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kati45 [8]
3 years ago
7

If you have an extremely "bullish" outlook on the stock market, you could attempt to maximize your rate of return by ___________

_____. purchasing out-of-the-money call options purchasing at-the-money bull spreads purchasing in-the-money call options purchasing at-the-money call options
Business
1 answer:
Bad White [126]3 years ago
6 0

purchasing out-of-the-money call options is the answer

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U.i designs is an all equity firm that has 40000 shares of stock outstanding. the company has decided to borrow $1 million to bu
velikii [3]

Answer: The value of the firm is $16 million.

For this question we use the Modigliani-Miller Proposition I which states that the value of the firm is same irrespective of the amount of equity and debt in its capital structure, ignoring taxes.

Amount borrowed for buyback = $1m

No. of shares bought back   = 2500

Value per share                    = $400 = \frac{1000000}{2500}

Shares outstanding before buyback = 40000 shares

Shares bought back                           =  2500 shares

Shares outstanding after buyback    = 37500 = 40000-2500  

Next we calculate the value of the firm before and after buyback of shares.

The value of the firm before buyback comprises of only 40000 equity shares. There is no debt. Hence,

Value of the firm before buyback = Shares outstanding before buyback * Value per share

Value of the firm before buyback = 40000 * 400

Value of the firm before buyback = 16000000 or 16 million

The value of the firm after buyback will be

Value after buyback = (Shares outstanding after buyback * Value per share) + Value of debt

Value after buyback = (37500* 400) + 1000000

Value after buyback = 15000000 + 1000000

Value after buyback = 16000000 or 16 million

Since value of the firm before and after buyback of shares is the same, we can say that the Modigliani-Miller Proposition I without taxes holds and the value of the firm is $16 million.

3 0
3 years ago
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's reporting year-end is Dece
Lyrx [107]

Answer:

Adjusting entries

Depreciation on the office equipment for the year is $10,300.

Dr Depreciation expense 10,300

    Cr Accumulated depreciation 10,300

Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $900.

Dr Wages expense 900

    Cr Wages payable 900

On October 1, 2021, Pastina borrowed $50,600 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.

Dr Interest expense 1,518

    Cr Interest payable 1,518

On March 1, 2021, the company lent a supplier $20,600 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.

Dr Interest receivable 1,373

    Cr Interest revenue 1,373

On April 1, 2021, the company paid an insurance company $6,600 for a two-year fire insurance policy. The entire $6,600 was debited to prepaid insurance.

Dr Insurance expense 2,475

    Cr Prepaid insurance 2,475

$560 of supplies remained on hand at December 31, 2021.

Dr Supplies expense 1,240

    Cr Supplies 1,240

A customer paid Pastina $2,300 in December for 900 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.

No entry is required

On December 1, 2021, $1,200 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $600 per month. The entire amount was debited to prepaid rent.

Dr Rent expense 600

    Cr Prepaid rent 600

             Pastina Company

             Income Statement

For the Year Ended December 31, 2021

Sales revenue $149,000

Interest revenue $1,373

Cost of goods sold -$73,000

Salaries expense -$20,100

Rent expense -$11,900

Depreciation expense -$10,300

Interest expense -$1,518

Supplies expense -$2,640

Insurance expense -$2,475

Advertising expense -$3,300

Net income = $25,140

             Pastina Company

               Balance Sheet

For the Year Ended December 31, 2021

Assets

Current assets:

Cash $32,000

Accounts receivable $40,600

Supplies $560

Inventory $60,600

Notes receivable $20,600

Interest receivable $1,373

Prepaid rent $600

Prepaid insurance $4,125

Total current assets: $160,458

Non-current assets:

Office equipment $82,400

Accumulated depreciation $41,200

Total non-current assets: $41,200

Total assets: $201,658

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $31,600

Wages payable $900

Interest payable $1,518

Deferred sales revenue $2,300

Total current liabilities: $36,318

Long term debt:

Notes payable $50,600

Total long term debt: $50,600

Total liabilities: $86,918

Stockholders' equity:

Common stock $64,200

Retained earnings $50,540

Total stockholders' equity: $114,740

Total liabilities and stockholders' equity: $201,658

retained earnings = previous balance + net income - dividends = $30,000 + $25,140 - $4,600 = $50,540

                          Pastina Company

             Statement of Shareholders’ Equity

          For the Year Ended December 31, 2021

Balance on January 1: Common stock            $64,200

Balance on January 1: Retained earnings       $30,000

Net income 2021                                                $25,140

- Dividends                                                         ($4,600)

Subtotal                                                              $50,540

Balance on December 31: Common stock      $64,200

Balance on December 31: Retained earnings $50,540

6 0
3 years ago
____are not very liquid because you cannot take out money
kykrilka [37]

Answer:

My answer is A) C) and D)

Explanation:

If I am wrong please tell me.

4 0
3 years ago
Fvbfffbvbfbfbt rgrfgvfvfv
Dmitry [639]

Answer:

I do not understand the letters of which you are writing.

5 0
3 years ago
In 1969, don bought a dodge dart for $2,500. he drove this car until 2003 when he bought a honda civic for $18,000. if the price
nexus9112 [7]
Close to around 15,000?
3 0
3 years ago
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