Business College

Your firm has taken out a 521,000 loan with 8.6% APR (compounded monthly) for some commercial property. As is common in commercial real estate, the loan is a 5-year loan based on a 15-year amortization. This means that your loan payments will be calculated as if you will take 15 years to pay off the loan, but you actually must do so in 5 years. To do this, you will make 59 equal payments based on the 15-year amortization schedule and then make a final 60th payment to pay the remaining balance.
A. What will your monthly payments be?
B. What will your final payment be?

Answers

Answer 1

Answer:

A. What will your monthly payments be?

$5,161.08

B. What will your final payment be?

$419,650

Explanation:

loan = $521,000

interest rate = 8.6% compounded monthly

loan schedule = 15 years

monthly payment = loan amount / PV annuity factor, 0.7167%, 180 periods* = $521,000 / 100.94786 = $5,161.08

No annuity table will give you the annuity factor for 0.7167%, so you must search for an annuity calculator on the web.

Then I prepared an amortization schedule to determine the balance after the 59th payment (attached file). The balance after the 59th payment is $416,649 + $3,001 in interests = $419,650.

Related Questions

What was the non-live show revenue (merchandising + record sales + etc) for the Amzai Brothers during September-December 2019?

Answers

Full question attached

Answer and Explanation:

Answer and explanation attached

A diet is to contain at least 3640 mg vitamin C, 2190 mg Calcium, and 2170 calories every day. Two foods, a dairy-based meal and a vegan option are to fulfill these requirements. Each ounce of the dairy-based meal provides 40 mg vitamin C, 30 mg Calcium, and 10 calories. Each ounce of the vegan option provides 60 mg vitamin C, 30 mg Calcium, and 50 calories. If the dairy-based meal costs $0.21 per ounce and the vegan option costs $0.27 per ounce.

Required:
a. How many ounces of each food should be purchased to minimize costs?
b. What is that minimum cost (per day)?

Answers

Answer:

(A) 73 ounces of diary-based meal and 28.8 ounces of the vegan option.

(B) The minimum cost per day is [73 × 0.21] + [28.8 × 0.27] = 15.33 + 7.776 = $23.106

Explanation:

First thing to note is that the dairy-based meal costs less than the vegan option. In otherwords, if you're to minimize cost, you should purchase as many ounces of dairy-based meal as possible. This is the first mindset or step.

What the diet should contain everyday:

3640mg - Vitamin C

2190mg - Calcium

2170 - Calories

DAIRY BASED:

(40 × 91 = 3640), (30 × 73 = 2190), (10 × 217 = 2170)

VEGAN OPTION:

(60 × 60.67 = 3640), (30 × 73 = 2190), (50 × 43.4 = 2170)

Getting 73 ounces of dairy-based meal, you have

(40 × 73), (30 × 73), (10 × 73) = 2920mg, 2190mg, 730 calories.

You have left 720mg of Vitamin C and 1440 calories to obtain from the Vegan Option.

(60 × 12 = 720), (30 × 0 = 0), (50 × 28.8 = 1440)

The highest quantity needed here is 28.8 ounces of calories from the vegan option, hence 28.8 ounces of the vegan meal should be purchased. There will be excesses of Vitamin C and Calcium but that is necessary in order to purchase the stipulated minimum amount of each nutrient.

The minimum cost per day will now be [73 × 0.21] + [28.8 × 0.27] = 15.33 + 7.776 = $23.106

how does the IoT and Big Data currently play into your job, your organization and the industry? Are these two things connected and if so, how?

Answers

Explanation:

The term IoT is an acronym for 'Internet of Things' which refers to a modern technology that allows certain physical objects or “things” as we may call it to connect to the internet.

While Big Data refers not just to large data, but to an innovative field of technology that specializes in analyzing very large (big) data sets.

Consider the education industry, by means of IoT, it is possible for school management to effectively track their student's academic progress in real-time.

IoT and Big Data connected in the sense that, as these physical things (objects) communicate over the internet, a mass amount of data ("Big Data") is been generated which could then be analyzed using specialized software. In other words, they are mutually beneficial.

On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $17,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computer World at a cost of $105,000 and were expected to have a useful life of six years with no residual value. Both firms record amortization and depreciation semi-annually.
Required:
1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease.
2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease.
• 1 Record the beginning of the lease for Nath-Langstrom Services.
• 2 Record the lease payment and interest expense for Nath-Langstrom Services.
• 3 Record the amortization expense for Nath-Langstrom Services.
• 4 Record the lease payment and interest expense for Nath-Langstrom Services.
• 5 Record the amortization expense for Nath-Langstrom Services.
• 6 Record the lease revenue received by ComputerWorld Leasing.
• 7 Record the Depreciation expense for ComputerWorld Leasing.
• 8 Record the lease revenue received by ComputerWorld Leasing.
• 9 Record the Depreciation expense for ComputerWorld Leasing.

Answers

Answer:

Lessee journal entries:

lease expense 17,500 debit

cash 17,500 credit

--to record lease payment June 30th, 2021--

lease expense 17,500 debit

cash 17,500 credit

--to record lease payment Dec 31st, 2021--

The lessee does not depreciate the equipment as it is not part of their company.

Lessor journal entries:

cash 17,500 debit

lease revenue 17,500 credit

--to record cash collection on Nath-Langstrom June 30th--

depreciation expense 8,750 debit

acc depreciation- equip 8,750 credit

--to record depreciation on leased equipment June 30th--

cash 17,500 debit

lease revenue 17,500 credit

--to record cash collection on Nath-Langstrom Dec 31st--

depreciation expense 8,750 debit

acc depreciation- equip 8,750 credit

--to record depreciation on leased equipment Dec 31st--

Explanation:

This is an operating lease as the equipment returns to the firm at the end of the contract and it is below 75% of the useful life (2 years / 6 years = 33%)

amortization on the equipment:

(cost - salvage value ) / useful life

(105,000 - 0 ) / 6 = 17,500 per year

semiannual depreciation: 17,500 / 2 = 8,750

You are CEO of Rivet Networks, maker of ultra-high performance network cards for gaming computers, and you are considering whether to launch a new product. The product, the Killer X3000, will cost $900,000 to develop up front (year 0), and you expect revenues the first year of $800,000, growing to $1.5 million the second year, and then declining by 40% per year for the next 3 years before the product is fully obsolete. In years 1 through 5, you will have fixed costs associated with the product of $100,000 per year, and variable costs equal to 50% of revenues.
A. What are the cash flows for the project in years 0 through 51
B. Plot the NPV profile for this nvestment using discount rates from 0% to 50% in 5% increments.
C. What is the project's NPV if the project's cost of capital is 10%?
D. Use the NPV profile to estimate the cost of capital at which the project would become unprofitable; that is, estimate the project's IRR or calculate it using the data.
Initial investment $900,000
Revenues vear 1 $800,000
Revenues vear 2 $1,500,000
Revenues decline years 4000
Fixed costs vears 1-5 $100,000
Variable costs 50%

Answers

Answer:

F= (900,000)

F1= 300,000

F2 = 650,000

F3 = 350,000

F4 = 170,000

F5 = 62,000

NPV at 10% $327487

IRR 20.587%

Explanation:

F0 -900,000

revenues variable cost fixed cost net flow

F1 800,000 -400000 -100,000 = 300,000

F2 1,500,000 -750000 -100,000 = 650,000

F3 900000 -450000 -100,000 = 350,000

F4 540000 -270000 -100,000 = 170,000

F5 324000 -162000 -100,000 = 62,000

NPV at 10%:

For each cashflow, we apply the discount of a lump sum formula

[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]

And add them together for the net present value

[tex]\left[\begin{array}{ccc}Year&$cashflow&PV\\0&-900,000&-900,000\\1&300,000&272,727\\2&650,000&537,190\\3&350,000&262,960\\4&170,000&116,112\\5&62,000&38,497\\Total&&327487\\\end{array}\right][/tex]

We solve for the IRR using the excel IRR formula

we list the cashflow and use IRR to select them.

Atom Endeavour Co. issued $17 million face amount of 12.0% bonds when market interest rates were 13.38% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds

Answers

Answer:

$2,040,000

Explanation:

Annual Interest calculation

Interest = Par/Face Value × Coupon Rate

= $17,000,000 × 12.0%

= $2,040,000

Therefore, interest to be paid annually on these bonds is $2,040,000.

Which best describes the difference in the duties of restaurant employees who work inside and outside a kitchen?
O Kitchen workers clear tables and wash dishes, while the other restaurant employees take orders and prepare and
cook the food.
O Kitchen workers answer phones and handle advertising, while the other restaurant employees prepare drinks and
set tables.
O Kitchen workers greet guests and take orders, while the other restaurant employees prepare and cook food and
clean dishes.
o Kitchen workers prepare and cook food and clean dishes, while the other restaurant employees greet guests and
take orders

Answers

Answer:

Kitchen workers prepare and cook food and clean dishes, while the other restaurant employees greet guests and take orders.

Explanation:

Kitchen workers prepare and cook food and clean dishes, while the other restaurant employees greet guests and take orders is the best describes the difference in the duties of restaurant employees who work inside and outside a kitchen. Hence, option D is correct.

What are duties and responsibilities of restaurant staff?

The tasks and obligations of a waiter or waitress include greeting and seating customers, collecting their orders, properly relaying them to the kitchen, and memorizing the menu in order to suggest additional appetizers, desserts, or drinks.

The duties of an assistant manager in a restaurant range from scheduling shifts to taking care of the needs of the personnel. They must also guarantee that the establishment complies with all relevant rules and encourages a pleasant dining experience with top-notch customer service.

promptly, expertly, and amiably handled customers' orders for food and beverages. Good menu knowledge was used to help clients and, when possible, upsell menu items. Ensured that everything was kept orderly and clean at all times, including the placement of all tables and silverware.

Thus, option D is correct.

For more information about duties and responsibilities of restaurant staff, click here:

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On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $15 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $13 million. The loss from operations of the segment during 2021 was $4.8 million. Pretax income from continuing operations for the year totaled $7.8 million. The income tax rate is 25%.
Prepare the lower portion of the 2021 income statement beginning with income from continuing operations before income taxes. Ignore EPS disclosures. (Amounts to be deducted and negative amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions.)

Answers

Answer:

Income from continuing operations before income taxes 7,800,000

Less Income tax expenses (7,800,000*25%) (1,950,000)

Income from continuing operations 5,850,000

Discontinued operations:

Loss from operations of discontinued component (2,800,000)

Income tax benefit 700,000

Loss on discontinued operations (2,100,000)

Net Income (loss) 3,750,000

Working

Loss from operations of discontinued component

= Gain from sale of semiconductor business - loss from operations of the segment

= (15 - 13 ) - 4.8

= -$2.8 million

Income tax benefit

= 2,800,000 * 25%

= $700,000

Leonard, a company that manufactures explosionproof motors, is considering two alternatives for expanding its international export capacity. Option 1 requires equipment purchases of $900,000 now and $560,000 two years from now, with annual M&O costs of $79,000 in years 1 through 10. Option 2 involves subcontracting some of the production at costs of $280,000 per year beginning now through the end of year 10. Neither option will have a significant salvage value.

Required:
Use a present worth analysis to determine which option is more attractive at the company’s MARR of 20% per year. (Note: Check out the spreadsheet exercises for new options that Leonard has been offered recently.)

Answers

Answer:

Since the total present value of Option 2 of – $1,453,892 is lower than the total present value of Option 1 of – $1,620,094, it implies that Option 2 costs less and more attractive at the company’s MARR of 20% per year than Option 1. Therefore, Option 2 should be selected.

Explanation:

Note: See the attached excel file for the calculation of the total present values (in bold red color) of the two alternatives for expanding international export capacity.

Present worth can be described as an equivalence method of analysis in which the cash flows of an investment or a project are discounted to a single present value.

From the attached excel file, we have:

Total present value of Option 1 = – $1,620,094

Total present value of Option 2 = – $1,453,892

Skidmore Music Company had the following transactions in March:
a. Sold instruments to customers for $16, 700, received $10, 700 in cash and the rest on account. The cost of the instruments was $7, 100.
b. Purchased $4, 900 of new instruments inventory; paid $1, 700 in cash and owed the rest on account.
c. Paid $720 in wages for the month.
d. Received $3, 100 from customers as deposits on orders of new instruments to be sold to the customers in April.
e. Received a $280 bill for March utilities that will be paid in April.
Required:
Complete the following statements:
1. Cash basis Income Statement
2. Accrual basis Income Statement

Answers

Answer: Check attachment

Explanation:

A cash basis income statement is simply referred to as an income statement which contains revenues and expenditures for the company whereby cash has either being received or paid by the company.

For accrual basis income statement, revenue and expenditures are recorded when they're either earned or made.

Check the attachment for more analysis.

Cascade Company was started on January 1, 2016, when it acquired $60,000 cash from the owners. During 2016, the company earned cash revenues of $35,000 and incurred cash expenses of $18,100. The company also paid cash distributions of $4,000.
Required:
Prepare a 2016 income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows under each of the following assumptions.
a. Cascade is a sole proprietorship owned by Carl Cascade.
b. Cascade is a partnership with two partners, Carl Cascade and Beth Cascade. Carl Cascade invested $24,000 and Beth Cascade invested $36,000 of the $60,000 cash that was used to start the business. Beth was expected to assume the vast majority of the responsibility for operating the business. The partnership agreement called for Beth to receive 60 percent of the profits and Carl to get the remaining 40 percent. With regard to the $4,000 distribution, Beth withdrew $2,400 from the business and Carl withdrew $1,600.
c. Cascade is a corporation. It issued 5,000 shares of $5 par common stock
for $60,000 cash to start the business.

Answers

Answer:

the income statement is the same for all types of businesses:

Revenues $35,000

Expenses ($18,100)

Net income $16,900

a. Cascade is a sole proprietorship owned by Carl Cascade.

statement of equity

Carl Cascade, capital beginning balance $0

paid in capital, Carl Cascade $60,000

net income $16,900

subtotal $76,900

Carl Cascade, drawings (4,000)

Carl Cascade, capital ending balance $72,900

balance sheet

Assets

Cash $72,900

Equity

Carl Cascade, capital $72,900

statement of cash flows

Cash flow from operating activities $16,900

Cash flow from financing activities:

Paid in capital $60,000

Drawings ($4,000)

net cash from financing activities $56,000

net cash increase $72,900

beginning cash balance $0

ending cash balance $72,900

b. Cascade is a partnership with two partners, Carl Cascade and Beth Cascade.

statement of equity

Carl Cascade, capital beginning balance $0

Beth Cascade, capital beginning balance $0

paid in capital, Carl Cascade $24,000

paid in capital, Beth Cascade $36,000

net income $16,900

subtotal $76,900

Carl Cascade, drawings (1,600)

Beth Cascade, drawings (2,400)

Carl Cascade, capital ending balance $29,160

Beth Cascade, capital ending balance $43,740

balance sheet

Assets

Cash $72,900

Equity

Carl Cascade $29,160

Beth Cascade $43,740

total equity $72,900

statement of cash flows

Cash flow from operating activities $16,900

Cash flow from financing activities:

Paid in capital $60,000

Drawings ($4,000)

net cash from financing activities $56,000

net cash increase $72,900

beginning cash balance $0

ending cash balance $72,900

c. Cascade is a corporation.

statement of equity

Common stock beginning balance $0

Common stock issued (5,000 stocks) $25,000

Additional paid in capital $35,000

net income $16,900

subtotal $76,900

Dividends (4,000)

Common stock ending balance $25,000

Additional paid in capital ending balance $35,000

Retained earnings $12,900

balance sheet

Assets

Cash $72,900

Equity

Common stock $25,000

Additional paid in capital $35,000

Retained earnings $12,900

total equity $72,900

statement of cash flows

Cash flow from operating activities $16,900

Cash flow from financing activities:

Common stocks issued $25,000

Additional paid in capital $35,000

Dividends ($4,000)

net cash from financing activities $56,000

net cash increase $72,900

beginning cash balance $0

ending cash balance $72,900

Mcmurtry Corporation sells a product for $250 per unit. The product's current sales are 13,600 units and its break-even sales are 10,608 units. The margin of safety as a percentage of sales is closest to:

Answers

Answer:

22%

Explanation:

Margin of Safety is the amount by which sales can fall before making a loss.

Margin of Safety = Expected Sales - Break-even Sales ÷ Expected Sales

= (13,600 - 10,608) ÷ 13,600

= 0.22 or 22%

Shannon’s Brewery is a newly opened micro-brewery of craft beers located about a mile from Samantha Springs in Keller, Texas. According to Shannon Carter, (owner, founder, and brew master) Samantha Springs "is an exceptional water source." "It’s surrounded by a very unique rock formation that has very, very hard compressed rocks that have been hollowed out with this very fine sand. The water travels for miles, and the end product is this filtered water that is just phenomenal." Shannon Carter crafts what the brew master calls "wholesome beers" made with the highest quality, non-GMO grains and malts available and brewed using techniques garnered from his Irish heritage. Shannon’s mission statement closely reflects this philosophy. According to Shannon Carter:

Our award-winning beer is brewed with the best stuff on earth: pure spring water, whole grain, whole flower hops and a whole lotta love! For us, "brewed with the best stuff on earth," is much more than a saying. it’s a guiding principle. Paramount to this commitment is our multi-step fire-brewed process.

Required:
What makes Shannon’s beer great?

Answers

Answer:

Marketing Mix

Explanation:

What makes Shannon's beer great is basically her Marketing Mix. This combination of aspects is what ultimately makes Shannon's beer unique and attracts a large number of customers which makes it very profitable. This includes a combination of a unique beer recipe with high-quality ingredients, a top-notch mission statement, dedicated marketing that focuses on the organic and wholesome features of the product, and lastly a dedicated customer base that loves all of these features and purchases the product. This marketing mix sets Shannon's Beer apart from the competition and makes it great.

3. Identify TWO possible suitable sources of external finance Chris could consider, if the local bank
manager refuses to give him a loan for purchasing a new van for his business. (10 marks)
Please help

Answers

Answer:

Hire Purchase

Loans from friends

Explanation:

Hire purchase

A hire purchase (HP) , is also called an installment plan, it is is an financing contract whereby a customer agrees to acquire an asset by paying an initial deposit and repays the balance of the price plus interest on installment bases over a period of time .

Loans from friends

These are loans received from friends which are mostly interest free

Following are account balances (in millions of dollars) from a recent FedEx annual report, followed by several typical transactions. Assume that the following are account balances on May 31, 2014:

Property and equipment (net) $15,543
Retained earnings 12,716
Accounts payable 1702
Prepaid expenses 329
Accrued expenses payable 1894
Long-term notes payable 1667
Other noncurrent assets 3557
Common stock ($0. 10 par value) 32
Receivables $4,581
Other current assets 610
Cash 2328
Spare parts, supplies, and fuel 437
Other noncurrent liabilities 5616
Other current liabilities 1286
Additional paid-in capital 2472

These accounts are not necessarily in good order and have normal debit or credit balances. Assume the following transactions (in millions) occurred the next year ending May 31, 2015:

a. Provided delivery service to customers, receiving $21,704 in accounts receivable and $17,600 in cash.
b. Purchased new equipment costing $3,434; signed a long-term note.
c. Paid $13,864 cash to rent equipment and aircraft, with $10,136 for rental this year and the rest for rental next year.
d. Spent $3,864 cash to maintain and repair facilities and equipment during the year.
e. Collected $24,285 from customers on account.
f. Repaid $350 on a long-term note (ignore interest).
g. Issued 20 shares of additional stock for $16.
h. Paid employees $15,276 during the year.
i. Purchased for cash and used $8,564 in fuel for the aircraft and equipment during the year.
j. Paid $784 on accounts payable. Ordered $88 in spare parts and supplies.

Answers

Question Completion:

Prepare the necessary journal entries without the narration.

Answer:

FedEx

a. Debit Cash $17,600

Debit Accounts Receivable $21,704

Credit Service Revenue $39,304

b. Debit Equipment $3,434

Credit Note Payable (long-term) $3,434

c. Debit Rent Expense $10,136

Debit Prepaid Rent $3,728

Credit Cash Account $13,864

d. Debit Maintenance Expense $3,864

Credit Cash Account $3,864

e. Debit Cash Account $24,285

Credit Accounts Receivable $24,285

f. Debit Long-term Notes Payable $350

Credit Cash Account $350

g. Debit Cash Account $320

Credit Common Stock $2

Credit Additional paid-in capital $318

h. Debit Salaries and Wages Expense $15,276

Credit Cash Account $15,276

i. Debit Spare parts, supplies, and fuel Expense $8,564

Credit Cash Account $8,564

j. Debit Accounts Payable $784

Credit Cash Account $784

k. No journal is required.

Explanation:

With the above journal entries, the accountants at FedEx have recorded the listed business transactions for the first time in the accounts of FedEx. From the entries, these transactions will then be posted to the general ledger where accounts, transactions, and business events are summarized.

In both the United States and France, the demand for haircuts is given by QD=300−10P . However, in the United States, the supply is given by QS=−300+20P , while in France, the supply is given by QS=−33.33+6.67P .

Required:
a. What are the equilibrium prices and quantities of haircuts in the two countries?
b. What are the new equilibrium prices and quantities of haircuts in the two countries?

Answers

Answer:

a. P = 20 and Q = 100 in the United States; and also P = 20 and Q = 100 in France.

b. P = 23.33 and Q = 166.70 in the United States; and P = 26 and Q = 140 in France.

Explanation:

Note: The part b of the requirement is not complete. The entire question is therefore represented with the complete pat b before answering the question as follows:

Required:

a. What are the equilibrium prices and quantities of haircuts in the two countries?

b. Suppose that the demand for haircuts in both countries increases by 100 units at each price, so that the new demand is QD = 400 - 10P. What are the new equilibrium prices and quantities of haircuts in the two countries?

The explanation to the answers is now provided as follows:

a. What are the equilibrium prices and quantities of haircuts in the two countries?

In economics, an equilibrium occurs at point where the quantities demanded is equal to the quantities supplied.

Let Q denotes equilibrium quantity and P denotes equilibrium price, the equilibrium prices and quantities of haircuts in the two countries can therefore be calculated as follows:

In the United States

QD =300 − 10P

QS= −300 + 20P

Since at equilibrium, QD = QS, we can therefore solve for P by equating the two equations above as follows:

300 - 10P = −300 + 20P

300 + 300 = 20P + 10P

600 = 30P

P = 600 / 30

P = 20

To obtain equilibrium quantity, we substitute P = 20 into any QD and QS since at equilibrium QD = QS. Using QD, we have:

Q = 300 – 10(20)

Q = 300 – 200

Q = 100

Therefore, P = 20 and Q = 100 in the United States.

In France

QD = 300 − 10P

QS= −33.33 + 6.67P

Since at equilibrium, QD = QS, we can therefore solve for P by equating the two equations above as follows:

300 - 10P = −33.33 + 6.67P

300 + 33.33 = 6.67P + 10P

333.33 = 16.67P

P = 333.33 / 16.67

P = 20

To obtain equilibrium quantity, we substitute P = 20 into any QD and QS since at equilibrium QD = QS. Using QD, we have:

Q = 300 – 10(20)

Q = 300 – 200

Q = 100

Therefore, P = 20 and Q = 100 also in France.

In the United States

QD = 400 − 10P

QS= −300 + 20P

Since at equilibrium, QD = QS, we can therefore solve for P by equating the two equations above as follows:

400 - 10P = −300 + 20P

400 + 300 = 20P + 10P

700 = 30P

P = 700 / 30

P = 23.33

To obtain equilibrium quantity, we substitute P = 20 into any QD and QS since at equilibrium QD = QS. Using QD, we have:

Q = 400 – 10(23.33)

Q = 400 – 233.30

Q = 166.70

Therefore, P = 23.33 and Q = 166.70 in the United States.

In France

QD = 400 − 10P

QS= −33.33 + 6.67P

Since at equilibrium, QD = QS, we can therefore solve for P by equating the two equations above as follows:

400 - 10P = −33.33 + 6.67P

400 + 33.33 = 6.67P + 10P

433.33 = 16.67P

P = 433.33 / 16.67

P = 25.99 = 26

To obtain equilibrium quantity, we substitute P = 20 into any QD and QS since at equilibrium QD = QS. Using QD, we have:

Q = 400 – 10(26)

Q = 400 – 260

Q = 140

Therefore, P = 26 and Q = 140 in France.

In, & Sons, a small environmental-testing firm, has a small environmental-testing firm, performed 11,400 radon tests for $260 each and 15,000 lead tests for $210 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 12% next year. However, awareness of radon-related health hazards is expected to result in a 5% increase in radon-test volume each year in the near future. Jim Hart feels that if he lowers his price for lead testing to $200 per test, he will have to face only a 4% decline in lead-test sales in 2018.

Required:
a. Prepare a 2018 sales budget for Hart & Sons assuming that Hart holds prices at 2017 levels.
b. Prepare a 2018 sales budget for Hart & Sons assuming that Hart lowers the price of a lead test to $200.
c. Should Hart lower the price of a lead test in 2018 if the company’s goal is to maximize sales revenue?

Answers

Answer:

A. $5,884,200

B. $5,992,200

C. If the company's aim and objective is for them to maximize their sales revenue then they should go ahead and lower the selling price of lead tests in 2018

Explanation:

a. Preparation of 2018 sales budget for Hart & Sons assuming that Hart holds prices at 2017 levels

Sales budget

For the year ended December 31, 2018

Selling price Units sold Total Revenue

Radon tests

$260 *11,970 =$3,112,200

(11,400 x 1.05 = 11,970)

Lead tests $210*13,200= $2,772,000

(15,000 x 0.88 = 13,200)

(100%-12%=88%)

Total $5,884,200

$3,112,200+$2,772,000

b. Preparation of 2018 sales budget (lower price)

Sales budget

For the year ended December 31, 2018

Selling price Units sold Total Revenue

Radon tests

$260 *11,970 =$3,112,200

(11,400 x 1.05 = 11,970)

Lead tests $200*14,400= $2,880,000

(15,000 x 0.96 = 14,400)

(100%-4%=96%)

Total $5,992,200

$3,112,200+$2,880,000

C. If the company's aim and objective is for them to maximize their sales revenue then they should go ahead and lower the selling price of lead tests in 2018

Wainwright Corporation owns and operates a wholesale warehouse.
The following transactions occurred during March 2016:
1. Issued 30,000 shares of capital stock in exchange for $300,000 in cash.
2. Purchased equipment at a cost of $40,000. $10,000 cash was paid and a note payable was signed for the balance owed.
3. Purchased inventory on account at a cost of $90,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $120,000. The cost of the goods sold was $70,000.
5. Paid $5,000 in rent on the warehouse building for the month of March.
6. Paid $6,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2016.
7. Paid $70,000 on account for the merchandise purchased in 3.
8. Collected $55,000 from customers on account.
9. Recorded depreciation expense of $1,000 for the month on the equipment.
Required:
1.Analyze each transaction and classify each as a financing, investing and/or operating activity.
A transaction can represent more than one type of activity.
Also indicate the cash effect of each, if any.
Activities:
Transaction Financing Investing Operating
1
2
3
4
5
6
7
8
9