Answer:
Risk-free rate = 3.5%
Market risk-premium = 6.9%
Cost of equity (Ke) = ?
Ke = Rf +β(Rm - Rf)
Ke = Rf + Market risk premium
Ke = 3.5 + 6.9
Ke = 10.4%
Cost of debt (Kd) = 5.4%
Market value of debt (D) = 12
Market value of equity (E) = 88
Market value of the company (V) = 100
WACC = Ke(E/) + Kd(D/V)(1-T)
WACC = 10.4(88/100) + 5.4(12/100)(1-0.40)
WACC = 9.152 + 0.3888
WACC = 9.54%
Explanation:
In this case, there is need to calculate cost of equity according to capital asset pricing model, which is risk-free rate plus market risk-premium.
Then, we will calculate the weighted average cost of capital, which equals cost of equity multiplied by the proportion of equity in the capital structure plus after-tax cost of debt multiplied by the proportion of debt in the capital structure. Since the proportion of debt in the capital structure is 12%(12/100), the proportion of equity will be 88%(88/100).
Answer:
C. Variances falling outside of an acceptable range of outcomes do not require investigation.
Explanation:
The purpose of any business is to generate profit which is the difference between the revenues and all cost related to business.
In order to define suitable selling price and acceptable cost, all figures are to be set in standard range; any variance outside the standard, even lower or higher, must be investigated then the company can make proper adjustments.
In the end, the right standard is not only achievable but also maximize for the profit set.
So while other statements are true about standard and variance, the statement (C) is totally wrong because it said “Variances falling outside of an acceptable range of outcomes do not require investigation”
B. Real estate prices in Miami will fall, real estate prices in Chicago will fall.
C. Real estate prices in Miami will rise, real estate prices in Chicago will rise.
D. Real estate prices in Miami will fall, real estate prices in Chicago will rise.
E. None of the above.
Answer:
D. Real estate prices in Miami will fall, real estate prices in Chicago will rise.
Explanation:
Real estate prices in Miami will fall because according to the model, climate change will lower the amenity value of the local climate. This means that climate change will make the climate of Miami less desirable for potential residents, causing a drop in the price of the real estate of the city due to less demand.
Chicago on the other hand, will have the amenity level of its climate increased, and this will attract more potential residents who will drive up demand, causing Chicago's real estate prices to rise.
Answer:
the break-even point in dollars is $6,500,000
Explanation:
The computation of the break even point in dollars is shown below;
As we know that
Break even point in dollars is
= Fixed cost ÷ contribution margin ratio
Since the variable cost is 80%, so the contrbibution margin is 20% so that the total selling price would be 100%
now
= $1,300,000 ÷ 20%
= $6,500,000
Hence, the break-even point in dollars is $6,500,000
Answer:
Net income = $8,318
Explanation:
Current asset
Cash 5,345
Accounts receivables 2,662
Prepaid expenses 725
Total 8,732
Fixed asset
Equipment 14,421
Less dep. 6,970
Balance. 7,451
Total 8,733 + 7,451 = 16,184
Current liabilities
Accounts payable 1,643
Notes payable. 5,223
Total. 6,866
Financed by
Common stock 1,000
Net Income. 8,318
Total 6,866 + 9,318 = 16,184
Calculating CLV is most helpful for Assessing the viability of any pricing strategy.
The correct option is B
What is customer lifetime value?
The total amount of money a client is anticipated to spend with your company or on your products over the course of an average business relationship is known as customer lifetime value.
If you can reach a CLV that is between three and five times your cost per new customer, it is a good range. Therefore, you should strive for a CLV of at least $450 if you are investing an average of $150 in acquiring a new customer.
The formula for customer lifetime value is: CLV = Average Transaction Size x Number of Transactions x Retention Period.
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I understand that the question you are looking for is:
Calculating CLV is most helpful for which of the following?
(A) Opening a new retail location
(B) Assessing the viability of any pricing strategy
(C) Estimating demand for a product
(D) Calculating research investment for a new product
Answer:
Job 33 $ 27250
Job 34 $ 31500
Job 35 $ 12325
Cost of Goods Sold Job 33 $ 27250
Finished Goods Inventory Job 34 $ 31500
Work in Process Inventory Job 35 $ 12325
Explanation:
Work in Process Balance on 3/1
Job 33 $ 7,500
Job 34 6,000
Total $ 13,500
Job 33
Direct Materials $3500
Direct Labor 6500
Overheads (150%) 9750
Add Opening WIP 7500
Total Cost $ 27250
We add the Direct Material Direct Labor and Mfg overheads with the opening balance of WIP to get the total cost of given jobs.
Job 34
Direct Materials $6000
Direct Labor 7800
Overheads (150%) 11700
Add Opening WIP 6000
Total Cost $ 31500
Job 35
Direct Materials $4200
Direct Labor 3250
Overheads (150%) 4875
Add Opening WIP ------
Total Cost $ 12325
Cost of Goods Sold Job 33 (given) $ 27250
Finished Goods Inventory Job 34 (given) $ 31500
Work in Process Inventory Job 35(given)$ 12325
It is given in the question that Job 34 is transferred to Finished Goods , Job 35 is still in process and Job 33 is cost of goods sold.
By accounting for beginning balances, cost of materials, labor, and overheads, the costs of Jobs 33, 34, and 35 at end of the month are $27,250, $31,500 and $12,325 respectively. The Work in Process Inventory is $12,325, Finished Goods Inventory is $31,500 and Cost of Goods Sold is $27,250.
To calculate the cost of each job at Oak Creek Furniture Factory (OCFF), we first need to consider all cost factors. These include the beginning balances, additional materials requisitioned, labor hours, and overheads. Job overheads for OCFF are applied as 150 percent of direct labor cost.
Job 33: The initial cost was $7,500. During March, materials costing $3,500 and labor cost of $6,500 were added, making a total of $10,000. Applying the overhead calculation, we find that overheads amount to $6,500 * 1.5 = $9,750. The total cost for job 33 is therefore $7,500 (beginning balance) + $10,000 (material and labor costs) + $9,750 (overhead) = $27,250.
Job 34: Initial cost was $6,000. Material and labor costs for March amount to $6,000 and $7,800 respectively, summing up to $13,800. The overhead equals $7,800 * 1.5 = $11,700. The total cost for job 34 is accordingly $6,000 (beginning balance) + $13,800 (material and labor costs) + $11,700 (overhead) = $31,500.
In regard of Job 35, which is still in progress, only the cost of materials $4,200 and labor $3,250 have been added, totalling $7,450. Calculating overheads, we get $3,250 * 1.5 = $4,875. Therefore, the cost so far for job 35 is $7,450 (material and labor costs) + $4,875 (overhead) = $12,325.
For the balance of the Work in Process Inventory, we just include the cost of Job 35, which isn't finished yet: $12,325.
The Finished Goods Inventory includes the cost of Job 34 which is completed but not sold: $31,500.
Cost of Goods Sold consists of completed and sold jobs, in this case only Job 33: $27,250.
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