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Mice21 [21]
3 years ago
8

Athlon Company acquired 30 percent of the common stock of Opteron Corporation, at underlying book value. For the same year, Opte

ron reported net income of $55,000, which includes an extraordinary gain of 40,000. It did not pay any dividends during the year. By what amount would Athlon's investment in Opteron Corporation increase for the year, if Athlon used the equity method
Business
1 answer:
MatroZZZ [7]3 years ago
8 0

Answer:

$16,500

Explanation:

The computation of increase in investment is shown below:-

Here, if the investor holds 20% or more but less than 50% shares than the dividend paid and income earned by the investee are reported.

Increase in investment = Shares of net income - Share of dividends

= $55,000 × 30% - $0 (Dividend is not paid)

= $16,500

Therefore for computing the increase in investment under equity method we simply applied the above formula.

You might be interested in
. El Capitan Foods has a capital structure of 36% debt and 64% equity, its tax rate is 35%, and its beta (leveraged) is 1.4. Bas
almond37 [142]

Answer:

The firm's unleveraged beta is 1.0251

Explanation:

Hamada's equation  is used to separate the financial risk of a levered firm from its business risk.

The Hamada equation:

Bu= Bl/(1 + (1 − T)(D/E))

Bl = 1.4

wd = 0.36

Tax rate = 35%

D/E = wd / (1 – wd) = 0.5625 = 56.25%

= 1.4/ (1+(1-0.35)(0.5625))

=1.4/ 1 + (0.65)(0.5625)

=1.4/1.36

= 1.0251

5 0
3 years ago
A group of individuals in the age group of 11 to 16 years who extensively use the internet is an example of market segment
Leni [432]
The correct answer to this statement is true. It is because a market segment's purpose is to have a group in which shares the same characteristics or goals because of marketing purpose. It could be seen in the scenario above in how they share the same characteristic in using the internet.
3 0
3 years ago
Nichols Enterprises has an investment in 250 bonds of Elliott Electronics that Nichols accounts for as a security available for
abruzzese [7]

Answer:

securities available for trade: 250,000

Explanation:

The investment will be trade at market value. which is 1,200

Nichols cannot set the price of an assetat his own will. If possible a company will do it to increase his assets and look more solid than it is.

To evaluate the bonds at 1,200 the market price will need to be at 1,200

Currently the price third parties gives the security is 1,000 so it should carry the investment  at

250 bonds x 1,000 market value = 250,000

4 0
3 years ago
The cost performance index (CPI): a. can be used to estimate the projected cost of completing the project. b. indicates that the
Evgen [1.6K]

Answer:

The correct answer is letter "A": can be used to estimate the projected cost of completing the project.

Explanation:

The Cost Performance Index or CPI measures the projected cost of work completed compared to the current cost spent. The CPI represents a ratio of earned value to actual cost. If the CPI is greater than one, the project is under budget. When the CPI equals one the planned and actual costs are equal. If the CPI is higher than one, the project is over budget.

3 0
2 years ago
An economics professor is discussing a measure of inflation over time based on a basket of goods comprised of all the components
Jlenok [28]

Answer:

GDP Price Deflator

Explanation:

GDP price deflator is a measure of the general changes in the price level of all the finished goods and services in a country in a period.  While GDP is a measure of the total output in an economy, the GDP price deflator shows the extent to which prices changed in a period. In proving the effects of price changes, the GDP deflator identifies a base year then compares the current prices to base year prices.

The GDP price deflator allows economists to compare the GDP   of different periods while considering the inflation between those periods. It does this by comparing the nominal GDP with the real GDP.

3 0
3 years ago
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