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Elanso [62]
3 years ago
14

Assume General Electric Company reports the following footnote in its 10-K report. December 31 (In millions) 2016 2015 Raw mater

ials and work in process $ 5,527 $ 5,042 Finished goods 5,152 4,806 Unbilled shipments 333 402 11,012 10,250 Less revaluation to LIFO (697) (661) $10,315 $ 9,589 The company reports its inventories using the LIFO inventory costing method. Assume GE has a 35% income tax rate. As of the 2016 year-end, how much has GE saved in taxes by choosing LIFO over FIFO method for costing inventory
Business
1 answer:
True [87]3 years ago
6 0

Answer:

$ 244 million

Explanation:

Calculation for how much has GE saved in taxes by choosing LIFO over FIFO method for costing inventory

Tax rate Amount (In millions)

LIFO $ 10,315.00 35% =$ 3,610.25

FIFO $ 11,012.00 35% =$ 3,854.20

Savings in taxes $ (697.00) $ (243.95)

Hence,

Savings in taxes=$ 3,610.25 million-$ 3,854.20 million

Savings in taxes=($243.95 million)

Savings in taxes=($ 244 million) Approximately

Therefore the amount that GE saved in taxes by choosing LIFO over FIFO method for costing inventory will be $ 244 million

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lawyer [7]

Answer:

Proceeds from sale of rights will be $49407.62

Explanation:

Proceeds from the sale of rights

=> Net Proceeds per share = Subscription price per share x (1 – Spread)

= $27 × (1 – 0.06)

= $25.38 per share

=> New shares offered = money raised/net proceeds per share              

                                       = 5300000/25.38 =  208826 Shares

=> Number of rights needed = current shares/New share offered    

                                               = 590000/208826 = 2.82532

=> The Ex-rights stock price will be

Ex-rights stock price = ((Number of rights needed × selling price per share) + Subscription price) + (Number of rights needed + 1)

= ((2.82532 × 54) + $27 per share) / (2.82532 + 1) = $46.94177 per share

So, the value of a right = Selling price per share - Ex-rights stock price

= $54 - $46.94177

= $7.05823 per share

Therefore, proceeds from selling the rights will be

= Number of shares × value of a right

= 7000 × 7.05823

= $49407.62

Proceeds from sale of rights will be $49407.62

5 0
3 years ago
Delta Lighting has 30,000 shares of common stock outstanding at a market price of $15.00 a share. This stock was originally issu
Oksi-84 [34.3K]

Answer:

Option (B) 10.87%

Explanation:

Data provided in the question:

common stock outstanding = 30,000

Market price = $15.00

Issuing price of share = $31 per share

Total face value = $280,000

Selling price = 86% of par

Cost of equity, ke = 13%

After-tax cost of debt, kd = 6.9%

Beta = 1.48

Tax rate = 30%

Now,

Market value of debt, Md = Total face value × Selling price

= $280,000 × 86%

= $240,800

Market value of equity, Me = Stocks outstanding × Market price

= 30,000 × $15

= 450,000

Thus,

WACC = [ Kd × Md + Ke × Me ] ÷ ( Md + Me )

= [ 0.069 × $240,800 + 0.13 × $450,000 ] ÷ ( $240,800 + $450,000 )

= $75,115.20 ÷ $690,800

= 0.1087

or

= 0.1087 × 100%

= 10.87%

Option (B) 10.87%

5 0
3 years ago
Daisy's Dolls sold 30,000 dolls this year. Each doll sold for $40 and had a variable cost of $19. Fixed expenses were $250,000.
Vitek1552 [10]

The Net operating income for the year is $380,000

<h3>What is Net operating?</h3>

Net operating income (NOI) is a common metric for determining a property's profitability. The calculation involves deducting all operating expenses from all revenue generated by the property. The more profitable a property is, the higher the revenues and the lower the expenses.

A property, for example, may earn money from tenant rents and a coin laundry machine. Operating expenses include not only maintenance fees, but also insurance and professional assistance. The strength of NOI is that it incorporates all necessary income and expenditures per property into a single calculation.

Using this formula

Net operating income=[Sales×(Fixed Cost-Variable cost)] -Fixed expenses

Let plug in the formula

Net operating income=[30,000×($40-$19)]-$250,000

Net operating income=(30,000×$21) -$250,000

Net operating income=$630,000-$250,000

Net operating income=$380,000

Inconclusion The Net operating income for the year is $380,000.

Learn more about Net Operating Income here:

brainly.com/question/21175714

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6 0
2 years ago
When a change in the supply and demand occur within a market, the effect on the new equilibrium market price or quantity can be
ZanzabumX [31]

Answer:

consumer income rises; pizza dough decreases in price

⇒ output increases; price uncertain

  • higher consumer income results in higher prices
  • but decrease in the price of inputs results in lower prices
  • both result in higher output

consumer income falls; pizza dough decreases in price

⇒ price decreases; output uncertain

  • both result in lower prices
  • falling consumer income result in lower output
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consumer income falls; cheese increases in price

⇒ output decreases; price uncertain

  • both lower output
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consumer income rises; cheese increases in price

⇒ price increases; output uncertain

  • both increase price
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5 0
3 years ago
Suppose that a monopoly firm is required to pay a new annual license fee just for the privilege of doing business in its city an
nlexa [21]

Answer:

will not change it prices

Explanation:

Economic profit is the difference between the total income received and the total costs of inputs minus opportunity costs. Opportunity costs will include other implicit costs.

While accounting profit considers the general expenses in calculating profit and loss, economic profit takes into account opportunity costs together with the regular expenses.

If the licensee fee will not affect the economic profit, it implies that the firm profitability will remain the same. The accounting profit, which is what is usually reported in the income statement, will not be significantly affected. Therefore, the company will likely not change its prices.

6 0
3 years ago
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