Answer:
The minimum transfer price is $92
Explanation:
Minimum transfer price = Variable cost + Opportunity cost
= $42 + $(92-42)
= $42 + $50
= $92
Answer:
$2,664.68
Explanation:
Salary $3,600
Overtime $0
Gross Pay:$3,600
Required Deductions:
Federal Tax(15%*3,600) $540
Social Security Tax(6.2%*3,600) $223.2
Medicare Tax(1.45%*3,600) $52.12
Voluntary Deductions:
Health Insurance 48
Union Dues $0
Retirement $0
Savings:( 2% *3,600)72
Other:
Total Deductions:935.32
Net Pay: (3,600-935.32) $2,664.68
Therefore Susan Net pay will be $2,664.68
Answer:
Bond Contract:
1. Call provision allows the issuer to redeem bonds under specified terms prior to maturity.
2. To operationalize the sinking fund provision of an indenture, issuers can (2) call the bonds if they contain a call provision.
3. A firm is more likely to buy the required number of bonds in the open market as opposed to using one of the other procedures "When interest rates are lower than they were when the bonds were issued."
Explanation:
a) Call provisions: When a bond contains a provision that enables the issuer to buy the bond back from the bondholder at a pre-specified price prior to maturity, the bond is said to be callable. Issuers use this provision to reduce their interest if rates fall after a bond is issued. This is because existing bonds can then be replaced with lower-yielding bonds.
A call provision is not to the advantage of the bondholder, hence, the bond will offer a higher yield than an otherwise identical bond with no call provision. A call provision cannot be bought or sold separately from the bond, therefore, it is called an embedded option.
b) Sinking Fund: Bonds issued with a provision that requires the issuer to repurchase a fixed percentage of the outstanding bonds each year, regardless of the level of interest rates is said to be issued with a sinking fund provision. This reduces the possibility of default, that is, when a bond issuer is unable to make promised payments in a timely manner. A sinking fund reduces credit risk to bondholders and is offered with a lower yield than an otherwise identical bond with no sinking fund.
c) Bonds, generally, are debt securities issued by an entity to the public with a promise to repay the borrowed funds with fixed period interest. They can be issued at par, a discount, or a premium.
Answer:
The project is viable as the net present value is positive. The project yields even more than the cost of capital
Explanation:
for the cost of the mahcine we must include all the cost for leave it ready to use.
So, we add the purchase and installation cost:
250,000 + 20,000 = 270,000 investment cost.
revenue of 90,000
time of 5 years
and salvage value of 75,000 at the end of useful life.
<u>Present value of the salvage value:</u> present value of a lump sum
Salvage 75,000.00
time 5.00
rate 0.12
PV 42,557.01
<u>Present value of revenues:</u> will be considered ordinary annuity
C 90,000
time 5
rate 0.15
PV $324,429.86
Net present value:
present value of inflow less present value of outflow:
324,429.86 + 42,557.01 -270,000 = 96.986,87