You are asked to lend money for a major commercial real estate development in a foreign country. There is some talk about a further devaluation of the foreign country's currency. What information do you need to assess the creditworthiness of this project? In your evaluation of the project, be sure to take into account translation exposure and economic exposure (operating and transaction), as well as exchange risk.

Answers

Answer 1

Answer:

Answer:

Please see explanation below

Explanation:

Before Investment for the real estate development in a foreign country, it is very crucial to determine the viability of the project, and more importantly how the cash flows are being populated over the period. One of the major risks involved in investing in foreign country is the currency exchange risk. The value of currencies for the countries continue to fluctuate based on several economic conditions and other macro factors.

If a regulator in a foreign country is devaluing the country’s currency, then it goes in favour of exporters, as the foreign consumers can afford to buy more goods and services with the same amount. However, the people residing in the the country(importers) faces a huge trouble spending in foreign country due to currency devaluation.

To identify the creditworthiness of the project we need information regarding the property prices, its growth, and public spending in the country where we want to make our investment. Secondly, we need the historical data of currency devaluation event (if any) to assess the actual impact it will have on the economy once the devaluation takes place. Thirdly, we need to identify the exposures or the risk involved in operating the business in the foreign country, and how are we go about mitigating the risk from transaction and operating exposure.

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Boilermaker House Painting Company incurs the following transactions for September. 1. Paint houses in the current month for $15,000 on account. Assets increase and stockholders' equity increases.
2. Purchase painting equipment for $16,000 cash. One asset increases and another asset decreases.
3. Purchase office supplies on account for $2,500. Assets increase and liabilities increase.
4. Pay employee salaries of $3,200 for the current month. One asset increases and another asset decreases.
5. Purchase advertising to appear in the current month, $1,200. Assets increase and stockholders' equity increases.
6. Pay office rent of $4,400 for the current month. Assets decrease and stockholders' equity decreases.
7. Receive $10,000 from customers in (1) above. One asset increases and another asset decreases.
8. Receive cash of $5,000 in advance from a customer who plans to have his house painted in the following month. Assets increase and liabilities increase.
For each transaction, describe the dual effect on the accounting equation. For example, for the first transaction, (1) assets increase and (2) stockholders' equity increases.

Answers

The descriptionof the dual effects of the transactions on the accounting equation is as follows:

1. Asset increases (Accounts Receivable) and stockholders' equity (Retained Earnings) increases.

2. One asset (Equipment) increases and another asset (Cash) decreases.

3. Assets (Supplies) increase and liabilities (Accounts Payable) increase.

4. Assets (Cash) decrease and stockholders' equity (Retained Earnings) decreases.

5. Assets (Cash) decrease and stockholders' equity (Retained Earnings) decreases.

6. Assets (Cash) decrease and stockholders' equity (Retained Earnings) decreases.

7. One asset (Cash) increases and another asset (Accounts Receivable) decreases.

8. Assets (Cash) increase and liabilities (Deferred Revenue) increase.

What is the Accounting Equation?

The accounting equation is a depiction that assets equal liabilities and equity at every given time and with every transaction. This equation gives each transaction the dual effect.

Data Analysis:

1. Accounts Receivable $15,000 Service Revenue $15,000

2. Equipment $16,000 Cash $16,000

3. Supplies $2,500 Accounts Payable $2,500

4. Salaries Expense $3,200 Cash $3,200

5. Advertising Expense $1,200 Cash $3,200

6. Rent Expense $4,400 Cash $4,400

7. Cash $10,000 Accounts Receivable $10,000

8. Cash $5,000 Deferred Revenue $5,000

Thus, the dual effect means that each transaction affects, at least, two accounts of the accounting equation.

Learn more about the dual effects of accounting transactions at brainly.com/question/2707498

On January 1, Year 1, Chaco Company sold $300,000 of 10% twenty-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were issued for $359,378, priced to yield 8%. What is the amount of effective interest expense that Chaco will record for the six months ended June 30, Year 1

Answers

Answer:

The amount of effective interest expense that chaco will record in the first six months is $14,375

Explanation:

interest payment that will be first made is on June 30, Year 1. Therefore, the outstanding balance used in the calculation is the issue price.

The interest expense is calculated by these formula

Interest expense = Effective semiannual interest rate × Outstanding balance

Interest expense = (8% ÷ 2) × $359,378 = $14,375

So the interest expense is gotten as %14,375

Final answer:

The Chaco Company will record an effective interest expense of $14,375.12 for the six months ended June 30, Year 1.

Explanation:

The effective interest method is a technique used for discounting bonds. This method is used to calculate the amount of interest expense for a specific time period. In this case, we are finding the effective interest for the six months ended June 30, Year 1 on a bond issued by the Chaco Company.

The formula for the effective interest method is: Book value of the bond at the beginning of the period X Yield rate/Number of periods per year.

The book value of the bond at the beginning of the time period (January 1, Year 1) was $359,378. The yield was 8% and there are two periods in the year because the interest is paid semiannually.

So, the effective interest for the six months ended June 30, Year 1 = $359,378 * 8%/2 = $14,375.12.

Therefore, the amount of effective interest expense that Chaco will record for the six months ended June 30, Year 1 is $14,375.12.

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you recently increased you're spending on marketing by 10%. you now spend 5500 per month. revenue increase by 1000 per month and you're gross margin percentage is 70%. All other expenses stayed consant. Did the increase pay off?

Answers

Answer:

Answer is yes

Explanation:

An economist has conducted extensive research and has found that jones cola is a substitute for tucker cola. ceteris paribus, the price of jones cola increases. the impact on the demand curve for tucker cola is a(n):

Answers

Answer: Increase in demand

Explanation: Change in demand occurs when factors affecting demand other the its price changes. While, a change in quantity demanded occurs when the price of the good changes other things constant. Since, jones cola and tucker cola are substitutes to each other. A rise in the price of jones cola will shift demand towards tucker cola. This, will lead to a rightward shift in the demand curve for tucker cola and an increase in demand for tucker cola.

A company began its fiscal year with inventory of $186,000. Purchases and cost of goods sold for the year were $945,000 and $982,000, respectively. What was the amount of ending inventory?

Answers

Answer:

$149,000

Explanation:

Data provided as per the question below

Cost of goods sold = $982,000

Inventory = $186,000

Purchase = $945,000

The computation of amount of ending inventory is shown below:-

Cost of goods sold = Inventory + Purchase - Ending inventory

= $982,000 = $186,000 + $945,000 - Ending inventory

= $982,000 = $1,131,000 - Ending inventory

= $149,000

g On January 1 the company had office supplies costing $2,700 recorded as an asset. During the year $9,600 of office supplies were purchased and recorded as an asset, but the company did not make any journal entries to record the use of supplies during the year. The physical count on December 31 revealed that supplies of $3,100 were remaining. What adjusting entry would be necessary on December 31

Answers

Answer:

Debit Supplies expense $9200

Credit Supplies account $9200

Explanation:

The adjustment required is for the recognition of supplies used. When supplies are purchased, Debit Supplies account, credit cash or accounts payable. On use of supplies, Debit Supplies expense, credit Supplies account

The movement in the balance of supplies at the start and end of a period is as a result of usage and purchases. While usage reduces the balance in supplies, purchases increases the balance. This may be expressed mathematically as

Opening balance + purchases - units used = closing balance

$2,700 + $9,600 - Units used = $3,100

Units used = $2,700 + $9,600 - $3,100

= $9,200

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