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2 years ago

Variable costs are costs

Business

1 answer:

saul85 [17]2 years ago

8 0

Answer:

Correct option is D

Explanation:

Variable cost remains constant for each single unit.

That means variable cost is defined per unit, therefore with this we know statement b is correct.

Also with change in production in number of units, the total cost varies and proportionately changes with change in level of output.

Therefore statement A is also correct.Thus on the conclusive part, Staement D is correct.

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ABC Company issues a 3-year bond with a $1,000 Face Value and a 5% Coupon Rate, with coupons paid once a year at the end of ever

AlekseyPX

Answer:

yield to maturity = 9.78%

Explanation:

yield to maturity = {coupon + [(face value - market value) / n]} / [(face value + market value) / n]]

YTM = {$50 + [($1,000 - $913) / 2]} / [(($1,000 + $913) / 2]] = $93.50 / $956.50 = 0.09775 = 9.78%

The yield to maturity represents the total rate of return that an investor should receive if he/she holds a bond until it matures.

3 0

2 years ago

On January 1, 20Y3, The Simmons Group, Inc., purchased the assets of NWS Insurance Co. for $37,152,500, a price reflecting an $5

Triss [41]

Answer:

The Simmons Group, Inc.

a. December 31, 20Y9, the book value of Goodwill before impairment = $5,572,875

b. Effects on the accounts of the December 31, 20Y9 adjustment for the goodwill impairment:

1. Impairment loss of $3,901,012 will be accounted for in the Income Statement for the year, thus reducing the reported profits by $3,901,012.

2. Goodwill be reduced to $1,671,863 in the balance sheet by deducting the impairment loss of $3,901,012 from the book value before the impairment.

Explanation:

a) Data and Calculations:

Jan. 1, 20Y3, Purchase price of NWS Insurance Co. = $37,152,500

Goodwill on acquisition = $5,572,875

December 31, 20Y9, the book value of Goodwill before impairment = $5,572,875

Impaired value - $1,671,863

Impairment loss = $3,901,012 ($5,572,875 - $1,671,863)

b) The Goodwill impairment shows that the carrying amount, $1,671,863, is less than the fair value of $5,572,875. Goodwill is an intangible asset which Simmons Group acquired from NWS Insurance on January 1, 20Y3. It is annually tested for impairment by comparing the fair value with the carrying value.

6 0

2 years ago

In a department meeting, Jamira engages in a thoughtful dissent aimed at constructively challenging her manager, Shivana, to ret

kvasek [131]

Answer:

The correct answer is a) Constructive resistance.

Explanation:

Constructive Resistance is the ability of structural elements to withstand the efforts to which they are subjected without breaking. It depends on many factors among which the material used, its geometry and the type of union between the elements stand out.

6 0

2 years ago

Your firm is considering opening a branch office in Kyle. The office would cost $485,000 to build the office. During the office

wariber [46]

Answer:

The NPV from opening the branch office is negative ( -$106668.08). Thus the branch office should not be opened.

Explanation:

The decision to open the branch office will be taken based on the NPV provided by opening of the branch office. If the NPV of a project is positive based on the required rate of return used as a discount rate fro cash flows, the investment is worth undertaking.

The net present value (NPV) for a project can be calculated as,

NPV = CF1 / (1+r) + CF2 / (1+r)² + ... + CFn / (1+r)^n - Initial Outlay

Where,

r is the appropriate discount rate
Initial Outlay is the Initial cost of the project
CF represents cash flows from the project

As the required return is 16%, we will take this as the appropriate discount rate.

NPV = 45000 / (1+0.16) + 120000 / (1+0.16)² + 150000 / (1+0.16)³ +

150000 / (1+0.16)^4 + 150000 / (1+0.16)^5 - 485000

NPV = - $106668.08

As the NPV from project is negative at a required return of 16%, the project should not be under taken and the branch office should not be open.

7 0

2 years ago

1. The beta for Eastman Kodak is 1.10. The current six-month treasury bill rate is 3.25%. Estimate the cost of equity for Eastma

Afina-wow [57]

Answer:

1) Cost of equity is 12.501%

2) Price of bond is $935.82

3) Price of semi-annual bond is $934.96

Explanation:

1) Given:

Beta = 1.1

Risk free rate (Rf) = 3.25%

Market risk premium (Rp) = 8.41%

Using CAPM to compute cost of equity:

Re = Rf + β (Rp)

= 3.25 + 1.1(8.41)

= 12.501%

2) Price of bond is present value of bond.

Face value (FV) = $1,000

Maturity (nper) = 10 years

Coupon rate = 8%

Coupon payment (PMT) = 0.08× 1000 = $80

Discount rate (rate) = 9% or 0.09

Using spreadsheet function =PV(rate,nper,pmt,FV)

Price of bond is $935.82. It is negative as it's cash outflow

3) Price of semi-annual bond is present value of bond.

Face value (FV) = $1,000

Maturity (nper) = 10×2 = 20 periods

Coupon rate = 8% ÷ 2 = 4%

Coupon payment (PMT) = 0.04× 1000 = $40

Discount rate (rate) = 9% ÷ 2 = 4.5% or 0.045

Using spreadsheet function =PV(rate,nper,pmt,FV)

Price of semi-annual bond is $934.96

7 0

2 years ago