1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
LenKa [72]
3 years ago
7

Flint Systems is considering investing in​ production-management software that costs​ $630,000, has​ $67,000 residual​ value, an

d leads to cost savings of​ $1,650,000 per year over its​ five-year life. Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return.
Business
1 answer:
gizmo_the_mogwai [7]3 years ago
5 0

Answer:

The average amount invested in the asset that should be used for calculating the accounting rate of return is $348,500

Explanation:

For computing the average amount invested in the assets, following equation should be used which is shown below:

= (Production management cost + Residual value) ÷ 2

= ($630,000 + $67,000) ÷ 2

= $697,000 ÷ 2

= $348,500

In this the question has asked to compute the average so the amount should be divided by 2.

The cost saving should be irrelevant in the computation part because this is used in computing accounting rate of return. Thus, it is not been considered.

Hence, the the average amount invested in the asset that should be used for calculating the accounting rate of return is $348,500

You might be interested in
You have been assigned the task of using the corporate, or free cash flow, model to estimate Petry Corporation's intrinsic value
Oxana [17]

Answer:

$40 million

Explanation:

The computation of stock price is shown below:-

For computing the stock price first we need to compute the firm value which is below:-

Firm value = Free cash flow-1 ÷ (Weighted average cost of capital - Growth rate)

= $70.0 million ÷ (10% - 5%)

= $70.0 million ÷ 5%

= $1,400 million

Stock price = (Firm value - Debt) ÷ Number of shares

= ($1,400 million - $200 million) ÷ 30 million

= $1,200 million ÷ 30 million

= $40 million

6 0
2 years ago
Suppose that the spot price of the euro is currently $1.30. The 1-year futures price is $1.35. Is the interest rate higher in th
valkas [14]

Answer:

The interest rate is higher in the US.

Explanation:

The forward price is calculated using the following formula,

F= S ( 1+Rd / 1+Rf)^t

where,

  • F = Forward rate
  • S = Spot rate
  • Rd = Nominal interest rate in domestic market
  • Rf = Nominal interest rate in foreign market
  • t = time in years

We consider that the domestic market is the US and the domestic currency is the USD. Thus, it is a direct quote where 1 EUR = 1.3 USD

The forward price ER is more than the Sport ER only when the interest rate in domestic market is more than the interest rate in foreign market and as a result, the value of domestic currency against a foreign currency in the forward market depreciates.

We can see this by the following example,

Say Spot rate is $1.3 per 1 EUR and the interest rate in US is 10% while that in Euro zone is 5%. When we calculate the forward ER we will see that 1 EUR will buy us more USD in forward (more than 1.3 USD)

F= 1.3 * (1.1 / 1.05)^1   => $1.362 PER 1EUR

3 0
3 years ago
Which of the following mechanisms would be most likely to help motivate managers to act in the best interests of shareholders?
myrzilka [38]

Answer:

The correct answer is d) Increase the proportion of executive compensation that comes from stock options and reduce the proportion that is paid as cash salaries.

Explanation:

Option D. represents two situations that perfectly describe the interest that the shareholders pursue: the maximization of the profits of the company where they have their resources invested.

The shareholder, on the other hand, is also an investor, since he contributes capital with a view to obtaining a dividend.

Its investment is said to be in equities, given that there is no contract through which the shareholder will receive fixed fees in return for his investment. Their remuneration is through two ways:

  1. Dividend
  2. Increase in the price of the company. This is produced by its good progress and its ability to generate future benefits, as well as by the increase in assets through past benefits.
5 0
3 years ago
Auditors who are searching for evidence that assets, liabilities, and equity items have been recorded at appropriate amounts and
trasher [3.6K]

Answer:

a. valuation and allocation.

Explanation:

Financial accounting is an accounting technique used for analyzing, summarizing and reporting of financial transactions like sales costs, purchase costs, payables and receivables of an organization using standard financial guidelines such as Generally Accepted Accounting Principles (GAAP) and financial accounting standards board (FASB).

Internal controls can be defined as the policies, set of rules, and procedures implemented or put in place by an organization to protect its assets, boost efficiency, enhance financial accountability, enforce adherence to company policies and prevent fraudulent behaviors among the employees.

The main purpose of internal controls is to guarantee that loss is eliminated by ensuring that there is an accurate and reliable accounting system.

An internal control involves the timely use of both internal and external sources of auditing or financial reporting and as such enhance the maintenance of accurate and proper financial records which would also improve their operational efficiency.

An auditor refers to an authorized individual who review, examine and verify the authenticity and accuracy of business financial records or transactions.

Auditors make use of accuracy, valuation and allocation to search for evidence that assets, liabilities, and equity items have all been recorded at appropriate amounts and allocated to the correct general ledger accounts of a business firm.

The main purpose of a general ledger is to list all accounts used in recording an organization's transactions and as such it contains a list of transactions affecting each account and the account's balance. Also, the page number of the account debited or credited in the journal is written in a posting reference of a ledger and it usually serves as a link to cross-reference or juxtapose the transaction from one record to another in a business firm.

6 0
2 years ago
An oil and gas producing company owns 42,000 acres of land in a southeastern state. It operates 630 wells which produce 18,000 b
valkas [14]

Answer:

The bid amount should be $13,200,264.

Explanation:

An oil and gas producing company owns 42,000 acres of land in a southeastern state.

It operates 630 wells which produce 18,000 barrels of oil per year and 1.7 million cubic feet of natural gas per year.

The revenue from the oil is ​$1,800,000 per year and for natural gas the annual revenue is ​$581,000 per year.

Total Annual Revenue

= Revenue from oil + Revenue from gas

= $1,800,000 + $581,000

= $2,381,000

The bid amount should be the present worth of total annual revenue.

Present Worth of total annual revenue

= Revenue \times\ \frac{( 1 + i )^{n} -1 }{i (1 + i)^{n} }

= $2,381,000\ \times\ \frac{( 1 + 0.11 )^{9} -1 }{0.11 × (1 + 0.11)^{9} }

= $2,381,000\ \times\ \frac{( 1.11 )^{9} -1 }{0.11 × (1.11)^{9} }

= $2,381,000\ \times\ \frac{2.5580 - 1 }{0.11 × 2.5580 }

= $2,381,000\ \times\ \frac{1.5580 }{0.281}

= $2,381,000\ \times\ 5.544

= $13,200,264

7 0
3 years ago
Other questions:
  • The assets of Prosian Italia, a marble and granite company, amount to $400 million, and its liabilities add up to $180 million.
    14·1 answer
  • A person with a poor self-concept is more likely to be hired for a position, because they are easier to “mould”.
    6·1 answer
  • Problem definition requires the researcher to specify what information is needed to assist in either solving problems or identif
    12·1 answer
  • The constraint at Johngrass Corporation is time on a particular machine. The company makes three products that use this machine.
    13·1 answer
  • When a customer service manger works to diffuse a situation with an irate customer, which of mintzberg's roles is he/she taking
    8·1 answer
  • Which of the following assumptions is likely to be met in the real world? Group of answer choices All labor has zero costs of mo
    12·1 answer
  • Carl represents a marketing channel intermediary company and gets paid a commission for finding business buyers and linking them
    7·1 answer
  • Driving skills are a basic qualification of
    13·2 answers
  • What might a concept include along with a brief written description of the product?
    14·1 answer
  • The owner of a national software company has been watching current economic information for the past two quarters and a rapid ri
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!