Olsen Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $4 million of retained earnings with a cost of rs = 10%. New common stock in an amount up to $7 million would have a cost of re = 11.5%. Furthermore, Olsen can raise up to $3 million of debt at an interest rate of rd = 11% and an additional $6 million of debt at rd = 14%. The CFO estimates that a proposed expansion would require an investment of $7.9 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.
%
In: Finance
Olsen Outfitters Inc. believes that its optimal capital structure consists of 40% common equity and 60% debt, and its tax rate is 25%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $1 million of retained earnings with a cost of rs = 12%. New common stock in an amount up to $7 million would have a cost of re = 13.5%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of rd = 10% and an additional $6 million of debt at rd = 13%. The CFO estimates that a proposed expansion would require an investment of $3.8 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.
%
In: Finance
Olsen Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $5 million of retained earnings with a cost of rs = 15%. New common stock in an amount up to $7 million would have a cost of re = 19%. Furthermore, Olsen can raise up to $3 million of debt at an interest rate of rd = 11% and an additional $3 million of debt at rd = 13%. The CFO estimates that a proposed expansion would require an investment of $7.8 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.
In: Finance
The manufacturer of hardness testing equipment uses steel-ball indenters to penetrate metal that is being tested. However, the manufacturer thinks it would be better to use a diamond indenter so that all types of metal can be tested. Because of differences between the two types of indenters, it is suspected that the two methods will produce different hardness readings. The metal specimens to be tested are large enough so that two indentions can be made. Therefore, the manufacturer uses both indenters on each specimen and compares the hardness readings. Construct a 95% confidence interval to judge whether the two indenters result in different measurements.
Note: A normal probability plot and boxplot of the data indicate that the differences are approximately normally distributed with no outliers.
Specimen Steel ball Diamond
1 50 52
2 57 55
3 61 63
4 70 74
5 68 69
6 54 55
7 65 68
8 51 51
9 53 56
Construct a 95% confidence interval to judge whether the two indenters result in different measurements, where the differences are computed as 'diamond minus steel ball'.
The lower bound is
The upper bound is
(Round to the nearest tenth as needed.)
In: Statistics and Probability
A trucking company determined that the distance traveled per truck per year is normally distributed, with a mean of 50 thousand miles and a standard deviation of 12 thousand miles. Complete parts (a) through (c) below. a. nbsp What proportion of trucks can be expected to travel between 34 and 50 thousand miles in a year? The proportion of trucks that can be expected to travel between 34 and 50 thousand miles in a year is . 4082. (Round to four decimal places as needed.) b. nbsp What percentage of trucks can be expected to travel either less than 40 or more than 65 thousand miles in a year?
The percentage of trucks that can be expected to travel either less than 40 or more than 65 thousand miles in a year is ______%. (Round to two decimal places as needed.)
In: Statistics and Probability
EXERCISE 5
The Quality Inspector of a bottle company checks a random sample of 7 elements in two different processes that make the same product and checks the liquid in them.
The results are:
PROCESS 1: 50 49.9 50.2 50.1 50 49.8 50.3
PROCESS 2: 50,2 48,95 49,2 49,5 49,7 50 49,8
Do you think that the production of this plant is following a standard process? Test with an alpha-level of 5 per cent.
In: Finance
Membrane-associated translocators are responsible for importing polypeptides into both mitochondria and peroxisomes. The processes in the two organelles are different because _______________.
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mitochondria have only one membrane translocator complex and peroxisomes have two |
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polypeptides are unfolded during translocation into mitochondria but not peroxisomes |
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mitochondrial polypeptides bind to cytosolic receptors or chaperones and peroxisomal polypeptides do not |
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peroxisome import requires signal sequences while mitochondrial import does not |
Match each event in glycolysis with the correct description.
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In: Biology
Transfer pricing company is a two division firm, consisting of a manufacturing division and a distribution division. Manufacturing division produces a single product, called product X. The cost of producing product X consists of a variable cost of $50 per unit, and a fixed cost of $100 per unit. This fixed cost per unit is calculated assuming that Manufacturing runs at its capacity of 10,000 units. Assume there is an external customer that contracts with Manufacturing to buy up to 4,000 units of product X for $200 per unit. More precisely, assume that the external customer will pay $200 per unit for any number of units that Manufacturing ships to it, up to 4,000 units, but it will not buy more than 4,000 units.
Q1. The distribution division wants 8,000 units of product X from the manufacturing division. Calculate the transfer price for the internal transfer of 8,000 units of product X according to the general transfer pricing rule.
Q2. The distribution division wants 10,000 units of product X from the manufacturing division. Calculate the transfer price for the internal transfer of 10,000 units of product X according to the general transfer pricing rule.
Q3. Compute the payback period of a project that requires an initial investment of $500,000 in year zero and pays back $100,000, $300,000, $400,000, and $200,000 in years 1 through 4.
Q4. Compute the discounted payback period of a project that requires an initial investment of $500,000 in year zero and pays back $100,000, $300,000, $400,000, and $200,000 in years 1 through 4. Assume that 10% is the appropriate discount rate of the project
Please show me how to get the answers.
In: Accounting
1.
FIN3100’s outstanding bonds mature in 10 years, have a par value of $1,000, and make an annual coupon payment of $70. The market yield on the bond is currently 10%. What is the bond's price?
B.) FIN3100 issued bonds with a 15-year maturity two year ago. The bonds have a 7% coupon, make one payment per year, and sold at their $1,000 par value. Market rate at the time was 7%. Now, two year later, the market rate has declined from 7% to 4%. At what price should FIN3100's bonds now sell?
C.)
FIN3100’s bonds have a 15-year maturity, a 12% quarterly coupon ($30 coupon payments are made every three months), a face value of $1,000, and cannot be called. The going nominal annual interest rate (rd) for similar quarterly payment bonds of equivalent risk is 8%. What is the bond's price?
In: Finance
| Stick | Collapsible | ||
| Units Sold | 60,000 | 3,000 | |
| Selling Price | $12.50 | $14.00 | |
| Direct Material Cost Per Unit | $3.00 | $3.10 | |
| Direct Labor Cost Per Hour | $7.50 | $8.00 | |
| Variable MO | $0.40 | $0.40 | |
| Variable Selling Costs | $1.10 | $1.10 | |
| Labor Hours Per Unit | 0.2 | 0.2 | |
| Sales Orders | 120 | 1 | |
| Purchase Orders | 50 | 3 | |
| Production Runs | 45 | 6 | |
| Material Moves | 86 | 10 | |
| Machine Setups | 130 | 6 | |
| Machine Hours | 525 | 32 | |
| Inspections | 200 | 10 | |
| Shipments | 60 | 3 | |
| Activity Information from Instructions | |||
| Activity | Activity Cost | Activity Cost Driver | |
| Order Processing | $35,000 | Number of Sales Orders | |
| Purchasing | $36,000 | Number of Purchase Orders | |
| Material Handing | $28,000 | Material Moves | |
| Machine Setup | $14,000 | Machine Setups | |
| Production | $99,000 | Production Runs | |
| Assembly | $80,000 | Machine Hours | |
| Inspecting | $11,000 | Number of Inspections | |
| Shipping | $7,500 | Number of Shipments | |
| Requirement 1 | |||
| Activity | Total Costs | Quantity of Cost Allocation Base | Overhead Allocation Rate |
| Order Processing | $35,000 | 121 | $289.26 |
| Purchasing | $36,000 | 53 | $679.25 |
| Material Handing | $28,000 | 96 | $291.67 |
| Machine Setup | $14,000 | 136 | $102.94 |
| Production | $99,000 | 51 | $1,941.18 |
| Assembly | $80,002 | 557 | $143.63 |
| Inspecting | $11,000 | 210 | $52.38 |
| Shipping | $7,500 | 63 | $119.05 |
| Requirement 2 | |||
| Traditional Costing | |||
| Stick Umbrella | Collapsible Umbrella | Total | |
| Revenues | $750,000 | $42,000 | $792,000 |
| Direct Materials | $180,000 | $9,300 | $189,300 |
| Direct Labor | $90,000 | $4,800 | $94,800 |
| Variable Overhead | $24,000 | $1,200 | $25,200 |
| Variable Selling Costs | $66,000 | $3,300 | $69,300 |
| Allocated Fixed Overhead | $295,200 | $14,760 | $309,960 |
| Total Costs | $655,200 | $33,360 | $688,560 |
| Operating Income | $94,800 | $8,640 | $103,440 |
| Operating Income % | 12.64% | 20.57% | |
| Per Unit Operating Income | $1.58 | $2.88 | |
| Requirement 3 | |||
| Activity-Based Costing | |||
| Stick Umbrella | Collapsible Umbrella | Total | |
| Revenues | $750,000 | $42,000 | $792,000 |
| Direct Materials | $180,000 | $9,300 | $189,300 |
| Direct Labor | $90,000 | $4,800 | $94,800 |
| Variable Overhead | $24,000 | $1,200 | $25,200 |
| Variable Selling Costs | $66,000 | $3,300 | $69,300 |
| Order Processing Costs | $34,711 | $289 | $35,000 |
| Purchasing Costs | $33,963 | $2,038 | $36,000 |
| Material Handing Costs | $25,084 | $2,917 | $28,000 |
| Machine Setup Costs | $13,382 | $618 | $14,000 |
| Production Costs | $87,353 | $11,647 | $99,000 |
| Assembly Costs | $75,406 | $4,596 | $80,002 |
| Inspecting Costs | $10,476 | $524 | $11,000 |
| Shipping Costs | $7,143 | $357 | $7,500 |
| Total Costs | $647,517 | $41,586 | $689,103 |
| Operating Income | $102,483 | $414 | $102,897 |
| Operating Income % | 14% | 1% | |
| Per Unit Operating Income | $1.71 | $0.14 | |
| Requirement 4 | |||
| Costs per Unit | Stick Umbrella | Collapsible Umbrella | |
| Traditional | $1.58 | $2.88 | |
| ABC | $1.71 | $0.14 | |
| Difference | -$0.13 | $2.74 | |
Identify an alternative costing method that could benefit this company, and describe the main characteristics of that method. What should a company look for when trying to determine whether they should adopt such a system?Should the company adopt this alternative costing method?
In: Accounting