Overton, Inc. had the following transactions in 2017, its first year of operations: • Issued 15,000 shares of common stock. Stoc

Result:

The amount he should pay equals = $270,000

Explanation:

The sum due for the investment represents the present value of net income, discounted at a 12% return rate.

The occupancy percentage = 100 - 5= 95%

The net income equals occupancy rate × total income - expenses

                              = 95%× 3,600× 12 - 8,640= 32400

PV of net income = A/r

A = 32400, r = 12%

                            = 32400/0.12

                             =$270000

The amount he should pay equals = $270,000

Answer:

The necessary tax reduction amounts to $13.33

Explanation:

The Tax Multiplier indicates the extent of change (decrease) in income resulting from a tax alteration (increase).

The formula for Tax Multiplier is Tax Multiplier = ΔY / ΔT = - MPC / (1- MPC)

Given: Required Change in Income [ΔY] = 40

The MPC is 0.75

Inserting into the formula;

40 / ΔT  = - 0.75 / (1- 0.75)

40 / ΔT = - 0.75 / 0.25

40 / ΔT  =  - 3

Thus, ΔT = - 40/ 3

This leads to ΔT = - 13.33

Answer:

a) the small bus

b) the medium or large bus

c) the small bus

Explanation:

a) using the maximin criterion, the manager aims to maximize the least possible profit (a pessimistic approach), which results in the following profits:

Bus size Demand

Low Medium High

Small 50 60 70 → minimum profit = 50

Medium 40 80 90 → minimum profit = 40

Large 20 50 120 → minimum profit = 20

Thus, the optimal choice yielding the highest minimum profit is the small bus.

b) applying the maximin criterion, the manager will seek to minimize potential maximum losses, determining losses based on the best profit scenario:

Bus size Demand

Low Medium High

Small 0 -20 -50 → maximum loss = -50

Medium -10 0 -30 → maximum loss = -30

Large -30 -30 0 → maximum loss = -30

Hence, the option that bears the least maximum loss is either the medium or large bus.

c) for calculating the expected value of each option:

small = 30/100*50 + 30/100*60 + 40/100*70 = 61

medium = 30/100*40 + 30/100*80 + 40/100*90 = 72

large = 30/100*20 + 30/100*50 + 40/100*120 = 69

The small bus turns out to be the best choice, as it has the highest expected profit.

Answer:

a) With a cost of $11, the operating income amounts to $660,000

b) If the cost is set at $9, the operating income is $540,000

c) Indeed, the manager is concerned with the chosen price. The Cutting Division operates as a cost center.  

Explanation:

a)                                              Cutting                          Assembly

Revenue                              $660,000                       $2,500,000

Cost of services

Incurred                               $660,000                        $360,000

Transferred-in                           $0                              $660,000

Total                                    $660,000                        $1,020,000

Operating income                    $0                              $1,480,000

At a cost of $11, operating income is calculated as 60,000 cords × $11 = $660,000

b)                                            Cutting                            Assembly

Revenue                               $540,000                       $2,500,000

Cost of services

Incurred                               $660,000                        $360,000

Transferred-in                           $0                              $540,000

Total                                    $660,000                        $900,000

Operating income              ($120,000)                       $1,600,000

At a cost of $9, the operating income is 60,000 cords × $9 = $540,000  

Response:

Are we not feeling okay because we are trying