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Shtirlitz [24]
3 years ago
12

Use the following information for Problems 35 through 40 A potential investor is seeking to invest $1,000,000 in a venture, whic

h currently has 2 million shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce 1 million dollars in income per year at year 5. It is known that a similar venture recently produced $2,000,000 in income and sold shares to the public for $20,000,000. What is the percent ownership of our venture that must be sold in order to provide the venture investor’s target return?
Business
1 answer:
vodka [1.7K]3 years ago
4 0

Answer:

0.3797 or 37.97%

Explanation:

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

Wants Rate on return on investment = 50%

Expected value of return on investment = invested amount × (1+g)^t

= $1,000,000 × (1+50%)^5

= $1,000,000 × 7.59375

= $7,593,750

Similar venture would achieve valuation of $20,000,000 for $2,000,000. We can expect that company would achieve similar valuation of $20,000,000 in 5 years from now.

Investor’s share value at 5 years = $7,593,750 ÷ $20,000,000

= 0.3797 or 37.97%

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Reporting an Income Statement, Reporting a Statement of Retained Earnings, Reporting a Balance Sheet and Recording Closing Journ
Ber [7]

Answer and Explanation:

The Journal entry is shown below:-

1. Sales Revenue Dr, $42,030

   Rent Revenue $300

        To Salaries and Wages Expense $21,600

        To Depreciation Expense $1,300

       To Utilities Expense $4,220

       To Insurance Expense $1,400

        To Rent Expense $6,000

       To Income Tax Expense $2,900

       To Retained Earnings $4,910

(Being closing of revenues and expenses is recorded)

2. Retained Earnings Dr, $300

         To Dividends $300

(Being closing of dividend is recorded)

4 0
3 years ago
The United States and France both produce sweaters and caps. Suppose that a US worker can produce 50 caps per hour or 1 sweater
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Explanation
5 0
2 years ago
Cook Company processes and packages frozen seafood. The year just ended was Cook's first year of business and they are preparing
lys-0071 [83]

Answer:

Cook Company

a. The direct labor price variance and the direct labor efficiency variance for the year:

Direct labor price variance =  (Actual rate - Standard rate) * Actual hours

= $247,000 Favorable

Efficiency variance = (Actual hours - Standard hours) * Standard rate

= $94,500 Unfavorable

b. If all variances are written off to the Cost of Goods Sold:

Journal Entries:

Debit Work in Process $247,000

Credit Direct labor variance $247,000

To record the favorable direct labor price variance.

Debit Direct labor variance $94,500

Credit Work in Process $94,500

To record the unfavorable direct labor efficiency variance.

Debit Direct labor variance $152,500

Credit Cost of Goods Sold $152,500

To close the direct labor price variance.

c. The appropriate accounts are not indicated, though they should be Raw materials, Work in Process, and Cost of Goods Sold.  However, the ratios are not given for prorating.

Explanation:

a) Data and Calculations:

Standard direct labor hours per unit = 2

Standard rate per direct labor hour = $27

Production units = 60,000

Ending Finished goods = 4,800

Cost of goods sold units = 55,200

Actual direct labor hours used = 123,500

Standard hours = 120,000 (2 * 60,000)

Actual direct labor costs = $3,087,500

Actual direct labor price = $25 ($3,087,500/123,500)

Standard direct labor costs = $3,240,000 (120,000 * $27)

a. The direct labor price variance and the direct labor efficiency variance for the year:

Direct labor price variance =  (Actual rate - Standard rate) * Actual hours

= ($25 - $27) * 123,500

= $247,000 Favorable

Efficiency variance = (Actual hours - Standard hours) * Standard rate

= (123,500 - 120,000) * $27

= $94,500 Unfavorable

b. If all variances are written off to the Cost of Goods Sold:

Analysis of Journal Entries:

Work in Process $247,000 Direct labor variance $247,000

Direct labor variance $94,500 Work in Process $94,500

Direct labor variance $152,500 Cost of Goods Sold $152,500

($247,000 - $94,500)

5 0
3 years ago
M7_IND4. Andre Greipel is the owner of a small company that produces heart rate monitors. The annual demand is for 2,250 heart r
Stolb23 [73]

Answer :

a) Economic Production Quantity = 1,612 monitors

b) Number of setups = 1.4

c) Total cost = $972.12 per year

Explanation :

As per the data given in the question,

a) Economic Production Quantity = sqrt((2 × annual demand × set up cost) ÷ carrying cost × (1 - daily demand ÷ daily production))

=sqrt((2 × 2,250 × $350) ÷ $0.80 × (1 - 35 ÷ 140))

= 1,620.19

= 1,621 monitors

b) Number of setups = Annual demand ÷ Economic production quantity

= 2,250 ÷ 1,621

= 1.3880

= 1.4

c) Formula of Total cost = Carrying cost + Annual setup cost

Carrying cost=(Economic production quantity ÷ 2) × Carrying cost × (1 - daily demand ÷ daily production)

= (1,612 ÷ 2)× $0.80 × (1 -35 ÷ 140)

= $486.30

Annual setup cost = (Annual demand ÷ Economic production quantity) × setup cost

= (2,250 ÷ 1,621) × $350

= $485.812

So, Total cost = $486.30 + $485.812

= $972.12 each year

We simply applied the above formulas

6 0
3 years ago
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