Company A and B can borrow for a 3-year term at the following rates. While A desires fixed rate borrowing, B prefers floating rate borrowing.
Fixed Rate Floating Rate
A 8.5% LIBOR + 0.5%
B 7% LIBOR
The swap bank currently makes a market for plain vanilla 3-year interest rate swaps at 7.25% - 7.5%.
Please Complete ALL Parts!!!!
In: Finance
Danni is a single 30 percent owner of Kolt (a business entity). In the current year, Kolt reported a $1,000,000 business loss. Answer the following questions associated with each of the following alternative scenarios: (Leave no answer blank. Enter zero if applicable.) Problem 15-55 Part a a. Kolt is organized as a C corporation and Danni works 20 hours a week as an employee for Kolt. Danni has a $200,000 basis in her Kolt stock. How much of Kolt’s loss is Danni allowed to deduct this year against her other income?
In: Accounting
Danni is a single 30 percent owner of Kolt (a business entity). In the current year, Kolt reported a $1,000,000 business loss. Answer the following questions associated with each of the following alternative scenarios: (Leave no answer blank. Enter zero if applicable.) Problem 15-55 Part b b. Kolt is organized as an LLC taxed as a partnership. Thirty percent of Kolt’s loss is allocated to Danni. Danni works 20 hours a week on Kolt business activities (she is not considered to be a passive investor in Kolt). Danni has a $400,000 basis in her Kolt ownership interest and she also has a $400,000 at-risk amount in her investment in Kolt. Danni does not report income or loss from any other business activity investments. How much of the $300,000 loss allocated to her from Kolt is Danni allowed to deduct this year?
In: Accounting
Question 1.
The following data is from the accounting records of Padcore Ltd. for the year just ended:
|
Administrative expenses |
64,000 |
|
Administrative salaries |
110,000 |
|
Depreciation, factory |
25,000 |
|
Depreciation, office equipment |
8,000 |
|
Direct labour |
400,000 |
|
Factory equipment maintenance |
15,000 |
|
Factory supervisor's salary |
80,000 |
|
Insurance, factory |
22,000 |
|
Raw materials purchased |
260,000 |
|
Sales |
1,700,000 |
|
Sales salaries and commissions |
120,000 |
|
Selling expenses |
40,000 |
|
Supplies, factory |
9,000 |
|
Utilities, factory |
12,000 |
|
Beginning of |
End of |
|||
|
the Year |
the Year |
|||
|
Raw Materials |
20,000 |
35,000 |
||
|
Work in process |
40,000 |
30,000 |
||
|
Finished goods |
65,000 |
40,000 |
Calculate the cost of goods manufactured, cost of goods sold and net income for the year just ended:
Question 2.
Waldorf Corporation had the following overhead costs for the previous year (Waldorf allocates overhead on the basis of direct labour hours):
|
Labour hours |
Total Overhead |
|||
|
1st Quarter |
7,000 |
$ 75,000 |
||
|
2nd Quarter |
6,000 |
$ 74,000 |
||
|
3rd Quarter |
8,000 |
$ 77,000 |
||
|
4th Quarter |
7,500 |
$ 76,000 |
Assume that total overhead is comprised of Indirect materials (a variable cost), Rent (a fixed cost) and Maintenance (a mixed cost). The breakdown of these three costs at the 6,000 labour hour level is as follows:
|
Indirect materials (V) |
$ 3,600 |
|
|
Rent (F) |
35,000 |
|
|
Maintenance (M) |
35,400 |
|
|
$ 74,000 |
Determine how much of the total overhead at the 8,000 direct labour hour is maintenance. Using the amount just determined and the high low method, estimate a cost formula for maintenance. Determine what the cost formula for total overhead would be and estimate what total overhead costs would be at the 10,000 direct labour hour level.
Question 2A
Question 3.
The income statement for Big Franks Bicycle Emporium for the month just ended is as follows:
|
Sales |
300,000 |
|||
|
Cost of goods sold |
140,000 |
|||
|
Gross margin |
160,000 |
|||
|
Less operating expenses |
||||
|
Selling expenses |
40,000 |
|||
|
Depreciation |
25,000 |
|||
|
Admin expenses |
65,000 |
|||
|
Total operating expenses |
130,000 |
|||
|
Net income |
30,000 |
|||
Additional information:
· On average Frank sells his bikes for $300 each
· The sales department has variable expenses of $12 per bike sold
· Depreciation expense is unaffected by changes in the sales level
· Admin costs are 70% fixed and 30% variable
Prepare an income statement for the month just ended using the contribution margin approach.
Question 4.
Wyatt Enterprises manufactures and sells a single product. The company’s sales and expenses for the month just ended are as follows:
|
Total |
Per Unit |
||
|
Sales |
$ 190,000 |
$ 50 |
|
|
Less variable expenses |
114,000 |
30 |
|
|
Contribution margin |
76,000 |
$ 20 |
|
|
less fixed expenses |
60,000 |
||
|
Net income |
$ 16,000 |
Determine the break-even point in terms of both units and dollars. How many units would need to be sold in a month to achieve a target profit of $25,000? What is Wyatt’s margin of safety in both dollars and as a percentage?
Question 5.
The Happy Cardiologist Ltd. manufactures and sells pacemakers for $3,400 each. Cost information for March was as follows:
|
Variable manufacturing costs per unit |
$ 1,650 |
|
Variable selling costs per unit |
150 |
|
Fixed manufacturing costs |
290,000 |
|
Fixed admin costs |
825,000 |
In March, the company sold 750 pacemakers.
Calculate the margin of safety in both dollars and as a percentage. Compute the company’s degree of operating leverage. If sales increase by 20%, by how much will net income increase?
In: Accounting
Derek will deposit $4,355.00 per year for 30.00 years into an account that earns 9.00%, The first deposit is made next year. How much will be in the account 45.00 years from today?
In: Finance
Suppose that the consensus forecast of security analysts of NoWork Inc. is that earnings next year will be E1= $5.00 per share. The company tends to plow back 60% of its earnings and pay the rest as dividends. The CFO estimates that the company’s growth rate will be 8% from now on.
(a) If your estimate of the company’s required rate of return is 12%, what is the equilibrium price of the stock?
(b) Suppose there is uncertainty about the growth rate. With 50% probability the growth rate will be 6%, with 50% probability the growth rate will be 10%. What are the respective market values under the two growth rates? What must be the price of the stock, given that both growth rates have equal probability?
(c) Under the probabilities in (b) the expected growth rate of the
firm is 8%. Howcome the valuation in part (b) is different from the
valuation in part (a)?
In: Finance
Assume that VCU is considering the purchase of a 20-year, noncallable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If VCU require an 9.5% nominal yield to maturity on this investment, what is the maximum price VCU should be willing to pay for the bond?
In: Finance
|
An auditor obtains the year end closing market price of the shares in a listed public company and applies this to the number of these shares owned by the entity. Which assertion is the auditor most likely addressing? Which ans in correct an which is incorrect. explain the reason for both accordingly. |
|
| The information is not incomplete. | |
|
a. Rights and obligations |
|
|
b. Accuracy, valuation and allocation |
|
In: Accounting
|
Foulds Company makes 13,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: |
| Direct materials | $ | 12.70 |
| Direct labor | 20.30 | |
| Variable manufacturing overhead | 2.50 | |
| Fixed manufacturing overhead | 10.40 | |
| Unit product cost | $ | 45.90 |
|
An outside supplier has offered to sell the company all of these
parts it needs for $41.80 a unit. If the company accepts this
offer, the facilities now being used to make the part could be used
to make more units of a product that is in high demand. The
additional contribution margin on this other product would be
$62,400 per year. |
||
|
If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $5.70 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.
|
In: Accounting
The nominal price (per pound) of apples for each year is shown in the timeline below. What is the real price of apples in year 2002 (as seen from year 2001). Calculate your answer to the nearest penny (e.g., 3.81) Year 2001 2002 2003 2004 Nominal Price $2.38 $2.51 $2.62 $2.76 Price Level 151 155 157 160 Price Adjustment Real Price
In: Finance