Owner could sell a property he or she fixed up.
Residents pay rent to the owner.
Answer:
Require the issuer to set aside assets at specified amounts to retire the bonds at maturity.
Explanation:
Sinking fund is defined as amounts of money that are set aside to pay off a bond or debt. When a company incurs a debt it will take a large allocation of revenue to offset it. So they start setting aside sinking funds to cushion the hardship of repayment.
This is a way to avoid lump sum payment at bond maturity.
Sinking funds gives some level of security and reduces default risk, so interest rate is usually lower. Cash flow and profitability is increased
Answer:
6,00 is the correct answer.
Explanation:
Gross Profit =
10,000
- 4,000
------------
= $6,000
- Ignore everything except for Sales Revenue (Net Sales) and Cost of goods sold.
Answer:
Nominal rate is 4.4%
Periodic rate is 1.1%
Effective rate is 4.5%
Explanation:
Bank offer the the nominal interest rate to their customer which already includes the inflation effect, so the stated rate is the nominal rate on the investment.
Nominal Interest rate = 4.4%
Interest rate that is calculated for a specific period from an annual rate is periodic interest rate.
Periodic interest rate (Quarterly) = 4.4% x 3 /12 = 1.1%
Effective Interest rate is the actual rate of return that an investor receives including compounding effect. It is expressed in annual term.
Effective Interest rate = ( 1 + 1.1% )^4 - 1 = 4.5%
Answer:
The WACC is 10.93%
Explanation:
The WACC or weighted average cost of capital is the cost of a firm's capital structure. The capital stricture may be formed of the following components namely debt, preferred stock and common stock. The WACC assigns the weights to each of these components based on the finance provided by each of the above components as a proportion of total capital structure or total assets.
The WACC is calculated by taking the market value of each component. The formula for WACC is as follows,
WACC = wD * rD * (1-tax rate) + wP * rP + wE * rE
Where,
- w represents the weight of each component
- r represents the cost of each component
- D, P and E represents debt, preferred stock and Common stock respectively.
- We take after tax cost of debt. So we multiply rD with (1-tax rate)
Debt = 377000 * 106.5% = $401505
Preferred stock = 6850 * 90.50 = $619925
Common stock = 27500 * 70 = $1925000
Total assets = 401505 + 619925 + 1925000 = $2946430
WACC = 401505/2946430 * 7.81% * (1-0.35) + 619925/2946430 * 6.9% +
1925000/2946430 * 13.45%
WACC = 0.1093 or 10.93%
