Bon Nebo Co. sold 25,000 annual subscriptions of Bjorn 20XX for $85 during December 2014. These new subscribers will receive monthly issues, beginning in January 2015. In addition, the business had taxable income of $840,000 during the first calendar quarter of 2015. The federal tax rate is 40%. A quarterly tax payment will be made on April 12, 2015.

Prepare the Current Liabilities section of the balance sheet for Bon Nebo Co. on March 31, 2015.

Answers

Answer 1

Answer:

Current Liabilities

Federal Income Taxes Payable $336,000

Advances on Magazine Subscriptions $1,593,750

Total Current Liabilities $1,929,750

Explanation:

Federal Income Taxes Payable

This is a current Liability as it falls under a period of a year. As March ends the first quarter, the quarterly tax is;

= 840,000 x 40%

= $336,000

Advances on Magazine Subscriptions

They are to deliver monthly subscriptions for 12 months to the tune of 25,000 copies which they have already been paid for. Under the Accrual system they cannot recognize this as revenue until they have fulfilled their obligation to deliver the magazines and until then, they are current Liabilities. As of end of March, they have fulfilled their obligations for 3 months leaving 9 in the year.

= 25,000 x $85 x 9/12

=$1,593,750


Related Questions

________ means that service quality depends on the quality of buyer-seller interaction during the service encounter.

Answers

Answer: interactive marketing

Explanation:

Interactive marketing is also referred to as event-driven marketing or trigger based marketing and it simply has to do with using an effective communication which is two-ways to enable the consumers connect directly with a company.

Interactive marketing means service quality depends on the quality of buyer-seller interaction during the service encounter.

A small ice cream business earns $26538 profit during the two months of July and August. This represents 35% of the annual profit. Find the annual profit. Round to the nearest whole number.

Answers

Let the annual profit be x.

profit earned in July and August is 35% of the annual profit

=> $26538 = 35% of x

=> $26538 = (35/100) × x

=> $26538 × (100/35) = x

=> $2653800/35 = x

=> $530760/7 = x

So, the profit is $530760/7.

The annual profit is $75,823.

Given that,

Two months profit is $26,538.This two month profit represents 35% of annual profit.We need to find annual profit.

According to the scenario, computation of the given data are as follows,

Let annual profit be X.

So, X [tex]\times[/tex] 35% = 26,538

X = 26,538 [tex]\div[/tex] 0.35

X = 75,822.86 or 75,823

Hence annual profit = $75,823.

Learn more : https://brainly.com/question/21003301

People decide to save 20 percent of their incomes. The value of the marginal propensity to consume is ________ and the value of the spending multiplier is ________.

Answers

Answer: 0.8; 5

Explanation:

From the question, we are informed that people decide to save 20 percent of their incomes. We should note that the addition of the marginal prospensity to consume(MPC) and the marginal prospensity to save(MPS) will be equal to 1.

Therefore, the value of the marginal propensity to consume will be:

= 1 - 20%

= 1 - 0.2

= 0.8

The value of the spending multiplier will be calculated as:

= 1/MPS

= 1/0.2

= 5

​What is the relationship between total surplus and economic efficiency?

Answers

Answer: When total surplus gets maximized, then economy meet economic efficiency.

Explanation:

Economic efficiency is described as a thinking that there is one possible way to make situation better by imposing a cost on another.

Total surplus is described as the sum of producer and consumer surplus.

It gets maximized in a perfect competition (hit free-market equilibrium).

i.e. It gets maximized when both consumer and producer surplus is maximum, and then the economy meet economic efficiency.

The company currently markets McDog T-bone, Lapdog Lunchtreats, Rover's Potroast, and Puppy Porterhouse in the dog food market. Prime Cuts will be an addition to the

Answers

Answer:

company's product line in the dog food market

Explanation:

In the description provided, it can be said that Prime Cuts will be an addition to the company's product line in the dog food market. A product line is a group of related products all marketed under a single brand name and are sold by the same company to the same targeted group of consumers. Such as in this scenario, all of the products listed are dog treats/food with different ingredients and are all sold by the same company to people looking for dog food.

g An arbitrage opportunity arises when... Group of answer choices An investment has a high risk-return ratio. disparity between 2 or more prices allow investors to yield a sure profit the risk-free rate generates a positive alpha. a net investment is taken place within a portfolio

Answers

Answer:

disparity between 2 or more prices allow investors to yield a sure profit

Explanation:

Arbitrage is defined as the practice where there is simultaneous buying and selling of an asset so as to benefit from a price difference.

Usually the price differences occur in different markets, so the arbitrator acts as a supplier of the goods to market where goods are to be sold.

For example if a company buys fertiliser from a whole seller and immediately sells the goods to a farmer's cooperative at higher price this is arbitrage.

So abitrage opportunity is when disparity between 2 or more prices allow investors to yield a sure profit

Suppose the Federal Reserve purchases $1,000,000 worth of foreign assets.
a. if the Federal Reserve purchases the foreign assets with 51,000,000 in currency, show the effect of this open market operation, using T-accounts. What happens to the monetary base?
b. if the Federal Reserve purchases the foreign assets by selling 51,000,000 in T-bills, show the effect of this open market operation, using T-accounts. What happens to the monetary base?

Answers

Answer:

A. Federal Reserve

               Assets                                 Liabilities

Foreign Assets $1,000,000       Currency in circulation $51,000,000

The federal liabilities increase by $51,000,000 in currency because it uses that money to purchase foreign assets which increase the foreign assets category by an equivalent amount. The monetary base is defined as the sum of currency circulating in the public and commercial banks reserve with the central bank

Since, the currency in circulation has increased. Thus, the monetary base will increase by $51,000,000

B. Federal Reserve

               Assets                            Liabilities

Securities T-bill - $51,000,000

Foreign Assets $1,000,000

The federal is basically swapping T-bills with foreign assets. It did not use currency to make this purchase and the composition of assets changes, but the total does not.

Thus, the monetary base does not change

Perkins Company own 85% of Sheraton Company. Perkins Company sells merchandise to Sheraton Company at 20% above cost. During 2008 and 2009, such sales amounted to $450,000 and $486,000, respectively. At the end of each year, Sheraton Company had in its inventory one-third of the amount of goods purchased from Perkins during that year.
Prepare the workpaper entries necessary to eliminate the effects of the intercompany sales for 2008 and 2009.

Answers

Answer:

2008

Correct Overstatement

Cost of Sales $450,000 (debit)

Revenue $450,000 (credit)

Correct Unrealized Profit in Inventory

Cost of Sales $25,000 (debit)

Inventory $25,000 (credit)

2009

Adjustments of Opening Balances

Retained Earnings $25,000 (debit)

Cost of Sales $25,000 (credit)

Correct Overstatement

Cost of Sales $486,000 (debit)

Revenue $486,000 (credit)

Correct Unrealized Profit in Inventory

Cost of Sales $27,000 (debit)

Inventory $27,000 (credit)

Explanation:

The Sale of merchandise by Perkins Company (Parent) to Sheraton Company (Subsidiary) is an Intragroup transaction since the companies form a group.

This results in the Cost of Goods Sold and Revenue being overstated for each intra-sale transaction and an unrealized profit resulting in the inventory that has not been sold at the end of the period.

The above are the necessary adjustments that are required to correct the overstatement and unrealized profits.

Coney Island Entertainment issues $1,300,000 of 5% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year.
Calculate the issue price of a bond and complete the first three rows of an amortization schedule when:
Required:
1. The market interest rate is 5% and the bonds issue at face amount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)
Issue price
Date Cash Paid Interest Expense Increase in Carrying value Carrying value
1/1
6/30
13/31
2. The market interest rate is 6% and the bonds issue at a discount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)
3. The market interest rate is 4% and the bonds issue at a premium. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)

Answers

Answer:

1) The market interest rate is 5% and the bonds issue at face amount.

Dr Cash 1,300,000

    Cr Bonds payable 1,300,000

Year         Interest payment       Book value of bonds

June/1          $32,500                 $1,300,000

Dec/1            $32,500                 $1,300,000

June/2         $32,500                 $1,300,000

2) The market interest rate is 6% and the bonds issue at a discount.

price of bonds:

PV of face value = $1,300,000 / (1 + 3%)³⁰ = $535,582.79

PV of coupons = $32,500 x 19.600 (PV annuity factor, 3%, 30 periods) = $637,000

market price = $1,172,582.79

Dr Cash 1,172,582.79

Dr Discount on bonds payable 127,417.21

    Cr Bonds payable 1,300,000

discount amortization per coupon payment = $127,417.21 / 30 = $4,247.24

Year     Cash paid      Interest        Amortization       Bond           Book

                                   expense      bond discount    discount      value

June/1   $32,500   $36,747.24     $4,247.24     $123,169.97   $1,176,830.03

Dec/1    $32,500   $36,747.24     $4,247.24     $118,922.73    $1,181,077.27

June/2  $32,500   $36,747.24     $4,247.24     $114,675.49   $1,185,324.51

3. The market interest rate is 4% and the bonds issue at a premium.

price of bonds:

PV of face value = $1,300,000 / (1 + 2%)³⁰ = $717,692.16

PV of coupons = $32,500 x 22.396 (PV annuity factor, 2%, 30 periods) = $727,870

market price = $1,445,562.16

Dr Cash 1,445,562.16

    Cr Bonds payable 1,300,000

    Cr Premium on bonds payable 145,562.16

discount amortization per coupon payment = $145,562.16 / 30 = $4,852.07

Year     Cash paid      Interest        Amortization       Bond           Book

                                   expense      bond discount    premium     value

June/1   $32,500   $27,647.93     $4,852.07    $140,710.09   $1,440,710.09

Dec/1    $32,500   $27,647.93     $4,852.07    $135,858.02   $1,435,858.02

June/2  $32,500   $27,647.93     $4,852.07    $131,005.95   $1,431,005.95

A small distribution organization uses a payroll company to provide employee compensation services and keep timesheet records and employee attendance history. This situation is an example of

Answers

Complete Question:

A small distribution organization uses a payroll company to provide employee compensation services and keep timesheet records and employee attendance history. This situation is an example of?

Group of answer choices.

A. Offshoring

B. Centralized work surveillance.

C. Outsourcing.

D. Telecommuting.

Answer:

Outsourcing.

Explanation:

When a small distribution organization uses a payroll company to provide employee compensation services and keep timesheet records and employee attendance history. This situation is an example of outsourcing.

Outsourcing can be defined as a contractual agreement in which a company contracts another firm (third-party) to be responsible for providing certain job functions, tasks or services rather than use employees or departments within the company.

In this scenario, the outsourcing firm or company is saddled with the responsibility of providing employees compensation services, keep timesheet records, and manage the attendance history of employees working at the outsourced distribution organization.

Ballpark has shares of par common stock outstanding. Ballpark announces a stock split of for1. What is the effect of the​ split?

Answers

Answer:

The answer is 'it increases the number of shares outstanding'

Explanation:

Stock split increases the number of shares outstanding. It causes dilution of earnings per share.

For example, ABC Inc. has 50,000 shares outstanding and it announces a stock split of 3-for- 1.

This means that any shareholder that has 1 will exchange that 1 share for 3 shares. So at the end of the stock split the total number of shares outstanding will be 150,000 shares (50,000 x 3)

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

Answers

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

Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May. Estimated inventory (units), May 1 30,000 Desired inventory (units), May 31 25,000 Expected sales volume (units): South region 20,000 West region 40,000 North region 20,000 Unit sales price $10 a.85,000 b.105,000 c.75,000 d.80,000

Answers

Answer:

Production= 75,000 units

Explanation:

Giving the following information:

Estimated inventory (units), May 1 30,000

Desired inventory (units), May 31 25,000

Expected sales volume (units):

South region 20,000

West region 40,000

North region 20,000

To calculate the production for May, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

Production= (20,000 + 40,000 + 20,000) + 25,000 - 30,000

Production= 75,000 units

Dunstreet’s Department Store would like to develop an inventory ordering policy of a 95 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets.

Demand for white percale sheets is 5,000 per year. The store is open 365 days per year. Every two weeks (14 days) inventory is counted and a new order is placed. It takes 10 days for the sheets to be delivered. Standard deviation of demand for the sheets is five per day. There are currently 150 sheets on hand.

How many sheets should you order?

Answers

Answer:

The number of sheets you should order is 219 sheets.

Explanation:

Before we can determine the number sheets to order, we need to first calculate the targeted number of sheet as follows:

TN = DD * (LT + RT) + z + SDD * [tex]\sqrt{LT + RT}[/tex] .......................... (1)

Where;

TN = Targeted number of sheets = ?

DD = Daily demand = 5,000 / 365 = 13.70

LT = Lead time = 10

RT = Review time or stock taking time = 14

SDD = Standard Deviation of Daily Demand = 5

z = 1.64

Note: Since Dunstreet’s Department Store would like to develop an inventory ordering policy of a 95 percent probability of not stocking out, the z is determined by just typing the function =NORM.S.INV(0.95) in the Microsoft Excel to obtain the 1.64.

Substituting the values into equation (1), we have:

TN = 13.70 * (10 + 14) + 1.64 * 5 * [tex]\sqrt{10+14}[/tex]

TN = 369 approximately

Since there are currently 150 sheets on hand, the number of sheets you should order can be determined as follows:

Number of sheet to order = TS - Number of sheets on hand = 369 - 150 = 219 sheets

Therefore, the number of sheets you should order is 219 sheets.

Answer:

219 sheets

Explanation:

The computation of the number of sheets ordered is computed by applying the following formula

Number of sheets ordered is

= Average daily demand × (Lead time + time taken) + Service probability × standard deviation in lead time - present inventory level

where,

Standard deviation in lead time is

= [tex]\sqrt{10+14(5)}[/tex]

= 24.49

And, the service probability level could be find out by applying the =NORMSINV(0.95) in excel so the value of z is 1.64

And, all other things would remain the same

= 5,000 ÷ 365 days × (10 + 14) + (1.64) (24.49) - 150

= 219 sheets

Which of the following ratios indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?
A. Margin of safety ratio
B. Costs and expenses ratio
C. Profit ratio

Answers

Answer:

The correct answer is the option A: Margin of safety ratio.

Explanation:

To begin with, the name of "Margin of Safety", in the field of business and accounting, is refered to a ratio whose main purpose is to establish the point in where the company knows that it has to sale obligately due to the fact that at that point the company can be sure that they have covered the fixed costs of it and after that point every sale will became a profit for the company. So that is why that this ratio indicates the percentage of each sales dollar that is available to cover those costs.

Rose dies with passive activity property having an adjusted basis of $156,400, suspended losses of $50,048, and a fair market value at the date of her death of $218,960. Of the $50,048 suspended loss existing at the time of Rose's death, how much is deductible on her final return or by the beneficiary

Answers

Answer:

12512 dollars that she have

Suppose a good has a downward-sloping, straight-line demand curve. If the price elasticity of demand is 2.5 when the price is $10 per unit, then the price elasticity of demand when the price is $7 per unit could be a. approaching infinity. b. 2.7. c. 2.5. d. 1.7.

Answers

Answer:

c. 2.5

Explanation:

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

Price elasticity of demand = percentage change in quantity demanded / percentage change in price

If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.  

the price elasticity would not change as a result of the change

In which of the following situations would a delegation of contractual duties be allowed? Multiple Choice A painter hired to paint your home. A sculptor hired to sculpt your bust. An actor hired to perform in a play. A surgeon performing brain surgery.

Answers

Answer:

A painter hired to paint your home.

Explanation:

Delegation of contractual duty occurs when the individual that is supposed to perform a task transfers the responsibility of performing the task to another person.

For example if someone is supposed to paint a house but he has other engagements. He can delegate to another painter to perform the painting.

Delegation does not transfer contractual rights as the original person still collects payment for performance of the task.

Usually delegation can occur for tasks that do not require special skill and can be performed by anyone.

In the other scenarios special skill is required so delegation will not be usually allowed.

The advantages of using typedef do not include:a. Making programs more portable by allowing data types to be easily changed to meet system specifications.b. Making type names shorter.c. Making programs more readable.d. Increasing the efficiency of accessing struct member variables.

Answers

Answer:

d. Increasing the efficiency of accessing struct member variables.

Explanation:

In the programming language C and C++ there is a keyword i.e typedef that function is to provide a new name. It is to be used to develop an extra name for the other data type but it does not develop a new data type

Here the advantage of using typedef is as follows

1. It allows the data types for meeting the specifications of the system

2. The name would become shorter

3. Readable program

but it does not increase the efficiency

Hence, the last option is correct

During 2021, Deluxe Leather Goods issued 707,000 coupons which entitles the customer to a $5.00 cash refund when the coupon is submitted at the time of any future purchase. Deluxe estimates that 71% of the coupons will be redeemed. 261,000 coupons had been processed during 2021. Deluxe recognizes coupon expense in the period coupons are issued. At December 31, 2021, Deluxe should report a liability for unredeemed coupons of:

Answers

Answer:

Deluxe should report a liability for unredeemed coupons of $1,204,850

Explanation:

Estimated coupons to be redeemed     $501,970

(707,000 * 71%)

Less: Coupons redeemed                       $261,000

Coupons unredeemed                             $240,970

X Cost per Coupon                                      5.00    

Liability for unredeemed Coupons       $1,204,850

What problems does the Singaporean system of emphasizing health savings accounts most directly address?

Answers

Answer:

I. The funding gap in the health care sector

II. Universal health care coverage

III. Access to medical care

Explanation:

The Singaporean health care savings account system has really helped to solve the problems associated with health care funding in the country, it has also helped the country to attain a universal health care for its citizens as it was rated in 2014 by Bloomberg as the country with the most efficient health care system in the world. The system has helped to address the issues of non-catastrophic health outcomes and helped to increase the life expectancy of its citizens.

During 2018, its first year of operations, Pave Construction provides services on account of $126,000. By the end of 2018, cash collections on these accounts total $93,000. Pave estimates that 20% of the uncollected accounts will be bad debts. Required: a. Record the adjustment for uncollectible accounts on December 31, 2018.b. Calculate the net realizable value of accounts receivable.

Answers

Answer: Please see answer in the explanation column

Explanation:

Account receivables = Total account - cash collections

                                         $126,000 -- $93,000

                                  = $33,000

Uncollectible Accounts = 20% x 33,000 = $6,600

a) Journal to record the adjustment for uncollectible accounts

Date                  Account                       Debit                Credit

Dec 31, 2018   Bad debts expense   $6,600  

Allowance for uncollectible accounts                          $6,600

B) net realizable value of accounts receivable= Total Accounts Receivable - Allowance for uncollectible accounts

= $33,000 - $6,600= $26400

Using the same information from before, please calculate the WACC of Correct Inc. assuming a risk free rate of 2.5%, a company Beta of 1.2 and a market risk premium of 6%.

Answers

Answer:

WACC = 21.7%

Explanation:

The firm is an all-equity finance firm which implies that the company uses only equity funds to finance its its operation without the use of debt. Therefore, the cost of the equity of the firm would be the same as its cost of capital (WACC)

The WACC can be determined using the the capital asset pricing model (CAPM). The CAPM relates the price of a share to the market risk or systematic risk. The systematic risk is that which affects all the all the economic agents, e.g inflation, interest rate e.t.c  

Using the CAPM , the required rate of return is given as follows:  

E(r)= Rf +β(Rm-Rf)  

E(r) - required return

β- Beta

Rm- Return on market  

Rf- Risk-free rate

Rm-Rf- Market risk premium

DATA

E(r) =? , Rf- 2.5%, Rm-Rf- 6% , β- 1.2

E(r) = 2.5% + 1.2× (16%) = 21.7 %

Cost of equity = 21.7%

WACC = 21.7%

A project requires an investment of $10 million and offers an annual after-tax cash flow of $1,250,000 indefinitely. If the firm's WACC is 12.5% and the project is riskier than the firm's average projects, should it be accepted?

Answers

Answer:

No.It should not be Accepted.

Explanation:

Weighted Average Cost of Capital (WACC) is the minimum return that is expected from a project. It shows the risk of the entity. If a project gives a return below the WACC, it is regarded as very risk and must not be accepted.

Cash $38,600 Short-term investments 9,000 Accounts receivable 40,000 Inventory 240,000 Prepaid expenses 17,400 Accounts payable 87,200 Other current payables 22,300 Multiple Choice 0.96 and 3.96. 2.99 and 1.25. 3.15 and 0.80. 3.15 and 0.32.

Answers

Answer:

Current ratio and Acid-test ratio (3.15 and 0.80)

Explanation:

Note: The missing part of the question is "Using the following year-end information for Bauman, LLC, calculate the current ratio and acid-test ratio:"

i. Current ratio = Current assets/Current liabilities

Current assets = 38,600 + 9,000 + 40,000 + 240,000 + 17,400

Current assets = $345,000

Current liabilities= 87,200 + 22,300

Current liabilities = $109,500

Current ratio = $345,000 / $109,500

Current ratio = 3.15

ii. Acid-test ratio = {Current assets - (Inventory + Prepaid expenses)}/Current liabilities

Acid-test ratio = 345,000- (240,000  + 17,400 ) / 109,500

Acid-test ratio = 87,600 / 109,500

Acid-test ratio = 0.80

You have risen through the ranks of a coffee​ comany, from the lowly​ green-apron barista to the coveted black​ apron, and all the way to CFO. A quick internet check shows that your​ company's beta is 0.6. The​ risk-free rate is 4.1% and you believe the market risk premium to be 5.2%. What is your best estimate of​ investors' expected return on your​ company's stock​ (its cost of equity​ capital)?

Answers

Answer:

The cost of equity capital or expected rate of return is 7.22%

Explanation:

The expected rate of return or the required rate of return is the minimum rate of return required by the investors to invest in a stock or a portfolio of stock based on the systematic risk that a stock carries as represented by a stock's beta. The expected rate of return (r) of a stock can be calculated using the CAPM equation.

The CAPM equation is,

r = rRF + Beta * rpM

Where,

rRF is the risk free raterpM is the risk premium on market

r = 0.041 + 0.6 * 0.052

r = 0.0722 or 7.22%

Your Competitive Intelligence team is predicting that the Digby Company will invest in adding capacity to their Deal product this year. Assume Digby's product Deal invests in increasing its capacity by 10% this year. Because of this new information, your company anticipates all other products in the Core segment will increase their capacity by the same amount. How much can the industry produce in the Core segment the next year

Answers

Answer:

13,288

Explanation:

The computation of the amount that industry produced in the core segment is shown below:

It can be determined in two ways i.e.

= 6,444 + 6,444

= 13,288

And, the other method is

= 6,444 × 2

= 13,288

In both the methods, the answer would remain the same

Hence, the 13,288 should be produced by the industry for the next year production

Byrd Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 205,000 shares of stock outstanding. Under Plan II, there would be 125,000 shares of stock outstanding and $1.73 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes. a. Use MM Proposition I to find the price per share. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the value of the firm under each of the two proposed plans? ((Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)

Answers

Answer:

a) $21.63

b) $4,433,125

Explanation:

plan I, total stocks outstanding = 205,000

plan II, total stocks outstanding = 125,000, and $1,730,000 in debt ($1,730,000 x 8% = $138,400 in interests)

under MM proposition I, a firm's total value is equal whether it uses external financing (debt) or not:

205,000P₀ = 125,000P₀ + $1,730,000

205,000P₀ - 125,000P₀ = $1,730,000

80,000P₀ = $1,730,000

P₀ = $1,730,000 / 80,000 = $21.625 = $21.63

the firm's total value = $21.625 x 205,000 = $4,433,125

You are organizing an executive event for the company you work for. Write a letter to the person in charge of a venue that you are considering for the event and ask for detailed information regarding dates, services and costs. Be thorough and consider things such as: Entertainment Food Beverages Valet Cost Etc

Answers

Answer:

                                  Mi-Tech Information and Communication INC,

                                  43 D-Drive, Michigan,

                                  USA.

                                  August 8th, 2020.

The Empire Event Center INC,

3 Boulevard avenue, Michigan,

Sir,

            INFORMATION INQUIRY FOR HOSTING AN EVENT

As the communication officer of the above named company, I wish to bring to your notice about our aim of hosing our end of the business year party using your facility. This is based on the agreement reached by the management board.

Unfortunately, due to lack of detailed information and financial implication involved, I was asked to write to your company. The information I need from your company include:

1. The cost of the event Venue

2. The cost of catering of food for 200 people in the venue. Drinks and water would be inclusive.

3. The entertainment, would it be free when renting the event venue or it would attract extra charge?

4. The valet who would render services, what are their charges like or would the cost be catered by your company?

5. The proposed date for the party is 30th and 31st December. Hope your organization is not engaged by that time?

6. What other extra services is available and which your company offers for such events we are planning to host?

7. Is there any other extra cost which my company should be aware of if we are to use your facility?

I will need to relay back to the management board the above answers to questions which I asked above. I look forward to your response soonest.

Yours sincerely,

Adam Michael (Communication officer)

For: Mi-Tech Information and Communication INC.

Explanation:

When modeling the right to develop an oil property as a real option, and in the presence of fixed costs, using oil price volatility in the option-pricing model will

Answers

Answer:

overestimate because the value of the option depends on the volatility of revenue

Explanation:

The greater the market volatility, the greater the range that would be needed to determine the option premium. This would end up causing an overestimation of the premium value.

Therefore making use of oil price volatility in the option-pricing model will overestimate as value of option is dependent on how volatile the revenue is.

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