Answer:
1.22%
Explanation:
The modified duration of the bond gives an indication of change in price due to a 1% change in the yield to maturity,hence, the bond modified duration is computed using the formula below:
modified duration=Macaulay Duration/(1+YTM)
Macaulay Duration=4.2
YTM(initial)=3%
modified duration=4.2/(1+3%)= 4.08
That for 1% change in yield to maturity price would change 4.08%
0.3% change in yield(3.3%-3%)= 4.08%*0.3%=1.22%
Answer:
b) $2,350
Explanation:
The computation of the cost of goods sold under the LIFO method is shown below:
Since there is 60 unit sold
So,
= Number of units purchase × price per unit + opening inventory remaining units × price per unit
= 50 units × $40 + 10 units × $35
= $2,000 + $350
= $2,350
hence, the cost of goods sold under the LIFO method is $2,350
Therefore the correct option is b) $2,350
Answer:
- Dr Bad Debt expense 4,000
- Cr Allowance for Uncollectible Accounts account 4,000
Explanation:
The ending balance of the Allowance for Uncollectible Accounts account should equal $6,500. Currently the account's balance is just $2,500, so you need to credit $4,000 more to that account in order for its ending balance to equal the bad debts expense.
So you should record the following:
- Dr Bad Debt expense 4,000
- Cr Allowance for Uncollectible Accounts account 4,000
Since bad debts is an expense, when it increases it should be debited.
Since allowance for uncollectible accounts is a contra asset account, when it increases it should be credited.
Answer:
Dr Accounts payable $1000
Cr Cash $400
Cr Notes payable $600
Explanation:
The $1000 owed was previously a credit in the accounts payable,since it has now been settled partly in cash and the remainder with notes payable,the accounts payable is debited with $1000.
Besides,the cash account should have witnessed an outflow of $400 and should be credited with $400.
Finally,$600 of the $1000 has been converted into notes payable instead of accounts payable and the notes payable should receive a credit of $600
Answer:
Chittenden enterprises' share price will be $16.167.
Explanation:
Chittenden Enterprises has 600 million outstanding shares.
The expected earnings at the end of the year are $970 million.
The equity cost of capital is 8%.
The constant growth rate is 5%.
Next year's dividend per share
=30%*$970 million/600 million
=$291 million/600 million
=$0.485/share
Share Price
= Dividend next year
/(Cost of Equity
-Constant growth rate
)
=$0.485/(8%- 5%)
=$16.167
