Discuss FOUR ways in which SAA could benefit from proper long-term planning.

Answers

Answer 1

Answer:

Explanation:

Planning is a core and fundamental step which should be done before embarking in a process, business or task. It could be used to project a short or long term engagement or task.

The benefits of long term planning could include :

Business having a long term plan shows a proactive sense of approach, that is it shows that the business has a blue print, a target and a defined goal which is being laid down in sequence, this ensures that they will have very few chances of making rash decisions due to market fluctuation or growth as d they are less proned to having a reactive agenda.

Similarly, With a laid down long term plan, this shows that there is a guide, a path, a set and defined target which the company aims to achieve with patience and tact. Thus ensures that the business has a well defined direction.

Also, It improves efficiency, the fact that developments to be made at each point or time has long been defined, then there is a dequate preparedness towards such target which in turn improves.

Long term strategic planning will ultimately lead to company's growth and drive profit due to sustained existence in the market and well guided and structure long term planning , leading to increased popularity and revenue drive.


Related Questions

How does a business achieve economies of scale?

Answers

Answer:

Companies can achieve economies of scale by increasing production and lowering costs. This happens because costs are spread over a larger number of goods. Costs can be both fixed and variable. ... The larger the business, the more the cost savings.

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Security training involves: Providing some members of the organization information about protecting data, but not all to reduce costs. Establishing CBT, computer based training, but never face-to-face training. Providing members of the organization with detailed information and instructions to prepare them to perform their specific duties securely. Expecting employees to research good security practices on their own

Answers

Answer: Providing members of the organization with detailed information and instructions to prepare them to perform their specific duties securely

Explanation:

Protection of data in organizations is important as it helps in the safeguarding of vital data from third parties and prevention of fraud.

Therefore, in order to tackle security issues in an organization, it is essential to provide all the members of the organization with detailed information and instructions about how they can perform their specific duties securely.

This can be done through establishing face to face training, computer based training, and every other forms of training in order to secure data.

Purple Hedgehog Forestry Inc. is expected to generate $200,000,000 in net income over the next year. Purple Hedgehog Forestry has forecasted a capital budget of $85,000,000, and it wishes to maintain its current capital structure of 70% debt and 30% equity.

Required:
What will Purple Hedgehog Forestry's dividend payout ratio be if it follows a residual dividend policy?

Answers

Answer:

87.25%

Explanation:l

Capital Budget = $85,000,000

Financed through Equity = $25,500,000 (30%*$85,000,000)

Residual Earnings = Expected net income - Financed through Equity

Residual Earnings = $200,000,000 - $25,500,000

Residual Earnings = $174,500,000

Dividend Payout Ratio = Residual Earnings / Expected net income

Dividend Payout Ratio = $174,500,000 / $200,000,000

Dividend Payout Ratio = 0.8725

Dividend Payout Ratio = 87.25%

so sánh nên kinh tế tự nhiên và kinh tế thị trường

Answers

Kinh tế tự nhiên là trong nền kinh tế tự nhiên, sản xuất nhỏ chiếm ưu thế. Nền kinh tế tự nhiên do nhiều đơn vị kinh tế thuần nhất hợp thành và mỗi đơn vị kinh tế ấy làm đủ việc để tạo ra những sản phẩm cuối cùng.

Thị trường giữ vai trò là công cụ phân bổ các nguồn lực kinh tế. Trong quá trình trao đổi, các yếu tố thị trường như giá cả, có tác động điều tiết quá trình sản xuất hàng hóa phân bổ các nguồn lực kinh tế và tài nguyên thiên nhiên như vốn, tlsx, nguồn vật tiền lương… đều do các cấp có thẩm quyền quyết định

James Perkins wants to have a million dollars at retirement, which is 15 years away. He already has $200,000 in an IRA earning 8 percent annually. How much does he need to save each year, beginning at the end of this year, to reach his target

Answers

Solution :

Given :

James needs $ 1,000,000 after 15 years.

His IRA deposit is $ 200,000 and is earning at the rate of 8% per annum.

Maturity value of $200,000 after 15 years = [tex]2000000 \times( 1.08)^{15}[/tex]

                                                                     = $ 634,434.

Balance fund needed after 15 years = 1,000,000 - 634,434

                                                           = $ 365,566

Therefore, the future value of the annuity is :

[tex]FV=A[\frac{(1+k)^n-1}{k}][/tex]

Here, FV = future annuity value = 365,566

            A = periodical investment

            k = interest rate = 8%

            n = period = 15 years

∴[tex]365566 = A\frac{[(1.08)^{15}-1]}{0.08}[/tex]

       A = 13,464

Thus, James needs to save $ 13,464 each year end to reach his target.

Identify the correct statement. Select one: a. Debt increases when the budget deficit decreases. b. A budget deficit is a stock variable, while debt is a flow variable. c. A budget deficit is a flow variable, while debt is a stock variable. d. A budget deficit and debt are both stock variables. e. The budget deficit decreases when aggregate demand decreases.

Answers

Answer:

c

Explanation:

A flow variable is a variable that is measured over a period in time

A stock variable is a variable that is measured at a point in time.

Budget deficit occurs when government spending exceeds income of the government.

Debt is the total amount owed by an entity

Budget deficit is a flow variable because it increases as debt increases Debt is measured at a point in time. It is a stock variable

When budget deficit increases, debt increases. This is because a deficit would need to be funded by additional borrowing

Five years ago, when the relevant cost index was 120, a nuclear centrifuge cost $40,000. The centrifuge had a capacity of separating 1500 gallons of ionized solution per hour. Today, it is desired to build a new centrifuge with capacity of 4500 gallons per hour, but the cost index now is 300. Assuming a power sizing exponent to reflect economies of scale, x, of 0.75, use the power sizing model to determine the approximate cost (expressed in today's dollars) of the new reactor.

Answers

Answer:

The approximate cost (expressed in today's dollars) of the new reactor is $227,950.71.

Explanation:

This can be calculated as follows:

Cost of centrifuge with 4500 capacities 5 years ago / Cost of centrifuge with 1500 capacities 5 years ago = (Capacity of centrifuge with 4500 capacities / Capacity of centrifuge with 1500 capacities)^Power sizing exponent

Cost of centrifuge with 4500 capacity 5 years ago / $40,000 = (4500 / 1500)^0.75

Cost of centrifuge with 4500 capacities 5 years ago / $40,000 = 2.27950705695478

Cost of centrifuge with 4500 capacities 5 years ago = 2.27950705695478 * $40,000 = $91,180.28

Therefore, we have:

Cost of centrifuge with 4500 capacities now = (Cost index now / Cost index 5 years ago) * Cost of centrifuge with 4500 capacities 5 years ago = (300 / 120) * $91,180.28 = $227,950.71

Therefore, the approximate cost (expressed in today's dollars) of the new reactor is $227,950.71.

Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000 at a yield to maturity of 8%. Now, with 7 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 12%. What is the price of the bond now

Answers

Answer:

$814.10

Explanation:

Calculation to determine what the price of the bond now

Using this formula

Bond price = PV of coupon payments + PV of face value

Bond price= C×((1 / r) – {1 / [r(1 + r)t]}) + FV / (1 + r)t

Let plug in the formula

Bond price= [(.080 ×$1,000) / 2] ×[[1 / (.12 / 2)] – (1 / {(.12 / 2)[1 + (.12 / 2)](7 ×2)})] + $1,000 / [1 + (.12 / 2)](7 ×2)

Bond price= $814.10

Therefore the price of the bond now is $814.10

Mickley Company’s plantwide predetermined overhead rate is $20.00 per direct labor-hour and its direct labor wage rate is $15.00 per hour. The following information pertains to Job A-500: Direct materials $ 280 Direct labor $ 150 Required: 1. What is the total manufacturing cost assigned to Job A-500? 2. If Job A-500 consists of 70 units, what is the unit product cost for this job? (Round your answer to 2 decimal places.)

Answers

Answer and Explanation:

The computation is shown below;

1.

Total hours for job A - 500

= Direct labor ÷direct labor wage rate

= $150 ÷ $15

= 10

Total over head cost = overhead cost per labor hours × no. of labor hours

= $20 × 10

= $200

total manufacturing cost = Direct materials cost + Direct labor cost + Total over head cost

= $280 + $150 + $200

= $630

2.  

Cost assigned to each unit

= total manufacturing cost ÷  number of units

= $630 ÷ 70

= $9

You are Howard Schultz, and you've just spent $100,000,000 to buy La Boulange. What would you do to get the maximum return in your investment in this company over the next three years?

Answers

Answer:

In order to get maximum returns from this investment, Howard Schultz should do the following-

a) Design the product of La Boulange so that they are included in the menu of starbucks so that people preferring to have La Boulange products can also be included in the customer base of starbucks.

b) La Boulange itself has a brand identity and was quite popular among people, hence instead of dissolving its identity, individual outlets must be run under the brand starbucks to maximize the annual turnover.

Explanation:

In order to get maximum returns from this investment, Howard Schultz should do the following-

a) Design the product of La Boulange so that they are included in the menu of starbucks so that people preferring to have La Boulange products can also be included in the customer base of starbucks.

b) La Boulange itself has a brand identity and was quite popular among people, hence instead of dissolving its identity, individual outlets must be run under the brand starbucks to maximize the annual turnover.

The best way to learn about small business is to "bite the bullet" and start your own.

a. True
b. False

Answers

Answer:

b. False

Explanation:

If one starts a sole proprietorship, it remains a good way to learn about  the operations of a small business, but it is not the only sure way.  Before embarking on the entrepreneurship journey, the prospective business person can gain invaluable experience by reading about other sole proprietorships, both the successful and unsuccessful ones.  Doing so equips the person with the best information required to start the race.  It remains a comfortable journey with all the risks and rewards of ownership.

XYZ Tile Installation Corporation measures its activity in terms of square feet of tile installed. Last month, the budgeted level of activity was 1,180 square feet and the actual level of activity was 1,270 square feet. The company's owner budgets for supply costs, a variable cost, at $3.50 per square foot. The actual supply cost last month was $4,980. What would have been the spending variance for supply costs

Answers

Answer:

The appropriate solution is "$535 U". A further explanation is described below.

Explanation:

The given values are:

Actual level of activity,

= 1270

Budgeted variable cost,

= $3.50

Actual supply cost,

= $4980

Now,

The spending variance for supply costs will be:

= [tex](Actual \ level \ of \ activity\times Budgeted \ variable \ cost)\times Actual \ supply \ cost[/tex]

= [tex](1270\times 3.50)-4980[/tex]

= [tex]4445-4980[/tex]

= [tex]535[/tex] (unfavorable)

Denison Specialty Hospital is planning its master budget for the coming year. The budget wil include operating, capital, cash and flexible budgets. The hospital is noted for its three fine programs: oncology (cancer), cardiac (heart), and rhinoplasty (nose jobs).
Section A
The managers at Denison have been busy working. They have reviewed past records and considered changes in competition, the general economy, and overall medical trends. Using past charges and anticipated rates of medical inflation, they have also made a first attempt at setting thier prices.
Based on a thorough review and discussion of these data, they have projected that next year they will have 240 patients. They expect 120 oncology patients, 80 caridace patients, and 40 rhinoplasty patients.
The charge, of list price, for oncology patient will average $50,000. Cardiac patients will be charged on average of $40,000, and rhinoplasty, $25,000 per patient. However, those charges are not the actual amounts ultimately received.
The amount the hospital receives depends on whether patients pay their own hospital bills or have healthcare insurance. Assume that private insurance companies pay the full charge or list price. However, Medicare and Medicaid have announced rates they will pay for the coming year as follow: oncology patients $40,000, cardiac patients $30,000, and rhinoplasty patients $10,000. Self-pay patients are supposed to pay the full charge, but generally 25 percent of self-pay charges become a bad credit. Note that bad credit are treated as an expense in healthcare. They may not be shown as a reduction lowering revenues. The full charge for self-pay patients is shown as revenues, and then the uncollectible amount is shown as an expense. No payment for charity care is ever recieved, and charity care is not shown s a revenue or expense.
The payer mix is as follows:
Private insurance Medicare/Medicaid Self-Pay Charity
Oncology 30% 50% 10% 10%
Cardiac 20% 60% 10% 10%
Rhinoplasty 10% 20% 60% 10%
Gift shop revenue is projected to be $120,000 for the current year and is expected to remain the same. However, this revenue will increase or decline in proportion to charges in patient volume.
Denison Hospital has an endowment of $1,000,000. It is invested as follows:
a-$500,000 in 6 percent U.S. Governement Bonds that pay interest annually
b-$250,000 in AT&T stock, which pays a dividend of 8 percent annually
c-$250,000 in growth stocks that pay no dividend
Section A requirements:
1. Calculate patient revenue on an accural basis for the coming year. Subdivide revenue by program, and with each program subdivide it by type of payer.
2. Calculate endowment revenue on an accural basis for the coming year.
3. Prepare a revenue budget on an accural basis, including all sources of revenue discussed previously. The revenue budget does not have to show all of the detail from requirements 1 and 2, but should show each major source of revenue, such as patient services and endowment.
Section B
The hospital expects to employ worker in the following departments
Radiology Nursing Administration Total
Managers 100,000 200,000 200,000 500,000
Staff 1,900,000 4,200,000 300,000 6,400,000
Total 2,000,000 4,400,000 500,000 6,900,000
Supplies are expected to be purchased throughout the year for the departments, as follows:
Total
Radiology 360,000
Nursing 160,000
Administration 20,000
Total 540,000
Assume that all supply use varies with the number of patients.
Denison Hospital currently pays rent on its building and equipment for $300,000 per year. Rent is expected to be unchanged next year. The rent is paid $75,000 each quarter.
To better serve its patients, Denison would like to buy $500,000 of new oncology equipment at the start of the year. It would be paid for immediately upon purchase. The equipment has a 5-year life and would be expected to be used up evenly over that lifetime. Although the capital budget would normally include justification for why the equipment is needed, it is sufficient for our purpose to know that the capital budget for Denison is $500,000 and the equipment to be purchased has 5-year useful life. It will have no value left at the end of the 5 years. Denison charges the cost of its capital acquisitions on a straight-line depreciation basis. The means that the cost is spread out over the useful life, with an equal being charged as an expense, called depreciation expense, each year.
Section B Requirements:
1. Calculate expected bad debt expenses on an accural basis for the coming year
2. Calculate an expense budget on a accural basis for the coming year. The expense budget does not require detailed information by program or department, but should show each type of expense as salaries and supplies. Be sure to consider the impact of capital acquisitions on the expense budget.
3. Combine the revenue (section A) and expense budget to present an operating budget for the coming year.

Answers

Answer:

Section A:-

1) Total Patient Revenue = 7980000.

2) Endowment Revenue:-

Investment = $1000000.

Income = $ 50000.

3) Revenue Budget on Accrual Basis for Next year= $ 8150000.

Section B:

1) Calculation of Expected Bad Debts for Coming Year= $ 380000

2) Expense Budget for Coming Year = $ 8220000.

3) Operating Budget For coming Year:-

Total Budget Revenue = $ 8150000.

Total Budget Expense = $8220000.

Excess Over Revenue = $ 70000.

Explanation:

When the Jones were shopping for their present home, the asking price from the previous owner was $375,000.00. The Jones had decided they would pay no more than $365,000.00 for the house. After negotiations, the Jones actually purchased the house for $350,000.00. They, therefore, enjoyed a consumer surplus of

Answers

Answer:

$15,000

Explanation:

Calculation to determine the consumer surplus

Consumer surplus=$365,000.00-$350,000.00

Consumer surplus=$15,000

They, therefore, enjoyed a consumer surplus of $15,000

Kingbird, Inc. sells 450 shares of common stock being held as an investment. The shares were acquired six months ago at a cost of $50 a share. Kingbird sold the shares for $51 a share. The entry to record the sale is:_____.

Answers

Answer:

Debit  : Cash  $22,950

Credit : Common Stock  $22,950

Explanation:

When shares were held sorely for  investment, on date of sale, we simply record the cash proceeds and no gain on sale of shares is recognized.

Therefore, Cash Proceeds = $51 x 450 shares = $22,950

What are the opportunity offers by
vocational education?​

Answers

Answer:

Where I grew up, I went to a vocational school for just the beginning of the year, then left to a charter school, At a vocational school, I can choose a cooking class, welding, mechanic, and some other neat stuff, it's kinda of preparing you to be independent, but also you can do it working with other people too.

They are strict with absences and tardies, 3 tardies make one absence, and absences put penalties on your highschool resume/record, depending on how many penalties from absences and tardies you get, they kick you out of the school which is not fair if you have construction workers on the road  slowing you down on your way to school for 3 months.

If you do a vocational school, collages you want to go to are more likely to take you in faster than a person who went to a regular high school.

Dallas Boot Corporation has been asked to submit a bid on supplying 1,000 pairs of military combat boots to the Armed Forces Training Center. The company's costs per pair of boots are as follows:

Direct material $8
Direct labor 6
Variable overhead 3
Variable selling cost (commission) 3
Fixed overhead (allocated) 2
Fixed selling and administrative cost 1

Assuming that there would be no commission on this potential sale, the lowest price the firm can bid is some price greater than:_________

Answers

Answer:

Dallas Boot Corporation

Assuming that there would be no commission on this potential sale, the lowest price the firm can bid is some price greater than:_________

= $20.

Explanation:

a) Data and Calculations:

Pairs of military combat boots on the bid = 1,000

Direct material                                     $8

Direct labor                                            6

Variable overhead                                3

Variable selling cost (commission)      3

Fixed overhead (allocated)                  2

Fixed selling and administrative cost  1

Total cost of production and sales $23

Less commission                                 3

Total cost per boot                         $20

b) The bidding price less sales commission will be a price that is greater than $20 per boot.  The extra amount per boot will cover the profit expected from the transaction.

What is a joint production process? Describe a special decision that commonly arises in the context of a joint production process. Briefly describe the proper approach for making this type of decision. Draw an example with detailed cost numbers.

Answers

Answer:

Quy trình sản xuất nói chung là quá trình con người tác động vào tài nguyên thiên nhiên để biến chúng thành các sản phẩm có ích cho xã hội.

Explanation:

The following information was available for the year ended December 31, 2016:
Earnings before interest and taxes (operating income) $ 81,000
Interest expense 17,000 Income tax expense 22,000
Net income 42,000
Total assets at year-end 270,000
Total liabilities at year-end 148,000
Required:
a. Calculate the debt ratio at December 31, 2016. (Round your answer to 1 decimal place.)
b. Calculate the debt/equity ratio at December 31, 2016. (Round your answer to 2 decimal places.)
c. Calculate the times interest earned for the year ended December 31, 2016. (Round your answer to 2 decimal places.)

Answers

Answer and Explanation:

The calculation is given below:

a. The debt ratio is

= Total liabilities ÷ total assets

= $148,000 ÷ $270,000

= 0.5 times

b. The debt/equity ratio is

= Debt ÷ equity

= $148,000 ÷ ($270,000 - $148,000)

= $148,000 ÷ $122,000

= 1.21 times

c. The times interest earned ratio is

= earning before interest and taxes ÷ interest expense

= $81,000 ÷ $17,000

= 4.76 times

a mixed economy combines features of other economic system by

Answers

Answer:

allowing some government regulation of a mostly free market economy

Explanation:

Income elasticity measures the:____.
A. Responsiveness of quantity demanded for one good to a percentage change in price of another good.
B. Percentage change in quantity demanded given a percentage change in wealth.
C. Responsiveness of quantity demanded to a percentage change in income.
D. Way in which consumers switch from one product to another when price rises.

Answers

Answer:

C. Responsiveness of quantity demanded to a percentage change in income.

Explanation:

Income elasticity is defined as the responsiveness of the quantity of a good demanded by an individual as his income changes, all other factors being constant.

Mathematically it is calculated as percentage change in quantity demanded divided by percentage change in income.

Income elasticity is used to find out if a good is a necessity or a luxury good.

The demand for goods that are a necessity does not change with a change in income.

However demand for a luxury good increases as income increases and vice versa

The advantage to savers and investors of receiving compound interest rather than simple interest is that future values are larger because interest is earned on accumulated interest payments. Also, the difference in future values becomes smaller as time goes by.

a. True
b. False

Answers

Answer:

B. false

Explanation:

over time it becomes larger because you are bringing in more money from interest sitting there

Using the following information, compute NET INCOME.

Cost of Goods Sold $ 6,000
Interest Expense 1,100
Selling and Administrative Expense 750
Cash 400
Sales 10,000
Accrued Wages Payable 250
Dividends 700
Retained Earnings (beginning) 1,000
Income Tax Expense 1,200

a. $1,350
b. $700
c. $1,700
d. $950
e. $1,950

Answers

Answer:

d. $950

Explanation:

Calculation to determine the NET INCOME

Sales $ 10,000.00

Cost of goods sold $ 6,000.00

Gross margin $ 4,000.00

($10,000-$6,000)

Selling and administrative expenses $ 750.00

Net operating income $ 3,250.00

($4,000-$750)

Interest expense $ 1,100.00

Net income before taxes $ 2,150.00

($3,250-$1,100)

Income taxes $ 1,200.00

Net income $ 950.00

($2,150-$1,200)

Therefore the NET INCOME will be $950

Information related to Kerber Co. is presented below.
1. On April 5, purchased merchandise from Wilkes Company for $23,000, terms 2/10, net/30, FOB shipping point.
2. On April 6, paid freight costs of $900 on merchandise purchased from Wilkes.
3. On April 7, purchased equipment on account for $26,000.
4. On April 8, returned damaged merchandise to Wilkes Company and was granted a $3,000 credit for returned merchandise.
5. On April 15, paid the amount due to Wilkes Company in full.
Collapse question
Prepare the journal entries to record these transactions on the books of Kerber Co. under a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
No. Date Account Titles and Explanation Debit Credit
1. April 5April 6April 7April 8April 15
2. April 5April 6April 7April 8April 15
3. April 5April 6April 7April 8April 15
4. April 5April 6April 7April 8April 15
5. April 5April 6April 7April 8April 15

Answers

Answer:

Date        Account titles & Explanation           Debit         Credit

Apr-05    Merchandise Inventory                    $23,000

                       Accounts Payable                                        $23,000

Apr-06    Merchandise Inventory                    $900

                       Cash                                                              $900

Apr-07     Equipment                                        $26,000

                       Accounts Payable                                       $26,000

Apr-08    Accounts Payable                             $3,000

                        Merchandise Inventory                              $3,000

Apr-15     Accounts Payable                            $20,000

               ($23,000-$20,000)

                     Merchandise Inventory                                 $400

                     ($20,000*2%)

                     Cash                                                                $19.600

A company enters a futures contract to sell 50,000 units of a commodity for 70 cents per unit. The initial margin is $4,000 and the maintenance margin is $3,000. What change in the futures price (per unit) would lead to a margin call?

Answers

Answer:

72 cents

Explanation:

There is going to be a margin call when greater than 1000 dollars has been lost from the margin. Then the balance in the account is going to be smaller than that of the maintenance margin. so 1 cent increase in the price would bring about a lossof

0.01 * 50000

= $500

if the increase in the future price is about 2 cents then there would be a margin call.

70+2 = 72cents, this is when there would be a margin call

Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $5 per unit. Minor currently produces and sells 7,500 units at $6.00 each. This level represents 75% of its capacity. Production costs for these units are $4.50 per unit, which includes $3.00 variable cost and $1.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. Should the company accept the special order?
A. No, because additional production would exceed capacity.
B. No, because incremental costs exceed incremental revenue.
C. No because incrementa conse o Yes, because incremental revenue exceeds incremental costs.
D. Yes, because incremental costs exceed incremental revenues.
E. No, because the incremental revenue is too low.

Answers

Answer:

D. Yes, because incremental costs exceed incremental revenues.

Explanation:

Given that

The Selling price of the order  is $5

The Variable cost of manufacturing is $3

The Contribution per unit is $2

The Number of units is 1500

now  

Total contribution

= 1500 × $2

= $3,000

Less: Machine costs ($1000)

Tota incremental revenue $2,000

As the incremental revenue is positive and  exceeds the incremental cost so the special order can be accepted  

On December 31, after making a concerted effort, management determines that it will not be able to collect the $1,200 owed to it by its customer Acme, Inc. The company uses the direct write-off method to account for uncollectible accounts.

Required:
Prepare the journal entry to record the reinstatement of the account receivable.

Answers

Answer:

Journal Entry to Record the Reinstatement of the Account Receivable:

Initial Write-off of Account:

December 1: Debit Bad Debts Expense $1,200

Credit Accounts Receivable (Acme, Inc.) $1,200

To write-off the account as uncollectible.

December 31: Debit Accounts Receivable (Acme, Inc.) $1,200

Credit Bad Debts Expense $1,200

To record the reinstatement of the accounts.

When the Cash is Collected:

December 31: Debit Cash $1,200

Credit Accounts Receivable (Acme, Inc.) $1,200

To record the cash receipt for reinstated account.

Explanation:

a) Data and Analysis:

December 1: Bad Debts Expense $1,200 Accounts Receivable (Acme, Inc.) $1,200

December 31: Accounts Receivable (Acme, Inc.) $1,200 Bad Debts Expense $1,200

December 31: Cash $1,200 Accounts Receivable (Acme, Inc.) $1,200

AAA Inc. is a levered firm, and ZZZ Inc. is an unlevered firm. They are exactly the same in every possible way, however they have different capital structures. AAA Inc. and ZZZ Inc. each expect to generate $11.1 million in earnings before interest and taxes, every year, in perpetuity. Both AAA Inc. and ZZZ Inc. do not retain any net income and distribute all of it as dividends to their stockholders. Levered AAA Inc. has debt with neverending interest payments which has the current market value of $59 million and has an annual interest rate of 5 percent. Also, AAA Inc. has 1.7 million shares outstanding, and each share sells for $75 in the market. Unlevered ZZZ Inc. has no debt, 3.4 million shares outstanding, and each share goes for $58 in today's market. Both AAA Inc. and ZZZ Inc. do not pay taxes on their income.

Required:
Calculate the equity value of each company.

Answers

Answer:

AAA Inc. and ZZZ Inc.

                                     AAA Inc             ZZZ Inc.

Equity value =         $127.5 million     $197.2 million

Explanation:

a) Data and Calculations:

                                                                         AAA Inc        ZZZ Inc.

Annual earnings before interest and taxes $11.1 million    $11.1 million

Annual interest (5% of $59 million)             $2.95 million

Income taxes                                                 $0                   $0

Annual dividends payments                         $8.15 million   $11.1 million

Annual retained earnings                             $0                   $0

Current market value of debts                     $59 million    $0

Outstanding shares                                       1.7 million       3.4 million

Market price per share                                 $75                $58

Equity value = (outstanding shares * market price)

=                                                                     $127.5 million $197.2 million

                                                          (1.7 million * $75)      (3.4 million * $58)

Total assets                                                 $186.5 million   $197.2 million

Fort Thomas Living is a small publishing company located in the Northern Kentucky. Recently, Fort Thomas Living has contracted with several different local writers to publish various magazines and short-story books. Once such transaction involves an exchange of $10,200. Another transaction involves an exchange of $9,600? Are both of these exchanges of money subject to the disclosure requirements of the Money Laundering Control Act?

Answers

Answer: No

Explanation:

The Money Laundering Control Act of 1986 which was passed to curb the effects of large scale money laundering at the federal level, only requires that transactions above $10,000 be disclosed.

There is a transaction here that is only to the tune of $9,600 so this will not be disclosed as it is less than the $10,000 threshold. The other transaction of $10,200 will however, be disclosed.

A firm is considering expanding its current operations and has estimated the internal rate of return on that expansion to be 12.2%. The firm's WACC is 11.8%. Given this, you know that the: the project will have a lower debt-equity ratio than the firm's current operations. the appropriate discount rate for the project is between 11.8% and 12.2%. the project has slightly more risk than the firm's current operations. the expansion should be undertaken as it has a positive net present value.

Answers

Answer:

expansion should be undertaken as it has a positive net present value

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