Answer:
A $10 bill|
The funds in a savings account
A share in a publicly traded company
Your car
Explanation:
Liquidity measures how fast an asset can be converted to cash.
A $10 bill is already cash so it is the most liquid.
The funds in a savings account can be easily withdrawn from the account when needed. it is the second most liquid
The process of converting a share to cash is a little longer.
To sell a car, one has to find a ready buyer and negotiate the price. It is the least liquid
How do you short term goals differ from long-term goals
Answer:
Short term goals differ from long term goals because long term goals tend to take longer than short term goals.
Explanation:
Hope this helps!
The firm is currently an all-equity firm with assets worth $250 million and 100 million shares outstanding. The firm plans to borrow $100 million and use these funds to repurchase shares. The firm’s marginal corporate tax is 20%, and it plans to keep its outstanding debt equal to $100 million permanently. What is the lowest price per share the firm can offer and have shareholders tender their shares? A) $3.50 B) $1.50 C) $1.70 D) $2.50 E) $2.70
Answer:
C) $1.70
Explanation:
The value of the firm after the debt would be = 250 million + (20% * 100 million) = $270 million
Value of equity = Total value of firm - Value of debt
Value of equity = $270 million - $100 million
Value of equity = $170 million
The total number of share outstanding is 100 million shares
Hence, he should offer the shares at = $170 million / 100 million shares = $1.7 per share
Select the correct statement from the following,assuming Carmichael Company had a favorable direct materials price variance of $3,000 and an unfavorable direct materials usage variance of $2,000.
A) The total direct materials variance is $1,000 unfavorable.
B) The total direct materials variance is $5,000 favorable.
C) The total direct materials variance is $5,000 unfavorable.
D) The total direct materials variance is $1,000 favorable.
Answer:
Total direct material variance= $1,000 favorable
Explanation:
Giving the following information:
Company had a favorable direct materials price variance of $3,000 and an unfavorable direct materials usage variance of $2,000.
To calculate the total direct material variance, we need to use the following formula:
Total direct material variance= price variance +/- quantity variance
Total direct material variance= 3,000 - 2,000
Total direct material variance= $1,000 favorable
At the beginning of the month, the Forming Department of Martin Manufacturing had 26,000 units in inventory, 30% complete as to materials, and 15% complete as to conversion. During the month the department started 76,000 units and transferred 86,000 units to the next manufacturing department. At the end of the month, the department had 16,000 units in inventory, 90% complete as to materials and 60% complete as to conversion. If Martin Manufacturing uses the weighted average method of process costing, compute the equivalent units for materials and conversion respectively for the Forming Department.
Answer:
materials = 100,400 units and conversion = 95,600 units
Explanation:
Computation of the equivalent units of production for materials
Units completed and transferred (86,000 × 100%) = 86,000
Units in Ending Work In Process (16,000 × 90%) = 14,400
Total equivalent units of production for materials = 100,400
Computation of the equivalent units of production for conversion cost
Units completed and transferred (86,000 × 100%) = 86,000
Units in Ending Work In Process (16,000 × 60%) = 9,600
Total equivalent units of production for Conversion cost = 95,600
"Preferred stock is issued with an "anti-dilutive" covenant. If the corporation declares a 5% stock dividend, which statements are TRUE?"
Answer: B. I and IV
Explanation:
Anti-Dilutive clauses are made to ensure that when new common shares are issued, they do not reduce the value of the shares already there because new shares being issued reduces the value of individual shares.
To do this, when new shares are issued or dividends declared, the conversion price is reduced and the conversion ratio is increased so that the preferred stocks can be diluted into more shares thus keeping their value intact.
An eight-year project is estimated to cost $528,000 and have no residual value. If the straight-line depreciation method is used and the average rate of return is 18%. determine the estimated annual net income.
Answer: $48,420
Explanation:
Average rate of return = Annual Net Income/ Average Investment
Average Investment
= (Beginning value of asset - ending value) / 2
= ( 538,000 + 0)/2
= $269,000
18% = Annual Net Income/269,000
Annual Net Income = 269,000 * 18%
Annual Net Income = $48,420
When using the simple EOQ model to determine optimal order quantity, which of the following is true?
A. Order quantity increases as order cost per order decreases
B. Order quantity decreases as order cost per order increases
C. Order quantity increases as holding cost per unit per year decreases
D. Order quantity decreases as holding cost per unit per year decreases
Answer:
C. Order quantity increases as holding cost per unit per year decreases
Explanation:
the formula for calculating economic order quantity (EOQ) is:
EOQ = √(2SD/H)
S = cost per orderD = annual demandH = holding cost per unitIf holding cost per unit (H) decreases, the EOQ will increase. Whenever you are dividing, if the denominator decreases, the result will be larger.
Prepare a bank reconciliation: ABC Enterprises gathered the following information prior to reconciling their cash balance per books (internal accounting records) to the recently received bank statement for the month ending January 31, 2018: Cash per balance per books, 1/31/18 Deposits in transit NSF check Bank services charges Outstanding checks Notes Receivable collected by the bank S 1,000 Cash balance per bank, 1/31/18 $7,500 S 500 50 000'9 S $11,950 Perform the bank reconciliation: The ADJUSTED CASH BALANCE PER BOOK as of January 31, 2018:________
A) $7,950
B) $7,500
C) $6,950
D) $3,500
Answer: ADJUSTED CASH BALANCE PER BOOK as of January 31, 2018 is A) $7,950
Explanation:
ABC Enterprises reconciled cash balance per books (internal accounting records as of January 31, 2018.
Cash balance as per company book $7,500
Add:
Notes receivable collected by bank $1000
Deduct:
NSF check $500
Bank service charge $50
Adjusted Book Balance $7,950
Describe the formation process of cross-border mergers, acquisitions, and international joint ventures. What are the major differences?
Answer:
The answer is below
Explanation:
Merger is a business term that defines the major mean of concentrating businesses. It can be in two different forms, which can either be through the arrangement of a new company or through the through the unification of one or more firms into another firm.
Acquisition however is a business term that describes the purchases of a company's most or all shares, in order gain control that company, buy another company (buyer).
On the other hand, An international joint venture often referred to as IJV is a business term that describes the formation of partnership of companies based in two or more countries, without taking over the other company outright.
Hence, the formation process of a merger, acquisition and international joint venture involves the following:
1. Planning: this stage involves the signing of the letter of intent, advisor appointment, creating and documenting the timetable, transaction method and expert report
2. Resolution: this stage is also vital which involves meetings of Board of Director, extraordinary shareholder, identification of opposition party and go ahead from the antitrust authority.
3. Implementation: this is a stage involving the enrolment of the merger deed in the Company Register.
A bank of 10 machines requires regular periodic service. Machine running time and service time are both exponential. what is the optimal number of operators for this bank of machines
Answer:
hello your question lacks some details below is the complete question
A bank of 10 machines requires regular periodic service. Machine running time and service time are both exponential. Machines run for an average of 44 minutes between service requirements, and service time averages six minutes per machine
If operators cost $15 per hour in wages and fringe benefits and machine downtime costs $75 per hour in lost production, what is the optimal number of operators for this bank of machines?
A 1
B 2
C 3
D 4
E 5
Answer : 3 operators ( c )
Explanation:
number of machines = 10
machine run time for each = 44 minutes
service time = 6 minutes
cost of each operator = $15 per hour
loss during machine down time = $75 per hour
hence the optimal number of operators
The total minutes the machine would work in a hour
= (60 - 6) * 10 = 540 minutes
assuming we assign 180 minutes to each operator then each operator would cost = 15 * 3 = $45
for three operators that would be = 45 * 3 = $135
lost inquired during down time
= 6 minutes * 10 = 60 minutes i.e the total cost inquired per hour = $75
hence 3 operators would be an optimal number of operators because the operators would work lesser hours and more efficiently as well
You purchase a Treasury inflation-protected note with an original principal amount of $1,000,000 and a 2.8% annual coupon (paid semiannually). What will the first coupon payment be if the semiannual inflation over the first 6 months is 1.4%?
Answer:
$14,159.60
Explanation:
Inflation-adjusted principal = Principal * (1+inflation)
Inflation-adjusted principal = 1,000,000 * (1+1.14%)
Inflation-adjusted principal = 1,000,000 * 1.0114
Inflation-adjusted principal = $1,011,400
Now, the coupon rate is given as 2.8% or 1.4% semi annually.
Coupon Payment = Coupon rate * Inflation-Adjusted Principal
Coupon Payment = 1.4% * $1,011,400
Coupon Payment = $14,159.60
Therefore, the first coupon payment is $14,159.60
Benace Parts and Supply makes a variety of car parts. The company produces A90 parts each year. Each A90 sells for and has a contribution margin of . Currently, of fixed manufacturing overhead is allocated to the A90 product line. If Benace Parts and Supply discontinues the A90 product line, of fixed manufacturing overhead costs would be avoided. What would be the impact on total operating income if the A90 product line were to be discontinued?
Answer:
The total Operating income will decrease by $5,000
Explanation:
Note that some word are missing and are inserted as written below:
"Benace Parts and Supply makes a variety of car parts. The company produces 6,000 A90 parts each year. Each A90 sells for $7 and has a contribution margin of $2. Currently, $16,000 of fixed manufacturing overhead is allocated to the A90 product line. If Benace Parts and Supply discontinues the A90 product line, $7,000 of fixed manufacturing overhead costs would be avoided. What would be the impact on total operating income if the A90 product line were to be discontinued? "
Solution:
Loss of Contribution margin if the A90 product line discontinued = Units * Contribution margin per unit
= 6,000 units * $2
= $12,000
Saving of avoidable fixed Overhead = $7,000
Decrease in Total Operating Income = Loss of Contribution margin - Saving of avoidable fixed Overhead
= $12,000 - $7.000
= $5,000 (Decrease)
Hence, the total Operating income will decrease by $5,000
Repudiation is a form of breach of contract which always entitles the innocent party to cancel the contract.a. Trueb. False
Answer: True
Explanation:
Repudiation of a contract means that one party is unwilling or has resigned not to perform their duties as expressed in the contract.
As this is the basis for which the contract was entered to, refusing to do it entitles the other party to cancel the contract as it no longer serves its purpose.
Baden Corporation entered into a lease agreement for 100 photocopy machines for its corporate headquarters. The lease agreement qualifies as an operating lease except there is a bargain purchase option. After the 5-year lease term, the corporation can purchase each copier for $1,000, when the anticipated fair value is $2,500. Jerry Suffolk, the financial vice president, thinks the financial statements must recognize the lease agreement as a finance lease because of the bargain purchase option. The controller, Diane Buchanan, disagrees: "Although I don’t know much about the copiers themselves, there is a way to avoid recording the lease liability." She argues that the corporation might claim that the copier technology advances rapidly and that by the end of the lease term, the machines will most likely not be worth the $1,000 bargain price.
(a) What ethical issue is at stake?
(b) Should the controller’s argument be accepted if she does not really know much about copier technology? Would it make a difference if the controller were knowledgeable about the rate of change in copier technology?
(c) What should Suffolk do?
Answer:
Answer is explained below
Explanation:
A)
The ethical issue at stake is whether to record the lease agreement for 100 photocopy machine as a finance lease or operating lease because in operating lease we don't record it as asset or liability in financial statements but in finance lease, we record both asset and liability generally at the present value of rentals payments. As the bargain option is available this lease agreement will be said to be a finance lease agreement.
B)
No without knowing much about the copier technology the argument of controller should not be accepted.
C)
Suffolk should represent lease as a financial lease but he can get the terms of lease revised as to the fair value of copier revised after the proper analysis and computation of copier value.
A firm with a cost of capital of 7% is considering two projects (they are not mutually exclusive), one expected to return 9% and a second expected to return 9.5%. Which projects should it pursue
Answer:
pursue both projects
Explanation:
The projects are not mutually exclusive thus the choice of one project does not hold back the pursuant of another (can occur at the same time).
Projects which provide a return above their cost of capital must be pursued as they are less risky.
Both projects provide the return above the costs of capital and should be pursued.
Review the Globe to determine Baldwin's current strategy. How will they seek a competitive advantage
This question is incomplete, the complete question is;
Review the Inquirer to determine Baldwin's current strategy. How will they seek a competitive advantage?
From the following list, select the top five sources of competitive advantage that Baldwin would be most likely to pursue. Select: 5 Save Answer Add additional products Offer attractive credit terms Accept lower plant utilization and higher capacities to insure sufficient capacity is available to meet demand Reduce cost of goods through TQM initiatives Seek high plant utilization, even if it risks occasional small stock outs Increase demand through TQM initiatives Seek excellent product designs, high awareness, and high accessibility Seek high automation levels Seek the lowest price in their target market while maintaining a competitive contribution margin Reduce labor costs through training and recruitment.
Answer:
1) Reduce labor costs through training and recruitment
2) Seek the lowest price in their target market while maintaining a competitive contribution margin
3) Reduce cost of goods through TQM initiatives
4) Seek excellent product designs, high awareness, and high accessibility
5) Seek high plant utilization, even if it risks occasional small stock outs
Explanations
The top resources that will help Baldwin to attain competitive advantage are shown below
Reduce labor costs through training and recruitment- Lower labor costs would help Baldwin maintain higher profit levels, giving Baldwin an edge over its competitors. This would be an example of a Cost Leadership strategy.
Seek the lowest price in their target market while maintaining a competitive contribution margin- Baldwin can focus on target markets and offer its products/ services at the lowest prices with competitive. This would help Baldwin get a very good reach and hold on the target markets, and would get ahead of its customers in the process. This would be an example of a Focus strategy.
Reduce cost of goods through TQM initiatives- Lower cost of goods would mean higher profits for Baldwin, giving it a competitive edge. This would be an example of a Cost Leadership strategy.
Seek excellent product designs, high awareness, and high accessibility- With excellent product designs, high awareness and accessibility, Baldwin would be able to make its products stand out from its competitors' products. When customers see a product which is different from others, which offers good benefits and which is easily available, they definitely get interested in that product and may even pay a little more to buy the product. This is an example of a Differential strategy.
Seek high plant utilization, even if it risks occasional small stock outs- With high plant utilization, Baldwin can optimize its fixed costs, thereby lowering total costs which shall give it a competitive edge. This again would be an example of a Cost Leadership strategy. Losses due to occasional small stock outs would be compensated by high plant utilization.
Describe three types of resources the founders of Airbnb needed most to start the company and explain how they acquired these resources
Answer:
The newly formed company must have following three resources as per the world economic forum research that Airbnb must acquire before starting a business:
Access to MarketsHuman ResourceFunding ResourcesExplanation:
The Access to Markets means you have access to wider customers either through distribution channels or marketing channels. The domestic demand of the product not only supports the company but will also help in developing product differentiation and increased foreign customers.
The Human Capital includes the talented employees that the company would require to solve its evolving problems with great creative ideas. The technical employees plays very important role at the start of the business. The management that manages the business operation are the second most important human resource for the company.
The startup that has Access to Funds can take better decisions because the decision totally differs when you have funds in hand. The reason is that when you have money in hand you will invest in better future and when you don't have money access then you will try to survive which means business growth is not possible without investment. It is the most difficult resource to obtain for a startup.
The formed company must have following three resources as per the world economic forum research that Airbnb must acquire before starting a business: Access to Markets, Human Resource and Funding Resources.
What are the three types of resources the founders of Airbnb?The Access to Markets means you have access to wider customers either through distribution channels or marketing channels.
The Human Capital includes the talented employees that the company would require to solve its evolving problems with great creative ideas.
The startup that has Access to Funds can take better decisions because the decision totally differs when you have funds in hand.
Learn more about resources, refer to the link:
https://brainly.com/question/12152594
Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay 1/3 of the sales price of a jet ski when they initially purchase the ski, and then pay another 1/3 each year for the next two years. Because Lake has little information about collectibility of these receivables, they use the installment method for revenue recognition. In 2010 Lake began operations and sold jet skis with a total price of $900,000 that cost Lake $450,000. Lake collected $300,000 in 2010, $300,000 in 2011, and $300,000 in 2012 associated with those sales. In 2011 Lake sold jet skis with a total price of $1,500,000 that cost Lake $900,000. Lake collected $500,000 in 2011, $400,000 in 2012, and $400,000 in 2013 associated with those sales. In 2013 Lake also repossessed $200,000 of jet skis that were sold in 2011. Those jet skis had a fair value of $75,000 at the time they were repossessed.
1) In 2010, Lake would recognize realized gross profit of:______.
a) $0.
b) $450,000.
c) $300,000.
d) $150,000
2) In 2012, Lake would recgonize a realized gross profit of:_______.
a) $700,000.
b) $310,000.
c) $450,000.
d) $0
3) In 2013, Lake would record a lost on repossessions of:______.
a) $80,000.
b) $45,000.
c) $200,000.
d) $120,000.
4) In its December 31, 2011, balance sheet, Lake would report:_______.
a) deferred gross profit of $700,000.
b) installement receivables (net) of $900,000.
c) installment receivables (net) of $750,000.
d) deferred gross profit of $1,500,000.
Answer:
1) In 2010, Lake would recognize realized gross profit of:______.
a) $0.
Revenue for calculating gross profit is only recognized when the cost of goods sold (COGS) has been fully recovered.
2) In 2012, Lake would recognize a realized gross profit of:_______.
c) $450,000.
gross profit related to 2010 sales = $900,000 - $450,000 (remaining COGS) = $450,000
gross profit related to 2011 sales = $900,000 - $900,000 = $0
3) In 2013, Lake would record a lost on repossessions of:______.
c) $200,000.
4) In its December 31, 2011, balance sheet, Lake would report:_______.
b) installment receivables (net) of $900,000.
total installments receivables = $300,000 + $1,000,000 = $1,300,000
remaining COGS from 2011 sales = $400,000
installment receivables (net) = $1,300,000 - $400,000 = $900,000
Chiller Company has credit sales of $5.60 million for year 2013. Chiller estimates that 1.32% of the credit sales will not be collected. Historically, 4% of outstanding accounts receivable is uncollectible. On December 31, 2013, the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $3,561. Chiller prepared a schedule of its December 31, 2013, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here:
Answer:
$59,045.80
Explanation:
The following information was missing:
Accounts Receivable total $1,565,170
Assuming the company uses the percent of accounts receivable method, what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry?
total uncollectible debt = $1,565,170 x 4% = $62,606.80
since the account balance of the allowance for doubtful accounts is $3,561 (credit), the adjusting entry should be:
December 31, 2013, bad debt expense
Dr Bad debt expense (= $62,606.80 - $3,561) 59,045.80
Cr Allowance for doubtful accounts 59,045.80
Open market operations are typically repurchase agreements. What does this tell you about the likely volume of defensive open market operations relative to the volume of dynamic open market operations?
Answer: • Defensive operations are usually common and that the dynamic open market operations is smaller than the volume of the defensive open market operations.
Explanation:
Open market operations is when treasury bills and securities are on sale in an economy. It is typically bought by the central bank to ensure that money is available in an economy.
Open market operations are typically repurchase agreements tells us that defensive operations are usually common and that the dynamic open market operations is smaller than the volume of the defensive open market operations.
If cost of goods sold under FIFO was $8,000 and was $10,000 under LIFO, assuming a tax rate of 40%, how much tax savings resulted from using LIFO
Answer:
$800
Explanation:
The computation of the tax saving from using LIFO is shown below:
= Cost of goods sold under LIFO × tax rate - Cost of goods sold under FIFO × tax rate
= $10,000 × 40% - $8,000 × 40%
= $4,000 - $3,200
= $800
By applying the above formula, the tax saving resulted from using the LIFO is $800 and the same is to be considered
SFX Paintball Games, Inc., and Truck & Trailer Delivery Corporation sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is
Answer:
A liquidated damages clause.
Explanation:
The liquidated damage clause is the clause in which the party who has breach the contract or who has delay the completion of the contract has to pay the damages for the liquidation of the contract
here in the given situation, since the company has an agreement with the other party and if anyone party breach the contract then the price they paid would be $1,000 approx
Therefore this represents the liquidated damages clause
Consider the following cash flows of two projects for Fontana Rubber Parts Company. Assume the discount rate for Fontana Rubber Parts is 14%.
Year Dry Prepreg Solvent Prepreg.
0 -$30,000 -$90,000
1 10,000 28,000
2 10,000 28,000
3 10,000 28,000
4 10,000 28,000
5 10,000 28,000
a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project
b. Assuming the projects are independent, which one(s) would you recommend?
c. If the projects are mutually exclusive, which would you recommend?
Answer:
Year Dry Prepreg discounted cash flow
0 -$30,000 -$30,000
1 10,000 8,772
2 10,000 7,695
3 10,000 6,750
4 10,000 5,921
5 10,000 5,194
Year Solvent Prepreg. discounted cash flow
0 -$90,000 -$90,000
1 28,000 24,561
2 28,000 21,545
3 28,000 18,899
4 28,000 16,578
5 28,000 14,542
a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project
Dry Prepreg
NPV = $4,330
IRR = 19.86%
MIRR = 17.12%
payback = 3 years
discounted payback = 4.17 years
Solvent Prepreg
NPV = $6,130
IRR = 16.80%
MIRR = 15.51%
payback = 3.21 years
discounted payback = 4.58 years
b. Assuming the projects are independent, which one(s) would you recommend?
both projects, since their NPV is positivec. If the projects are mutually exclusive, which would you recommend?
Dry prepreg becuase its IRR, MIRR are higher, and its payback and discounted payback periods are shorter.
The firm has total fixed costs of $40 and a constant marginal cost of $2 per unit. We can conclude that
Here's the full question;
The firm has total fixed costs of $40 and a constant marginal cost of $2 per unit. We can conclude that
a. firms will exit this market.
b. firms will enter this market.
c. this firm is operating at its efficient scale.
d. this market is in long-run equilibrium
Answer:
d. this market is in long-run equilibrium
Explanation:
Long-run equilibrium occurs when a firm records a marginal revenue that is equal to its marginal costs.
In the firm above we noticed that the firm has total fixed costs of $40 and a constant marginal cost of $2 per unit, by multiplying the marginal cost of $2 by 20 units (20*2) as found in the attached image, we arrived at a value which equals the total fixed cost.
ou are using earned value analysis to track your project's progress. In your project, earned value is higher than planned value and actual value. That means the project is _____ schedule and _____ budget.
Answer:
B. ahead of; under
Explanation:
Earned value analysis is the process to check the status of the project and the analysis, evaluation is to be done. It can be done between the earned value with the actual cost incurred and with the planned value
Here Planned value refers to the value i.e. to be permitted and to be completed within the prescribed time. Here earned value is compared with the planned value to check the variance schedule of the project
Here the actual value is the value that is actually spent or incurred till date. Here the earned value compared with the actual value so that any variance related to cost could be checked
And, the earned value is the value of the work completed till date. It could be in terms of costing and scheduling.
So if the earned value is more than the planned value and the actual value so the project is ahead and it is under budget
hence, option B is correct
How much would Israel’s nominal GDP growth be next year if it experienced real GDP growth next year the same as its average over the past 50 years, with an inflation rate of 3% and population growth of 1%?
Answer:
Nominal GDP growth = 7.25%
Explanation:
Given:
Inflation rate = 3%
Population growth = 1%
Note:
Growth rate in real GDP (Not given) = 3.25%
Find:
Nominal GDP growth
Computation:
Nominal GDP growth = Inflation rate + Population growth + Growth rate in real GDP
Nominal GDP growth = 3% + 1% + 3.25%
Nominal GDP growth = 7.25%
provides its employees two weeks of paid vacation per year. As of December 31, 70 employees have earned two weeks of vacation time to be taken the following year. If the average weekly salary for these employees is $890, what is the required journal entry to accrue compensated absences?
Answer and Explanation:
The journal entry is shown below:
Salary and Wages Expense Dr. $124,600 (70 employees × 2 weeks × $890)
To Salaries and wages payable $124,600
(Being the compensation absences accrued)
For recording this we debited the salary and wages expense and credited the salaries and wages payable as it increased the expenses and liabilities.
Which of the following is an advantage of pursuing an unrelated diversification strategy over a related diversification strategy?
a. There is greater coordination between business units.
b. Functional competencies would be useful in many different industries.
c. There are higher bureaucratic costs.
d. The company doesn't need coordination between business units.
Answer:
Correct Answer:
b. Functional competencies would be useful in many different industries.
Explanation:
This is because, the competencies of the organization could be useful leading to its application in many different industries. For example, a company into plastic manufacturing could diversify into electric bicycle manufacturing. Their competency in plastic manufacturing could come handy due to the parts of the bicycle being manufactured made up of plastics also.
When the corporation declares a stock dividend, a stockholder's percentage ownership in the stock of the corporation:_______
A) will increase
B) can increase or decrease
C) will decrease
D) remains unchanged
You bought one of Great White Shark Repellant Co.'s 8 percent coupon bonds one year ago for $810. These bonds make annual payments and mature 14 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 11 percent. If the inflation rate was 3.4 percent over the past year, what was your total real return on investment?
Answer:
real rate of return = 4.77%
Explanation:
you purchased the bond at $810 with 14 years to maturity
now, 1 year later the bond's price is:
PV of coupon payment = $1,000 / 1.11¹³ = $257.51PV of coupon payments = $80 x 6.7499 (PV annuity factor, 11%, 13 periods) = $539.99market value = $797.50
total nominal returns = $80 (coupon payment) + ($797.50 - $810) = $67.50
the real rate of return = {[1 + ($67.50/$810)] / (1 + 3.4%)} - 1 = 4.77%