Answer: According to Ian Redpath and Greg Urban, the threshold amount required for conclusively stating whether a substantial basis adjustment is mandatory is $250,000. The amount required is $250,000 in order for one to know whether they are in need for a substantial basis reduction or maybe not. It's required when the amount indeed exceeds $250,000.
Answer:
1.23
Explanation:
Inventory turnover is a ratio showing how many times a company has sold and replaced inventory during a given period.
Cost of Sales=Opening Inventory+Purchases-Closing Inventory
=5,500+4,000-3,800= 5,700
Average Inventory= Opening + Closing/2
= 5,500+3,800/2= 4,650
Inventory Turnover Ratio= <u>Cost of Sales</u>
Avg Inventory
= 5,700/4,650=1.23
Explanation:
A). The computation of price per share is shown below:-
Debt outstanding ÷ (Stock outstanding of Plan 1 - Stock outstanding of
Plan 2)
= $1,730,000 ÷ (205,000 - 125,000)
= $21.63 per share
B a.) Under equity plan the value is
= Debt outstanding × Stock outstanding of Plan 1
= $21.63 × 205,000 shares
= $4,433,125
B b.) under the levered plan the value is
Price per share × Stock outstanding of Plan 2 + Debt outstanding
= $21.63 × 125,000 shares + $1,730,000
= $2,703,125 + $1,730,000
= $4,433,125
Answer:
Year Cash Flow (A) Cash Flow (B)
0 -37,500 -37,500
1 17,300 5,700
2 16,200 12,900
3 13,800 16,300
4 7,600 27,500
1) Using an excel spreadsheet and the IRR function:
IRR project A = 20%
IRR project B = 19%
2) Using the IRR decision rule, Bruin should choose project A.
3) In this case, since the length of the projects is only 4 years, then there should be no problem with the IRR decision rule, but for projects with longer time lengths, the discounts rates might vary and the best option is to use the modified internal rate of return (MIRR). But in this case the NPV of project B is higher, then Bruin should probably project B because it has a higher NPV. The NPV is always more important then the IRR.
4) Again using an excel spreadsheet and the NPV function:
NPV project A = $6,331
NPV project B = $8,139
5) first we must subtract cash flows from A by the cash flows from B:
1 $11,600
2 $3,300
3 -$2,500
4 -$19,900
then we calculate the IRR = 16%
Bruin should be indifferent between the two projects at a 16% discount rate. That means that at discount rates above 16%, you should choose project A, but at discount rates below 16%, you should choose project B
Answer:
A) a 23.5% decrease in materials
B) a 64% decrease in labor costs
C) a 29.1% decrease in overhead
Explanation:
White Tiger's multifactor productivity = $300 / $148 = 2.027
if we want to increase the multifactor productivity by 12%, it will = 2.27
since we will not change the sales price, we must determine the new total cost:
$300 / cost = 2.27
cost = $300 / 2.27 = $132.16 ≈ $132, which represents a $16 decrease
A) materials ⇒ $16/$68 = 23.5%
B) labor costs ⇒ $16/$25 = 64%
C) overhead ⇒ $16/$55 = 29.1%
