Write the president (me) a memo explaining your reasoning and suggest a new pricing strategy. (You can decide what kind of business we’re in)

Answers

Answer 1

Answer:

To: President

From: General Manager Finance

Subject : Pricing strategy for existing products

Date : 20th June 2021

As you are aware about the declining sales of our various products. The main reason identified by our sales and marketing analysts for the declining sales is over pricing of various products. There have been increase competition in the market and new entrants have adopted strategy of economies of scale which enable them to sell the product at low price and gain market share. There we need to cut our costs and then reduce our profit margin to boost sales of our products. We can be profitable from volume sales strategy.

If you need to discuss further on this matter, we can arrange a meeting with head of different department to discuss the business strategy in more detail.


Related Questions

Both corrective taxes and tradable pollution permits reduce the cost of environmental protection and thus should increase the public's demand for a clean environment. b. Both corrective taxes and tradable pollution permits provide market-based incentives for firms to reduce pollution. c. Tradable pollution permits have an advantage over corrective taxes if the government is uncertain as to the optimal size of the tax necessary to reduce pollution to a specific level. d. Corrective taxes set the maximum quantity of pollution, whereas tradable pollution permits fix the price of pollution.

Answers

Answer:

d. Corrective taxes set the maximum quantity of pollution, whereas tradable pollution permits fix the price of pollution.

Explanation:

The government applied the alternatives for the policy in order to control the pollution problem

here following two vital policy alternatives i.e.

1. Corrective taxes

2. Permits of Tradable pollution

The corrective taxes impose the per unit tax with regard to the pollution i.e. emitted. Also it fixed the pollution price  

Here there is a permit of the tradable pollution that could set the pollution limit i.e. maximum. On the other hand, the firm could emit the pollution till the quantity mentioned by the permit of the tradable permit  

So, the option d should be considered

The following data apply to Benevento Industries, Inc. (BII): Value of operations $1,000 million Short-term investments $100 million Debt $300 million Number of shares 100 million The company plans on distributing $100 million as dividend payments. What will the intrinsic per share stock price be immediately after the distribution

Answers

Answer: $7

Explanation:

Firstly, we'll calculate the equity which will be:

= Value of operations - Value of debt

= $1000 - $300

= $700

Then, the intrinsic price will be:

= Equity/Number of shares

= $700/100

= $7

Therefore, the intrinsic per share stock price immediately after the distribution will be $7

Clover Hardware sold a range of products. A few weeks ago, orders arrived for the garden center and outdoor living areas. 500 grills, purchased at a cost of $75 each, were distributed among 10 locations. 200 were sold for $175 each across all locations. The cost of goods sold totals __________.

Answers

Answer:

COGS= $15,000

Explanation:

Giving the following information:

Purchase= 500 grills

Unitary cost= $75

Units sold= 200

To calculate the cost of goods sold, we need to use the following formula:

COGS= beginning finished inventory + cost of goods purchased - ending finished inventory

COGS= 0 + 500*75 - 300*75

COGS= $15,000

or;

COGS= 200*75= $15,000

The ledger of Shamrock, Inc. on March 31, 2017, includes the following selected accounts before adjusting entries.

Debit Credit
Supplies 2,610
Prepaid Insurance 2,480
Equipment 22,500
Unearned Service Revenue 12,000

An analysis of the accounts shows the following.

1. Insurance expires at the rate of $310 per month.
2. Supplies on hand total $960.
3. The equipment depreciates $150 per month.
4. During March, services were performed for two-fifths of the unearned service revenue.

Required:
Prepare the adjusting entries for the month of March.

Answers

Answer and Explanation:

The adjusting entries are as follows:

1 Insurance expense Dr $310

           To Prepaid Insurance  $310

(Being insurance expense is recorded)  

2 Supplies expense Dr $1,650 ($2,610 - $960)

           To Supplies $1,650

(Being supplies expense is recorded)  

3 Depreciation expense Dr $150

           To Accumulated Depreciation - Equipment $150

(Being depreciation expense is recorded)  

4 Unearned service revenue Dr (two-fifth of $12,000) $4,800

           To Service Revenue $4,800

(Being service revenue is recorded)

Ethelbert is a young software company owned by two entrepreneurs. It currently needs to raise $1,254,400 to support its expansion plans. A venture capitalist is prepared to provide the cash in return for a 40% holding in the company. Under the plans for the investment, the VC will hold 19,600 shares in the company and the two entrepreneurs will have combined holdings of 29,400 shares.
a. What is the total after-the-money valuation of the firm?
b. What value is the venture capitalist placing on each share?

Answers

Answer:

a. $3,136,000

b. $64 per share

Explanation:

The computation is shown below

a. The total after the money valuation is

= $1,254,400 ÷ 40%

= $3,136,000

b. The value that venture capitalist place on each share is

= $3,136,000 ÷ (19,600 ÷ 40%)

= $3,136,000 ÷ 49,000 shares

= $64 per share

Hence, the same should be considered

dự báo thị trường trên các đường bay dự kiến khai thác

Answers

I don’t really know What your saying lol

Sah Inc's last free cash flow was $1.75 million. Its free cash flow growth rate is expected to be constant at 25% for 2 years, after which free cash flows are expected to grow at a rate of 6% forever. Its weighted average cost of capital WACC is 12%. Huxley has $5 million in short-term investments and $7 million in debt and has 2 million shares outstanding. What is the best estimate of the current intrinsic stock price

Answers

Answer:

$40.64 per share

Explanation:

The computation of the best estimate of the current intrinsic stock price is given below;

Enterprise value is

= ($1.75 × (1.25)) ÷ (1.12)^1 + ($1.75 × (1.25)^2) ÷ (1.12)^2 + (($1.75 × (1.25)^2 × 1.06) ÷ 0.06) ÷ (1.12)^2

= $42.64 million

now  

market cap = enterprise value - debt + investments

= $42.64 - $7 + $5

= $40.64 million

Now finally  

price = $40.64 million ÷ 1million

= $40.64 per share

In order to sell a product at a profit the product must be priced higher than the total of what it costs you to build the unit, plus period expenses, and plus overhead. At the end of last year the broad cost leader Chester had an Elite product Cake. Use the Inquirer's Production Analysis to find Cake's production cost, (labor materials). Exclude possible inventory carrying costs. Assume period expenses and overhead total 1/2 of their production cost. What is the minimum price the product could have been sold for to cover the unit cost, period expenses, and overhead

Answers

Answer: Hello there is a missing data below is the missing data

                The production cost is $21.45.

answer : 32.175  ≈ $32

Explanation:

Using the Inquirer's Production Analysis to find Cake's production cost, (labor materials).

Period expenses and Overhead = 1/2 production cost

Minimum price = production cost + period cost + overhead cost ( 1/2 production cost )

∴ Minimum price = 21.45 + 10.725

                             ≥ 32.175

On January 2, 2017, Concrete Master Construction, Inc. issued $500,000, ten-year bonds for $574,540. The bonds pay interest on June 30 and December 31. The face rate is 8% and the market rate is 6%. What is the carrying value of the bonds after the first interest payment is made on June 30, 2017

Answers

Answer:

The carrying value of the bonds after the first interest payment is made on June 30, 2017, is $571,776

Explanation:

The carrying value of the bond after the first interest payment will be calculated as follow

Carrying value of bond = Bond Issuance value - Amortization of Bond premium

Where

Bond Issuance value = $574,540

Amortization of bond premium = Coupon payment - ( Bond issuance value x Market rate ) = ( $500,000 x 8% x 6/12 ) - ( $574,540 x 6% x 6/12 ) = $20,000 - $17,236 = $2,764

Placing values in the formula

Carrying value of bond = $574,540 - $2,764

Carrying value of bond = $571,776

Use the following information: Windswept, Inc. 2017 Income Statement ($ in millions) Net sales $10,160 Cost of goods sold 8,210 Depreciation 510 Earnings before interest and taxes $1,440 Interest paid 122 Taxable income $1,318 Taxes 461 Net income $857 Windswept, Inc. 2016 and 2017 Balance Sheets ($ in millions) 2016 2017 2016 2017 Cash $320 $350 Accounts payable $1,730 $1,610 Accounts rec. 1,180 1,080 Long-term debt 1,190 1,390 Inventory 2,080 1,830 Common stock 3,520 3,520 Total $3,580 $3,260 Retained earnings 730 980 Net fixed assets 3,590 4,240 Total assets $7,170 $7,500 Total liab.& equity $7,170 $7,500 What is the quick ratio for 2017?a. 89 times.b. 1.81 times.c. 1.14 times.d. 88 times.e. 2.02 times.

Answers

Answer:

See below

Explanation:

Given the information above, Quick ratio is computed as shown below;

Quick ratio = Quick assets / Current liabilities

Where,

Quick assets = Cash and cash equivalents + Marketable securities + Account receivables

Current liabilities = Bills payable + Accounts payable + Other short term liabilities

From the balance sheet, Quick assets includes cash and account receivables, while Current liabilities includes Accounts payable only

Quick ratio = $350 + $1,080 / $1,610

Quick ratio = $1,430/ $1,610

Quick ratio = 0.89 times

Therefore, the quick ratio for 2017 is 0.89 times

You are sitting next to a person in business class on a flight from Los Angeles to Sydney, Australia. You mention to that person that you got your ticket two months ago for only $12,500. The person responds that she bought her ticket two days ago for $7,800. This sometimes happens because airlines often use an approach called:

Answers

Answer:

price discrimination (third degree price discrimination)

Explanation:

Price discrimination is when the same product is sold at different prices to customers in different markets

types of price discrimination

1. first degree price discrimination : here sellers charge each consumer at their willingness to pay in order to eliminate consumer surplus.

2. second degree price discrimination : here firms offer different prices depending on the quantity purchased. e.g. giving discounts for bulk purchases.  

3, third degree price discrimination : firms charge different prices to different groups of customers. e.g. having a certain price for senior citizens, students  

While attending a show you are disturbed by a child behind you who talks incessantly while repeatedly kicking the back of your seat.You respond by occasionally turning around and fidgeting in your seat.What type of conflict-management style are you exhibiting?
A) collaboration
B) competition
C) accommodation
D) avoidance
E) withdrawal

Answers

Answer: avoidance

Explanation:

Conflict avoidance occurs when a person avoids conflict by not reacting to it and rather changes the subject or avoids fighting back.

Since the person doesn't confront the child whom talking incessantly while repeatedly kicking the back of the seat but rather occasionally turns around and fidgets in the seat, then the type of conflict-management style being exhibited is avoidance.

Match these terms with their definitions.

a. The rate that reflects the provisions of the debt instrument, the credit standing of the borrowing business, and the current conditions in the credit markets and the economy as a whole.
b. The rate found in the debt contract that determines the amount of the interest payment.
c. Occurs when a bondâs issue price exceeds its face value.
d. The amount that must be repaid at maturity.
e. A type of liability which requires the issuing entity to pay the face value to the holder on the maturity date and to pay interest periodically at a specified rate.
f. Occurs when a bond is issued for an amount that is less than the principal.
g. Term referring to the date that a bondâs principal has to be repaid.

1. Bond.
2. Contract, coupon, stated rate.
3. Discount.
4. Face value, par value, principal.
5. Market rate, yield.
6. Maturity.
7. Premium.

Answers

Answer and Explanation:

The matching is as follows

a. 5. Market rate, yield. as it represent the debt instrument provisions, credit standing, and the present conditions

b. 2. Contract, coupon, stated rate, this represent that rate that could be find in the contract of the debt that measures the interest payment amount

c. 7. Premium. this is the case when the issue price of the bond is more than the face value

d. 4. Face value, par value, principal. It is the amount that should be repay at the maturity

e. 1. Bond. It is the liability that needs the entity to pay off the face value on the maturity date

f. 3. Discount. It arise when the issue price of the bond is lower than the principal

g. 6. Maturity. it refers to the date when the principal of the bond is repaid  

In preparation for developing its statement of cash flows for the year ended December 31, 2018, Millennium Solutions, Inc. collected the following information:

Payment for the early extinguishment of long-term notes (book value: $100 million) $108.1
Sale of common shares 352.1
Retirement of common shares 244.1
Loss on sale of equipment 4.1
Proceeds from sale of equipment 16.1
Issuance of short-term note payable for cash 20.1
Acquisition of building for cash 14.1
Purchase of marketable securities (not a cash equivalent) 10.1
Purchase of marketable securities (considered a cash equivalent) 2.1
Cash payment for 3-year insurance policy 6.1
Collection of note receivable with interest (principal amount, $22) 26.1
Declaration of cash dividends 66.1
Distribution of cash dividends declared in 2020 60.1

Required:
a. Prepare the investing activities section of Millennium's statement of cash flows for 2018.
b. Prepare the financing activities section of Millennium's statement of cash flows for 2018.

Answers

Answer and Explanation:

The preparation of the investing and the financing activities is presented below:

1) Investing activities

Proceeds from the sale of equipment 16

Purchase of building -14

Purchase of marketable securities -10

Collection of notes receivable 26

Net cash flow from investing activities 18

2) Financing activities

Payment of long term notes -108

Sales of common share 352

Retirement of shares -244

Issue short term notes payable 20

Dividend paid -60

Net cash flow from financing activities -40

Kaspar Industries expects credit sales for January, February, and March to be $205,200, $266,800, and $316,800, respectively. It is expected that 75% of the sales will be collected in the month of sale, and 25% will be collected in the following month. Compute cash collections from customers for each month.
Collections from Customers
Credit Sales January February March
January
February
March

Answers

Answer:

Results are below.

Explanation:

Giving the following information:

It is expected that 75% of the sales will be collected in the month of sale, and 25% will be collected in the following month.

Sales:

January= $205,000

February= $266,800

March= $316,800

Cash collection January:

Sales in cash from January= 205,000*0.75= 153,750

Total cash collection January= $153,750

Cash collection February:

Sales in cash from February= 266,800*0.75= 200,100

Sales in account from January= 205,000*0.25= 51,250

Total cash collection February= $251,350

Cash collection March:

Sales in cash from March= 316,800*0.75= 237,600

Sales in account from February= 266,800*0.25= 66,700

Total cash collection March= $304,300

Instead of issuing securities, Artificial Intelligence Inc. pursues other sources of funds. To obtain venture capital financing, the firm will most likely:_______.a. pool funds to invest in a business venture. b. give up a share of its ownership. c. borrow funds to be returned on a designated maturity date. d. pay periodic dividends.

Answers

Answer:

The answer is B.

Explanation:

The correct option is B. - give up a share of its ownership. Venture capitalist invest in a start up ventures or small businesses that they believe have high future prospects.

Because venture capitalists are exprienced business wise and have enough money, they tend to make or provide managerial decisions. The business will be in form of partnership, hence, Artificial Intelligence Inc. giving up part of its ownership.

It is not a must venture business pay a periodic dividend but business capitalist share in the profit or loss of the business.

Weaver Corporation had the following stock issued and outstanding at January 1, Year 1:
1. 70,000 shares of $14 par common stock.
2. 7,500 shares of $100 par, 7 percent, non-cumulative preferred stock.
On June 10, Weaver Corporation declared the annual cash dividend on its 7,500 shares of preferred stock and a $2 per share dividend for the common shareholders. The dividends will be paid on July 1 to the shareholders of record on June 20.
Prepare general journal entries to record the declaration and payment of the cash dividends.

Answers

Answer:

Preferred shareholder (7,500*$100)*7%   $52,500

Common shareholder (70,000×$2)          $140,000

Total dividend                                            $192,500

Date         General Journal                  Debit         Credit

10 June     Dividend                            $192,500

                        To dividend payable                      $192,500

                 (To record dividends payable)

20 June    No entry required

01 July       Dividend payable              $192,500

                         To cash                                           $192,500

                  (To record dividend payment)  

31 Dec      Retained earning               $192,500

                         To dividends                                   $192,500

                (To close dividend account)

Ricky is not in a consumer equilibrium. Given the prices of goods, Ricky has allocated all his income such that his marginal utility per dollar spent is ________ for ________ goods.

Answers

Answer:

The options are

A) as small as possible; all

B) equal; all

C) equal; normal

D) maximized; all

The answer is B) equal; all

Ricky not being in a consumer equilibrium and he considering the prices prices of goods means he allocated all his income in such a way that entails his marginal utility per dollar spent is equal for all goods.

This is to ensure that he cuts cost and maximizes his spending power.

Vincenzo Martin and Sasha Boudrakis have started a new firm, The Fan Base. Vincenzo is a well-known marketing guru who advises major league sports franchises on how to maximize the revenue from their teams' brands and logos. Sasha, meanwhile, is mostly silent in the operation. He has invested $2 million to get The Fan Base off the ground, and in return he receives 25% of the firm's annual profits. The Fan Base is organized as a Group of answer choices corporation. limited liability company (LLC). sole proprietorship. general partnership. limited partnership.

Answers

Answer: limited partnership

Explanation:

With the description given in the question, the The Fan Base is organized as a limited partnership. A limited partnership has a general partner, whom has an unlimited liability and a limited partner.

A limited partnership is when two or more partners go into business together, and in this case, the limited partners will be liable only up to the amount that they invested in the business.

Rudd Clothiers is a small company that manufactures tall-men's suits. The company has used a standard cost accounting system. In May 2017, 11,250 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours. All materials purchased were used.
Cost Element Standard (per unit) Actual
Direct materials 8 yards at $4.40 per yard $375,575 for 90,500 yards
($4.15 per yard)
Direct labor 1.2 hours at $13.40 per hour $200,925 for 14,250 hours
($14.10 per hour)
Overhead 1.2 hours at $6.10 per hour $49,000 fixed overhead $37,000 variable
overhead (fixed $3.50; variable $2.60)
Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $49,000, and budgeted variable overhead was $36,400
Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round answers to 0 decimal places, e.g. 125.)

Answers

Answer: See explanation

Explanation:

1. The total, price, and quantity variances for materials will be:

Actual Production = 11250

Standard Quantity of Direct Material Required per unit = 8

Standard Quantity of Direct Material required (SQ) = 11250*l × 8 = 90000

Standard Price per Yard (SP) = 4.4

Actual Direct Material (AQ) = 90500

Actual Price per Pound (AP) = 4.15

Total Material Variance:

= (SP × SQ) - (AP × AQ)

= (4.40 × 90000) - (4.15 × 90500)

= 396000 - 375575

= 20425

Direct Material Price Variance:

= AQ × (SP - AP)

= 90500 × (4.40 - 4.15)

= 90500 × 0.25

= 22625 Favourable

Direct materials quantity variance:

= SP × (SQ - AQ)

= 4.40 × (90000 - 90500)

= 4.40 × -500

= -2200 Unfavourable

2. The total, price, and quantity variances for labor will be:

Actual Production = 11250

Standard Hours Required per unit = 1.2

Standard Hours required (SH) = 11250 × 1.20 = 13500

Standard Rate per Hour (SR) = 13.4

Actual Hours required (AH) = 14250

Actual Rate per Hour (AR) = 14.1

Total Labour Variance:

= (SR × SH) - (AR × AH)

= (13.40 × 13500) - (14.10 × 14250)

= 180900 - 200925

= -20025 Unfavourable

Dircet Labour RateVariance:

= AH × (SR - AR)

= 14250 × (13.40 - 14.10)

= 14250 × -0.7

= -9975 Unfavourable

Direct Labour efficiency variance:

= SR × (SH - AH)

= 13.40 × (13500 - 14250)

= 13.40 × -750

= -10050 Unfavourable

A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $36,000 for A and $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $18.

Requied:
a. Determine each alternativeâs break-even point in units.
b. At what volume of output would the two alternatives yield the same profit?
c. If expected annual demand is 10,000 units, which alternative would yield the higher profit?

Answers

Answer:

Results are below.

Explanation:

Giving the following information:

Alternative A:

Fixed costs= $36,000

Unitary variable cost= $7

Selling price= $18

Alternative B:

Fixed costs= $31,000

Unitary variable cost= $11

Selling price= $18

First, we need to calculate the break-even point in units for each alternative:

Break-even point in units= fixed costs/ contribution margin per unit

Alternative A= 36,000 / (18 - 7)= 3,273

Alternative B= 31,000 / (18 - 11)= 4,429

Now, we equal the indifference point:

36,000 + 7x = 31,000 + 11x

x= number of units

5,000 = 4x

1,250 = x

The indifference point is 1,250 units.

Finally, 10,000 units are sold:

Alternative A:

Net income= 10,000*(18 - 7) - 36,000

Net income= $74,000

Alternative B:

Net income= 10,000*(18 - 11) - 31,000

Net income= $39,000

15. Assume that Bullen issued 12,000 shares of common stock, with a $5 par value and a $47 fair value, to obtain all of Vicker's outstanding stock. In this acquisition transaction, how much goodwill should be recognized

Answers

Answer:

$104,000

Explanation:

Note: The full question is attached as picture below

Fair value of net assets = Cash and receivables + Inventory + Land + Buildings (net) + Equipment (net) - Liabilities

Fair value of net assets = $70,000 + 210,000 + 240,000 + 270,000 + 90,000 - 420,000

Fair value of net assets = $460,000

Purchase consideration paid = 12,000*$47

Purchase consideration paid = $564,000

Goodwill recognized = Purchase consideration - Fair value of net assets

Goodwill recognized = $564,000 - $460,000

Goodwill recognized = $104,000

The BRS Corporation makes collections on sales according to the following schedule:45% in month of sale50% in month following sale5% in second month following saleThe following sales have been budgeted:Sales April $ 160,000May $ 180,000June $ 170,000Budgeted cash collections in June would be:___________a) $170,800b) $166,500c) $170,000d) $174,500

Answers

Answer:

$170,500

Explanation:

Calculation to determine what the Budgeted cash collections in June would be

Cash collections for June:March credit sales collected in June ($160,000 × 45%)$72,000

February credit sales collected in June ($180,000 × 50%) $90,000

January credit sales collected in June ($170,000 × 5%) $8,500

Total cash collections in June $170,500

Therefore the Budgeted cash collections in June would be:$170,500

Problems and Applications Q8 Suppose that the government decides to issue tradable permits for a certain form of pollution. In terms of economic efficiency in the market for pollution, having the government auction the permits off is distributing them to firms. True or False: If the government chooses to distribute the permits, the allocation of permits among firms does not matter for efficiency, but it would affect the distribution of wealth. True False

Answers

Answer:

1. False

2. True

Explanation:

Tradable permits issued to firms, there will be no effect on economic efficiency for the market of pollution permit. The revenue of government will be increase by selling and auctioning those permits.

The process for converting present values into future values is called________________.

Answers

Answer:

Compounding.

Explanation:

Compounding is typically an accounting process used for the conversion of present values of an asset, investment or money into future values.

Generally, a compound interest is calculated based on the interest rate on a loan, principal and the accumulated interest gained from previous periods. This interests is compounded for a certain number of times such as daily, weekly, quarterly or annually.

Mathematically, to find the future value from the present value of an asset or investment, we would use the compound interest formula;

[tex] A = P(1 + \frac{r}{n})^{nt}[/tex]

Where;

A is the future value. P is the principal or starting amount. r is annual interest rate. n is the number of times the interest is compounded in a year. t is the number of years for the compound interest.

The discount rate is the interest rate banks charge their best customers. the interest rate banks charge each other for overnight loans. the interest rate the U.S. Treasury pays on Treasury Bills. the interest rate the Fed charges to banks for loans from the Fed.

Answers

The interest rate banks charge each other for overnight loans.

Describe the key stages in integrating total quality management into the strategy of an international petrochemical company

Answers

Answer:

Total quality management (TQM) describes a management approach to long-term success through customer satisfaction. In a TQM effort, all members of an organization participate in improving processes, products, services, and the culture in which they work.

Explanation:

If my answer is incorrect, pls correct me!

If you like my answer and explanation, mark me as brainliest!

Crossfade Corp. has a bond with a par value of $2,000 that sells for $1,956.84. The bond has a coupon rate of 6.84 percent and matures in 24 years. If the bond makes semiannual coupon payments, what is the YTM of the bond

Answers

Answer:

Semestral rate= 3.51%

Annual rate= 7.02%

Explanation:

Giving the following information:

Par value= $2,000

Present value= $1,956.84

Coupon= (0.0684/2)*2,000= $68.4

Number of periods= 24*2= 48 semesters

To calculate the YTM, we need to use a financial calculator:

Function= CMPD

n= 48

I%= SOLVE = 3.51%

PV= 1,956.84

PMT= -68.4

FV= -2,000

Semestral rate= 3.51%

Annual rate= 3.51*2= 7.02%

Huprey Co. is the defendant in the following legal claims. For each of the following claims, indicate whether Huprey should (a) record a liability, (b) disclose in notes, or (c) have no disclosure.

Answers

Answer:

Record a liability.Disclose in notes.Have no disclosure.

Explanation:

A contingent liability should only be recorded if the likelihood of it happening is known and the value can reasonably be estimated.

In the first scenario, it is likely that Huprey will lose so the likelihood is known. The value can also be reasonably estimated to be $1,070,000 so this should be recorded as a liability.

In the second scenario, the likelihood is known but the value cannot be estimated. In such a case, simply disclose this possibility in the notes of the financial statement.

For the third scenario, the possibility of the liability being incurred is remote so there is no need to either record or disclose the liability.

Suppose two factors are identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 4% and IR 6%. A stock with a beta of 1 on IP and 0.4 on IR currently is expected to provide a rate of return of 14%. If industrial production actually grows by 5%, while the inflation rate turns out to be 7%, what is your best guess for the rate of return on the stock? (Round your answer to 1 decimal place.)

Answers

Answer:

15.4%

Explanation:

Calculation to determine your best guess for the rate of return on the stock

The revised estimate on the rate of return on

the stock would be:

Before

14% = α +[4%*1] + [6%*0.4]

α = 14% - 6.4%

α = 7.6%

With the changes:

7.6% + [5%*1] + [7%*0.4]

= 7.6% + 5% + 2.8%

= 15.4%

Therefore your best guess for the rate of return on the stock will be 15.4%

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