You have looked at the current financial statements for Reigle Homes, Co. The company has an EBIT of $3,050,000 this year. Depreciation, the increase in net working capital, and capital spending were $235,000, $100,000, and $465,000, respectively. You expect that over the next five years, EBIT will grow at 16 percent per year, depreciation and capital spending will grow at 21 per year, and NWC will grow at 11 per year. The company currently has $17,100,000 in debt and 350,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3 percent indefinitely. The company’s WACC is 9.4 percent and the tax rate is 35 percent.

What is the price per share of the company's stock?

You have looked at the current financial statements for Reigle Homes, Co. The company has an EBIT of $3,010,000 this year. Depreciation, the increase in net working capital, and capital spending were $233,000, $98,000, and $455,000, respectively. You expect that over the next five years, EBIT will grow at 17 percent per year, depreciation and capital spending will grow at 22 per year, and NWC will grow at 12 per year. The company currently has $16,700,000 in debt and 340,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.5 percent indefinitely. The company’s WACC is 9.3 percent and the tax rate is 35 percent. What is the price per share of the company's stock?

Question:Consider the following statement “The Australian economy is "weak", with households weighed down by slow wages growth and higher taxes, the OECD has declared in a report that backs lower interest rates, calls for more government spending and paves the way for unconventional monetary policies.” Use the dynamic AD-AS model to describe a longer run scenario where the government is trying to pursue higher economic growth using higher government spending, but were incorrect in their estimation of the major parameters governing long run full employment equilibrium. In your analysis discuss the implications of an incorrect scenario predicted by the government when effecting their stimulus policy on equilibrium output and (un)employment. Make sure to outline the assumptions you have made to reach your conclusion.

1,Assume that the United States begins deficit spending to fund new social welfare programs.

Using a correctly labeled loanable funds graph, show and explain the impact of the new spending on real interest rates in the United States.

Explain the impact of the change in interest rates you identified in part (A) on each of the following:

a.Capital investment

b.Long-term economic growth

c.The international value of the U.S. dollar

2.

Assume a visitor from another nation decides to open a checking account at J & R National Bank. The visitor deposits $20,000 that is new money to the Macro Islands economy. The central bank has set a required reserve ratio of 10%.

i.What is the change in the total amount that J & R National Bank can loan out? Explain.

ii.Calculate the total amount that the bank can create? (Calculate means show your work.)

Now assume that the Macro Islands government decides to increase spending to fund new projects that will bring in more visitors. Explain what will happen to the demand for loanable funds and real interest rates as a result.

3.

If a decrease in personal income taxes increase aggregate income, then real interest rates will

A. decrease with a decrease in aggregate income.

B.increase with an increase in aggregate income.

C.remain stable as the decrease in taxes offsets the increase in aggregate income.

D.decrease with a decrease in aggregate income.

E.remain stable as the decrease in taxes offsets the decrease in aggregate income.

4.

Crowding out occurs when

A.the government is using contractionary fiscal policy. (my answer, correct?)

B.the government is using expansionary fiscal policy.

C.Congress increases personal income taxes.

D.Congress increases business taxes.

E.Congress increases spending and personal income taxes by the same amount.

5. The market for loanable funds and government policy

The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.)

DemandSupplyINTEREST RATE (Percent)LOANABLE FUNDS (Billions of dollars)Demand   Supply   

Scenario 1: Individual Retirement Accounts (IRAs) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year.

Shift the appropriate curve on the graph to reflect this change.

This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to (fall/rise)   and the level of investment spending to (decrease/increase) .

Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government repeals a previously existing investment tax credit.

Shift the appropriate curve on the graph to reflect this change.

The repeal of the previously existing tax credit causes the interest rate to (fall/rise) and the level of investment to (fall/rise)   .

Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes.

This change in spending causes the government to run a budget (surplus/deficit) , which (increases/decreases)   national saving.

Shift the appropriate curve on the graph to reflect this change.

This causes the interest rate to (fall/rise) , (increasing/crowding out) the level of investment spending.

For each of the following scenarios, explain how things are included or excluded from being counted in GDP:

1. You get a new XBOX-1 gaming system at Best Buy last year and sell it on Facebook marketplace this year
2. You buy a new digital textbook for your macroeconomics course
3. You and your realtor find a fully renovated historic home that you purchase
4. Newly produced leather that is used for automobile seats
5. Your friend buys a 2020 certified pre-owned Toyota
6. Your neighbor purchases a new snow plow for his 2010 pickup truck
7. A construction firm trades in a used bulldozer for a new one; the used bulldozer is sold to another firm.

2. GDP (also known as "Y") is made up of 4 components:

• G - Government spending
• I - Investment
• C- Consumption
• XN - Net exports

Which component are each of the following included in? Label each one.

1. A newly built condominium on Miami Beach
2. Specialty cheeses imported from Italy
3. Your new pumpkin spice Yankee candle
4. Your automobile registration renewal from the DMV

3.  Suppose C = 600, I = 250, G = 150, and X = 0

1. What is gross domestic product (GDP)?
2. Calculate each component’s share of GDP.
3. Suppose government spending increases to 200, but the other components of GDP do not change. What is government spending’s share of GDP now? What is the new non-government share?
4. Suppose that the level of potential GDP (Y*) is 1000 and is unaffected by the increase in government spending described previously. Without doing any calculations, explain in general terms what happens to C/Y*, X/Y*, and I/Y* after the government spending increase in (b).

Flexible Budget, Standard Cost Variances, T-Accounts

Ingles Company manufactures external hard drives. At the beginning of the period, the following plans for production and costs were revealed:

During the year, 24,800 units were produced and sold. The following actual costs were incurred:

There were no beginning or ending inventories of direct materials. The direct materials price variance was $9,672 unfavorable. In producing the 24,800 units, a total of 12,772 hours were worked, 3 percent more hours than the standard allowed for the actual output. Overhead costs are applied to production using direct labor hours.

Required:

Instructions for parts 1 and 2: If a variance is zero, enter "0" and select "Not applicable" from the drop down box.

1. Prepare a performance report comparing expected costs to actual costs.

2. Determine the following. If a variance amount is zero, enter "0" and select "Not applicable" from the drop-down list.

a. Direct materials usage variance
$

b. Direct labor rate variance
$

c. Direct labor usage variance
$

d. Fixed overhead spending and volume variances

e. Variable overhead spending and efficiency variances

Marigold, Inc. manufactures ergonomically designed computer furniture. Marigold uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: Job No. Item Units Accumulated Cost CC723 Computer caddy 22,000 $970,000 CH291 Chair 15,000 440,000 PS812 Printer stand 26,000 286,000 $1,696,000 On November 30, Marigold’s Raw Materials Inventory account totaled $685,000, and its Finished Goods Inventory totaled $3,486,400. Marigold applies manufacturing overhead on the basis of machine hours. The company’s manufacturing overhead budget for the year totaled $4,850,000, and the company planned to use 970,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 880,000 machine hours, total manufacturing overhead amounted to $4,274,500, and Cost of Goods Sold was $8,790,250. For the pursposes of this problem, ignore year-end disposition of over / under applied overhead. Marigold purchased $638,000 in raw materials in December and incurred the following costs for jobs in process that month: Job No. Materials Issued Machine Hours Direct Labor Hours Direct Labor Cost CC723 $196,000 20,000 12,000 $127,400 CH291 $17,800 5,000 3,800 $45,200 PS812 $238,000 22,400 18,300 $224,500 DS444 $256,000 20,000 16,700 $141,000 The following jobs were completed in December and transferred to the Finished Goods Inventory: Job No. Item Units CC723 Computer caddy 22,000 CH291 Chair 15,000 DS444 Desk 7,000

(a) Calculate the total cost of each of the four jobs worked on in December. CC723 CH291 PS812 DS444 Total Cost $ $ $ $

(b) Calculate the total manufacturing cost for December. Total manufacturing cost $

(c) Calculate the cost of goods manufactured for December. Cost of goods manufactured $

(d) Calculate the balance in the Work in Process Inventory account on December 31. Balance in work in process $

(e) Assume that Marigold sold 15,000 computer caddies, 12,000 chairs, and 4,500 desks in December. Calculate Cost of Goods Sold for the month of December and the ending Finished Goods Inventory balance on December 31. (For computation purpose round per unit rates to 2 decimal places, e.g. 3.54. Round final answers to 0 decmial places, e.g. 45,000.)

Cost of goods sold $

Finished goods inventory $

Accounting records for

RockfordRockford

Corporation yield the following data for the year ended

JuneJune

3030?,

20162016

?(assume sales returns are? non-existent):

Requirements

Requirement 1. Journalize

Rockford'sRockford's

inventory transactions for the year under the perpetual system. ?(Record debits? first, then credits. Exclude explanations from any journal? entries.)

The first transaction is the purchase of inventory. Record the entry.

The debits to Work in Process--Assembly Department for April, together with data concerning production, are as follows: Work in process, April 1, 3,000 units: Direct materials cost, for 3,000 units $ 7,200 Conversion costs, for 3,000 units, 60% completed $ 6,000 Direct materials added during April, 10,000 units $ 25,000 Conversion costs during April $ 35,750 Goods finished during April, 12,000 units --- April 30 work in process, 1,000 units, 40% completed --- All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The direct materials cost per equivalent unit for April is: a) $2.50 per unit b) $5.25 per unit c) $2.08 per unit d) $2.40 per unit