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4 years ago

The method that allocates an equal amount of depreciation to each year of an asset’s service life is:

Business

1 answer:

kvasek [131]4 years ago

6 0

Answer: Straight line method of depreciation

Explanation: Under the straight line method of depreciation the asset is expensed over its useful life. In this method, depreciation or amortization is calculated by dividing the difference of initial cost and salvage value of the asset from its useful number of years.

This method is not commonly used for assets having longer term period but still some business entities use it as it is easy to calculate.

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Your company plans to spend $2,350,000 in cash to build a plant that will produce benefits with a total present value of $4,575,

Leto [7]

Answer:

$200,000

Explanation:

Data provided in the question:

Amount willing to spend in cash to build the plant = $2,350,000

Total present value of the benefits produced = $4,575,000

Purchasing cost of the land = $900,000

Present value of the land = $2,025,000

Now,

Total present value of investment

= Amount spent to build the plant + Present value of the land

= $2,350,000 + $2,025,000

= $4,375,000

Therefore,

The net present value of the proposed plant

= Total present value of the benefits - Total present value of investment

= $4,575,000 - $4,375,000

= $200,000

6 0

3 years ago

Financial data for Stirling Inc. for last year are as follows:

Tom [10]

Answer:

profit margin: 6.04%

Assets turnover: 2.08

ROI 25.89%

Residual Income 137,330

Explanation:

profit margin:

income/sales = 326,480/5,404,000 = 0.060414507 = 6.0414507%

Assets turnover:

$\frac{net \: sales}{average \: assets} \\\\where:\\average \: assets = \frac{ending + beginning}{2}$

(2,561,000 + 2,629,000)/2 = 2,595,000 average assets

5,404,000/2,595,000 = 2.082466281 Assets TO

ROI

$\frac{net \: income}{average \: equity} \\\\where:\\average \: equity= \frac{ending + beginning}{2}$

(1,206,000+1,316,000)/2 = 1,261,000 average equity

326,480/1,261,000 = 25.890563%

Residual Income:

current income - income at desired RoR

That means calculate which income generates a ROI of 15% which is the minimum required return:

ROI = income / equity = 0.15

X/1,261,000 = 0.15

X=1,261,000 x 0.15 = 189,150

Now we calculate the diference between this number and the current income.

326,480 - 189,150 = 137,330 Residual Income

8 0

3 years ago

If an individual investor uses the services of a broker to buy and sell stocks that are currently being traded in the stock mark

sergejj [24]

Answer:

a. False

Explanation:

A "primary transaction" refers to the selling of new stocks and bonds for the first time towards the public. A great example of this is the "Initial Public Offering" (IPO) which allows "public share issuance."

On the other hand, a "secondary transaction" refers to the trading of investors among themselves. There is no involvement of the issuing companies here. So, this means that if an investor uses the services of a broker to buy and sell stocks that are currently being traded in the stock market, the transaction doesn't directly involve the issuing company. This kind of transaction is then called "secondary."

So, this explains the answer.

8 0

3 years ago

You have researched your dream around-the-world vacation and determined that the total cost of the vacation will be $33,000. You

My name is Ann [436]

Answer:

Explanation:

What 22

6 0

3 years ago

Maria spots a beautiful dress in the window of a boutique. Maria goes into

Yakvenalex [24]

Answer:

Asking Price

Explanation:

8 0

4 years ago