Answer:1. Make provision for warranty claims.
2. Disclosure of contingent liability
3. No cost should be recorded.
Explanation:
Warranty is an assurance made by firms to make good any agreed loss that is incurred by the customers in usage of goods and services whiting the period of the warranty. Since an estimation can be made based on firms history of sales a provision has to be made for possible warranty.
Since it's only probably that a loss will be Incurred by the firm by going into the contract and the financial statement has not been issue the firm should made a contingent liability disclosure in the report.
The self insurance is not a contract with a third party, in this vein no cost will be accrued until the loss is actually suffered.
The convexity of the bond is 61.810 and the duration of the bond is 7.330 years.
<u>Explanation</u>:
- A newly issued bond has a maturity of 10 years. It pays a 7.7% coupon rate. The coupon payments will receive each year. Using the coupon payments the year will be reduced.
- The maturity year will get reduced. So the duration of the bond is approximately 7.330 years. If the bond is sold at par value the convexity can be calculated using the number of years.
- So the convexity of the bond is 61.810.
Answer:
$58,740
Explanation:
The computation of the cash paid is shown below:
For March month
= March purchase × remaining percentage
= $53,000 × 80%
= $42,400
For April month
= April purchase × given percentage × after applying cash discount
= $86,000 × 20% × 95%
= $16,340
So, the total amount of cash paid would be
= $42,400 + $16,340
= $58,740
Simply we multiply the monthly percentage with their percentage criteria
Answer: higher than
Explanation: The stockholders of companies in the infant industry gain when they are protected from world competition
-Consumes in that country will therefore pay a price higher than the world price.
Answer:
7.42%
Explanation:
Value = 500 million
Amount of debt = 200 million
Time = year
Volatility = 6%
Risk free rate = 0.05
Nd1 = 0.9720
Nd2 = 0.9050
We have to calculate the value =
500 - (500 x 0.9720 - 200 x e^-0.05 x 0.9050)
= 186.17 million
We now calculate the yield
(200/186.17)^1 - 1
= 0.0742
= 7.42%
