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Dmitriy789 [7]
3 years ago
14

Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance

Assets Cash $ 134,000 $ 126,000 Accounts receivable 342,000 487,000 Inventory 567,000 481,000 Plant and equipment, net 807,000 796,000 Investment in Buisson, S.A. 409,000 428,000 Land (undeveloped) 251,000 254,000 Total assets $ 2,510,000 $ 2,572,000 Liabilities and Stockholders' Equity Accounts payable $ 378,000 $ 340,000 Long-term debt 1,010,000 1,010,000 Stockholders' equity 1,122,000 1,222,000 Total liabilities and stockholders' equity $ 2,510,000 $ 2,572,000 Joel de Paris, Inc. Income Statement Sales $ 3,927,000 Operating expenses 3,337,950 Net operating income 589,050 Interest and taxes: Interest expense $ 110,000 Tax expense 199,000 309,000 Net income $ 280,050 The company paid dividends of $180,050 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an investment in the stock of another company. The company's minimum required rate of return of 15%.
Required:
1. Compute the company's average operating assets for last year.
2. Compute the company’s margin, turnover, and return on investment (ROI) for last year. (Do not round intermediate calculations and round your final answers to 2 decimal places.)
3. What was the company’s residual income last year?
Business
1 answer:
Nikolay [14]3 years ago
8 0

Answer:

Please see the detailed solution below:

Explanation:

Solution 1:

Average Operating Assets = (Beginning Operating Assets + Ending Operating Assets) / 2

Average Operating Assets = ($1,850,000 + $1,890,000) / 2

Average Operating Assets = $3,740,000 / 2

Average Operating Assets = $1,870,000

Solution 2:

Margin = Net Operating Income / Sales

Margin = $589,050 / $3,927,000

Margin = 0.15 i.e., 15%

Turnover = Sales / Average Operating Assets

Turnover = $3,927,000 / $1,870,000

Turnover = 2.1

Return on Investment = Margin x Turnover

Return on Investment = 15% x 2.1

Return on Investment = 31.5%

Solution 3:

Residual Income = Net Operating Income - (Minimum Required Rate of Return x Average Operating Assets)

Residual Income = $589,050 - (15% x $1,870,000)

Residual Income = $589,050 - $280,500

Residual Income = $308,550

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tatiyna

Answer:

$41.69.

Explanation:

P9 = Next dividend / Required rate - Growth rate

P9 = $5 / 8% - 2%

P9 = $5 / 6%

P9 = $5 / 0.06

P9 = $83.33

So, the stock price for 9th year is $83.33

Current stock price = P9 / (1 + Required rate of return)

Current stock price = $83.33 / (1+0.08)^9

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8 0
3 years ago
A home buyer can afford to spend no more than $1500/month on mortgage payments. Suppose that the interest rate is 6%, that inter
krok68 [10]

Answer:

20 years mortgage:

maximum loan  $ 209, 371.16

interest paid     $  150,628.84

30 years mortage

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interest paid     $  289,812.58

Explanation:

20 years mortgage:

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 1,500.00

time 240 (20 years x 12 months)

rate 0.005 ( 6% annual / 12 months per year)

1500 \times \frac{1-(1+0.005)^{-240} }{0.005} = PV\\

PV $209,371.1575

Quota x number of cuotas - principal = total interest

1,500 x 240 - 209,371.16 = 150628.84

30 years mortgage

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 1,500.00

time 360

rate 0.005

1500 \times \frac{1-(1+0.005)^{-360} }{0.005} = PV\\

PV $250,187.4216

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8 0
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On December 31, 2021, Interlink Communications issued 6% stated rate bonds with a face amount of $100 million. The bonds mature
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Answer:

The bonds were issued at $87,590,959

Explanation:

The bonds will be issued at the present value of the coupon and maturity discounted by the market rate

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 6,000,000.000 ( 100 million x 6%)

time 30 (2051 - 2021)

market rate 7% = 7/100 = 0.07

6000000 \times \frac{1-(1+0.07)^{-30} }{0.07} = PV\\

PV $74,454,247.1010

PV of the maturity

\frac{Maturity}{(1 + rate)^{time} } = PV  

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time   30.00

rate  0.07

\frac{100000000}{(1 + 0.07)^{30} } = PV  

PV   13,136,711.72

Total current value of the bonds:

PV coupon  $ 74,454,247.1010

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8 0
2 years ago
NeNe is an accountant and a U.S. citizen who has accepted a permanent position in Madrid, Spain, for a Spanish financial service
s2008m [1.1K]

Question options:

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b) 16,128

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Answer:

a) NeNe can exclude all of the housing payment because she worked more than 330 days overseas

Explanation:

US citizens working and living abroad would still have to remit taxes to the US, albeit with exclusions.

Under US tax law, IRS states that US citizens may deduct/exclude the value of meal and lodging expenses granted to them by the employer. Under the foreign housing exclusion, Nene qualifies for the benefits of housing exclusion because she has a foreign earned income and has lived at least 330 days within a period of 12 consecutive months in the foreign country.

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