Answer and Explanation:
As we know that
Multiplier Effect = 1 ÷ Reserve Ratio
So,
Reserve ratio = 1 ÷ 0.2
= 5
Now this means that $1 million deposit result into increased by $5 million in the overall money supply
So the money supply should rise by $50 and it should be $10 of the government securities
Mr. Hopper expects to retire in 30 years, and he wishes to accumulate $1,000,000 in his retirement fund by that time. If the interest rate is 12% per year, how much should Mr. Hopper put into his retirement fund at the end of each year in order to achieve this goal
Answer:
Annual deposit = $4100
Explanation:
Annual deposit = $4100
Number of years for retirement = 30 years
Future value of money = $1000000
Interest rate = 12%
Now use the below formula to find the annuity amount.
Annual deposit = Future value (A/F, r, n)
Annual deposit = 1000000 (A/F, 12%, 30)
Annual deposit = 1000000(0.0041)
Annual deposit = $4100
The amount Mr Hopper should put in his retirement fund each year is $4143.66.
In order to determine the amount of money Mr. Hopper should deposit each year, this formula would be used:
Yearly payment = future value / annuity factor
Annuity factor = {[(1+r)^n] - 1} / r
Where:
R = interest rate
N = number of years
Annuity factor = [(1.12)^30 - 1] / 0.12 = 241.332684
Yearly payment = $1,000,000 / 241.332684 = $4143.66
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Semtech Manufacturing purchased land and building for $5 million. In addition to the purchase price, Semtech made the following expenditures in connection with the purchase of the land and building:
Title insurance $ 24,000 Legal fees for drawing the contract 9,000 Pro-rated property taxes for the period after acquisition 44,000 State transfer fees 4,800
An independent appraisal estimated the fair values of the land and building, if purchased separately, at $4.2 and $1.8 million, respectively. Shortly after acquisition, Samtech spent $90,000 to construct a parking lot and $48,000 for landscaping.
1. Determine the initial valuation of each asset Semtech acquired in these transactions.
2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Semtech demolished the building. Demolition costs were $330,000 and the salvaged materials were sold for $5,000. In addition, Semtech spent $87,000 clearing and grading the land in preparation for the construction of a new building.
Answer:
Semtech Manufacturing
1. Initial valuation of each asset:
Land = $3,526,460
Building = $1,511,340
2. The initial valuation of land = $5,449,800
Explanation:
a) Data and Calculations:
Cost of purchased land and building = $5 million
Additional expenditures:
Title insurance $ 24,000
Legal fees for drawing the contract 9,000
Prorated property taxes for the period after acquisition 44,000
State transfer fees 4,800
Allowed additional costs:
Title insurance $ 24,000
Legal fees for
drawing the contract 9,000
State transfer fees 4,800
Total additional costs $37,800
Total expenditure on the land and building = $5.037.8 million
Initial valuation of each asset:
Land = $3,526,460 ($5,037,800 * $4,200,000/$6,000,000)
Building = $1,511,340 ($5,037,800 * $1,800,000/$6,000,000)
Cost of land after the demolition of the building:
Initial purchase cost of land and building = $5 million
Additional cost = $37,800
Demolition costs = $330,000
Salvage of materials ($5,000)
Clearing and grading land = $87,000
Total cost of land = $5,449,800
William owns 1 share of Park stock. He purchased the stock three years ago for $17.50. The stock is currently trading for $40 per share. The stock has paid the following dividends over the past three years. o Year 1: $1.00. o Year 2: $2.00. o Year 3: $3.00. What is the compounded rate of return (IRR) that William has earned on this investment
Answer:
sim eu também preciso desta respota
Liquidating Partnerships—Deficiency Prior to liquidating their partnership, Wakefield and Barns had capital accounts of $105,000 and $55,000, respectively. The partnership assets were sold for $40,000. The partnership had no liabilities. Wakefield and Barns share income and losses equally. a. Determine the amount of Barns' deficiency. $fill in the blank 1 b. Determine the amount distributed to Wakefield, assuming Barns is unable to satisfy the deficiency. $fill in the blank 2
Answer:
Liquidating Partnerships
a. The amount of Barn's deficiency is:
= $5,000.
b. The amount distributed to Wakefield, assuming that Barns is unable to satisfy the deficiency is:
= $40,000.
Explanation:
a) Data and Calculations:
Sharing of profits and losses = 1:1
Wakefield Barns Total
Capital account balances $105,000 $55,000 $160,000
Proceeds from partnership assets = 40,000
Loss from sale of partnership assets = 120,000
Sharing of loss equally -60,000 -60,000 -120,000
Capital account balances $45,000 ($5,000)
Distribution to Wakefield 40,000
Barn's capital account deficiency $5,000
b) When Barn is not able to satisfy his capital deficiency after the equal sharing of the loss from the sale of the partnership assets, the amount distributed to Wakefield is reduced by Barn's deficiency. Therefore, Wakefield will be paid cash of $40,000 since there are no liabilities.
how goal succession takes place? Explain the condition responsible for goal succession
Answer:Goal succession refers to the situation where the new or modified goals are incorporated or substituted for the existing one in such a manner that they do not change the spirit of the existing goals. The new goals are such that individuals or the organisation are willing to state publicly.
Explanation:
Answer:
Goal succession refers to the situation where the new or modified goals are incorporated or substituted for the existing one in such a manner that they do not change the spirit of the existing goals. The new goals are such that individuals or the organisation are willing to state publicly.
Waggoner Company has a cash balance of $44,000 on April 1. The company is required to maintain a cash balance of $25,000. During April expected cash receipts are $174,000. Expected cash disbursements during the month total $200,800. During April the company will need to borrow:____.
a. $2,500.b. $3,500.c. $4,000.d. $6,000.
Answer: $7,800
Explanation:
The amount that the company needs to borrow can be found using the formula:
= Opening balance + Cash receipts - Cash to be maintained - Cash disbursement
= 44,000 + 174,000 - 25,000 - 200,800
= -$7,800
Amount to be borrowed is the shortfall of $7,800
Câu 1 Bản chất của quản trị chiến lược là phác thảo hình ảnh tương lai của doanh nghiệp trong lĩnh vực hoạt động trên cơ sở khai thác các:
a Nguồn lực
b Năng lực cạnh tranh
c Thế mạnh
d Lợi thế cạnh tranh
Differentiate between expansionary fiscal policy and contractional fiscal policy
Answer:
Expansionary fiscal policy includes tax cuts, transfer payments, rebates and increased government spending on projects such as infrastructure improvements. For example, it can increase discretionary government spending, infusing the economy with more money through government contracts. On the other hand, in Contractional Fiscal Policy, the government taxes more than it spends—either by increasing tax rates, decreasing spending, or both. This type of fiscal policy is best used during times of economic prosperity. Contractionary fiscal policy is the opposite of expansionary fiscal policy.
Explanation:
Doug Datner had an eclectic background. He completed his law degree from the University of Virginia, then went to work for a technology start-up in Dubai. After the start-up was purchased by a larger corporation, affording Doug a hefty sum of money, Doug and his spouse returned to the United States. While working with an architect and a designer to build their dream home, they realized that there was not a provider of high-quality custom-made door and window hardware at a reasonable price point in the United States. Even though Doug had no experience in the field, he decided to start a business manufacturing high-quality custom-made door and window hardware. He named the company Hardware House Doug and his wife cleared space in their newly constructed garage, designed several basic prototypes, and hired a metalwork expert to replicate their prototypes. They decided to have a few designs in catalog as one component of their business, but have the capability to alter those designs to provide designers with custom hardware. The first few years were tough. Business was steady enough to hire a second metalwork expert, but cash flow challenges often made Doug worry whether he would be able to pay his metalwork experts on time. Still, the Hardware House had gained a number of consistent clients, and was able to move into an old warehouse space and expand operations. Ten years later, Hardware House has nearly 100 employees. While the majority of the employees work in manufacturing, there are also employees in marketing, design, accounting, and human resources. Doug structured the business to limit his liability in case of lawsuit, but still managed to maintain the business without sharing ownership.
Which of the following is an advantage Doug should expect by sharing ownership with others?
a. Gaining access to all of the distribution of profits.
b. Access to additional knowledge and expertise.
c. Additional freedom from government regulation.
d. Enhanced control to make decisions immediately
e. Greater degree of secrecy
Answer: b. Access to additional knowledge and expertise.
Explanation:
One of the advantages of opening a limited company be it private or public, is the additional knowledge that the other shareholders would bring on board.
In the case of a private company, the new shareholders would be from various backgrounds and would have knowledge on how to grow the business and in the case of a public company, the Board of Directors are usually drawn from various industries and so will put their experience from those industries into the company thereby giving it an edge.
PART A. MULTIPLE CHOICE - 15 MARKS
1. Company orientation does not include which topic below?
Economic Factors
b. Fringe Benefits
C. Occupational Health and Safet
d. None of the above
what is the answer?
Answer: a. Economic factors
Explanation:
Company orientation refers to training that is given to new employees to better prepare them to work in the company and be as efficient as possible.
It includes things like occupational health and safety so that the employee may know how best to behave so as not to cause accident or get injured by one. It also includes telling the employees of the various fringe benefits that might accrue to them.
It would not include economic factors as these as not specific to the company.
The prepaid insurance account had a balance of $9,400 at the beginning of the year. The account was debited for $10,400 for premiums on policies purchased during the year.
Journalize the adjusting entry required at the end of the year for each of the following situations:
a. The amount of unexpired insurance applicable to future periods is $3,730.
b. The amount of insurance expired during the year is $18,100.
Answer:
Following are the response to the given points:
Explanation:
[tex]\text{Insurance Expense} =\text{ Beginning Prepaid Insurance} + \text{Cash Premium Paid} -\text{Ending Prepaid Insurance}[/tex]
[tex]= \$9,400 + \$10,400 - \$3,730\\\\ = \$16,070[/tex]
[tex]Date \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ General \ Journal \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Dr. \ \ \ \ \ \ \ \ \ Cr. \\\\[/tex] [tex]March \ 31\ \ \ \ \ \ \ \ Insurance \ Expense \ \ \ \ \ 16,070 \ \ \ \ \ \ \ \ \ \ \ \ \ \\\\[/tex]
[tex]Prepaid\ Insurance \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 16,070\\\\[/tex]
For point b:
[tex]Date \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ General \ Journal \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Dr. \ \ \ \ \ \ \ \ \ Cr. \\\\[/tex] [tex]March \ 31\ \ \ \ \ \ \ \ Insurance \ Expense \ \ \ \ \ 18,100 \ \ \ \ \ \ \ \ \ \ \ \ \ \\\\[/tex]
[tex]Prepaid\ Insurance \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 18,100\\\\[/tex]
The following information was taken from Charu Company's balance sheet: Fixed assets (net) $860,000 Long-term liabilities 200,000 Total liabilities 600,000 Total stockholders’ equity 250,000 Determine the company's (a) ratio of fixed assets to long-term liabilities and (b) ratio of liabilities to stockholders' equity. If required, round your answers to one decimal place. a. Ratio of fixed assets to long-term liabilities fill in the blank 1 b. Ratio of liabilities to stockholders' equity
Answer:
A. 4.3
B. 2.4
Explanation:
(a) Calculation to determine ratio of fixed assets to long-term liabilities
Using this formula
Ratio of fixed assets to long-term liabilities =Fixed assets (net)/Long-term liabilities
Let plug in the formula
Ratio of fixed assets to long-term liabilities= $860,000 /$200,000
Ratio of fixed assets to long-term liabilities=4.3
Therefore Ratio of fixed assets to long-term liabilities is 4.3
(b) Calculation to determine ratio of liabilities to stockholders' equity
Using this formula
Ratio of liabilities to stockholders' equity=Liabilities/Total stockholders’ equity
Let plug in the formula
Ratio of liabilities to stockholders' equity=$600,000 /$250,000
Ratio of liabilities to stockholders' equity=2.4
Therefore ratio of liabilities to stockholders' equity is 2.4
which of the following constitutes an implicit cost to company A
A. property taxes
B. Payments of wages to its office workers
C. raw material costs paid by company A to the supplier B
D. value of the land owned by the company A
Answer:
Implicit cost to company A is:
D. value of the land owned by the company A
Explanation:
Implicit costs to company A will refer to the cost of resources already owned by the firm, which the company could have put to some other use. A good example is the value of the land owned by the company. This land could be put to another use, yielding some rent. It could also be sold outright. Its cost becomes implicit when the company uses it in its business. The land is not being held for sale.
企業が有利子負債を持っていると、（）から資本コストが安くなる。
1. 配当成長効果
2. リスク低減効果
3. 課税効果
4. 節税効果
5. 割引抑制効果
Answer:
this word is not in english plz write in english
Altuve Co. was incorporated on January 1, 2013, at which time 250,000 shares of $10 par value common stock were authorized, and 110,000 of these shares were issued for $17 per share. Net income for the year ended December 31, 2013, was $1,257,300. Altuve Co.’s board of directors declared dividends of $3 per share of common stock on December 31, 2013, payable on February 7, 2014.Use the horizontal model to show the effects of the following:a. The issuance of common stock on January 1, 2013b. The declaration of dividends on December 31, 2013.c. The payment of dividends on February 7, 2014.
Answer:
Altuve Co.
Horizontal Model and Transaction Effects:
Balance Sheet
a. The issuance of common stock on January 1, 2013
Assets = Liabilities + Equity
Cash $1,870,000 = Common Stock $1,100,000
Additional Paid-in 770,000
b. The declaration of dividends on December 31, 2013.
Assets = Liabilities + Equity
Assets = Liabilities $330,000 + Equity ($330,000)
c. The payment of dividends on February 7, 2014.
Assets ($330,000) = Liabilities ($330,000) + Equity
Explanation:
a) Data and Analysis:
a. The issuance of common stock on January 1, 2013
Jan. 1, 2013: Cash $1,870,000 Common Stock $1,100,000 Additional Paid-in Capital $770,000
b. The declaration of dividends on December 31, 2013.
Dec. 31, 2013: Cash Dividend $330,000 Dividends Payable $330,000
c. The payment of dividends on February 7, 2014.
Feb. 7, 2014: Dividends Payable $330,000 Cash $330,000
Assume that Jones Company made a payment on a mortgage. It included $100 of principal and $150 of interest. What would the journal entry be to record the payment?
Answer:
the journal entry be to record the payment
Debit : Interest expense $150
Debit : Mortgage Payable $100
Credit : Cash $250
Explanation:
When a payment for mortgage is made, we recognize the interest expense that accrues and also derecognize the part of capital repayment made for the mortgage. That means Mortgage Payable decreases, Interest expense increases and Cash account decreases with the to total of interest and principle.
Distribution network is not required for
product.
O Standardised
O Durable
O Unstandardised
O Perishable
Answer:
O Perishable
Explanation:
In the case of the perishable goods, the distrubution network is not required because the perishable goods are those goods that are consumed instantly such as vegetables, fruits
But on the other hand, the goods that are durable, standardised and non-standardised required the distribution network
Therefore the last option should be relevant
In 2016, 59.7 percent of the adult population (253 million) was employed. If the employment rate increased to 62 percent,
Instructions: In part a, round your response to one decimal place. In part b, enter your response as a whole number.
a. How many more people would be working?
______ million
b. By how much would output increase if per worker GDP were $122,000?
$ _____ billion
Answer:
a. 5.819 million
b. $709918
Explanation:
Below is the calculation:
a. Total number of adult population = 253 million
Total employed adult = 253 x 59.7% = 151.041
Number of employed adult after increase in employment rate = 253 x 62% = 156.86
More people would be working = 156.86 - 151.041 = 5.819 million
b. GDP per capita is $122,000, so increase in GDP = 5.819 x 122000
Increase in GDP = $709918
An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is (use the COGS equation for the Periodic System):__________
A. Cost of Goods Sold: Understated, and Net Income: Understated
B. Cost of Goods Sold: Overstated, and Net Income: Overstated
C. Cost of Goods Sold: Understated, and Net Income: Overstated
D. Cost of Goods Sold: Overstated, and Net Income: Understated
Answer:
C. Cost of Goods Sold: Understated, and Net Income: Overstated
Explanation:
The cost of goods can be defined as the amount that a business has to pay in other for them to get an inventory. the net income can be defined as the amount of money that is left from COGS and other expenditures that does not include taxes and payments of interest. Overstating the inventory causes the total amount of earnings to be overstated for that accounting period. while the cost of good sold would be understated
Sarasota Company purchased a machine at a price of $103,200 by signing a note payable, which requires a single payment of $130,002 in 3 years. Click here to view factor tables Assuming annual compounding of interest, what rate of interest is being paid on the loan
Answer:
-7.407%
Explanation:
Let interest rate be x%
Present value of payment = $130,002 * PV of discounting factor (rate%, time period)
$103,200 = $130,002 * 1.0x^3
1.0x^3 = $103,200 / $130,002
1.0x = ($103,200 / $130,002)^(1/3)
1.0x = 0.793834^(1/3)
1.0x = 0.92592660981
x = (0.92592660981 - 1) * 100
x = -0.07407*100
x = -7.407%
15.The following information is available for an economy. On the basis of information calculate:
1. Domestic income and 2.National income?
Page 3 of 3
Items crore
Wages 10,000
rent 5000
interest 400
dividend 3000
mixed income 400
undistributed profit 200
social security contribution 400
corporate profit tax 400
net factor income from abroad 1000
Time series are particularly useful to track variables such as revenues, costs, and profits over time. Time series models help evaluate performance and make predictions. Consider the following and respond in a minimum of 175 words: Time series decomposition seeks to separate the time series (Y) into 4 components: trend (T), cycle (C), seasonal (S), and irregular (I). What is the difference between these components
Answer:
Trend (T): This is a secular trend, which refers to the movement across time.
Cycle (C): These are cyclical swings that correspond to seasonal but not periodical variations.
Seasonal (S): These are seasonal shifts represented by seasonal variations.
Irregular (I): These are irregular variations, which are a different type of nonrandom cause of series variations.
Explanation:
A time series is a collection of data points that have been indexed (or listed or graphed) in chronological sequence.
The difference between the components can explained as follows:
Trend (T): This is a secular trend, which refers to the movement across time. A trend in data is a pattern that demonstrates the movement of a series to progressively higher or lower values over time. To put it another way, a trend can be seen when the time series has a rising or decreasing slope. A trend usually lasts for a short period of time before dissipating; it does not occur again.
Cycle (C): These are cyclical swings that correspond to seasonal but not periodical variations. The term cycle refers to recurring fluctuations in time series that persist longer than a year, sometimes up to 15 or 20 years. In terms of amplitude and length, these variations aren't regular. The majority of business time series show some form of cyclical or oscillatory fluctuation.
Seasonal (S): These are seasonal shifts represented by seasonal variations. Seasonal fluctuation may be present in time series data. Seasonal variation, often known as seasonality, refers to cycles that occur on a regular basis over time. Seasonal variation refers to a recurring pattern within each year, though it can also refer to patterns that repeat across any specified period.
Irregular (I): These are irregular variations, which are a different type of nonrandom cause of series variations. The polar opposite of a regular time series is an irregular time series. The data in the time series is organized in a chronological order, however measurements may not occur at regular intervals. The operator may produce unexpected or suboptimal results if the time series is erratic.
Maintenance costs for pollution control equipment on a call for an s are expected to be $180,000 now and another $70,000.03 years from now. assume that the company uses a real interest rate of 9% per year and the inflation rate average is 3% per year. What is the equivalent annual cost of the equipment?
Answer:
Annual cost = −64,083
Explanation:
Present maintenance costs = $180000
Maintenance costs after three years = $70000
Real interest rate = 9%
Inflation rate = 3%
Inflation adjusted interest rate, r = 0.09 + 0.03 + (0.09)(0.03) = 12.27% per year
Annual cost = −180,000(A/P,12.27%,5) –70,000(P/F,12.27%,3)(A/P,12.27%,5)
Annual cost = −180,000(0.27927)–70,000(0.70666)(0.27927)
Annual cost = −64,083
Princess Cruise Company (PCC) purchased a ship from Mitsubishi Heavy Industry. PCC owes Mitsubishi Heavy Industry 500 million yen in one year. The current spot rate is 124 yen per dollar and the one-year forward rate is 110 yen per dollar. The annual interest rate is 5% in Japan and 8% in the U.S. PCC can also buy a one-year call option on yen at the strike price of $.0081 per yen for a premium of .014 cents per yen.
Required:
a. Compute the future dollar costs of meeting this obligation using the money market and forward hedges.
b. Assuming that the forward exchange rate is the best predictor of the future spot rate, compute the expected future dollar cost of meeting this obligation when the option hedge is used.
c. At what future spot rate do you think PCC may be indifferent between the option and forward hedge?
Answer:
Explanation:
a)
In the case of forwarding hedge:
The future dollar cost will be = FX receiveable ÷ Foward exchange rate
= 500 million yen ÷ 110 yen/dollar
= $4.55 million
For money market hedge:
Present value of yen payable = [tex]500 \ yen \div (1+ \dfrac{5}{100})[/tex]
[tex]= \dfrac{500 \ yen }{1.06}[/tex]
= 476.20 million yen
PCC would convert dollars to yens at the spot market rate and borrow yen such that it would get 500 million yen at maturity(i.e after one year) for Mitsubishi to receive it.
Dollars needed to get these yen = 476.30 yen ÷ 124 yen/dollar
= $3.84 million
Future Value of these dollars (for comparison with the foward market hedge) = $3.84 × (1 + 0.08)
= $4.15 million
Hence, the money market hedge is better as the dollar cost is lower than the forward market hedge to meet the obligation.
b)
On the maturity date, the spot rate is 110 yen/dollar
Ad the strike price = 0.0081 /dollar
It is better for the company to go for the strike price due to the fact that it has a lower rate than the spot rate.
Now;
The premium amount = 500000000 yen × 0.014 dollar / yen
= 70000 dollars
However; the Future dollar-cost payable = 500000000 yen × 0.0081 dollar /yen
= 4050000 dollars
By applying option hedge, the total dollar cost required to meet the obligation = (4050000 + 70000) dollars
= 4120000 dollars
c)
The dollar cost needed from the option hedge required to matching the forward hedge is determined by subtracting it from the premium amount:
Thus;
for option hedge, dollar cost needed = (4550000 - 70000) dollars
= 4480000 dollars
The required future spot rate = 500000000/4480000
= 111.61 yen/dollar
As a result, at the future spot rate of 111.61 yen/dollar, PCC will be unconcerned about and indifferent about the option or forward hedge because the future dollar cost of meeting the obligation will be the same.
The financial statements of the Bramble Corp. report net sales of $473850 and accounts receivable of $56000 and $25000 at the beginning of the year and the end of the year, respectively. What is the accounts receivable turnover for Bramble?
Answer:
the accounts receivable turnover for Bramble is 5.85 times
Explanation:
The computation of the account receivable turnover ratio is shown below
the account receivable turnover ratio is
= Net sales ÷ (Beginning account receivable + ending account receivable) ÷ 2
= $473,850 ÷ ($56,000 + $25,000)
= 5.85 times
Hence, the accounts receivable turnover for Bramble is 5.85 times
Bud Corp. had book income (net) of $1,000,000 this year. The corporation's federal income tax expense was $200,000. This year, the corporation purchased and placed in service a depreciable asset. The asset cost $60,000. For book purposes, depreciation this year was $20,000 (already included in the calculation of $1,000,000 book income). For tax purposes, the corporation elected bonus depreciation for the asset. What is the corporation's taxable income for this year?
Answer:
$960,000
Explanation:
Calculation to determine the corporation's taxable income for this year
Using this formula
Taxable income=Book income+Depreciation Expense-Asset
Let plug in the formula
Taxable income=$1,000,000+$20,000-$60,000
Taxable income=$960,000
Therefore the corporation's taxable income for this year is $960,000
Assume that you are a loan officer of a bank. A local church is seeking a $4 million, 20-year loan to construct a new classroom building. Church officers submit a comprehensive financial report that was audited by a reputable CPA firm. In summary form (the actual statement showed details), the church’s statement of revenues and expenditures indicated the following (in millions):
Revenues from dues and contributions .... $1.8
Revenues from other sources ....... 0.2
Total revenues ............. $2.0
Less: total expenditures .......... 2.0
Excess of revenues over expenditures .... $0.0
The church's balance sheet reported assets, mainly cash and investments (at market value), of $0.2 million. In addition, a note to the financial statements indicated that equipment is approximately $3 million. The church has no outstanding debt.
a. Is there any information in the financial statements that would make you reluctant to approve the loan? If so, indicate and explain.
b. Is there any other financial information of the type likely to be reported in a conventional annual report that you would like to review prior to making a loan decision? If so, indicate and explain.
c. Is there any other information, of any type, that you would like to review prior to making a loan decision? If so, indicate and explain.
d. Comment on the inherent limitations of the financial statements of this church, or any comparable not-for-profit organization, as a basis for making loan decisions.
Answer:
Explanation:
a.
There is little information on how funds are used or how much money is spent to manage the church. The financial statements have been prepared incorrectly.
Interpretation:
While drafting the financial accounts, the church committed many errors. The church's revenue is equivalent to its daily operations operating expenditures. They have approximately $3 million in funding assets that they do not owe any money on.
It may be deduced that the church is attempting to preserve asymmetric information, and therefore it will be better to justify its sources of income and use of money in order to determine whether they can or they cannot pay the debt.
b.
The revenue from various channels must be detailed in the yearly report so that the loan officer may make an informed judgment.
Interpretation:
Since payments and contributions account for 90% of revenue and revenue from other sources accounts for 10%, it's surprising how the church earns money in other ways as stated on the income statement. As a result, it's important to understand what other potential revenue streams the church has before approving the loan.
c.
The officer in charge of the loan should check the church's book records to make sure and guarantee that there are no outstanding loans. This situation necessitates a thorough examination and assessment.
Interpretation:
The church has $3 million worth of equipment. The church's expenses, on the other hand, are equivalent to the church's income. As a result, it's unclear how the church acquired the equipment without taking out a loan. As a result, the church must be urged to produce a full breakdown of its expenses, which may be thoroughly and fully studied to see whether there are any financing charges that the church is attempting to hide in its yearly reports.
d.
There is no direct or primary source of income for the church. It solely makes money from charity donations.
Interpretation:
The church's only sources of income are fundraisers and charitable donations. It also doesn't possess any significant revenue streams. Because the church is attempting to conceal numerous possible pieces of information, this may be a case of micro-management by the proprietors, and so these issues should be considered by the officer in charge of the loan before accepting the loan.
Suppose that a price floor is set in the market for oranges, raising the price from $1.05 per pound to $1.10 per pound of oranges. The sum of which two areas represents the lost social surplus (deadweight loss) from this price floor?
Answer and Explanation:
To calculate deadweight loss, we need to know the initial price and quantity as well as the new price and quantity.
Assume at initial price $1.05, quantity is 300 oranges
At new price $1.10, quantity is 200 oranges
Deadweight loss = 0.5×(P2-P1)×(Q1-Q2)
= 0.5×(1.10-1.05)×(300-200)
Deadweight loss= 0.5×0.05×100
Deadweight loss= 2.5
Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.): Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) 9.4 % Quarterly % 18.4 Monthly 14.4 Daily
Answer and Explanation:
The computation of the effective annual rate in each of the following cases is shown below;
a. For quarterly
Effective annual rate = (1+0.094 ÷ 4)^4 - 1
= 9.74%
b. For monthly
Effective annual rate = (1+0.184 ÷ 12)^12 - 1
= 20.03%
c. For daily
Effective annual rate = (1+0.144 ÷ 365)^365 - 1
= 15.49%
In this way it should be calculated and measured
George Company has the opportunity to purchase an asset that costs $40,000. The asset is expected to increase net income by $10,000 per year. Depreciation expense will be $5,000 per year. Based on this information the payback period is:
Answer:
2 years 8 months.
Explanation:
The payback period is the length of time that it takes for the future cash flows to equal the amount of initial investment.
We use cashflows instead of net income in payback calculation. Therefore, add back the depreciation expense.
Yearly Cash flow will thus be $15,000 ($10,000 + $5,000)
Payback Period :
$40,000 = $15,000 (Year 1) + $15,000 (Year 2 )+ $10,000/$15,000 x 12 (Year 3)
This gives a payback period of 2 years 8 months