<span>Grocery,
inc., and Dave's market enter into a contract for the delivery of
locally grown produce. The parties use a standard grocery, inc. form
that contains some of the terms the parties agree on but not others.
some of the produce spoils before it can be sold. Dave's refuses to pay
for the spoiled goods. Grocery, inc. files a suit against Dave's,
claiming that the buyer assumed the risk of the spoilage of the unsold
produce. The court may allow evidence of this term if it finds that the
parties' contract is not fully integrated.</span>
Answer:
the after-tax cost of debt is 13.24
Explanation:
The after-tax cost of debt is the initial cost of debt as a result of the incremental income tax rate.
The after-tax cost of debt is dependent on the incremental tax rate of a business. If profits are low, a business would pay low tax rate, which means that the after-tax cost of debt will increase. Also, if the business profits increase, they would pay higher tax rate, so its after-tax cost of debt will decline.
Given that:
Required return (r) = 11.50% = 0.0115
The yield on a 20-year treasury bond (y) = 5.50% = 0.055
beta (b) = 1.29
rs = y + (r -y) x b
after-tax cost of debt = 5.50% + (11.50% - 5.50%) x 1.29
after-tax cost of debt = 13.24%
Answer:
PV of the sales price $1,986,948.23
Explanation:
We will calcualte the present value of the sale price using the present value of a lump sum formula:
Maturity 3,200,000
time 5 years
rate 10% = 10/100 = 0.1
PV $1,986,948.2338
This indicates the 3,200,000 in five years are equivalent to 1,986,948.23 dollars Thus, this investment is not profitable as the property will be purchased at 2,200,000
Answer:
C. $737,500
Explanation:
The formula to compute the ending balance of retained earning is shown below:
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
= $659,000 + $220,000 - $141,500
= $737,500
The net income is calculated below:
= Sales revenues - expenses
$600,000 - $380,000
= $220,000
