BUSINESS COLLEGE

Laurel, Inc., and Hardy Corp. both have 10 percent coupon bonds outstanding, with semiannual interest payments, and both are currently priced at the par value of $1,000. The Laurel, Inc., bond has six years to maturity, whereas the Hardy Corp. bond has 19 years to maturity.If interest rates suddenly rise by 2 percent, what is the percentage change in the price of each bond?

Answers

Answer 1
Answer:

Answer:

Laurel = -8.38%

Hardy = -14.85%

Explanation:

Present Price of Bond :

Laurel, Inc. = $1000

Hardy Corp. = $1000

After Percentage Price would be

Laurel, Inc = Present Value (i=6%, n=12, PMT=50, FV=1000)  = $916.16

Hardy Corp = Present Value (i=6%, n=30, PMT=50, FV=1000)  = $851.54

Percentage change in price

Laurel, Inc = (916.16-1000)/1000 = -8.38%

Hardy Corp = (851.54-1000)/1000 = -14.85%

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Byrd Company produces one product, a putter called GO-Putter. Byrd uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 120,000 units per year. The total budgeted overhead at normal capacity is $1,080,000 comprised of $420,000 of variable costs and $660,000 of fixed costs. Byrd applies overhead on the basis of direct labor hours. During the current year, Byrd produced 74,000 putters, worked 98,300 direct labor hours, and incurred variable overhead costs of $133,200 and fixed overhead costs of $612,000.

Required:
a. Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.
b. Compute the applied overhead for Byrd for the year.
c. Compute the total overhead variance.

Answers

Answer:

Instructions are below.

Explanation:

Giving the following information:

Standard= 1 direct labor hour per unit

The total budgeted overhead at normal capacity is $1,080,000 comprised of $420,000 of variable costs and $660,000 of fixed costs.

During the current year, Byrd produced 74,000 putters, worked 98,300 direct labor hours, and incurred variable overhead costs of $133,200 and fixed overhead costs of $612,000.

First, we need to calculate the estimated overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= (420,000 + 660,000)/120,000

Estimated manufacturing overhead rate= $9 per direct labor hour

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 9*98,300= $884,700

Finally, the total overhead variance:

Overhead variance= real overhead - allocated overhead

Overhead variance= 745,200 - 884,700

Overhead variance= 139,500 favorable

If Congress ends an investment tax credit that used to subsidize domestic investment, how would this affect the market for loanable funds in an open economy context?

Answers

Answer: Demand will fall, Interest rates will fall

Explanation:

The investment tax credit would have encouraged more companies to seek loanable funds in order to embark on investment opportunities because they would be taxed less. This increase in demand in the market for loanable funds would have led to rates rising to keep up with demand.

If Congress were to end this credit, the incentive to invest and avoid tax would be gone. Companies would therefore demand less loanable funds and with this drop in demand there will be a drop in interest rates as well to entice people to borrow at the lower rates.

Both product development strategies and diversification strategies involve ________. A. leaving the current market selling a company's B. current products developing a new product C. selling in a company's current market D. selling in new as well as existing markets

Answers

The options are:

A. leaving the current market selling a company's current products B. developing a new product C. selling in a company's current market D. selling in new as well as existing markets.

Answer:

B. developing a new product

Explanation:

Both when involved in product development strategy and diversification there will be development of a new product.

In product development strategy involves bringing new innovation to customers. New products that the market needs are developed.

In diversification strategy involves entering a new market and developing new product to get market share.

Both product development strategies and diversification strategies involveselling in new as well as existing markets. Hence option D is correct.

Both product development strategies and diversification strategies involve expanding a company's market reach. Product development strategies focus on introducing new products or improving existing products to target the company's current market.

On the other hand, diversification strategies involve entering new markets with either new or existing products. Both approaches aim to increase the company's market share and revenue by reaching new customers or expanding the offerings to existing customers.

Learn more about diversification here:

brainly.com/question/32814087

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A peer or manager who works closely with employees to motivate them, help them develop their skills, and provide reinforcement and feedback is known as a

Answers

Answer: Coach

Explanation:

Like a coach does in sports, so does a coach do in business. They work closely with employees so that they can bring out the best in them by motivating them, helping them develop their skills and providing feedback and reinforcement so that they can know where to improve upon.

They can either be peers in the company or they can be managers but the bottom-line is that they aim to help employees do their best so that the company benefits as well.

It costs Fortune Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 1,000 scales at $15 each. Fortune would incur special shipping costs of $1 per scale if the order were accepted. Fortune has sufficient unused capacity to produce the 1,000 scales. If the special order is accepted, what will be the effect on net income?

a)$2,000 increaseb)$2,000 decreasec)$3,000 decreased)$15,000 increase

Answers

Answer:

c)$3,000 decrease

Explanation:

The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.

Considering the data given with respect to the special order, the net income would be equal to the sales less the additional cost which are variable and fixed.

net profit/(loss) from order

= 1000 ($15 - $5 - $12 - $1)

= ($3000)

Answer:

a)$2,000 increase

Explanation:

As fixed cost is the irrelevant expense in the decision making for the special order. It is avoidable cost.

Special Order

Quantity 1000 scales

Price                            $15 per sale

Less: Variable cost     $12 per sale

Less: Shipping cost    $1 per sale

Contribution margin   $2 per scale

Total Contribution margin = 1,000 scales x $2 per scale = $2,000

Net Income will increase by $2,000 if the special order is accepted.

An investment has an expected return of 11 percent per year with a standard deviation of 26 percent. Assuming that the returns on this investment are at least roughly normally distributed, how often do you expect to earn less than -15 percent?

Answers

Answer:

P(X<-15)=P((X-\mu)/(\sigma)<(-15-\mu)/(\sigma))=P(Z<(-15-11)/(26))=P(Z<-1)

And we can find this probability using the normal standard distribution table or excel and we got:

P(Z<-1)=0.159

Explanation:

Previous concepts

Normal distribution, is a "probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean".

The Z-score is "a numerical measurement used in statistics of a value's relationship to the mean (average) of a group of values, measured in terms of standard deviations from the mean".  

Solution to the problem

Let X the random variable that represent the expected return, and for this case we know the distribution for X is given by:

X \sim N(11,26)  

Where \mu=11 and \sigma=26

We are interested on this probability

P(X<-15)

And the best way to solve this problem is using the normal standard distribution and the z score given by:

z=(x-\mu)/(\sigma)

If we apply this formula to our probability we got this:

P(X<-15)=P((X-\mu)/(\sigma)<(-15-\mu)/(\sigma))=P(Z<(-15-11)/(26))=P(Z<-1)

And we can find this probability using the normal standard distribution table or excel and we got:

P(Z<-1)=0.159
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