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Rom4ik [11]
3 years ago
13

Differential Analysis for a Lease or Buy Decision

Business
1 answer:
il63 [147K]3 years ago
4 0

Answer:

Lease Equipment $150,000

BUY EQUIPMENT$134,700

Differential Effects-$15,300

The company should choose BUY EQUIPMENT which is Alternative 2

Explanation:

Preparation of the differential analysis dated March 15 to determine whether Laredo Corporation should lease (Alternative 1) or purchase (Alternative 2) the equipment

Differential Analysis

Lease (Alt. 1) or Buy (Alt. 2) Equipment

March 15

Lease Equipment (Alternative 1); Buy Equipment

(Alternative 2); Differential Effects (Alternative 2)

Costs:

Purchase price $0 $120,000 $120,000

Freight and installation $0 $1,500 $1,500

Repair and maintenance (6 years) $0 $13,200.$13,200

($2,200*6=$13,200)

Lease (6 years) $150,000 $0 -$150,000

($25,000*6)

Total costs $150,000 $134,700 -$15,300

Based on the above calculation the company should choose BUY EQUIPMENT which is Alternative 2

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Sunbird Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Sunbird Theatre Inc. has declared the foll
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Answer:

See the explanation below.

Explanation:

1. Calculation of total dividend for six years (2011 to 2016)

Total dividend = 2011  dividend + 2012  dividend + 2013  dividend + 2014  dividend + 2015  dividend + 2016  dividend

Total dividend = $20,000 + $36,000 + $70,000 + $90,000 + $102,000  + $150,000  

Total dividend = $468,000  

2. Calculation of per-share dividends declared on each class of stock for each of the six years

Note that preferred stock holders are entitled to dividend first before the common stock holders. It is what remains after paying the preferred shareholders that the common shareholders get. Therefore, the calculation is done as follows:

2011:

Preferred dividend per share = Preferred dividend rate × Preferred stock price

Expected preferred dividend per share = 1% × $30 = 0.30 per share

Expected total preferred dividend = Expected preferred dividend per share × Number proffered share

Expected total preferred dividend = $0.30 × 100,000 = $30,000

Actual dividend declared = $20,000

Preferred dividend declared per share = $20,000 ÷ 100,000 = $0.20

Preferred dividend arrears (Cumulative) = $30,000 - $20,000 = $10,000

Preferred dividend per share arrears (Cumulative)  = $10,000 ÷ 100,000 = $0.10

Since preferred stock holders are entitled to dividend first before the common stock holders and the dividend declared is lower than the dividend payable to the preferred shareholders, the common stockholders will receive zero dividend in 2011.

Also, since it is stated in the question that the preferred 1% stock is cumulative

2012:

Expected preferred dividend per share = 1% × $30 = 0.30 per share

Expected total preferred dividend = Expected preferred dividend per share × Number proffered share

Expected total preferred dividend = $0.30 × 100,000 = $30,000

Total dividend declared = $36,000

Preferred dividend declared per share = $30,000 ÷ 100,000 = $0.30

To pay preferred dividend in arrears = $36,000 - $30,000 = $6,000

Preferred dividend arrears per share paid = $6,000 ÷ 100,000 = $0.06

Balance of preferred dividend arrears = $10,000 - $6,000 = $4,000

Balance of preferred dividend per share arrears  = $4,000 ÷ 100,000 = $0.04.

Total preferred dividend paid in 2012 = $36,000

Preferred dividend per share paid in 2012 = $36,000 ÷ 100,000 = 0.36

Again for the same reason as stated above, the common stockholders will also receive zero dividend in 2012.

2013:

Expected preferred dividend per share = 1% × $30 = 0.30 per share

Expected total preferred dividend = Expected preferred dividend per share × Number proffered share

Expected total preferred dividend = $0.30 × 100,000 = $30,000

Total dividend declared = $70,000

Preferred dividend declared per share = $30,000 ÷ 100,000 = $0.30

To pay preferred dividend arrears = $4,000

Preferred dividend arrears per share paid = $4,000 ÷ 100,000 = $0.04

Common stock dividend = $70,000 - $34,000 = $36,000

Common stock dividend per share = $36,000 ÷ 400,000 = $0.09.

2014:

Expected preferred dividend per share = 1% × $30 = 0.30 per share

Expected total preferred dividend = Expected preferred dividend per share × Number proffered share

Actual total preferred dividend = $0.30 × 100,000 = $30,000

Preferred dividend declared per share = $30,000 ÷ 100,000 = $0.30

Total dividend declared = $90,000

Common stock dividend = $90,000 - $30,000 = $60,000

Common stock dividend per share = $60,000 ÷ 400,000 = $0.15.

2014:

Expected preferred dividend per share = 1% × $30 = 0.30 per share

Expected total preferred dividend = Expected preferred dividend per share × Number proffered share

Actual total preferred dividend = $0.30 × 100,000 = $30,000

Preferred dividend declared per share = $30,000 ÷ 100,000 = $0.30

Total dividend declared = $102,000

Common stock dividend = $102,000 - $30,000 = $72,000

Common stock dividend per share = $72,000 ÷ 400,000 = $0.18.

2015:

Expected preferred dividend per share = 1% × $30 = 0.30 per share

Expected total preferred dividend = Expected preferred dividend per share × Number proffered share

Actual total preferred dividend = $0.30 × 100,000 = $30,000

Preferred dividend declared per share = $30,000 ÷ 100,000 = $0.30

Total dividend declared = $150,000

Common stock dividend = $150,000 - $30,000 = $130,000

Common stock dividend per share = $130,000 ÷ 400,000 = $0.33.

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Drew is in charge of writing a report for his company that talks about the quality and safety of his company's products, busines
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Answer: Compliance review

Explanation: A compliance review can be defined as an audit done with the objective to assess whether the company is following the regulatory guidelines. In such a review the auditor tries to determine if the items that being examined complies with the set standards.

In the given case, Drew is  writing the report to spread the information that they are following all the guidelines related to safety and quality.

Thus, from the above we can conclude that the correct option is C.

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3 years ago
Charles is planning a trip to Guatemala. He has allocated $415 for spending money. If the exchange rate from US dollars to Guate
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A. its the answer  3,533.10 quetzals
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Rocoe Company produces a variety of garden tools in a highly automated manufacturing facility. The costs and cost drivers associ
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Answer:

Explanation:

Overhead allocation:

Unit level = $35,960/5800 * 480 = 2,976

Batch level = 13,052/260 * 27 = 1355.4

Product level = 3,988*40% = 1595.2

Facility level = 45,600/38,000 * 12,000 = 14,400

Total overhead allocated 20,326.6

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3 years ago
Angie, CEO of a local alternative energy company that provides power for residential and commercial customers in your community,
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Explanation:

CEO of a local alternative energy company is engaged in the process of developing a list of questions that will be used to evaluate her company's internal situation. An internal analysis looks at the factors that are within the organization such as the strengths and weaknesses of the organization. Some typical areas that are considered during the internal analysis are the financial resources like the funding and investment opportunities, physical resources like the company's location, facilities and equipment, and the human resources like the employees, and the target audiences. In the options given above, every option tackles the company's internal situation except for "Is our company competitively stronger or weaker than key rivals?" This question is not meant to assess the internal situation of the company as the question is evaluating the competition involved in the business while comparing other companies to Angie's comoanv.

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