Answer:
a. 5.40%
Explanation:
First, I will calculate the new cost of equity for both stock X and Y:
Required rate of return = risk free rate + (beta x market premium)
Re stock X = 8% + (1.6 x 6%) = 8% + 9.6% = 17.6%
Re stock Y = 8% + (0.7 x 6%) = 8% + 4.2% = 12.2%
The difference between the required rate of return = 17.6% - 12.2% = 5.4%
Machine 1 has a monthly lease cost of $647, and there is a cost of $0.033 per page copied. Machine 2 has a monthly lease cost of $785, and there is a cost of $0.048 per page copied. Customers are charged $.08 per page copied. If Benny expects to make 97,000 copies per month, what would be the monthly cost for each machine
Answer:
Results are below.
Explanation:
Giving the following information:
Machine 1:
Fixed cost= $647
Unitary variable cost= $0.033
Machine 2:
Fixed cost= $785
Unitary variable cost= $0.048
The total cost for 97,000 copies:
Machine 1:
Total cost= 647 + 0.033*97,000
Total cost= $3,848
Machine 2:
Total cost= 785 + 0.048*97,000
Total cost= $5,441
You are the owner of a smoothie shop in California. Afterhearing a podcast about customer relationship management (CRM), youdecide to gather more information regarding customer behavior inyour store to better understand the relationships that existbetween your business and your customers. CRM is a comprehensivebusiness model for increasing revenues and profits by focusing oncustomers.Customer Lifetime Value (CLV) is particularly importantwhen it comes to CRM and is often considered one of the mostcrucial metrics associated with a CRM system. Collecting data oncustomers and their relationships with a company (and commonlystoring it within a CRM system) helps make it possible to calculateCLV, or the total amount a customer will spend throughout theirrelationship with a company.
After a review and analysis of your customer data you are ableto determine the following information:
Average Value of Sales per Year per Customer: $120
Average Customer Retention Cost: $75
Customer Acquisition-oriented Marketing Expenses per Month:$1,000
Average Customer Retention Rate: 80%
You acquire an average of 25 new customers a month.
Use the following equations to help determine the CLV:
Average Customer Acquisition Cost = CustomerAcquisition-oriented Marketing Expenses per Month/Number of NewCustomers Acquired per Month
Customer Lifetime Value = [1/(1-Average Customer Retention Rate)] x(Average Value of Sales per Year per Customer)- (Average customerAcquisition Cost + Average Customer Retention Cost)
This activity is important because marketing managers need tounderstand and know how to calculate customer lifetime value as apart of customer relationship management. Knowledge of CLV caninform a number of critical marketing decisions related to suchfactors as the development of strategies designed to aid in theacquisition, nurturing, and retention of customers.
The goal of this exercise is to test your understanding of CLVby considering this example.
You must (1) complete the spreadsheet and (2) answer thequestions that follow to receive full credit for this exercise.
Answer:
Average Customer Retention rate = 80%
Average Value of Sales per year per customer = $120
Average customer acquisition cost = Customer acquisition oriented market expenses per month/
number of new customers acquired per month
[tex]=\frac{1000}{25} = 40[/tex]
Average customer retention cost = $75
CLV =[1/(1- Average customer retention rate)] x (average value of sales per year per customer)-(average customer acquisition cost + average customer retention cost)
[tex]= [1/(1-0.8)] x 120-(40+75)[/tex]
=$485
A) Average customer retention rate =90%
B) Average value of sales per year per customer = $125
C) Average customer acquisition cost =$60
D) Average customer retention cost =$100
CLV = [1/(1- Average customer retention rate)] x (average value of sales per year per customer)-(average customer acquisition cost + average customer retention cost)
[tex]= [1/(1-0.9)] x 125 - (60+100)[/tex]
E) Customer Lifetime Value = 1090
Explanation:
Here are the spreadsheets.
Sheridan Corporation had 2020 net income of $798,000. During 2020, Sheridan paid a dividend of $2 per share on 33,200 shares of preferred stock. During 2020, Sheridan had outstanding 236,000 shares of common stock.
Required:
Compute Sheridan's 2020 earnings per share.
Answer:
$3.10 per share
Explanation:
Total preferred dividend = 33,200 shares * $2
Total preferred dividend = $66,400
Earning per share = (Net income - Preferred dividend) / Number of common stock outstanding
Earning per share = ($798,000 - $66,400) / 236,000 shares
Earning per share = $731,600 / 236,000 shares
Earning per share = $3.10 per share
For each transaction:
a. analyze the transaction using the accounting equation
b. record the transaction in journal entry form
c. post the entry using T-accounts to represent ledger accounts.
1. On May 15, DeShawn Tyler opens a landscaping company called Elegant Lawns by investing $7,000 in cash along with equipment having a $3,000 value in exchange for common stock.
2. On May 21, Elegant Lawns purchases office supplies on credit for $500.
3. On May 25, Elegant Lawns receives $4,000 cash for performing landscaping services.
4. On May 30, Elegant Lawns receives $1,000 cash in advance of providing landscaping services to a customer.
Answer:
Elegant Lawns
a. Analysis of transactions using the accounting equation:
1. May 15, Assets Cash $7,000 Equipment $3,000 Equity: Common stock $10,000
2. May 21, Assets: Office supplies $500 Liabilities: Accounts Payable $500
3. May 25, Assets: Cash $4,000 Equity: Service Revenue $4,000
4. May 30, Assets: Cash $1,000 Equity: Service Revenue $1,000
b. Journal Entries:
Date Account Titles Debit Credit
1. May 15, Assets: Cash $7,000
Assets: Equipment $3,000
Equity: Common stock $10,000
2.
May 21, Assets: Office supplies $500
Liabilities: Accounts Payable $500
3. May 25, Assets: Cash $4,000
Equity: Service Revenue $4,000
4. May 30, Assets: Cash $1,000
Equity: Service Revenue $1,000
c. T-accounts:
Cash
Date Account Titles Debit Credit
1. May 15 Common stock $7,000
3. May 25, Service revenue 4,000
4. May 30, Service revenue 1,000
Equipment
Date Account Titles Debit Credit
1. May 15 Common stock $3,000
Office Supplies
Date Account Titles Debit Credit
2. May 21, Accounts Payable $500
Common Stock
Date Account Titles Debit Credit
1. May 15 Cash $7,000
1. May 15 Equipment 3,000
Accounts Payable
Date Account Titles Debit Credit
2. May 21, Office supplies $500
Service Revenue
Date Account Titles Debit Credit
3. May 25, Cash $4,000
4. May 30, Cash 1,000
Explanation:
a) Data and Analysis with Accounting Equation:
1. May 15, Assets Cash $7,000 Equipment $3,000 Equity: Common stock $10,000
2. May 21, Assets: Office supplies $500 Liabilities: Accounts Payable $500
3. May 25, Assets: Cash $4,000 Equity: Service Revenue $4,000
4. May 30, Assets: Cash $1,000 Equity: Service Revenue $1,000
At the beginning of June, Circuit Country has a balance in inventory of $2,050. The following transactions occur during the month of June.
June 2 Purchase radios on account from Radio World for $1,750, terms 2/15, n/45.
June 4 Pay cash for freight charges related to the June 2 purchase from Radio World, $210. June 8 Return defective radios to Radio World and receive credit, $200.
June 10 Pay Radio World in full. June 11 Sell radios to customers on account, $3,100, that had a cost of $2,250.
June 18 Receive payment on account from customers, $2,100.
June 20 Purchase radios on account from Sound Unlimited for $2,850, terms 2/10, n/30.
June 23 Sell radios to customers for cash, $4,350, that had a cost of $2,650.
June 26 Return damaged radios to Sound Unlimited and receive credit of $500.
June 28 Pay Sound Unlimited in full.
Required:
a. Assuming that Circuit Country uses a perpetual inventory system, record transactions using the following account titles: Cash, Accounts Receivable, Inventory, Accounts Payable, Sales, and Cost of Goods Sold.
b. Prepare the top section of the multiple-step income statement through gross profit for the month of June.
Answer:
Circuit Country
a. Journal Entries:
June 2: Debit Inventory $1,750
Credit Accounts payable (Radio World) $1,750
To record the purchase of goods, terms 2/15, n/45.
June 4: Debit Freight-in $210
Credit Cash $210
To record the payment for freight.
June 8: Debit Accounts payable (Radio World) $200
Credit Inventory $200
To record the return of goods.
June 10: Debit Accounts payable (Radio World) $1,550
Credit Cash $1,519
Credit Cash Discounts $31
To record payment on account, including discounts.
June 11: Debit Accounts receivable $3,100
Credit Sales Revenue $3,100
To record the sale of goods on account.
June 11: Debit Cost of goods sold $2,250
Credit Inventory $2,250
To record the cost of goods sold.
June 18: Debit Cash $2,100
Credit Accounts receivable $2,100
To record cash received on account.
June 20: Debit Inventory $2,850
Credit Accounts payable (Sound Unlimited) $2,850
To record the purchase of goods on credit, terms 2/10, n/30.
June 23: Debit Cash $4,350
Credit Sales Revenue $4,350
To record the sale of goods for cash.
June 23: Debit Cost of goods sold $2,650
Credit Inventory $2,650
To record the cost of goods sold.
June 26: Debit Accounts payable(Sound Unlimited) $500
Credit Inventory $500
To record the return of goods.
June 28: Debit Accounts payable(Sound Unlimited) $2,350
Credit Cash $2,303
Credit Cash Discounts $47
To record payment on account, including discounts.
b. Income Statement for the month ended June 30:
Sales Revenue $7,450
Cost of goods sold 5,032
Gross profit $2,418
Explanation:
a) Data and Analysis:
June 1: Beginning inventory $2,050
June 2: Inventory $1,750 Accounts payable (Radio World) $1,750, terms 2/15, n/45.
June 4: Freight-in $210 Cash $210
June 8: Accounts payable (Radio World) $200 Inventory $200
June 10: Accounts payable (Radio World) $1,550 Cash $1,519 Cash Discounts $31
June 11: Accounts receivable $3,100 Sales Revenue $3,100
June 11: Cost of goods sold $2,250 Inventory $2,250
June 18: Cash $2,100 Accounts receivable $2,100
June 20: Inventory $2,850 Accounts payable (Sound Unlimited) $2,850 terms 2/10, n/30.
June 23: Cash $4,350 Sales Revenue $4,350
June 23: Cost of goods sold $2,650 Inventory $2,650
June 26: Accounts payable(Sound Unlimited) $500 Inventory $500
June 28: Accounts payable(Sound Unlimited) $2,350 Cash $2,303 Cash Discounts $47
Cash
Date Account Titles Debit Credit
June 4: Freight-in $210
June 10: Accounts payable (Radio World) 1,519
June 18: Accounts receivable $2,100
June 23: Sales Revenue 4,350
June 28: Accounts payable(Sound Unlimited) 2,303
Accounts Receivable
Date Account Titles Debit Credit
June 11: Sales Revenue $3,100
June 18: Cash $2,100
Inventory
Date Account Titles Debit Credit
June 1 Beginning balance $2,050
June 2 Accounts payable
(Radio World) 1,750
June 8: Accounts payable (Radio World) $200
June 11: Cost of goods sold 2,250
June 20: Accounts payable
(Sound Unlimited) 2,850
June 23: Cost of goods sold 2,650
June 26: Accounts payable
(Sound Unlimited) 500
Accounts Payable
Date Account Titles Debit Credit
June 2: Inventory $1,750
June 8: Inventory $200
June 10: Cash 1,519
Cash Discounts 31
June 20: Inventory 2,850
June 26: Inventory 500
June 28: Cash 2,303
Cash Discounts 47
Sales
Date Account Titles Debit Credit
June 11: Accounts receivable $3,100
June 23: Cash 4,350
June 30: Income Summary $7,450
Cost of Goods Sold
Date Account Titles Debit Credit
June 4: Freight-in $210
June 10: Cash discounts $31
June 11: Inventory 2,250
June 23: Inventory 2,650
June 28: Cash discounts 47
June 30: Income Summary $5,032
Please research employment opportunities in the accounting field and provide insight into the relevance and usefulness of Excel in relation to the job title/description. Please explain how a potential candidate could leverage the functionality of Excel to make their every-day tasks efficient, effective and accurate.
Answer:
Following are the responses to the given question:
Explanation:
The progress throughout the financial sector does not take a confined path. One can move to more responsible roles when you're on the broad route to changing industries, receiving certificates, or switching disciplines — without even being derailed. Select from the range of staff inside the broad fields of public accountancy. You could be a lead financial official or a partner in a company of qualified checksum. A height of your career.
Although the accounting foundation is founded upon consistent accounting practices, the accountants can apply this theory in many various ways.
Employment accounts governmental and non-profit:
Accounting FundJobs of IRSPublic Accounting Jobs:
Estimated CostForensic Accountable Enrolled AgentImmobilien AssessorAccountant TaxationFiscal ProsecutorsPreparing taxJobs in private accounting:
Clerk of AccountingPayable/Deputy Clerk AccountsSystem Accounting SpecialistActuarial accountant/accountant insuranceBookkeepingAnalyst for the budgetAccountant of capitalFinancial Controller/Control OfficeAccountant costsMeasurement of environmental accountant/sustainabilityAccountant payrollFiscal Services:
Specialist in Business ValuationCertificated Financial PlannerFiscal AnalystAdvisor on taxesAccounts only include the cash that can be represented financially. Some individuals call accountancy "the language of business," as well as its objective is to allow accountancy users to make better choices
This included many tasks performed by the CPAs for its clients:
Asset records collection and maintenanceAssess banking transactions and make key management for optimum financial practicesReviewing accounting system and financial accounting to verify that they are effective and conform with approved accounting standards and proceduresTax documents and related tasksWhile on a trip to South Africa, Madison was impressed with the colorful woven outdoor placemats, floor mats, chair cushions, and umbrellas that local artisans were weaving. Upon returning to the United States, she was confident that U.S. consumers would be as intrigued by these accessories as she was. Madison decided to explore the possibility of starting an import business to bring these products to the United States. Which statement seems to be good advice for Madison?
Answer: A) Learn from others who import goods from abroad, and particular from Africa.
Explanation:
Nothing beats experience when it comes to acquiring knowledge so if Madison wants to acquire the knowledge necessary to bring the goods she saw in South Africa to the U.S., she should go to people who have experience in the matter and find out what they know.
This will giver her insight on the amount of money she needs to startup with as well as what business status she should have. They will also give her insight into cost cutting measures to enable her import with more efficiency and make more profit.
Suppose banks increase excess reserves by $ 471845 . If the reserve ratio is 12 percent, what is the maximum increase in the money supply
Answer:
$3,932,025.94
Explanation:
Multiplier = 1 / rr
Multiplier = 1 / Reserve ratio
Multiplier = 1 / 0.12
Multiplier = 8.3333
Increase in money supply = Multiplier * Increase in excess reserves
Increase in money supply = 8.3333 * $471,845
Increase in money supply = $3,932,025.94
So, the maximum increase in the money supply is $3,932,025.94.
Kentucky Corporation uses a process-cost accounting system. The company adds direct materials at the start of its production process; conversion cost, on the other hand, is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 40% complete. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?
A. Materials, 40%; conversion cost, 40%.
B. Materials, 40%; conversion cost, 100%.
C. Materials, 100%; conversion cost, 40%.
D. Materials, 100%; conversion cost, 60%.
E. Materials, 100%; conversion cost, 100%.
Answer:
The following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory:
D. Materials, 100%; conversion cost, 60%.
Explanation:
The above is actually the best option which would be used to calculate the correct number of equivalent units in the ending work-in-process inventory.
____________- allows more than one variable at a time to be changed, and it takes into account the probabilities of changes in the key variables.
Answer:
scenario analysis
Explanation:
scenario analysis estimates changes that would result from a hypothetical change in the market or a reoccurrence of an historical event.
types of scenario analysis
1. historical scenarios : scenarios measure an hypothetical change that would result from a repeat of a particular period of financial history.
2. Hypothetical scenarios : scenarios have never occurred and are just conjured for the sake of analysis.
Sensitivity measures the impact of the change of one variable.
Explain why a finance manager need to understand accounting information even if the firm has a trained accountant on its staff.
Answer:
Following are the solution to the given question:
Explanation:
A financial manager should understand adequate information on accountancy. This is irrespective of whether the business does have a trained counterpart.
Accountancy is a necessary input into the function of financial management. Throughout the extent, as accounts were important input in financial decision-making is closely connected with both the interaction between finance and financial.
Accrual analysis provides information mostly on the company's operations. The result of the accountancy is accounts like the income statement, the income statement, and the position financial adjustments report. The information in such statements helps money advisors assess a company's previous growth and career projections.
The purpose of accountancy in the choice process is to gather and provide financial data on the institution's past, present, and future activities.
During the economic transaction, the finance department uses these data. This is not possible for money advisors to collect data or to make choices from accounts. And an investor's primary focus is to collect data and display it, whereas budgeting, control, and judgment are the main job of a financial manager. In a sense, financial management starts at the end of accountancy.
What is true about the relationship between household consumption and disposable income?
Answer:
Both have positive relationship with each other
Explanation:
In simple words, Consumption rises in lockstep with current revenue and that the higher the marginal inclination to purchase, the much more present expenditure is influenced by current disposable revenue . The consumption-smoothing impact is higher when the marginal willingness to consume is low.
Thus, from the above we can conclude that both have non linear positive relation.
Of the "Five C's of Credit" which do you think is most important in determining someone's credit worthiness? Why?
Answer:
Character
Explanation: If you have borrowed money, you have most likely heard your lender discuss the Five C’s of Credit. Recently, many lenders have indicated that character of the borrower is the most important of the Five C’s, particularly in tough economic times. -https://www.farmprogress.com/most-important-c-credit
The "Five C's of Credit" that is most important in determining someone's creditworthiness is Character. This is further explained below.
What is Character?Generally, Character is simply defined as the mental and moral characteristics that distinguish a person
In conclusion, lenders of money, look to character history to determine the potency Five C's of Credit.
Read more about Character
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Your sister just deposited $5,500 into an investment account. She believes that she will earn an annual return of 8.8 percent for the next 6 years. You believe that you will only be able to earn an annual return of 8 percent over the same period. How much more must you deposit today in order to have the same amount as your sister in 6 years
Answer:
$5749.02
Explanation:
The first step is to determine the future value of my sister's deposit
The formula for calculating future value:
FV = P (1 + r)^n
FV = Future value
P = Present value
R = interest rate
N = number of years
5500 (1.088)^6 = $9122.97
the second step is to determine the present value of $9122.97 using an interest rate of 8%
$9122.97 / (1.08)^6 = $5749.02
A 20-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for $1,100. (Assume that the bond has just been issued.)
Required:
a. What is the bond's yield to maturity?
b. What is the bond's current yield?
c. What is the bond's capital gain or loss yield?
d. What is the bond's yield to call?
Answer:
A. 3.57%
B. 7.27%
C. 5.45%
Explanation:
a. Calculation to determine What is the bond's yield to maturity
Using this formula
SemiannualYTM=PMT+Par−Price÷N÷Par+Price/22
Where,
Par = $1,000
Annual payment = $1,000 x 8% = $80
Semiannual payment = $80 x 0.5 = $40
Price = $1,100
Call price = $1,040
Time to call = 5 years
Time to maturity = 20 years
Let plug in the formula
SemiannualYTM=$40+$1,000−$1,100÷20×2÷$
1,000+$1,100/2
SemiannualYTM=3.57%
b. Calculation to determine What is the bond's current yield
Using this formula
Current yield=Annual payment/price
Let plug in the formula
Current yield=80/1100
Current yield=7.27%
c. Calculation to determine What is the bond's capital gain or loss yield
Using this formula
Capital loss=Call price-Current price/Current price
Let plug in the formula
Capital loss=1040-1100/1100
Capital loss=5.45%
On July 15, 2021, M.W. Morgan Distribution sold land for $41.0 million that it had purchased in 2016 for $26.0 million.
Required:
What would be the amount(s) related to the sale that Morgan would report in its statement of cash flows for the year ended December 31, 2021, using the direct method?
Answer:
$41.0 million
Explanation:
Calculation to determine the amount(s) related to the sale that Morgan would report in its statement of cash flows for the year ended December 31, 2021, using the direct method
DIRECT METHOD:
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash proceeds received from sale of land $41.0 million
Therefore the amount(s) related to the sale that Morgan would report in its statement of cash flows for the year ended December 31, 2021, using the direct method is $41.0 million
Vertical analysis can best be described as a technique for analyzing the percentage change in individual financial statement line items from one accounting period to the next.
a. True
b. False
Answer:
False
Explanation:
Vertical analysis can be regarded as accounting tool which gives room for
proportional analysis of some documents. This document is usually
financial statements.In carrying out vertical analysis, all the item line that is on the financial statement is been recorded as percentage of another item. Instance of this is an income statement.
Weighted Average Cost Flow Method Under Perpetual Inventory System The following units of a particular item were available for sale during the calendar year:
Jan. 1 Inventory 4,000 units at $40
Apr. 19 Sale 2,500 units
June 30 Purchase 4,500 units at $44
Sept. 2 Sale 5,000 units
Nov. 15 Purchase 2,000 units at $46
Required:
The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale.
Answer:
Cost of goods sold:
Apr. 19 = $100,000
Sept. 2 = $215,000
Inventory Balance on:
Apr. 19 = $60,000
Sept. 2 = $43,000
Explanation:
a) Data and Calculations:
Date Description Units Unit Price Inventory Cost of Sales
Jan. 1 Inventory 4,000 $40 $160,000
Apr. 19 Sale 2,500 $40 $60,000 $100,000
June 30 Purchase 4,500 $44 $258,000 ($44 * 4,500 + $60,000)
Sept. 2 Sale 5,000 $43 $43,000 $215,000
Nov. 15 Purchase 2,000 $46 $135,000 ($46 * 2,000 + $43,000)
An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in:
Answer:
an increase in price and an indeterminate increase in equilibrium quantity
Explanation:
Increase in demand leads to an outward shift of the demand curve. As a result equilibrium price and quantity increases
A decrease in supply leads to an inward shift of the supply curve
Irwin Company has budgeted direct labor hours for the coming three months as follows: July, 6,500 hours; August, 8,100 hours; and September, 8,300 hours. Manufacturing overhead is budgeted at $13,300 per month plus $3.30 per direct labor hour. What is the budgeted manufacturing overhead for August
Answer:
the budgeted manufacturing overhead for August is $40,030
Explanation:
The computation of the budgeted manufacturing overhead for August is shown below:
= Budgeted manufacturing overhead + direct labor hour rate × direct labor hours for august
= $13,300 + $3.30 × 8,100 hours
= $13,300 + $26,730
= $40,030
Hence, the budgeted manufacturing overhead for August is $40,030
Why are Americans dependent of what is produced in other countries
Answer:
Climate, resources, cheap labor and outsourcing of manufacturing jobs.
Explanation:
As a developed country, labor cost are higher in the US in comparison to most of world. US consumers expect best price for their money. So many manufacturers have moved overseas to keep labor cost low and make a better profit while satisfying their consumers. Then mass ship items to keep cost low. Also some produced can only be grown in climates that the US doesn't have. There are some resources the US have that others countries. The mineral gold is much more plentiful in Africa but is widely used in electronics. The US is a prime buyer of electronics.
Division of labor and specialization
Answer:
Division of Labour vs Specialization. Basically, both these concepts involve dividing the main process into different tasks, assigning each task to individual workers or group of workers. Thus, there is no significant difference between division of labour and specialization.
Explanation:
Lowden Company has a predetermined overhead rate of and allocates overhead based on direct material cost During the current period direct labor cost is 58,000 and direct materials cost is $ 88,000 . How much overhead cost should Lowden Company should apply in the current period
Answer:
$138,160
Explanation:
Calculation to determine How much overhead cost should Lowden Company should apply in the current period
Using this formula
Overhead =157%*Direct material cost
Let plug in the formula
Overhead=157%*88,000
Overhead=$138,160
Therefore the amount of overhead cost that Lowden Company should apply in the current period is $138,160
You own a golf course in Florida and you need to determine how many golf carts you need to buy to maximize profits. Please answer the following questions given the information below.
A brand new golf cart costs 2000 rounds of golf and the rate of depreciation is 5%.
The real interest rate is 8%
The expected marginal product of capital is given by MPKf = 1000 – 10K.
a) What is the user cost of capital and what is it expressed in?
b) How many golf carts should you buy to maximize profits (i.e., what is K*)?
c) Draw a graph (the uc / MPK graph) depicting the state of affairs and label this initial profit maximizing point as point A.
Now suppose the (local) government with all their financial shortfalls embarks on a campaign to raise revenue to fund the fire department by imposing a so-called "luxury tax" (we know it as τ) equal to 15% of gross revenue. What happens to the profit maximizing number of golf carts? Please show all work and round to two decimal places.
Answer:
a) 260 rounds of golf
b) 74
c) attached below
d) 70 golf carts
Explanation:
a) Calculate the user cost of capital and what is it expressed in
user cost of capital = total depreciation + total interest
= ( rate of depreciation * Golf cart cost ) + ( real interest rate * Golf cart cost )
= ( d + r ) Golf cart cost
= ( 0.05 + 0.08 ) 2000 = 260 rounds of golf
b) determine the number of carts that should be bought to maximize profits
Profits are maximized when User Cost of capital = MPKF
(d +r) Golf cart cost = MP Kf = 1000 – 10K
( 0.05 + 0.08 ) 2000 = 1000 – 10K
260 = 1000 – 10K ∴ K = ( 1000 - 260 ) / 10 = 74
c) attached below is the required graph
d) Determine what happens to the profit maximizing number of golf carts
User cost of capital ( 1 - t ) = MPK^f
∴ User cost of capital ( 1 - t ) = 1000 – 10K
260 ( 1 - 0.15 ) = 1000 – 10K
305.88 = 1000 – 10K
K=69.41
that is approximately 70 golf carts is been bought to maximize profit
Reasons why South African post office taking private courier companies to court(10)
Answer:
Not sure how but could be for antitrust and breaching anti-competition laws. Unlikely cause could be for defamation
The diameter of a brand of tennis balls is approximately normally distributed, with a mean of 2.56
inches and a standard deviation of 0.04
inch. A random sample of 11
tennis balls is selected. Complete parts (a) through (d) below.
Answer:
sample mean = 2.63 inches
sample standard deviation = \frac{standard \hspace{0.15cm} deviation}{\sqrt{n} } = \frac{0.03}{\sqrt{9} } = \frac{0.03}{3} = 0.01
n
standarddeviation
=
9
0.03
=
3
0.03
=0.01
b) P(X < 2.61) = 0.0228
c.) P(2.62 < X < 2.64) = 0.6827
d.) Therefore 0.06 = P(2.6292 < X < 2.6307)
Step-by-step explanation:
i) the diameter of a brand of tennis balls is approximately normally distributed.
ii) mean = 2.63 inches
iii) standard deviation = 0.03 inches
iv) random sample of 9 tennis balls
v) sample mean = 2.63 inches
vi) sample standard deviation = \frac{standard \hspace{0.15cm} deviation}{\sqrt{n} } = \frac{0.03}{\sqrt{9} } = \frac{0.03}{3} = 0.01
n
standarddeviation
=
9
0.03
=
3
0.03
=0.01
vii) the sample mean is less than 2.61 inches = P(X < 2.61) = 0.0228
viii)the probability that the sample mean is between 2.62 and 2.64 inches
P(2.62 < X < 2.64) = 0.6827
ix) The probability is 6-% that the sample mean will be between what two values symmetrically distributed around the population measure
Therefore 0.06 = P(2.6292 < X < 2.6307)
Kawamura, a careful utility maximizer, consumes peanut butter and ice cream. Assume that both peanut butter and ice cream are normal goods and that diminishing marginal utility applies to both goods. Right after he achieves the utility-maximizing level of consumption of the two goods, the price of peanut butter falls. After he adjusts to this event, the marginal utility of peanut butter goes _____ and that of ice cream goes _____.
Answer:
The marginal utility of peanut butter goes down and that of ice cream goes up.
Explanation:
The substitution effect states that when the price of a product falls, it will lead to a rise in the quantity demanded of the product as buyers will buy more of the product that is now relatively cheaper.
And as more of a good is bought, its marginal utility falls. And as less of a product is bought, its marginal utility increases.
Based on the above explanation therefore, the marginal utility of peanut butter goes down and that of ice cream goes up after Kawamura adjusts to the event.
This is because as more of peanut butter is bought due to the fall in its price, its marginal utility falls. And as less of ice cream is bought as it is now relatively more expensive, its marginal utility increases.
Please be prepared to give your presentation on the monthly sales figures at our upcoming staff meeting. In addition to the accurate accounting of expenditures for the monthly sales, be ready to discuss possible reasons for fluctuations as well as possible trends in future customer spending. Thank you. The main focus of the presentation will be _
Answer:
The main focus of presentation will be Sales forecast and expected revenue.
Explanation:
In the presentation the main focus will be the sales forecast. The monthly budgeted sales will be presented to the team and target should be made realistic so that they are achievable. There can be fluctuations in the sales because of seasonal effect or due to some other reasons. The trend should be analyzed before determining the sales targets.
A firm that purchases electricity from the local utility for $350,000 per year is considering installing a steam generator at a cost of $270,000. The cost of operating this generator would be $270,000 per year, and the generator will last for five years. If the firm buys the generator, it does not need to purchase any electricity from the local utility. The cost of capital is 13%. For the local utility option, consider five years of electricity purchases. For the generator option, assume immediate installation, with purchase and operating costs in the current year and operating costs continuing for the next four years. Assume payments under both options at the start of each year (i.e., immediate, one year from now,..., four years from now). What is the net present value of the more attractive choice
Answer:
Option 1:
Purchasing Electricity from the utility:
NPV = -$1391065.
Option 2:
NPV of more attractive alternative = NPV of purchasing generator = -$1343107.
Explanation:
Option 1:
Purchasing Electricity from the utility:
Purchase cost per year = $350000
[tex]NPV = -350000 * [PVAF (5-1, 0.13) + 1]\\= -350000 * [2.974471 + 1]\\\\= -1391064.85[/tex]
NPV = -$1391065.
Option 2:
Purchasing generator:
Initial Cash Flow:
Purchase Cost of generator -$270000
Operating Cash Flow -$270000
= -$540000
Recurring Cash Flows:
Operating Cost -$270000
NPV:
Year Cash Flow PVF (13%) PV of Cash Flow
0 -$540000 1 -$540000
1-4 -$270000 2.974471 -$803107
-$1343107
NPV = -$1343107
Since NPV in the case of purchasing a generator is more than that of purchasing electricity,
NPV of more attractive alternative = NPV of purchasing generator = -$1343107.
Eric, a ghost writer, conducted market research and discovered a niche market in writing scripts for corporate online videos. He also knows now the market will bear $250 per script. What question should he ask next about placement of his marketing mix
Answer: What is the best way to get his service to his target customers
Explanation:
Market research is the process of determining how viable a product will be after research has been conducted in the market. This is vital in getting opinions of customers.
Marketing mix are the marketing tools which an organization can use in order to pursue its marketing objectives.
The question that should be asked about the marketing mix placement is "What is the best way to get his service to his target customers". This is vital in knowing the best method to use in making the product available to the customers.