Answer:
140 pounds of tuna
Explanation:
Lago
Abuta
Lago should produce tuna while Abuta should produce oat. If they specialize:
Lago trades 60 pounds of tuna in exchange for 60 units of oat, so it will have 140 pounds of tuna and 60 units of oat in total.
Answer:
Part 1 . Determine the cost of goods manufactured
Direct materials $280,000
Direct labor $324,000
Factory overhead $188,900
Add Opening Stock of Work In Progress Inventory $72,300
Less Closing Stock of Work In Progress Inventory $76,800
Cost of Goods Manufactured $788,700
Therefore cost of goods manufactured is $788,700
Part 2 . Statement of Cost of Goods Manufactured
Opening Stock of Finished Goods Inventory 39,600
Add Cost of Goods Manufactured 788,700
Less Closing Stock of Finished Goods (41,200)
Cost of Goods Manufactured 787100
Explanation:
Part 1 . Determine the cost of goods manufactured
This is a calculation of all Overheads Incurred in the Manufacturing process
Part 2 . Statement of Cost of Goods Manufactured
It is Important to note that Glenville Company is in the Manufacturing Business and their Cost of Sales cost from cost of Finished Goods.This would be the statement available for external use
b. may receive patent protection for two years by filing a simpler, shorter, cheaper provisional patent application while he is working on his complex, regular patent application.
c. is entitled to a patent over someone else who invents the same product if he is the first to invent it.
d. may sell his product for up to five years to see how well it sells before going through the complex process of filing a patent application with the PTO Office.
Answer:
a. must apply for a patent within one year of selling the product commercially.
Explanation:
As the product is the novel and also useful at the same time so he himself wants to try for the commercial purpose for reaping the benefits and the same should be used for a patent within one year for selling the product commercially manner
So as per the given situation, the option a is correct
And, the rest of the options seems incorrect
Answer:
Explanation:
The fixed cost is relevant in this situation as it can not be avoided and there would be no other use for the facility.
Unit cost
Direct materials 9.70
Variable manufacturing cost 3.55
Fixed manufacturing overhead 4.50
Direct labor 8.70
Total 26.45
Units produced cost of producing 38,000 = 38000* 26.45 = 1,005,100
Cost of buying 38,000 = 38,000 * 24.55 = 932,900
Cost saved = 1,005,100 - 932,900 =72,200
Answer:
Total Return = 10.45%
Explanation:
To calculate the return, we must first determine the appreciation in the value of the securities in terms of the US dollar.
The initial investment in terms of US dollar was of,
Initial Investment in USD = Investment in Pounds * Exchange rate
Initial Investment in USD = 2340 * 1.52
Initial Investment in USD = $3556.8
The current value of the investment in terms of USD is,
Current value of investment in USD = 2440 * 1.61
Current value of investment in USD = $3928.4
The formula to calculate total return is,
Total Return = (Current Value - Initial Value) / Initial Value
So, the total return based on US dollars was:
Total return = (3928.4 - 3556.8) / 3556.8
Total Return = 0.10447 or 10.447% rounded off to 10.45%
The total return for the U.S. investor in U.S. dollars is a profit of $371.60, calculated by assessing the change in the value of British securities from 2,340 to 2,440 pounds and considering the exchange rate shift from $1.52 to $1.61 per pound.
The question involves calculating the total return for a U.S. investor based on the change in the value of British securities and exchange rates. The investor originally purchased British securities for 2,340 pounds at an exchange rate of $1.52 per pound. One year later, the securities are worth 2,440 pounds, and the exchange rate is $1.61 per pound. The initial U.S. dollar investment would have been 2,340 pounds × $1.52 = $3,556.80. The value of the securities in U.S. dollars after one year is now 2,440 pounds × $1.61 = $3,928.40.
This results in a profit of $3,928.40 - $3,556.80 = $371.60, which represents the investor's total return based on U.S. dollars.
Answer:
$2,960,000
Explanation:
Raw Material Used in production:
= Raw Material Inventory Beginning + Purchases of Raw Material - Raw Material Inventory Ending
= $30,000 + $1,500,000 - $60,000
= $1,470,000
Total Manufacturing Cost:
= Raw Material Used in production + Direct Labor + Manufacturing Overhead applied to Work in process
= $1,470,000 + $690,000 + (225,000 + 75,000 + 500,000)
= $1,470,000 + $690,000 + $800,000
= $2,960,000
WACC Estimation
The table below gives the balance sheet for Travellers Inn Inc. (TII), a company that was formed by merging a number of regional motel chains.
Travellers Inn: December 31, 2012 (Millions of Dollars)
Cash $10 Accounts payable $10
Accounts receivable 20 Accruals 10
Inventories 20 Short-term debt 5
Current assets $50 Current liabilities $25
Net fixed assets 50 Long-term debt 30
Preferred stock 5
Common equity
Common stock $10
Retained earnings 30
Total common equity $40
Total assets $100 Total liabilities and equity $100
The following facts also apply to TII:
1. Short-term debt consists of bank loans that currently cost 8%, with interest payable quarterly. These loans are used to finance receivables and inventories on a seasonal basis, bank loans are zero in the off-season.
2. The long-term debt consists of 30-year, semiannual payment mortgage bonds with a coupon rate of 8%. Currently, these bonds provide a yield to investors of rd= 12%. If new bonds were sold, they would have a 12% yield to maturity.
3. TII's perpetual preferred stock has a $100 par value, pays a quarterly dividend of $2.50, and has a yield to investors of 11%. New perpetual preferred would have to provide the same yield to investors, and the company would incur a 3% flotation cost to sell it.
4. The company has 4 million shares of common stock outstanding. P0 = $20, but the stock has recently traded in price the range from $17 to $23. D0 = $1 and EPS0 = $2. ROE based on average equity was 26% in 2008, but management expects to increase this return on equity to 31%; however, security analysts and investors generally are not aware of management's optimism in this regard.
5. Betas, as reported by security analysts, range from 1.3 to 1.7; the T-bond rate is 10%; and RPM is estimated by various brokerage houses to be in the range from 4.5% to 5.5%. Some brokerage house analysts reports forecast dividend growth rates in the range of 10% to 15% over the foreseeable future.
6. TII's financial vice president recently polled some pension fund investment managers who hold TII's securities regarding what minimum rate of return on TII's common would make them willing to buy the common rather than TII bonds, given that the bonds yielded 12%. The responses suggested a risk premium over TII bonds of 4 to 6 percentage points.
7. TII is in the 35% federal-plus-state tax bracket.
8. TII's principal investment banker predicts a decline in interest rates, with rd falling to 10% and the T-bond rate to 6%, although the bank acknowledges that an increase in the expected inflation rate could lead to an increase rather than a decrease in interest rates.
Assume that you were recently hired by TII as a financial analyst and that your boss, the treasurer, has asked you to estimate the company's WACC under the assumption that no new equity will be issued. Your cost of capital should be appropriate for use in evaluating projects that are in the same risk class as the assets TII now operates. Do not round intermediate steps. Round your answer to two decimal places.
%
NOTE:
Wrong Answers:
14.29% & 14.76% --> Please someone give me right answer, I am posting same question 4th time; please dont post spam.
--> It's Problem 9-17 of mangerial finance course WACC Estimation problem; required to consider above table with given 8 assumption to get WACC value; it will be only one answer liike 15.12%; 17.32%.....
Answer:
Explanation:
(1) Cost of short-term debt after tax : 8% ( 1 – tax rate)
= 8% ( 1 – 35%)
= 8% (65%)
= 5.2%
Market value of Short term debt ( in million $) = 5
(2) Cost of long-term debt after tax: 8% ( 1 – tax rate)
= 8% ( 1 – 35%)
= 8% (65%)
= 5.2%
Market value of long term debt ( in $ million) = ( par value of Debt * coupon rate) / Yield
= (30 * 8%) / 12%
= 2.4 / 12%
= 20
(3) Market price of preferred stock = annual Dividend / Yield to investor
= ($2.50*4) / 0.11
= $ 10 / 0.11
= $ 90.909
Cost of new preferred stock = Annual dividend / Current market price – floatation cost
= ($2.50*4) / $ 90.909 – ( 3% * $ 90.909)
= $ 10 / $ 90.909 – $ 2.727
= $ 10 / $ 88.182
= 0.1134
= 11.34%
Market value of Preferred stock ($ millions) = Par value of Preferred * Annual Dividend rate / Yield
= 5 * ( $ 10 / $ 100) / 0.11
= 5 * 0.1 / 0.11
= 0.5 / 0.11
= 4.545454
(4) Market value of Common stock ($ millions) = No of common stock outstanding * Current market price
= 4 * 20
= 80
Retention ratio = (1 – dividend pay-out ratio)
= (1 – $1 / $ 2)
= (1 – 0.5)
= 0.5
= 50%
Growth rate = return on equity * retention ratio
= 26% * 0.5
= 13%
Cost of common stock (Alternative 1) = (Dividend for next year / Current market price) + growth rate
= [1 ( 1+ 0.13) / 20 ] + 13%
= [1 ( 1.13) / 20 ] + 13%
= [1.13 / 20 ] + 13%
= 5.65% + 13%
= 18.65%
Cost of common stock (alternative 2) = Risk free rate + Beta (Market risk premium)
= 10% + [(1.3 + 1.7)/2] [(4.5% + 5.5%) /2]
= 10% + [(1.3 + 1.7)/2] [(4.5% + 5.5%) /2]
= 10% + (1.5)( 5%)
=10% + 7.5%
= 17.5%
Cost of Common stock (Alternative 3) = Yield on TII Bond + Average Risk premium
= 12% + (4% + 6%) / 2
= 12% + (10%) / 2
= 12% + 5%
= 17%
Cost of common stock = Highest of Alternative 1, Alternative 2 & Alternative 3
= Highest of (18.65%, 17.5% and 17%)
= 18.65%
Answer : Weighted Average cost of capital (WACC) of Company is 15.28% (take a look to the document attached)