Q: Farley Inc. has perpetual preferred stock outstanding that sells for $44 a share and pays a dividend…
A: Formula Required rate of return = Annual dividend/Current stock price Where Stock price = $44 Annual…
Q: The is the better choice because the IRR for the change from is percent, which is the MARR. (Round…
A: IRR stands for Internal rate of return refers to the rate of interest at which the sum of all cash…
Q: Discuss the 10-year Bond rate of UK government as proxy of risk-free rate.
A: In finance risk free rate is a very important concept. The risk free rate means that interest rate…
Q: A man is offered two proposals to invest his money. The first offer is to invest $ 20,000 in the…
A: We need to calculate future value of both investments. Higher future value proposal will be chosen…
Q: If Phil borrows $40,000 from a loan company at an interest rate of 6.5% per year compounded weekly,…
A: Here, Loan amount = $40,000 Quarterly payment of the loan = $800 Interest rate = 6.5% compounded…
Q: The present value of the bond is $. (Round to the nearest cent.)
A: Bond valuation refers to a method which is used to compute the current value or present value (PV)…
Q: If $2,000 is withdrawn from the bank by a customer, the bank's Assets rise O Assets and liabilities…
A: When the customer withdraws money, in his books, the cash account is debited and bank account is…
Q: The initial cost of painting the Golden Gate Bridge is $400,000. If the bridge is painted now and…
A: The present value method is one of the methods for finding the profitability of a project by…
Q: stment of 100,000 is to be used to make payments of 4,000 at the end of each quarter for as long as…
A: The payments are made periodically that carry the payment of principal amount and payment of…
Q: Kinston Industries just announced that it will cut its dividend from $3.00 to $2.00 and use the…
A: Answer - Step 1 - Calculation of Cost of Equity - Stock Price = Dividend / (Cost of Equity -…
Q: This can occur when a selection among mutually exclusive alternatives is based wrongly on…
A: Answer- Ranking errors can occur when a selection among mutually exclusive alternatives is based…
Q: How much money would you have at the end of 15 years if you initially invested $7,500 at a nominal…
A: Concept. A = P (1 + r)n Where A = amount including compound interest. P = principal amount R = rate…
Q: Cash flow Asset End of Year Amount Appropriate required return $ 7,000 7,000 7,000 A 1 9% 3 В 1…
A: Present Value: The present value is the value of cash flow stream or the fixed lump sum amount at…
Q: 15 Maturity (ynars Price (per $100 tace value) $77 12 396 03 $91 61 S06 99 $82 17 a. Compute the…
A: Yield to maturity is the rate of return that is earned by the bond when bonds already make all the…
Q: McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $825 per set and…
A: Selling price of new line of golf club is $825 per set. Variable cost per set of new club is $385…
Q: Discuss the strengths and weakness of the Newer Innovative health financing mechanisms
A: Innovative financing can enable private investors to participate in health more quickly and bring…
Q: Water damage from a major flood in a Midwestern city resulted in damages estimated at $108 million.…
A: Insurance companies can be important for financial system stability because they are large investors…
Q: Which of the following is not true Large Value Transfer System is an electronic, real time net…
A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…
Q: 1. Mary made a loan of P58,000 to supply her new business. It is to be amortized by ten equal…
A: We need to use RATE function in excel to calculate interest rate. Formula is =RATE(NPER,-PMT,PV)
Q: A 6% coupon bond with semiannual coupons has a convexity (in years) of 120, sells for 80% of par,…
A: Convexity: Curvature in the relationship between bond prices and bond yields is measured by…
Q: Sainsbury is financed by both debt and equity. Using the following information and calculate the…
A: WACC means weighted average cost of finance or to raise the funds. Company has to pay an additional…
Q: What is the final balance owing on the account in two years (24 months from now)?
A: Time value of money (TVM) is used to measure the value of money at different point of time in the…
Q: a) a best efforts arrangement whereby Astro will keep 2.4% of the retail sales or (b) a firm…
A: Any net profits obtained upon the disposal, realisation, or redemption of an Authorized Investment,…
Q: A $1,000 par bond with an annual coupon has only one year until maturity. Its current yield is…
A: Given that: Current Yield= 6.713% Price of the bond=(Coupon+1000)1.10............................(1)…
Q: A stock is expected to pay a dividend of $1.00 at the end of the year (i.e., D1 = $1.00), and it…
A: FORMULA Stock's expected price 4 years from today = D5/(i-g) Where D5 - Dividend after 5 years from…
Q: A bond with annual coupon payments has a coupon rate of 8%, yield to maturity of 10%, and Macaulay…
A: Modified duration of bond can be calculated by using this equation Modified duration =Macaulay…
Q: What’s the present value of a perpetuity that pays $300 per year if the appropriate interest rate is…
A: present value of a perpetuity = Annual payment/Discount rate
Q: Arona would like to receive $15,820 each year for the next 5 years, starting today. Then she hopes…
A: Since payment is due today or at the beginning of the year, this is annuity due problem. For…
Q: 11. Heinz Inc expects to generate earnings over the next five years of Php 50,000.00; Php 60,000.00;…
A: Value of the firm can be calculated by using capitalisation earning method. For this we need to use…
Q: 13. You are considering adding a microbrewery on to one of your firm's existing restaurants. This…
A: The change in net working capital refers to the additional investment in working capital assets of…
Q: alue Of d. If the firm merges with another firm that will reduce the growth rate to 2% and raise the…
A: The dividend discount model: The dividend discount model assumes that the dividends are paid…
Q: In what circumstance would a property insurance claim be rejected?
A: An insurance claim is a written request for coverage or compensation from an insurance company for a…
Q: rate is 30% and the after-tax cash flow from sale of the property at the end of year 10 is expected…
A: The process through which a company evaluates possible big projects or investments is known as…
Q: From the interest statement of 18% per year, compounded monthly, determine the value for compounding…
A: Compounding period is referred as the period, which is the span of time that are between the…
Q: Direction: Solve what is being asked and show your complete and neat solution. (ROUND OF PV FACTORS…
A: There are two types of annuities one is annuity due and other is ordinary annuity that is being paid…
Q: Bruce Wayne is going public with his new business. Berkman Investment Bank will be his banker and is…
A: No. of shares for the auction = Authorized Shares - Wayne's Holdings - Venture Capitalists -…
Q: Determine the number of times interest would be compounded in 6 months from the interest statements…
A: Compound interest (or compounding interest) is interest calculated on a loan or deposit based on…
Q: 4. Two large-scale conduits are under consideration by a large municipal utility district (MUD). The…
A: The Present Value: The total value of future cash flows at the current date is known as its present…
Q: Dul Melissa is unsure about the financial reporting integrity of Generic's finance team. She decides…
A: Last year Dividend = $4 The required return for utility stocks =9% Credibility risk premium = 1.5%
Q: Small enterprise Support- what are the key findings that lose and tengeh 2015 found in their study?…
A: lose and tengeh 2015 paper looked into the difficulties that business incubators (BIs) face when…
Q: Find the accumulated value of an annuity-immediate which pays 1 at the end of each half-year for…
A: Compounding is a technique which is used to compute the future value (FV) of present cashflows by…
Q: college can purchase a telephone system for $35000 or lease a system for 5 years for a front-end…
A: Present value analysis is a technique for evaluating capital budgeting decisions. A company should…
Q: . Fong Company introduced a new product last year for which it is trying to find an optimal selling…
A: We will take the units to be increased by 5000 units and we will reduce the selling price by $2 for…
Q: s the price of a car that
A: Monthly payment refers to the amount which is to be paid at fixed intervals for some particular…
Q: For projects A and B determine the payback period(PBP) and the Account rate of return (ARR). The…
A: Payback period and accounting rate of return are tools to evaluate potential investment projects of…
Q: You use the Black Scholes model to price a Call option on a stock with discrete dividends. The…
A:
Q: Paul is risk averse and is offered the choice between contract A that pays $400 or $600, each with…
A: The risk-averse investor prioritizes capital preservation over the possibility of a…
Q: A hydraulic lift is purchased for a warehouse for $60,000. This lift is expected to generate $7000…
A: Rate of Return on Investment = Net income/Total Investment Depreciation Expense = Cost of the…
Q: On January 2, 2021, an Australian Copper Exploration Company was investigating the feasibility of…
A: Net Present Value (NPV) of a project is the sum of the present value of all cash inflows and…
Q: QUESTION THREE Sharpy and Jane are saving for the college education of their newborn son, Kasuba.…
A: Future Value of Ordinary Annuity refers to the concept which determines the sum total of all the…
Step by step
Solved in 6 steps with 4 images
- Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of goods sold 660.0 Gross profit 135.0 Selling expenses 73.5 EBITDA 61.5 Depreciation expenses 12.0 Earnings before interest and taxes (EBIT) 49.5 Interest expenses 4.5 Earnings before taxes (EBT) 45.0 Taxes (40%) 18.0 Net income 27.0 a. Calculate the ratios you think would be useful in this analysis. b. Construct a DuPont equation, and compare the companys ratios to the industry average ratios. c. Do the balance-sheet accounts or the income statement figures seem to be primarily responsible for the low profits? d. Which specific accounts seem to be most out of line relative to other firms in the industry? e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?Refer to RE22-2. Assume the pretax cumulative effect adjustment is 50,000. Prepare the journal entry that Heller Company would make at the beginning of 2020 to record the cumulative effect of the change from LIFO to FIFO. RE22-2 Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.Recording Various Liabilities Glenview Hardware had the following transactions that produced liabilities during 2020: a. Purchased merchandise on credit for $30,000. ( Note: Assume a periodic inventory system.) b. Year-end wages of $10,000 were incurred, but not paid. Related federal income taxes of $1,200, Social Security of $620 (employee portion), and Medicare taxes of $145 were with-held from employees. c. Year-end estimated income taxes payable, but unpaid, for the year were $42,850. d. Sold merchandise on account for $1,262, including state sales taxes of S48. ( Note: Assume a periodic inventory system.) e. Employers share of Social Security and Medicare taxes for the period were $620 and $145, respectively. f. Borrowed cash under a 90-day, 9%, $25,000 note. Required: Prepare the entry to record each of these transactions (treat each transaction independently).
- Unusual income statement items Assume that the amount of each of the following items is material to the financial statements. Classify each item as either normally recurring (NR) or unusual (U) items. If unusual item, then specify if it is a discontinued operations item (DO). a. Interest revenue on notes receivable. b. Gain on sale of segment of the company's operations that manufactures bottling equipment. c.Loss on sale of investments in stocks and bonds. d. Uncollectible accounts expense. e. Uninsured flood loss. (Hood insurance is unavailable because of periodic Hooding in the area.)Inventory Write-Down The inventory records of Frost Company for the years 2019 and 2020 reveal the cost and market of the January 1, 2019, inventory to be 125,000. On December 31, 2019, the cost of inventory was 130,000, while the market value was only 128,000. The December 31, 2020, market value of inventory was 140,000, and the cost was only 135,000. Frost uses a perpetual inventory system. Required: 1. Assume the inventory that existed at the end of 2019 was sold in 2020. Prepare the journal entries at the end of 2019 and 2020 to record the lower of cost or net realizable value under the: a. allowance method b. direct method 2. Show the presentation of cost of goods sold and inventory of Frosts income statement and balance sheet for 2019 and 2020 under the: a. allowance method (assume the cost of goods sold prior to applying the lower of cost or net realizable value rule was 595,000 and 605,000 for 2019 and 2020, respectively) b. direct methodSound Break CorporationIncome and Retained Earnings StatementFor the year Ended December 31, 2020Net Sales P1,000,000Cost of Goods Sold:Inventory, Dec. 31, 2019 P250,000Purchases 720,000Total Goods Available P970,000Inventory 220,000 750,000Gross Margin on Sales P 250,000Selling and Administrative (including Depreciation of P20,000) 125,000Net Income before Tax P 125,000Provision for Income Tax 35,000Net Income for the Year P 90,000Retained Earnings, beginning 130,000Total P 220,000Dividends Paid 30,000Retained Earnings, December 31, 2020 P 190,000 Sound Break CorporationBALANCE SHEETDecember 31, 2019 and 2020 ASSETS 2019 2020Current Assets:Cash P 75,000 P 85,000Marketable Securities 25,000 25,000Trade Receivables, net 185,000 245,000Inventory, at cost 250,000 220,000Prepaid Expenses 15,000 10,000Total Current Assets P550,000 P585,000Property and Other Assets:Equipment, net P340,000 P320,000Other Assets 15,000 15,000Total Property and Other Assets P355,000 P335,000 Total Assets…
- THE ATHLETIC ATTICIncome StatementFor the Year Ended December 31, 2024Net sales $8,900,000Cost of goods sold 5,450,000Gross profit 3,450,000Expenses: Operating expenses $1,600,000 Depreciation expense 210,000 Interest expense 50,000 Income tax expense 360,000 Total expenses 2,220,000Net income $1,230,000 THE ATHLETIC ATTICBalance SheetsDecember 31 2024 2023Assets Current assets: Cash $164,000 Accounts receivable 790,000 Inventory 1,405,000 Supplies 110,000Long-term assets: Equipment 1,150,000 Less: Accumulated depreciation (420,000) Total assets $3,199,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $115,000 Interest payable 0 Income tax payable 40,000 Long-term liabilities: Notes payable 600,000 Stockholders' equity: Common stock 700,000…How to compute this problem? Problem:The data shown below were obtained from the financial records of the BST Corporation for the year ended December 31, 2020. Sound Break CorporationIncome and Retained Earnings StatementFor the year Ended December 31, 2020Net Sales P1,000,000Cost of Goods Sold:Inventory, Dec. 31, 2019 P250,000Purchases 720,000Total Goods Available P970,000Inventory 220,000 750,000Gross Margin on Sales P 250,000Selling and Administrative (including Depreciation of P20,000) 125,000Net Income before Tax P 125,000Provision for Income Tax 35,000Net Income for the Year P 90,000Retained Earnings, beginning 130,000Total P 220,000Dividends Paid 30,000Retained Earnings, December 31, 2020 P 190,000 Sound Break CorporationBALANCE SHEETDecember 31, 2019 and 2020 ASSETS 2019 2020Current Assets:Cash P 75,000 P 85,000Marketable Securities 25,000 25,000Trade Receivables, net 185,000 245,000Inventory, at cost 250,000 220,000Prepaid Expenses 15,000 10,000Total Current Assets…tion 8Income statement for the year ended 31 December, 2019 of KKMTN Ghana Ltd2018 2019ȼ ‘000 ȼ ‘000Turnover 420,000 523,600Cost of sales (330,000) (417,200)Gross profit 89,000 106,400Expenses:Administration 44,600 50,200Selling and distribution 15,400 (60,000) 19,600 (69,800)Profit before interest 29,000 36,600Debenture interest - (2,800)Net profit before tax 29,000 33,800Taxation (8,000) (10,000)Net Profit after tax 21,000 23,800Ordinary dividend paid 8,400 9,250Ordinary shares issued 12 million and trading at ȼ3 each as at yesterday onGSE.You are required to compute the following investment ratios:a). Earnings per shareb). Dividend per sharec). Payout ratiod). Price earnings ratioe). Earnings yield
- Kincaid Company reported the following data (in millions) for the past two years:2019 2018$$$$$2801501304090$$$$$2501401103575Net revenues........................................Cost of goods sold...............................Gross profit..........................................Operating expenses..............................Operating income................................In a vertical analysis of 2019, the operating expenses percentage is closest toa. 225%.b. 69%.c. 14%.d. 32%.QUESTION 1The following are extracts of the income statement and the statement of financial position forMorula Industries.STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2019PulaSales 500,000Less Cost of sales:Opening inventory 120,000Purchases 415,000Cost of goods available for sale 535,000Closing inventory (115,000) (420,000)Gross profit 80,000Operating expenses (40,000)Net surplus for the year 40,000 STAMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019PulaCurrent assetsInventory 115,000Receivables 133,000Bank overdraft 124,000Current LiabilitiesPayables 96,000Capital and reservesShare capital 70,000General reserve 110,000Retained profit 110,000Additional Information The receivables and payables opening balances were P50, 000 each. All sales and purchases were made on credit.Required:a. Calculate the:i. Average payment period. ii. Average age of inventory. iii. Average collection period. iv. Cash conversion cycle. b. Explain five strategies that can improve the cash conversion…SUNLAND COMPANYIncome StatementsFor the Years Ended December 31 2022 2021 Net sales $2,178,400 $2,030,000 Cost of goods sold 1,207,000 1,187,080 Gross profit 971,400 842,920 Selling and administrative expenses 590,000 565,220 Income from operations 381,400 277,700 Other expenses and losses Interest expense 25,960 23,600 Income before income taxes 355,440 254,100 Income tax expense 106,632 76,230 Net income $ 248,808 $ 177,870 SUNLAND COMPANYBalance SheetsDecember 31 Assets 2022 2021 Current assets Cash $ 70,918 $ 75,756 Debt investments (short-term) 87,320 59,000 Accounts receivable 139,004 121,304 Inventory 148,680 136,290 Total current assets 445,922 392,350 Plant assets (net) 765,820 613,954 Total assets $1,211,742…