Answer:
The required rate of return is 7.20%
Explanation:
The price of a share that pays a particular dividend amount in perpetuity is given by the below formula:
price of share=dividend/required rate of return
price of share is $91.00 per share
dividend payable in perpetuity is $6.55
required rate of return is unknown
$91=$6.55/required rate of return
required rate of return =$6.55/$91
=7.20%
to confirm the required of return,I divided the by the required rate of return as shown below:
6.55/0.0.72=$90.97 .approximately $91
That is a way to validate the computed required rate of return
Answer:
$117,000
Explanation:
Manufacturing overhead is also known as the production overhead. It can be estimated by the adding the variable manufacturing overhead to the fixed manufacturing overhead. Therefore:
Fixed manufacturing overhead is equivalent to the cost of the fixed units (i.e. 15,000 units) = $4*15000 = $60000
Variable manufacturing overhead is equivalent to the cost of the variable units (i.e. 19000 units) = $3*19000 = $57000
Total manufacturing overhead = $60000 + $57000 = $117000
Sales $38,000 Assets $27,300 Debt $6,700
Costs 32,600 Equity 20,600
Net income $5,400 Total $27,300 Total $27,300
The company has predicted a sales increase of 20 percent. Assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not.
a. Prepare the pro forma statements.
b. Determine the external financing needed.
Answer and Explanation:
a. Proforma income statement
Sales $45,600
Costs $39,120
Net income $6,480
b. Proforma balance sheet
Particulars Amount Liabilities Amount
Assets $32,760 Debt $8,950
Equity $23,810
Total $32,760
External finance = Predicted debt - Beginning debt
= $7,585 - $6,700
= $885
Working note:-
For pro forma statements:
Sales = $38,000 × (1 + 0.20)
= $38,000 × 1.20
= $45,600
Costs = 32,600 × (1 + 0.20)
= $32,600 × 1.20
= $39,120
Net income = Sales - Costs
= $45,600 – 39,120
= $6,480
Assets = 27,300 × (1 + 0.20)
= 27,300 × 1.20
= $32,760
Equity = Beginning balance + Net income - Dividend
= $20,600 + $6,480 - ($6,480 × 1 ÷ 2)
= $20,600 + $6,480 - $3,240
= $23,810
Debt = Assets - Equity
= $31,760 - $23,810
= $8,950
The pro forma statements are prepared by adjusting the sales, costs, and assets by the 20% increase. The net income and dividends are then calculated. The external financing needed is found by deducting the sum of debt, equity and retained earnings from the adjusted total assets.
The pro forma statements are prepared by first adjusting sales, costs, and assets by the predicted increase of 20%. The new sales amount would be $38,000 * 1.20 = $45,600. Costs increase at the same rate, so the new costs would be $32,600 * 1.20 = $39,120. The new assets would be $27,300 * 1.20 = $32,760.
On the pro forma income statement, the net income is calculated by subtracting the new costs from the new sales, which is $45,600 - $39,120 = $6,480. The dividend would be $6,480 * 0.50 = $3,240. The retained earnings (AKA addition to retained earnings) increase by the net income minus the dividends, which is $6,480 - $3,240 = $3,240.
On the pro forma balance sheet, the total assets increased to $32,760. As debt and equity don't change, then they remain at $6,700 and $20,600 respectively. The sum of debt and equity added to the predicted retained earnings is $6,700 + $20,600 + $3,240 = $30,540. Therefore, the external financing needed is the new total assets minus this sum, which is $32,760 - $30,540 = $2,220.
#SPJ3
Answer: a. in the short run but not in the long run
Explanation:
The Short Run is usually considered in Economics/ Business as a point in time where at least ONE factor of production is FIXED. This factor is usually the Factory because it is hard to change the capacity of a Factory in the Short run. For instance a wing might need to be constructed. Labour on the other hand is considered variable in the Short run though because more people can be hired and the people already hired can put in more overtime.
The Long Run is classified as a point where EVERY factor of production is Variable. There is enough time to even change the capacity of a Factory. So here even Factory is Variable.
b. $60.
c. $30.
d. $36.92
Answer:
The correct answer is A.
Explanation:
Giving the following information:
Estimated manufacturing overhead= 960,000
Estimated number of hours= 32,000
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 960,000/32,000= $30 per direct labor hour
Now, we can allocate to each unit of Planter:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 30*2= $60
Answer:
Consider the following calculations
Explanation:
This 2-step mortgage problem requires a 2-step solution.
To solve for the PMT for the last 23 years of the loan, we first need to know what the principal is at the end of the 7th year.
Thus, step I uses the initial info to solve for the PMT for each month of the first 7 years. N=360, I/Y=5(%)/12 = 0.416667(%), PV=150,000, => PMT = 805.
The discount rate will change to 5% index rate plus 2% margin = 7% at the beginning of the 8th year.
In Step II we first determine the remaining balance at the end of year 7. This requires using the amortization worksheet.
On the TI BA II Plus, AMORT is the secondary function of PV.
Set P1, the periods at which the calculations begin, equal to 1. We cursor down to P2, which is the last period of the calculation, and set it equal to 84. Cursoring down once again, we see that BAL at month 84 = 131,917.52.
Going back to the TVM row, we set PV remaining at the end of 23 years = 131,917.52. I/Y is calcluated as 5(%) index rate plus 2(%) margin =7%; dividing 7(%) by 12 = 0.583333(%). N=360-84 = 276 months left.
Finally, we solve for PMT = 962.89.
Answer:
Establish metric-based performance measures.
Explanation:
In the given scenario the line managers are not taking corporate objectives into consideration in their decision making.
As a upper-level manager can resolve this by introducing metric based performance measures that will show clearly productivity of the line managers.
The Key Performance Indicators should be tailored to the organisation's objectives.
The line managers that are not performing well according to the KPIs will need to align and perform better in the specific areas.
This is an effective way of disseminating the corporate objectives in the organisation.
To effectively disseminate corporate objectives throughout an organization, holding supervisory manager meetings, establishing metric-based performance measures, and evaluating and increasing manager salaries and benefits can be effective methods.
In order to correct the issue of corporate objectives not being effectively disseminated throughout an organization, the best method to try would be to hold a series of supervisory manager meetings. This would create a direct channel for upper management to communicate these objectives to line managers. It also gives room for discussion, understanding, and eventual implementation of the objectives in their decision-making process. Establishing metric-based performance measures could also be useful in this context as it would provide a defined and quantifiable way to bring about desired behaviors in line-level managers by linking their performance indicators directly to corporate objectives. Evaluating and increasing manager salaries and benefits will also incentivize them to work in accordance with the corporate objectives.
#SPJ3