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LenaWriter [7]
3 years ago
8

Peter Pan is moving from Never Never land to Oz. In Oz, he will receive 35,000 dollars per year in perpetuity. He received 25,00

0 per year in Never Never Land and attached a value of 150,000 to being close to Tinker Bell. Determine if the following statement is either True or False Peter’s discount rate could be either 4%, 5%, or 8%
Business
1 answer:
Licemer1 [7]3 years ago
6 0

Answer: True

Explanation:

At 4%

PV = 35,000/4% = 875000

At 5%

PV = 35000/5% = 70000

At 8%

PV = 35000/8% = 437500

At various rates r we can see that the value is greater than what Peter Pan receives in Never Never Land which is $25,000 + $150,000 = $175,000

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Knowledge Check 01 Feline Watch Company makes wrist watches out of silver metal sheets. Feline sold 200 watches in the month of
anastassius [24]

Answer:

the number of watches to be produced in July is 500

Explanation:

The calculation of the number of watches to be produced in July is given below;

Units Expected to be sale 400  

Add: Desired ending inventory 300 (50% of 600)

Total available 700  

Less: Beginning Inventory -200  

Units to be produced 500

Hence, the number of watches to be produced in July is 500

6 0
3 years ago
Fitch Ratings a credit rating agency, recently downgraded Vermont's debt rating from AAA to AA, citing the state's economy and c
Natalija [7]

Answer:

a. Increase the direct costs of the state's debt.

Explanation:

When a bond's rating is downgraded is a signal to the investors that investing in the bond now is riskier than it was prior to the rating downgrade, hence, a perceived higher risk using the risk/return relationship means that the bond issue would have to offer a higher return to entice the investors to invest in the bonds.

As a result, the higher required rate of return translates into a higher direct cost of the state's debt since their interest rate offered has increased

5 0
2 years ago
This information relates to Wildhorse Co..
noname [10]

Answer:

Wildhorse Co.’s books

Perpetual Inventory System

Date                  Account                                        Dr.              Cr

5 April                 Merchandise Inventory       $28,200

                              Accounts/ Notes Payable                                $28200

Purchased merchandise from Carla Vista Company for $28,200, terms 2/10, n/30.

6 April                 Freight Charges                  $ 710

                                Cash                                                   $ 710

Paid freight costs of $710

7 April                    Equipment                    $ 33200

                               Accounts Payable                              $ 33,200

Purchased equipment on account for $33,200.

8 April                 Accounts Payable             $3800

                                Merchandise Inventory                     $ 3800

Returned $3,800 of April 5 merchandise

15 April                  Accounts Payable               $ 24,400

                                 Purchases Discount                              488

                                 Cash                                                       $ 23,912

Paid the amount due ($28,200- $3800= $24,400)

2% of $ 24,400= $ 488

b. Payment of balance due on May 4 instead of Apr 5

4 May                Accounts Payable             $ 24,400

                                   Cash                                                  $ 24,400

4 0
3 years ago
Workers with knowledge-based education and managerial skills are
Lady_Fox [76]
C Skilled labour as it say in the statement
6 0
3 years ago
Read 2 more answers
Northwood Company manufactures basketballs. The company has a ball that sells for S25. At present, the ball is manufactured in a
Maksim231197 [3]

Answer:

1A. Compute the CM ratio and the break-even point in balls.

  • CM ratio = 2.5
  • break even point = 21,000 balls

1B. Compute the degree of operating leverage at last year.

  • 31.82%

2. Due to an increase in labor rates, the company estimates that variable expenses will increase by $3 per ball next year. If this change takes place and the selling price per ball remains constant at $25, what will be the new CM ratio and break-even point in balls?

  • CM ratio = 3.57
  • break even point = 30,000 balls

3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $90,000, last year?

  • 42,858 balls

4. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year, what selling price per ball must it charge next year to cover the increased labor costs?

  • new price of $28 per ball

5. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls?

  • CM = 1.32
  • 26,250 balls

6.a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $90,000, as last year?

  • 31,875 balls

6.b. Assume the new plant is built and that next year the company manufactures and sells 30,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage.

Income Statement

Total revenue $750,000

Variable expenses <u>($270,000) </u>

Contribution margin $480,000

Fixed expenses <u>($420,000 )</u>

Net operating income $60,000

Degree of operating leverage = 60.87%

6.c. If you were a member of top management, would you have been in favor of constructing the new plant?

  • If you cannot avoid paying the salary raise, then the company needs to carry on the new plant project.

Explanation:

sales price per ball = $25

variable expenses: $15 per unit

  • direct labor $9
  • other variable costs $6

CM ratio = net sales / CM = $750,000 / $300,000 = 2.5

break even point = total fixed costs / CM per unit = $210,000 / $10 = 21,000 balls

degree of operating leverage = fixed costs / total costs = $210,000 / $660,000 = 31.82%

new CM ratio = net sales / CM = $750,000 / $210,000 = 3.57

break even point = total fixed costs / CM per unit = $210,000 / $7 = 30,000 balls

sales level for $90,000 profit = ($210,000 + $90,000) / $7 = 42,857.14 ≈ 42,858 balls

CM ratio (new plant) = net sales / CM = $750,000 / $570,000 = 1.32

break even point = total fixed costs / CM per unit = $420,000 / $16 = 26,250 balls

sales level for $90,000 profit = ($420,000 + $90,000) / $16 = 31,875 balls

8 0
3 years ago
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