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3 years ago

Which of the following describe the reason(s) why maximization of intrinsic stock value benefits society?

Business

1 answer:

Dafna1 [17]3 years ago

7 0

Answer:

B. Workers prefer companies that minimize operating costs.

C. The owners of stock are society.

D. Successful companies attract more talent.

Explanation:

The intrinsic stock value does not need to reflect the market value of the company stock. However, the intrinsic stock reflects the company's lucrative aspect, something more intuitive that describes the company's operating. Therefore, a high intrinsic stock value reflects a company with great reputation.

A company with high intrinsic stock will surely attract more talent, as the talent pool is motivated by working in a reputable, efficient company. This kind of company is surely cost-effective in terms of operation too.

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Identify the risks exist in the conversion cycle of Central Production Limited.

Elenna [48]

Answer:

Authorization of transactions

Explanation:

In simple words, There is indeed a possible possibility of getting into a contract multiple times owing to uncertain subordination. To order to minimise this, all workers will obey the defined rules for multiple purchases, such as the fixed pricing chart, to insure that it is a minimal amount of mistake.

A few assigned staff members should be delegated with difficult responsibilities linked to their divisions, such as the manufacturing clerk, who is accountable for revamping the internet material bill as well as the path sheet documents in order to decrease human mistake.

6 0

4 years ago

Compute the future value of $10,000 at an 12 percent interest rate 15, 20, and 30 years into the future. what would the future v

Anestetic [448]

Future value
F=P(1+i)^n
where
P=present value=10000
i=annual interest rate
n=number of years={15,20,30}

At 12% interest rate, i=0.12,
After 15 years,
$F=P(1+i)^15=10000(1.12)^15=54735.66$
After 20 years,
$F=P(1+i)^20=10000(1.12)^20=96462.93$
After 30 years,
$F=P(1+i)^20=10000(1.12)^30=299599.22$

At 6% interest rate, i=0.06,
After 15 years,
$F=P(1+i)^15=10000(1.06)^15=23965.58$
After 20 years,
$F=P(1+i)^20=10000(1.06)^20=32071.35$
After 30 years,
$F=P(1+i)^20=10000(1.06)^30=57434.91$

The results show clearly the power of compounding increases drastically with time.

6 0

3 years ago

A firm issues 20-year bonds with a coupon rate of 4.4%, paid semiannually. The credit spread for this firm's 20-year debt is

kotegsom [21]

Answer:

$327.08

Explanation:

The following steps are followed:

Step 1: Calculation of the present value of the coupon (PVC) of cash flows

To achieve this, the formula for calculating the PV of an ordinary annuity is employed as below:

PVC = P × [{1 - [1 ÷ (1+r)]^n} ÷ r] …………………………………. (1)

Where;

PVC = Present value of the coupon (PVC) cash flow = ?

P = Semiannual coupon amount = $100 × (4.4% ÷ 2) = $2.2 0

r = Yield to maturity rate = 1.2% +5.3% annual = 6.5% annual = 6.5% ÷ 2 semiannually = 3.25% or 0.0325 semiannually

n = number of period = 20 years = 20 × 2 semiannual = 40 semiannual

Substituting the values into equation (1), we have:

PVC = 2.20 × [{1 - [1 ÷ (1+0.0325)]^40} ÷ 0.0325] = $48.86

Step 2: Calculation of the present value of the face value (PVFAV) of the bond

The following PV formula is used to calculated this:

PVFAV = FAV ÷ (1 + r)^n ……………………………………. (2)

Where;

PVFAC = Present value of the face value of the bond = ?

FAC = Face value of the bond = $1,000

r and n are as already described in step 1 above

Substituting the values into equation (2), we have:

PVFAV = $1,000 ÷ (1 + 0.0325)^40 = $278.23

Step 3: Calculation of the price of the firm's outstanding 20-year bonds

The price of a bond can be obtained by adding the PV of expected cash flows and PV of the face value of the bond as follows:

Price of bond = PVC + PVFAC …………………………… (3)

Since PVC = $48.86 and PVFAV = $278.23, we have:

Price of bond = $48.86 + $278.23 = $327.08

Therefore, the price of the firm's outstanding 20-year bonds with face value of $1000 is $327.08 .

3 0

3 years ago

During 2020, Starnes Corporation developed a patent. Starnes incurred the following costs related to the development of the pate

Vitek1552 [10]

Answer:

a. Patent development and registration costs incurred in 2020.

Dr Patent 11,200 (only patent registration fees)

Dr Research and development expense 49,600

Cr Accumulated depreciation 6,400

Cr Cash 54,400

b. Legal fees paid in 2021.

Dr Patent 4,800

Cr Cash 4,800

c. Amortization expense in 2021.

Dr Amortization expense 607.50

Cr Patent 607.50

($11,200/20 x 9/12) + ($15,000/20 x 3/12) = $607.50

d. Amortization expense in 2022

Dr Amortization expense 750

Cr Patent 750

7 0

3 years ago

Computing absorption cost per unit and variable cost per unit Adamson, Inc. has the following cost data for Product X:

zvonat [6]

Answer:

unit cost for 2,000 units=$115

unit cost for 2,500 units =$113

unit cost for 5,000 units= $109

Explanation:

Absorption costing is method of costing where overheads are charged to units produced using volume-based bases. e.g machine hours, labour hours e.t.c. Units are valued using full cost per unit

Full cost per unit= Direct material cost + direct labor cost + Variable production overhead + Fixed production overhead

Fixed production overhead = Budgeted overhead/Budgeted production units

unit cost for 2,000 units

unit cost = 41 + 57 + 7 + (20,000/2000) = $115

unit cost for 2,500 units

unit cost = 41 + 57 + 7 + (20,000/2,500)= $113

unit cost for 5,000 units

unit cost = 41 + 57 + 7 + (20,000/5,000) = $109

unit cost for 2,000 units=$115

unit cost for 2,500 units =$113

unit cost for 5,000 units= $109

7 0

4 years ago