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3 years ago

Which of the following statements is false?

1 answer:

8 0

Answer: d. A company paid for an insurance premium of $6,000 on January 1. The insurance is for a year. Failing to make adjustments for the month of January would overstate assets and stockholder's equity by $6,000.

Explanation:

If a company were to pay $6,000 for Insurance for the YEAR in January, this would be recorded as a PREPAID EXPENSE.

This Prepaid Expense will then be apportioned per month over the year to each month as expenses of $500.

Failing to make adjustments for the month of January would not overstate assets and stockholder's equity by $6,000 but by $500.

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Wald Inc.'s bonds currently sell for $1,120 and have a par value of $1,000. They pay an $85 annual coupon and have a 20-year mat

ella [17]

Answer:

A. 7.08%

B. 6.49%

C. 5.95%

D. 6.71%

E. 7.34%

The correct option is B,6.49%

Explanation:

The return that the investor would earn is the yield to maturity of the bond which is calculated using rate formula in excel as shown thus:

=rate(nper,pmt,-pv,fv)

nper is the number of coupon payments the bond would receive which 5 since the bond can be called in 5 years

pmt is the annual coupon of $85

pv is the current market price of $1,120

fv is the call price in 5 years which is $1,050

=rate(5,85,-1120,1050)=6.49%

5 0

3 years ago

One of the four major time value of money terms; the amount to which an individual cash flow or series of cash payments or recei

maxonik [38]

Answer:

Future value

Explanation:

Future value is the value an assets as currently based on the assumed rate of its growth or increase.

Determining the future value of money or an investment helps one to make calculated decisions on what to get from the purchasing power of such money or how much the investment will be worth in the future.

Future value is calculated using

FVi=PV (1+I)n

Where

FVi is the value at the end of a particular period.

PV is price value.

I is the interest rate.

n is the number of compounding periods.

4 0

4 years ago

Read 2 more answers

Rida, Inc., a manufacturer in a seasonal industry, is preparing its direct materials budget for the second quarter. It plans pro

exis [7]

Answer and Explanation:

The preparation of the direct material budget for the second quarter is presented below:

Rida Inc

Direct Materials Budget Second Quarter

Units to be produced 240,000 units

Materials requirement per unit 0.60 pounds

Materials needed for production (pounds) 144,000 pounds

Add: Budgeted ending inventory (pounds) 9,450 pounds

(52,500 units × 0.60 pounds × 30%)

Total materials requirements (pounds) 153,450 pounds

Less: Beginning inventory (pounds) 43,200 pounds

Materials to be purchased (pounds) 110,250 pounds

Multiply Material price per pound $175

Budgeted cost of direct materials $19,293,750

We added the ending inventory and deduct the beginning inventory to the production units so that the purchased units could come and then multiply it with the material price per pound so that the budgeted cost could come

7 0

4 years ago

Marie has a weekly budget of $24, which she likes to spend on magazines and pies. If the price of a pie is $12, what is the maxi

dedylja [7]

Answer:

a. If the price of a magazine is $4 each, what is the maximum number of magazines she could buy in a week?

6 magazines

b. If the price of a pie is $12, what is the maximum number of pies she could buy in a week?

2 pies

c. What is Marie's opportunity cost of purchasing a pie?

3 magazines

Explanation:

Marie's weekly budget = $24

each magazine costs $4, total amount of magazines that can be purchased per week = $24 / $4 = 6 magazines

each pie costs $12, total amount of pies that can be purchased per week = $24 / $12 = 2 pies

Marie's opportunity cost of purchasing one pie = $12 / $4 = 3 magazines

6 0

4 years ago

Read 2 more answers

If annualized nominal interest rates in the US and Switzerland are 12% and 8% respectively and the 90-day forward [one-year forw

Kobotan [32]

Answer:

Current spot rate for the Swiss frank will interest rate parity hold is <u>$1.0214</u>

Explanation:

As per given data

Annualized nominal interest rates in the US = 12%

Annualized nominal interest rates in the Switzerland = 8%

90 days forward rate = $1.0218

As we know

According to interest rate parity theory

Forward rate differential = Interest rate differential

( ( F - S ) / S ) x (360/n) = ( ( 1 + ru ) / ( 1 + rs ) ) - 1

Where

F = Forward Rate = $1.0218

S = Spot rate = ?

n = numbers of days = 90 days

ru = Annualized nominal interest rates in the US = 12%

rs = Annualized nominal interest rates in the Switzerland = 8%

Placing the values in the formula

( ( $1.0218 - S ) / S ) x (360/90) = ( ( 1 + 12% ) / ( 1 + 8% ) ) - 1

( ( $1.0218 - S ) / S ) x 4 = ( 1.12 / 1.08% ) - 1

( ( $1.0218 - S ) / S ) x 4 = 0.037037

( ( $1.0218 - S ) / S ) = 0.037037 / 4

( $1.0218 - S ) / S = 0.00925925

$1.0218 - S = S0.00925925

$1.0218 = S0.00925925 + S

$1.0218 = S1.00925925

S = $1.0218 / 1.00925925

S = $1.0214

7 0

3 years ago