Answer:
TRUE
Explanation:
Adam Smith 'Laissez Faire' Theory implies : Markets as free mechanisms are best, they are guided by self interest which tends to bring best socio economic welfare by increasing wealth. The market 'Invisible Hand' acts as an automatic stabiliser to any economic discrepancy & any government intervention is unnecessarily distortionary.
Answer:
$65
Explanation:
The computation of the break even price for this position is shown below:
Break even price is
= Strike price - premium
= $70 - $5
= $65
The stock goes upward to $65 so you lose only $5 but it falls than the stock would be $0
Hence, the break even price of this position is $65
Therefore by applying the above formula we can get the break even price and the same is to be considered
Answer: 15%
Explanation:
IRR is the discount rate that makes the NPV equal zero. Required rates of return that are less than the IRR will therefore result in a positive NPV and those that are higher will result in a negative NPV.
Use Excel to find the IRR.
= IRR(-328325,115000,115000,115000,115000)
= 15%
As the required rate of 13% is less than the IRR of 15%, the new machine will have a positive NPV.
Answer:
a. Utilities Expense 500
Cash 500
Explanation:
Given: Consulting immediately paid $500 cash for utilities.
As $500 cash been paid for utility expenses.
We know the golden rule of accounting transaction:
- Personal accounts: Debit the receiver, credit the giver.
- Impersonal real account: Debit what comes in, credit what goes out.
- Impersonal Nominal account: Debit all expenses and losses, credit all profit and gains.
Paid for utility expense of firm is not the personal account, however, it is impersonal account. In the given case, cash is going out of business.
Therefore, Debit all expense and losses and credit what goes out of business.
Journal Entry of the transaction:
Debit utility expenses account--- $500
Credit cash account--- $500
Answer and Explanation:
The computation is shown below:
a) Liabilities to equity ratio is
= $200 ÷ ($500 - $200)
= 0.667
Times interest earned ratio is
= EBIT ÷ Interest expense
= $120 ÷ $28
= 4.285
Times burden covered is
= EBIT ÷ (Interest +Principal repayment ÷ ( 1 -tax rate))
= 120 ÷ (28+24 ÷ (1-0.4))
= 1.764
b)
Interest paying requirements
= ($128 - $20) ÷ 120
= 76.7%
Principal and interest requirements
= [$120 - ($28 + $24 ÷ (1-0.4))] ÷ 120
= 0.433 or 43.3%
Principal, Interest and Common dividend payments -
= [$120 - ($28 + (($24 + 0.3 × 20) ÷ (1 - 0.4))] ÷ 120
= 0.35 or 35%
