A project with an initial cost of $51,400 is expected to generate annual cash flows of $16,910 for the next 5 years. What is the project's internal rate of return

Answers

Answer 1

Answer:

Answer:

19.27%

Explanation:

Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested

IRR can be calculated with a financial calculator

Cash flow in year 0 = $-51,400

Cash flow each year from year 1 to 5 = $16,910

IRR = 19.27%

To find the IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.

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6. A system anticipates that spending $300,000 on an advertising campaign will increase bed days by 650. The marketing department anticipates that each additional bed day will yield $2,100 in additional revenue and will increase costs by $1,700. The campaign a. will reduce profits by $40,000. b. will increase profits by $40,000. c. will increase profits by $90,000. d. will increase profits by $210,000
True Fit Shoe Company makes loafers. During the most recent year. True Fit incurred total manufacturing costs of $24.500.000. Of this amount. $3,000,000 was direct materials used and $16, 800,000 was direct labor. Beginning balances for the year were Raw Materials Inventory. $900,000. Work-in-Process Inventory. $600,000; and Finished Goods Inventory. $1, 300,000. At the end of the year, balances were Raw Materials inventory. $800,000; Work-in-Process Inventory. $1, 700,000; and Finished Goods inventory. $390,000.RequirementsAnalyze the inventory accounts to determine:1. Cost of raw materials purchased during the year.2. Cost of goods manufactured for the year.3. Cost of goods sold for the year.4. Cost of raw materials purchased during the year.
Sako Company’s Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow: Selling price per unit on the intermediate market $ 47 Variable costs per unit $ 17 Fixed costs per unit (based on capacity) $ 8 Capacity in units 56,000Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 9,000 speakers per year. It has received a quote of $35 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits.Assume that the Audio Division is now selling only 49,000 speakers per year to outside customers. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?
Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes.Activity (Cost) Cost Driver Delux Moderate EconomyMachine maintenance ($330,000) machine hours 250 750 1,000Setups ($630,000) setups 35 20 15Packing ($166,000) cartons 10 30 60Photo development ($574,000) pictures 4,400 2,400 1,400Deluxe textbooks are made with the finest quality paper, six-color printing, and many photographs. Moderate texts are made with three colors and a few photographs spread throughout each chapter. Economy books are printed in black and white and include pictures only in chapter openings.Required:Sheridan currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year:Deluxe Moderate Economy50,000 150,000 200,000Determine the overhead cost per book for each book type.
Derek has the opportunity to buy a money machine today. The money machine will pay Derek $43,245.00 exactly 5.00 years from today. Assuming that Derek believes the appropriate discount rate is 13.00%, how much is he willing to pay for this money machine?

Colter Steel has $5,600,000 in assets. Temporary current assets $ 3,200,000 Permanent current assets 1,610,000 Fixed assets 790,000 Total assets $ 5,600,000 Short-term rates are 10 percent. Long-term rates are 15 percent. Earnings before interest and taxes are $1,180,000. The tax rate is 20 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be

Answers

Answer:

The Earnings after taxes will be $400,000

Explanation:

According to the data we have the following Long term financing funds of Permanent current assets = $1,610,000 and Fixed assets = $790,000 so the total of Long term financing funds= $ 2,400,000

Also, we have Termperory current assets = $3,200,000

Therefore, the Long term interest expenses = $2,400,000 * 15%

= $360,000

and the Short term interest expenses = $3,200,000* 10%

= $ 320,000

Hence, Total interest expenses=$360,000+$ 320,000=$680,000

So, Earnings before taxes=Earnings before interest and taxes-Interest expenses=$ 1,180,000- $ 680,000=$500,000

The tax rate is 20 percent, hence, taxes=$500,000*20%=$100,000

Therefore, The Earnings after taxes would be=Earnings before taxes-taxes

=$500,000-$100,000

=$400,000

Suppose that you hold a piece of land in the City of London that you may want to sell in one year. As a U.S. resident, you are concerned with the dollar value of the land. Assume that, if the British economy booms in the future, the land will be worth £2,000 and one British pound will be worth $1.40. If the British economy slows down, on the other hand, the land will be worth less, i.e., £1,500, but the pound will be stronger, i.e., $1.50/£. You feel that the British economy will experience a boom with a 60% probability and a slow-down with a 40% probability.Required:
a. Estimate your exposure b to the exchange risk.
b. Compute the variance of the dollar value of your property that is attributable to the exchange rate uncertainty.
c. Discuss how you can hedge your exchange risk exposure and also examine the consequences of hedging.

Answers

Answer and Explanation:

(A) E(P) = (0.6) × ($2800) + (0.4) × ($2250)

= $1680+$900

= $2,580

E(S) = (0.6) × (1.40)+(0.4) × (1.5)

= 0.84 + 0.60

= $1.44

Var(S) = (0.6)(1.40 - 1.44)² + (.4)(1.50 - 1.44)²

= .00096+.00144

= 0.0024.

Cov(P,S) = (0.6)(2800-2580)(1.4-1.44) + (0.4)(2250-2580)(1.5-1.44)

= -5.28-7.92

= -13.20

b = Cov(P,S)/Var(S)

= -13.20/.0024

= -£5,500.

there is a negative exposure. as the pound gets stronger/weaker against the dollar the dollar value of british holding goes higher.

(B) b²Var(S) = (-5500)²(.0024) = 72,600($)²

(C). i would Buy 5,500 forward to hedge exchange risk exposure. By doing this, i can eliminate the volatility of the dollar value of your British asset that is due to the volatility of the exchange rate

Final answer:

The exposure to exchange risk is the difference between the expected dollar value and the current dollar value due to changes in the economy and exchange rate. Variance of the dollar value of the property is calculated factoring in the probabilities of the economic scenarios. Hedging such as use of a forward contract provides certainty by eliminating exchange risk, but it can also limit potential profit.

Explanation:

The exposure to the exchange risk can be estimated by calculating the expected dollar value of the property. If the economy booms, the expected value will be £2,000 * $1.40 = $2800, and if it slows down, it will be £1,500 * $1.50 = $2250. The expected dollar value is then: 0.60 * $2800 + 0.40 * $2250 = $1680 + $900 = $2580. The exchange risk exposure b is the difference between the expected dollar value and the current dollar value of the property.

The variance of the dollar value of your property attributable to the exchange rate uncertainty can be computed as: 0.60 * ($2800 - $2580)² + 0.40 * ($2250 - $2580)².

To hedge your exchange risk exposure, you can enter into a forward contract to sell pounds for dollars at a predetermined rate. This will eliminate exchange rate risk but it could also limit your potential for profit if the pound appreciates more than expected against the dollar. Thus, hedging has the consequence of providing certainty while potentially sacrificing profit.

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Carruthers Company expects the following total sales:Month Sales
March $29,000
April $19,000
May $25,000
June $24,000
The company expects 70% of its sales to be credit sales and 30% for cash. Credit sales are collected as follows: 25% in the month of sale, 67% in the month following the sale with the remainder being uncollectible and written off in the month following the sale. The budgeted accounts receivable balance on May 31 is:
a. $22,320.
b. $18,750.
c. $13,125.
d. $11,725.

Answers

Answer:

Option (c) is correct.

Explanation:

It is assumed that all the sales cash and credit up to the month of April will be adjusted before 31st may.

Any receivables remaining as on 31st May are related to the sales of May only.

May Sales = $25,000

Out of which Cash sales adjusted in the same month:

= 30% of May sales

= 30% × 25,000

=$7,500

Remaining credit sales:

= May sales - Cash sales

= $25,000 - $7,500

= $17,500

Out of which 25% i.e. $4,375 received in May only.

The budgeted accounts receivable balance on May 31 is:

= Remaining credit sales - Received 25% in May

= 17,500 - 4,375

= $13,125

UQuestion 6
1 pts
Petulia has been following the stock market, and has noticed that it has generally been declining for
the last several weeks. Many of her friends have sold stock, but Petulia looks at this situation as a
good opportunity to buy. Petulia's views are consistent with the
approach to investing
in the stock market.
O contrarian
opposing
Ο Ο Ο Ο
O arbitrarian
negativist
Question 7

Answers

Answer:

Contrarian

Explanation:

In this case, Petulia is following the contrarian investment style. Those who follow this style, invest contrary to prevailing market trends (hence the name), by buying when other are selling, and selling when others are buying.

Petulia is a contrarian because instead of selling stock during the downward trend, she opted to buy stock instead, hoping for a rise in the market in the short, or in the long-term.

Alton Company produces metal belts. During the current month, the company incurred the following product costs: Raw materials $100,000; Direct labor $75,000; Electricity used in the Factory $25,000; Factory foreperson salary $3,750; and Maintenance of factory machinery $2,000. Alton Company's indirect product costs totaled:

Answers

Answer:

Total indirect product costs $30,750

Explanation:

The indirect product costs refer to all the costs that are associated with the manufacturing overheads and can be calculated as follows:

Electricity used in the Factory $25,000

Factory foreperson salary $3,750

Maintenance of factory machinery $2,000

Total indirect product costs $30,750

Calculating and Interpreting EPS Information Wells Fargo reports the following information in its 2015 Form 10-K. In millions 2015 2014 Wells Fargo net income $25,116 $25,279 Preferred stock dividends $1,646 $1,458 Common stock dividends $7,400 $6,908 Average common shares outstanding 5,136.5 5,237.2 Diluted average common shares outstanding 5,209.8 5,324.4 Determine Wells Fargo's basic EPS for fiscal 2015 and for fiscal 2014. Round answers to two decimal places.

Answers

The answer is 20 because 30 is 20 but in a different hdhwgegdhdhbshehdhdb way

Final answer:

The basic Earnings Per Share (EPS) for Wells Fargo for 2015 is $4.57 and for 2014 is $4.54, calculated by subtracting preferred dividends from net income and dividing by average common shares.

Explanation:

The provided figures help us calculate the basic Earnings Per Share (EPS) for Wells Fargo for 2015 and 2014. EPS is computed by taking the net income, subtracting the preferred stock dividends, and then dividing by the average common shares outstanding.

For 2015, the calculation is as follows: ($25,116 million - $1,646 million) / 5,136.5 = $4.57 EPS.

Moreover, for 2014, we find: ($25,279 million - $1,458 million) / 5,237.2 = $4.54 EPS.

These EPS values help shareholders understand how much of a company's profit is attributable to each share of common stock.

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