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dezoksy [38]
3 years ago
8

Cash flows during the first year of operations for the Harman-Kardon Consulting Company were as follows: Cash collected from cus

tomers, $340,000; Cash paid for rent, $40,000; Cash paid to employees for services rendered during the year, $120,000; Cash paid for utilities, $50,000. In addition, you determine that customers owed the company $60,000 at the end of the year and no bad debts were anticipated. Also, the company owed the gas and electric company $2,000 at year-end, and the rent payment was for a two-year period. Calculate accrual net income for the year.
Business
1 answer:
lukranit [14]3 years ago
7 0

Answer:

$208,000

Explanation:

Net income= Revenue -expenses

The first step is to calculate the total revenue

Total revenue= credit sales+cash collected from customers

= $60,000 + $340,000

= $400,000

The total expenses can be calculated as follows

= Rent expense + salaries expense + utilities expense

= (40,000/2)+$120,000 + ($50,000 + $2,000)

= $20,000 + $120,000 + $52,000

= $192,000

Therefore the accrual net income for the year can be calculated as follows

= $400,000 - $192,000

= $208,000

Hence the accural net income for the year is $208,000

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Answer:

a)

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Thus,  

Expected Rate of Return = [Risk free Rate + Beta × (Market Risk - Risk free Rate)]

Beta = [Expected Rate of Return – Risk Free Rate] / [Market Risk - Risk free Rate]

Beta = [12% - 5%] / [10% -5%]

Beta = 7/5

Beta =1.4

The final possible instability while taking the same estimated rate of return as Amazon is $21,000 ($15,000 × 1.4) which indicate that it borrows $6,000 ($21,000 - $15,000). Now the -$6,000 is specified as strength benefit. So the volatility of the asset is,

Volatility = [Volatility of Asset x Beta]

Volatility = [18% × 1.4]

Volatility = 0.252 or 25.20%

Therefore the volatility is less than the volatility of Amazon.

b)

The market share has a instability of "n". The corresponding instability of Amazon will be 2.22 (40%/18%). So the assortment with the most notable predictable give back that has a faint variability from Amazon is $33,333.33 ($15,000x 2.22) which will be the market assortment and it also uses $18,333.33 ($33,333.33 - $15,000). Here the -$18,333.33 is specified as strength asset. So the return is,

Expected Return = [Risk free Rate + Beta × (Market Risk – Risk free Rate)]

Expected Return = [5%+ 122 × (10% - 5%)]

Expected Return = [5%+ 122 × 5%]

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In betting, expected value can be defined as (Amount won per bet * probability of winning) – (Amount lost per bet * probability of losing)

For the first gamble:

EV=(0.5*20) - (0.5*20) = 0

For the second gamble:

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