BUSINESS COLLEGE

Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2021. LPC's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Effective Decrease in Outstanding
interest interest balance balance
1/1/2021 $207,020
6/30/2021 $7,000 $6,211 $789 206,230
12/31/2021 7,000 6,187 813 205,417
6/30/2022 7,000 6,163 837 204,580
12/31/2022 7,000 6,137 863 203,717
6/30/2023 7,000 6,112 888 202,829
12/31/2023 7,000 6,085 915 201,913
6/30/2024 7,000 6,057 943 200,971
12/31/2024 7,000 6,029 971 200,000
What is the annual stated interest rate on the bonds?
a. 3.5%
b. 6%
c. 7%
d. none of the above

Answers

Answer 1
Answer:

Answer:

c. 7%

Explanation:

According to the given scenario, the computation of the annual stated interest rate on the bonds is shown below:-

Sated interest Rate = Cash interest ÷ Face Value of the bond × 2

= $7,000÷ $200,000 × 2

= 7%

Therefore for computing the annual stated interest rate on the bonds we simply applied the above formula. hence the correct option is c

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Suppose you purchase twelve call contracts on Macron Technology stock. The strike price is $65, and the premium is $2.30. If, at expiration, the stock is selling for $71 per share, what are your call options worth? What is your net profit? (Omit the "$" sign in your response.)

Answers

Answer:

Call option worth = 6

Net profit = 3.7

Explanation:

Call option worth and net profit can be calculated as follows

DATA

Strike price = 65

Premium = 2.30

Selling price = 71

Call option worth =?

Net profit =?

Requirement A: Call option worth

Solution

Call option worth = Selling price - strike price

Call option worth = 71 - 65

Caall option worth = 6

Requirement B Net profit

Solution

Net profit = Selling price - (Strike price + Premium)

Net profit = 71 - (65 + 2.3)

Net profit = 71 -67.3

Net profit = 3.7

Answer:

Call option worth = $6

Net Profit = $3.70

Explanation:

The strike price of the option is $65

The amount of premium = $2.30

The selling price = $71

Call option worth = Current Price - Strike price

Call option worth = $71 - $65

Call option worth = $6

Net Profit = Selling Price - (Strike price + Premium)

Net Profit = $71 - ($65 + $2.30)

Net Profit = $71 - $67.30

Net Profit = $3.70

he following information relates to Jay Co.'s accounts receivable for 2004: Accounts receivable, 1/1/04 $650,000 Credit sales for 2004 2,700,000 Sales returns for 2004 75,000 Accounts written off during 2004 40,000 Collections from customers during 2004 2,150,000 Estimated future sales returns at 12/31/04 50,000 Estimated uncollectible accounts at 12/31/04 110,000 What amount should Jay report for accounts receivable, before allowances for sales returns and uncollectible accounts, on December 31, 2004?

Answers

Answer:

$1,085,000

Explanation:

Given that,

Accounts receivable, 1/1/04 = $650,000

Credit sales for 2004 = 2,700,000

Sales returns for 2004 = 75,000

Accounts written off during 2004 = 40,000

Collections from customers during 2004 = 2,150,000

Estimated future sales returns at 12/31/04 = 50,000

Estimated uncollectible accounts at 12/31/04 = 110,000

Receivable before allowances for sales returns and uncollectible accounts:

= Accounts receivable, 1/1/04 + Credit sales for 2004 - Accounts written off during 2004 - Collections from customers during 2004 - Sales return

= $ 650,000 + $2,700,000 - $40,000 - $2,150,000 - 75,000

= $1,085,000

A. Explain the role labor’s productivity plays in wage determination in the competitive labor market. If productivity increases, what happens to wages and why? b. What is meant by the term "compensating wage differentials?"
c. Why is the demand for labor called a "derived demand."

Answers

Answer:

(A)Wages decrease in the long term

Explanation:

(A) The principles of supply and demand applies here.

Higher worker productivity in a particular industry implies increased demand for workers in the industry (short term effect).

Increased supply of workers implies:

1. output per worker increases, resulting in increase in supply of products in the industry. But, the laws of supply and demand comes in, because when supply increases, prices decrease.

That is, the increase in worker productivity may cause a decrease in prices resulting in a decrease in wages since the firm's revenue declined (long term effect).

2. Increase in the supply of workers in the industry with increased in productivity over workers from other industry because of initial increase in wages. This would lead to a decrease in wages because the supply of workers would exceed demand.

(B) The compensation differential is the additional amount of money that a given worker must be offered in order to motivate him to accept a given undesirable job, relative to other jobs that the worker could perform.

(C) This is called a derived demand because it is often based on the demand for products.

For example, when consumers want more of a particular good or service eg clothing, more firms in the industry will want workers that make this product.

David and Lilly Fernandez have determined their tax liability on their joint tax return to be $1,700. They have made prepayments of $1,500 and also have a child tax credit of $2,000, of which $1,400 is refundable.What is the amount of their tax refund or taxes due?

Answers

Answer:

-$1,800

Explanation:

Given that

Tax liability = $1,700

Prepayment made = $1,500

Child tax credit = $2,000

The computation of tax refund is given below:-

= Tax liability - (Prepayment made + Child tax credit)

= $1,700 - ($1,500 + $2,000)

= $1700 - $3500

= -$1,800

Therefore, from the above calculation simply we subtract tax liability from prepayment and child tax credit.

Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales $ 1,000,000 Variable expenses 390,000 Contribution margin 610,000 Fixed expenses 625,000 Net operating income (loss) $ (15,000 ) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Division East Central West Sales $ 250,000 $ 400,000 $ 350,000 Variable expenses as a percentage of sales 52 % 30 % 40 % Traceable fixed expenses $ 160,000 $ 200,000 $ 175,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $15,000 based on the belief that it would increase that division's sales by 20%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented? 2-b. Would you recommend the increased advertising?

Answers

Answer:

\left[\begin{array}{ccccc}&East&Central&West&Total\nSales&250000&400000&350000&1000000\nVariable Cost&-130000&-120000&-140000&-390000\nContribution&120000&280000&210000&610000\nTracable fixed&-160000&-200000&-175000&-535000\nOperating Income&-40000&80000&35000&75000\nCommon&&&&-90000\nNet Income&&&&-15000\n\end{array}\right]

Income Smatement will increase by 27,000

Therefore to 13,000 net income from 15,000 net loss.

I would recommended.

Explanation:

We will calcualte the contribution per division and the opèrating income at division level. Then, we apply the common fixed cost and get the net income.

Increase of West division sales by 20%

350,000 x 20% = 70,000

70,000 x ( 1-40%) = 42,000 increase in contribution

less 15,000 adertizing cost: 27,000

Answer: (1) Divisional segmented margin East ($40,000) Central $80,000, West $35,000 (2) incremental profit $27,000 (b ) I would recommend the increased advertising because it would increase profit by $27,000

Explanation:

East. Central. West. Total

Sales 250,000. 400,000. 350,000. 1,000,000

Less:variable

Expenses 130,000. 120,000. 140,000. 390,000

---------------- ------------------ ------------------- -------------------

Contribution

Margin. 120,000. 280,000. 210,000. 610,000

Traceable fixed

Expenses. 160,000. 200,000. 175,000. 535,000

Divisional

Segmented margin (40,000) 80,000. 35,000. 75,000

Common fixed

Expenses not traceable to

Division. - - - 90,000

Net operating income (loss) - - - (15,000)

Working of common fixed expenses not traceable to division

Fixed Expenses - Total traceable fixed expenses

625,000 - 535,000 = 90,000

(2)

Incremental contribution (0.2 × 210,000) 42,000

Less : Fixed cost. 15,000

-----------------

Incremental profit. 27,000

-------------------

(b) I would recommend the increased advertising because it would increase profit by $27,000

The risk premium for exposure to aluminum commodity prices is 4%, and the firm has a beta relative to aluminum commodity prices of .6. The risk premium for exposureto GDP changes is 6%, and the firm has a beta relative to GDP of 1.2. If the risk-free rate is 4%, what is the expected return on this stock?

A.
14.4 percent

B.
10.0 percent

C.
13.6 percent

D.
11.5 percent Please show work

Answers

Answer:

C.  13.6 percent

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × risk-free rate of return + Beta × market risk premium

= 4% + 0.6 × 4% + 1.2 × 6%

=  4% + 2.4% + 7.2%

= 13.6%

The (Market rate of return - Risk-free rate of return)  is also known as market risk premium
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