Answer:
A.Incorrect
B. Incorrect
Explanation:
a) A manager might reject a proposal using ROI that the manager would accept using residual income
The statement is incorrect. The reverse is true. Using ROI entails the manager comparing the ROI after a project to the ROI before, where implementing a project makes the ROI after to be less than what it before the project, the Manager would most likely not implement the project. This would happen notwithstanding that the project produces positive residual income.
b) Managers will be more likely to pursue projects that will benefit the entire company when being evaluated on ROI instead of residual income.
This statement is incorrect. ROI makes the manager to pursue his own interest and that of its division at the expense of the group objectives. It leads to sub-optimal decision
Answer:
cash 910,000 debit
bonds payable 850,000 credit
premium on BP 60,000 credit
-- to record issuance of bonds --
interest expense 63700 debit
amortization 4300 credit
cash 68000 credit
--to record coupon payment at December 31th--
Explanation:
issuance:
cash proceed of 910,000 face value of 850,000 the 60,000 difference wil be a premium.
interest entry:
we multiply the carrying value of the bonds by the market rate
we calcualte the cash procees as ussual: face value x bond rate
the difference wil be the amortization on premium
910,000 x 7% 63,700
850,000 x 8% 68,000
amorization 4,300
Answer:
the maximum loan size is $1,278,335.62
Explanation:
The computation of the maximum loan size is as follows:
= (NOI first year ÷ debt coverage rate) × 1 ÷ (rate of interest) × (1 - 1 ÷ (1 + rate of interest)^number of years)
= ($150,000 ÷ 1.5) × 1 ÷ (6%) × (1 - 1 ÷ (1 + 6%)^(25))
= $1,278,335.62
hence, the maximum loan size is $1,278,335.62
We simply applied the above formula
Answer:
a) What is the expected transaction price with variable consideration estimated as the expected value?
- original cost $5,800 if job is finished in one month (15% probability)
- bonus price for finishing 2 weeks earlier $5,800 x 1.25 = $7,250 (25% probability)
- bonus price for finishing 1 week earlier $5,800 x 1.15 = $6,670 (60% probability)
expected transaction price = ($5,800 x 15%) + ($7,250 x 25%) + ($6,670 x 60%) = $6,684.50
b) What is the expected transaction price with variable consideration as the most likely amount?
$6,670, since it has a 60% probability
