A company issues $60,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $62,000 for the bonds, the premium on bonds payable will (increase/decrease) total interest expense recognized over the life of the bond by $ .

Answers

Answer 1

Answer:

Decrease, $2,000

Explanation:

The premium on bonds payable will decrease total interest expense recognized over the life of the bond by $2,000. The difference between the face value & the issue value $2,000 ($62,000 - $60,000) should be amortize over a period of time and of which is reduced from interest expense.


Related Questions

The risk-free rate is 3%. The beta is 1.4, the alpha is 0.6 and the average return is 12%. What is the market return? How is it calculated?

Answers

Answer:

9.00%

Explanation:

In  a bid to determine the market return, we make use of the formula for average return  provided below whereby the formula is rearranged in order to market return the subject of the formula as shown thus:

Average return = Alpha + rf + β * (rm - rf)

Average return=12%

Alpha=0.6%

rf=risk-free rate=3%

β=Beta=1.4

rm=market return=the unknown

12%=0.6%+3%+1.4*(rm-3%)

12%=0.6%+3%+1.4rm-4.20%

12%=3.6%+1.4rm-4.20%

12%-3.6%+4.20%=1.4rm

12.60%=1.4rm

rm=12.60%/1.4

rm=9.00%

Indicate weather the following transactions will be included in that is, directly increase the GDP of the United Sextes.

Treetopplers, a U.S. lumber company, produces wood at a plant in Oregon on September 19, 2020. It sells the wood to Buildit and Partners, a developer, for use in the production of a new house that will be built in the United States in 2020. (Note: Focus exclusively on whether production of the wood increases GDP directly, and ignore the effect of production of the new house on GDP.) An accountant starts a client's 2020 tax return on April 14, 2021, finishing it just before midnight on April 15, 2021.

Answers

Answer:

Treetopplers, a U.S. lumber company, produces wood at a plant in Oregon on September 19, 2020. It sells the wood to Buildit and Partners, a developer, for use in the production of a new house that will be built in the United States in 2020. - it will not be included

An accountant starts a client's 2020 tax return on April 14, 2021, finishing it just before midnight on April 15, 2021. - excluded

Explanation:

Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year

GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export

Consumption spending includes spending by households on goods and services. Consumption spending includes :  

spending on durables - e.g. laptop  

spending on nondurables - e.g. clothes, food

spending on services  - e.g. payment of hospital bill  

the purchase of a textbook by a student is an example of consumption spending on durable goods

Investment - It includes purchases of goods and services made by businesses in the production of goods and services

the airplane purchased by the airline would be used to provide services for airline customers. Also, the packing boxes bought by Amazon would be used in delivering goods to customers  

Government spending - It includes government consumption expenditure and gross investment.  The purchase of a new  limousine for the president is an example of consumption expenditure

Items not included in the calculation off GDP includes:  

1. services not rendered to oneself

2. Activities not reported to the government  

3. illegal activities

4. sale or purchase of used products

5. sale or purchase of intermediate products

The wood sold is an intermediate good and would not be included in the GDP

The tax returns would be included in 2021s GDP and not in 2020

Item65eBookItem 65When managers identify a market trend that suggests a new opportunity and then devise a strategy to go after this new opportunity, they are involved in the function of

Answers

Answer:

Planning.

Explanation:

A manager can be defined as an individual who is saddled with the responsibility of providing guidance, support, supervision, administrative control, as well as acting as a role model or example to the employees working in an organization by being morally upright.

Planning can be defined as the process of developing organizational objectives and translating them into action plans or courses of action.

This ultimately implies that, planning is a strategic technique used by organizations to make an aggregate plan for its manufacturing (production) process typically ahead of time, in order to have an idea of the level of goods that are to be produced and what resources are required so as to reduce the total cost of production to its barest minimum.

When managers identify a market trend that suggests a new opportunity and then devise a strategy to go after this new opportunity, they are involved in the function of planning.

Hartford, Inc. manufactures a single product. Shown are projected revenues and costs based on last year's income statement (8,000 units) and practical capacity (10,000 units). The costs are either variable, fixed, or mixed (part variable and part fixed.) You need to figure out what the cost type is based on the cost behavior.Last Year(8,000 units) Practical Capacity(10,000 units) Total Per Unit Total Per UnitRevenue $800,000 $100.00 $1,000,000 $100.00Costs: Direct Material $200,000 $25.00 $250,000 $25.00Direct Labor $160,000 $20.00 $200,000 $20.00Mfg. Overhead $180,000 $22.50 $200,000 $20.00Selling Expenses $40,000 $5.00 $50,000 $5.00Admin. Expenses $50,000 $6.25 $50,000 $5.00Total Costs $630,000 $78.75 $750,000 $75.00Pre-Tax Profit $170,000 $250,000 RequiredAssume that Hartford expects to sell the same number of units as last year in their normal distribution channels (8,000 units). They have received an offer from a one-time customer (not part of their normal customer mix) to buy 1,000 units (additional to their expected normal sales) at a price of $71. By how many dollars would pre-tax profit increase or decrease if Hartford accepts the special order? (9 points)

Answers

Answer:

Hartford, Inc.

If Hartford accepts the special order, the pre-tax profit would increase by

= $21,000.

Explanation:

a) Data and Calculations:

Production and sales capacity last year = 8,000 units

Practical capacity = 10,000 units

                                         Last Year                Practical Capacity

                                      (8,000 units)                  (10,000 units)

                                Total         Per Unit           Total         Per Unit

Revenue                 $800,000  $100.00      $1,000,000  $100.00

Costs:

Direct Material       $200,000   $25.00        $250,000    $25.00

Direct Labor            $160,000   $20.00        $200,000    $20.00

Mfg. Overhead       $180,000   $22.50        $200,000    $20.00

Selling Expenses     $40,000     $5.00          $50,000       $5.00

Admin. Expenses    $50,000     $6.25          $50,000       $5.00

Total Costs            $630,000   $78.75        $750,000     $75.00

Pre-Tax Profit         $170,000                       $250,000

Variable cost per unit              $50.00                              $50.00

Fixed cost            $230,000                        $250,000

Sales revenue from the one-time customer = $71,000

Variable cost per unit                                         50,000

Additional pre-tax profit (increase)                  $21,000                    

A loan processing operation that processes an average of 7 loans per day. The operation has a design capacity of 10 loans per day and an effective capacity of 8 loans per day. A furnace repair team that services an average of 3 furnaces a day if the design capacity is 9 furnaces a day and the effective capacity is 8 furnaces a day.

a. Utilization ____________ %
b. Efficiency ____________ %

Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than those other systems?

Answers

Answer:

Efficiency = Actual Output / Effective Capacity * 100%

Utilization = Actual Output / Design Capacity * 100%

Loan processing operation

Actual output = 9 loans per day

Design capacity = 10 loans per day

Effective capacity = 8 loans per day

Utilization = 9/10 * 100

Utilization = 90.0%

Efficiency = 9/8 x 100

Efficiency = 112.5%

Furnace repair team

Actual output = 3 furnaces per day

Design capacity = 9 furnaces per day

Effective capacity = 8 furnaces per day

Utilization = 3/9 * 100

Utilization = 33.3%

Efficiency = 3/8 * 100

Efficiency = 37.5 %

Sweet Treats common stock is currently priced at $17.15 a share. The company just paid $1.22 per share as its annual dividend. The dividends have been increasing by 2.4 percent annually and are expected to continue doing the same. What is this firm's cost of equity

Answers

Answer:

9.68 percent

Explanation:

Calculation to determine the firm's cost of equity

Using this formula

Cost of equity=[(Annual dividend×Increase in dividends×/Current price of common stock]+Dividends

Let plug in the formula

Cost of equity=[($1.22 × 1.024)/$17.15] + 0.024

Cost of equity=($1.24928/$17.15)+0.024

Cost of equity=0.0728+0.024

Cost of equity=0.0968*100

Cost of equity=9.68 percent

Therefore the firm's cost of equity is 9.68 percent

A disadvantage of the line structure is that it

Answers

Answer:

Disadvantages of a Line Organization

A line organization can suffer from a lack of specialization. This is because each department manager is concerned only with the activities of his own department. Therefore, employees are skilled in tasks pertaining to their departments alone.

These organizations can overburden a keyman or a few key-men to the extent of their breaking point. Also, in the absence of a staff aid, if a strong man seizes the organization, he can run it arbitrarily. Such arbitrary power can lead to a considerable damage to the organization.

Such organizations usually suffer from a lack of expert advice. If the line manager has trouble making a decision, there is no expert staff that he can turn to.

A line organization is usually rigid and inflexible. In fact, such organizations maintain discipline so rigorously that they can rarely change.

These organizations are based on the autocratic system of management.

The division of work is not based on any scientific plan but on the whims of the manager.

It might stop progress and prevent the unit to work effectively.

Such organizations might also encourage nepotism or favoritism based on relationship or friendship.

I hope this is helpful information.

ACS Industries is considering a project with an initial cost of $6.2 million. The project will produce cash inflows of $1.8 million a year for five years. The firm uses the subjective approach to assign discount rates to projects. For this project, the subjective adjustment is 2%. The firm has a pre-tax cost of debt of 6.7% and a cost of equity of 9.4%. The debt-equity ratio is 0.6 and the tax rate is 35%. What is the net present value of the project

Answers

Answer:

$0.710 million

Explanation:

The net present value of the project is the present value of future cash inflows discounted at the appropriate project discount rate minus the initial investment outlay.

The weighted average cost of capital of the firm is computed using the formula below:

WACC=(weight of equity*cost of equity)+(weight of debt*after-tax cost of debt)

debt-equity ratio=debt/equity=  0.6(which means debt is 0.6 while equity is 1 since 0.6/1=0.6)

weight of equity=equity/(equity+debt)

weight of equity=1/(1+0.6)=62.50%

weight of debt=debt/(equity+debt)

weight of debt=0.6/(1+0.6)=37.50%

cost of equity=9.4%

after-tax cost of debt=pre-tax cost of debt*(1-tax rate)

pre-tax cost of debt=6.7%

tax rate=35%

after-tax cost of debt=6.7%*(1-35%)=4.36%

WACC=(62.50%*9.4%)+(37.50%*4.36%)

WACC=7.51%

The WACC would be adjusted upward by 2% to reflect the higher level of risk of the new project

project's discount rate=7.51%+2%=9.51%

present value of a future cash flow=future cash flow/(1+discount rate)^n

n is the year in which the future cash flow is expected, it is 1 for year 1  cash flow ,2 for year 2 cash flow, and so on.

NPV=$0.710 million($710,000)

A married couple with only one spouse currently working outside the home plans to retire in several years. An annuity that would be particularly suitable for saving for that retirement would be:_________
a. a straight life annuity on the life of the working spouse,
b. a straight life annuity on the life of the nonworking spouse,
c. a deferred joint and survivor annuity,
d. an immediate joint and survivor annuity.

Answers

Answer:

b i'm not sure but don't go by my answer please i don't want to get u wrong

Explanation:

Risk assessment is an evaluation of the PPS supported by a number of analysis methodologies, including :__________.

Answers

Answer:

Threat analysis Consequence analysis Event and Fault tree analyses Vulnerability analysis

Explanation:

Threat Analysis

Involves the identification of areas of the system in question that are vulnerable to risk and then identifying what those risks are.

Consequence Analysis

With consequence analysis, the possible effects of the risks identified will be analyzed to see how much damage they can cause.

Event and Fault tree analyses

Here a tree is used to show all of the possible effects of a risky activity failing. It is used to find out the cause of the worst case scenario.

Vulnerability analysis

As the term implies, vulnerability analysis is done to see which parts of a system are at risk and how vulnerable they are to this risk and then ranking these vulnerabilities so that they can be prioritized.

g Suppose a commercial bank has checkable deposits of $80,000 and the legal reserve ratio is 20 percent. If the bank's required and excess reserves are equal, then its actual reserves

Answers

Answer:

$32,000

Explanation:

The computation is shown below;

Required reserves = checkable deposits × legal reserve ratio

= $80,000 × 20%

= $16,000

Now the actual reserves is

= $16,000 + $16,000

= $32,000

Also excess reserve is equivalent to the required reserves

Hence, the actual reserves is $32,000

Assume that the U.S. borrowing rate is 8% while the German is 10%. If Euros are borrowed by a U.S. firm for one year, they would have to _____ against the dollar by_____ to have the same effective financing rate as borrowing dollars. Group of answer choices Appreciate, 1.1818%. Appreciate, 1.8518%. Depreciate, 1.6363%. Depreciate, 1.8518%. Depreciate, 1.1818%.

Answers

Answer:

Depreciate 1.1818

Explanation:

U.S. has a borrowing rate of 8% and German has borrowing rate of 10%. If U.S. dollars are borrowed from firm then Euros will depreciate to match with the dollar borrowing.

[1 + 8% ] / [ 1 + 10%] - 1 = - 1.1818

While all members of the Federal Reserve Board of Governors vote at Federal Open Market Committee (FOMC) meetings, only _________ of the regional bank presidents are members of the FOMC. Which of the following contributes to making the Federal Reserve an independent policymaking body?

a. Its role is written into the U.S. Constitution.
b. There are 12 Federal Reserve banks.
c. Members of the Board of Governors are appointed for 14-year terms.

Answers

Answer: See explanation

Explanation:

While all members of the Federal Reserve Board of Governors vote at Federal Open Market Committee (FOMC) meetings, only (5) of the regional bank presidents are members of the FOMC.

The option that contributes to making the Federal Reserve an independent policymaking body is that members of the Board of Governors are appointed for 14-year terms.

Timeliness of financial statements varies across nations.Which of the following countries has financial statements issued closest to year-end (on average)?
A) Japan
B) Germany
C) Canada
D) Italy

Answers

Answer: C. Canada

Explanation:

While Canada does not enforce a rule that says that companies should issue statements at year end, most companies on average seem to favor having a December year end in Canada than all the other countries on this list.

A survey in 2017 showed that 57% of Canadian companies favored a December year end with the other months not even receiving anything more than 7% each. Compared to the U.S. however, Canada is lacking as 71% or more American companies favored a December year end.

The acid-test ratio differs from the current ratio in that: _______
a) The acid-test ratio is a measure of liquidity but the current ratio is not.
b) Liabilities are divided by current assets
c) The acid-test ratio measures profitability and the current ratio does not.
d) Prepaid expensand inventory are excluded from the calculation of the acid-test ratio.
e) The acid-test ratio excludes short-term investments from the calculation.

Answers

Answer:

d) Prepaid expensand inventory are excluded from the calculation of the acid-test ratio.

Explanation:

The acid-test can be regarded quick ratio, this ratio makes the comparison between most short-term assets of a company and most short-term liabilities of the company in order to ascertain if there is enough cash for the company to pay immediate liabilities in the company. These immediate liabilities could be short-term debt. There is usually disregards of current assets by acid-test ratio which it's liquidation is difficult example is inventory.

Current ratio can be regarded as ratio that compares current assets of a company and the current liabilities. It can be gotten by finding ratio of current assets of the company and current liabilities. liquidity of a company can be measured using current ratio by potential creditors.

It should be noted that The acid-test ratio differs from the current ratio in that Prepaid expensand inventory are excluded from the calculation of the acid-test ratio.

the administrative marketing and manufacturing operations that many international firms multinational firms and transnational firms have around the world afre often called

Answers

Answer:

divisions

Explanation:

Divisional organizational structure

can be regarded as structure that organizes the activities of a particular organization or business around a market, geographical, as well as product and service groups. A company could organize on divisional lines by having operating groups for different geographical Locations like in United States or Europe, all the divisions will individually contains complete set of functions, each could handle their different activities such as sales and

accounting activities.

It should be noted that divisions is

the administrative marketing and manufacturing operations that many international firms multinational firms and transnational firms have around the world.

Douglas owns rental property that he bought several years ago for $250,000. He has taken depreciation on the house in the amount of $35,000 since buying it. He sells it in 2020 for $290,000. His selling expenses are $12,000 for the year. What was Bob's realized gain on the sale?
a. $77,000.
b. $63,000.
c. $18,000.
d. $53,000.

Answers

Answer:

Gain= $63,000

Explanation:

First, we need to calculate the book value:

Book value= purchase price - accumulated depreciation

Book value= 250,000 - 35,000

Book value= 215,000

Now, the gain or loss from the sale:

Gain/loss= selling price - book value - selling expense

Gain/loss= 290,000 - 215,000 - 12,000

Gain= $63,000

Which of the following statements is most correct concerning a project with normal cash flows (i.e., a cash outflow in Year 0 followed by cash inflows in all subsequent years)?
a) If the NPV of a project is positive then the payback period rule will always accept the project.
b) If the NPV of a project is negative, then the profitability index of the project will always be greater than one.
c) If the profitability index of a project is greater than one, then the IRR will always be less than the project’s cost of capital.
d) If the NPV of a project is zero, then the IRR of the project will be equal to the discount rate for the project.
e) If the discount rate of a project is zero, then the project will always be accepted.

Answers

Answer: D. If the NPV of a project is zero, then the IRR of the project will be equal to the discount rate for the project.

Explanation:

Net present value (NPV) refers to the difference that exist between the present value of the cash inflows and that of the cash outflows for a particular period of time.

The net present value is used in capital budgeting to determine if a projected investment or project will be profitable or not. For a project with normal cash flows, if the NPV of a project is zero, then the IRR of the project will be equal to the discount rate for the project.

Therefore, the correct option is D.

Crane Corporation's computation of cost of goods sold is:

Beginning inventory $34800
Add: Cost of goods purchased 470000
Cost of goods available for sale 504800
Less: Ending inventory 72000
Cost of goods sold $432800

The average days to sell inventory for Fry are:________

Answers

Answer:

16.64 days

Explanation:

Given the above information, we will calculate the average days to sell inventories with the formula below;

Average days to sell inventories = [Ending inventory / Cost of goods sold] × 100

Ending inventory = $72,000

Cost of goods sold = $432,800

Then, Average days to sell inventories

= [$72,000 / $432,800] × 100

= 16.64 days

Therefore, the average days to sell inventory for Fry are 16.64 days

You have been asked to analyze First Union Bank. You have only the following information on the bank at year-end 2021: Net income is $440,000, total debt is $2.0 million, and the bank’s debt ratio is 50 percent. What is First Union Bank’s ROE for 2021? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places. (e.g., 32.16))

Answers

Answer:

22%

Explanation:

Calculation to determine First Union Bank’s ROE for 2021

First step

Debt ratio = 0.50 = $2.0m / Total assets

Second step

Total assets = $2.0m / 0.50

Total assets = $4.000m

Third step

Total equity = $4.000m - $2.0m

Total equity = 2.000m

Now let determine the ROE

ROE = $440000 / $2.000m

ROE=22.00%

Therefore First Union Bank’s ROE for 2021 is 22.00%

Copy equipment was acquired at the beginning of the year at a cost of $56,000 that has an estimated residual value of $8,000 and an estimated useful life of 5 years. It is estimated that the machine has an estimated 1,000,000 copies. This year 240,000 copies were made. Determine the (a) depreciable cost, (b) depreciation rate, and (c) the units-of-production depreciation for the year.

Answers

Answer:

Results are below.

Explanation:

The depreciable cost is the result of deducting from the purchase price the salvage value:

Depreciable cost= 56,000 - 8,000

Depreciable cost= $48,000

The depreciable rate is the depreciation that the asset suffers in one year express as a percentage:

Depreciation rate= 1/5 = 0.2 or 20% per year

Finally, the units of production depreciation for the first year:

Annual depreciation= [(original cost - salvage value)/useful life of production in copies]*number of copies

Annual depreciation= (48,000/1,000,000)*240,000

Annual depreciation= 0.048*240,000

Annual depreciation= $11,520

Angelina's made two announcements concerning its common stock today. First, the company announced that its next annual dividend has been set at $2.20 a share. Secondly, the company announced that all future dividends will increase by 5% annually. What is the maximum amount you should pay to purchase a share of Angelina's stock if your goal is to earn a 10% rate of return

Answers

Answer:

44

Explanation:

according to the constant dividend growth model

price = d1 / (r - g)

d1 = next dividend to be paid

r = cost of equity

g = growth rate

2.2 / 0.1 - 0.05 = 44

Capital budgeting is the process of planning and controlling investments in assets that are expected to produce cash flows for one year or less. This statement is:

Answers

Answer:

True

Explanation:

It is True that Capital budgeting is the process of planning and controlling investments in assets that are expected to produce cash flows for one year or less.

Payne Company provided the following information relevant to its inventory sales and purchases for December 2013 and the first quarter of 2014:

Dec. 2013 Jan. 2014 Feb. 2014 Mar. 2014
(Actual) (Budgeted) (Budgeted) (Budgeted)
Cost of goods sold $80,000 $140,000 $180,000 $120,000

Desired ending inventory levels are 25% of the following month's projected cost of goods sold. The company purchases all inventory on account. January Year 2 budgeted purchases are $180,000. The normal schedule for inventory payments is 60% payment in month of purchase and 40% payment in month following purchase.

Budgeted cash payments for inventory in February 2014 would be: __________

Answers

Answer:

$171,000

Explanation:

Purchases in February = ($120,000 * 25%) + ($180,000 -$180,000*25%)

Purchases in February = $30,000 + $135,000

Purchases in February = $165,000

Payment in February = ($180,000 * 40%) + ($165,000 * 60%)

Payment in February = $72,000 + $99,000

Payment in February = $171,000

So, the bdgeted cash payments for inventory in February 2014 will be $171,000.

A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry—that is, other companies cannot enter the market to create competition in that particular industry.Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario.ScenarioBarriers to EntryExclusive Ownership of a Key ResourceGovernment-Created MonopoliesEconomies of ScaleThe Aluminum Company of America (Alcoa) formerly controlled all U.S. sources of bauxite, a key component in the production of aluminum. Given that Alcoa did not sell bauxite to any other companies, Alcoa was a monopolist in the U.S. aluminum industry from the late-nineteenth century until the 1940s. Patents are granted to inventors of a product or process for a certain number of years. The reason for this is to encourage innovation in the economy. Without the existence of patents, it is argued that research and development for improved pharmaceutical products is unlikely to take place, since there's nothing preventing another firm from stealing the idea, copying the product, and producing it without incurring the development costs. In the natural gas industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary pipes and hoses makes it risky and, most likely, unprofitable for competitors to enter the market.

Answers

Answer:

Monopolist's Market Power and Barriers to Entry

Scenario 1

The Aluminum Company of America (Alcoa) formerly controlled all U.S. sources of bauxite, a key component in the production of aluminum. Given that Alcoa did not sell bauxite to any other companies, Alcoa was a monopolist in the U.S. aluminum industry from the late-nineteenth century until the 1940s.

Barrier to Entry:

Exclusive Ownership of a Key Resource

Scenario 2

Patents are granted to inventors of a product or process for a certain number of years. The reason for this is to encourage innovation in the economy. Without the existence of patents, it is argued that research and development for improved pharmaceutical products is unlikely to take place, since there's nothing preventing another firm from stealing the idea, copying the product, and producing it without incurring the development costs.

Barrier to Entry:

Government-Created Monopolies

Scenario 3:

In the natural gas industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary pipes and hoses makes it risky and, most likely, unprofitable for competitors to enter the market.

Barrier to Entry:

Economies of Scale

Explanation:

Exclusive Ownership of a Key Resource: It has been argued that monopolies do not arise from exclusive ownership of a key resource.  However, having exclusive ownership grants an entity a kind of natural monopoly.

Government-Created Monopolies: Governments create monopolies by protecting intellectual property and issuing patents and copyrights, which give the holders exclusive rights to produce some products or render  some services for a period of time.  The purpose is to encourage innovation and industrialization.

Economies of Scale: When a company is able to produce goods in large quantity, this reduces the average cost per unit, increases efficiency, and economies of scale are achieved because the costs of production are spread over larger units.

Nouvelle-Aquitaine Railroad is comparing two separate capital structures. The first structure consists of 405,000 shares of stock and no debt. The second structure consists of 252397 shares of stock and $1.82 million of debt. What is the price per share of equity?
a. $75.56.
b. $88.76.
c. $82.42.
d. $72.12.
e. $93.20.

Answers

Answer:

$11.93

Explanation:

Calculation to determine the price per share of equity

Using this formula

Price per share of equity = Debt under Plan II / (Number of shares under Plan I - Number of shares under Plan II)

Let plug in the formula

Price per share of equity= $1,820,000 / (405,000 - 252,397)

Price per share = $1,820,000 / 152,603

Price per share = $11.93

Therefore the price per share of equity is $11.93

Edible Chemicals Corporation owns a $2 million whole life insurance policy on the life of its CEO, naming Edible Chemicals as beneficiary. The annual premiums are $72,000 and are payable at the beginning of each year. The cash surrender value of the policy was $22,000 at the beginning of 2018.
1. & 2. Prepare the appropriate 2018 journal entries to record insurance expense and the increase in the investment assuming the cash surrender value of the policy increased according to the contract to $28,200. The CEO died at the end of 2018.

Answers

Answer:

1. Dr Insurance expense $65,800

Dr Cash surrender value of life insurance $6,200

Cr Cash $72,000

2. Dr Cash $2000,000

Cr Cash surrender value of life insurance $28,200

Cr Gain on life insurance settlement $1,971,800

Explanation:

1. & 2. Preparation of the appropriate 2018 journal entries to record insurance expense and the increase in the investment

1. Dr Insurance expense $65,800

($72,000+$22,000-$28,200)

Dr Cash surrender value of life insurance $6,200

($72,000-$65,800)

Cr Cash $72,000

2. Dr Cash $2000,000

Cr Cash surrender value of life insurance $28,200

Cr Gain on life insurance settlement $1,971,800

($2000,000-$28,200)

The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next six years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $250,000$37,500$180,000$300,000$750,000$725,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 6.5%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar

Answers

Answer: $1,694,292

Explanation:

The present value is simply the sum of the discounted value of the various cash flows.

[tex]= \frac{250000}{1 + 0.065} + \frac{37500}{1.065^{2} } + \frac{180000}{1.065^{3}} + \frac{300000}{1.065^{4}} + \frac{750000}{1.065^{5}} + \frac{725000}{1.065^{6}}[/tex]

= $1,694,291.63

= $1,694,292

Which of the following is a component of the talent acquisition function of HR management?
Group of answer choices

Recruiting

Training

Career planning

Orientation

Answers

Answer:

Recruiting

Explanation:

Recruitment is the process of hiring individuals in an organization to accomplish the tasks assigned. It is the process carried by the Human Resource Management in an organization. The HR management is responsible to organize and manage the human talents and recruit them respectively. The talent are recognized by the team and are hired to meet the goals of the organization.

Lancashire Railway Company (LRC) has two divisions, L and H. Division L is the company’s low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division H is considering a project with an expected return of 12%. Should Lancashire Railway Company (LRC) accept or reject the project?

Answers

Answer:

Lancashire Railway Company (LRC)

Lancashire Railway Company (LRC) should reject the project.  The basis for rejecting Division H's project is that its return (12%) is less than the risk-based cost of capital for the division (14%).

Explanation:

a) Data:

Division L's weighted-average cost of capital = 8%

Division H's weighted-average cost of capital = 14%

Weight of Division L = 50%

Weight of Division H = 50%

Company composite weighted average cost of capital = 11% (8% * 50%) + (14% * 50%)

Expected return from a proposed project for Division H = 12%

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