Business Law 241 BYU Flashcards

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accounting

Milan Company issued bonds with a face value of $200,000 on January 1, 2016. The bonds had a 7 percent stated rate of interest and a six-year term. The bonds were issued at face value. Interest is payable on an annual basis.

Required

Write a memo explaining whether the total cash outflow for interest would be more, less, or the same if the bonds pay semiannual versus annual interest.

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business

Studies conducted by the manufacturer of Boston and Vermont asphalt shingles have shown product weight to be a major factor in the customer's perception of quality. Moreover, the weight represents the amount of raw materials being used and is therefore very important to the company from a cost standpoint. The last stage of the assembly line packages the shingles before the packages are placed on wooden pallets. Once a pallet is full (a pallet for most brands holds $\mathrm{16 \ squares}$ of shingles), it is weighed, and the measurement is recorded. The data from the file contains the weight (in pounds) from a sample of $\mathrm{368 \ pallets}$ of Boston shingles and $\mathrm{330 \ pallets}$ of Vermont shingles. For the Boston shingles, is there evidence at the $0.05$ level of significance that the population mean weight is different from $\mathrm{3,150 \ pounds}$ ?

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accounting

An acquaintance has proposed the following business plan to you. A local company requires a consistent quantity of a commodity and is looking for a reliable supplier. You could become that reliable supplier.

The cost of the commodity is expected to rise steadily over the foreseeable future, but the company is willing to pay more than the price that is current at the time. All you would need to do is make an investment, purchase the inventory and then deliver inventory to the company over the following year. One complication is that the commodity is available for purchase only seasonally, so at the end of every year you would need to purchase the supply for the following year. The customer pays promptly on delivery.

An initial cash investment of $62,000 would be used to purchase$50,000 of inventory on December 2019. The remaining cash would be held for liquidity needs. In the following year, you would deliver this inventory to the customer. Inventory costs are expected to increase by $10,000 per year, and the customer agrees to pay$15,000 more than the current cost of inventory. So, during 2020, you would deliver inventory that originally cost $50,000, receives a payment of$75,000 and pays $60,000 to purchase inventory for the current year. This pattern would continue in future years, but with annually increasing costs of inventory and corresponding increases in the price charged to the customer.

If you accept this proposal, your objective would be to receive$9,000 in dividends (about a 15% return on the $62,000 investment) at the end of each year. Assume your business would have an income tax rate of 40%.

c. Suppose that your business would operate in a tax jurisdiction that allowed the use of LIFO for inventory. Would this opportunity meet your financial objective? Why?

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economics

Match the following terms to the correct definitions. A. Inflation B. Inflation rate C. Deflation D. Consumer price index E. Market basket F. Base period G. Producer price index H. Hyperinflation I. Shoe leather costs J. Menu costs ___________ A bundle of goods that an average consumer might buy.

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