A home is purchased for 395,000 with a 10% down payment and a 30 year amortized mortgage charging 3.6% compounded monthly find: a) the amount borrowed, b) the size of the monthly mortgage payment and c) the total interest paid over 30 years?

. Variance Analysis

Sourpatch company is a manufacturer of a custom engraved hammers. For the year 2021, the weekly budget was as follows.

• Sales revenue $64,000: 2,000 hammers × price $32
• Variable costs:
  • Direct materials $10,000: 2,000 hammers ×1 lbs per hammer×price $5/lb
  • Direct labour $50,000: 2,000 hammers× 5 hour per hammer× rate $5/hour
  • no variable overhead
• Fixed costs: $3,000
• Profit: $1,000

The actual performance of the week was as follows.

• Sales revenue $70,400: 2,200 hammers × price $32
• Variable costs:
  • Direct materials $13,200: 2,200 hammers ×1 lbs per hammer×price $6/lb
  • Direct labour $46,200: 2,200 hammers× 3 hour per hammer× rate $7/hour
  • no variable overhead
• Fixed costs: $8,000
• Profit: $8,000

Required:

1) Compute the following variances

a) Spending and Volume Variances of Materials

b) Spending and Volume Variances of Labour

c) Spending and Volume Variances of Fixed Overhead

c) Materials Quantity Variance

d) Materials Price Variance

e) Labour Efficiency Variance

f) Labour Rate Variance

2) SourPatch company hired an experienced engineer and asked her to re-organize the production process. How could hiring an experienced engineer and their new production process explain the variances? Please comment on individual components of variances, their relations to other variances, and overall impact on profitability.

More time on the Internet: A researcher polled a sample of

1097

adults in the year

2010

, asking them how many hours per week they spent on the Internet. The sample mean was

9.42

with a standard deviation of

13.23

. A second sample of

1031

adults was taken in the year

2012

. For this sample, the mean was

10.63

with a standard deviation of

14.47

. Assume these are simple random samples from populations of adults. Can you conclude that the mean number of hours per week spent on the Internet increased between

2010

and

2012

? Let

μ1

denote the mean number of hours spent on the Internet in

2010

and

μ2

denote the mean number of hours spent on the Internet in

2012

. Use the  

=α0.05

level and the

P

-value method with the table.

Part 1 of 6

Your Answer is correct

State the appropriate null and alternate hypotheses.

Part 2 of 6

Your Answer is correct

Compute the test statistic. Round the answer to three decimal places.

=t

−2.01

Part: 2 / 6

2 of 6 Parts Complete

Part 3 of 6

Your Answer is incorrect

How many degrees of freedom are there, using the simple method?

The cash flows of a firm next year will be either $250 or $1,750 in two equally probable scenarios. The firm dissolves at the end of the year and discount rates are zero. The firm has debt with face value $500 and maturity one year (no coupon).

1. What is the value of the firm? What is the value for shareholders? What is the value of bondholders?

2.. Suppose that the firm decides to invest in a safer asset that transforms its payoffs to 500$ and 1, 500$. What is the change in the wealth of shareholders and bondholders?

3. Suppose that the firm decides to invest in a riskier asset that transforms its payoffs to 0$ and 2, 000$. What is the change in the wealth of shareholders and bondholders?

Lost with this, please explain how to come to answers!

Closing the Balances in The Variance Accounts at the End of the Year

Yohan Company has the following balances in its direct materials and direct labor variance accounts at year-end:

Unadjusted Cost of Goods Sold equals $1,570,000, unadjusted Work in Process equals $316,000, and unadjusted Finished Goods equals $190,000.

Required:

1. Assume that the ending balances in the variance accounts are immaterial and prepare the journal entries to close them to Cost of Goods Sold. Note: Close the variances with a debit balance first. If an amount box does not require an entry, leave it blank or enter "0".

What is the adjusted balance in Cost of Goods Sold after closing out the variances?

$

2. What if any ending balance in a variance account that exceeds $11,000 is considered material? (a) Close the immaterial variance accounts to Cost of Goods Sold. (b) Prorate the largest of the labor variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. (c) Prorate the largest of the material variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. The prime cost in Cost of Goods Sold is $1,050,000, the prime cost in Work in Process is $160,800, and the prime cost in Finished Goods is $131,000. If an amount box does not require an entry, leave it blank or enter "0".

Note: Round all interim calculations to three decimal places, and round your final answers to the nearest dollar. Adjust credit entry for rounding to ensure debits equal credits in journal entry.

What are the adjusted balances in Work in Process, Finished Goods, and Cost of Goods Sold after closing out all variances?

You are the sole bondholder in a firm that will be liquidated next year. Your main concern is that you will not be paid back the $200M you are owed at that time. The current market value of the firm is $225M, although it is unknown what the market value will be next year.

a)Provide the payoff diagram for the bondholder with the final market value of the firm on the x-axis.

b)The financial manager of the firm is currently considering a project that will cause the market value of the firm to be equal to either $450M or nothing next year with equal probability.Assume that the bondholders and shareholders have to maintain their positions until firm liquidation next year. What is the expected payoff to bondholders and shareholders next year under this project? (Hint:Use the table below.)

c)If you were to completely protect yourself against the state of the world where the firm does not pay you back, would you buy a (call or put)option on the final market value of the assets of the firm, and at what strike price?

d)This option youpurchase has a price of only $40M. You decide to borrow the $40M, in order to pay for the option, at a 10% interest rate. The loan plus interest must be repaid in one year. What is your total expected payoff (bond + option –loan repayment) in one year?(Hint:Use the table below.)

Firms that go bankrupt are typically unable to fully repay all bondholders. Bondholders can protect themselves from this by entering into “Credit Default Swaps”, in which they pay a third counterparty a fee (or a sequence of fees over time), and in exchange the third counterparty will repay the bondholders instead in the event that the firm goes bankrupt (you also hand over the bond to that third counterparty). “Credit Default Swaps” are, in essence, the option that you purchased in part (c).

The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year.

What is your portfolio dollar return and percentage return?

What is the outlook for Verizon Communication Inc. for the year 2020 and beyond in terms of growth, opportunities or challenges for the business in the Telecom industry.

X Company is unhappy with a machine that they bought just a year ago for $43,000. It is considering replacing it with a new machine that will save significant operating costs. Operating costs with the current machine are $68,000 per year; operating costs with the new machine are expected to be $46,000 per year. Both machines will last for 5 more years.The current machine can be sold immediately for $7,000 but will have no salvage value at the end of 5 years. The new machine will cost $75,000 and have a salvage value of $2,000 in 5 years.

Assuming a discount rate of 7%, what is the net present value of replacing the current machine?

A couple will retire in 40 years; they plan to withdraw $39,000 a year in retirement, and they

will make 20 withdraw. They believe that they can earn 8% interest on the retirement

savings.

- If they make annual deposit into their retirement savings, how much will they need to save

each year? Assume the first deposit comes at the end of the first year, and the first withdraw

comes at the end of year 41.