Answer:
1,768,913 new stocks
Explanation:
the company needs to raise amount needed to finance expansion plus SEC's filing and administrative fees = $74,000,000 + $825,000 = $74,825,000
net amount received per stock issued = stock price x (1 - underwriting fee) = $45 x (1 - 6%) = $42.30 per stock
the company needs to issue = $74,825,000 / $42.30 per stock = 1,768,912.53 = 1,768,913 new stocks
Firm M has a margin of 7%, turnover of 2.0, sales of $910,000, and average stockholders' equity of $490,000. Required: Calculate Firm M’s average total assets, net income, return on investment (ROI), and return on equity (ROE
Answer:
1. Average total asset = $455,000
2. Net income = $63,700
3. Return on investment = 14%
4. Return on equity (ROE) = 13%
Explanation:
These can be calculated as follows:
1. Average total asset
To calculate this, we use the formula for calculating the Asset turnover ratio as follows:
Asset turnover ratio = Sales / Average total asset ……………………………… (1)
Where;
Turnover = asset turnover ratio = 2
Sales = $910,000
Average total asset = ?
Substituting the values into equation (1) and solve for average total asset, we have:
2 = $910,000 / Average total asset
Average total asset = $910,000 / 2
Average total asset = $455,000
2. Net income
To calculate this, we use the formula for calculating net income margin as follows:
Net income margin = Net income / Sales ……………………………………. (2)
Where,
Margin = Net income margin = 7%, or 0.07
Net income = ?
Sales = $910,000
Substituting the values into equation (2) and solve for net income, we have:
7% = Net income / $910,000
Net income = $910,000 * 7%
Net income = $63,700
3. Return on investment
To calculate this, we use the formula for calculating the return on investment as follows:
Return on investment = Net income / Average total assets ……………… (3)
Where;
Net income = $63,700
Average total asset = $455,000
Substituting the values into equation (3), we have:
Return on investment = $63,700 / $455,000
Return on investment = 0.14, or 14%
4. Return on equity (ROE)
To calculate this, we use the formula for calculating the return on equity (ROE) as follows:
Return on equity (ROE) = Net income / Average stockholders' equity…….. (4)
Net income = $63,700
Average stockholders' equity = $490,000
Substituting the values into equation (4), we have:
Return on equity (ROE) = $63,700 / $490,000
Return on equity (ROE) = 0.13, or 13%
Common stock is called a hybrid security because it takes on the attributes of both preferred stock and bonds.
a. True
b. False
Answer:
false
Explanation:
examples of hybrid stocks is convertible preferred shares
A common stock is a stock that entitles owners of the stock to a fixed amount of shares and holders of the stock are owners of the company where the stock is bought.
Answer:
a. True
Explanation:
In most stocks that attributes of both bonds and preferred stock, it is referred to as a hybrid security. Most organisations and the government recognized it as a medium of security in situations of seeking for loan.
Idaho Industries Inc. is considering a project that has an initial aftertax outlay or aftertax cost of $450,000. The respective future cash inflows from its fiveyear project for years 1 through 5 are $95,000 each year. Idaho expects an additional cash flow of $60,000 in the fifth year. The firm uses the IRR method and has a hurdle rate of 10%. Will Idaho accept the project? A. Idaho accepts the project because it has an IRR greater than 10%. B. Idaho accepts the project because it has an IRR greater than 5%. C. Idaho rejects the project because it has an IRR less than 10%. D. There is not enough information to answer this question.
Answer:
c
Explanation:
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested
IRR can be calculated using a financial calculator
Cash flow in year 0 = $-450,000
Cash flow each year from year 1 to 4 = $95,000
Cash flow in year 5 = $95,000 + $60,000 = $155,000
IRR = 5.62%
Idaho would reject the project because the IRR is less than the hurdle rate
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
Wyckam Manufacturing Inc. has provided the following information concerning its manufacturing costs:
Fixed Cost per Month Cost per Machine-Hour
Direct materials $ 5.40
Direct labor $ 42,400
Supplies $ 0.30
Utilities $ 1,700 $ 0.25
Depreciation $ 15,200
Insurance $ 11,600
For example, utilities should be $1,700 per month plus $0.25 per machine-hour. The company expects to work 4,200 machine-hours in June. Note that the company’s direct labor is a fixed cost.
Required:
Prepare the company's planning budget for manufacturing costs for June.
Answer:
Total Manufacturing Costs is $95,680
Explanation:
Wyckam Manufacturing Inc.
Planning Budget for Manufacturing costs
For the month Ended June 30
Direct Materials (4,200 hours *$5.40) $22,680
Direct Labor Fixed $42,400
Supplies (4,200 hours * $0.25 ) $1,050
Utilities ($1,700+ 4,200 Hours * $0.25) $2,750
Depreciation Fixed $15,200
Insurance Fixed $11,600
Total Manufacturing Costs $95,680
A retail operation has an average gross margin of 35%. If the average monthly sales for the store is $200,000.00, what is the cost of goods sold?
Answer:
COGS= $130,000
Explanation:
Giving the following information:
A retail operation has an average gross margin of 35%.
Sales= $200,000.00
To calculate the cost of goods sold, we need to use the following formula:
Gross margin= sales - COGS
COGS= sales - gross margin
COGS= 200,000 - (200,000*0.35)
COGS= $130,000
Central to agency theory is the concern with problems that can arise between the principals who are the owners of the firm and the agents who are the people who are paid by outside consultants to perform a job on their behalf.
a. True
b. False
Answer:
Correct Answer:
a. True
Explanation:
Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents in any given company's establishment. In addition, the relationship could be one that is between shareholders, as principals on one hand, and company executives, as agents.
Agency problem is that many authors have found that include separations of ownership from control, conflict of interest and risk adverseness etc.
What is the term agency theory about?
Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents in any given company's establishment.
In addition, the relationship could be one that is between shareholders, as principals on one hand, and company executives, as agents.
Therefore, correct option is True.
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You own 150 shares of Western Feed Mills stock valued at $41.20 per share. What is the dividend yield if your annual dividend income is $372
Answer:
6.01%
Explanation:
Calculation for the dividend yield
Using this formula
Dividend yield=(Annual dividend income/Numbers of shares)/Amount per shares
Let plug in the formula
Dividend yield =($372/150 shares)/$41.20 per share
Dividend yield =$2.48/$41.20
Dividend yield =0.0601*100
Dividend yield =6.01%
Therefore Dividend yield will be 6.01%
Based on your case knowledge, to what extent do you agree or disagree with the following statement - "Kay Whitmore - Kodak CEO, had an understanding of Kodak's potential in the PC market. This was illustrated by her strong engagement with Bill Gates and Microsoft."
1. Strongly Agree
2. Mildly Agree
3. Neither Agree nor Disagree
4. MIldly Disagree
5. Strongly Disagree
6. Not Applicable
Answer:
3. Neither Agree nor Disagree
Explanation:
The reason was that the Kay Whitmore's engagement with Bill Gates and Microsoft has not much impacts on the potential of Kodak's products to exploit additional opportunities in Microsoft hence statement in consideration is not a one side argument as it is doubtful position.
So I am neither agreeing nor disagreeing with the statement hence the option 3 is correct here.
You have gathered the following information on your investments. What is the expected return on the portfolio? Stock Number of Shares Price per Share Expected Return F 310 $ 40 13.32 % G 315 $ 26 10.05 % H 255 $ 52 10.59 %
Answer:
Expected return on the portfolio = $3,879.00
Explanation:
a) Data and Calculations:
Stock Number of Shares Price per Share Expected Return Expected
Value
F 310 $ 40 13.32 % $1,651.68
G 315 $ 26 10.05 % $823.09
H 255 $ 52 10.59 % $1,404.23
Total 880 $3,879.00
b) The expected return on the portfolio is the addition of the expected returns of each class of shares. This is obtained by multiplying the number of shares in each class with the price and the expected return in percentage. This gives a weighted value for the class of shares, which are then added to obtain the expected return on the portfolio.
The calculation of WACC involves calculating the weighted average of the required rates of return on debt and equity, where the weights equal the percentage of each type of financing in the firm's overall capital structure.
_________ is the symbol that represents the cost of preferred stock in the weighted average cost of capital (WACC) equation.
Bryant Co. has $2.3 million of debt, $1.5 million of preferred stock, and $1.8 million of common equity. What would be its weight on common equity?
A. 0.32
B. 0.24
C. 0.22
D. 0.30
Answer:
Option A is the correct answer
Weight of equity =0.32
Explanation:
Weighted average cost of capital is the average cost of all of the long-term types of finance used by a company weighted according to the that amount of finance used in relation to the total pool of fund.
The weight is the market value of nominal value of the source of fund as a proportion of the total capital funds.
Total capital funds = Debt funds + Preferred Funds + Equity funds
= ($2.3 + $1.5 + $1.8 ) million = $5.6 million
Weight of equity = Equity capital/Total capital funds
= 1.8/5.6 =0.32
Weight of equity =0.32
Seven Manufacturing Corporation uses both standards and budgets. The company estimates that production for the year will be 100,000 units of Product Fast. To produce these units of Product Fast, the company expects to spend $600,000 for materials and $800,000 for labor.
Required:
Compute the estimates for a standard cost.
Answer:
Unitary cost= $14
Explanation:
Giving the following information:
Production= 100,000
To produce these units of Product Fast, the company expects to spend $600,000 for materials and $800,000 for labor.
First, we need to calculate the total cost and then the unitary cost:
Total cost= 600,000 + 800,000= $1,400,000
Unitary cost= 1,400,000/100,000= $14
You are aware that your neighbor trades stocks based on confidential information he overhears at his workplace. This information is not available to the general public. This neighbor continually brags to you about the profits he earns on these trades. Given this, you would tend to argue that the financial markets are at best _____ form efficient.
Answer:
Semi-strong Form Efficient.
Explanation:
There are three levels of market efficiency as weak, semi-strong and strong.
In a semi-strong form efficient market, the stock prices change independently of the previous return points and the current information so it is not possible to predict the future stock prices.
The example given in the question, which states that the neighbor has non-public information, can be classified as a semi-strong form efficient market.
I hope this answer helps.
When gasoline gallons are priced in terms of number of seashells, seashells serve as: Group of answer choices
Answer:
Unit of account
Explanation:
Money serves three functions :
1. Unit of account : money serves the function of determining the value of a good or service. It is usually assumed that goods that are more highly priced are more valuable that goods that have lower prices
2. Medium of exchange : goods and services can be exchanged for money. For example, if I want to buy a gallon of gasoline and pay 4 seashells, money has served as a medium of exchange.
3. store of value: money can be saved, retrieved and exchanged sometimes in the future
of a portfolio. The beta of four stocksG, H, I, and Jare , , , and , respectively. What is the beta of a portfolio with the following weights in each asset: LOADING...? What is the beta of portfolio 1?
Answer: 1.02
Explanation:
The Portfolio Beta will be the weighted average of the betas of the individual stocks in Portfolio 1.
Portfolio Beta = (weight in G * beta of G) + (weight in H * beta of H) + (weight in I * beta of I) + (weight in J * beta of J)
= (0.25 * 0.45) + ( 0.25 * 0.82) + ( 0.25 * 1.14) + ( 0.25 * 1.66)
= 0.1125 + 0.205 + 0.285 + 0.415
= 1.0175
= 1.02
The last dividend paid by Coppard Inc. was $1.25. The dividend growth rate is expected to be constant at 27.5% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its current stock price
Answer:
36.38
Explanation:
The Current stock price can be calculated by identifying Present value of dividends in all three years adding terminal value of dividends in year 3.
Year Dividend Growth Dividend PV factor Present Values
1 1.25 127.5% 1.59 0.900901 1.43
2 1.59 127.5% 2.03 0.811622 1.64
3 2.03 127.5% 2.59 0.731191 1.88
3 42.987(w) 0.731191 31.43
Total PV 36.38
Current Dividend = 2.59
Rate of return = 11.00%
Growth Rate = 6.00%
Terminal value = Current Dividend*(1+Growth rate)/(Rate of return-Growth Rate)
Terminal value = 2.59 x (1+0.06) / (0.11-0.06)
Terminal value =42.987
Current stock price = 1.43 +1.64+1.88+31.43
Current stock price = 36.38
A NASDAQ security is bid at $30.25 and offered at $30.75. An over-the-counter trader effects a trade at $30.75 and charges a commission of $.50 to the customer. The price that will show on the tape is:
Answer:
$30.75
Explanation:
Given that
Security bidding = $30.25
Offered price = $30.75
over the counter trading = $30.75
Commission charged = $0.50
based on the above information, the price that shows on the tape is equivalent to the over the counter trading price i.e $30.75 also it does not include the commission charged i.e $0.50
Hence, the price is $30.75
The offer curve describes Group of answer choices different wage offers a firm will make to workers of different education levels. different wage-and-risk level offers made by different firms. different wage-and-risk levels available to one firm. different risk levels associated with the same wage level.
Answer: different wage-and-risk level offers made by different firms.
Explanation:
The offer curve show the different wage-and-risk level offers made by different firms.
When firms make different wages and risk level offers, the offer curve can be used to show the comparison and relationship between the offers by the firms that are involved.
Click to review the online content. Then answer the question(s) below, using complete sentences. Scroll down to view additional questions. Career Connection: Shin-fong How does Shin-fong keep track of his finances?
Answer:
By means of a budget he prepared.
Explanation:
According to the information available, Shing-fong has a carefully thought out strategy. Here's some of what he does;
he keeps tracks of his finances by means of a budget plan.he views all his transactions also checking his debit or credit cards to keep track of how much he spendsShing-Fong avoids eating out as much as he used to and preparing cheaper food at home.he also avoids unnecessarily spending with friends whenever he is invited.Fetzer Company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The journal entry to record the payment of the dividend is:
Answer:
Please see journals below
Explanation:
Retained earnings Dr $104,000
Common dividend payable Cr $104,000
Common dividend payable Dr $104,000
Cash Cr. $104,000
Retained earnings Dr $100,100
Common dividends payable Cr $100,100
Common dividends payable Dr $100,100
Cash Cr $100,100
Retained earnings Dr $110,000
Common dividends payable Cr $110,000
Working
Dividends payable
= 190,000 × $0.55
= $104,000
Common dividend payable
= $0.55 × (190,000 shares - 8,000 shares)
= $100,100
A stock had returns of 17.88 percent, −5.16 percent, and 20.39 percent for the past three years. What is the variance of the returns?
Answer:
Variance of the return = 0.01983
Explanation:
[tex]S^{2}[/tex]= Σ[tex](X-X)^{2}[/tex]/ N - 1
Mean return = 17.88% + -5.16% + 20.39% = 11.0367%
Variance = [(17.88% - 11.0367%)2 + (-5.16% - 11.0367%)2 + (20.39% - 11.0367%)2] /(3 - 1)
Variance = [0.004683 + 0.026233 + 0.008748]/2
Variance = 0.01983
Which of the following statements is not true about self-awareness?
a. Self-awareness involves a capacity to monitor and control biases that potentially affect your decision making.
b. Managers who have low self-awareness are superior performers.
c. Self-awareness can be increased by acquiring multiple experiences in diverse situations and with diverse others.
d. Self-awareness is best described as the capacity for introspection and the ability to reconcile oneself as an individual separates from the environment and other individuals.
Answer:
b. Managers who have low self-awareness are superior performers.
Explanation:
Self-awareness can be defined as a mental process, which occurs when an individual has knowledge about himself, about his knowledge, his actions and attitudes.
Therefore, in the workplace, having self-awareness is essential for a manager to achieve high performance, as this is a skill that includes knowing your skills, values, internal resources that ensure that there is the possibility of better monitoring of environments and oneself, control of emotions and improved perception of oneself and others.
This is a characteristic that adds to a manager 's assertive ability to establish communication focused on ethics, mutual respect, cordiality, etc.
The statement that is not true about self awareness from the list is B. "Managers who have low self-awareness are superior performers."
Self awareness refers to the ability of one to understand their thoughts, feelings, impulses and actions. Being self aware is a very important leadership attribute.
Therefore the statement that 'managers who have low self awareness are superior performers' is wrong.
A manager that lacks self awareness will definitely not perform their job effectively.
Self awareness helps one to become better at making decisions, it helps control biases, communicate more effectively and build good relationships in the work place or other places.
Thus, we can conclude that managers who have low self awareness are not superior performers.
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Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2015, 125 shares of preferred stock and 2,700 shares of common stock have been issued. The following transactions affect stockholders� equity during 2015:
March 1 Issue 2,700 additional shares of common stock for $13 per share.
April 1 Issue 175 additional shares of preferred stock for $37 per share.
June 1
Declare a cash dividend on both common and preferred stock of $0.40 per share to all stockholders of record on June 15.
June 30 Pay the cash dividends declared on June 1.
August 1 Repurchase 175 shares of common treasury stock for $10 per share.
October 1 Reissue 125 shares of treasury stock purchased on August 1 for $12 per share.
Nautical has the following beginning balances in its stockholders� equity accounts on January 1, 2015: Preferred Stock, $1,250; Common Stock, $2,700; Paid-in Capital, $19,200; and Retained Earnings, $11,200. Net income for the year ended December 31, 2015, is $7,500.
Required:
1. Record each of these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Select whether each of these transactions would increase (+), decrease (?), on total assets, total liabilities, and total stockholders� equity by completing the following table. (If none of the categories apply for a particular item, leave the cell blank.)
Transaction Total Assets Total Liabilities Total Stockholders Equity
Issue common stock
Issue preferred stock
Declare cash divedens
Pay cash divedens
Repurchase treasury stock
Reissue treasury stock
Answer:
Nautical1. Journal Entries:
March 1:
Debit Cash Account $35,100
Credit Common Stock $35,100
To record the issue of 2,700 shares of common stock for $13 per share.
April 1:
Debit Cash Account $6,475
Credit Preferred STock $6,475
To record the issue of 175 shares of preferred stock for $37 per share.
June 1:
Debit Dividends $2,280
Credit Dividends Payable $2,280
To record dividends of $0.40 per share to all stockholders of record.
June 30:
Debit Dividends Payable $2,280
Credit Cash Account $2,280
To record the payment of cash dividends.
August 1:
Debit Treasury Stock $1,750
Credit Cash Account $1,750
To record the repurchase of 175 shares of common stock for $10 per share.
October 1:
Debit Cash Account $1,500
Credit Treasury Stock Account $1,500
To record the reissue of 125 shares of treasury stock for $12 per share.
2. Selection of whether each of these transactions would increase (+), decrease (?), on total assets, total liabilities, and total stockholders' equity:
Transaction Assets Liabilities Stockholders
Total Total Total Equity
Issue common stock $35,100 +$35,100 +$35,000
Issue preferred stock $6,475 +$6,475 +$6,475
Declare cash dividends $2,280 +$2,280 ?$2,280
Pay cash dividends $2,280 ?$2,280 ?$2,280
Repurchase treasury stock $1,750 ?$1,750 ?$1,750
Reissue treasury stock $1,500 +$1,500 +$1,500
Explanation:
a) Data and Calculations:
Authorized share capital:
$10 par preferred
$1 par value common
Issued, beginning of 2015:
Preferred = 125 shares
Common = 2,700 shares
b) The issue of 2,700 additional shares of common stock for $13 per share totalled $35,100. This amount is credited to the Common Stock and the receipt of cash debited to the Cash Account. The same is applicable with respect to the 175 additional shares issued at $37 per share.
c) When a cash dividend is declared, the stockholders of record on the record date of June 15 are noted, since they are the only ones that will participate in the dividends. The accounting records are debit to the dividend account and a credit to the Dividends Payable account, establishing the liability. The payment for the declared dividend is recorded with a debit to the Dividends Payable account to close the liability and a credit to the Cash Account.
d) Treasury stock is a stock of common stock repurchased by the company. The issue and reissue of treasury stock are treated in the treasury stock account if the costing method is used, otherwise, the par-value method would be operational.
Duerr company makes a $73,000, 90-day, 10% cash loan to Ryan Co. The maturity value of the loan is: (Use 360 days a year.)
Answer: $74,825
Explanation:
Maturity value is the amount that a borrower will pay to the lender when the loan matures.
Based on the above analysis, the interest will be:
= $73,000 × 10% × 90/360
= $73,000 × 0.1 × 0.25
= $1825
Maturity value will now be the addition of the principal and the interest. This will be:
= $73,000 + $1825
= $74,825
The open interest on silver futures at a particular time is the Group of answer choices number of all long or short silver futures contracts outstanding. number of silver futures contracts traded during the day. number of silver futures contracts traded the previous day. number of outstanding silver futures contracts for delivery within the next month.
Answer:
number of all long or short silver futures contracts outstanding.
Explanation:
The open interest on silver futures at a particular time is the number of all long or short silver futures contracts outstanding. Open interest can be defined as the total or overall number of contracts (open long and short positions) outstanding in a futures market.
In stocks exchange, when a contract begins trading it has an open interest that is equal to zero and in future dates, more contracts are entered into as time passes by.
Additionally, majority of the contracts are liquidated before their maturity date.
"Which of the following are covered under the Securities Exchange Act of 1934? I Registration of new issues II Stabilization of new issues III Registration of exchanges IV Registration of broker/dealers"
Answer: II. stabilization of new issues
III. registration of exchanges
IV. registration of broker-dealers
Explanation:
The Securities Exchange Act of 1934 was put in place in order to be in charge of security trading.
From the options, those that are covered under the Securities Exchange Act of 1934 include the stabilization of new issues, the registration of exchanges and the registration of broker/dealers.
It should be noted that the Securities Exchange Act of 1934 does not cover the registration of new issues.
Effectiveness of a solution is equal to:_______
a. Quality of a Solution 20% (x) Acceptability of the Solution 80%
b. Quality of a Solution 80% (x) Acceptability of the Solution 20%
c. Quality of a Solution 10% (x) Acceptability of the Solution 90%
d. Quality of a Solution 90% (x) Acceptability of the Solution 10%
e. None of the above
Answer:
a. Quality of a Solution 20% (x) Acceptability of the Solution 80%
Explanation:
We say that a solution is effective i.e 100%, when it has a 20% of its quality and 80% of its acceptability.
A solution is effective when it has a 100% effect. The application of a solution to a problem which yields 100% effect is said to be effective and acceptable.
The scale used is the relationship given as:
Effectiveness of a solution = Quality of a Solution 20% (x) Acceptability of the Solution 80%
The break-even point is a.the maximum possible operating loss. b.where the total sales line intersects the total costs line on a cost-volume-profit chart. c.the total fixed costs. d.the maximum possible operating income.
Answer:
The answer is B.
Explanation:
To a layman, break-even point is the point where an entity neither make profit nor loss. It is the point where total revenue equals total cost(where the total sales line intersects the total costs line on a cost-volume-profit chart).
Points greater or above this intersection or point mean the firm is making profit and points lesser or below this intersection or point mean the firm is making loss.
The unfavorable volume variance may be due to all of the following factors except:_______
a. failure to maintain an even flow of work
b. machine breakdowns
c. failure to obtain enough sales orders
d. unexpected increases in the cost of utilities
Answer:
d. unexpected increases in the cost of utilities
Explanation:
there are several volume variances:
direct materials volume variancedirect labor volume variancemanufacturing overhead volume variance sales volume varianceUtilities are part of manufacturing overhead, but volume variances using the standard rates, so an unexpected increase in the cost of utilities will not affect the overhead volume variance.
The unfavorable volume variance can not be due because of unexpected Increases in the cost of utilities
Unfavorable volume variance means that the amount of applied fixed manufacturing overhead costs is less than the budgeted fixed manufacturing overhead costs
The machine breakdowns will affect production levels, thus, resulting to unfavorable volume variance.
The failure to maintain even flow of work will impact the production quantities, thus, resulting to unfavorable volume variances
The failure to obtain enough sales order will limit production quantities, thus, resulting to unfavorable volume variances.
Thus, the Option D is correct because unfavorable volume variance can not be due because of unexpected Increases in the cost of utilities
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An investor holds a 10 year bond pays a coupon rate of 9%. The yeid to maturity of the bond is 10% . The bond is trading:
Answer:
the bond is trading at a discount
Explanation:
There is an inverse relationship between the yield and the price of the bond.
As the yield goes up, the price of the bond goes down and as the yield goes down, the price of the bond goes up.
The yield - 10%, is greater than the coupon rate - 9%, the price will be less than the par value, and we say that the bond is trading at a discount.
Oriole Company purchased equipment for $41600. Sales tax on the purchase was $2496. Other costs incurred were freight charges of $624, repairs of $364 for damage during installation, and installation costs of $696. What is the cost of the equipment
Answer:
The cost of the equipment is $45,416.
Explanation:
The cost of a newly purchased equipment is the addition of all relevant costs uncured in order to make the equipment ready for use.
The cost of the equipment includes costs such as purchase price, tax paid on the purchase, installation costs, etc.
However, any cost incurred to repair any damage to an equipment during installation is not part of equipment cost. Such repair costs are just ordinary expenses that are charged to the income statement during the period.
Based on the explanation above, the cost of the equipment by Oriole Company can be calculated as follows:
Equipment cost = Purchase price + Sales tax + Freight charges + Installation costs ..................... (1)
Since,
Purchase price = $41,600
Sales tax on the purchase = $2.496.
Freight charges = $624
Installation costs = $696.
Substituting the values into equation (1), we have:
Equipment cost = $41,600 + $2,496 + $624 + $696 = $45,416
Therefore, the cost of the equipment is $45,416.
