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An 80-room motel forecasts its average room rate to be $68.00 for next year at 75% occupancy. The rooms department has a fixed wage cost of $186,000. Variable wage cost for housekeeping is $9.00 an hour; it takes one-half hour to clean a room. Fringe benefits are 18% of total wages. Linen, laundry, supplies, and other direct costs are $2.75 per occupied room per day. The motel also has a 50-seat, limited-menu snack bar. Breakfast revenue is derived solely from customers staying overnight in the motel. On average, 40% of occupied rooms are occupied by two persons and, on average, 80% of overnight guests will eat breakfast. Average breakfast check is $6.50. Lunch seat turnover is 1.5, with an average check of $8.95. The average dinner check is $10.95 and there are 2.0 seat turns for dinner. The snack bar is open 365 days a year for all three meals. Direct costs for the snack bar are 78% of total snack bar revenue. Indirect costs for the motel are estimated at $580,800 for next year. a. Calculate the budgeted contributory income statement for each department and a consolidated total motel departmental income statement to determine operating income. b. Assume that at the end of next year, actual revenue was on 21,700 rooms occupied at an average rate of $68.40; actual housekeeping wages (before employee fringe benefits) were $108,208. Analyze room revenue for price and sales volume variances and housekeeping wages for cost, quantity, and sales volume variances; assume it took 32 minutes to clean each room actually occupied (sold).
Explain the following statement: “When the NPV of a project = $0, the discount rate being used will equal the project’s IRR.” Use math to explain your answer. Hint: Equations 10-1 and 10-2 may help with the math.
A savings account, which started with a balance of $500, has the following end of year balances: Year 1 = $550; Year 2 = $580; Year 3 = $660; Year 4 = $772; Year 5 = $950. No withdrawals were made over the life of the account, but there was one addit..
You are given the following information. S=50, X=59, simple annual risk free interest rate is 5%, standard deviation of monthly stock returns is 10%. What is the value of a one year European call option using the black scholes option pricing model? A..
Abagail Nelson, a 25-year-old personal loan officer at First National Bank- How much will she have accumulated when she turns 65 if she invests in equities and earns 8 percent on average?
Provide a description of the three forms of the Efficient Market Hypothesis using the picture below. Do you think the markets are efficient?
Mr. Art Deco will be paid $100,000 one year hence. This is a nominal flow, which he discounts at an 8% nominal discount rate: PV = 100,000 = $ 92,593 1.08 The inflation rate is 4%. Calculate the PV of Mr. Deco’s payment using the equivalent real cash..
E-Eyes.com has a new issue of preferred stock it calls 20/20 preferred. The stock will pay a $20 dividend per year, but the first dividend will not be paid until 20 years from today. If you require a 9.25 percent return on this stock, how much should..
If a company has cash flow from operations of $3 million, depreciation and amortization of $2 million, and its working capital accounts did not change from the previous period, what its net income for this period ?
Granite Graphics has a pretax cost of debt of 7.68 percent and a cost of equity of 15.2 percent. The firm uses the subjective approach to determine project discount rates. The project has an initial cost of $4.3 million and produces cash inflows of $..
Use the "percent of sales method" of preparing pro forma financial statements to determine the projection for next year's inventory. Make the following assumptions: current year's sales are $27,800,000; current year's cost of goods sold is $17,528,00..
Navel County Choppers Inc. is experiencing rapid growth. The company expects dividends to grow at 16 percent per year for the next 8 years before leveling off at 6 percent into perpetuity. The required return on the company’s stock is 15 percent.
What would be the net cash flow from above activities? Dividend income received by a corporation. Which of the following as a business entity pays federal income tax?
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