Appalachian Registers, Inc. (ARI) has current sales of $50 million. Sales are expected to grow to $70 million next year. ARI currently has accounts receivable of $9 million, inventories of $14 million, and net fixed assets of $14 million. These assets are expected to grow at the same rate as sales over the next year. Accounts payable are expected to increase from their current level of $17 million to a new level of $22 million next year. ARI wants to increase its cash balance at the end of next year by $1 million over its current cash balances, which average $3 million. Earnings after taxes next year are forecasted to be $10 million. Next year, ARI plans to pay dividends of $2 million, up from $500,000 this year. ARI's marginal tax rate is 34 percent. How much external financing is required by ARI next year?
Answers
Explanation :
Given, Sales of Appalachian Registers, Inc. (ARI) = $50 million
Expected sales next year = $70 million
Accounts receivable = $9 million
Inventories = $14 million
Net fixed assets = $14 million
Accounts payable = $17 million
Cash balance = $3 million
Earnings after tax next year = $10 million
Dividends next year = $2 million
Marginal tax rate = 34%
Therefore, total asset growth = (Sales growth rate) (Total assets) = 20/50 (50+9+14+14) = $37.2 million
Total liabilities growth = (Sales growth rate) (Total liabilities) = 20/50 (17) = $6.8 million
Total retained earnings = $10 – $2 (dividends) – [0.34($10 – $2)] (taxes) = $4.78 million
Therefore, total financing needed = $37.2 – 6.8 – 3 – 4.78 = $22.62 million
Therefore, $22.62 million external financing is required by ARI next year. This explains that external financing that is required by ARI next year is $22.62 million.
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Related Questions
The concept that states that the timing of the receipt or payment of a cash flow will affect its value to the holder of the cash flow
Answers
The time value of money is a financial theory that argues that when cash flows are received or paid, the timing will determine how much they are worth (TVM).
What does the term "cash flow statement" mean?A financial statement called a cash flow report gives complete information about all cash inflows a company makes from continuing activities and the outside investment sources. Additionally, it comprises of all financial disbursements made over a specific period of time to cover investments and expenditure.
What 3 different kinds of cash flow statements are there?Companies should monitor and analyze three forms of cash flow: cash flow from operating operations, cash flow from investment activities, and cash flow from financing activities to assess the liquidity and solvency of the company. A company's cash flow statement will include all three.
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Hi, I need URGENT help for my accounting!!
REVIEW THE ATTACHED DOCUMENTS FOR ALL DETAILS
Record the following transactions in the spreadsheet template provided for this assignment.
1. On May 1, 2015, Ahmed & Ahmed Dental Office had five patients who paid with different forms of payment. They use a revenue account called Dental Service Fees. Assume there is no sales tax.
Record the following transactions in the general journal:
a) A patient pays $70 cash for a regular check-up.
b) A patient pays $125 with a ScotiaBank Visa card. ScotiaBank charges merchants a 4% service fee.
c) A patient pays $225 for two fillings with a debit card. The bank charges merchants 15 cents per transaction.
d) Sarah Smithson promises to pay $150 for dental services at the end of the month.
e) A patient pays for $150 in services with an American Express card. The service fee that American Express charges merchants is 5%.
2. Rodriguez Carpentry accepts a six month, 8% promissory note from James Matheson on June 1 to
settle a $14,000 outstanding account receivable.
Record the following transactions in the general journal:
a) The issuing of the note on June 1.
b) Full payment of the note on December 1.
c) Assume the note is dishonoured on December 1.
3. On February 1, 2015, Samson Design writes off $2,500 of its accounts receivable as bad debts.
a. Using the direct write-off method, record this transaction.
b. Which GAAP is (are) violated when the direct write-off method is used? Explain your answer.
4. In 2015, Decorators Unlimited had net credit sales totaling $1,200,000. Based on past years, 2.5% of credit sales are estimated to be uncollectible. The balance in the Allowance for Doubtful Accounts account is $12,000.
a. Record the journal entry to adjust for the estimated bad debts on December 31, 2015
assuming Decorators uses the income statement method.
b. On February 1, 2016, the account receivable for B. Stinson of $3,000 is deemed
uncollectible. Record the journal entry to write off this account.
c. On July 15, 2016, Decorators Unlimited receives a cheque for $3,000 in full payment from B.
Stinson for the account previously written off on Feb 1. Record both the recovery and the payment.
5. The Chowdhury Landscaping Company uses the balance sheet method to determine bad debts. The ageing schedule at December 31, 2015 is: a. Calculate the total estimated bad debts. b. If the balance in the Allowance for Doubtful Accounts account is $2,000, record the journal entry to adjust for the bad debts at December 31, 2015.
Answers
The record for the following transactions in the general journal:
a) A patient pays $70 cash for a regular check-up.
The General Journal for the transactionDate Particular Debit Credit
a) Cash 70
To Dental Service Fees 70
b) Bank 120
Bank Charges 5
To Dental Service Fees 125
c) Bank 224.85
Bank Charges .15
To Dental Service Fees 225
d) Sarah Smithson
150
To Dental Service Fees 150
e) Bank 142.5
Bank Charges 7.5
To Dental Service Fees 150
The General JournalDate Particular Debit Credit
a) 8% PromisoryNote 14000
To Bank 14000
b) Bank 14560
To 8% PromisoryNote 14000
To Interest Income 560
c) Bad Debt 14560
To 8% PromisoryNote 14000
To Interest Income 560
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explain economics in your own words
Answers
1. The Industrial Revolution began primarily because of.
A) Larger numbers of people unable to find work
B) The growth of corporations in the U.S.
C) The invitation of machines allowing the faster processing of raw materials.
D) Managers using practices to improve productivity of employees.
2. The first effort to apply scientific study to the management of businesses was?
A) Behavioral management
B) Classical management
C) Quality management
D) administrative management
Answers
The Industrial Revolution began primarily because of the invitation of machines allowing the faster processing of raw materials. The Option C is correct.
What led to Industrial Revolution in Europe?The Industrial Revolution transformed the economy from an agrarian to a manufacturing economy in which products were no longer made solely by hand but also by machines. This resulted in increased output and efficiency, lower prices, more goods, higher wages, and a shift from rural to urban areas.
The first Industrial Revolution began in Great Britain in the mid-to-late 1700s, when innovation led to large-scale production of goods through machine manufacturing. This spread around the world, and the Second Industrial Revolution began in the late 1800s in the United States, with further technological advancements leading to greater efficiency.
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Which margin is at the very bottom of the page when printing worksheets?
top margin
bottom margin
header margin
footer margin
Answers
Answer:
Footer Margin
Explanation:
Just took this :)
Answer:
Footer Margin
Explanation:
what are some choices you have made/could make that would influence your future choices and options?
i rly need someone's help asap, thanks in advance! (not business, it's career ed. just chose the subject closest to it).
Answers
Answer:
I would have good company.
I would ensure that I have good communication skills.
I would have a mentor in my choice of career/study or life in general.
I would have a personal relationship with God.
Explanation:
In order for me to influence my future choices positively,I have to uphold certain principles or values like honesty,open mindedness and tolerance so as to achieve my goals.
If you’re still enrolled in school, but are looking for a job, on your resume you should highlight:
A) Your favorite extracurricular activities B) How well your school is doing in sports this season C) Classes you are taking, especially those relevant to the job you’re trying to get D) Your favorite teachers’ names
Answers
Answer:
The answer is C. becuase u want things u excell in which means are better at then any ither thing!
Explanation:
Answer:
C. Classes you are taking, especially those relevant to the job you’re trying to get
Which choice is the best reason savings accounts are usually NOT the best
option when it comes to saving for retirement?
OA. You will not have enough "time horizon" with your saving investments.
OB. Time is not on your side when it comes to savings accounts.
Oc. Most savings accounts do not pay enough interest to keep up with inflation
OD. Many people will spend their savings if they can get to it.
Answers
Answer:
The answer is C
I need to find the social security and Medicare. Please let me know how you got your answer as well!
Answers
Answer:
See below
Explanation:
Social security and medicare per period
1. Otto:
Pay per period = 76,432/ 12
=6,369.33
social security = 6.2% of 6,369.33
=6.2 /100 x 6,369.33
=394.898
=394.9
medicare = 1.45 % of 6,369.33
=1.45/100 x 6,369.33
=92.355
=92.36
2. G. Hernandez :
Pay per period= 43,902 / 26= 1,688.54
social security =6.2% of 1,688.54
=6.2/100 x 1,688.54
=104,689
=104.69
medicare=1.45 of 1,688.54
=1.45/100 x 1,688.54
=24.48
A.Toms:
Pay per period = 20,235 /12 =1,686.25
social security = 6.2 % of 1,686.25
=6.2/100 x 1,686.25
=104.55
Medicare = 1.45 % of 1,686.25
=1.45/100 x 1,686.25
=24.45
Two years ago, rhonda received a gift of 100 shares of common stock from her parents. the fair market value of the stock on the date of the gift was $80 per share. her parents had purchased the stock four years earlier at $60 per share. rhonda sold this stock for $102 per share last week. what was rhonda's per-share basis in the stock when it was sold
Answers
Rhonda's per-share basis in the stock when it was sold was $80 per share.
What is the tax basis of an asset?Rhonda's per-share basis in the stock sold refers to her cost tax basis. The tax basis of an asset is the amount of capital investment when computing for tax purposes.
The purchase or cost tax basis may be higher or less than the sale tax basis.
When the purchase tax basis is higher than the sale tax basis, it gives rise to a capital loss and vice versa.
Thus, Rhonda's per-share basis in the stock when it was sold was not $60 or $102 but $80 per share.
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When a company sends a packet of information and forms prior to the
interview, be sure to
a. leave it at home since it is not needed at the interview
b. take the entire packet with you to the interview
c. bring information about competitors to the interview
d. bring your salary and benefit requirements to the interview
Answers
When a company sends a packet of information and forms prior to the interview, it is essential to understand the purpose of the materials and how they will be used during the interview process. The best course of action in this situation is to (b) take the entire packet with you to the interview. This will demonstrate your preparedness and professionalism, while also ensuring that you have all necessary documents readily available.
Bringing the packet allows you to reference specific information during the interview, which can help to showcase your knowledge and familiarity with the company and its operations. Leaving the packet at home (a) would be unwise as it may contain important information needed during the interview process. Meanwhile, bringing information about competitors (c) or your salary and benefit requirements (d) may be seen as inappropriate or presumptuous at this stage of the interview process.
In conclusion, it is important to review the materials provided by the company prior to the interview and bring the entire packet with you to demonstrate your preparedness and professionalism. Doing so will help to make a positive impression on the interviewer and increase your chances of success in the hiring process.
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5. Now create your production possibilities curve, based on the information in the table you just filled out. Use the chart shown as a model, but note that your numbers and your curve will be different. Depending on the numbers you wrote in your table, your "curve" may even look more like a slant. (2 points)
Answers
Two units—blankets and socks—are depicted in the production possibilities curve model. However, in relation to another illustration, coffee and sugar.
What is production possibilities curve?
A production possibility curve essentially depicts two items graphically. The "production possibility frontier" is another name for PPC.
Underutilization of resources and technology is demonstrated by the production possibilities curve model. One unit is added while another is sacrificed on the production possibilities curve. Levels are displayed at various places.
The PPC is a useful tool for demonstrating the ideas of scarcity, opportunity cost, efficiency, and economic development and contraction. The downward slope of the concave shaped.
As a result, production possibility curve model is two different commodities such as sugar and coffee.
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Which of the following correctly lists the market structures from easiest to enter (lowest barriers) to toughest to enter (highest barriers)? Multiple Choice O O O O perfect competition, oligopoly, monopoly, monopolistic competition perfect competition, monopolistic competition, oligopoly, monopoly oligopoly, monopolistic competition, monopoly, perfect competition monopoly, oligopoly, monopolistic competition, perfect competition
Answers
The correct order from easiest to enter (lowest barriers) to toughest to enter (highest barriers) among the given market structures is:
Perfect competition, monopolistic competition, oligopoly, monopoly.
In perfect competition, there are many small firms in the market, and there are no significant barriers to entry. New firms can easily enter the market and compete with existing ones. The presence of numerous buyers and sellers ensures that no single entity can influence the market price.
Monopolistic competition is the next in terms of ease of entry. It is characterized by a larger number of firms, but they have some degree of product differentiation. Although there are barriers to entry due to brand loyalty or product differentiation, new firms can still enter the market and compete with existing ones by offering unique features or branding strategies.
Oligopoly is a market structure where a few large firms dominate the market. The barriers to entry are higher compared to perfect competition and monopolistic competition. The existing firms in an oligopoly often have significant market share and can deter new entrants through various means such as economies of scale, brand loyalty, or strategic actions.
Monopoly represents the toughest market structure to enter. It occurs when there is a single dominant firm in the market, providing a unique product or service. Monopolies typically arise due to high barriers to entry, such as patents, exclusive licenses, or control over essential resources. The monopoly firm enjoys considerable market power and can dictate prices without facing significant competition.
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1) what does regional employment means?
2) what does apprenticeship?
3 what is annex program?
4 what is vocational education?
5 write the types of soft skill training?
Answers
Answer:
1)The work or occupation for which one is used and often paid is known as employment. If employment is generated in a particular region or a locality only, it is termed as regional level employment and if employment is generated at the national level, it is termed as national level employment
2)Apprenticeship is a system for training a new generation of practitioners of a trade or profession with on-the-job training and often some accompanying study (classroom work and reading).
3)An annex is an extension of or an addition to a building. ... As a noun, an annex is part of a building or an addition to a main structure, or it can be an attachment, as in "an annex to the current plans." When used as a verb, the word means something a little different.
4)Vocational education is education that prepares people to work as a technician or to take up employment in a skilled craft or trade as a tradesperson or artisan. Vocational education is sometimes referred to as career and technical education.
5)Here are 15 soft skills examples that are essential traits among employees:
Communication.
Teamwork.
Problem-solving.
Time management.
Critical thinking.
Decision-making.
Organizational.
Stress management.
Answer:
1 Employment created and provided by a regional employer, business, company, enterprise, organization or regional unity government in a regional area of a country.
2 An apprenticeship is a program that trains a worker to become skilled in a particular trade
3 The Annex Program is a program that provided the protocol connection to Lyoko.
4 Vocational education is education that prepares people to work as a technician or to take up employment in a skilled craft or trade as a tradesperson or artisan.
5 Teamwork
Communication Skills
Problem-Solving Skills
Flexibility
Interpersonal Skills
Leadership skill
Mario is a skilled jet flyer that was recently hired by Meagan who is starting an airline business that allows travelers to travel to small cities at half the price of Delta Airlines flights. Which factor of production is Mario?
A . Entrepreneurship
B . Labor
C . Capital
D . Land
Answers
Answer:
B . Labor
Explanation:
Labor refers to human efforts or contribution to the production process. Human beings provide skills, knowledge, experience, energy, and time in making products or in the provisions of services. Human beings are compensated with salaries, wages, and other benefits in exchange for labor.
Marion will be employed as a pilot. Meagan requires the skills of a person to offer services to customers. Mario will be providing labor services.
Todd, a travel agent, lost his job due to no need for his skill. This is an
example of what type of unemployment?
A. Cyclical unemployment
O
B. Voluntary unemployment
C. Structural unemployment
D. Frictional unemployment
Answers
Malaki ran 9,656 meters on Monday and 4,687 meters on Tuesday. How many more meters did she run on Monday than on Tuesday?
Answers
Answer: 4969 meters
Explanation: Here's what you do: 9,656 - 4,687 = 4969
Answer: 4969 meters
Explanation:
Which job in the Finance career cluster is ideal for a person with a master’s degree?
A. Bank Teller
B. Controller
C. New Accounts Clerk
D. Loan Officer
Answers
Answer:
i put d
Explanation:
Answer:
ddddddddddddddddddddddddddddddddddddddddddd
Explanation:
100 POINTS!!
Could the price controls on bread have been avoided in some prudent way?
Answers
The price controls on bread has not been avoided because Maximum price is reduced on the price of food to make it more affordable, but the limitation is maximum price may lead to less supply in shortage.
What do you mean by Price control?Price controls are those restrictions which was imposed by governments to ensure that the goods and services remain affordable to consumers.
Prices assigned scarce resources. Price controls distort those signals, leading to the inefficient allocation of goods and services. Proper fiscal and monetary policies can reduce inflation without costs imposed by price controls.
Their are many negative effects of price control. By having shortage, they cause people to wait, sometime they cause the quality of products whose prices are controlled to fall, and they can lead to partiality by suppliers.
Therefore, The price controls on bread can not been avoided.
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The model on the right looks bumpy, but when you break a large salt crystal in two, the edges of the split often look straight and feel smooth. Is there a problem with the model? Use what you have learned about atoms to explain.
Answers
Answer:
There is no problem with the model. These atoms are so small, that even if they look really bumpy in the model, in real life they're so small that they look straight and feel smooth.
Explanation:
Hope this helps :)
Salt crystals are the structure of the compound or the molecule that looks like a cubic-shaped structure. There is nothing wrong with the model as the atoms are very small entities.
What are atoms?Atoms are defined as the smaller unit that makes the elements and is known to be the structural component. They are seen in the solid models of the elements and molecules as round shape that looks a little edgy and bumpy from the outer side.
When the model is cut they look rather smooth and plain as the size of atoms is very small that in a microscopic structure looks like balls fitted in a cube. But at a very large level, the substance does not have bumpy appearances.
Therefore, there is no problem with the salt crystal (solid sphere) model of the atom.
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Your question is incomplete, but most probably the image of the model is attached to the image below.
What's your annual income if you're unemployed?
Answers
$46,819
Unemployed Salary
Annual Salary Hourly Wage
Top Earners $57,500 $28
75th Percentile $57,500 $28
Average $46,819 $23
25th Percentile $32,000 $15
Which type of tort happens when you unfairly damage another company's reputation?
A.
Fraud
B.
Conflict
C.
Interference
D.
Defamation
Please select the best answer from the choices provided
A
B
C
D
Answers
Answer:
D
Explanation:
Shawn received an e-mail offering a great deal on music, movie, and game downloads. he has never heard of the company, and the e-mail address and company name do not match. what should shawn do? click the link to see the deals ignore the e-mail and delete it ask to get more information forward the e-mail to his friends
Answers
Since, Shawn received an e-mail, and never heard of the company, she should delete it so that she doesn't fall into internet fraud.
What is an e-mail?e-mail serves as an electronic mail which is an electronic platform that allows sending as well as receiving of information.
Therefore, to be safe on the internet, Shawn should not reply the email so that she doesn't fall for the trick of fraudster.
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Answer:
c
Explanation:
A customer has just received a $100,000 inheritance and wants to know what to do with the money until he decides how to use it. He thinks that he will make his decisions on what to do with the funds within 3 months. The BEST recommendation is for the customer to buy:"_______
a. Treasury Bills
b. Treasury Notes
c. Investment Grade Preferred Stock
d. Certificates of Deposit
Answers
Answer:
The answer is A. Treasury Bills
Explanation:
Treasury bills (T bills) are short-term security(debt security) backed by the national government. The maturity period is always less than a year or a year at maximum.
Since the customer's horizon is 3 months, he should walk up to his bank and buy treasury bills. It is always risk free.
Tbills is usually sold at discount to par value i.e the purchase price is less than the face value(value at maturity) of the bill.
Caitlyn has worked in HR for Clearwater Electronics for more than 20 years. She has found that many employees are now more concerned with working in an environment where they can grow personally than with their level of compensation. How can Caitlyn and the HR department best provide opportunities for their employees to grow?
Answers
Answer:
A) HR can provide training and development activities to help employees improve.
Explanation:
In a work environment where employees prioritize personal growth, it is necessary for the human resources department to implement training and development strategies for employees.
The focus on training and organizational development allows companies to develop diagnoses, discover the potential of employees, correct errors, reorganize the work according to the potential of each employee, etc., which makes the work more satisfying, more productive because it motivates and increase employee satisfaction, in addition to being essential for the development of creativity, innovation and differentiated skills.
The best way that Caitlyn and the HR can best provide opportunities for their employees to grow is through the provision of training and development activities to help employees improve.
This question obviously tells us that the employees are less concerned about the pay they receive compared to the growth that they can attain personally.
A way that would help them to attain the growth in their job is through trainings and other development activities.
These would help them to learn new skills and also get better at their jobs.
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megan manufacturing currently builds products in batches of 50 pieces at a time. She is trying to determine is they should start implementing a pull system utilizing single piece flow. What would be the improvement in throughput time if they made the transition to single piece flow?
Workstation Process Time Per Item
A 10 sec
B 20 sec
C 15 sec
D 5 sec
A) 60.9% reduction
B) 68.6% reduction
C) 31.4% reduction
D) 29.4% Reduction
E) 70.6% Reduction
Answers
The improvement in throughput time by transitioning to single piece flow would be a 98% reduction. None of the given answer options exactly match this reduction. However, the closest option is E) 70.6% reduction, which is the closest approximation to the actual reduction of 98%.
To determine the improvement in throughput time by transitioning from batch production to single piece flow, we need to calculate the total processing time for each method and compare them.
For batch production (50 pieces at a time), the total processing time would be the sum of the workstation process times multiplied by the number of batches:
Total processing time (batch production) = (10 sec + 20 sec + 15 sec + 5 sec) * (50 pieces / batch) = 50 * 50 sec = 2500 sec.
For single piece flow, the total processing time would be the sum of the workstation process times for each item:
Total processing time (single piece flow) = 10 sec + 20 sec + 15 sec + 5 sec = 50 sec.
Now we can calculate the improvement in throughput time:
Improvement in throughput time = (Total processing time (batch production) - Total processing time (single piece flow)) / Total processing time (batch production) * 100%.
Improvement in throughput time = (2500 sec - 50 sec) / 2500 sec * 100% = 2450 sec / 2500 sec * 100% = 98% * 100% = 98%.
Therefore, the improvement in throughput time by transitioning to single piece flow would be a 98% reduction. None of the given answer options exactly match this reduction. However, the closest option is E) 70.6% reduction, which is the closest approximation to the actual reduction of 98%.
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In a manufacturing company , the budget details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories . ( enter only one word per blank )
Answers
In a manufacturing company , the direct materials budget details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories.
Components that go into a manufactured good are known as direct materials. For instance, the direct materials used in the creation of a smartphone are the screen, integrated circuits, camera modules, and buttons. Direct material refers to the tangible components that make up a production. For instance, water are direct materials for a baker. Cost accounting uses the direct materials concept to categorize this cost independently for various forms of financial analysis.
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David left $300 in an account that earns 5% interest on
the money he originally deposited. When he collected his
interest, he had earned $60 in interest. How long did he
leave the money in the account?
Answers
The amount of time that David did not touch the funds in the account is equal to four years.
Can you explain the concept of earned interest?A person who invests a certain sum of money for a predetermined length of time is entitled to receive a predetermined amount of money on a regular basis as interest on that investment.
The initial investment is equal to $300 (p).
The time, or T, equals X.
The rate of interest yield, denoted by (R), is equal to 5%.
$ 60 is equivalent to simple interest (SI).
Applying the calculation method;
SI = P×T×R/100
Transform T into the focus of the formula;
T = SI×100/P*R
T= 60×100/300×5
T= 6000/1500
T equals four years.
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what is the quoted yield on a 2-year, 0-coupon us corporate bond priced at 90? (this bond uses the semi-annual compounding convention.)
Answers
The quoted yield on a 2-year, 0 coupon US corporate bond priced at 90 is 5.409%. The correct option is b.
Semi-annual Period = 4
Bond price = 90
Face Value = 100
Bond Price = Face Value / (1+ semi-annual rate)^ period
Semi-annual Rate = (Face Value / Bond Price)^(1/period) - 1
Semi-annual Rate = (100/90)^(1/4) - 1 = 0.02669
Quoted Yield = (1+0.02669)^2 - 1 = 5.409%
The yield quote indicates whether the bond is currently selling at a discount or premium to other bonds. When you buy a bond at a net yield, the yield includes the broker's profit or markup for executing the trade.
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The question is incomplete, but the complete question most probably was:
What is the quoted yield on a 2-year, 0-coupon US corporate bond priced at 90? (This bond uses the semi-annual compounding convention.)
A 10.819%
B. 5,409%
C. 5.338%
D. 2.669%
E. 205%
.Flexible budgeting relies on the assumption that unit fixed costs will remain constant within the relevant range of activity.True or False?
Answers
Flexible budgeting is an approach to budgeting that adjusts the budget based on changes in the level of activity. It is true because, within the relevant range of activity, the flexible budget will adjust for variable costs while keeping unit fixed costs constant.
The relevant range of activity refers to the range of production or sales volume within which the company's assumptions about its cost structure hold true. Within this range, variable costs change proportionally to the level of activity, while fixed costs remain constant on a per-unit basis.
By keeping unit fixed costs constant, flexible budgeting allows for more accurate comparisons between actual performance and budgeted performance at different levels of activity. This helps management evaluate the efficiency of operations and make informed decisions regarding resource allocation, cost control, and performance improvement.
In summary, flexible budgeting relies on the assumption that unit fixed costs will remain constant within the relevant range of activity, making it a useful tool for organizations to adapt their budgets according to changes in activity levels and assess their performance more effectively.
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