estimated $652,500 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm’s actual overhead cost for the year was $671,800 and its actual total direct labor was 77,550 hours.
Required:
1. Compute the predetermined overhead rate.
2. During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available with respect to this job:
Direct materials $ 43,500
Direct labor cost $ 23,400
Direct labor hours worked 300
Compute the total job cost for the Xavier Company engagement.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Compute the predetermined overhead rate. (Round your answer to 2 decimal places.)
Predetermined overhead rate per DLH
Compute the total job cost for the Xavier Company engagement. (Round your intermediate calculations to 2 decimal places.)
Direct materials
Direct labor
Overhead applied
Total manufacturing cost

Answers

Answer:

1. $9.50 per Direct labor hour

2. $69,750

Explanation:

1. Computation for the predetermined overhead rate

First step is to calculate the Total Estimated overhead cost

Variable overhead cost $36,250

(72,500 Direct labor hours *$ 0.50 )

Add Fixed overhead cost $652,500

Total Estimated overhead cost $688,750

Now let calculate the predetermined overhead rate

Using this formula

Predetermined overhead rate = Total estimated overhead cost / Total estimated direct labor hours

Let plug in the formula

Predetermined overhead rate = $688,750 / 72,500

Predetermined overhead rate = $9.50 per Direct labor hour

Therefore Predetermined overhead rate will be $9.50 per Direct labor hour

2. Computation for the total job cost for the Xavier company Engagement

Direct Materials $43,500

Direct Labor $ 23,400

Overhead applied $2,850

(300 Direct labor * $9.50 )

Total Manufacturing cost $69,750

Therefore total job cost for the Xavier Company engagement will be $69,750

Which one of the following statements is TRUE?
a. An example of an agency cost is when an outside investor is only willing to pay less for stock because she thinks the original owner will consume too many perquisites.
b. The commission required by the Federal Housing Agency for a small business loan is an example of an agency cost.
c. An example of an agency cost is when an attorney hires an expert witness for a trial.
d. An example of an agency cost is when the board of directors pays a dividend to shareholders.
e. An example of an agency cost is the salary of the agent hired to work for the principal.

Answers

Answer: A. An example of an agency cost is when an outside investor is only willing to pay less for stock because she thinks the original owner will consume too many perquisites.

Explanation:

An agency cost typically occurs between between a principal and the agent. This occurs when the agent is given much power and make decisions on behalf of the principal.

An example of an agency cost is when an outside investor is only willing to pay less for stock because she thinks the original owner will consume too many perquisites. The agent typically has more information and there might be different incentives sometimes.

Therefore, the correct option is A.

The Walking Dead Co. provides services on-account and in exchange for cash. All general ledger accounts are adjusted monthly. For September, the following information is available: Accounts Receivable on September 1st is $22,400 (debit) Allowance for Doubtful Accounts on September 1st is $4,400 (credit) Services provided during September for cash $20,000 Services provided during September on-account $45,000 During the month collections on account were $34,400 and accounts written off as uncollectible were $2,000. The Walking Dead estimates bad debts at 8% of accounts receivable. After adjusting journal entries are recorded, what is the September 30th balance in Allowance for Doubtful Accounts

Answers

Answer:

See below

Explanation:

Given that,

Accounts receivables :

Beginning balance 1 September = $22,400

Services on account = $45,000

Cash collected = $34,400

Written off accounts = $2,000

Allowance for doubtful accounts:

Beginning balance 1 September = $4,400

Adjusted balance for Allowance for doubtful accounts on 30th September

= Beginning balance 1 September - Written off accounts + Bad debt expense

= $4,400 + $2,000 + ($45,000 × 8%)

= $4,400 + $2,000 + $3,600

= $6,000

Autoliv produces air bag systems that it sells to automobile manufacturers throughout the world. Assume the company has a capacity of 50 million units per year, it is currently producing at an annual rate of 40 million units. Autoliv has received an order from a Japanese manufacturer to purchase 100,000 units at $65 each. Budgeted costs for 40 million and 45 million units are as follows:
(in thousands, except costs per unit) 40 Million Units 45 Million Units
Manufacturing costs
Direct materials $ 560,000 $ 630,000
Direct labor 220,000 247,500
Factory overhead 1,780,000 1,822,500
Total 2,560,000 2,700,000
Selling and administrative 1,120,000 1,125,000
Total $ 3,680,000 $ 3,825,000
Costs per unit
Manufacturing $ 64.00 $ 60.00
Selling and administrative 28.00 25.00
Total $ 92.00 $ 85.00
Sales to auto manufacturers are priced at $120 per unit, but the sales manager believes the company should aggressively seek the Japanese business even if it results in a loss of $20 per unit. She believes obtaining this order would open up several new markets for the company's product. The general manager commented that the company cannot tighten its belt to absorb the $2,000,000 loss ($20 × 100,000) it would incur if the order is accepted.
(a) Determine the financial implications of accepting the order. (Hint: Use the high-low method to determine variable costs per unit.)
Accepting the offer will Answerdecreaseincrease
profits by $________
(b) How would your analysis differ if the company were operating at capacity? Determine the advantage or disadvantage of accepting the order under full-capacity circumstances.

Answers

Answer: See explanation

Explanation:

a. The variable cost per unit will be:

= (3,825,000 - 3,680,000) / (45million - 40 million)

= 0.029

Then, the financial order of accepting the order will be:

Contribution margin = Unit selling price - Unit

= 65 - 29

= 36

Since the size of the order is 100,000, the financial impact of accepting the order will be:

= 36 × 100,000

= 3,600,000

b. The differential analysis will be:

Contribution from special order = 3,600,000

Opportunity cost {100,000 = 120,000,000 - 29,000,000 = 9,100,000

Net disadvantage of accepting order will then be:

= 3600000 - 9100000

= 5,500,000

Partnership XYZ distributed a piece of land in a nonliquidating distribution to Bob, a 50% partner, during the current taxable year. The land had an adjusted basis of $50,000 and a FMV at the date of the distribution of $180,000. Bob has been a partner for 10 years. He had contributed the land to the partnership at formation when its FMV and basis were both equal. He has a basis in the partnership of $40,000 at year end, without taking into consideration the effects of the distribution. Calculate items 1-4 using the information above. Enter the appropriate amounts in the designated cells below. Indicate negative numbers by using a leading minus (-) sign. If no entry is necessary, enter a zero (0). Item Amount
1. Partnership XYZ's recognized gain (loss)
2. Bob's taxable gain (income)
3. Bob's basis in the property
4. Bob's basis in the partnership

Answers

Answer:

Partnership XYZ

Item                                                                  Amount

1. Partnership XYZ's recognized gain (loss) $130,000

2. Bob's taxable gain (income)                       $65,000

3. Bob's basis in the property                        $90,000

4. Bob's basis in the partnership                 $105,000

Explanation:

a) Data and Calculations:

Bob's partnership interest = 50%

Adjusted basis of land = $50,000

Fair market value (FMV) = $180,000

Bob's basis in the partnership at year end = $40,000

Item                                                                   Amount

1. Partnership XYZ's recognized gain (loss) $130,000 ($180,000 - $50,000)

2. Bob's taxable gain (income)                      $65,000 ($130,000 * 50%)

3. Bob's basis in the property                       $90,000 ($180,000  * 50%)

4. Bob's basis in the partnership                 $105,000 ($65,000 + $40,000)

You would like to combine a risky stock with a beta of 1.68 with a treasury bill in a way that the risk level of the portfolio is equivalent to the risk level of the market. What weight of the portfolio should be invested in the Treasury Bill?

Answers

Answer:

0.60 or 60%

Explanation:

Calculation of weight of the portfolio

Assume that the weight is x

x*[Beta of stock) + (1+x)*(Beta of Tbills) = 1

x * (1.68) + (1-x)*(0) = 1

1.68x + (1-x)*0 = 1

1.68x + 0 = 1

x = [1/1.68]

x = 0.5952

x = 0.60 or 60%

So, the weight of the portfolio that should be invested in the Treasury Bill is 0.60 or 60%.

Consider the following information for Watson Power Co.: Debt: 3,500 7 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 102 percent of par; the bonds make semiannual payments. Common stock: 84,000 shares outstanding, selling for $59 per share; the beta is 1.06. Preferred stock: 10,000 shares of 6 percent preferred stock outstanding, currently selling for $104 per share. Market: 8.5 percent market risk premium and 5.5 percent risk-free rate. Assume the company's tax rate is 35 percent. Find the WACC.

Answers

Answer:

9. 82 %

Explanation:

WACC = Cost of equity x Weight of equity + Cost of Preferred Stock x Weight of Preferred Stock + Cost of Debt x Weight of Debt.

Remember to always use the After tax cost of debt :

Cost of Debt :

PV = - $1,020

FV = $1,000

N = 20 x 2 = 40

P/YR = 2

PMT = ($1,000 x 7 %) ÷ 2 = $35

I/YR = ???

The Cost (I/YR) is calculated as 6.82 %. The  After tax cost of debt is 4.433 %.

Cost of Equity :

Cost of Equity = Return from risk free security + beta x market premium'

                        = 5.5 % + 1.06 x 8.5 %

                        = 14.51 %

Cost of Preferred Stock :

Cost of Preferred Stock = 6 %

therefore,

WACC = 14.51 % x 51.8 % +  6 % x 10.87 %+ 4.433 % x 37.3 %

            = 9. 82 %

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