(Individual or component costs of capital) Compute the cost of capital for the firm for the following: a. A bond that has a $1 comma 000 par value (face value) and a contract or coupon interest rate of 11.3 percent. Interest payments are $56.50 and are paid semiannually. The bonds have a current market value of $1 comma 125 and will mature in 10 years. The firm's marginal tax rate is 34 percent. b. A new common stock issue that paid a $1.79 dividend last year. The firm's dividends are expected to continue to grow at 7.7 percent per year, forever. The price of the firm's common stock is now $27.83. c. A preferred stock that sells for $124, pays a dividend of 8.8 percent, and has a $100 par value. d. A bond selling to yield 11.7 percent where the firm's tax rate is 34 percent. a. The after-tax cost of debt is nothing%. (Round to two decimal places.) b. The cost of common equity is nothing%. (Round to two decimal places.) c. The cost of preferred stock is nothing%. (Round to two decimal places.) d. The after-tax cost of debt is nothing%. (Round to two decimal places.)
In: Finance
Precision Mechanical is considering purchasing a robotic system at a cost of $250,000. There will be additional costs for installation and modification totalling $14,000. Use of the system will reduce annual labour costs of $200,000 by 25%. Product defects will also be reduced, saving the company $18,000 per year. Precision will need to increase net operating working capital by $5,000. The company has decided that the robot can be located in a part of the factory that is currently underutilized and is undergoing a $20,000 upgrade for a separate project. The robotic system has an expected life of 6 years, at which time it will have a salvage value of $40,000. Precision Mechanical has a weighted average cost of capital of 13%. The applicable corporate tax rate is 35% and the CCA rate is 20%. The company will be financing the system with a 6-year bank loan with annual year-end payments of $57,000, (consisting of both interest and principal).
Determine if precision mechanical should purchase this equipment.
In: Accounting
Using the information on the Data tab of the spreadsheet , complete the cost of goods manufactured for January.
Show calculations for all items/questions
| Below is manufacturing data from Webster Company for January, 2020. | ||
| Beginning raw materials inventory | $ 321,300 | |
| Raw materials purchased | $ 845,150 | |
| Ending raw materials inventory | $ 275,475 | |
| Direct labor costs | $ 104,590 | |
| Indirect materials | $ 47,560 | |
| Indirect labor | $ 29,876 | |
| Factory utilities and maintenance | $ 148,890 | |
| Factory depreciation | $ 19,876 | |
| Other factory related overhead | $ 7,890 | |
| Beginning work in process | $ 225,678 | |
| Ending work in process | $ 214,545 | |
| 1. Use this information to produce a Schedule of Cost of Goods Manufactured in the next tab | ||
| Direct Materials | ||
| Raw materials transferred to production | ||
| Direct Labor | ||
| Factory Overhead | ||
| Total manufacturing costs | ||
| Less: Ending work in process, Jan 31 | ||
| Cost of goods manufactured |
| 2. Cost of Goods Sold for January was $1,460,000. What was the change in Finished Goods Inventory during the month (indicate positive or negative change)? | ||||||||
In: Accounting
An important application of regression analysis in accounting is
in the estimation of cost. By collecting data on volume and cost
and using the least squares method to develop an estimated
regression equation relating volume and cost, an accountant can
estimate the cost associated with a particular manufacturing
volume. Consider the following sample of production volumes and
total cost data for a manufacturing operation.
| Production Volume (units) | Total Cost ($) |
| 400 | 4000 |
| 450 | 5000 |
| 550 | 5400 |
| 600 | 5900 |
| 700 | 6400 |
| 750 | 7000 |
In: Statistics and Probability
How to use cost accounting information for products that are currently in production?
In: Accounting
What is a standard? What is a standard cost? How is it calculated? Why is it important for companies to develop standards?
In: Accounting
For a university, identify a cost that you think is controllable in the short term and explain why. Identify a cost that you think is controllable in the intermediate term and explain why. Identify a cost that you think is controllable in the long term and explain why. What does this cost structure imply about the university’s flexibility in responding to changing student demands and enrollments?
In: Accounting
Suppose, in the Solow growth model, that learning by doing is
captured as a cost of installing new capital. In particular,
suppose that for each unit of investment, r units of goods are used
up as a cost to firms.
(a) Determine how r affects the steady state quantity of capita per
worker, and per capita income.
(b) Now suppose that r differs across countries. How
will these countries differ in the long run? Discuss.
In: Economics
Is there a paradox to the statement, the marginal cost of producing a pure public good is always positive, some consumers can enjoy the benefits of pure public goods at zero marginal costs?
In: Economics
Which of the following are manufacturing cost for a company that produces sweaters？
A. The knitting wool that use to sew the tag on it.
B. The supervisor review the finished sweaters in the factory.
C. Depreciation of equipment used by the human resources department.
D. All of them are not manufacturing costs.
Which of the following are considered as product cost?
A.equipment repair fee
B.Utilities
C.Supplies used by the human resources department
D.Sales manager's salary
E. finished goods warehouse fee
In: Accounting