Spencer Grant is a New York-based investor. He has been closely following his investment in 200 shares of Vaniteux, a French firm that went public in February 2010. When he purchased his 200 shares at 16.68 euro per share, the euro was trading at $1.3654/euro. Currently, the share is trading at 28.37 euro per share, and the dollar has fallen to $1.4016/euro. Spencer considers selling his shares at this time but he chooses not to sell them after all. He waits, expecting the share price to rise further after the announcement of quarterly earnings. His expectations area correct, and the share price rises to 31.62 euro per share after the announcement. The current spot exchange rate is $1.3022/euro.
a. If Spencer sells his shares today, what percentage change in the share price would he receive? (Round to two decimal places)
b. What is the percentage change in the value of the Euro versus the dollar over this same period? (Round to two decimal places)
c. What would be the total return Spencer would earn on his shares if he sold them at these rates?
c a.) If he sold his shares today, it would yield the following amount in euros ______ (round to two decimal places)
c b.) The sales proceeds in U.S Dollars is $ _______ (Round to the nearest cent)
c c.) The original investment (cost) of 200 shares in Vaniteux in euros is _____ (Round to two decimal places)
c d.) The original investment (cost) of shares in U.S Dollars calculated at the original spot rate is $ _____ (Round to the nearest cent)
c e.) The rate of return on Spencer's investment, net proceeds divided by initial investment is ____ % (Round to two decimal places)
In: Finance
Clark and Shiffer LLP perform activities related to e-commerce consulting and information systems in Vancouver, British Columbia. The firm, which bills $162 per hour for services performed, is in a very tight local labor market and is having difficulty finding quality help for its overworked professional staff. The cost per hour for professional staff time is $72. Selected information follows. • Billable hours to clients for the year totaled 8,200, consisting of: information systems services, 4,920; e-commerce consulting, 3,280. • Administrative cost of $414,760 was (and continues to be) allocated to both services based on billable hours. These costs consist of staff support, $221,520; in-house computing, $156,000; and miscellaneous office charges, $37,240. A recent analysis of staff support costs found a correlation with the number of clients served. In-house computing and miscellaneous office charges varied directly with the number of computer hours logged and number of client transactions, respectively. A tabulation revealed the following data:
| E-Commerce Consulting | Information Systems Services |
Total | |||
| Number of clients | 70 | 250 | 320 | ||
| Number of computer hours | 2,320 | 3,670 | 5,990 | ||
| Number of client transactions | 830 | 700 | 1,530 | ||
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Assume that the firm uses traditional costing procedures, allocating total costs on the basis of billable hours. Determine the profitability of the firm’s e-commerce and information systems activities, expressing your answer both in dollars and as a percentage of activity revenue. (Do not round intermediate calculations. Round "Profitability" to 2 decimal places.) |
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Using activity-based costing, determine the profitability of the firm’s e-commerce and information systems activities, expressing your answer both in dollars and as a percentage of activity revenue. (Round intermediate calculations and final answers to 2 decimal places.) |
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In: Accounting
1. The statement of financial position is another name for the income statement
True
False
2. The income statement only statement dated as of a point in time.
True
False
3. Assets and liabilities come into existence at different times and are not affected the same way by inflation and specific price level changes
True
False
4. For the purposes of the balance sheet preparation, there are several different measurement bases are used (historical cost, depreciated historical cost, market value, realizable value, present value) which compromises the comparability characteristic of accounting information
True
False
5. The present value of a future cash flow is its discounted value and it is the primary measurement basis for long term investmests
True
False
6. Current asset (CA): an asset expected to be realized in cash or to be consumed or sold during the normal operating cycle, or within one year of the balance sheet date, whichever is shorter.
True
False
7. Gains represent increases in net assets or settlements of liabilities by providing goods and services
True
False
8. Expenses represent decreases in net assets or incurred liabilities through the provision of goods or services
True
False
9. The requirement to disclose comprehensive income affects the computation of net income
True
False
10. Statement of Cash Flows is required for all business enterprises which report both financial position (Balance Sheet) and results of operations (Income Statement) for a period.
True
False
11. Under the net method of accounting for the cash discounts, if the customer does not pay within the discount period, a sales discount forfeit is recognized (revenue account):
True
False
12. Under the allowance method, we can estimate the uncollectable accounts receivable using either the 1) Percentage-of-Sales Approach and/or 2) Percentage-of-Receivables Approach:
True
False
In: Accounting
True / False Questions
1. Inventory is a relatively liquid asset and usually appears above Accounts Receivable on the balance sheet.
2. The operating cycle of a merchandising company consists of (1) purchases of merchandise; (2) sales of the merchandise; and (3) collection of accounts receivable.
3. Inventory shrinkage refers to unrecorded decreases in inventory resulting from breakage, theft, and sales of inventory.
4. In a perpetual inventory system, when merchandise is purchased, it is debited to an account called Purchases.
5. In a periodic inventory system, the Cost of Goods Sold account may be created during the closing process by debiting Cost of Goods Sold and crediting the Beginning Inventory and the Purchases account.
6. Purchase Discounts Lost is shown as a reduction of cost of goods sold in the income statement.
7. Net Sales is computed as total sales revenue less sales returns and allowances less sales discounts.
8. The contra-revenue accounts, Sales Returns and Allowances and Sales Discounts, should be closed by crediting these accounts and debiting Income Summary for each account.
9. Gross profit margin is the dollar amount of gross profit expressed as a percentage of gross sales.
10. The accounting cycle of a merchandising business is the length of time covered by the company's income statement.
In: Accounting
To celebrate their Queen’s 90th birthday, the country of Wonderland has decided to bake the world’s largest cake. The main ingredient(input) of the cake will be flour. It has been estimated that the cake will use 50,000 tons of flour, which represents 20% of the current supply of flour. The current price of flour is $4000 per ton. Previous study has shown the elasticity of supply, Es, for flour to be 0.3 and the elasticity of demand, Ed to be -1.2.
a. Assuming linear demand curves, calculate the percentage change in the price of flour that would result due to this project? Also, calculate the change in quantity supplied as well as the change in quantity demanded by private consumers. What is the opportunity cost of flour that should be used in a cost-benefit analysis of this project?
[Hint: Es = (ΔQs/ΔP)(P/Qs) and Ed =(ΔQd/ΔP)(P/Qd) where Qs is current supply and P is current price. Note that the amount of flour demanded by the project Qp = ΔQs – ΔQd
Using the above equations, you should be able to find the change in price, ΔP. Once, you have the value for ΔP, you can plug it into the elasticity formula to find ΔQs & ΔQd]
b. Sketch the supply and demand for flour and show the opportunity cost on your sketch.
In: Economics
True / False Questions
1. Inventory is a relatively liquid asset and usually appears above Accounts Receivable on the balance sheet.
2. The operating cycle of a merchandising company consists of (1) purchases of merchandise; (2) sales of the merchandise; and (3) collection of accounts receivable.
3. Inventory shrinkage refers to unrecorded decreases in inventory resulting from breakage, theft, and sales of inventory.
4. In a perpetual inventory system, when merchandise is purchased, it is debited to an account called Purchases.
5. In a periodic inventory system, the Cost of Goods Sold account may be created during the closing process by debiting Cost of Goods Sold and crediting the Beginning Inventory and the Purchases account.
6. Purchase Discounts Lost is shown as a reduction of cost of goods sold in the income statement.
7. Net Sales is computed as total sales revenue less sales returns and allowances less sales discounts.
8. The contra-revenue accounts, Sales Returns and Allowances and Sales Discounts, should be closed by crediting these accounts and debiting Income Summary for each account.
9. Gross profit margin is the dollar amount of gross profit expressed as a percentage of gross sales.
10. The accounting cycle of a merchandising business is the length of time covered by the company's income statement.
In: Accounting
The data shown were obtained from the financial records of Italian Exports, Inc., for March:
| Estimated Sales | $590,000 |
| Sales | 567,925 |
| Purchases | 294,831 |
| Ending Inventory* | 10% |
| Administrative Salaries | 50,320 |
| Marketing Expense** | 5% |
| Sales Commissions | 2% |
| Rent Expense | 7,300 |
| Depreciation Expense | 900 |
| Utilities | 2,700 |
| Taxes*** | 15% |
*of next month's sales
**of estimated sales
***of income before taxes
Sales are expected to increase each month by 10%.
Prepare a budgeted income statement. Round your answers to the nearest dollar.
| Italian Exports, Inc. | |
| Budgeted Income Statement | |
| For the Month Ending Mar. 31, 2020 | |
| Sales | $ |
| Cost of Goods Sold | |
| Beginning Inventory | $ |
| Purchases | |
| Cost of Goods Available for Sale | $ |
| Ending Inventory | |
| Cost of Goods Sold | $ |
| Gross Profit | |
| Operating Expenses | |
| Administrative Salaries | $ |
| Marketing Expenses | |
| Sales Commissions | |
| Rent Expense | |
| Depreciation Expense | |
| Utilities | |
| Total Operating Expenses | $ |
| Income From Operations | $ |
| Income Tax Expense | |
| Net Income | $ |
Beginning inventory uses the ending inventory percentage and estimated sales to determine the beginning inventory amount. Apply the other percentages as applicable to determine the required amounts as specified.
In: Accounting
John Bilodeau is the managing partner of a business that has just finished building a 60-room motel. Bilodeau anticipates that he will rent these rooms for 12,000 nights next year (or 12,000
room-nights). All rooms are similar and will rent for the same price. Bilodeau estimates the following operating costs for next year:
The capital invested in the motel is $1,040,000. The partnership's target return on investment is 30%.
Bilodeau expects demand for rooms to be uniform throughout the year. He plans to price the rooms at full cost plus a markup on full cost to earn the target return on investment.
Requirements
|
1. |
What price should Bilodeau charge for a room-night? What is the markup as a percentage of the full cost of a room-night? |
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2. |
Bilodeau's market research indicates that if the price of a room-night determined in requirement 1 is reduced by 55%, the expected number of room-nights Bilodeau could rent would increase by 55%. Should Bilodeau reduce prices by 55%? Show your calculations. |
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Variable operating costs |
$ 3 per room night |
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Fixed costs |
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Salaries and wages |
$170,000 |
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Maintenance of building and pool |
52,000 |
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Other operating and administration costs |
222,000 |
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Total fixed costs |
$444,000 |
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|
$444,000 |
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In: Accounting
assume the total market value of Firm A consists of the
following securities:
Common stock: Price=$48, div(t=0)=$2.25, g=3%.
100m shares outstanding
Preferred stock: Price=$80, perpetual annual dividend=$6.50.
2.5m shares outstanding
Bonds: Price=$1000, YTM=7% (semiannual coupons), Par=$1000, 13 years until maturity.
5m bonds outstanding
1. Use the DCF approach to calculate the cost of common equity. Ignore flotation costs.
2. Express your answer as a percentage. Enter "12.43" for 12.43%. Round to two decimal places if necessary.
3. Calculate the component cost of preferred stock. Ignore flotation costs.
Assuming a tax rate of 40%, calculate the after-tax component cost of debt.
4. Calculate Firm A’s WACC. Assume the firm is currently operating at its target capital structure (in this case, market weights = target weights).
5. Assume Firm B’s FCFs are as follows: Year 1: $120m, Year 2: $200m, and g=4% after Year 2. WACC=7%. Use the Corporate Valuation Model to calculate Firm B’s total market value. Ignore flotation costs.
In: Finance
Muskoge Company uses a process-costing system. The company manufactures a product that is processed in two departments: Molding and Assembly. In the Molding Department, direct materials are added at the beginning of the process; in the Assembly Department, additional direct materials are added at the end of the process. In both departments, conversion costs are incurred uniformly throughout the process. As work is completed, it is transferred out. The following table summarizes the production activity and costs for February: Beginning inventories for Molding; Assembly (first number for molding second number for assembly) Physical units 10,000;8,000 Costs: Transferred in ? ;$ 45,200 Direct materials $ 22,000; ? Conversion costs $ 13,800 ;$ 16,800 Current production: Units started 25,000 ; ? Units transferred out 30,000 ; 35,000 Costs: Transferred in ? ; ? Direct materials $ 56,250 ; $ 39,550 Conversion costs $103,500 $136,500 Percentage of completion: Beginning inventory 40% ; 50% Ending inventory 80 ; 50 Required: 1. Using the weighted average method, prepare the following for the Molding Department: a. A physical flow schedule b. An equivalent units calculation c. Calculation of unit costs. Round to four decimal places. d. Cost of ending work in process and cost of goods transferred out e. A cost reconciliation
In: Accounting