Answer: Interest expense = $45500
Cash outflow = $45500
Explanation:
Based on the information that were given in the question, the amounts of interest expense and cash flows from operating activities, that will be reported in the financial statements for the year ending December 31, Year 1 will be calculated thus:
Interest expense = $700,000 × 6.50%
= $700,000 × 0.065
= $45500
The interest expense of $45500 will be reported on December 31, Year 1 in the income statement and will also be reported in the cash outflow as well. Therefore,
Interest expense = $45500
Cash outflow = $45500
Answer: Option (B) is correct.
Explanation:
Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.
If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.
The opportunity cost of attending college for Brooke is the amount that she could earn as an actress i.e. $2 million per year.
The opportunity cost of attending college for Sandy is the amount that he could earn by serving hamburgers i.e. $10,000 a year.
Therefore, opportunity cost of attending college is greater for Brooke than for Sandy.
Question : What is sustainable growth Rate
Answer:
Sustainable growth Rate = 1.69 %
Explanation:
Sustainable growth Rate = Return on Equity x Retention Rate
Where Return on Equity = Asset Utilization Rate x Profitability Rate x Financial Utilization Rate
Asset Utilization Rate= Total Sales/Total Assets
= 20,700/46,260 = 0.45
Profitability Rate = Net Income/ Total Assets
= 4,940/46,260 = 0.11
Financial Utilization Rate = total debt/ Total equity
= 16,780/ 29,480 = 0.57
Return on Equity = 0.45 x 0.11 x 0.57
=0.028
Retention Rate = 1- dividend pay out ratio
= 1-0.40
= 0.60
Sustainable growth Rate = 0.028 x 0.60
= 1.69 %
Answer:
a. Jason works harder than the other employees
Explanation:
In this scenario, the statement that would strengthen Jason's case would be that he works harder than the other employees. If Jason is able to provide proof of this then that would indicate that effort and work-efficiency is not the reason for Jason not receiving a wage increase. This would mean that the reason is either personal or superficial which are all labor-market discrimination. Therefore, if Jason can prove that he does actually work harder than the other employees it would drastically increase his chances of winning the court case against his employer.
Answer:
3.06 years
Explanation:
The break-even point is when the total revenue equals the total production costs. In case of the change in manufacturing plan, the break even point is when the additional fixed costs are equal to the savings from the reduced manufacturing costs
Total Manufacturing Costs
<em>Opt 1: Hand Tool Method</em>
Cost = 1.60$/unit*4200unit/year*xyear
Cost = $6720x
<em>Opt 2: Automated System</em>
Cost = 0.65$/unit*4200unit/year*xyear
Cost = $2730x
Additional Fixed Costs
Additional Fixed Cost = $13400 - $1200
Additional Fixed Cost = $12200
Break Even Point
Additional Fixed Cost = Opt 1 Manufacturing Cost - Opt 2 Manufacturing Cost
$12200 = $6720x - $2730x
12200 = 3990x
x = 3.06 years
Assumptions:
- The annual volume is the same every year
- The tools/system costs are a one time costs
- No depreciation of the system has been considered
- The manufacturing cost per unit is the same every year
- There are no other additional costs/expenses