Answer:
Ronald basketball star and Rawlings engaged in investment spending.
Rupert money buckets and Russia engaged in investing in financial assets
Rhonda moviestar invested in physical assets.
Explanation:
Each investments by these entities have been grouped under 1, 2 and 3.
1. Investment Spending
- Ronald Basketballstar spends $10 million to build a new mansion with a view of the Pacific Ocean
- Rawlings builds a new plant to make catcher’s mitts
2. Investing in Financial Assets
- Rupert Moneybuckets buys 100 shares of existing Coca-Cola stock
- Russia buys $100 million in U.S. government bonds
3. Investing in Physical Assets
- Rhonda Moviestar spends $10 million to buy a mansion built in the 1970s.
Answer:
a-The net present value in dollars is 494939.0687.
b-1-The required return on franc flows is 11.72%.
b-2-The net present value in Francs is 519686.02.
b-3-The NPV in dollars as calculated from NPV in Francs is $494939.07
Explanation:
a
In order to find the solution, firstly the exchange rate for the 5 years is calculated. It is calculated using the formula:
Here
- EER is the expected exchange rate which is to be calculated
- CER is the current exchange rate which is 1.05
- GRD is the going rate of dollars which is 6% or 0.06
- GRF is the going rate of Francs which is 4% or 0.04
- t is the time in years.
From this exchange rate, the PV factor is calculated which is than used to find the present value and similarly net present value in total. The solution is provided in the attached Excel Sheet.
The net present value in dollars is 494939.07
b-1
The required rate on the Franc return is given as:
Here
- FRR is the franc return rate which is to be calculated
- DR is the dollar rate which is 14% or 0.14
- GRD is the going rate of dollar which is 6% or 0.06
- GRF is the going rate of Franc which is 4% or 0.04
So the value becomes:
The required return on franc flows is 11.72%.
b-2
Similar to part a, the solution is found for the return rate of 11.72 and the exchange rate is not required. The values are as indicated in the excel sheet attached.
The net present value in Francs is 519686.02.
b-3
In order to convert the Franc NPV to dollars, the exchange rate of 1.05SF is used which gives
Here
- NPV_dollars is the value of NPV which is to be calculated.
- NPV_francs is the value of NPV calculated in previous step which is 510686.02.
- ER is the exchange rate whose value is 1.05
So the equation becomes:
The NPV in dollars as calculated from NPV in Francs is $494939.07
Answer:
$1,287 unfavorable
Explanation:
According to the scenario, computation of the given data are as follow:-
But before that we need to calculate the following things
Total Budgeted Fixed Cost
= Supervision Fixed Cost + Utilities Fixed Cost + Factory Depreciation Fixed Cost
= $15,510 + $14,800 + $59,780
= $90,090
Budgeted Fixed Manufacturing Overhead Rate
= Total Budgeted Fixed Cost ÷ Original Budgeted Machine Hours
= $90,090 ÷ 7,700 hours
= $11.7
Based on the above calculation, the overall fixed manufacturing overhead volume variance is
= Budgeted Fixed Manufacturing Overhead Rate × (Original Budgeted Machine Hours - Actual Output of Month Totaled)
= $11.7 × (7,700 hours - 7,590 hours)
= $11.7 × 110
= $1,287 unfavorable
According to the analysis, the overall fixed manufacturing overhead volume variance for the month is $1,287
Answer:
the effective rate is higher
Explanation:
the formula used to calculate effective rate is: effective rate = (1 + r/n)ⁿ - 1
for example, he stated rate is 6%:
- if it is compounded annually, the effective rate is 6%
- if it is compounded semiannually, the effective rate = (1 + 6%/2)² - 1 = 6.09%
- if it is compounded quarterly, the effective rate = (1 + 6%/4)⁴ - 1 = 6.14%
- and so on