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Aleonysh [2.5K]
3 years ago
14

When you construct the replicating portfolio for the option in the previous question how many dollars do you need to invest in t

he cash account
Business
1 answer:
netineya [11]3 years ago
4 0

Answer: The same amount of dollars

When it comes to the financial level, a replicating portfolio as the name implies, is a repetition of specific flows of a given asset, so it must be constituted with the same resources. In this case, the same amount of cash would be needed to create the replica.

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upton industries has revenues of $42,629, interest expense of $1,230, depreciation of $2,609, cost of goods sold of $23,704, div
igor_vitrenko [27]

Option a) $5075.88 is the addition to the retained earnings

Current profits less any dividends or other payouts to shareholders are a company's retained earnings. Every time an accounting entry is made that has an effect on a revenue or expense account, this sum is modified. A sizable retained profits balance suggests that the corporation is in a secure financial position.

Computing after-tax profit:

(Revenues - Interest cost - Depreciation - Cost of goods sold - Administrative costs) x ( 1 - tax)

= ($42629 - $1,230 - $2,609 - $23,704 - $7,040) x ( 1 - 22%)

= $6,275.88

Retained earnings addition:

= After-tax net profit - Dividends paid

= 6,275.88 - 1,200

= $5,075.88

Hence, option a) is the correct answer

Learn more about retained earnings:

brainly.com/question/14529006

#SPJ4

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