Answer:
LOL Music Store
Journal Entry to record the payment:
November 21:
Debit Accounts Payable $1,000
Credit Cash $980
Credit Cash Discounts $20
To record the payment on account.
Explanation:
a) Data and Analysis:
November 17: Inventory $1,000 Accounts Payable $1,000
November 21: Accounts Payable $1,000 Cash $980 Cash Discounts $20
b) When LOL Music Store uses the perpetual inventory system to account for its merchandise, it debits the Inventory account instead of the Purchases account on November 17. The credit entry goes to the Accounts Payable account. On November 21, when payment is made, the Accounts Payable is debited while the Cash account and Cash Discounts are correspondingly credited.
Answer:
$2,252,000
Explanation:
Calculation to determine what amount should Sunland report as Cost of Goods Sold in the 2021 income statement
Using this formula
2021 income statement Cost of Goods Sold =Cost of Goods Sold account+(2021 LIFO Reserve account ending balance-2020 LIFO Reserve account ending balance)
Let Plug in the formula
2021 income statement Cost of Goods Sold =$2110000+($419000-$277000)
2021 income statement Cost of Goods Sold =$2110000+$142,000
2021 income statement Cost of Goods Sold =$2,252,000
Therefore The amount that Sunland should report as Cost of Goods Sold in the 2021 income statement is $2,252,000
B. Anchoring: This is the overreliance on an initial single piece of information or experience to make subsequent judgments. Once an anchor is set, other judgments are made by adjusting away from that anchor, which can limit one’s ability to accurately interpret new, potentially relevant information.
C. Shifting: This is the bias involved in shifting perspectives too rapidly, thereby forgoing objectivity and sound reasoning.
D. Halo effect: This is an observer’s overall impression of a person, company, brand, or product, and it influences the observer’s feelings and thoughts about that entity’s overall character or properties. It is the perception, for example, that if someone does well in a certain area, then they will automatically perform well at something else regardless of whether those tasks are related.
E. Overconfidence bias: This bias occurs when a person overestimates the reliability of their judgments. This can include the certainty one feels in her own ability, performance, level of control, or chance of success.
Answer:
Option C would be the correct answer.
Explanation:
Throughout objective reasoning, cognitive bias seems to be a weakness that has been triggered by that of the human brain's propensity to interpret knowledge through a prism of individual perspective including interests. The types of cognitive bias but for the remaining change.
The types of cognitive bias are almost as follows:
The latter considerations provided are not closely linked to the case provided. So, the answer above is the right one.
All of the given options are forms of cognitive bias except C. Shifting.
Cognitive biases are systematic patterns of deviation from objective judgment or rationality in decision-making. They can significantly impact the quality of our decisions. Among the listed options, all are recognized forms of cognitive bias except "Shifting."
Confirmation bias involves favoring information that confirms existing beliefs, Anchoring refers to relying too heavily on initial information, Halo effect influences overall judgments based on one aspect, and Overconfidence bias entails overestimating one's judgment's reliability.
"Shifting" is not a documented cognitive bias but may refer to rapidly changing perspectives, potentially leading to inconsistent or less objective reasoning. Understanding these biases is crucial for making more rational and informed decisions in various aspects of life.
So, option C is the answer.
For more questions on cognitive bias:
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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)
Answer:
The correct answer is letter "B": A personal interest.
Explanation:
Businesses based on consumers' personal interests attempt to provide a tailored good or service. The competitive advantage of the organization relies on the uniqueness of the product they can provide to their clients compared to competitors who tend to offer products with wide features to cover the larger amount of needs possible.
Conducting businesses driven by customers' personal interests requires constant studies of consumer patterns to adapt in front of market changes and segmentation to identify what sector of the market the company will dedicate their efforts to.
Answer:
Warbocks Corporation
Statement of retained earnings for the year ended December 31, 2017
Amount in $
Opening retained earnings 12,600
Net income for the year 7,000
Dividend (5,000)
Closing retained earnings 14,600
Explanation:
The retained earnings statement shows the movement in the retained earnings balance between the start and end of the year.
This includes the net earnings and dividend paid during the year.
Net income = $30,000 - $15,000 - $2,000 - $4,500 - $500 - $1,000
= $7,000
Answer:
Well, it depends on the product. But, I'd say, first, an idea for the product. Creating/designing and refining the product is next. Then, when finally satisfied, begin mass production
Explanation: