Problem 15-11 The yield to maturity on 1-year zero-coupon bonds is currently 8.5%; the YTM on 2-year zeros is 9.5%. The Treasury plans to issue a 2-year maturity coupon bond, paying coupons once per year with a coupon rate of 11%. The face value of the bond is $100. a. At what price will the bond sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will the yield to maturity on the bond be? (Do not round intermediate calculations. Round your answer to 3 decimal places.) c. If the expectations theory of the yield curve is correct, what is the market expectation of the price that the bond will sell for next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Recalculate your answer to (c) if you believe in the liquidity preference theory and you believe that the liquidity premium is 1.5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answers
Answer:
a. At what price will the bond sell?
- $102.71
b. What will the yield to maturity on the bond be?
- 0.0952 or 9.52%
c. If the expectations theory of the yield curve is correct, what is the market expectation of the price that the bond will sell for next year?
- $101.37
d. Recalculate your answer to (c) if you believe in the liquidity preference theory and you believe that the liquidity premium is 1.5%.
- $102.78
Explanation:
current YTM for zero coupon bonds = 8.5% for 1 year bonds and 9.5% on 2 year bonds
The Treasury plans to issue a 2-year maturity coupon bond, paying coupons once per year with a coupon rate of 11%. The face value of the bond is $100.
bond price = PV of maturity value + PV coupons
- $100 / (1 + 9.5%)² = $83.40
- [$11 / (1 + 8.5%)] + [$11 / (1 + 9.5%)²] = $10.14 + $9.17 = $19.31
- issue price = $83.40 + $19.40 = $102.71
YTM = [C + (FV - PV)/n] / [(FV + PV)/2] = [11 + (100 - 102.71)/2] / [(100 + 102.71)/2] = 0.0952 or 9.52%
next year's price:
- $100 / (1 + 9.5%) = $91.32
- $11 / (1 + 9.5%) = $10.05
- total = 101.37
next year's price if you believe in liquidity preference theory (1.5%):
- $100 / (1 + 9.5% - 1.5%) = $92.59
- $11 / (1 + 9.5% - 1.5%) = $10.19
- total = $102.78
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Broomhilda manufactures broomsticks for her fellow witch (and wizard) friends. Broomhilda uses a job order cost system and applies overhead to production on the basis of direct labor cost. On September 1, Job 50 (a super deluxe broom complete with a separate sleep space and shower area as well as an espresso machine) was the only job in process. The costs incurred prior to September on this job were as follows: direct materials $20,000, direct labor $12,000, and manufacturing overhead $16,000. As of September 1, Job 49 (a broom shaped like a cat with some extra cargo space for all the cats) had been completed at a cost of $90,000 and was part of finished goods inventory. There was a $15,000 balance in the Raw Materials Inventory account. During the month of September, Broomhilda began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month.1. Purchased additional raw materials of $90,000 on account.2. Incurred manufacturing overhead costs as follows: indirect materials $17,000 (including broom polish and specially crafted scissors to trim stray twigs), indirect labor $20,000 (Hansel and Gretel clean the shop and run errands for the elves), depreciation expense on equipment $12,000 (Broomhilda has multiple molding stations for each broom she creates), and various other manufacturing overhead costs on account $16,000.3. Assigned direct materials and direct labor to jobs as follows: Job no. Direct Materials Direct Labor50 10,000 5,00051 39,000 25,00052 30,000 20,000Required:a. Calculate the predetermined overhead rate for September, assuming Broomhilda estimates total manufacturing overhead costs of $840,000 and direct labor costs of $700,000 for September.b. Open job cost sheets for Jobs 50, 51, and 52. Enter the September 1 balances on the job cost sheet for Job 50.c. Prepare the journal entries to record the purchase of raw materials, and the manufacturing overhead costs incurred during the month of March.d. Prepare the summary journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning overhead costs, use the overhead rate calculated in (1). Post all costs to the job cost sheets as necessary.e. Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry (or entries) to record the completion of any job(s) during the month.f. Prepare the journal entry (or entries) to record the sale of any job(s) during the month.g. What is the balance in the Finished Goods Inventory account at the end of the month? What job(s) does this balance consist of? 8. What is the amount of over- or underapplied overhead? Prepare the journal entry to close this to Cost of Goods Sold
The goal of data analytics is to get results to make better decisions and better outcomes for business. Think about Descriptive, Predictive, and Prescriptive analytics and provide some examples with your thoughts behind your statements.
The County legislature approved its 2020 budget. Revenues from property taxes are estimated to be $800,000. The assessed value of all the property in the county is $40 million. The County has received certificates for property tax exemption of consisting of $3 million for homestead exemptions, $1.3 million for veterans, $700,000 for old age, and $5 million for nonprofits. In addition, the County believes all property taxes will be collectible. What property tax rate per $1,000 of net assessed value must the County charge to collect sufficient property taxes to meet its $800,000 estimate
$420,000.
$400,000.
$430,000.
Answers
Question: What percentage of the variation in overhead costs is explained by the independent variable
Answer: 82.8%
Explanation:
= 0.848 (84.8%), the explanation of variation in Y from the X regress
Question: What is the total overhead cost for an estimated activity level of 60,000 direct labor-hours
Answer: $410,000
Explanation:
The equation resulting from this regression analysis is:
Total overhead = Estimated fixed cost + Estimated variable cost per labor hour x Labor hours
= Intercept estimate + Coefficient estimate on independent variable x 60,000 DLH
= 110000 + 5 x 60000 DLH
= 110000 + 300000
= 410000
Here is the full question with the appropriate tables.
Cortez Company is planning to introduce a new product that will sell for $108 a unit. The following manufacturing cost estimates have been made on 20,000 units to be produced the first year;
Direct Materials $700,000
Direct Labor $720,000 (= $18 per hour × 40,000 hours)
Manufacturing overhead costs have not yet been estimated for the new product, but monthly date on total production and overhead costs for the post 24 months have been analyzed using simple linear regression. The following results were derive from the simple regression and provide the basis for overhead cost estimates for the new product.
Simple Regression Analysis Results.
Dependent variable-Factory overhead cost-Independent Variable-Direct labor hours Computed values
Intercept $ 120,0000
Coefficient on independent variable $ 5.00
Coefficient of correlation .920
R² .828
What percentage of the variation in overhead costs is explained by the independent variable? 82.8% 91.1% 99.4% 74.5% None of the above.
What is the total overhead cost for an estimated activity level of 60,000 direct labor-hours?
$410,000.
$420,000.
$400,000.
$430,000.
Answer:
R² = 82.8%
$420,000
Explanation:
Given that:
R² = .828
The percentage of the variation in overhead costs explained by the independent variable in Y from the X regressor = %
= 82.8%
Given that:
direct labor-hours = 60,000
To calculate the Total overhead cost; we have:
(Total overhead) to be = Estimated fixed cost + estimated variable cost per
labor hour × labor-hours
= Intercept estimate + Coefficient estimate on
independent variable × 60,000 direct labor-hours
= $120,000 + ($5 × 60,000) direct labor-hours
= $120,000 + $300,000
= $420,000
∴ the total overhead cost for an estimated activity level of 60,000 direct labor-hours = $420,000.
Answers
Answer:
1. Getting and Staying Profitable
Maintaining profitability means making sure that revenue stays ahead of the costs of doing business. Focus on controlling costs in both production and operations while maintaining the profit margin on products sold.
2. Productivity of People and Resources
Employee training, equipment maintenance and new equipment purchases all go into company productivity. Your objective should be to provide all of the resources your employees need to remain as productive as possible.
3. Excellent Customer Service
Good customer service helps you retain clients and generate repeat revenue. Keeping your customers happy should be a primary objective of your organization.
4. Employee Attraction and Retention
Employee turnover costs you money in lost productivity and the costs associated with recruiting, which include employment advertising and paying placement agencies. Maintaining a productive and positive employee environment improves retention.
Contribution margin
Pretax income
(2) Compute the number of units expected to be sold next period.
Choose Numerator: / Choose Denominator: = Units
/ = Units
Answers
Answer and Explanation:
1. The computation of the total expected dollar sales for next period is given below:
Sales $4,410,000
Less: variable cost $1,764,000
Contribution margin $2,646,000
Less: fixed cost $2,364,000
Pre tax income $282,000
2. The number of units that should be sold is
= $2,646,000 ÷ $63 per unit
= 42,000 units
In this way it should be calculated
Answers
Dimitry formats his memo so the four heading elements are positioned to the left of the page. This is an example of the design principle of alignment
Explanation:
The principle called alignment in designing refers to the way the elements are arranged relative to each other and to the page. There are different kinds of alignments used such as edge alignment,center, horizontal, vertical alignment and mixed alignment.
In the example given, Dimitry is formatting the memo in which the heading elements are positioned to the left of the page. Hence the design principle used by Dimitry will be the principle of alignment. This helps in creating a balance of elements and helpful of readers.
a) motivation.
b) organizational citizenship behaviors (OCB).
c) ethical sensitivity.
d) ability.
Answers
Answer:
d) ability
Explanation:
Based on the information provided regarding the scenario at hand it seems that Dave is trying to improve his employees' abilities and role-perception. Dave wants this training to allow his employees to gain the knowledge of how to operate correctly and efficiently during work-hours in order to increase overall performance and at the same time customer satisfaction.
Answers
Answer:
The correct answer is letter "E": cash flow to stockholders.
Explanation:
The cash flow to stockholders is the amount of money a firm pays to its debtholders and stockholders. It is calculating by subtracting the dividends paid minus new equity -if raised any. The Board of Directors determines the amount and the period to be considered for the dividends and if they are paid from the organization's current earnings or the reserve revenues.