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BARSIC [14]
3 years ago
6

A local marketing firm is considering launching a new and extensive social media marketing campaign. This investment of resource

s is being looked at through the length of the project since it is anticipated to last at least 5 years. What financial calculation should be used to compute the investment's value, taking into account the time value of money?'
Business
1 answer:
slava [35]3 years ago
7 0

Answer:

The marketing firm should use the Present Net Value calculation to see if the marketing campaign will add value to the company.

Explanation:

The Present Net Value is a calculation that brings to present time all the future cash flows of an investment. Seeing the campaign marketing strategy as a potential investment, the firm has to identify the revenue entirely caused by the marketing campaign. Doing this, the firm will identify inflows (sales) per year that have to be subtracted to the outflows (marketing expenses). The net value of every year is discounted at a discount rate, and if the Present Net Value is higher than 0, it means that the marketing strategy is expected to bring value to the firm

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Leto [7]

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7 0
3 years ago
Forty Winks Corporation manufactures night stands. The production budget shows that Forty Winks Corporation plans to produce 1 c
miv72 [106K]

Answer:

Direct labor cost= $29,250

Explanation:

Giving the following information:

Production:

March= 1,900 nightstands

April= 2,000 nightstands

Each nightstand requires 0.5 direct labor hours in its production.

Forty Winks Corporation has a direct labor rate of $ 14.00 per direct labor hour.

First, we need to determine the number of hours required for each month:

March= 1,900*0.5= 950 hours

April= 2,000*0.5= 1,000 hours

Now, the combined cost:

Direct labor cost= 1,950*15

Direct labor cost= $29,250

3 0
3 years ago
Jamie has an undergraduate degree in finance and is employed full-time by a bank. She is taking courses at a local university le
ivann1987 [24]

Answer:

Please find the detailed answer as follows:

Explanation:

a) The cost of obtaining an MBA degree for someone who is employed in a business position normally is a deductible education expense. But if the reason for taking course is to qualify her for a new trade or business then the expense will not be deductible or disallowed.

Reasons Deductible or Nondeductible

  • It is to maintain or improve existing skills required in her present job. Deductible
  • It is to meet the minimum educational standards for qualification in her existing job. Deductible
  • It is to qualify her for a new trade or business. Nondeductible .
  • It is to meet the express requirements of her employer or the requirements imposed by law to retain her employment status. Deductible.

b) $4,000 will be allowed as deduction for qualified tuition under § 222. Except for this amount of tuition portion, Jamie must itemize to claim the deduction and it will also be subject to the 2% of AGI limitation.

5 0
3 years ago
In the current year, Tanager Corporation (a calendar year C corporation) had operating income of $480,000 and operating expenses
alekssr [168]

Answer:

(a) Tanager Corporation taxable income is $9,000 and its tax for the year is $1,890.

(b) Tanager Corporation taxable income is still $9,000 and its tax for the year is still $1,890.

Explanation:

(a) Compute Tanager’s taxable income and tax for the year.

Step 1: Calculation of tax ordinary taxable income

Ordinary taxable income = Operating income - Operating expenses

                                          = $480,000 - $390,000

Ordinary taxable income = $9,000

The US Corporate tax rate is presently 21%. This is applied to the ordinary taxable income as follows:

Ordinary income tax = Ordinary taxable income × Corporate tax rate

                                  = $9,000 × 21%

Ordinary income tax = $1,890  

Step 1: Calculation of capital gain tax

In the US, capital loss from the short or long term capital is deductible to the extent of the available other capital gains either short or long term capital gains but cannot be deducted from ordinary income for the period. Therefore, tax on taxable capital gains is calculated as follows:

Taxable capital gains = long-term capital gain - short-term capital loss

                                     = $55,000 - $40,000

Taxable capital gains = $15,000

Since the capital gain falls between $0 and $39,375, Tanager Corporation will pay zero tax on taxable capital gains of $15,000.

Therefore, Tanager Corporation taxable income is $9,000 and its tax for the year is $1,890.

(b) Assume the same facts except that Tanager's long-term capital gain was  $15,000. Compute Tanager’s taxable income and tax for the year.

Since only Tanager's long-term capital gain of  $15,000 was different, we recompute the capital gain/loss and capital gain tax as follows:

Taxable capital gains/loss = long-term capital gain - short-term capital loss

                                     = $15,000 - $40,000

Capital loss = - $25,000

Since Tanager is a corporation, it is not allowed to deduct excess capital loss of $25,000 from the ordinary taxable income.

Therefore, Tanager Corporation taxable income is still $9,000 and its tax for the year is still $1,890.

4 0
3 years ago
Village Bank has $350 million worth of assets with a duration of 12 years and liabilities worth $301 million with a duration of
Zielflug [23.3K]

Answer:

-2591.

Explanation:

From the question, we are given that Village Bank's assets,A = $350 million, duration for the assets,DA = 12 years, Village Bank's liabilities,L = $301 million, duration for the liabilities,DL = six years and the interest rate T-bond futures contracts now selling for 103-22 (30nds) and T-bond underlying the futures contract has a duration of nine(9) years.

The numbers of futures contracts must Village Bank sell to fully hedge the balance sheet is;

= - [ DA - (L/A) DL × A].

= - [ 12 - (301/350) × 6] × 350,000,000.

= - [ 12 - (0.86 × 6] × 350,000,000.

= - [ 12 - 5.16] × 350,000,000.

= - 2394000000.

Also, T-bond underlying the futures contract duration × price of future contract.

[ price of future contract = 100000 × 102 (20/30) = 102666.66667].

= 9 × 102666.66667 = 924000.00003.

Then, the numbers of futures contracts must Village Bank sell to fully hedge the balance sheet is;

= - 2394000000 ÷ 924000.00003.

= -2590.90909082497.

= - 2591.

8 0
3 years ago
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