BUSINESS COLLEGE

Paradise, Inc., has identified an investment project with the following cash flows.Year Cash Flow1 = $5752= $ 8253= $1,1254 =$1,325(a) If the discount rate is 11 percent, what is the future value of these cash flows in year 4?(b) What is the future value at a discount rate of 16 percent? (c) What is the future value at discount rate of 29 percent?

Answers

Answer 1
Answer:

Answer and Explanation:

The computation of the future value is shown below;

a. For the year 4

Future value is

= ($575 × 1.11^3) + ($825 × 1.11^2) + ($1,125 × 1.11) + ($1325)

= $4,275.89

b. At  16%

Future value is

= ($575 × 1.16^3) + ($825 × 1.16^2) + ($1,125 x 1.16) + ($1,325)

=$4,637.64

c. At 29%

Future value is

= ($575 × 1.29^3) + ($825 × 1.29^2) + ($1125 × 1.29) + ($1,325)

= $5,383.48
Answer 2
Answer:

Final answer:

The future values of the cash flows in year 4 for Paradise, Inc. are $4,265 at 11% discount rate, $4,529 at 16% discount rate, and $4,942 at 29% discount rate.

Explanation:

We'll use the future value of a series of cashflows formula (FV = ∑ CF / [(1 +r)^n]) to determine the future value of these investments. The formula essentially totals up the effects of compounding for each of your cashflows.

(a) At 11 percent discount rate, the future value in year 4 comes out to be $4,265.

(b) When the discount rate is 16 percent, the future value in year 4 is $4,529.

(c) At a higher 29 percent discount rate, the future value in year 4 is $4,942.

As the discount rate increases, the future value of the cash flows also increases.

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Broomhilda manufactures broomsticks for her fellow witch (and wizard) friends. Broomhilda uses a job order cost system and applies overhead to production on the basis of direct labor cost. On September 1, Job 50 (a super deluxe broom complete with a separate sleep space and shower area as well as an espresso machine) was the only job in process. The costs incurred prior to September on this job were as follows: direct materials $20,000, direct labor $12,000, and manufacturing overhead $16,000. As of September 1, Job 49 (a broom shaped like a cat with some extra cargo space for all the cats) had been completed at a cost of $90,000 and was part of finished goods inventory. There was a $15,000 balance in the Raw Materials Inventory account. During the month of September, Broomhilda began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month.1. Purchased additional raw materials of $90,000 on account.2. Incurred manufacturing overhead costs as follows: indirect materials $17,000 (including broom polish and specially crafted scissors to trim stray twigs), indirect labor $20,000 (Hansel and Gretel clean the shop and run errands for the elves), depreciation expense on equipment $12,000 (Broomhilda has multiple molding stations for each broom she creates), and various other manufacturing overhead costs on account $16,000.3. Assigned direct materials and direct labor to jobs as follows: Job no. Direct Materials Direct Labor50 10,000 5,00051 39,000 25,00052 30,000 20,000Required:a. Calculate the predetermined overhead rate for September, assuming Broomhilda estimates total manufacturing overhead costs of $840,000 and direct labor costs of $700,000 for September.b. Open job cost sheets for Jobs 50, 51, and 52. Enter the September 1 balances on the job cost sheet for Job 50.c. Prepare the journal entries to record the purchase of raw materials, and the manufacturing overhead costs incurred during the month of March.d. Prepare the summary journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning overhead costs, use the overhead rate calculated in (1). Post all costs to the job cost sheets as necessary.e. Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry (or entries) to record the completion of any job(s) during the month.f. Prepare the journal entry (or entries) to record the sale of any job(s) during the month.g. What is the balance in the Finished Goods Inventory account at the end of the month? What job(s) does this balance consist of? 8. What is the amount of over- or underapplied overhead? Prepare the journal entry to close this to Cost of Goods Sold
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Regarding the AQCD​ criteria, strive to include all high quality factors in an external assessment for a firm. A high quality factor will meet​ ______ of the AQCD​ criteria; a low quality factor will meet​ ______ of the AQCD criteria. A. ​3; 1 B. 3 or​ 4; 2 or fewer C. 3 or​ 4; 0 D. ​4; 0 E. ​All; none

Answers

Answer:

Option B) 3 or​ 4; 2 or fewer

Explanation:

A high quality factor will not meet 3 or 4 and low quality factor will not meet 1 or 0 so option A, C and D are incorrect.

The correct option is B. 3 or 4; 2 or fewer as a high quality factor will meet three or four of the AQCD criteria; a low quality factor will meet two or fewer of the AQCD critieria.

Assume that Jose is indifferent between investing in a corporate bond that pays 10 percent interest and a stock with no growth potential that pays an 9.7 percent dividend yield. Assume that the tax rate on dividends is 15 percent. What is Jose's marginal tax rate?a. 47%.b. 37%.c. 32%.d. 15%.e. None of these.

Answers

Answer:

e. None of these.

Explanation:

Step 1. Given information.

Taxable Dividend Yield = 9.7%

Tax rate on Dividend yield=15%

Interest rate=10%

Let Tax rate on Interest=X

Step 2. Formulas needed to solve the exercise.

Interest rate * (1 - x) = taxable dividend yield ( 1 - tax rate on dividend yield)

Step 3. Calculation.

0.10*(1-x)=0.097*(1-0.15)

0.10-0.10x=0.08245

0.10x=0.01755

x=0.01755/0.10

=0.1755

=17.55%

Step 4. Solution.

e. None of these.

M Corporation has provided the following data concerning an investment project that it is considering: Initial investment $ 380,000 Annual cash flow $ 133,000 per year Expected life of the project 4 years Discount rate 13 % Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:

Answers

Answer:

NPV = $262,604.7

Explanation:

The NPV is the difference between the PV of cash inflows and the PV of cash outflows. A positive NPV implies a good investment decision and a negative figure implies the opposite.

NPV of an investment:

NPV = PV of Cash inflows - PV of cash outflow

PV of annuity= 1 -(1+r)^(-n)/r × Annual cash flow

r- discount rate, n- number of years

PV of cashinflow = 133,000 × (1- 1.13^(-4))/0.13 =395,604.6863

NPV  =  395,604.6863  - 133,000= 262,604.7

NPV = $262,604.7

Suppose that on August 14, 2019, an antique woven rug handmade in Canada is priced at CAD 1,100. The approximate U.S. dollar price of the rug would be

Answers

Answer:

USD 825.95

Explanation:

Step one:

To tackle this problem we need data from historical chart.

From historical chart, on August 14, 2019, 1 USD  is equivalent to CAD 1.3318

Step two:

From the historical data we need to perform conversion on the data to get the USD equivalent of the CAD given in the problem

Hence

if 1 USD = CAD 1.3318  then

x USD   =  CAD 1,100

by cross multiplying we have

x USD=  1,100/ 1.3318

x USD= 825.95

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Head-First Company had planned to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $100,500. The degree of operating leverage is 1.5. Now Head-First expects to increase sales by 10% next year.Required:


1. Calculate the percent change in operating income expected.___ %


2. Calculate the operating income expected next year using the percent change in operating income calculated in Requirement 1. $___

Answers

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Sales= 5,000 units

Selling price= $75

The unit variable cost= $45

Total fixed cost equals= $49,500

Operating income at 5,000 units sold is $100,500.

Degree of operating leverage= 1.5

Now Head-First expects to increase sales by 10% next year.

1) % Change on income= ?

We know that the degree of operating leverage is calculated by the following formula:

degree of operating leverage= %change in income/ %change in sales

1.5= %change in income/0.10

0.15= %change in income

15%= %change in income

2) Net operating income

Sales= 5,500*75= 412,500

Total variable cost= 5,500*45= (247,500)

Contribution margin= 165,000

Fixed costs= (49,500)

Net operating income= 115,500

Change in income= (115,500 - 100,500)/100,500= 0.1493= 14.93%

Preparing a Sales Budget Patrick Inc. sells industrial solvents in 5-gallon drums. Patrick expects the following units to be sold in the first three months of the coming year: January 41,000 February 38,000 March 50,000 The average price for a drum is $35. Required: Prepare a sales budget for the first 3 months of the coming year, showing units and sales revenue by month and in total for the quarter. Do not include a multiplication symbol as part of your answer. Patrick Inc. Sales Budget For the Coming Quarter January February March 1st Quarter Total Units Price $ $ $ $ Sales $ $ $ $

Answers

Answer:

Patrick Inc.      

Sales Budget    

For the First Quarter    

January February March Total Quarter 1

Sale Units  41,000   38,000   50,000   129,000  

Average Selling Price per Unit $35.00  $35.00  $35.00  

Sales Value   $1,435,000   $1,330,000   $1,750,000   $4,515,000  

Explanation:

The Sales unit for each month is multiplied by its average sales price for e.g for January (41,000 units × by $35 = $ 1,435,000)

The Quarter totals (Units and sales Values in $) are added up to give the answer under the heading of Total Quarter 1.

The working is also attached with the answer.

Final answer:

For Patrick Inc., the sales budget for the first quarter is calculated by multiplying the expected units sold each month by the average price per unit. The total sales for the first quarter amount to $4,515,000.

Explanation:

Preparing a sales budget for Patrick Inc. involves multiplying the units sold each month by the price per unit. The average price for a 5-gallon drum of industrial solvent is $35.

For January: 41,000 units * $35/unit = $1,435,000.

For February: 38,000 units * $35/unit = $1,330,000.

For March: 50,000 units * $35/unit = $1,750,000.

Adding these amounts will give the total revenue for the 1st Quarter: $1,435,000 (January) + $1,330,000 (February) + $1,750,000 (March) = $4,515,000.

So, the sales budget for the first quarter would be as follows:
January: $1,435,000
February: $1,330,000
March: $1,750,000
Total first Quarter: $4,515,000.

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