Answer:
$13,300
Explanation:
The cost of improvement should be depreciation over the lower of - remaining lease term or estimated useful life of improvement
.
In our case, the lease number of years is shorter than the estimated life of improvement.
So, the cost will be depreciation for 5 years.
Hence, the amount to be recorded for first year:
= cost for improving leased office space ÷ Years remaining on lease
= 66,500 ÷ 5
= $13,300
Therefore, the amount of expense that should be recorded the first year related to the improvements is $13,300.
Answer:
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Answer:
Using the Put-Call parity principle where the following relationship holds:
Covered Call = Protective Put
Using the above, find the call price:
Call + Strike price / (1 + risk free rate) = Stock price + Put
Call + 18 / (1.08) = 20 + 3.33
Call + 16.67 = 20 + 3.33
Call = 23.33 - 16.67
Call = $6.66
<em></em>
<em>The call option is overvalued at $7 so sell the Call option and buy the Put option and the Stock and borrow $16.67 which is the present value of the Put. </em>
<em>The net gain will be:</em>
<em>= 7 - 6.66</em>
<em>= $0.34</em>
