Western Electric has 35,000 shares of common stock outstanding at a price per share of $85 and a rate of return of 12.70 percent. The firm has 7,600 shares of 8.40 percent preferred stock outstanding at a price of $98.00 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $422,000 and currently sells for 114 percent of face. The yield to maturity on the debt is 8.26 percent. What is the firm's weighted average cost of capital if the tax rate is 40 percent

Answer:

10.83 %

Explanation:

Weighted average cost of capital = Cost of Equity x Weight of Equity + Cost of Debt x Weight of Debt + Cost of Preferred Stock x Weight of Preferred Stock

therefore,

Weighted average cost of capital = 12.70 % x 70.82 % + 4.956 % x 17.73 % + 8.40 % x 11.45 %

                                                        = 10.83 %

Remember to use after tax cost of debt.

A construction company is considering investing $80,000 in a dump truck. The truck will last 5 years, at which time it will be sold for $15,000. The maintenance cost at the end of the first year is estimated to be $9,000. Maintenance costs for the truck are estimated to increase by $1000 per year over its life. As an alternative, the company may lease the truck from a dealership for $X per year, including maintenance.

Required:
a. Draw a cash flow diagram of both alternatives.
b. For what value of X should the company lease the truck if the company does business with a MARR of 7%. Assume end-of-year lease payments.

The objectives of labor unions frequently shift with social and economic trends. In the 1970s, the primary objective was additional pay and benefits for members. In the 1980s, job security and union recognition were uppermost. In the 1990s and into the 2000s, unions again focused on job security due to the growth of global competition and outsourcing. Organized labor has also strongly opposed the increase in offshore outsourcing, claiming this practice will cost U.S. jobs. Labor unions generally insist that a contract contain a union security clause stipulating that employees who reap union benefits either officially join or at least pay dues to the union. Edward was recently transferred to a location in a new state. He was surprised that he was not required to be in the union in the new state, but he was in the old state. He later learned that the new state passed a provision giving him the choice.

a. Open shop agreement
b. Union shop agreement
c. Agency shop agreement & Right-to-work law

Why do they say Accounting Equation is the basis for the preparation of statement of financial position in accordance to IFRS financial statement presentation ?​

The Waverly Company has budgeted sales for the year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. The finished goods inventory at the start of the year is 3,000 units. Scheduled production for the second quarter is (in units): A. 17,500 units. B. 16,500 units. C. 15,000 units. D. 13,000 units.

The following income statements are provided for Li Company's last two years of operation: Year 1 Year 2 Number of units produced and sold 4,500 4,100 Sales revenue $ 69,750 $ 63,550 Cost of goods sold 41,700 38,000 Gross margin 28,050 25,550 General, selling, and administrative expenses 17,500 16,300 Net income $ 10,550 $ 9,250 Assuming that cost behavior did not change over the two-year period, what is Li Company's contribution margin in Year 2?

HURRY IM BEING TIMED



Most loans are paid back in __________ installments.A. daily. weekly. monthly. yearly

The market research department of the National Real Estate Company conducted a survey among 500 prospective buyers in a suburb of a large metropolitan area to determine the maximum price a prospective buyer would be willing to pay for a house. From the data collected, the distribution that follows was obtained.

Maximum Price Considered, x P(X = x)
(in thousands of dollars)
480 10
500
490 20
500
500 75
500
510 85
500
520 70
500
550 95
500
580 95
500
600 45
500
650 5
500


Required:
Compute the mean, variance, and standard deviation of the maximum price x that these buyers were willing to pay for a house.

Choose one of the management or leadership theories (you may know of one not listed below) and three of the characteristics listed below. You want to research what details for each characteristic you chose applies to the selected management or leadership theory. You should write at least 100-word minimum for each characteristic.
Management and leadership theories include :_____.
a. Contingency theory
b. Systems theory
c. Chaos theory
d. Theory X and Theory Y
e. Human relations theory
f. Transactional leadership theory
g. Transformational leadership theory
h. Path-goal theory
i. Charismatic leadership theory
j. Situational leadership theory.
Different types of characteristics to consider for each management or leadership theory are :_______.
a. Traits
b. Values, integrity and moral development
c. Confidence and optimism
d. Skills and expertise
e. Behavior
f. Influence tactics
g. Attributes about followers
h. Beliefs and assumptions.

Andy derives utility from two goods, potato chips (Qp) and Cola (Qc). Andy receives zero utility unless he consumes some of at least one good. The marginal utility that he receives from the two goods is given as follows:
Qp MUp Qc MUc
1 12 1 24
2 10 2 22
3 8 3 20
4 6 4 18
5 4 5 16
6 2 6 14
7 -2 7 12
8 4 8 10
Refer to Scenario, what is the total utility that Andy will receive if he consumes 5 units of potato chips (Qp) and no Cola drink (Qc)?

Which TWO details should be covered by the scope of Loretta’s business message?

Loretta is writing a brochure about storm preparedness for the county’s emergency management services. In the brochure, Loretta should include information about the....
a. Different kinds of storms, b. storm routes in the neighboring county, c. storm shelters in the county .

She should also inform the recipients about the..... a. specific medical procedures to follow,b. history of emergency services, c. emergency supplies to have on hand. .

Crane Company had 190000 shares of common stock, 19000 shares of convertible preferred stock, and $1490000 of 4% convertible bonds outstanding during 2021. The preferred stock is convertible into 39000 shares of common stock. During 2021, Crane paid dividends of $0.80 per share on the common stock and $2 per share on the preferred stock. Each $1,000 bond is convertible into 30 shares of common stock. The net income for 2021 was $590000 and the income tax rate was 30%. Basic earnings per share for 2021 is (rounded to the nearest penny)

During the current month, Tomlin Company incurs the following manufacturing costs.
(a) Purchased raw materials of $16,940 on account.
(b) Incurred factory labor of $38,528. Of that amount, $32,281 relates to wages payable and $6,247 relates to payroll taxes payable.
(c) Factory utilities of $3,108 are payable, prepaid factory property taxes of $2,008 have expired, and depreciation on the factory building is $8,322.
Prepare journal entries for each type of manufacturing cost. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. Account Titles and Explanation Debit Credit
(a)
(b)
(c)

Livingston Fabrication has created the following aggregate plan for the next five months:
August September October November December
Forecasting demand (units of finished goods)
1,000,000.00 1,000,000.00 2,000,000.00 4,000,000.00 1,000,000.00
Production plan
2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00
Assume that Livingston will have nothing in inventory at the end of July. Livingston employs 500 production assembly workers and it takes one production assembly worker 3 minutes to assemble one unit of finished good. (The unit is complete at that point.) Each production assembly worker can provide 160 hours of assembly time a month without requiring overtime pay.
Livingston wants to complete this plan without working any overtime in assembly. How many additional production assembly workers does Livingston need to hire, in order to accomplish this? When should they be hired?
Using this production plan, how many units will be in inventory at the end of October?
What will the average inventory level be each month?

The Northern Ring Company manufactures 2,000 telephones per year. The full manufacturing costs per telephone are as follows: Direct materials $ 2 Direct labor 8 Variable manufacturing overhead 6 Average fixed manufacturing overhead 6 Total $22 The Texas Ring Company has offered to sell Northern Ring Company 2,000 telephones for $15 per unit. If Northern Ring Company accepts the offer, $10,000 of fixed overhead will be eliminated. Northern Ring should: Select one: A. Buy the telephones; the savings is $12,000 B. Make the telephones; the savings is $2,000 C. Buy the telephones; the savings is $24,000 D. Make the telephones; the savings is $12,000

Indicate which activities of Stockton Corporation violated the rights of a stockholder who owned one share of common stock. (You may ch mooosere than one answer.
a. Did not allow the stockholder to sell the stock to her brother.
b. Rejected the stockholder's request to be put in charge of its retail store.
c. When additional common stock was later issued, the company did not give the shareholder the preemptive right to protect her proportionate interest.
d. The company did not provide all stockholders with timely financial reports.
e. In liquidation, paid the common shareholder after all creditors were already paid.

Adamson Corporation is considering four average-risk projects with the following costs and rates of return:

Project Cost Expected Rate of Return
1 $2,000 16.00%
2 3,000 15.00
3 5,000 13.75
4 2,000 12.50

The company estimates that it can issue debt at a rate of rd = 10%, and its tax rate is 30%. It can issue preferred stock that pays a constant dividend of $5 per year at $48 per share. Also, its common stock currently sells for $33 per share; the next expected dividend, D1, is $4.00; and the dividend is expected to grow at a constant rate of 5% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock.

Required:
a. What is the cost of each of the capital components?
b. What is Adamson's WACC?

A company acquired a copyright that now has a remaining legal life of 30 years. In the hands of the previous owner, the copyright had a 38-year useful life assigned to it. An analysis of market trends and consumer habits indicated that the copyrighted material will generate positive cash flows for approximately 25 years. What is the remaining useful life, if any, over which the company can amortize the copyright for accounting purposes

Penetration pricing doesn't work if ________.

Locomotive Corporation is planning to repurchase part of its common stock by issuing corporate debt. As a result, the firm’s debt–equity ratio is expected to rise from 30 percent to 50 percent. The firm currently has $3.3 million worth of debt outstanding. The cost of this debt is 9 percent per year. Locomotive expects to have an EBIT of $1.32 million per year in perpetuity. Locomotive pays no taxes.
a. What is the market value of Locomotive Corporation before and after the repurchase announcement?
b. What is the expected return on the firm’s equity before the announcement of the stock repurchase plan?
c. What is the expected return on the equity of an otherwise identical all-equity firm?
d. What is the expected return on the firm’s equity after the announcement of the stock repurchase plan?

Amy and Builders Corporation enter into a contract in which Amy agrees to deliver cement to Builders at a construction site. They neglect to include a price in the agreement. A court will a. determine a reasonable price for the cement and insert it into the contract. b. leave the parties in the position in which it found them. c. refuse to enforce the agreement. d. select the lowest quoted price for cement and insert it into the contract.

The stockholders’ equity section of Velcro World is presented here.
VELCRO WORLD
Balance Sheet (partial)
($ and shares in thousands)
Stockholders' equity:
Preferred stock, $1 par value $ 5,800
Common stock, $1 par value 28,000
Additional paid-in capital 1,028,600
Total paid-in capital 1,062,400
Retained earnings 286,000
Treasury stock, 12,000
Common shares (360,000)
Total stockholders' equity $ 988,400
Based on the stockholders' equity section of Velcro World, answer the following questions. Remember that all amounts are presented in thousands.
1. How many shares of preferred stock have been issued? (Enter you answer in total number of shares, not in thousands.)
2. How many shares of common stock have been issued? (Enter you answer in total number of shares, not in thousands.)
3. If the common shares were issued at $30 per share, at what average price per share were the preferred shares issued?
4. If retained earnings at the beginning of the period was $250 million and $30 million was paid in dividends during the year, what was the net income for the year? (Enter your answer in million (i.e., 5,000,000 should be entered as 5).)
5. What was the average cost per share of the treasury stock acquired?

LJM Corporation includes two divisions, Shay Division and Patty Division. The Shay Division makes specialized filters, including one that could be used by the Patty Division. Costs for the filter are variable costs, $16; fixed costs, $20. Shay Division has capacity to make 20,000 of the filters, and it is operating at capacity. It sells the filters to other companies for $52 each. The Patty Division needs 8,000 filters per year, and it has been purchasing them from another company for $45 each. Required: 1) If a transfer were to occur between Shay Division and Patty Division, what is the maximum that Patty Division should be willing to pay for the filters? 2) If a transfer were to occur between Shay Division and Patty Division, what is the minimum price that Shay Division should be willing to accept?

Exercise 23-2 Make or buy LO P1 Gelb Company currently manufactures 43,000 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related to making this component are $73,000 per year, and allocated fixed costs are $78,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 43,000 units and buying 43,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier

n 1982 the inflation rate hit 16%. Suppose that the average cost of a textbook in 1982 was $25. What was the expected cost in the year 2017 if we project this rate of inflation on the cost? (Assume continuous compounding. Round your answer to the nearest cent.) If the average cost of a textbook in 2012 was $150, what is the actual inflation rate (rounded to the nearest tenth percent)?

Which of the following is NOT a reason to extend credit to
customers you are trying to sell to?
O Selling on credit was a long-established industry practice before you
entered the market and it is expected.
O You are selling an intangible asset with fat margins and customer's
struggle to find financing and if the customer doesn't pay, you have not
lost much
You feel like you can sell more product by accommodating customers and
you have a high level of knowledge about the industry you sell into and
you can make informed decision quicker than a generic bank.
It is the end of the quarter, and all of the sales people are trying to hit
their quota but you don't have anybody available to check credit or do
financial reviews of new customers. You are selling a low margin product
with a high amount of C.O.G.S.

XYZ Office Supplies is about to introduce a new customer service program that will affect all its 355 sales and service employees. Job duties will be changed, and the employee rewards system will be altered to fit this new customer focus. Moreover, the company wants to improve the efficiency of work processes, thereby removing some of the comfortable (and often leisurely) routines that employees have followed over the years. Top management is concerned about the different types of forces resisting change that the company will potentially experience during this change process. The employees at XYZ discreetly weaken the new customer service program to prove that the decision is wrong and that the new program is not effective. Which of the following reasons to resist change is depicted in this scenario?
a. induce organizational learning.
b. negotiate with the employees.
c. use the stress management technique.
d. create an urgency for change.

The following is a list of various costs of producing T-shirts. Classify each cost as either a variable, fixed, or mixed cost for units produced and sold.
a. Ink used for screen printing Variable
b. Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used Mixed
c. Thread Variable
d. Electricity costs of $0.038 per kilowatt-hour Variable
e. Janitorial costs of $4,000 per month Fixed
f. Advertising costs of $12,000 per month
g. Accounting salaries
h. Color dyes for producing different colors of T-shirts Variable
i. Salary of the production supervisor
j. Straight-line depreciation on sewing machines Fixed
k. Salaries of internal pattern designers
l. Hourly wages of sewing machine operators Variable
m. Property taxes on factory, building, and equipment Fixed
n. Cotton and polyester cloth
o. Maintenance costs with sewing machine company (the cost is $2,000 per year plus $0.001 for each machine hour of use.) Mixed

profit generated by corporations is known as ?

Bramble Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $212,000; and fixed costs $70,400. Management is considering the following independent courses of action to increase net income. Compute the net income to be earned under each alternative. 1. Increase selling price by 10% with no change in total variable costs or sales volume. Net income $ 2. Reduce variable costs to 60% of sales. Net income $ 3. Reduce fixed costs by $18,000. Net income $ Which course of action will produce the highe

The cash account for American Medical Co. at April 30 indicated a balance of $334,985. The bank statement indicated a balance of $388,600 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: A.Checks outstanding totaled $61,280. B.A deposit of $42,500, representing receipts of April 30, had been made too late to appear on the bank statement.