BUSINESS COLLEGE

Your company expects to receive CAD 1,200,000 in 90 days. The 90 day forward rate for CAD is $0.80 and the current spot rate is $0.75. If you use a forward hedge, estimate the cost of hedging the receivable if, 90 days later, the spot rate for CAD 90 days later turns out to be $0.82.a. $50,000
b. $50,000
c. $75,000
d. $75,000

Answers

Answer 1
Answer:

Answer:

Cost of hedging = $24,000

Explanation:

cost of hedging = 1,200,000 * ($0.80 - $0.82) = 1,200,000 * $0.02 = -$24,000

Since the actual forward rate was higher than th eexpected forward rte, the coampny lost money by hedging the operation. The cost of hedging the operation was $24,000.

Related Questions

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: Location Annual Fixed Variable Alpha Ave. $ 5,000 $ 200 per person Beta Blvd. $ 8,000 $ 150 per person What would be the total annual costs for the Alpha Ave. location with 20 persons living there
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?
Dextra Computing sells merchandise for $6,000 cash on September 30 (cost of merchandise is $3,900). Dextra collects 5% sales tax. 1. Record the entry for the $6,000 sale and its sales tax. 2. Record the entry that shows Dextra sending the sales tax on this sale to the government on October 15.3. Record the cost of Sept. 30th sales.4. Record the entry that shows the remittance of the 5% tax on this sale to the state government on October 15.5. Record the cash sales and 3% sales tax.
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Madden Enterprises sells two​ products, Silver models and Gold models. Madden Enterprises predicts that it will sell 6 comma 3006,300 Silver models and 3 comma 9003,900 Gold models in the next period. The unit contribution margins for Silver models and Gold models are $ 95$95 and $ 190$190​, respectively. What is the weighted average unit contribution​ margin?

Answers

Answer:

The weighted average contribution margin per unit is $131.32.

Explanation:

The total combined sales of both the products equal, 6300 + 3900 = 10200

The weightage of each product in sales mix is,

Silver = 6300 / 10200

Gold = 3900 / 10200

The weighted average contribution margin can be calculated by multiplying the per unit contribution of each product with their respective weights.

Weighted average unit CM = 6300/10200 * 95 + 3900/10200 * 190

Weighted average unit CM = $131.32

Chang Corp. has $375,000 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $550,000, and its net income was $25,000. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would the firm need in order to achieve the 15% ROE, holding everything else constant? Do not round your intermediate calculations.

Answers

Answer:

10.22%

Explanation:

Data provided in the question:

Assets of Chang corp. = $375,000

Sales = $550,000

Net income = $25,000

Net Income required at 15% ROE = 15% × $375,000

= $56,250

Therefore,

The profit margin = \frac{\textup{Net income}}{\textup{Total sales}}*100\%

or

The profit margin = \frac{\textup{56,250}}{\textup{550,000}}*100\%

or

The profit margin = 10.22%

Answer:

Profit Margin = 10.227%

Explanation:

Given:

Total Assets = $375,000(Common equity)

Sales = $550,000

Net Income = $25,000

Return on equity = 15% = 15/100 = 0.15

Profit margin = ?

Computation of profit margin:

Profit margin = (Common Equity × Return on equity) / Sales

Profit Margin = ($375,000 x 0.15) / $550,000

Profit Margin = ($56,250) / $550,000

= 0.102272

Profit Margin = 10.227% (approx)

20. WACC and NPV [LO3, 5] Sommer, Inc., is considering a project that will result in initial aftertax cash savings of $2.3 million at the end of the first year, and these
savings will grow at a rate of 2 percent per year indefinitely. The firm has a target
4.6 percent. The cost-saving proposal is somewhat riskier than the usual project the
firm undertakes; management uses the subjective approach and applies an adjustment factor of +3 percent to the cost of capital for such risky projects. Under what
circumstances should the company take on the project?

Answers

Mark Brainliest please

Sommer Inc is considering the new project, and yet we have to calculate under what circumstances the company have to take on the project. In order to assess the project, we need to compute the break-even cost such as the present value of future cash flows and calculate the WACC weighted cost of capital. It measures the weighted cost of equity and the after tax cost of debt. The following information are given: Debt to equity ratio = 0.90 Cost of equity = 13% After-tax cost of debt = 4.8% After-tax cost of savings = $2.7 million Debt to equity ratio = Debt / Equity = 0.90 Therefore, Value of firm = value of debt + value of equity Value of firm = 0.90E + E Value of firm

See the calculation of WACC as attachment

Accounts receivable in an existing business:A) are rarely worth their face value.

B) unlike inventory, are often worth their face value.

C) appreciate over time due to interest and penalties.

D) are not a significant consideration when buying anexisting business

Answers

Answer:

The correct answer is letter "A": are rarely worth their face value.

Explanation:

Accounts receivables are notes issued to customers after selling them a product or rendering services on credit. The repayment term may vary from 30, 60 or 90 days. If an account receivable is not paid after that period it could be considered as an uncollectible account which implies the company will incur losses.

Accounts receivable are hardly ever accepted at face value (real value of the moment of the purchase) because companies add the interest rate that is to be charged for the sale on the account.

A. Scissorwire Inc. can register with the SEC at any point after the dip in shares.

b.

The U.S. government can file a criminal lawsuit against Scissorwire Inc. to seek
Scissorwire Inc. sells shares of its stock to the public, with each share valued at $16. After a year, the company incurs a loss and the price of the stock drops to $5. The company reveals that it had deliberately not registered with the SEC before going public and that it has no money to pay the investors. Which of the following holds well in this context?
Answer


a.

Scissorwire Inc. can register with the SEC at any point after the dip in shares.

b.

The U.S. government can file a criminal lawsuit against Scissorwire Inc. to seek criminal penalties.

c.

The investors have been negligent in not verifying registration before purchase of shares and cannot rescind their purchase.

d.

Scissorwire Inc. is liable for the violation of the Securities Exchange Act of 1934.

Answers

The answer to this would be the second one

Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Janine, Michael, and Candice). The couple received salary income of $100,000 and qualified business income of $10,000 from an investment in a partnership, and they sold their home this year. They initially purchased the home three years ago for $200,000 and they sold it for $250,000. The gain on the sale qualified for the exclusion from the sale of a principal residence. The Jacksons incurred $16,500 of itemized deductions, and they had $3,550 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. However, because Candice is 18 years of age, the Jacksons may only claim the child tax credit for other qualifying dependents for Candice. (Use the tax rate schedules.)

Answers

Solution:

(1) Net sales $110,000 $100,000 Wage benefit + $10,000 QBI.  

Winning $50,000 home prices is exempt.  

(2) Deductions for AGI 0.

(3) Adjusted gross income 110,000 (1) − (2)

(4) Regular deduction 24,000 Married registration together.

(5) 16,500 deductions, which have been recorded.

(6) Greater regular allowances or comprehensive allowances 24,000 24,000 Greater of (4) or (5)

(7) Deduction for qualified business income 2,000 $10,000 QBI × 20%

(8) Total deductions from AGI 26,000 (6) + (7)

(9) Taxable income $ 84,000 (3) − (8)

(10) Income tax liability $ 10,359 (84,000 - 77,400) × 22% + 8,907 (see tax rate schedule for married filing jointly).

(11) Other taxes 0

(12) Total tax $ 10,359 (10) + (11)

(13) Credits (6,500 ) Child credits for four children (3 ×$2,000 + 1 × $500)

(14) Prepayments (3,550 )

Tax due with return $ 309 (12) + (13) + (14)
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