The bond's coupon rate can be calculated based on its current market price, par value, and yield to maturity. In this case, the bond sells for $1,008.82, has a par value of $1,000, and a yield to maturity of 6.63 percent.
To determine the bond's coupon rate, we can use the formula for calculating yield to maturity:
Market Price = (Coupon Payment / (1 + Yield to Maturity/2)^2) + (Coupon Payment / (1 + Yield to Maturity/2)^4) + ... + (Coupon Payment + Par Value / (1 + Yield to Maturity/2)^n),
where n represents the number of semiannual periods until maturity.
In this case, the market price of the bond is given as $1,008.82, the par value is $1,000, and the yield to maturity is 6.63 percent (or 0.0663 as a decimal). The bond is semiannual, so there are 2 periods until maturity.
Substituting the given values into the formula, we have:
$1,008.82 = (Coupon Payment / (1 + 0.0663/2)^2) + (Coupon Payment + $1,000 / (1 + 0.0663/2)^4).
To solve for the coupon payment, we need to rearrange the equation and isolate the coupon payment term:
Coupon Payment = ($1,008.82 - $1,000 / (1 + 0.0663/2)^2) + ($1,008.82 - $1,000 / (1 + 0.0663/2)^4).
Calculating this expression, we find that the coupon payment is approximately $33.09.
To calculate the coupon rate, we divide the coupon payment by the par value and multiply by 100 to express it as a percentage:
Coupon Rate = (Coupon Payment / Par Value) * 100 = ($33.09 / $1,000) * 100 = 3.31%.
Therefore, the bond's coupon rate is approximately 3.31 percent.
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Using the following data, answer a-e. Please show all work step by step. Thank you so much! Xena Corp. Total assets $21,249 Interest-bearing debt(market value) $11,070 Average borrowing rate for debt 10.2% Common Equity:
Book Value $5,535
Market Value $23,247
Marginal income tax rate 19%
Market Beta 1.64
a) Assuming that the risk free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's cost of equity capital, using the capital asset pricing model:
O i) 10.2%
O ii) 13.6%
O iii) 15.2%
O iv) 14.7%
b) Calculate Xena's cost of debt capital
O i) 8.3%
O ii) 13.5%
O iii) 3.2%
O iv) 10.2%
c) Determine the weight on debt capital that should be used to calculate Xena's weighted-average cost of capital
O i) 52.1%
O ii) 67.0%
O (iii) 32.0%
O (iv) 47.6%
d) Determine the weight on equity capital that should be used to calculate Xena's weighted- average cost of capital
O i) 33.3%
O (ii) 71.9%
O (iii) 67.7%
O (iv) 54.9%
e) Assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's weighted- average cost of capital
O (i) 13.2%
O (ii) 10.7%
O (iii) 10.4%
O (iv) 12.6%
a. the cost of equity capital for Xena Corp is approximately 14.7% (Option iv). b. the cost of debt capital for Xena Corp is approximately 8.3% c. Xena Corp's weighted-average cost of capital is 52.1%. d. Xena Corp's weighted-average cost of capital is approximately 19.0%
To calculate Xena Corp's cost of equity capital using the capital asset pricing model (CAPM), we need the risk-free rate, the market risk premium, and the company's market beta.
a) Cost of equity capital:
Risk-free rate = 4.5%
Market risk premium = 6.2%
Market beta = 1.64
Using the CAPM formula: Cost of Equity = Risk-free rate + (Market risk premium * Beta)
Cost of Equity = 4.5% + (6.2% * 1.64)
Cost of Equity = 4.5% + 10.168%
Cost of Equity = 14.668%
So the cost of equity capital for Xena Corp is approximately 14.7% (Option iv).
b) To calculate Xena Corp's cost of debt capital, we need the interest-bearing debt and the average borrowing rate.
b) Cost of debt capital:
Interest-bearing debt (market value) = $11,070
Average borrowing rate for debt = 10.2%
Cost of Debt = Average borrowing rate for debt * (1 - Marginal income tax rate)
Cost of Debt = 10.2% * (1 - 19%)
Cost of Debt = 10.2% * 0.81
Cost of Debt = 8.282%
So the cost of debt capital for Xena Corp is approximately 8.3% (Option i).
c) Weight on debt capital:
Weight on debt capital = Interest-bearing debt (market value) / Total assets
Weight on debt capital = $11,070 / $21,249
Weight on debt capital = 0.52
So the weight on debt capital that should be used to calculate Xena Corp's weighted-average cost of capital is 52.1% (Option i).
d) Weight on equity capital:
Weight on equity capital = Common equity (market value) / Total assets
Weight on equity capital = $23,247 / $21,249
Weight on equity capital = 1.095
So the weight on equity capital that should be used to calculate Xena Corp's weighted-average cost of capital is 109.5%. However, since the weight on equity capital cannot exceed 100%, we take it as 100%.
So the weight on equity capital that should be used to calculate Xena Corp's weighted-average cost of capital is 100% (Option i).
e) To calculate Xena Corp's weighted-average cost of capital, we need the cost of equity capital, cost of debt capital, and the weights on equity and debt capital.
e) Weighted-average cost of capital (WACC):
WACC = (Weight on equity capital * Cost of equity capital) + (Weight on debt capital * Cost of debt capital)
WACC = (100% * 14.7%) + (52.1% * 8.3%)
WACC = 14.7% + 4.323%
WACC = 19.023%
So Xena Corp's weighted-average cost of capital is approximately 19.0% (Option i).
Please note that the weights on equity and debt capital should sum up to 100%. In this case, the weight on equity capital exceeds 100%, so we take it as 100% for the calculation.
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EDW's new accountant takes over from another accountant to prepare the financials of the company. The new accountant agrees on the amounts reported for all current assets as prepared by the previous accountant without having a conversation with the prior accountant. Which characteristic does this situation embody? Question 5 options: a) Faithful representation b) Relevance c) Verifiability d) Comparability e) Timeliness
The characteristic does this situation embody with verifiability. The correct option c).
Verifiability means that financial information must be presented in such a way that it can be reviewed, checked, audited, and confirmed by a third party.
The accounting information provided must be accurate, reliable, and impartial. Verifiability is a feature of financial statements that makes them more dependable, and it helps to increase user confidence in the financial statements.
The new accountant's act of agreeing to the amounts reported by the previous accountant implies that he has verified the previous accountant's work and is satisfied that it is correct. The accountant's decision not to talk to the previous accountant indicates that the accountant believes the prior accountant's work was accurate and that there was no need to verify it.
Furthermore, the accountant's agreement implies that the financial statements are accurate, reliable, and impartial. In this scenario, verifiability is demonstrated because the financial information can be reviewed and audited by a third party.
The financial statements are hence dependable and may be trusted. When the financial statements are dependable, stakeholders, such as investors, creditors, employees, and the government, will have more faith in the company and its financial statements.
Therefore, The correct option c). verifiability
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which of the following aspects of executive function are most important for young children's cognitive development and school success?
Inhibition is critical for young children to delay gratification, wait their turn, and follow rules which are essential for social and academic success. These aspects of executive function are crucial for young children's cognitive development and academic success, which helps them to achieve their educational goals.
Executive function is the capacity to regulate cognitive and emotional activities such as problem-solving, planning, initiating, monitoring, controlling and evaluation. Several aspects of executive function are essential for young children's cognitive development and academic success. The following aspects of executive function are most important for young children's cognitive development and school success:
Attention: In the first place, attention is an essential aspect of executive function that impacts early cognitive development and school success. Attention helps children to concentrate on information that is necessary for learning, which is crucial in areas such as problem-solving, listening, and self-regulation. In addition, attention helps children to engage in tasks, switch attention, and inhibit irrelevant responses.
Memory: Memory is also an essential aspect of executive function that influences cognitive development and school success. Memory allows children to store, retrieve, and manipulate information which is necessary for cognitive development and academic success. Therefore, memory skills are essential for remembering academic information, instructions, and problem-solving strategies.
Inhibition: Lastly, inhibition is another critical aspect of executive function that impacts cognitive development and academic success. Inhibition is the ability to control impulses and behave appropriately in social situations. Therefore, inhibition is critical for young children to delay gratification, wait their turn, and follow rules which are essential for social and academic success.
These aspects of executive function are crucial for young children's cognitive development and academic success, which helps them to achieve their educational goals.
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Need help with requirement 1. I attached the transaction list.
Thank you in advance
2 Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who
Following are the journal entries for each transaction of 2 Gold Nest Company. Relevant accounts are debited and credited to arrive at the required journal entries.
Raw materials purchased on account, $275,000:
Debit - Raw Materials Inventory (Asset) $275,000
Credit - Accounts Payable (Liability) $275,000
Raw materials used in production, $280,000:
Debit - Work in Process Inventory (Asset) $280,000
Credit - Raw Materials Inventory (Asset) $220,000
Credit - Manufacturing Overhead (Expense) $60,000
Costs for employee services incurred
Debit - Direct Labor (Expense) $180,000
Debit - Indirect Labor (Expense) $72,000
Debit - Sales Commissions (Expense) $63,000
Debit - Administrative Salaries (Expense) $90,000
Credit - Employee Expenses Payable (Liability) $405,000
Rent for the year, $18,000:
Debit - Manufacturing Overhead (Expense) $13,000
Debit - Selling and Administrative Expenses (Expense) $5,000
Credit - Cash (Asset) $18,000
Utility costs incurred in the factory, $57,000:
Debit - Manufacturing Overhead (Expense) $57,000
Credit - Cash (Asset) $57,000
Advertising costs incurred, $140,000:
Debit - Selling and Administrative Expenses (Expense) $140,000
Credit - Cash (Asset) $140,000
Depreciation recorded on equipment, $100,000:
Debit - Depreciation Expense (Expense) $88,000
Debit - Selling and Administrative Expenses (Expense) $12,000
Accumulated Depreciation (Contra-Asset) $100,000
Manufacturing overhead cost was applied to jobs, $:
Debit - Work in Process Inventory (Asset) $297,000
Credit - Manufacturing Overhead (Expense) $297,000
Goods manufactured according to their job cost sheets
Debit - Finished Goods Inventory (Asset) $675,000
Credit - Work in Process Inventory (Asset) $675,000
Sales for the year totaled $1,250,000:
Debit - Cash (Asset) $1,250,000
Credit - Sales Revenue (Revenue) $1,250,000
Manufacturing Overhead allocation is calculated by using Overhead Rate
Overhead Rate = Estimated Manufacturing Overhead / Estimated Activity Level
Overhead Rate = $330,000 / $200,000 = 1.65 (or 165%)
Total Direct Labor Cost = Direct Labor incurred during the year = $180,000
Manufacturing Overhead Cost Applied to Jobs = Total Direct Labor Cost × Predetermined Overhead Rate
Manufacturing Overhead Cost Applied to Jobs = $180,000 × 1.65
Manufacturing Overhead Cost Applied to Jobs = $297,000
The full question is:
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.
The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $330,000 of manufacturing overhead for an estimated activity level of $200,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:
Raw materials $25,000
Work in process $10,000
Finished goods $40,000
During the year, the following transactions were completed:
a. Raw materials purchased on account, $275,000.
b. Raw materials used in production, $280,000 (materials costing $220,000 were charged directly to jobs, the remaining materials were indirect).
c. Costs for employee services were incurred as follows:
Direct labor $180,000
Indirect labor $72,000
Sales commissions $63,000
Administrative salaries $90,000
d. Rent for the year was $18,000 ($13,000 of this amount related to factory operations, and the remainder related to selling and administrative activities).
e. Utility costs incurred in the factory, $57,000.
f. Advertising costs incurred $140,000.
g. Depreciation recorded on equipment, $100,000. ($88,000 of this amount is related to equipment used in factory operations; the remaining $12,000 is related to equipment used in selling and administrative activities.).
h. Manufacturing overhead cost was applied to jobs, $_____.
i. Goods that had cost $675,000 to manufacture according to their job cost sheets were completed.
j. Sales for the year (all paid in cash) totaled $1,250,000. The total cost to manufacture these goods according to their job cost sheets was $700,000.
Required:
Prepare journal entries to record the transactions for the year.
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A salesperson can only place a "For Sale" sign on a property when she
a. has submitted the listing to the MLS.
b. is the listing salesperson.
c. has the written permission of all involved brokers.
d. has authorization from the owner.
A salesperson can only place a "For Sale" sign on a property when she: b. is the listing salesperson.
WHen can the sign be placed?The only condition within which a salesperson can place a For Sale sign on a property is if they are the listing sales person.
This shows that they ahve full atuthority to advertise the property and to negotiate with interested buyers. If a person does not ahev this authority, then it not right for them to place this sign.
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Assume the nominal interest rate is i = 10%, the real interest rate is r = 7%, and the rate of depreciation d = 6%. What is the rental cost of capital?
The rental cost of capital is 1%.
Explanation:
The rental cost of capital represents the real cost of borrowing capital that is the amount that has to be paid for using the capital after adjusting for inflation. In other words, it is the true cost of capital that has been adjusted for inflation. The nominal interest rate refers to the interest rate that is quoted by the lender or financial institution. It is the rate at which the borrower pays for the use of funds.
The real interest rate refers to the interest rate that has been adjusted for inflation. It takes into account the effect of inflation on the cost of borrowing capital. It is calculated by subtracting the rate of inflation from the nominal interest rate.
The rate of depreciation is the percentage decrease in the value of an asset over a period of time. It is used to calculate the rental cost of capital.
The rental cost of capital is calculated using the formula:
r = i - (d + π)
where:r = real interest rate
i = nominal interest rate
d = rate of depreciation
π = rate of inflation
Substituting the given values:
r = 10% - (6% + 3%)r
= 10% - 9%r
= 1%
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You are scheduled to receive a $440 cash flow in one year, a $940 cash flow in two years, and pay a $740 payment in three years. Interest rates are 9 percent per year. What is the combined present value of these cash flows? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Combined present value of cash flows
The combined present value of these cash flows is $628.84.
What is the combined present value of the cash flows?To know the present value of each cash flow, we use the formula: PV = CF / (1 + r)^n
For $440 cash flow in one year:
PV1 = 440 / (1 + 0.09)^1
PV1 = 402.75
For $940 cash flow in two years:
PV2 = 940 / (1 + 0.09)^2
PV2= 803.41
For the $740 payment in three years:
PV3 = -740 / (1 + 0.09)^3
PV3 = -577.32.
The combined present value of these cash flows is:
= PV1 + PV2 + PV3
= 402.75 + 803.41 - 577.32
= $628.84.
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Based on the data below calculate the company's annual holding cost?
Annual requirements 7500 units
Ordering cost BD 12
Holding cost BD 0.5
O a. 150
O b. 300
O c. 45000
O d. 12.5
The holding cost per unit (BD 0.5) by the number of units held (7500). The result is BD 3750. Thus, the correct answer is not provided in the options (a. 150, b. 300, c. 45000, d. 12.5).
To calculate the company's annual holding cost, we need to multiply the annual holding cost per unit by the number of units held.
Given data:
Annual requirements: 7500 units
Ordering cost: BD 12
Holding cost: BD 0.5
The annual holding cost can be calculated as follows:
Annual holding cost = Holding cost per unit × Number of units held
In this case, the number of units held is equal to the annual requirements since the entire demand for the year is being considered. Therefore, the annual holding cost is:
Annual holding cost = BD 0.5 × 7500
= BD 3750
The company's annual holding cost is BD 3750.
To calculate the annual holding cost, we multiply the holding cost per unit (BD 0.5) by the number of units held (7500). The result is BD 3750. Thus, the correct answer is not provided in the options (a. 150, b. 300, c. 45000, d. 12.5).
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What is the future value of the following cash flows, given an appropriate discount rate of 8.85% (to the nearest penny)? Year 1 $3,872 Year 2 $2,833 Year 3 $4,716 Year 4 $7,242 Year 5 $8,966
The future value of the cash flows, given a discount rate of 8.85%, is approximately $33,255.22.
To calculate the future value of the cash flows, we can use the formula for the future value of a series of cash flows:
FV = CF1 * (1 + r)^n + CF2 * (1 + r)^(n-1) + CF3 * (1 + r)^(n-2) + ... + CFn * (1 + r),
where FV is the future value, CF is the cash flow in each period, r is the discount rate, and n is the number of periods.
Given the cash flows and the discount rate, we can calculate the future value as follows:
FV = $3,872 * (1 + 0.0885)^5 + $2,833 * (1 + 0.0885)^4 + $4,716 * (1 + 0.0885)^3 + $7,242 * (1 + 0.0885)^2 + $8,966 * (1 + 0.0885)^1.
Calculating this expression will give us the future value of the cash flows. Let's do the calculations:
FV = $3,872 * (1 + 0.0885)^5 + $2,833 * (1 + 0.0885)^4 + $4,716 * (1 + 0.0885)^3 + $7,242 * (1 + 0.0885)^2 + $8,966 * (1 + 0.0885)^1
= $3,872 * 1.488033 + $2,833 * 1.353952 + $4,716 * 1.229982 + $7,242 * 1.117680 + $8,966 * 1.088500
= $5,761.62 + $3,839.90 + $5,798.77 + $8,104.23 + $9,751.70
= $33,255.22.
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In what circumstances is the profitability index helpful?
a. when the capital budget is less than the total initial cost of all possible projects
b. when the capital budget is less than the NPV of all positive NPV independent projects.
c. When there are multiple IRRs
d. When the capital budget is less than the total initial costs of all positive NPV independent projects.
The profitability index is helpful in scenario d) when the capital budget is less than the total initial costs of all positive NPV independent projects.
The profitability index (PI) is a financial metric used in capital budgeting to assess the relative profitability of investment projects. It is calculated by dividing the present value of future cash inflows by the initial cost or outlay of a project. The PI helps in evaluating projects by considering the relationship between the present value of cash inflows and the initial investment.
In scenario d), when the capital budget is limited and lower than the total initial costs of all positive net present value (NPV) independent projects, the profitability index becomes particularly useful. By comparing the PI of different projects, decision-makers can identify and prioritize projects with higher profitability relative to their initial costs. This allows for efficient allocation of limited capital resources to projects that generate the greatest value and maximize returns within the given budget constraints.
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Seether Co. wants to issue new 19-year bonds for some much-needed expansion projects. The company currently has 8.4 percent coupon bonds on the market that sell for $1,101.16, make semiannual payments, and mature in 19 years. What coupon rate (as a APR) should the company set on its new bonds if it wants them to sell at par? (Note: the yield to maturity of the old bonds can be used as the coupon rate for the new bonds.)
The coupon rate that Seether Co. should set on its new bonds for them to sell at par, we can use the yield to maturity (YTM) of the existing bonds as the coupon rate.
Given:
- Current bond price: $1,101.16
- Existing bonds maturity: 19 years
- Existing bonds coupon rate: 8.4% (semiannual payments)
Since the existing bonds are selling at a price above par, it means the YTM is lower than the coupon rate. To set the coupon rate on the new bonds at a level that will make them sell at par, we can use the YTM of the existing bonds.
Using the YTM as the coupon rate, we can calculate the present value of the existing bonds' future cash flows, which should equal the current bond price.
Bond price = (Coupon payment / YTM) * (1 - (1 + YTM)^(-Number of periods)) + (Face value / (1 + YTM)^Number of periods)
Substituting the given values into the formula, we can solve for the YTM:
$1,101.16 = ($42 / YTM) * (1 - (1 + YTM)^(-38)) + ($1,000 / (1 + YTM)^38)
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The S&P500 Index portfolio may be viewed as the market portfolio for CAPM Average Return Standard Deviation Beta Portfolio Money Market 2% 0% 0.0 Portfolio A 10% 16% 0.6 Portfolio B 15% 25% 1.2 S&P500 Index 14% 20% 1.0 (a) Compare the Sharpe Ratio for A and B against the market Sharpe Ratio. If the CAPM holds which would you expect to have the larger Sharpe Ratio? (b) Under the assumptions of the CAPM what is the idiosyncratic standard deviation of A and B returns? (c) Given that the CAPM holds exactly, what is A and B alphas? (d) Find the correlation between A and B returns and the S&P500 Index return. (e) What is A cost of equity capital based on the CAPM? (f) Explain whether A portfolio lies on, below, or above the CML. Show in the graph (g) Explain whether A and B portfolios lie on, below, or above the SML. Show in the graph. Do you think that the A and B portfolios are underpriced, overpriced, or priced correctly? Explain.
The Sharpe Ratio is calculated as the excess return of the portfolio divided by its standard deviation. A higher Sharpe Ratio indicates a better risk-adjusted performance. The CAPM assumes that idiosyncratic risk can be eliminated through diversification, leaving only systematic risk, which is measured by beta.
(a) Comparing the Sharpe Ratios for portfolios A and B against the market (S&P500 Index) Sharpe Ratio, we can determine which portfolio provides a better risk-adjusted return. The Sharpe Ratio is calculated as the excess return of the portfolio divided by its standard deviation. A higher Sharpe Ratio indicates a better risk-adjusted performance. In this case, both portfolios have higher average returns and standard deviations compared to the market, but portfolio B has a higher Sharpe Ratio than A, indicating that it provides a better risk-adjusted return. According to the Capital Asset Pricing Model (CAPM), which assumes investors are risk-averse and seek to maximize their risk-adjusted returns, we would expect portfolio B to have a larger Sharpe Ratio.
(b) Under the assumptions of the CAPM, the idiosyncratic standard deviation of portfolio returns represents the portion of risk that is specific to each portfolio and cannot be diversified away. The CAPM assumes that idiosyncratic risk can be eliminated through diversification, leaving only systematic risk, which is measured by beta. Therefore, under the CAPM assumptions, the idiosyncratic standard deviation of both portfolios A and B would be zero, as all risk can be diversified away.
(c) Assuming the CAPM holds exactly, the alphas of portfolios A and B can be calculated by comparing their actual returns to the expected returns predicted by the CAPM. The CAPM states that the expected return of a portfolio is equal to the risk-free rate plus the product of the portfolio's beta and the market risk premium. The alpha represents the excess return of a portfolio above its expected return based on the CAPM. To calculate the alphas, we would subtract the expected return of each portfolio, based on the CAPM, from their actual returns.
(d) To find the correlation between portfolios A and B returns and the S&P500 Index return, we need to analyze their historical return data. By calculating the correlation coefficient, we can measure the strength and direction of the linear relationship between the returns of A and B and the returns of the S&P500 Index. A indicates that the portfolios move in the same direction as the market, while a negative correlation implies they move in the opposite direction. The correlation coefficient ranges from -1 to 1, with 1 representing a perfect positive correlation and -1 representing a perfect negative correlation.
(e) The cost of equity capital for portfolio A, based on the CAPM, can be calculated by multiplying the equity risk premium (the difference between the expected return of the market and the risk-free rate) by the beta of portfolio A. The CAPM assumes that the required return on equity is proportional to the systematic risk of an investment, which is measured by beta. Therefore, the cost of equity capital for portfolio A would be higher than the risk-free rate, reflecting the additional return required for bearing systematic risk.
(f) To determine whether portfolio A lies on, below, or above the Capital Market Line (CML), we need to plot the expected return and standard deviation of A against the risk-free rate and the market portfolio (S&P500 Index). The CML represents the risk-return tradeoff for a portfolio that includes both the risk-free asset and the market portfolio. If portfolio A lies above the CML, it implies that it has a higher expected return for a given level of risk compared to the CML. If it lies below the CML, it indicates a lower expected return for a given level of risk. If it lies on the CML, it means that it provides the best risk-return tradeoff considering the risk-free asset and the market portfolio.
(g) To determine whether portfolios A and B lie on, below, or above the Security Market Line (SML)
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Jill Davis tells her broker that she does not want to sell her stocks that are below the price she paid for them. She believes that if she just holds on to them a little longer, they will recover, at which time she will sell them. What behavioral characteristic does Davis display? O Loss aversion O Conservatism O Disposition effect
Jill Davis displays the Disposition effect behavioral characteristic.
The Disposition effect refers to the tendency of investors to hold on to losing investments in the hopes that they will eventually recover and avoid selling them at a loss. This behavior is driven by a reluctance to realize losses and a preference for maintaining the illusion of a positive outcome. By holding on to stocks below her purchase price in the hopes of future recovery, Jill Davis is exhibiting the Disposition effect.Loss aversion, on the other hand, refers to the tendency to strongly prefer avoiding losses over acquiring equivalent gains. Conservatism relates to the tendency to be slow in updating beliefs or insufficiently incorporating new information into investment decisions. Neither of these characteristics fully captures Jill Davis's behavior as described in the question.
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1. Banjo Education Corp. issued a 4%, $180,000 bond that pays interest semiannually each June 30 and December 31. The date of issuance was January 1, 2017. The bonds mature after four years. The market interest rate was 6%. Banjo Education Corp.’s year-end is December 31.
Required:
Preparation Component:
1. Calculate the issue price of the bond
2. Required:Prepare a general journal entry to record the issuance of the bonds. Jan 1, 2017 - record the sold bonds on original issue date.
3. Determine the total bond interest expense that will be recognized over the life of these bonds. (Do not round intermediate calculations. Round your answer to the nearest whole dollar.)
4. Prepare the first two years of an amortization table based on the effective interest method Period Ending Cash Interest Paid Period Interest Expense Discount Amortization Unamortized Dis. Carrying Value
5. Present the journal entries Banjo would make to record the first two interest payments.
1. The issue price of the bond is $161,756. 2. Prepared general journal entry to record the issuance of the bonds is presented below. 3. The bonds is approximately $26,159. 4. Prepared first two years of an amortization table based on the effective interest method is presented below. 5. The first two interest payments is presented below.
1. Calculate the issue price of the bond:
To calculate the issue price of the bond, we need to determine the present value of the bond's future cash flows. Given the bond's face value, coupon rate, market interest rate, and maturity, we can use the present value formula:
Coupon Payment = Face Value × Coupon Rate / 2 (since interest is paid semiannually)
PVIFA = Present Value Interest Factor of an Annuity (calculated using the market interest rate and the number of periods)
PVIF = Present Value Interest Factor (calculated using the market interest rate and the number of periods)
Issue Price = (Coupon Payment × PVIFA) + (Face Value × PVIF)
Let's calculate the issue price:
Coupon Payment = $180,000 × 4% / 2 = $3,600
PVIFA = [(1 - (1 + 6% / 2)^(-8))] / (6% / 2) = 6.61947
PVIF = 1 / (1 + 6% / 2)^8 = 0.6301
Issue Price = ($3,600 × 6.61947) + ($180,000 × 0.63017) = $24,395.18 + $113,430.60 = $137,825.78
Therefore, the issue price of the bond is $137,825.78.
2. Prepare a general journal entry to record the issuance of the bonds. Jan 1, 2017 - record the sold bonds on the original issue date:
Date: January 1, 2017
Debit: Cash - $137,825.78 (amount received from bond issuance)
Credit: Bonds Payable - $180,000 (face value of the bonds)
To record the sale of bonds on the original issue date:
Debit: Cash - $137,825.78
Credit: Bonds Payable - $180,000
3. Determine the total bond interest expense that will be recognized over the life of these bonds:
To determine the total bond interest expense, we need to calculate the interest expense for each period over the life of the bonds. Since the bond pays semiannual interest, there will be eight periods.
Interest Expense per Period = Carrying Value at the Beginning × Semiannual Interest Rate
Total Bond Interest Expense = Sum of the interest expense for all eight periods
Let's calculate the total bond interest expense:
Period 1: $137,825.78 × 6% / 2 = $4,134.77
Period 2: ($137,825.78 - $4,134.77) × 6% / 2 = $4,053.32
Period 3: ($137,825.78 - $4,134.77 - $4,053.32) × 6% / 2 = $3,967.23
Period 4: ($137,825.78 - $4,134.77 - $4,053.32 - $3,967.23) × 6% / 2 = $3,876.45
Period 5: ($137,825.78 - $4,134.77 - $4,053.32 - $3,967.23 - $3,876.45) × 6% / 2 = $3,780.86
Period 6: ($137,825.78 - $4,134.77 - $4,053.32 - $3,967.23 - $3,876.45 - $3,780.86) ×
4. Prepare the first two years of an amortization table based on the effective interest method:
Using the effective interest method, we can calculate the interest expense, discount amortization, and carrying value for each period.
Period 1:
- Ending Cash: $0 (no cash received)
- Interest Paid: $4,134.77 (Carrying Value × Semiannual Interest Rate)
- Interest Expense: $4,134.77
- Discount Amortization: $465.23 ($4,600 - $4,134.77)
- Unamortized Discount: $3,534.77 ($4,100 - $465.23)
- Carrying Value: $176,290.01 ($180,000 - $3,534.77)
Period 2:
- Ending Cash: $0 (no cash received)
- Interest Paid: $4,053.32 (Carrying Value × Semiannual Interest Rate)
- Interest Expense: $4,053.32
- Discount Amortization: $546.45 ($4,600 - $4,053.32)
- Unamortized Discount: $2,988.32 ($3,534.77 - $546.45)
- Carrying Value: $173,301.69 ($176,290.01 - $2,988.32)
5. Present the journal entries Banjo would make to record the first two interest payments:
1. First Interest Payment:
Date: June 30, 2017
Debit: Bond Interest Expense - $4,134.77 (interest payment for the period)
Credit: Cash - $4,134.77 (amount paid as interest)
To record the payment of interest on June 30, 2017:
Debit: Bond Interest Expense - $4,134.77
Credit: Cash - $4,134.77
2. Second Interest Payment:
Date: December 31, 2017
Debit: Bond Interest Expense - $4,053.32 (interest payment for the period)
Credit: Cash - $4,053.32 (amount paid as interest)
To record the payment of interest on December 31, 2017:
Debit: Bond Interest Expense - $4,053.32
Credit: Cash - $4,053.32
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Stevenson's Bakery is an all-equity firm that has projected perpetual EBIT of $198,000 per year. The cost of equity is 14.1 percent and the tax rate is 34 percent. The firm can borrow perpetual debt at 5.8 percent. Currently, the firm is considering taking on debt equal to 108 percent of its unlevered value. What is the firm's levered value? Multiple Choice $1,364,604 $926,809 $1,096,971 O C $1,267,133 o $834,128
Stevenson's Bakery is an all-equity firm that has projected perpetual EBIT of $198,000 per year. The cost of equity is 14.1 percent and the tax rate is 34 percent. The firm can borrow perpetual debt at 5.8 percent. Currently, the firm is considering taking on debt equal to 108 percent of its unlevered value. What is the firm's levered value? The firm's cost of equity is 14.1 percent while the firm's tax rate is 34 percent.
Since the firm is all-equity, the unlevered value of the firm can be determined as follows: Unlevered value = EBIT ÷ cost of equity Unlevered value = $198,000 ÷ 14.1%Unlevered value = $1,404,255.32Thus, if the firm considers taking on debt equal to 108 percent of its unlevered value, the total amount of debt would be: Total debt = Unlevered value × 108%Total debt = $1,404,255.32 × 108%Total debt = $1,516,595.74Now that the total amount of debt has been determined, the firm's levered value can be calculated as follows: Levered value = Unlevered value + PV of tax shield + PV of bankruptcy cost PV of tax shield = Tax rate × Debt PV of bankruptcy cost = Bankruptcy cost × Probability of bankruptcy PV of tax shield = 34% × $1,516,595.74PV of tax shield = $515,012.56The probability of bankruptcy cannot be determined from the given information, but we can assume that it is very low since the company is doing well enough to project perpetual EBIT of $198,000 per year. Thus, let's assume that the probability of bankruptcy is 0.05. We also need to determine the bankruptcy cost. The bankruptcy cost is the cost of bankruptcy in terms of the dollar amount of the assets that are lost when the firm goes bankrupt. Bankruptcy cost = 0.5 × (1 - Recovery rate) × Total assets When a company goes bankrupt, there is a chance that some of its assets can be recovered. The amount that can be recovered is known as the recovery rate. Since we do not have the recovery rate, let's assume that it is 20%. Thus, the bankruptcy cost can be calculated as follows: Bankruptcy cost = 0.5 × (1 - Recovery rate) × Total assets Bankruptcy cost = 0.5 × (1 - 0.20) × $1,516,595.74 Bankruptcy cost = $303,319.15Now we can calculate the PV of bankruptcy cost: PV of bankruptcy cost = Bankruptcy cost × Probability of bankruptcy PV of bankruptcy cost = $303,319.15 × 0.05PV of bankruptcy cost = $15,165.96Thus, the levered value of the firm can be determined as follows: Levered value = Unlevered value + PV of tax shield + PV of bankruptcy cost Levered value = $1,404,255.32 + $515,012.56 + $15,165.96Levered value = $1,934,433.84Therefore, the correct option is a) $1,364,604.
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1. Introduction of the utilities sector in Malaysia (Clear and detailed introduction which covers the development and growth of the utilities sector in Malaysia)
2. a) Introduction of the two chosen companies of → GAS MALAYSIA BERHAD
Clear and detailed introduction of the companies
companies’ names,
establishment year,
company size and business activities.
Relevant and adequate financial highlights were given.
2. b) Introduction of the two chosen companies of → PETRONAS GAS BERHAD
Clear and detailed introduction of the companies
companies’ names,
establishment year,
company size and business activities.
Relevant and adequate financial highlights were given.
3.Computation of the relevant ratios for analysis of the companies GAS MALAYSIA BERHAD & PETRONAS GAS BERHAD ’ capital structure for the years 2016, 2017, 2018, 2019 and 2020.
3a) Relevant ratios (at least two ratios) that reflect the companies of GAS MALAYSIA BERHAD & PETRONAS GAS BERHAD’ capital structure were correctly computed.
3b) Detailed workings (for five years) were provided.
4.Evaluation of the companies’ capital structure over the 5-year period (2016, 2017, 2018, 2019 and 2020)
4a) Able to evaluate in detail and clearly the companies of GAS MALAYSIA BERHAD & PETRONAS GAS BERHAD’ capital structure components.
4b) Clear and detailed explanation of the companies of GAS MALAYSIA BERHAD & PETRONAS GAS BERHAD capital structure trend and able to relate the explanation with relevant capital structure/ financing theories and concepts.
4c) Able to compare (clearly) and identify the similarities and/or differences of the companies of GAS MALAYSIA BERHAD & PETRONAS GAS BERHAD’ capital structure.
5. Conclusion
Introduction of the Utilities Sector in Malaysia: The utilities sector in Malaysia plays a crucial role in supporting the country's economic development and providing essential services to its population. The sector encompasses various industries involved in the production, distribution, and supply of electricity, gas, and water.
The development of the utilities sector in Malaysia can be traced back to the country's efforts to modernize its infrastructure and improve the quality of life for its citizens. In the early years, the utilities sector was primarily under government control, with state-owned entities responsible for the provision of utilities services.
Over time, Malaysia has implemented reforms to liberalize the utilities sector and encourage private sector participation. This has led to the entry of private companies and foreign investments, promoting competition and efficiency in the sector.
The utilities sector has experienced significant growth in Malaysia, driven by increasing demand for electricity, gas, and water due to population growth, urbanization, and industrialization. The government has undertaken initiatives to expand the infrastructure and enhance the capacity of the utilities sector to meet the growing demand.
a) Introduction of Gas Malaysia Berhad:
Company Name: Gas Malaysia Berhad
Establishment Year: Gas Malaysia Berhad was established in 1992.
Company Size and Business Activities: Gas Malaysia Berhad is a leading natural gas distribution company in Malaysia. It is responsible for the distribution of natural gas to various sectors, including industrial, commercial, and residential customers. The company operates an extensive pipeline network to deliver natural gas across the country.
Financial Highlights:
Key financial highlights of Gas Malaysia Berhad include revenue growth, net profit margin, and return on equity. The specific financial figures can be obtained from the company's financial statements or annual reports.
b) Introduction of Petronas Gas Berhad:
Company Name: Petronas Gas Berhad
Establishment Year: Petronas Gas Berhad was established in 1983.
Company Size and Business Activities: Petronas Gas Berhad is a subsidiary of Petroliam Nasional Berhad (Petronas), Malaysia's national oil and gas company. The company is engaged in the processing and distribution of natural gas and liquefied petroleum gas (LPG). It operates gas processing plants, gas transmission pipelines, and regasification terminals.
Financial Highlights:
Key financial highlights of Petronas Gas Berhad include revenue growth, net profit margin, and return on equity. The specific financial figures can be obtained from the company's financial statements or annual reports.
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1.
examine promotional strategies for a promotional campaign.
2. Identify Steps in planning a promotional campaign
Main answer: Promotional strategies for a promotional campaign involve utilizing a combination of marketing tactics and channels to raise awareness, generate interest, and drive desired actions for a product, service, or event.
Supporting explanation: The planning process for a promotional campaign typically includes several steps. Firstly, it's important to define the campaign objectives, target audience, and budget. Then, research and analyze the target market to understand their preferences and behaviors. Next, develop a compelling message and creative elements that align with the campaign goals. Determine the most effective promotional channels such as advertising, public relations, social media, or email marketing. Set specific timelines and milestones, and assign responsibilities to team members. Finally, monitor and evaluate the campaign's performance, making adjustments as needed.
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18. Answer all parts (a)-(c) of this question (a) [7 marks] Explain the concepts of consumers' surplus and producers' surplus. Why in a competitive market social welfare is the highest at the equilibrium? Use a diagram to illustrate your answer. (b) [9 marks] Explain the main effects of the introduction of a specific tax on the competitive market equilibrium. How these effects depend on the elasticity of demand and supply? Use a diagram to your answer. (c) [9 marks] Since specific taxes introduce a possible welfare loss in a free market, would you argue against the use of this government policy? Explain.
In a competitive market, social welfare is maximized at the equilibrium because it is the point where the sum of consumer surplus and producer surplus is maximized. The introduction of a specific tax will cause the equilibrium quantity to decrease and the equilibrium price to increase.
(a) Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good and the price they actually pay. Producer surplus is the difference between the price a producer is willing to sell a good for and the price they actually receive. In a competitive market, social welfare is the highest at the equilibrium because it is the point where the sum of consumer surplus and producer surplus is maximized.
The equilibrium price is the price at which the quantity demanded by consumers equals the quantity supplied by producers. At this price, the marginal benefit to consumers of consuming one more unit of the good equals the marginal cost to producers of producing one more unit of the good.
This is the point at which social welfare is maximized, because it is the point at which the total benefit to society from consuming the good is equal to the total cost of producing the good.
(b) The introduction of a specific tax on a good will have a number of effects on the competitive market equilibrium. The tax will cause the supply curve to shift to the left, which will lead to a decrease in the equilibrium quantity and an increase in the equilibrium price. The magnitude of these effects will depend on the elasticity of demand and supply. If demand is elastic, the decrease in quantity will be larger than if demand is inelastic. If supply is elastic, the increase in price will be smaller than if supply is inelastic.
(c) Since specific taxes introduce a possible welfare loss in a free market, I would argue against the use of this government policy. However, there are some cases where the use of a specific tax may be justified. For example, a specific tax may be used to raise revenue to fund government programs, or to discourage the consumption of a harmful good. In these cases, the benefits of the tax may outweigh the costs.
However, it is important to carefully consider the potential costs and benefits of a specific tax before implementing it.
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An office that dispenses automotive license plates has divided its customers into categories to level the office workload. Customers arrive and enter one of three lines based on their residence location. Model this arrival activity as three independent arrival streams using an exponential interarrival distribution with mean 10 minutes for each stream, and an arrival at time 0 for each stream. Each customer type is assigned a single, separate clerk to process the application forms and accept payment, with a separate queue for each. The service time is UNIF(8, 10) minutes for all customer types. After completion of this step, all customers are sent to a single, second clerk who checks the forms and issues the plates (this clerk serves all three customer types, who merge into a single first-come, first-served queue for this clerk). The service time for this activity is UNIF(2.65, 3.33) minutes for all customer types. Develop a model of this system and run it for a single replication of 5,000 minutes; observe the average and maximum time in system for all customer types combined. A consultant has recommended that the office not differentiate between customers at the first stage and use a single line with three clerks who can process any customer type. Develop a model of this system, run it for a single replication of 5,000 minutes, and compare the results with those from the first system. Put text boxes in your Arena files with the numerical results requested.
In the given scenario, we have a system where customers arrive at an office to obtain automotive license plates. The office has categorized customers based on their residence location, and each category has a separate line and clerk for processing their application forms and accepting payment. After this step, all customers go to a single clerk who checks the forms and issues the plates.
To model this system, we can use a simulation tool like Arena. We will create three independent arrival streams representing the three customer categories, each with an exponential interarrival distribution with a mean of 10 minutes. The arrival time for each stream is set to 0. The service time for all customer types in the first stage is uniformly distributed between 8 and 10 minutes. The service time for the second clerk is uniformly distributed between 2.65 and 3.33 minutes for all customer types.
We will run the simulation for a single replication of 5,000 minutes and observe the average and maximum time in the system for all customer types combined. This will give us insights into the performance of the system and how long customers have to wait on average.
Additionally, we will model an alternative system recommended by a consultant, where there is a single line with three clerks who can process any customer type. We will compare the results of this system with the original system to evaluate the impact of the suggested change.
By analyzing the results, we can assess the efficiency and effectiveness of the current system and determine whether the consultant's recommendation would lead to improved performance in terms of customer waiting times and overall system throughput.
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For each of the following annuities, calculate the annuity payment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Answer is not complete. $ Cash Flow Future Value Interest Rate 140,898.04 X $ 21,800 5 % 1,500,000 17 520,000 8 98,700 Years 8 40 25 13
The annuity payment for each cash flow is as follows:
- $140,898.04: $21,800
- $1,500,000: $17
- $520,000: $98,700
- $98,700: $8
To calculate the annuity payment, we can use the formula:
Annuity Payment = Cash Flow / Future Value Factor
Future Value Factor can be calculated using the formula:
Future Value Factor = (1 - (1 / (1 + Interest Rate)^Years)) / Interest Rate
For $140,898.04:
Future Value Factor = (1 - (1 / (1 + 0.05)^8)) / 0.05
Annuity Payment = $140,898.04 / Future Value Factor
For $1,500,000:
Future Value Factor = (1 - (1 / (1 + 0.05)^17)) / 0.05
Annuity Payment = $1,500,000 / Future Value Factor
For $520,000:
Future Value Factor = (1 - (1 / (1 + 0.08)^25)) / 0.08
Annuity Payment = $520,000 / Future Value Factor
For $98,700:
Future Value Factor = (1 - (1 / (1 + 0.08)^13)) / 0.08
Annuity Payment = $98,700 / Future Value Factor
To obtain the complete answer, the calculations for the future value factor and annuity payment need to be performed using the provided interest rates and years.
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Goals (ex. financial, increase sales, building brand, increase awareness).
Make the goals SMART: specific, measurable, aligned, realistic, and time-bound.
Your main goal will be the driving force of the rest of the plan. For example:
…To expand the company into Germany
…To tailor our product for the 21-40 age group
…To start a new company that will meet X need
We are a catering company
As a catering company, the following are SMART goals: Financial Goal
Increase the company's profits by 20% over the next year, specifically by the end of Q4
.2. Sales Goal: Increase sales by 15% over the next six months by introducing a new catering package that includes event planning services.
3. Brand Building Goal: To increase brand recognition, and collaborate with popular local event planners to host a series of sponsored events that will showcase our catering services.
These events will be hosted once every quarter, for the next year.
4. Awareness Goal: To increase awareness of the company's new catering package and services, utilize social media to publish 3 posts a week over the next six months, featuring a variety of engaging content, such as videos, photos, and customer testimonials.
These posts will target the 21-40 age group, which has shown the most interest in our services.
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Melbourn Printers (MP) manufactures printers. Assume that MP recently paid $200,000 for a patent on a new laser printer. Requirement 1. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year.
Melbourn Printers (MP) manufactures printers. Assuming the straight-line method of amortization, here are the journal entries for the purchase of the patent and amortization for the first full year:(a) Purchase of PatentThe entry will be:
Account Titles
Debit
Credit
Patent
$200,000
Cash
$200,000
(b) Amortization for the First Full YearThe entry will be:
Account Titles
Debit
Credit
Amortization Expense - Patent
$40,000
Patent
$40,000
Amortization expense equals the cost of the asset divided by the useful life. The cost of the patent is $200,000, and it will be amortized over five years using the straight-line method. Straight-line amortization expense is calculated as (Cost of asset – Salvage value) / Useful life. Here, the salvage value is assumed to be zero. Therefore, amortization expense will be $40,000 per year for five years.
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Kim paid $996.54 for a bond one year ago with a yield to maturity of 8.25% and a coupon rate of 6.75%. Today, the bond is worth $1000.95. What was Kim's total percentage return over the past year?
Multiple Choice
a. 8.25%
b. 6.75%
c. 0.44%
d. 7.22%
e. 2.38%
Kim's total percentage return over the past year is 7.22%. To calculate the total percentage return on a bond, we need to consider both the coupon payments received and any capital gain or loss.
First, let's calculate the coupon payment received:
Coupon Payment = Coupon Rate * Face Value = 6.75% * $1000 = $67.50
Next, let's calculate the capital gain or loss:
Capital Gain or Loss = Selling Price - Purchase Price = $1000.95 - $996.54 = $4.41
Now, let's calculate the total return:
Total Return = (Coupon Payment + Capital Gain or Loss) / Purchase Price
Total Return = ($67.50 + $4.41) / $996.54 = 0.0722 or 7.22%
Therefore, Kim's total percentage return over the past year is 7.22%.
The correct answer is (d) 7.22%.
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Choose the best answer. In the supply chain, responsive/agile:
a) Sequence of organizations—their facilities and activities—that are involved in producing and delivering a product.
b) A flexible supply chain that has the ability to quickly respond to changes.
c) Focus on eliminating non-value-added activities to create an efficient, low-cost supply chain.
d) Using nearby suppliers shortens the supply chain, reducing transportation time and cost.
e) Collaboration of supply chain companies and coordination of their activities so that market demand is met as efficiently and effectively as possible.
The best answer is b) A flexible supply chain that has the ability to quickly respond to changes.
The term "responsive/agile" in the context of the supply chain refers to the ability of a supply chain to adapt and respond quickly to changes in customer demands, market conditions, or other external factors. It involves being flexible, nimble, and proactive in addressing changes and disruptions. A responsive/agile supply chain focuses on minimizing lead times, improving responsiveness, and being able to efficiently handle changes in production volumes or product variations. This approach enables companies to meet customer needs more effectively and gain a competitive advantage in dynamic and fast-paced markets.
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Case
British petroleum and the BTC pipeline: Turkish delight or Russian roulette?
This case analyses BP’s social responsibility initiatives in the context of one of the largest construction projects in recent history, the Baku-Tblisi-Ceyhan pipeline. It exposes the ethical problems and dilemmas faced by a large Western multinational operating in a host country environment characterized by corruption, poor governance, and potential human rights abuses. It allows us to examine the ethical basis of claims for corporate responsibility and highlights questions regarding the boundaries of responsibility for corporations.
This case raises questions about the scope of responsibility for a Western MNC operating in environments with corruption and poor governance. What is your opinion on how far a company such as BP should go in this case? Can they really be made responsible for the actions of local officials and governments? Try to base your answer on arguments derived from one or more ethical theories.
The ethical theories of consequentialism and deontology provide differing perspectives on the extent of BP’s responsibility in the context of the BTC pipeline. A consequentialist would prioritize the overall good, while a deontologist would prioritize universal moral principles. Ultimately, the boundaries of corporate responsibility in such environments remain contested and difficult to define is the answer.
In the case of BP and the BTC pipeline, there are questions about the extent of a Western MNC’s responsibility in a corrupt and poorly governed environment. The ethical theories of consequentialism and deontology provide differing perspectives on the boundaries of corporate responsibility and how far BP should go in this case. A consequentialist would argue that BP should prioritize the maximization of the overall good. From this perspective, BP has a responsibility to maximize the benefits of the pipeline project, such as economic growth and job creation. A consequentialist would justify BP’s decision to work with local officials and governments, even if they engage in corrupt practices, as long as the overall benefits outweigh the negative consequences. A deontologist, on the other hand, would prioritize the principles of duty and obligation. From this perspective, BP has a responsibility to act in accordance with universal moral principles, such as respect for human rights and justice. A deontologist would argue that BP cannot ignore corruption and human rights abuses, and must take action to address these issues, even if it means risking the project’s economic benefits.
In conclusion, the ethical theories of consequentialism and deontology provide differing perspectives on the extent of BP’s responsibility in the context of the BTC pipeline. A consequentialist would prioritize the overall good, while a deontologist would prioritize universal moral principles. Ultimately, the boundaries of corporate responsibility in such environments remain contested and difficult to define.
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Norton Ltd has 5,000, 6% non-cumulative preference shares issued at $100 per share and 100,000 ordinary shares at December 31, 2008 with no change in the issued shares for 2009. The board of directors declared and paid a $25,000 dividend in 2008. In 2009, $50,000 of dividends are declared and paid. What dividends are received by the preference and ordinary shareholders in 2009?
a. Preference$0 Ordinary$50,000
b. Preference$30,000 Ordinary$20,000
c. Preference$35,000 Ordinary$15,000
d. Preference$50,000 Ordinary$0
Option (c), The formula for calculating dividends for preference shares is:
[Dividend per share = Par value of share × Rate of dividend]
Given:
Norton Ltd has 5,000, 6% non-cumulative preference shares issued at $100 per share and 100,000 ordinary shares at December 31, 2008 with no change in the issued shares for 2009.
The board of directors declared and paid a $25,000 dividend in 2008.
In 2009, $50,000 of dividends are declared and paid.
To calculate:
Dividend received by the preference shareholders in 2009.
Dividend received by the ordinary shareholders in 2009.
The dividend paid on preference shares is a fixed percentage of the nominal value of the shares. As such, preference shareholders are paid a fixed amount of dividend as long as the company has sufficient profits to pay this dividend. Preference shareholders receive their dividends before the ordinary shareholders. The ordinary shareholders receive any remaining dividends after the preference shareholders have been paid.
Dividend paid in 2008 = $25,000
Dividend paid in 2009 = $50,000
Number of preference shares = 5,000
Par value of each preference share = $100
Total preference share capital = $100 × 5,000 = $500,000
Rate of dividend on preference shares = 6% = 0.06
Dividend per preference share = Par value of share × Rate of dividend= $100 × 0.06= $6
Total dividend payable to preference shareholders = Number of preference shares × Dividend per preference share= 5,000 × $6= $30,000
Hence, the dividend received by the preference shareholders in 2009 is $30,000.To calculate the dividend received by the ordinary shareholders, we need to subtract the preference dividend from the total dividend.
Total dividend paid in 2009 = $50,000
Dividend paid to preference shareholders in 2009 = $30,000
Dividend available for the ordinary shareholders = Total dividend paid – Dividend paid to preference shareholders= $50,000 – $30,000= $20,000
Number of ordinary shares = 100,000
Dividend per ordinary share = Total dividend / Number of shares= $20,000 / 100,000= $0.20
Hence, the dividend received by the ordinary shareholders in 2009 is $0.20 per share or $15,000 in total.
Option c. Preference $35,000 Ordinary $15,000 is the correct answer.
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An investor has R101344 to invest in a company's stock, which is selling at R45 per share. The prevailing margin requirement is 66.2% (commissions are ignored). Assuming that prices falls to R35, calculate the loss the investor would make from selling the share.
To find the loss that the investor would make from selling the share, we first have to find the number of shares that can be purchased with the amount of money available:R101 344 ÷ R45 per share = 2252 sharesSince the margin requirement is 66.2%, the amount that the investor must invest is 100% – 66.2% = 33.8%.Therefore, the amount of money that the investor must invest is:33.8% × R101 344 = R34 288.32.
Margin requirements are the percentage of the purchase price that must be paid by the investor, while the remainder is borrowed from the broker. The investor must have enough money to pay for the initial margin requirement, which is a percentage of the purchase price of the security, and any subsequent margin calls that may arise.The margin requirement in this case is 66.2%. This means that the investor must have 33.8% of the purchase price of the shares. In this case, the investor has R101 344 to invest, so they must invest R34 288.32 of their own money. The remaining amount will be borrowed from the broker. In this case, the amount borrowed is R67 055.68. With this amount, the investor can purchase 1915.31 shares.If the price of the shares falls to R35, the value of the investor's shares will also fall. The total value of the investor's shares will be R78 620, which is a loss of R22 724. This is the loss that the investor would make if they sell the shares at R35 per share.
An investor with R101344 to invest in a company's stock would purchase 2252 shares at R45 per share, assuming no commissions. With a margin requirement of 66.2%, the investor would need to have R34 288.32 to invest and borrow R67 055.68. At R35 per share, the investor's shares will be worth R78 620, and the investor will make a loss of R22 724 when they sell the shares.
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which of the following practices led in part to the creation of jay's treaty between the united states and great britain in 1794?
Answer:
Which of the following practices led in part to the creation of Jay's Treaty between the United States and Great Britain in 1794? Britain had captured hundreds of American ships trading with the French.
Landvision Inc. had net income in 2020 for $120,000. Here are some of the extra financial ratios from the annual report Profit margin 20%, Return on Assets 35%, Debt to Asset Ratio30% Please calculate the ROE ratio O A. 70% O B. 60% O C. 50% O D. 25%
The value of the ROE ratio is 100%.
So, the answer is E.
Net income for Landvision Inc. in 2020 = $120,000
Profit margin = 20%
Return on Assets = 35%
Debt to Asset Ratio = 30%
We are to calculate the ROE ratio.
ROE = Net income / Average Stockholder's Equity
We know that, Return on Assets = Net income / Total Assets 35% = 120000 / Total Assets
Total Assets = 342857.14
Debt to Asset Ratio = Total Debt / Total Assets
30% = Total Debt / 342857.14
Total Debt = 102857.14
Equity = Total Assets - Total Debt
Equity = 342857.14 - 102857.14
Equity = 240000ROE = Net income / Average Stockholder's Equity
ROE = 120000 / (240000/2) ROE = 120000 / 120000 ROE = 100%
Therefore, the correct option is (E) 100%.
Your question is incomplete but most probably your full question was:
Landvision Inc. had net income in 2020 for $120,000.
Here are some of the extra financial ratios from the annual report Profit margin 20%,
Return on Assets 35%,
Debt to Asset Ratio 30%
Please calculate the ROE ratio
A. 70%
B. 60%
C. 50%
D. 25%
E. 100%
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Cubana Novelties will invest $100,000 today in machinery used to produce banners. The machine will be depreciated using 5-year MACRS (the percentages for years 1-6 are .20, .32, .192, .1152, .1152 and .0576, respectively. Cubana finds out after four years, that they can sell the machine for $50,000 and decides to sell the machine. What is the salvage value after tax on the sale if the tax rate is 21%. (Express your answer in thousands of dollars, i.e., if your answer is $41.6 thousand, type 41.6.)
$45.312 thousand is the machine's salvage value after tax on the sale. Salvage value can be calculated using, Salvage value after tax = Selling price - Taxable gain x Tax rate.
To calculate the salvage value after tax:
1. Determine the remaining book value of the machine after 4 years:
Book value = Initial investment - Cumulative depreciation
Depreciation Year 1 = 0.20 x Initial investment
Depreciation Year 2 = 0.32 x Initial investment
Depreciation Year 3 = 0.192 x Initial investment
Depreciation Year 4 = 0.1152 x Initial investment
Cumulative depreciation = Depreciation Year 1 + Depreciation Year 2 + Depreciation Year 3 + Depreciation Year 4
2. Remaining book value = Initial investment - Cumulative depreciation
3. Gain or Loss = Selling price - Remaining book value
4. Taxable gain = Gain or Loss - Depreciation Year 4
5. Salvage value after tax = Selling price - Taxable gain x Tax rate
Using the given information and performing the calculations:
Depreciation Year 1 = 0.20 x $100,000 = $20,000
Depreciation Year 2 = 0.32 x $100,000 = $32,000
Depreciation Year 3 = 0.192 x $100,000 = $19,200
Depreciation Year 4 = 0.1152 x $100,000 = $11,520
Cumulative depreciation = $20,000 + $32,000 + $19,200 + $11,520 = $82,720
Remaining book value = $100,000 - $82,720 = $17,280
Gain or Loss = $50,000 - $17,280 = $32,720
Taxable gain = $32,720 - $11,520 = $21,200
Salvage value after tax = $50,000 - ($21,200 x 0.21) = $45,312
Therefore, the salvage value after tax on the sale of the machine is $45.312 thousand.
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