The lining of a plating tank must be replaced every three years at the cost of approximately $2,000. A new lining material has been developed that is more resistant to the corrosive effects of the plating liquid and will cost approximately $4,000. If the required rate of return is 20% and annual property taxes and insurance amount to about 4% of the initial investment, how long must the new lining last to be more economical than the present one? Please answer in terms of years.
In: Finance
If the government is interested in trying to maximize social welfare, the efficiency cost of taxation would be driven by income effects.
True or False
In: Finance
Various risk and return models is used to compute the cost of equity but they all assume that the marginal investor is well diversified. If you use these models to estimate cost of equity for private or closely held firms, you are likely to under or over estimate the cost of equity. How would you fix the bias?
In: Finance
Cost Accounting Question.
The profit shown in the financial accounts is Shs. 18,592 and for the same period, the cost accounts showed a profit of 20,496. Comparison of the two sets of accounts revealed the following:
|
Stock Valuations: |
Cost Accounts |
Financial Accounts |
|
Raw Materials |
Shs |
Shs |
|
Opening Stock |
6,841 |
7,269 |
|
Closing Stock |
5,493 |
5,148 |
|
Finished Goods |
||
|
Opening stock |
13,281 |
12,915 |
|
Closing stock |
11,410 |
11,141 |
Dividends and interest received of Shs.572 and a loss of 1,950 on the sale of a milling machine were not entered in the cost accounts
Required: Prepare a reconciliation of the two profits
In: Accounting
The cost data for Evencoat Paint for the year 2019 is as follows:
| Month | Gallons of Paint Produced |
Equipment Maintenance Expenses |
|||||
| January | 110,000 | $70,700 | |||||
| February | 68,000 | 66,800 | |||||
| March | 71,000 | 67,000 | |||||
| April | 77,000 | 68,100 | |||||
| May | 95,000 | 69,200 | |||||
| June | 101,000 | 70,300 | |||||
| July | 125,000 | 70,400 | |||||
| August | 95,000 | 68,900 | |||||
| September | 95,000 | 69,500 | |||||
| October | 89,000 | 68,600 | |||||
| November | 128,000 | 72,800 | |||||
| December | 122,000 | 71,450 | |||||
A. Using the high-low method, express the company’s maintenance costs as an equation where x represents the gallons of paint produced. Then estimate the fixed and variable costs.
Fixed cost $ 60,000
Variable cost $
Need help with variable cost.
In: Accounting
In: Accounting
When treasury stock is sold for more than the par value and the cost of the stock, what account(s) should be credited?
Select one:
a. Treasury Stock for the cost and additional paid-in capital for the excess of the sale price over the cost
b. Additional paid-in capital for the sale price
c. Treasury Stock for the sale price
d. Common Stock for the par value and retained earnings for the excess of the sale price over the par value
e. Common Stock for the sale price
In: Accounting
In: Accounting
In: Accounting
Cori's Meats is looking at a new sausage system with an installed cost of $450,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $64,000. The sausage system will save the firm $240,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $23,000. If the tax rate is 21 percent and the discount rate is 9 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.).
In: Finance