Answer:
The journal entries required for the redemption as well as the two instances of stock sale is given in details below:
Explanation:
DR CR
11-Oct Treasury stock 5000shares @$5 each 25000
Cash 25000
Being own shares repurchased
1-Nov Cash 31000
Treasury stock 1000 shares issued @$31 each 25000
Paid-in-capital treasury stock 6000
Reissuing treasury stock a higher price
25-Nov Cash 80000
Paid-in-capital treasury stock 6000
Retained earnings 14000
Treasury stock 100000
Reissuing treasury stock at a lower price
Answer:
ARP = 13.2184 %
Prepaid interest = $3,057.66
Explanation:
The ARP stands for annual percentage rate. It is defined as the amount of interest that one has to pay annually for the total mortgage loan he or she takes. In the question, the ARP will be 13.2184 % for a loan amount of $127,000 at the rate of 12.98% that will be amortized in 57 years with 0.13 points.
The prepaid interest is the interest amount the borrower pays for the loan he takes before the first scheduled of the debt repayment. In the question, the prepaid interest amount is $3,057.66 for the loan amount $524,000 to be amortized in 40 years with 0.58 points and at 5.33%.
Answer:
Annual depreciation= $51,400
Explanation:
Giving the following information:
Purchase price= $314,000
Salvage value= $57,000
Useful life= 5 years
<u>To calculate the depreciation expense under the straight-line method, we need to use the following formula:</u>
<u />
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (314,000 - 57,000) / 5
Annual depreciation= $51,400
<u />
<u>The depreciation expense is the same every year.</u>
Answer:
(1) 95.23 (2)5.008% or 5% (3) The value of equity is zero (4)The future value of the firm will be 110 mil. than Firm equity will be 110-100 =10 mil not zero
Explanation:
Solution
Given that:
The worth in good in this example= 110 mil
Worth in bad in this example =90 mil
The future value =( 110+90)/2
=100
Future value = 100
Now
(1) The Present value = F/(1+r)^n
=100/1.05
=95.23
(2) the yield to maturity is given below:
YTM = (FV/PV)^n -1
Here
FV = future value
PV = present value
n=years
Thus
(100/95.23)^1 -1
=5.008% or 5%
Since the bond are zero coupon bond so interest rate is equal to YTM
(3) The total worth =100 mil
Thus
The Debt +equity =100
100+equity =100
Equity =100-100
=0
Hence the value of equity is zero.
The firm BIG is only debt firm. Firm do not have equity.
(4) The future value of the firm will be 110 mil. than Firm equity will be 110-100
=10 mil not zero
It is impossible for long-term forecasts to be as accurate as short-term forecasts, because long-term forecasts are based on intuitive facts that may not happen.
Short-term forecasts are more accurate because they are based on how the financial market and trade are doing today, so it becomes easier to predict (through real data) the sales and revenues that a product will be able to produce in a few weeks. However, a country's market and economy situation can change in a matter of months, as these changes can be unpredictable, long-term forecasts are impaired and end up being less accurate.
We can see an example of this right now, through the economic crisis that is spreading all over the world, caused by the expansion of the coronavirus. This expansion was something completely premeditated and probably not considered in the companies' long-term forecasts.
