Plastics, Inc. and Joe's Canoe Shack both operate businesses located on the river. Plastics, Inc. dumps pollution into the river, which results in fewer canoe rentals for Joe. The marginal cost of cleaning up the pollution is $40,000 for Plastics, Inc. Joe estimates a reduction in pollution will lead to a marginal benefit of $27,000.1. If Joe owns the rights to the river, which of the following is the most likely outcome?
a. Plastics will pay Joe $32000 to pollute.
b. Joe will pay Plastics $32000 not to pollute.
c. Joe will enforce his property rights and not allow Plastics to pollute.
d. Plastics will use its property rights to continue polluting.
2. If Plastics, Inc. owns the rights to the river, which of the following is the most likely outcome?
a. Plastics will pay Joe $32000 to pollute.
b. Joe will pay Plastics $32000 not to pollute.
c. Joe will enforce his property rights and not allow Plastics to pollute.
d. Plastics will use its property rights to continue polluting.
Answers
If Joe owns the rights to the river will enforce his property rights and not allow Plastics to pollute and clean the pollution. Plastic is breaking his rights on the river
In this scenario Joe has benefit for 20,000
and Plastic losses for 12,000
2.- If Plastic own the rights to the river Joe will pay Plastics $15,000 to not pollute. This will make Plastic earn money for cleaning the river and Joe gain 5,000 incremental benefit
Explanation:
(A) Joe has legal claims, so It will used before any economic options
(B) Joe doesn't have legal claims, but It notices that a good offer make both parties win.
Plastic will receive 15,000 dollars to clean the river, which has cost of 12,000 realizing a net gain of 3,000
While Joe estimated a marginal benefit of 5,000 after paying to Plastic to clean the river, (20,000 benefit - 15,000 cost
First one is b
Second one is a
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Jepson uses the periodic inventory system and the gross method of accounting for purchases. The journal entry that Jepson will make on September 12 is:
B. lead users
C. early followers
D. intrapreneurs
Answers
Answer:
Letter B is correct. Lead Users.
Explanation:
Term developed by prof. Eric von Hippel, Lead Users are those users who are able to transform, adapt and modify a company's product or service for their own benefit, as they face the same market needs a while before regular users.
For Prof Eric von Hippel, there are four steps in developing Lead Users:
- Preparation,
- Needs and Trends Identification,
- Lead Users Identification, and
- Concept Design.
The premise is that the Lead Users method is effective in identifying innovation and product trends that need to be developed for a market for your needs.
Answers
Answer:
The correct answer is $9,850,000
Explanation:
The Enterprise fund which will be reported, total other financing sources of the amount is computed as:
= Face Value - Cost of issuance
where
Face Value is $10,000,000
Cost of issuance is $150,000
Putting the values above:
= $10,000,000 - $150,000
= $9,850,000
Note: Premium will not be considered as it is asked for when the bonds are issued.
Final answer:
The total other financing sources reported by the Enterprise Fund would be $9,850,000.
Explanation:
The correct answer is $9,850,000.
When the city's Enterprise Fund issued revenue bonds with a face value of $10,000,000, it added a 2% premium to the face value. The premium is calculated by multiplying the face value by the premium rate, which is 2% in this case. So, the premium amount is $10,000,000 * 2% = $200,000.
The issuance costs are additional expenses incurred in the process of issuing the bonds. In this case, the issuance costs totaled $150,000.
Therefore, the total other financing sources reported by the Enterprise Fund would be $10,000,000 - $200,000 - $150,000 = $9,850,000.
Learn more about Issuing revenue bonds here:
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unit and the company expects it can sell 350 000 unit per year at this price for a period of 4
years. Launching this project will require purchase of a $2 000 000 equipment that has
residual value in four years of $200 000 and adding $ 600 000 in working capital which is
expected to be fully retrieved at the end of the project. Other information is available below:
Depreciation method: straight line
Variable cost per unit: $11
Cash fixed costs per year $350 000
Discount rate: 10%
Tax Rate: 30%
Do an analysis with cash flows of the project to determine the sensitivity of the project NPV
with the following changes in the value drivers and provide your results in (a) relevant
tables:
Unit sales decrease by 10%
Price per unit decreases by 10%
Variable cost per unit increases 10%
Cash fixed cost per year increases by 10%
Answers
Answer:
Explanation:
The calculation can be done using sensitivity analysis
The sensitivity analysis is done as follows:
Scenario NPV Deviation in NPV from orignial scenario % depletion
Original 6140513
Unit sale decreases by 10% 5286234 -854279 13.91%
Price per unit decreases by 10% 2894254 -3246259 52.87%
Variable cost per unit increases 10% 5286234 -854279 13.91%
Cash fixed cost per year increases by 10% 6062851 -77662 1.26%
Calculation of original NPV
Sales (350000 * 22) 7700000
Less: Variable cost (350000 * 11) -3850000
Less: Fixed cost -350000
Less: Depreciation [(2000000 - 200000) / 4] -450000
Profit before tax 3050000
Less: Tax at 30% -915000
Profit after tax 2135000
Add: Depreciation 450000
Cash flow after tax 2585000
0 1 2 3 4
Initial investment -2000000
Working capital -600000
Cash flow after tax 2585000 2585000 2585000 2585000
Working capital released 600000
Residual value 200000
Net cash flows -2600000 2585000 2585000 2585000 3385000
PVF at 10% 1 0.9091 0.8264 0.7513 0.6830
Present value -2600000 2350000 2136364 1942149 2312001
NPV 6140513
Calculation of NPV when unit sales decrease by 10%
Sales (315000 * 22) 6930000
Less: Variable cost (315000 * 11) -3465000
Less: Fixed cost -350000
Less: Depreciation [(2000000 - 200000) / 4] -450000
Profit before tax 2665000
Less: Tax at 30% -799500
Profit after tax 1865500
Add: Depreciation 450000
Cash flow after tax 2315500
0 1 2 3 4
Initial investment -2000000
Working capital -600000
Cash flow after tax 2315500 2315500 2315500 2315500
Working capital released 600000
Residual value 200000
Net cash flows -2600000 2315500 2315500 2315500 3115500
PVF at 10% 1 0.9091 0.8264 0.7513 0.6830
Present value -2600000 2105000 1913636 1739669 2127928
NPV 5286234
Calculation of NPV when price per unit decrease by 10%
Sales (350000 * 19.8) 6237000
Less: Variable cost (350000 * 11) -3850000
Less: Fixed cost -350000
Less: Depreciation [(2000000 - 200000) / 4] -450000
Profit before tax 1587000
Less: Tax at 30% -476100
Profit after tax 1110900
Add: Depreciation 450000
Cash flow after tax 1560900
0 1 2 3 4
Initial investment -2000000
Working capital -600000
Cash flow after tax 1560900 1560900 1560900 1560900
Working capital released 600000
Residual value 200000
Net cash flows -2600000 1560900 1560900 1560900 2360900
PVF at 10% 1 0.9091 0.8264 0.7513 0.6830
Present value -2600000 1419000 1290000 1172727 1612526
NPV 2894254
Calculation of NPV when variable cost per unit increases 10%
Sales (350000 * 22) 7700000
Less: Variable cost (350000 * 12.1) -4235000
Less: Fixed cost -350000
Less: Depreciation [(2000000 - 200000) / 4] -450000
Profit before tax 2665000
Less: Tax at 30% -799500
Profit after tax 1865500
Add: Depreciation 450000
Cash flow after tax 2315500
0 1 2 3 4
Initial investment -2000000
Working capital -600000
Cash flow after tax 2315500 2315500 2315500 2315500
Working capital released 600000
Residual value 200000
Net cash flows -2600000 2315500 2315500 2315500 3115500
PVF at 10% 1 0.9091 0.8264 0.7513 0.6830
Present value -2600000 2105000 1913636 1739669 2127928
NPV 5286234
Calculation of NPV when cash fixed cost per year increases by 10%
Sales (350000 * 22) 7700000
Less: Variable cost (350000 * 11) -3850000
Less: Fixed cost -385000
Less: Depreciation [(2000000 - 200000) / 4] -450000
Profit before tax 3015000
Less: Tax 30% -904500
Profit after tax 2110500
Add: Depreciation 450000
Cash flow after tax 2560500
0 1 2 3 4
Initial investment -2000000
Working capital -600000
Cash flow after tax 2560500 2560500 2560500 2560500
Working capital released 600000
Residual value 200000
Net cash flows -2600000 2560500 2560500 2560500 3360500
PVF at 10% 1 0.9091 0.8264 0.7513 0.6830
Present value -2600000 2327727 2116116 1923742 2295267
NPV 6062851
Answers
Answer:
1.98359
Explanation:
Given that :
Index have three stocks and the prices of those sticks are $93, $351, and $74, respectively. Usually what stock split does is to increase he number of share outstanding without any interference with the original total amount of money.
So if Baker ( the company B ) undergoes 2:1 split stock, it typically implies that one share will be divided by two shares.
New divisor for price - weighted index is given by the formula:
Price weighted index =
Price of stock B before stock split is = $351
To determine the new stock B after stock split; we have
Price weighted index₀ =
=
= $175.5
The new divisor for the price weighted index is as follows;
Price weighted index =
Price weighted index =
Price weighted index = 1.98359
Thus, the new divisor for the price weighted index = 1.98359
Answer:The New Divisor for the price weighted index = 4.29 (rounded off to two decimals)
Explanation:
Able stock = $93
Baker = $351
Charlie = $74
Price Weighted Index Formula = sum of company share prices/number of companies
Price Weighted Index Formula = ($93 + $351 + $74)/5
Price Weighted Index = $425/5 = $85
The Price Weighted index before share split = $85 and the divisor is 5
Calculating the New Divisor for the Price weighted index
Let The new divisor for the price weighted index be α
Price of Barker stock after sare split = $351 x 1/2 = $175.5
Price Weighted Index = 85
Price Weighted Index= ($93 + $175.5 + $74)/α = $85
($93 + $175.5 + $74)/α = $85
cross multiply
$85α = ($93 + $175.5 + $74)
$85α = $342.5
α = $342.5/$85 = 4.29411765
α = 4.29
The New Divisor for the price weighted index = 4.29 (rounded off to two decimals)
What will be the selling price per unit if Garcia uses a markup of 15% of total cost?
Answers
Answer:
Selling price = $301.3
Explanation:
The selling price would be determined by adding the total unit cost to the mark- up.
Mark up is the proportion of cost that is to be earned as profit.
Selling price = Total unit cost + Profit
Profit = 25% × unit cost
Selling price = Unit cost + Mark-up
Selling price = Unit cost + (15%× unit cost)
Total unit cost =Variable cost + unit fixed cost
Total fixed cost = 645,000 + 111,000 = 756,000
Unit fixed cost = $756,000/10,500 =×72
Total unit cost = 105 + 35 + 50 + 72 = 262
Selling price = 262 + ( 15% + 262) = 301.3
Selling price = $301.3
Answers
Answer:
13.77 years
Explanation:
The maturity period is the period taken for the Bonds' Market Price equals its Face Value.
Calculation of the maturity period :
PV = - $394.47
PMT = $0
YTM = 6.87 %
P/YR = 2
FV = $1,000
N = ?
Using a financial calculator to input the values as above, the number of periods interest is accrued on the bond (N) is 27.54 thus the number of years will be 13.77 (27.54 ÷ 12) .