Answer:
Explanation:
Pam and Jon's dividend income of $134,500 each [($185,000 Accumulated E&P + $111,000 current E&P) / 2],
Statement of distribution for shareholders for tax purpose :-
Pam Jon
Total distribution $185,000 $185,000
less: Dividend income $134,500 $134,500
<em> $50,500 $50,500</em>
less : Stock basis $25,900 $103,600
Capital gain $24,600 $0
Pam has a taxable gain of $24,600 which reduces the stock basis to $0, whereas Jon has not any taxable gain but the stock basis has reduced to $53,100 [$103,600- $50,500]
In order to minimize the difficulty associated with meeting monthly loan payment, the debt service ratio should be : Below 35 %
This Ratio showed that your annual monthly income still able to cover up your loan payments after considering your housing and other expenses for your daily lives
The above is an example of directing
Directing is one of the responsibilities of a management
accountant. It involves governing the operations of a company in a particular
direction. It is a process through which the manager guides the performance of
workers to achieve set goals.
Answer:
option 14.92%
Explanation:
Data provided in the question;
Expected annual dividend to be paid = $0.65
Expected growth rate = 9.50%
Walter’s stock currently trades = $12.00 per share
Now,
Expected rate of return = 
+ Growth rate
or
Expected rate of return = 
+ 9.50%
or
Expected rate of return = ( 0.054167 × 100% ) + 9.50%
or
Expected rate of return = 5.4167% + 9.50%
or
Expected rate of return = 14.9167 ≈ 14.92%
Hence, the correct answer is option 14.92%
Answer:
The options are given below:
A. Firm X
B. Firm Y
C. Same variability of operating profits
D. It would depend on tax effect on taxable income
The correct option is B. Firm Y
Explanation:
This is because firm Y has a higher operating leverage than firm X.
<u>Operating Leverage</u> refers to a cost-accounting formula that measures the degree to which a firm can increase operating income by increasing revenue. Operating leverage actually boils down to the analysis of fixed costs and variable costs, and it is highest in companies that have a high fixed operating costs in comparison with variable operating costs. What this means is that this kind of company makes use of more fixed assets. On the other hand, operating leverage is lowest in companies that have a low fixed operating costs when compared with variable operating costs.
Companies with high operating leverage are capable of making more money from each additional sale if they do not have to incur more costs to produce more sales.
Therefore, from the scenario given above, we can conclude that firm Y has a higher operating leverage than firm X, because firm X has lower fixed costs than firm Y, and a higher variable cost than firm Y as well. Hence, firm Y has the potential to make more operating profits from its business activities.
