BUSINESS COLLEGE

Calculate the present value of the following: a-1. Annual payment of $800 for 10 years at 5% interest. (Do not round intermediate calculations. Round your answer to 2 decimal places.) a-2. Annual payment of $600 for 15 years at 5% interest. (Do not round intermediate calculations. Round your answer to 2 decimal places.) a-3. Which option would you prefer? b-1. Annual payment of $800 for 10 years at 20% interest. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b-2. Annual payment of $600 for 15 years at 20% interest. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b-3. Which option would you prefer?

Answers

Answer 1
Answer:

Answer:

a-1 Present value = 6,177.39

a2- Present Value =6,227.79

a3- Choose the payment stream with the highest present value = a2

b1- Present Value=3,353.98

b2-Present Value=2,805.28

b3-Choose the payment stream with the highest present value = b1

Explanation:

a-1 describes an ordinary annuity whose present value is calculated as follows:

Present value =PMT*([1-(1+i)^-^n])/(i)

where PMT=$800; i= 5%, n= 10

Present value =800*([1-(1+0.05)^-^1^0])/(0.05) = 6,177.39

a2- Present value =600*([1-(1+0.05)^-^1^5])/(0.05) = 6,227.79

a3- If I were receiving these payments annually, I would prefer the payment stream with the highest present value ie a2 -Annual payment of $600 for 15 years at 5% interest.

b1- Present value =800*([1-(1+0.20)^-^1^0])/(0.20) = 3,353.98

b2-Present value =600*([1-(1+0.20)^-^1^5])/(0.20) =2,805.28

b3- f I were receiving these payments annually, I would prefer the payment stream with the highest present value ie b1- Annual payment of $800 for 10 years at 20% interest.

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If Wild Widgets, Inc., were an all-equity company, it would have a beta of .95. The company has a target debt-equity ratio of .40. The expected return on the market portfolio is 11 percent and Treasury bills currently yield 3.5 percent. The company has one bond issue outstanding that matures in 15 years and has a coupon rate of 6.5 percent. The bond currently sells for $1,080. The corporate tax rate is 21 percent.Required:
a. What is the company's cost of debt?
b. What is the company's cost of equity?
c. What is the company's weighted average cost of capital?

Answers

Answer:

see explanation

Explanation:

a. The company's cost of debt

Cost of Debt = Total after tax cost

b. The company's cost of equity?

Cost of equity = Return from risk free + Beta x Market Premium

c. The company's weighted average cost of capital

weighted average cost of capital = Weighted Cost of Debt + Weighted Cost of Equity

Eilert Construction Company had a contract starting April 2018, to construct a $42,000,000 building that is expected to be completed in September 2019, at an estimated cost of $38,500,000. At the end of 2018, the costs to date were $17,710,000 and the estimated total costs to complete had not changed. The progress billings during 2018 were $8,400,000 and the cash collected during 2018 was $5,600,000. Eilert uses the percentage-of-completion method. [ What makes-up Construction in Process

Answers

Answer:

$20,790,000

Explanation:

Since the estimated total costs to complete had not change, the Construction is Process can be estimated as follows:

Construction in Process = Estimated total completion cost - Total costs of completion to date = $38,500,000 - $17,710,000 = $20,790,000

A firm has the following accounts and financial data for​ 2017: Sales Revenue ​$3,060 Accounts Receivable ​$500 Interest Expense ​$146 Total Operating Expenses ​$600 Cost of Goods Sold ​$1,800 Preferred Stock Dividends ​$28 Accounts Payable ​$240 Inventory ​$200 Number of Common Shares Outstanding ​1,000 Tax Rate ​40% The​ firm's earnings per share for 2017 is​ ________.

Answers

Answer:

$280

Explanation:

Given that Sales = $3,060

Minus: Cost of goods sold = $1,800

Gross Profit = $1,260

Minus: Operating expenses is = $600

Thus Operating profit is = $660

Minus: Interest = $146

Profit before tax = $514

Tax at 40% = $514 * 0.4 = $206

Net income (Income after-tax) = $308

Minus: Preferred stock dividend = $28

Earnings available to common stockholders = $280

Hence, in this situation, the correct answer is $280 per share

If the demand curve is linear and downward sloping, which of the following statements is not correct? Select one: a. Starting from a point on the upper part of the demand curve, an increase in price leads to a decrease in total revenue. b. Different pairs of points on the demand curve cannot result in different values of the slope of the demand curve. c. Different pairs of points on the demand curve can result in different values of the price elasticity of demand. d. Demand is more elastic on the lower part of the demand curve than on the upper part.

Answers

Answer:

The correct answer is option d.

Explanation:

If a demand curve is linear and downward sloping, different points on the line can show different values of slope. The value of slope will be equal to the ratio of change in price to change in quantity demanded. The value of slope will be the same throughout the line.

The price elasticity is the ratio of change in quantity to change in price. The price elasticity can be different for different points on the demand curve.

The points on the lower parts are more inelastic while the points on the upper portion are more elastic. The midpoint represents unit price elasticity.

Since the upper portion is more price elastic, an increase in price will cause a more than proportionate decrease in the quantity demanded. This will cause the total revenue to decrease.

Final answer:

Statement 'b' is incorrect. The slope of a linear demand curve remains constant, irrespective of the different pairs of points chosen on the curve. The other three statements provide accurate descriptions of the properties and behaviors of a linear, downward sloping demand curve.

Explanation:

In considering a linear and downward sloping demand curve, statement 'b' is incorrect when it declares that different pairs of points on the demand curve cannot result in different values of the slope of the demand curve. This statement is inaccurate because in a linear demand curve, the slope remains constant regardless of the different pairs of points chosen.

Statement 'a' is correct because as price increases, the quantity demanded decreases, thus leading to a decrease in total revenue. Statement 'c' is also correct because different parts of the demand curve can indeed have different price elasticities. Finally, statement 'd' is correct since the elasticity of demand generally becomes more elastic, as in more responsive to price changes, the further down the demand curve you move.

Learn more about Demand Curve here:

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Carla incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following values and adjusted bases:FMV Adjusted basis
Inventory $35,750 $10,100
Building 153,000 106,500
Land 291,750 375,000
Total $480,500 $491,600
The corporation also assumed a mortage of $153,750 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $320,750.
Required:
a. What amount of gain or loss does Carla realize on the transfer of the property to the corporation?
b. What amount of gain or loss does Carla recognize on the transfer of the property to the corporation?
c. What is Carla's basis in the stock she receives in her corporation?

Answers

Answer:

a. The amount of loss does Carla realize on the transfer of the property to the corporation is -$17,100

b. Carla does not recognized any gain or loss on the transfer of the property to the corporation

c. The amount of Carla's basis in the stock she receives in her corporation is $337,850

Explanation:

a. In order to calculate the amount of gain or loss does Carla realize on the transfer of the property to the corporation we would have to use the following formula:

amount of gain or loss=Fair market value of stock received+morgage assume by corporation-Adjusted tax basis of the property transferred

amount of gain or loss=$320,750+$153,750-$491,600

amount of gain or loss=-$17,100

The amount of loss does Carla realize on the transfer of the property to the corporation is -$17,100

b. Carla does not recognized any gain or loss on the transfer of the property to the corporation because the requirements are met and no boot is received in exchange.

c. In order to calculate the amount of Carla's basis in the stock she receives in her corporation we would have to use the following formula:

amount of Carla's basis in the stock=Adjusted tax basis of the property transferred-morgage assume by corporation

amount of Carla's basis in the stock=$491,600-$153,750

amount of Carla's basis in the stock=$337,850

The amount of Carla's basis in the stock she receives in her corporation is $337,850

Companies that achieve Value Innovation a. pursue differentiation and low cost simultaneously b. pursue differentiation or low cost c. pursue differentiation or low price d. None of the above

Answers

Answer: a. pursue differentiation and low cost simultaneously

Explanation:

Value Innovation as a strategy is highly sought after in many industries as it represents an opportunity to acquire more market share whist keeping costs low. This is because with Value innovation, a company invests in technology that will achieve both low costs and differentiation simultaneously.

This is great news for both consumers and the company because consumers get to buy more differentiated products at lower prices and for the company, they will get more customers buying from their brand.

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