Harwood Company purchased an office building for $5,000,000 cash on April 1. Prior to renting it out to tenants on July 1, Harwood spent $1,000,000 on materials and labor to renovate the property. It funded $100,000 of the renovation cost with its own funds and borrowed the remaining $900,000. As of July 1, $10,000 of interest had been paid to the bank, but none of the principal had been repaid. The basis of the building on July 1 is
A. $5,100,000.
B. $6,000,000.
C. $6,010,000.
D. $5,000,000.
Answer: C
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A firm operated at 80% of capacity for the past year, during which fixed costs were $210,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit was:
A) $90,000 B) $210,000 C) $590,000 D) $490,000
Acme, Inc., produces widgets. To manufacture a new type of widget, it took 79 hours for the first widget. Acme estimates it has an 81% learning rate. Using the logarithmic approach, calculate the time it will take to manufacture the 135th widget.
a. 17.78 hours b. 19.58 hours c. 16.52 hours d. 21.94 hours
Which of the following statements concerning the required rate of return on stocks is true?
A) If risk is reduced, the required return will decrease because more investors are risk-averse. B) The higher the risk, the higher the required return, other things being equal. C) The required return on preferred stock is generally higher than the required return on common stock. D) The higher an investor's required rate of return, the higher the value of the stock.
An example of a special court in the federal judicial system is the:
A) U.S. Court of Federal Claims. B) Federal District Court. C) U.S. Supreme Court. D) U.S. Court of Appeals.