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marishachu [46]
4 years ago
8

Assume the Hiking Shoes division of the All About Shoes Corporation had the following results last year (in thousands). Manageme

nt's target rate of return is 20% and the weighted average cost of capital is 30%. Its effective tax rate is 40%.-Sales $5,000,000-Operating income 1,250,000-Total assets 1,000,000-Current liabilities 750,000What is the division's Residual Income (RI)?A) $1,050,000B) $420,000C) $2,000,000D) $950,000
Business
1 answer:
NNADVOKAT [17]4 years ago
5 0

Answer:

A) $1,050,000

Explanation:

Residual income

= Net operating income - (Total assets*Target rate of return)

= 1,250,000 - (20%*1,000,000)

= $1,050,000

Therefore, The division's Residual Income is $1,050,000.

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Roberta transfers property with a tax basis of $495 and a fair market value of $546 to a corporation in exchange for stock with
Volgvan

Answer: $546

Explanation:

The amount realized by Roberta in the exchange will be gotten through the addition of the fair value of the stock that was acquired to the liability that's assumed by the corporation. This will be:

Fair value of stock acquired = $356

Add: Liability assumed by corporation = $190

Amount realised = $356 + $190 = $546

5 0
3 years ago
Consider the three theories of the upward slope of the short-run aggregate-supply curve. According to the sticky-wage theory, th
mrs_skeptik [129]

Answer:

According to the sticky-wage theory, the economy is in a recession because the price level has declined so that real wages are too high, thus labor demand is too low.

According to the sticky-price theory, the economy is in a recession because not all prices adjust quickly.

According to the misperceptions theory, the economy is in a recession when the price level is below what is expected.

Explanation:

The above mentioned are the three theories of the upward slope of the short-run aggregate-supply curve.

7 0
3 years ago
Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $2.50 per gallon. Complet
Darina [25.2K]

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

Price ceiling:-This is show the limit of the price on maximizing value of the product which is decided by government and his imposed group for customer.

Binding:-The binding price ceiling is below the equilibrium price.  

Unbinding:-The unbinding price ceiling is above equilibrium price.  

Price floor:-This is show the limit of the price on lower value of the product which is decided by government and his imposed group for customer. A price floor must be higher than the price equilibrium price in order to be effective.  

Binding:-The binding price floor is above the equilibrium price.  

Unbinding:-The unbinding price floor is below the equilibrium price.

It is given that the equilibrium price of milk is $2.50 per gallon.

Statement 1:-This is the example of price floor and binding because minimum price of $2.30 per gallon is decided.

Statement 2:-This is the example of price floor and binding because minimum price of $3.40 per gallon is decided for gasoline.

Statement 3:-This is the example of price floor and binding because teenagers are not hired due to minimum-wage laws.  

7 0
3 years ago
Why is a high-quality bond typically considered a lower-risk investment than a stock?
Verdich [7]
<span> <span>In investment, the term risk can be defined as the possibility of the investor losing all or part of their capital in a given venture. High quality bonds are considered lower risk because the the investor is promised to receive face value after a certain period unlike stocks that do not carry the same promise. Returns on high quality bonds are also guaranteed in the form of fixed interest rates whereas in stocks, a company may pay dividends but this is not an obligation on their part. Lastly bonds are safer investment as they are less susceptible to abnormal price changes unlike stocks whose prices can easily swing in either direction.</span></span>
8 0
3 years ago
In discussing inventory, helena mentions that bikinis for sale on the website are not always in stock. say customer feedback ind
quester [9]

The best action that Helena should take first is that she should decide that when retail stores and as well as online customers order bikinis, she should help them in a way that they don’t have to wait more than two weeks in regards of the order to arrive. By that, this will prevent customers from cancelling their order.

6 0
3 years ago
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