A firm can produce orange juice in the US and ship it to Japan at a cost of $1.75/unit. They want to sell it with a 50% markup (50% higher than their cost), and the yen/US$ exchange rate is 111.11.
1) At what price would they sell it in Japan (in yen)?
2)What is their US$ profit?
Now suppose the $ appreciates from ¥/US$ 111.11 to ¥120/US$ prior to payment.
3) What is the new US$ revenue and profit?
4) How does it compare with what the company was expecting?
5) What might the company have done to protect itself?
In: Finance
How to Complete page 1 of the 2017 federal 1040. (Tax Accouting Problem)
Richard S. and Mary A. Smith are Michigan residents and file a joint tax return, they have no dependents. Richard was born in 1949 and Mary in 1950. Richard is retired from the State of Michigan and receives a pension of $28,000; which is fully taxable for federal income purposes. Richard also works part-time at Wal-Mart and earned $35,800. Mary spends her time volunteering; however, during the year received from E*Trade a $20,000 distribution from her IRA account; also 100% taxable for federal income purposes.
Richard and Mary invested in US Savings Bonds and their local Nowhere, MI municipal bonds. They redeemed a number of US Savings Bonds this year and thus earned interest of $1,200. The municipal bond paid them $600 of interest. Richard and Mary also received qualified dividends of $9,000 this year.
Richard and Mary paid property taxes of $2,900 and their home which is assessed at $115,000. Richard had $900 withheld from his pension and $2,300 withheld from Wal-Mart for state income taxes (see attached for details). Mary did not have any funds withheld from her IRA distribution for state income taxes. Richard paid for medical and dental insurance for him and Mary which cost $2,100.
Richard and Mary purchased items from out of state but did track the receipts for these purchases and did not pay Michigan sales tax.
Social Security Numbers: Richard 123-43-5678 Mary 987-65-4321
School District Code 32000
Address: 123 Oak Street Nowhere, MI 49870
State Withholding Information
Company Name | State ID # | Wages | Withholdings |
Walmart | 38-9876541 | $35,800 | $2,300 |
State of MI | 38-4569871 | $28,000 | $900 |
E*Trade | 56-1234567 | $20,000 | $0 |
In: Accounting
On pages 15-21 and 22, the text notes that individuals who incur an alternative minimum tax liability attributable to timing differences are entitled to a credit against their regular tax liabilities incurred in future years, and gives a brief conceptual description of how the credit is computed.
What form is used to compute the amount of the credit earned by an individual for a taxable year?
What is the formula used on that form to compute the amount of the credit earned? Describe in enough detail so that the reader can understand what the form is intended to accomplish.
According to the IRS forms, what items are considered to be permanent differences between regular taxable income and alternative minimum taxable income, so that AMT attributable to those items does not produce the credit? List these items and describe them in detail.
Please answer each question in complete sentences, and cite name and number of the IRS publication or form/instruction where you found each answer, and the page number on which the answer is found. Use your own words in the answer – do not copy the IRS’ language.
In: Accounting
Conch Republic Electronics Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay McCanless, a recent MBA graduate, had been hired by the company in its finance department. One of the major revenue-producing items manufactured by Conch Republic is a smart phone. Conch Republic currently has one smart phone model on the market and sales have been excellent. The smart phone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smart phone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smart phone that has all the features of the existing one but adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smart phone. Conch Republic can manufacture the new smart phone for $205 each in variable costs. Fixed costs for the operation are estimated to run $5.1 million per year. The estimated sales volume is 64,000, 106,000, 87,000, 78,000, and 54,000 per year for the next five years, respectively. The unit price of the new smart phone will be $485. The necessary equipment can be purchased for $34.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $5.5 million. Net working capital for the smart phones will be 20 percent of sales and will occur with the timing of the cash flows for the year (i.e., there is no initial outlay for NWC). Changes in NWC will thus first occur in Year 1 with the first year?s sales. Conch Republic has a 35 percent corporate tax rate and a required rate of return of 12 percent. Shelly has asked Jay to prepare a report that answers the following questions: Questions
5. How sensitive is the NPV to changes in the price of the new smart phone?
6. How sensitive is the NPV to changes in the quantity sold?
7. Should Conch Republic produce the new smart phone?
8. Suppose Conch Republic loses sales on other models because of the introduction of the new model. How would this affect your analysis?
In: Finance
Conch Republic Electronics is a midsized electronics Q1anufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay Mccanless, a recent MBA graduate, has been hired by the company in its finance department. One of the major revenue-producing items manufactured by Conch Republic is a smart phone. Conch Republic currently has one smart phone model on the market and sales have been excellent. The smart phone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smart phone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smart phone that has all the features of the existing one but adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smart phone. ___.
Conch Republic can manufacture the new smart phone for $199 each in variable costs. Fixed costs for the operation are estimated to run $5.5 Million per year. The estimated sales volume is 64,000, 115,000, 90,000, 75,000, and 54,000 per year for the next five years, respectively. The unit price of the new smart phone will be $485. The necessary equipment can be purchased for $60 Million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $6.25 Million.
Net working capital for the smart phones will be 22 percent of sales and will occur with the time of cash flows for the year (i.e. there is no initial outlay for NWC). Changes in NWC will thus first occur in Year 1 with the first year’s sales. Conch Republic has 22 percent tax rate and a required return of 12 percent.
Shelly has asked Jay to prepare a report that answer the following questions using Microsoft EXCEL:
1. What is the payback period of the project?
2. What is the profitability index of the project?
3. What is the IRR of the project?
4. What is the NPV of the project?
5. How sensitive is the NPV to changes in the price
of the new smart phone?
6. How sensitive is the NPV to changes in the quantity
sold?
7. Should Conch Republic produce the new smart
phone?
8. Suppose Conch Republic loses sales on other
models because of the introduction of the new
model. How would this affect your analysis?
In: Finance
Conch Republic Electronics
Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded more than 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department.
One of the major revenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smartphone model on the market and sales have been excellent. The smartphone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smartphone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smartphone that has all the features of the existing one but adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smartphone.
Conch Republic can manufacture the new smartphone for $205 each in variable costs. Fixed costs for the operation are estimated to run $5.1 million per year. The estimated sales volume is 64,000, 106,000, 87,000, 78,000, and 54,000 per year for the next five years, respectively. The unit price of the new smartphone will be $485. The necessary equipment can be purchased for $34.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $5.5 million.
Net working capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year (i.e., there is no initial outlay for NWC). Changes in NWC will thus first occur in Year 1 with the first year's sales. Conch Republic has a 35 percent corporate tax rate and a required return of 12 percent.
Shelly has asked Jay to prepare a report that answers the following questions:
QUESTIONS
What is the payback period of the project?What is the profitability index of the project?What is the IRR of the project?What is the NPV of the project?
*************************************************************** here is a template to begin with
| Cost of new equipment | ||
| Unit price | ||
| Year 1 sales | ||
| Year 2 sales | ||
| Year 3 sales | ||
| Year 4 sales | ||
| Year 5 sales | ||
| Variable cost/ton | ||
| Year 1 depreciation | ||
| Year 2 depreciation | ||
| Year 3 depreciation | ||
| Year 4 depreciation | ||
| Year 5 depreciation | ||
| Fixed costs | ||
| Salvage value | ||
| NWC percent | ||
| Tax rate | ||
| Required return |
In: Finance
onch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded more than 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department.
One of the major revenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smartphone model on the market and sales have been excellent. The smartphone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smartphone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smartphone that has all the features of the existing one but adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smartphone.
Conch Republic can manufacture the new smartphone for $205 each in variable costs. Fixed costs for the operation are estimated to run $5.1 million per year. The estimated sales volume is 64,000, 106,000, 87,000, 78,000, and 54,000 per year for the next five years, respectively. The unit price of the new smartphone will be $485. The necessary equipment can be purchased for $34.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $5.5 million.
Net working capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year (i.e., there is no initial outlay for NWC). Changes in NWC will thus first occur in Year 1 with the first year's sales. Conch Republic has a 35 percent corporate tax rate and a required return of 12 percent.
Shelly has asked Jay to prepare a report that answers the following questions:
What is the payback period of the project?
What is the profitability index of the project?
What is the IRR of the project?
What is the NPV of the project?
How sensitive is the NPV to changes in the price of the new smartphone?
How sensitive is the NPV to changes in the quantity sold?
Should Conch Republic produce the new smartphone?
Suppose Conch Republic loses sales on other models because of the introduction of the new model. How would this affect your analysis?
PLEASE ANSWER ALL QUESTIONS USING EXCEL. THANK YOU!
In: Finance
A private college has several study programs. Recently there was a publication from BPS stating that the income of the middle class has increased by 10% this year. Although happy with the improving condition, the university is concerned that the impact of this change on applicants who will continue to the tertiary institution is estimated to decrease. From these concerns, what can we conclude about the study programs at these colleges? Complete the answers with graphic explanations.
In: Economics
Your company produces mass spectrometers for sale to colleges and universities throughout the United States. On February 12, the University of Washtaw contacts your company to purchase 12 mass spectrometers at $1,000,000 per unit. You enter into a contract with the university on March 1 under those terms, along with a delivery date of December 1. On April 10, you receive a letter from the university stating that, due to ambiguities in the contract language, they believe you are only owed $10,000,000. Specifically, Washtaw states, "please find enclosed a check for $10,000,000 for payment in full, check marked as such. Also, this is the total amount of our budget. We would be more agreeable to cancelling the contract than to have to come up with another $2,000,000." Your company has not yet started production on the spectrometers. What are your options and why?
In: Economics
2. Consider the following data on salaries and experience. Persons 2,4,6,8,and 9 have MBA degrees. All others only have undergraduate degrees.
b. Print the data set that allows you to do this regression. Sketch the graph the estimated regression that clearly indicates the impact of a MBA degree on Salary.
c. What is the market value of the MBA degree?
Person Salary Experience
1 $130,468 10 Years
2 62,250 1
3 50,000 2.3
4 140,000 9
5 110,000 8
6 80,050 2.8
7 95,772 7
8 110,000 6
9 87,752 4.2
10 79,290 5
In: Statistics and Probability