Answer:
$96 per unit
Explanation:
The computation of the average price paid for the commodity is shown below:
Average price = Total cost ÷ Total number of units
where,
Total cost = Total number of units buyed × spot rate - hedge fund
where,
Hedge fund is
= 1,000 × 80% × ($110 - $90)
= $16,000
So, the total cost is
= 1,000 units × $112 - $16,000
= $96,000
Now the average price is
= $96,000 ÷ 1,000 units
= $96 per unit
Answer:
($24,000, $0) and ($200,000, $2.78)
Explanation:
EBIT=24000
EPS=(24000-400000*6%)*(1-21%)/50000=0
EBIT=200000
EPS=(200000-400000*6%)*(1-21%)/50000=2.7808
Answer:
$60,000 income tax benefit
Explanation:
Since Crimson Corp. had a loss from operations and sold the asset for a loss we know that they lost money with the asset and an income tax benefit was generated. To calculate the income tax benefit we need to add both losses: $40,000 (operation) + $160,000 (sale) = $200,000 in total losses.
$200,000 x 30% = $60,000 income tax benefit
Answer:
At a corporate tax rate of 16.29%, both investment shall have same income, so it will be the indifference point.
Explanation:
Let take X to be the corporate tax rate
Note that 70% dividend exclusion for tax on dividend mean 30% is actually applied to dividend
Preferred dividend = 5000 * 7.75% = 387.5
Taxable dividend = 387.5 * 30% = 116.25
Interest on bond = 5000*10% = 500
For the purpose of Indifference of the two investment brought about by the two break-even corporate tax
387.5 - 116.25 * X = 500 - 500*X
500 X - 116.25 X = 500 - 387.5
383.75 X = 175
-112.5
383.75 X = 62.5
X= 62.5/383.75
X= 0.1629
X=16.29%
At a corporate tax rate of 16.29%, both investment shall have same income, so it will be the indifference point.
I'm not positive about this, but try C.