BUSINESS COLLEGE

The projected cash flow for the next year for Minesuah Inc. is $100,000, and FCF is expected to grow at a constant rate of 6%. If the company's weighted average cost of capital is 11%, what is the value of its operations?

Answers

Answer 1
Answer:

Answer:

$2,000,000

Explanation:

Menesuah incorporation has a projected cash flow of $100,000

FCF is expected to grow at a constant rate of 6%

The weighted average cost of capital is 11%

Therefore the value of its operation can be calculated as follows

= 100,000/(11/100-6/100)

= 100,000/0.11-0.06

= 100,000/0.05

= $2,000,000

Hence the value of its operation is $2,000,000

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A goal is a specific commitment to achieve a measurable result within a stated period of time. A) True B) False
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Machinery purchased for $66,000 by Metlock Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,400 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2021, it is determined that the total estimated life should be 10 years with a salvage value of $4,950 at the end of that time. Assume straight-line depreciation.Required:
a. Prepare the entry to correct the prior year's depreciation, if necessary.
b. Prepare the entry to record depreciation for 2021.

Answers

Answer:

a. Prepare the entry to correct the prior year's depreciation, if necessary.

  • When an asset's useful life is extended, the extension is done prospectively, not retrospectively. This means that past depreciation does not need to be adjusted.

b. Prepare the entry to record depreciation for 2021.

  • Dr Depreciation expense 4,510
  •     Cr Accumulated depreciation - machinery 4,510

Explanation:

purchase cost of machinery $66,000

estimated useful life 8 years

estimated salvage value $4,400

depreciation has been recorded using the previous basis during the first 5 years, but now the estimated useful life was extended to 10 years and the salvage value = $4,950

depreciation expense per year (during first 5 years) = ($66,000 - $4,400) / 8 = $7,700 per year

accumulated depreciation up to year 5 = $7,700 x 5 = $38,500

the carrying value of the asset on January 1, 2021 = $66,000 - $38,500 = $27,500

the new depreciation expense per year = ($27,500 - $4,950) / 5 = $4,510

depreciation expense for 2021:

Dr Depreciation expense 4,510

    Cr Accumulated depreciation - machinery 4,510

Plemmon Company adds materials at the beginning of the process in the forming department, which is the first of two stages of its production cycle. Information concerning the materials used in the forming department in April follows: Units MaterialsCosts Work in process at April 1 15,000 $ 8,000 Units started during April 60,000 $38,500 Units completed and transferred to next department during April 65,000 Using the average cost method, what is the materials cost of the work in process at April 30?

Answers

Answer:

$6,200

Explanation:

Beginning Work in progress     $15,000       $8,000

Units started                               $60,000      $38,500

Total process                              $75,000      $46,500

Less: Units transferred to tax    $65,000

Ending work in progress            $10,000

Average cost method material cost of work in progress = Material cost ÷ Total units

$46,500 ÷ $75,000

= $0.62

Material cost of work in progress = $0.62 × $10,000

= $6,200

Final answer:

In April, Plemmon Company started with $8000 worth of materials and used $38500 over the month. 65,000 units were completed, leaving 10,000 units still in process. The materials cost of these remaining units, calculated using the average cost method, is $6,200.

Explanation:

To find the material cost of work in process at April 30 using the average cost method, we first need to calculate the total cost of material used throughout April, which includes both the cost of materials from initial work in process and the materials started during the month. That gives us the sum of $8,000 and $38,500, amounting to $46,500 in total materials cost. Since 65,000 units were completed and transferred out during April, this means 10,000 units (75,000 units at the start and started during April - 65,000 units completed) remain in work in process at the end of April. Average cost per unit is calculated as total cost divided by total units, giving us $46,500 divided by 75,000 units, which equals $0.62 per unit. The material cost of work in process at April 30 is thus 10,000 units times $0.62, giving a result of $6,200.

Learn more about Average Cost Method here:

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The most powerful and widely used conceptual tool for diagnosing the principal competitive pressures in a market isa. the five forces framework.b. PESTEL.c. the driving forces model.d. strategic group mapping.e. SWOT analysis.

Answers

Answer:

The correct answer is letter "A": the five forces framework.

Explanation:

Porter's Five (5) Forces is an analysis scheme created by American economist Michael E. Porter (born in 1947). The ultimate goal of this analysis is to help managers set their expectations of profitability because as competition increases, profitability decreases. Three of the five forces relate to those involved in the industry. The other two apply to the suppliers, the vertical participants, and consumers.

The Foxmoor Company produces three products, X, Y, and Z, from a single raw material input. Product Y can be sold at the split-off point for total revenues of $63,000 or it can be processed further at a total cost of $36,000 and then sold for $108,000. Product Y: Multiple Choice
Should be sold at the split-off point, rather than processed further.
Would increase the company's overall net income by $45,000 if processed further and then sold.
Would increase the company's overall net income by $108,000 if processed further and then sold.
Would increase the company's overall net income by $9,000 if processed further and then sold.

Answers

Answer: Would increase the company's overall net income by $9,000 if processed further and then sold.

Explanation:

The Revenue if sold at the split-off point is $63,000.

But if processed further, we can realize revenue of,

= $108,000 - 36,000

= $72,000

To find out the revenue difference then we will subtract the alternatives.

= $72,000 - 63,000

= $9,000

$9,000 extra will be gained if we process further as opposed to selling at the Split-off point. This shows that Option D or the last option is correct.

In a perfectly competitive market in the long run, after all adjustments have occurred, an increase in demand causes equilibrium price to:

Answers

Spike before falling to the equilibrium level

On January 3, 2011, Austin Corp. purchased 25% of the voting common stock of GainsvilleCo., paying $2,500,000. Austin decided to use the equity method to account for thisinvestment. At the time of the investment, Gainsville's total stockholders' equity was$8,000,000. Austin gathered the following information about Gainsville's assets andliabilities:On January 3, 2011, Austin Corp. purchased 25% of

For all other assets and liabilities, book value and fair value were equal. Any excess of costover fair value was attributed to goodwill, which has not been impaired. For all other assets and liabilities, book value and fair value were equal. Any excess of costover fair value was attributed to goodwill, which has not been impaired.

What is the amount of goodwill associated with the investment?

Answers

Answer:

Amount of goodwill associated with the investment is $500,000

Explanation:

The first step is to calculate the total value of GainsvilleCo:

Total Value of GainsvilleCo  = 2,500,000 / 25% = $10,000,000

Book value of GainsvilleCo's underlying assets = $8,000,000

Goodwill = 10,000,000 - 8,000,000 = 2,000,000

Austin Corp Investor share = 25% of 2,000,000 = $500,000
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