If the company accepts the outside supplier's offer to buy Part A, there will be a decrease in profits.
By purchasing Part A from an outside supplier for $15 each, the company can avoid the costs associated with producing it internally. The total cost of producing Part A internally can be calculated as follows:
Total Cost = Direct materials + Direct labor + Variable factory overhead + Fixed factory overhead
= $100,000 + $40,000 + $35,000 + $65,000
= $240,000
Since the company produces 10,000 units of Part A annually, the cost per unit internally would be $240,000 / 10,000 = $24.
On the other hand, the outside supplier offers Part A for $15 each. Therefore, by accepting the supplier's offer, the company can save $24 - $15 = $9 per unit.
To calculate the increase or decrease in profits, we need to consider the number of units sold. Let's assume the company sells all 10,000 units of Part A each year.
Profit Increase/Decrease = (Savings per unit) x (Number of units sold)
= $9 x 10,000
= $90,000
Hence, if the outside supplier's offer is accepted, the company will experience a decrease in profits by $90,000.
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Under the equity method of accounting for a stock investment, the investment initially should be recorded at: None of these Fair value Book value Equity value
Under the equity method of accounting for a stock investment, the investment initially should be recorded at fair value.
The correct statement is that under the equity method of accounting for a stock investment, the investment initially should be recorded at fair value. The equity method is used when an investor has significant influence over the investee, typically when the investor owns 20-50% of the investee's voting stock.
In this method, the investor accounts for the investment on its books based on its proportionate share of the investee's net assets and earnings.
Initially, when the investment is made, it is recorded at its fair value. Fair value represents the amount at which the investment could be exchanged between knowledgeable and willing parties in an arm's length transaction. Fair value provides a more accurate representation of the investment's worth at the time of acquisition.
Subsequently, as the investee generates profits or incurs losses, the investor's share of the investee's earnings or losses is recognized on the investor's income statement, which impacts the carrying value of the investment on the investor's balance sheet.
Therefore, under the equity method, the investment is initially recorded at fair value to reflect its market worth at the time of acquisition.
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when must a creditor provide a copy of an appraisal
A creditor is generally required to provide a copy of an appraisal to a borrower or potential borrower under specific circumstances.
The requirement to provide an appraisal copy is typically outlined in regulations designed to promote transparency and protect borrowers in lending transactions, particularly in the context of real estate financing. These regulations aim to ensure that borrowers have access to critical information regarding the value of the property being used as collateral for a loan.
In the United States, for example, the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, stipulate that a creditor must provide a copy of an appraisal to a borrower or potential borrower. This requirement applies to residential mortgage loans secured by a first lien on a dwelling. The purpose is to give borrowers the opportunity to review and evaluate the appraisal report, which influences the terms and conditions of the loan.
The specific timing of when the creditor must provide the appraisal copy can vary. In general, however, the creditor must provide it promptly upon completion or three business days before closing the loan, whichever is earlier. This timeframe allows borrowers sufficient time to review the appraisal report and understand the basis for the property valuation before committing to the loan.
The requirement for a creditor to provide a copy of an appraisal serves to protect borrowers' rights and promote transparency in lending transactions. By providing borrowers with access to the appraisal report, they can review the estimated value of the property, assess the accuracy of the appraisal, and make informed decisions regarding the loan. This helps prevent potential cases of overvaluation or misrepresentation, and it enables borrowers to identify any discrepancies or concerns that may impact their decision to proceed with the loan. Overall, the provision of an appraisal copy empowers borrowers with essential information and contributes to a fair and transparent lending process.
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Provide three key recommendations to consider regarding ethics
and social responsibility in CHINA (e.g., intellectual property,
competition, corruption). PLEASE PROVIDE CURRENT REFERENCE
WITH LINKS
Three general recommendations regarding ethics and social responsibility in China: Intellectual Property Protection, Promoting Fair Competition and Combating Corruption.
Intellectual Property Protection: Encourage and enforce strict intellectual property laws to protect the rights of innovators, creators, and businesses operating in China. Implement robust mechanisms for patent registration, copyright protection, and trade secret safeguards. Consult up-to-date resources such as the World Intellectual Property Organization (WIPO) and China's National Intellectual Property Administration (CNIPA) for current guidelines and practices.
Promoting Fair Competition: Support and adhere to fair competition principles by complying with antitrust regulations and promoting a level playing field for businesses. Avoid anti-competitive practices such as price-fixing, collusion, and abuse of market dominance. Familiarize yourself with China's Anti-Monopoly Law and seek guidance from the State Administration for Market Regulation (SAMR) for specific rules and enforcement actions.
Combating Corruption: Implement robust anti-corruption measures and promote transparency in business operations. Comply with China's laws and regulations related to bribery, embezzlement, and illicit practices. Stay informed about China's anti-corruption campaigns and initiatives, such as the National Supervisory Commission, and consult resources like Transparency International for guidance on anti-corruption best practices.
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The following information are pertained to Bank Scotia for the year 2020 –
Net Income after Tax = $2000m
C + S + L + MA = $14000m
Interest Income = $6193m
Price/Earnings Ratio = 2.5
Interest Expense = $2848m
Non-Interest Income = $3960m
Total Equity Capital = $3000m
Non-Interest Expense = $2278m
Retained Earnings = $500m
EPS = $4
Bank has issued only common stock (no preferred stock).
Market/Book Ratio = 2
Number of full-time employees = 1000
Calculate the following ratios for Bank Scotia (no interpretation/analysis is required):
Write a proper answer and do not copy from another chegg experts answer.
Net Operating Margin
Net Profit margin
Leverage Ratio
Expense Control Efficiency
DPS
Dividend Payout Ratio
Tax Management Efficiency
Operating Efficiency Ratio
Market Value Per Share
Employee Productivity Ratio (10)
By substituting the given values into the respective formulas, we can calculate the ratios for Bank Scotia. To calculate the ratios for Bank Scotia based on the provided information, let's apply the formulas:
Net Operating Margin:
Net Operating Margin = (Operating Income / Total Revenue) x 100
Operating Income = Interest Income + Non-Interest Income - Non-Interest Expense
Operating Income = $6193m + $3960m - $2278m
Total Revenue = C + S + L + MA = $14000m
Net Operating Margin = (Operating Income / Total Revenue) x 100
Net Profit Margin:
Net Profit Margin = (Net Income / Total Revenue) x 100
Leverage Ratio:
Leverage Ratio = (Total Assets / Total Equity)
Total Equity = Total Equity Capital = $3000m
Expense Control Efficiency:
Expense Control Efficiency = (Non-Interest Expense / Total Revenue) x 100
DPS (Dividend per Share):
DPS = (Dividends Paid to Common Shareholders / Number of Common Shares Outstanding)
Dividends Paid to Common Shareholders = Retained Earnings = $500m
Number of Common Shares Outstanding = C + S = $120,000
Dividend Payout Ratio:
Dividend Payout Ratio = (Dividends Paid to Common Shareholders / Net Income) x 100
Tax Management Efficiency:
Tax Management Efficiency = (Income Tax Expense / Pre-Tax Income) x 100
Operating Efficiency Ratio:
Operating Efficiency Ratio = (Operating Income / Non-Interest Expense) x 100
Market Value Per Share:
Market Value Per Share = Price/Earnings Ratio x EPS
Employee Productivity Ratio:
Employee Productivity Ratio = (Net Income / Number of Full-Time Employees)
These ratios provide insights into the bank's financial performance, profitability, leverage, expense control, dividend policy, tax management, market valuation, and employee productivity.
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A promise by a customer to pay cash in the future is a(n): A. account receivable B. note payable C. prepaid asset D. liability
A promise by a customer to pay cash in the future is an A.) account receivable for that price.
An account receivable is an amount owed to a company by its customers as a result of the sale of goods or services on credit. It represents the company's right to receive payment from its customers for the products or services provided. When a customer promises to pay cash in the future, it creates an account receivable for the company. This is because the customer has incurred a liability to the company by purchasing goods or services on credit, and the company has an expectation of receiving payment in the future.
When a customer makes a promise to pay cash in the future, it means that the customer has not yet paid for the goods or services received. The company records this as an account receivable in its financial statements. Account receivables are classified as assets on the company's balance sheet because they represent the company's right to receive cash in the future.
They are considered current assets if the payment is expected within one year, or non-current assets if the payment is expected beyond one year. The company monitors and manages its accounts receivable to ensure timely collection of payments, as they have an impact on its cash flow and overall financial position. Hence, option A is correct
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Which of the following statements is true of control? O a porrective actions are not part of the control process. O b. The control process begins when work procedures conform to established standards. O c. Preventive measures are a form of control. O d. Control is the process of measuring employee performance using scientific performance scales.
The correct statement is: c. Preventive measures are a form of control. Preventive measures are indeed a form of control.
Control is the process of monitoring, evaluating, and taking corrective or preventive actions to ensure that activities and outcomes align with established standards and objectives. Preventive measures are proactive actions taken to anticipate and minimize potential issues or deviations from desired outcomes. By implementing preventive controls, organizations aim to identify and address problems before they occur, reducing the likelihood of errors, inefficiencies, or negative impacts on performance.
Preventive measures can take various forms, such as implementing robust quality assurance processes, conducting risk assessments, setting up internal controls and procedures, providing training and education, establishing safety protocols, and utilizing technologies for early detection of issues. These measures are designed to prevent deviations, errors, or failures from happening and contribute to maintaining efficiency, effectiveness, and compliance within an organization.
While the other statements contain some elements related to control, they are not entirely accurate. Option (a) is incorrect because corrective actions, which involve addressing and rectifying deviations or non-conformities, are indeed a part of the control process.
Option (b) is incorrect because the control process begins with establishing standards and then compares the actual performance against those standards, rather than when work procedures conform to established standards. Option (d) is also incorrect because control involves more than just measuring employee performance using scientific performance scales; it encompasses broader aspects of monitoring, evaluating, and taking appropriate actions across various organizational processes and functions.
Hence, the correct statement is: c. Preventive measures are a form of control. Preventive measures are indeed a form of control.
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Suppose the Fed commits itself to the use of the Taylor rule (shown below) to set the federal funds rate. Federal funds rate = Long − run target +1.5( Inflation rate − Inflation target )+0.5( Output gap ) Suppose the Fed has set the long-run target for the federal funds rate at 2.5 percent and its target for inflation at 3 percent. If the economy is currently hitting the Fed's inflation target and GDP exactly equals the trend GDP, then the Fed will set the federal funds at percent. (Enter your response with no rounding.)
According to the Taylor rule provided, the federal funds rate is at 2.5 percent in this scenario.
According to the Taylor rule provided, the formula to set the federal funds rate is as follows:
Federal funds rate = Long-run target + 1.5(Inflation rate - Inflation target) + 0.5(Output gap)
Given that the long-run target for the federal funds rate is 2.5 percent and the inflation target is 3 percent, we can substitute these values into the formula:
Federal funds rate = 2.5 + 1.5(Inflation rate - 3) + 0.5(Output gap)
In this scenario, the economy is hitting the Fed's inflation target and GDP exactly equals the trend GDP. This implies that the inflation rate is at 3 percent and the output gap is zero.
Substituting these values into the formula, we have:
Federal funds rate = 2.5 + 1.5(3 - 3) + 0.5(0)
Federal funds rate = 2.5 + 1.5(0) + 0.5(0)
Federal funds rate = 2.5 + 0 + 0
Federal funds rate = 2.5
Therefore, the Fed will set the federal funds rate at 2.5 percent in this scenario.
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Braxton Enterprises currently has debt outstanding of $35 million and an interest rate of 9%. Braxton plans to reduce its debt by repaying $7 million in principal at the end of each year for the next five years. If Braxton's marginal corporate tax rate is 21%, what is the interest tax shield from Braxton's debt in each of the next five years?
The interest tax shield from Braxton's debt in each of the next five years is as follows, Year 1: $661,500, Year 2: $529,200, Year 3: $396,900, Year 4: $264,600, Year 5: $132,300.
To calculate the interest tax shield from Braxton Enterprises' debt, we need to find the interest expense and then apply the tax rate to it. Here's how we can calculate the interest tax shield for each of the next five years:
Debt outstanding: $35 million
Interest rate: 9%
Principal repayment per year: $7 million
Marginal corporate tax rate: 21%
Year 1:
Interest expense = Debt outstanding * Interest rate = $35 million * 9% = $3.15 million
Interest tax shield = Interest expense * Tax rate = $3.15 million * 21% = $661,500
Year 2:
Debt outstanding = Debt outstanding - Principal repayment = $35 million - $7 million = $28 million
Interest expense = Debt outstanding * Interest rate = $28 million * 9% = $2.52 million
Interest tax shield = Interest expense * Tax rate = $2.52 million * 21% = $529,200
Year 3:
Debt outstanding = Debt outstanding - Principal repayment = $28 million - $7 million = $21 million
Interest expense = Debt outstanding * Interest rate = $21 million * 9% = $1.89 million
Interest tax shield = Interest expense * Tax rate = $1.89 million * 21% = $396,900
Year 4:
Debt outstanding = Debt outstanding - Principal repayment = $21 million - $7 million = $14 million
Interest expense = Debt outstanding * Interest rate = $14 million * 9% = $1.26 million
Interest tax shield = Interest expense * Tax rate = $1.26 million * 21% = $264,600
Year 5:
Debt outstanding = Debt outstanding - Principal repayment = $14 million - $7 million = $7 million
Interest expense = Debt outstanding * Interest rate = $7 million * 9% = $630,000
Interest tax shield = Interest expense * Tax rate = $630,000 * 21% = $132,300
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TRUE / FALSE.
A Limited liability company (LLC) can be organized in only one (1) state.
The statement is False. A Limited Liability Company (LLC) can be organized in more than one state.
The statement is false. A Limited Liability Company (LLC) can be organized in multiple states. In the United States, each state has its own laws and regulations regarding the formation and operation of LLCs. Therefore, an LLC can choose to be formed in one state, known as the home state, and then expand its operations by registering as a foreign LLC in other states where it conducts business.
Forming an LLC in multiple states allows the company to establish a legal presence and operate in those jurisdictions. It may be necessary to register as a foreign LLC in other states to comply with their respective laws and regulations, including taxation, business licenses, and reporting requirements. By doing so, the LLC can enjoy limited liability protection and other benefits provided by the LLC structure in each state where it operates.
It's important for businesses considering expansion into multiple states to consult with legal professionals and comply with the specific requirements of each state to ensure proper compliance and operation of the LLC in all jurisdictions.
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which of the following is not a reason why companies prefer certain accounting methods?
a. asset structure.
b. political costs.
c. bonus payments.
d. smooth earnings.
Asset structure is not a reason why companies prefer certain accounting methods. Option a is correct.
Accounting methods are a set of principles, procedures, and rules that define how financial information should be reported by an organization or a business. These methods are important as they can significantly affect an organization's financial position, results of operations, and cash flows.
Asset structure is not a reason why companies prefer certain accounting methods. It describes the composition of an organization's assets. While asset structure can influence certain accounting decisions, it is not a reason why companies prefer certain accounting methods.
Therefore, a is correct.
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The organizational method Remodeled with different stakeholders,
investment management and transformation in the light of the
statement, discuss public private partnership into
infrastructure.
Public-private partnerships (PPPs) have gained popularity in the past few decades as an organizational method for infrastructure development. This approach has been remodeled over time with various stakeholders, investment management, and transformation to create effective partnerships. PPPs can help improve infrastructure development by leveraging private sector investment, improving efficiency and accountability, and increasing public sector capacity.
Public-private partnerships (PPPs) are a type of contractual arrangement in which the public and private sectors work together to provide goods and services to the public. PPPs have been used for a wide range of infrastructure projects, including transportation, water supply, and social infrastructure like schools and hospitals. The organizational method of PPPs has evolved over time to become more effective. One important aspect of this evolution has been the inclusion of various stakeholders. Effective PPPs require collaboration between government agencies, private investors, and local communities. This collaboration helps ensure that the needs of all stakeholders are taken into account and that projects are designed to meet local needs. Investment management is another key aspect of successful PPPs. Private investors are attracted to PPPs because they offer the potential for long-term revenue streams. This means that investment management must be carefully considered to ensure that investors are able to achieve a reasonable return on their investment. Finally, PPPs must be designed to promote transformational change. This means that projects must be designed to have a positive impact on the local economy, environment, and society. Effective PPPs can help improve infrastructure development by leveraging private sector investment, improving efficiency and accountability, and increasing public sector capacity.
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If output is described by the production function Y = AK0.2L0.8, then the production function has:
Select one:
A. Constant returns to scale and the share of labor in GDP is 0.2.
B. increasing returns to scale and the share of labor in GDP is 0.2.
C. Decreasing returns to scale and the share of labor in GDP is 0.8.
D. constant returns to scale and the share of labor in GDP is 0.8.
The production function Y = [tex]AK^{(0.2)}[/tex][tex]L^{(0.8)}[/tex] exhibits (D) constant returns to scale and has a labor share of 0.8 in GDP.
To determine the characteristics of the production function, we need to examine the exponents on capital (K) and labor (L). In the given production function Y = [tex]AK^{(0.2)}[/tex][tex]L^{(0.8)}[/tex], we have an exponent of 0.2 on capital (K) and an exponent of 0.8 on labor (L).
To determine the returns to scale, we need to consider the sum of the exponents. In this case, 0.2 + 0.8 = 1. If the sum of the exponents is equal to 1, it indicates constant returns to scale. Therefore, the production function has constant returns to scale.
However, the share of labor in GDP is determined by the exponent on labor (L), which is 0.8. Thus, the share of labor in GDP is 0.8. Therefore, the correct answer is D. Constant returns to scale and the share of labor in GDP is 0.8.
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One major reason for undertaking marketing research is to identify market opportunities. Once the research is complete, the company must measure and forecast the size, growth, and profit potential of each market opportunity. With regards to the above information examine how demand can be estimated in a market.
Demand estimation is the process of predicting how much of a product or service will be sold in a given market, and can be done using historical sales data, surveys, economic analysis, or modeling.
Demand estimation is the process of predicting how much of a product or service will be sold in a given market. This is a critical step in marketing research, as it allows companies to make informed decisions about product development, pricing, and marketing strategies.
** There are a number of different methods that can be used to estimate demand. Some of the most common methods include:
Historical sales data: This is the most basic method of demand estimation. It involves looking at past sales data to see how much of a product or service has been sold in the past. This data can then be used to forecast future demand.
Surveys and focus groups: This method involves asking potential customers about their needs and wants. This can be done through surveys, focus groups, or interviews. The information gathered from these methods can then be used to estimate demand.
Economic analysis: This method involves looking at the overall economic conditions in a market. This includes factors such as income levels, population growth, and interest rates. This information can then be used to estimate demand.
Modeling: This method involves using mathematical models to predict demand. These models can be based on historical data, surveys, or economic analysis.
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How
can we manage website cookies more carefully in the future?
To manage website cookies more carefully in the future, individuals can follow best practices such as reviewing and adjusting cookie settings in their web browsers, utilizing privacy-enhancing browser extensions, regularly clearing cookies, and being selective about granting consent for cookie usage.
To manage website cookies more carefully, individuals can start by reviewing and adjusting the cookie settings in their web browsers. Most modern web browsers offer options to customize cookie preferences, allowing users to block or restrict cookies from certain websites or third-party sources. Utilizing privacy-enhancing browser extensions can provide additional control and protection against tracking cookies. Regularly clearing cookies from web browsers is another effective practice. This ensures that accumulated cookies are periodically removed, reducing the amount of data stored and minimizing the tracking potential. Users can manually clear cookies or configure their browsers to automatically delete cookies upon closing. Being selective about granting consent for cookie usage is crucial.
Many websites present cookie consent pop-ups, and users should carefully consider the purposes for which cookies are being used and the specific data being collected. Opting for websites that prioritize transparent cookie practices and respect user privacy can contribute to better cookie management. Staying informed about privacy policies, cookie usage, and data handling practices of websites can empower individuals to make informed decisions about their online privacy.
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Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $2,250 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $3,000. During the year, he drove his car a total of 14,200 miles (a combination of business and personal travel). Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.
Ryan estimates that he drove approximately 1,920 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 1,090 miles. What business expense amount can Ryan deduct (if any) for these trips?
Ryan can deduct a business expense amount of $646 for the business trips.
To determine the business expense amount that Ryan can deduct for his trips, we need to calculate the business use percentage of his car. Here's the breakdown of the calculations:
Total business miles driven: 1,090 miles
Total miles driven: 14,200 miles
Business use percentage = (Total business miles driven / Total miles driven) * 100
= (1,090 / 14,200) * 100
≈ 7.67%
Next, we calculate the total expenses incurred for the car:
Gasoline expenses: $2,250
Depreciation expenses (if fully used for business): $3,000
Total expenses = Gasoline expenses + Depreciation expenses
= $2,250 + $3,000
= $5,250
Finally, we calculate the business expense amount that Ryan can deduct:
Business expense amount = Total expenses * Business use percentage
= $5,250 * 7.67%
≈ $403.49
Since the business expense amount is rounded to the nearest whole dollar, Ryan can deduct $403 for the business trips.
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What’s the YTM of a three-year risk-free bond with 5% coupon
rate and annual coupons? Please add working.
'he following table summarizes prices of various risk-free, zero-coupon bonds expressed as a percentage of face value):
The given information for the problem is:Time to maturity (n) = 3 yearsCoupon rate (C) = 5% Annual coupon payment = $50 (5% of $1,000) Face value (FV) = $1,000Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. It is also the internal rate of return of an investment in the bond if it is purchased at the market price and held to maturity.
There are two types of bonds, annual coupons bonds and zero-coupon bonds. A bond with an annual coupon payment, such as this one, is called an annual coupon bond. We have to find the yield to maturity of the bond with annual coupons and risk-free. As we have all the information we can proceed with the calculation.
Working:Using the formula to find the price of the bond as per the table above:[tex]\text{Bond price} = \dfrac{\text{Annual interest payment}}{(1+i)^1} + \dfrac{\text{Annual interest payment}}{(1+i)^2} + \dfrac{\text{Face value + Annual interest payment}}{(1+i)^3}[/tex]Given the bond is risk-free, we can use the yield of the three-year risk-free bond as the discount rate.
To find the yield to maturity using the price of the bond, we use the following formula: Price of bond = [Coupon payment / (1+ YTM)¹] + [Coupon payment / (1+ YTM)²] + [Coupon payment / (1+ YTM)³] + [Face value / (1+ YTM)³]Where:YTM = Yield to maturity Solving the equation: 5% annual coupon rate and annual coupon payment of $50.00N = 3 yearsYTM = ?[tex]\text{Bond price} = \dfrac{\text{Annual interest payment}}{(1+i)^1} + \dfrac{\text{Annual interest payment}}{(1+i)^2} + \dfrac{\text{Face value + Annual interest payment}}{(1+i)^3}[/tex][tex]\text{Price of bond} = \dfrac{50}{1+i} + \dfrac{50}{(1+i)^2} + \dfrac{1050}{(1+i)^3}[/tex] Using a financial calculator, solve the equation above to find the YTM, we get 3.99%.
Therefore, the yield to maturity (YTM) of the three-year risk-free bond with 5% coupon rate and annual coupons is 3.99%.
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A Company borrows $286,900 for building repairs. Setup an
amortization schedule if the Company agrees to make
semi-annual
payments for 2½ years
at 10% APR.
Each payment is fixed at approximately $75,996.56, with the interest and principal portions varying over time. The remaining loan balance decreases with each payment until it reaches zero at the end of the 2½ year period.
To set up an amortization schedule for the company's loan, calculate the semi-annual payment amount and then determine how the payments will be allocated towards the principal and interest.
Given information:
Loan amount: $286,900
Payment frequency: Semi-annual
Term: 2½ years (or 5 semi-annual periods)
Annual Percentage Rate (APR): 10%
Step 1: Calculate the semi-annual interest rate:
Semi-annual interest rate = APR / Number of payments per year
Semi-annual interest rate = 10% / 2 = 5%
Step 2: Calculate the semi-annual payment amount using the formula for an amortizing loan:
Semi-annual payment amount = Loan amount * Semi-annual interest rate / (1 - (1 + Semi-annual interest rate)^(-Number of payments))
Semi-annual payment amount = 286,900 * 0.05 / (1 - (1 + 0.05)^(-5))
Semi-annual payment amount ≈ $75,996.56
Now, set up the amortization schedule for the 2½ year period (5 semi-annual periods).
Amortization Schedule:
Period | Payment | Interest | Principal | Remaining Loan
-----------------------------------------------------------------
1 | $75,996.56 | $14,345.00 | $61,651.56 | $225,248.44
2 | $75,996.56 | $11,262.42 | $64,734.14 | $160,514.30
3 | $75,996.56 | $8,025.71 | $67,970.85 | $92,543.45
4 | $75,996.56 | $4,618.22 | $71,378.34 | $21,165.11
5 | $75,996.56 | $1,058.25 | $74,938.31 | $0.00
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Comm Devices (CD) is a division of Flint Communications, Inc. CD produces restaurant pagers and other personal communication devices. These devices are sold to other Flint divisions, as well as to other communication companies. CD was recently approached by the manager of the Personal Communications Division regarding a request to make a special emergency- response pager designed to receive signals from anywhere in the world. The Personal Communications Division has requested that CD produce 11.400 units of
this special pager. The following facts are available regarding the Comm Devices Division.
Selling price of standard pager
$91
Variable cost of standard pager
555
Additional variable cost of special pager
$36 For each of the following independent situations, calculate the minimum transfer price, and determine whether the Personal
Communications Division should accept or reject the offer.
(a)
The Personal Communications Division has offered to pay the CD Division $113 per pager. The CD Division has no available capacity. The CD Division would have to forgo sales of 9,120 pagers to existing customers in order to meet the request of the Personal Communications Division. (Note: The number of special pagers to be produced does not equal the number of existing pagers that
would be forgone.)
It is profitable for CD to accept the offer from the Personal Communications Division as they are offering more than the minimum transfer price of $72 per pager. CD enable the transmission and reception of information, allowing people to connect, exchange messages, and share data in various forms.
CD has decided to discontinue the sale of 9,120 standard pagers in order to focus on producing special pagers instead. Consequently, the contribution forgone per unit can be calculated by subtracting the variable cost per unit from the selling price per unit, resulting in a value of $36 ($91 - $55). To ensure that CD does not incur a loss, the minimum transfer price for the special pagers should be at least equal to the contribution forgone per unit plus the additional variable cost per unit, totaling $72 ($36 + $36). Considering the offer made by the Personal Communications Division, which exceeds the minimum transfer price, it is financially beneficial for CD to accept their proposal. The Personal Communications Division's offer provides a price higher than the minimum transfer price of $72 per pager. Therefore, accepting the offer from the Personal Communications Division is a profitable decision for CD since they are offering a price that exceeds the minimum transfer price because the price offered by them is greater than the minimum transfer price.
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which of the following transactions can take place in an account that has been frozen because of failure to meet a reg t call?
It is advisable for the account holder to consult with their broker or the relevant regulatory authority to understand the exact limitations and steps required to address the account freeze.
When an account has been frozen due to failure to meet a Regulation T (Reg T) call, certain restrictions are imposed on the account holder. Reg T is a regulation imposed by the U.S. Federal Reserve that governs margin trading. In the context of a frozen account, the following transactions may generally be restricted:
1. Buying additional securities on margin: With a frozen account, the account holder typically cannot purchase additional securities on margin, as it would require further borrowing against the account.
2. Withdrawing cash or transferring securities: The account holder may be restricted from making cash withdrawals or transferring securities from the frozen account, as these actions could impact the margin requirements and further exacerbate the failure to meet the Reg T call.
It's important to note that the specific restrictions imposed on a frozen account can vary depending on the circumstances and the policies of the brokerage or financial institution involved.
It is advisable for the account holder to consult with their broker or the relevant regulatory authority to understand the exact limitations and steps required to address the account freeze.
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at the very least, an admitted insurance company shall be examined once every ___ years.
At the very least, an admitted insurance company shall be examined once every five years. This examination is conducted to assess the company's financial condition, compliance with regulations, and overall solvency.
Insurance is a risk management tool that provides financial protection against potential losses. It involves an agreement between an insurance company and an individual or organization, where the insured pays premiums in exchange for coverage. Insurance policies are designed to mitigate the financial impact of unforeseen events such as accidents, illnesses, property damage, or liability claims. Types of insurance include auto, health, life, property, and liability insurance. Insurance helps individuals and businesses manage risks and provides peace of mind by offering financial support in times of need.
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You have $30.000 in savings for college. If tuition and books total $15,000 per year (paid at the end of each year). approximately how many years of college can you finance with your savings assuming you can earn 5% annually? 2.05 years. 2.2 years. 2 years. 1.8 years.
Assuming an annual return of 5% on savings, with a total savings of $30,000 and annual expenses of $15,000 for tuition and books, approximately 2.05 years of college can be financed with the savings.
To determine the number of years of college that can be financed, we need to calculate how long it will take for the savings to be depleted at the end of each year, considering the annual expenses and the annual return on savings.
Given:
Total savings = $30,000
Annual expenses = $15,000
Annual return on savings = 5%
To calculate the number of years of college that can be financed:
Number of years = Total savings / (Annual expenses - Annual return on savings)
Plugging in the values:
Number of years = $30,000 / ($15,000 - 0.05 * $30,000)
Number of years ≈ 2.05 years
Therefore, with the given savings, annual expenses, and assumed annual return, approximately 2.05 years of college can be financed.
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A student with $30,000 in savings, considering a 5% annual interest, can finance approximately 2 years of college, considering tuition and book fees of $15,000 annually.
Explanation:The question pertains to how long the student can finance their college education with $30,000, given that tuition and books cost $15,000 per year, and the amount can earn a 5% interest annually. We will first calculate the total amount the student can accumulate after adding the annual interest of 5% to the original savings. This can be calculated by using the formula for simple interest, where the total money after a year = Principal amount + (Principal amount * Rate of interest * Time /100).
In this scenario, at the end of the first year, the total amount = $30,000 + ($30,000 * 5% * 1) = $31,500. After the deduction of the tuition and book fees of $15,000, remaining amount at the end of the first year will be $16,500.
Applying the same method for the second year, the total amount at the start of the second year = $16,500 + ($16,500 * 5% * 1) = $17,325. Again, after the deduction of tuition and book fees of $15,000, the remaining amount at the end of the second year will be approximately $2,325.
As the balance at the end of second year is less than the annual tuition fee, the savings with annual 5% interest can only finance approximately 2 years of college.
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Given below are the Operating, Financial, and Total leverage of Cai Corporation and Lanze Corporation.
Cai Corp. Lanze Corp.
Operating Leverage 1.25 1.71
Financial Leverage 1.71 1.25
Total Leverage 2.14 2.14
1. Considering that the total leverage of the two company is 2.14. Which of the two company has a better operating leverage and which of the two has a better financial leverage? Why?
2. What is operating leverage and what causes operating leverage?
3. What is financial leverage and what causes financial leverage?
1. Cai Corporation has better operating leverage, while Lanze Corporation has better financial leverage.
2. Operating leverage refers to the extent to which a company's operating income (earnings before interest and taxes) is affected by changes in sales or revenue. It measures the relationship between fixed costs and variable costs in a company's cost structure. Operating leverage is influenced by the proportion of fixed costs in relation to variable costs. Higher operating leverage means a greater proportion of fixed costs, indicating that a company's operating income is more sensitive to changes in sales or revenue.
3. Financial leverage, on the other hand, relates to the use of debt or borrowed funds to finance a company's operations. It measures the impact of debt on a company's earnings and return on equity (ROE). Financial leverage magnifies the effect of changes in operating income on earnings available to shareholders. It is influenced by the amount of debt a company has relative to its equity. Higher financial leverage indicates a higher proportion of debt in the capital structure, which can amplify returns when operating income increases but also increase risks when operating income decreases.
1. Cai Corporation has better operating leverage because it has a lower operating leverage ratio (1.25) compared to Lanze Corporation (1.71). A lower operating leverage ratio indicates that Cai Corporation has a lower proportion of fixed costs in its cost structure relative to variable costs. As a result, Cai Corporation's operating income is less sensitive to changes in sales or revenue compared to Lanze Corporation, making it more resilient to fluctuations in business activity.
Lanze Corporation, on the other hand, has better financial leverage because it has a lower financial leverage ratio (1.25) compared to Cai Corporation (1.71). A lower financial leverage ratio indicates that Lanze Corporation has a lower proportion of debt in its capital structure relative to equity. This implies that Lanze Corporation relies less on borrowed funds to finance its operations compared to Cai Corporation, reducing its financial risk and vulnerability to interest rate fluctuations.
2. Operating leverage is a measure of how a company's operating income responds to changes in sales or revenue. It is influenced by the proportion of fixed costs in a company's cost structure. Fixed costs are expenses that do not vary with changes in sales volume, such as rent, salaries, and depreciation. When a company has a higher proportion of fixed costs relative to variable costs (which fluctuate with sales volume), it has higher operating leverage. This means that small changes in sales or revenue can result in larger percentage changes in operating income.
3. Financial leverage, also known as leverage or gearing, refers to the use of debt or borrowed funds to finance a company's operations or investments. It measures the impact of debt on a company's financial performance and risk. Financial leverage is influenced by the amount of debt a company has relative to its equity. When a company has a higher proportion of debt in its capital structure, it has higher financial leverage. Financial leverage can amplify returns when operating income is higher than the cost of borrowed funds (interest expense), leading to higher earnings available to shareholders. However, it can also increase risks and financial vulnerability when operating income decreases, as the fixed interest payments on debt still need to be met.
Understanding operating leverage and financial leverage is crucial for assessing a company's risk profile, profitability, and ability to withstand economic fluctuations. Both measures provide insights into the financial health and performance of a company and help investors and stakeholders make informed decisions.
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Isaiah runs a cake shop. His monthly expenses are listed below. For each cost, indicate whether the cost is an implicit cost or an explicit cost of producing cakes and whether that cost is included in accounting profit, economic profit, or both.. a. Ingredients (flour, butter, sugar): Variable cost b. Bakers (cooks) paid hourly: Fixed cost c. Rent: Fixed cost d. Payments for equipment (ovens): Fixed cost e. Interest payments for borrowed capital: Variable cost f. delivery van g. time on promotions
a. Ingredients (flour, butter, sugar): Implicit cost, included in both accounting profit and economic profit.
b. Bakers (cooks) paid hourly: Explicit cost, included in accounting profit.
c. Rent: Explicit cost, included in accounting profit.
d. Payments for equipment (ovens): Explicit cost, included in accounting profit.
e. Interest payments for borrowed capital: Explicit cost, included in accounting profit.
f. Delivery van: Explicit cost, included in accounting profit.
g. Time on promotions: Implicit cost, not included in accounting profit but included in economic profit.
a. Ingredients (flour, butter, sugar): These costs are variable costs, meaning they vary with the level of cake production. They are implicit costs because Isaiah, as the owner, may not explicitly pay for them but uses his own resources (time, effort, etc.) to produce cakes. These costs are included in both accounting profit and economic profit as they represent forgone opportunities or alternative uses of resources.
b. Bakers (cooks) paid hourly: This is an explicit cost because Isaiah directly pays wages to the bakers. It is a fixed cost since it does not vary with the level of cake production. This cost is included in accounting profit as it is a direct expenditure.
c. Rent: Rent is an explicit cost and a fixed cost. It does not change with the quantity of cakes produced. Rent is included in accounting profit as it is an actual expense paid by Isaiah.
d. Payments for equipment (ovens): These payments represent explicit costs and are considered fixed costs. They do not vary with the quantity of cakes produced. Equipment payments are included in accounting profit.
e. Interest payments for borrowed capital: Interest payments are explicit costs and can be considered variable costs if the borrowed capital is used to finance the production of additional cakes. These costs are included in accounting profit as they involve actual cash outflows.
f. Delivery van: The delivery van represents an explicit cost and is included in accounting profit. However, the type of cost (fixed or variable) cannot be determined without additional information.
g. Time on promotions: Time spent on promotions represents an implicit cost as it is Isaiah's own effort and resources used for marketing activities. It is not included in accounting profit as no actual expenditure occurs. However, it is included in economic profit as it represents the opportunity cost of Isaiah's time and resources.
Understanding the distinction between implicit and explicit costs is important for assessing profitability. Implicit costs represent opportunity costs and are not explicitly incurred, while explicit costs involve actual monetary outlays. Accounting profit includes explicit costs, while economic profit considers both explicit and implicit costs. By categorizing each cost, such as ingredients, bakers' wages, rent, equipment payments, interest payments, delivery van, and time on promotions, Isaiah can accurately analyze his accounting and economic profits, enabling him to make informed business decisions.
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A textile firm uses 15 tons (15 000 kgs) of cotton during a year. The price of cotton is 15 TL per kg. The holding cost of keeping cotton in inventory is equal to 20% of the buying price. The acquisition cost per one order is calculated as 100 TL. Given this; calculate
a) optimal (economic) order size that will minimize the costs
b) How many orders must be given in a year to minimize the costs and at what intervals?
Note: You may use the formula to calculate EOQ
The optimal order size is 1732.05 kg. Economic order quantity (EOQ) is used in inventory management to describe the optimal quantity of goods that should be ordered to reduce inventory costs.
The optimal order size for the given textile firm can be determined using the formula for EOQ. The holding cost of the textile firm is 20% of the purchase price, and the purchase price is 15 TL per kg. The acquisition cost per order is 100 TL. The following formula is used to calculate the EOQ:
EOQ = √[(2 x O x C) ÷ H]
where O = Ordering cost
C = Annual demand
H = Holding cost based on the information given in the question:
Annual demand (C) = 15,000 kg
Ordering cost (O) = 100 TL per order
holding cost (H) = 20% of 15 TL per kg = 3 TL per kg
Applying these values to the EOQ formula, we get:
EOQ = √[(2 x 100 x 15,000) ÷ 3]= √(3,000,000)= 1732.05 kg
Therefore, the optimal order size is 1732.05 kg.
To minimize costs, the firm must place 9 orders annually (15,000 kg ÷ 1732.05 kg ≈ 8.66). The orders should be placed at intervals of approximately 40.2 days (365 days ÷ 9 orders ≈ 40.56). The firm will minimize its inventory costs by ordering 1732.05 kg of cotton every 40.2 days, resulting in 9 charges and a total annual cost of approximately 7,849.5 TL (rounded to the nearest tenth).
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The Walnut Division of Benton Corp. has average invested assets of $26,500,000. Sales revenue of $31,000,000 results in an operating income of $2,779,500. The hurdle rate is 8.40%.
a. Calculate the return on investment. (Round your answer to 2 decimal places.)
b. Calculate the profit margin. (Round your answer to 2 decimal places.)
c. Calculate the investment turnover. (Round your answer to 1 decimal place.)
d. Calculate the residual income.
The residual income is $447,000.
a. Return on investment = Operating income / Average invested assets
Return on investment = $2,779,500 / $26,500,000
Return on investment = 0.1048 or 10.48%
Therefore, the return on investment is 10.48%.
b. Profit margin = Operating income / Sales revenue
Profit margin = $2,779,500 / $31,000,000
Profit margin = 0.0897 or 8.97%
Therefore, the profit margin is 8.97%.
c. Investment turnover = Sales revenue / Average invested assets
Investment turnover = $31,000,000 / $26,500,000
Investment turnover = 1.17
Therefore, the investment turnover is 1.17.
d. Residual income = Operating income – (Average invested assets × Hurdle rate)
Residual income = $2,779,500 – ($26,500,000 × 0.084)
Residual income = $447,000
Therefore, the residual income is $447,000.
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The AD-AS: The economy of Stagflatia is represented by the following:
- long-run aggregate supply curve is vertical at Y = 4,000
- the short-run aggregate supply curve is horizontal at P = 1.0.
- the aggregate demand curve is Y = 2(M/P) and M = 2,000.
a. If the economy is in long-run equilibrium, what are the values of Y and P?
b. Assume that a supply shock moved the short-run aggregate supply curve to P=2.
What is the new, short-run, level of Y?
c. Assume that a supply shock moved the short-run aggregate supply curve to P=2.
Now, the supply shock is over and the economy moved back to the long-run equilibrium on its own (without FED's intervention.)
What would be the long-run equilibrium P and Y after the economy moves back to long-run equilibrium on its own ?
The long-run equilibrium P and Y after the economy moves back to long-run equilibrium on its own would be 1.0 and 4,000 respectively
a. In long-run equilibrium, the values of Y (real GDP) and P (price level) can be determined by setting aggregate demand (AD) equal to long-run aggregate supply (LRAS). From the given information, the long-run aggregate supply curve is vertical at Y = 4,000, and the aggregate demand curve is Y = 2(M/P), with M = 2,000. Substituting the values, we have:
2(M/P) = 4,000
2(2,000/P) = 4,000
4,000/P = 4,000
P = 1.0
Therefore, in long-run equilibrium, Y = 4,000 and P = 1.0.
b. If a supply shock moves the short-run aggregate supply curve to P = 2, we need to find the corresponding level of Y in the short run. Since the short-run aggregate supply curve is now horizontal at P = 2, the economy will adjust to the point where AD intersects the new SRAS curve. Using the aggregate demand equation Y = 2(M/P) and substituting P = 2, we can solve for Y:
Y = 2(2,000/2)
Y = 2,000
Therefore, in the short run, the new level of Y is 2,000.
c. When the supply shock is over and the economy moves back to the long-run equilibrium on its own, both the price level (P) and real GDP (Y) will return to their long-run equilibrium values. From part a, we know that the long-run equilibrium values are Y = 4,000 and P = 1.0. Therefore, after the economy adjusts, the long-run equilibrium values for P and Y will be P = 1.0 and Y = 4,000.
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Alton had $725 for Medicare, $3000 for state income tax, and $3100 for
Social Security deducted from his pay last year. How much did Alton have
deducted from his pay for FICA last year?
OA. $3825, because FICA consists of Medicare and Social Security
OB. $3725, because FICA consists of Medicare and Social Security
OC. $3725, because FICA consists of Medicare and state income tax
OD. $3825, because FICA consists of Medicare and state income tax
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SUBMIT
The amount Alton have deducted from his pay is B. $3725, because FICA consists of Medicare and Social Security.
How to Determine the Amount Deducted from FICA in a year?The correct answer is OB. $3725, since FICA which is the Federal Insurance Contributions Act, is composed of Medicare and Social Security deductions.
The total deductions mentioned in the question include $725 for Medicare and $3100 for Social Security, making a combined total of $3725 for FICA deductions. State income tax is separate from FICA and is not included in the calculation of FICA deductions.
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You are a tax professional, and you act for Winnie Wood. Winnie's husband Roger who has recently died. Roger had been a client of your firm for many years and was a good friend of your manager and the senior partner in the firm. A few weeks after Roger's death, you discover that Winnie had neglected to report rent received on a property that she lets out to students. You report the matter to your manager, who not wishing to upset Winnie, tells you to ignore the discovery as the amounts of tax which has not been paid, are not likely to be material. Your manager reminds you that he is responsible for agreeing your bonus. He says you should do what he says if you want to secure a bonus. You check the engagement letter between your firm and Winnie, and it has not been updated since 2014 and it does not contain a general permission to disclose such matters to HMRC.
REQUIRED
a) Evaluate whether the nondisclosure of the rent on Winnie's tax return would be regarded as tax planning, tax avoidance or tax evasion.
b) Identify the ethical principles and threats in the above scenario. Set out the actions you and your firm should undertake.
Maximum word count for question 1=675 words
a) The non-disclosure of rent on Winnie's tax return would be regarded as tax evasion.
Tax evasion is regarded as a criminal offense.
It takes place when a taxpayer intentionally conceals or misrepresents the actual information to HM Revenue and Customs to reduce their tax liability.
Here, Winnie has intentionally neglected to report rent received on a property that she lets out to students.
The amount of tax which has not been paid is material, which means that it is a significant amount, and failing to report such a large sum is considered tax evasion.
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Explain distribution channels and competitors of Organika health products company. ( Organika health products is a Canadian company which is situated in Ontario.
Organika Health Products utilizes various distribution channels, including online platforms and partnerships with retailers, to make its health and wellness products available to consumers.
Distribution channels play a crucial role in the success of Organika Health Products. The company employs a multi-channel approach to reach its target market. This includes both online and offline channels. Online distribution channels include the company's official website, where customers can directly purchase products and have them delivered to their doorstep.
Organika Health Products also utilizes e-commerce platforms and online marketplaces to expand its reach and make its products available to a wider customer base. In terms of offline distribution, the company partners with various retailers, pharmacies, and health food stores across Canada to ensure its products are accessible to consumers in physical locations.
In the competitive landscape of the health and wellness industry, Organika Health Products faces competition from other companies offering similar products and solutions. Some of its competitors may include well-known brands in the health and wellness sector, both local and international. These competitors may have their own distribution channels and marketing strategies to reach customers.
Organika Health Products differentiates itself by focusing on natural and high-quality ingredients, innovative product formulations, and a commitment to customer satisfaction. The company continuously strives to maintain its competitive edge by staying abreast of industry trends, investing in research and development, and delivering products that meet the evolving needs and preferences of consumers.
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Sullivan-Swyt Mining Company must install new machinery in its Nevada mine, It can obtain a bank loan for 100% of the after-tax cost of the machinery. Alternatively, a Nevada investment banking firm that represents a group of investors believes that it can arrange for a lease financing plan. Assume that the following facts apply?
1. The after-tax oost of the machinery is $950,000, and that will be the amount of the bank loan.
2. Estimated maintenance expenses are $60,000 per year.
3. Sullivan-Swift's federal-plus-state tax rate is 25%.
4. If the money is borrowed, the bank loan will be at a rate of 12%, amortized in 4 equal installments to be paid at the end of each year.
5. The tentative fease terms call for end-of year payments of $300,000 per year for 4 years.
6. Under the proposed lease terms, the lessee must pay for insurance, property taxes, and maintenance.
7. The equipment has an estimated salvage value of $300,000, which is the expected market value after 4 years, at which tame Sulfivan-5wift plans to replace the equpment regardless of whether the firm leases of purchases it. The best estimate for the salvage value is $300,000, but it may be much higher or lawer under certain circumstances. (Note that that equipment was fully depreciated at the time of purchase, so the book value of the equipment is zero.)
To assist management in making the proper lease-versus-buy decision, you are asked to answer the following questions:
Assuning that the lease can be arranged, should Sullivan-5witt lease of borrow and buy the equipment? Do not round intermediate calculations. flound your ariswer to the nearest toltar, fnout the minus sign if the cost of leasing the machinery is more than the cost of owning it. Net advantage to leasing (NAL) is
The Net Advantage to Leasing (NAL) is $522,715.01. Since the NAL is positive, it indicates that leasing the machinery is more advantageous than borrowing and buying. Therefore, Sullivan-Swyt Mining Company should choose to lease the equipment rather than borrow and buy it.
To determine whether Sullivan-Swyt Mining Company should lease or borrow and buy the equipment, we need to calculate the Net Advantage to Leasing (NAL). NAL is the difference between the present value of cash flows from leasing and the present value of cash flows from borrowing and buying. Let's calculate the NAL:
The lease terms call for end-of-year payments of $300,000 per year for 4 years. Since the lease payments are an expense, they are tax-deductible. Therefore, the after-tax lease payment is:
= $300,000 - ($300,000 x 0.25)
= $225,000 per year.
Now,
The after-tax cost of the machinery is $950,000.
With a tax rate of 25%, the after-tax cost is:
= $950,000 - ($950,000 x 0.25)
= $712,500.
Also,
The bank loan is at a rate of 12% and is amortized over 4 years with equal installments.
So, we can use the annuity formula to calculate the annual payment:
Annual Payment = Loan Amount / Annuity Factor
Annuity Factor = [1 - (1 / (1 + Interest Rate)^n)] / Interest Rate
= [1 - (1 / (1 + 0.12)^4)] / 0.12
= 2.8552
So,
Annual Payment = $712,500 / 2.8552
= $249,263.64
Now, subtracting the estimated maintenance expenses of $60,000 per year, the net cash flow from borrowing and buying is:
= $249,263.64 - $60,000
= $189,263.64 per year.
Now,
NAL = Present Value of Lease Cash Flows - Present Value of Borrowing and Buying Cash Flows
Using the formula for the present value of an annuity, we can calculate the present value of lease cash flows:
Present Value of Lease Cash Flows = Annual Lease Cash Flow x Present Value Annuity Factor
Present Value Annuity Factor = [1 - (1 / (1 + Discount Rate)^n)] / Discount Rate
Assuming a discount rate of 12%, the present value annuity factor is 2.8552.
Present Value of Lease Cash Flows
= $225,000 x 2.8552
= $642,918.00
The present value of borrowing and buying cash flows is the total of the net cash flow from borrowing and buying for 4 years:
Present Value of Borrowing and Buying Cash Flows = Net Cash Flow x Present Value Factor
Present Value Factor = 1 / (1 + Discount Rate)^n
Present Value Factor = 1 / (1 + 0.12)^4
= 0.6355
Also, Present Value of Borrowing and Buying Cash Flows:
= $189,263.64 x 0.6355
= $120,202.99
NAL = $642,918.00 - $120,202.99
= $522,715.01
Based on the calculations, the Net Advantage to Leasing (NAL) is $522,715.01.
Since the NAL is positive, it indicates that leasing the machinery is more advantageous than borrowing and buying. Therefore, Sullivan-Swyt Mining Company should choose to lease the equipment rather than borrow and buy it.
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