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sergejj [24]
1 year ago
13

Linda Clark received 175,000 from her mother's estate. She placed the funds into the hands of a broker, who purchased the follow

ing securities on Linda's behalf: a. Common stock was purchased at a cost of 95,000 . The stock paid no dividends, but it was sold for 160,000 at the end of three years. b. Preferred stock was purchased at its par value of 30,000 . The stock paid a 6% dividend (based on par value) the following year for three years. At the end of three years, the stock was sold for 27,000 . c. Bonds were purchased at a cost of 50,000 . The bonds paid 3,000 in interest every six months. After three years, the bonds were sold for 52,700. (Note: In discounting a cash flow that occurs semiannually, the procedure is to halve the discount rate and double the number of periods. Use the same procedure in discounting the proceeds from the sale.)The securities were all sold at the end of three years so that Linda would have funds available to open a new business venture. The broker stated that the investments had earned more than a 16% return, and he gave Linda the following computations to support his statement:
(b) Considering all three investments together, did Linda earn a 16% rate of return? Explain.
Business
1 answer:
sweet [91]1 year ago
5 0

Yes, Linda earns a 16% rate of return.

To support this statement, calculations are provided below:

Common stock

Gain on sale ($160,000 - $95,000)

                      = $ 65,000

Preferred stock

Dividends paid (6% x $30,000 x 3 years)

                          = 5,400

Loss on sale ($27,000 - $30,000)

                     = 3,000

Bonds:

Interest paid - ($ 6,000 x 3 years)

                       = 18,000

Gain on sale - ($52,700 - $50,000)

                       = 2,700

Net gain on all investments - $88,100

= $88,100 / 3 years / $175,000 = 16.8%

<h3>What do you mean by the term investments?</h3>

A purchase made with the intention of creating income or capital growth is known as an investment. An asset's value increasing over time is referred to as appreciation. When a person invests in a good, they do not intend to utilize it as a source of immediate consumption, but rather as a tool for future wealth creation. An investment always entails the expenditure of some capital—time, effort, money, or an asset—today with the expectation of a future return higher than the initial investment. For instance, an investor might buy a financial asset right away with the hope that it would provide income later on or that it can be sold for a profit at a higher price.

To learn more about Investments, visit:

brainly.com/question/14682309

#SPJ4

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An income statement for Sam's Bookstore for the first quarter of the year is presented below: Sam's Bookstore Income Statement F
nadezda [96]

Answer:

Contribution= $214,800

Explanation:

<em>Contribution margin ratio is the proportion of sales revenue that is earned as contribution. </em>

Unit sold = revenue / selling price = 880,000/55 = 16,000  units

Contribution = Sales revenue - variable cost

Variable  admin = 4% × 880,000= 35200

Variable selling = 5× 16,000 = 80,000

Contribution = Sales revenue - cost of goods sold - admin - selling

= 880,000 - 550,000- 35200 - 80,000=214,800

Contribution= $214,800

5 0
3 years ago
Which of the following is an example of the effective use of email communications?​ When sending an email, Jake avoids using a d
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Answer:

When sending an email, Ellis restates the subject in the body of the message.

Explanation:

Email has some standard guidelines for preparing the email.

It includes that the subject shall also be defined again in the descriptive area, where entire content of email is discussed.

There must be a descriptive line showing the purpose of email.

There shall be supportive subject for the description of email.

If the email has some quantitative data then it shall be summarized using graphs, pictures etc:

In a single email, least topics shall be discussed as that will not confuse the reader, and will be logical, towards the response for such email.

4 0
3 years ago
When a real estate agent says the three most important factors when buying a property are “location, location, location,” the ag
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<u>Answer:</u>

The correct answer for this is 'non price competition'.

<u>Explanation:</u>

When a real estate agent says the three most important factors when buying a property are “location, location, location,” the agent is referring to one of the forms of non price competition.

Non-price competition is a type of competition where two or more than two producers use factors like customer service, packaging or delivery rather than the price to increase the demand of the product or service.

Here, location is used as a non-price competition to increase the demand.

3 0
3 years ago
Read 2 more answers
Old Time Savings Bank pays 3% interest on its savings accounts. If you deposit $1,800 in the bank and leave it there: (Do not ro
klasskru [66]

Answer:

A. $54

B. 55.62

C. $70.46

Explanation:

The formula for calculating compound interest is

FV = P (1 + r ) ^n

FV = Future value

P = Present value

R = interest rate

N = number of years

A. $1,800 (1.03) = $1854

Interest rate = $1854 -$1,800 = $54

B. $1,800 (1.03)^2 = $1,909.62

Interest rate = $1,909.62 - $1854 = $55.62

C. $1,800 (1.03)^10 = $2,419.05

To service the interest rate, we have to determine the future value in year 9

$1,800 (1.03)^9 = $2,348.59

Interest rate = $2,419.05 - $2,348.59 = $70.46

I hope my answer helps you

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3 years ago
Many organizations are concerned about the rising cost of employee benefits and question their value to the organization and to
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Answer:

Benefits that are of most prominent incentive to the employees and to the organization are as per the following:  

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  • The firm ought to likewise give paid leaves and occasions to the employees to reproduce and revive their psychological capacity.

4 0
3 years ago
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