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babymother [125]
3 years ago
8

Pam is in need of cash right now and wants to sell the rights to a $1,000 cash flow that she will receive 5 years from today. If

the discount rate for such a cash flow is 9.5%, then what is the fair price that someone should be willing to pay Pam today for rights to that future cash flow?
Business
1 answer:
Virty [35]3 years ago
8 0

Answer:

Fair price =$635.23

Explanation:

<em>Th fair price that he should be willing to pay is the present value of the $1000 expected in 5 years time.</em>

<em>Present value (PV) is the worth today if a future amount is discounted at a particular rate of interest.</em>

PV = FV × (1+r)^(-n)

PV - present value = ?

FV -Future value - 1000,

r- discount rate - 9.5%,

n - future date - 5

PV = 1,000 × (1.0950^(-5)

PV = 1,000 × 0.6352

PV =635.2276653

Fair price =$635.23

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Incorporators are required to sign the charter, deliver it to the proper state officials, and purchase a certain percentage of t
alex41 [277]

The statement " Incorporators are required to sign the charter, deliver it to the proper state officials, and purchase a certain percentage of the initial stock offering " is FALSE.

Explanation:

Incorporation of a business means making a company officially known by the company's sole property or general partner. If a company forms, it becomes a legal structure separating the individuals who founded the company.

Even though a company does not have a office there, the company must always have a registered agent within the state of incorporation.

Incorporation provides shareholders with immunity from personal liability for the company's debts.

8 0
3 years ago
The best explanation of why Gulf airlines are giving U.S. legacy carriers stiff competition is that the Gulf carriers:
EleoNora [17]

Answer:

C. offer better service for lower costs than do the U.S. legacy carriers.

Explanation:

Globalization is best described as a process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs.

The strategic foundations of the globalization hypothesis are based primarily on cost reduction, which benefits the company in beating the rivals in the global market.

In the given case, Gulf airlines are giving U.S. legacy carriers stiff competition because Gulf carriers offer better service for lower costs than do the U.S. legacy carriers.

4 0
3 years ago
Break-Even Point Freese Inc. sells a product for 650 per unit. The variable cost is 455 per unit, while fixed costs are 4,290,00
andreyandreev [35.5K]

Answer:

Results are below.

Explanation:

<u>To calculate the break-even point in units, we need to use the following formula:</u>

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 4,290,000 / (650 - 455)

Break-even point in units= 22,000

<u />

<u>Now, if the selling price is $655, the break-even point in dollars is:</u>

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 4,290,000 / [(655 - 455) / 655]

Break-even point (dollars)= $14,049,750

6 0
2 years ago
On January 1 of year 1, Arthur and Aretha Franklin purchased a home for $1.5 million by paying $200,000 down and borrowing the r
ASHA 777 [7]

Answer:

a. What is the amount of the interest expense the Franklins may deduct in year 1?

this will depend on the total interest paid during the year, since we are not told how long their mortgage is, we cannot know exactly how much interest expense they will pay. Generally mortgages require monthly payments, so I prepared a simulated amortization schedule for the first year assuming that the mortgage lasts 30 years and a monthly payment of $8,648.93.

year  beg.     scheduled  principal interest ending

        balance      payment                                      balance

1 1300000    8649         1066 7583 1298934

2 1298934    8649         1072 7577 1297863

3 1297863    8649         1078 7571 1296785

4 1296785    8649         1084 7565 1295700

5 1295700    8649         1091         7558 1294609

6 1294609    8649         1097 7552 1293512

7 1293512    8649         1103         7545 1292409

8 1292409    8649         1110         7539 1291299

9 1291299    8649         1116      7533 1290183

10 1290183    8649         1123  7526 1289060

11 1289060    8649         1129  7520 1287931

12 1287931    8649         1136  7513 1286795

total interest                                     $90,582

  • The total interest that can be deducted in this case would be $90,582 during year 1.

b. Assume that in year 2, the Franklins pay off the entire loan but at the beginning of year 3, they borrow $300,000 secured by the home at a 7 percent rate. They make interest-only payments on the loan during the year. What amount of  interest expense may the Franklins deduct in year 3 on this loan (the Franklins do not use the loan proceeds to improve the home)?

  • $0, interests from home equity loans used for personal expenses are not deductible.

c. Assume the same facts as in (b), except that the Franklins borrow $80,000 secured by their home. What amount of interest expense may the Franklins deduct in year 3 on this loan (the Franklins do not use the loan proceeds to improve the home)?

  • $0, interests from home equity loans used for personal expenses are not deductible.

Explanation:

8 0
3 years ago
Compute the Cost of Goods Manufactured and Cost of Goods Sold for West Nautical Company for the most recent year using the amoun
Nadya [2.5K]

Answer:

All figures are imaginary .

Explanation:

West Nautical Company

<u>Cost of Goods Manufactured​ (in millions). and Sold</u>

 

                                                                               <u>Dr                     Cr </u>

 

                                                                           (000)                  (000)

 

Direct Materials (opening Inventory)                 30,000

 

Add Purchases                                                    10,000

 

Less Ending Inventory                                         6000

 

Direct Materials Used                                                                   34,000

 

Conversion Costs

 

Add Direct Labor                                               21,000

 

Factory Over Head                                                                    

 

Indirect Materials                                                 50

 

Indirect Labor                                                       14,000

 

Rent On Factory Building                                      3000

 

Depreciation (equip)                                           5000

Utilities                                                                   4000

 

Property Tax                                                          2000

 

Insurance                                                               1000

 

Total Factory Overhead/ Total Manufacturing Costs       29,050    

Deduct Under applied Overhead                                 <u>      250      </u>

<u>  Overhead applied to work in process                         28,800</u>

<u />

Total Manufacturing Costs                                            <u> 83,800</u>

Add Beginning Work In Process                                    4000

 

Total Goods in Process                                                                87,800

 

Less Ending Work In Process                                                       39,800

 

Cost Of Goods Manufactured                                                        48000

 

Add opening  Finished Goods                                                        12,000

 

Cost of Goods Available for Sale                                                    60,000

 

Less Closing Finished Goods                                                         24000

 

Cost Of Goods Sold                                                                          36000

Add underapplied overhead                                                              250

Cost of goods Sold ( adjusted for under applied overhead** )        36,250

 ** The company closes under applied or over applied overhead into cost of goods sold . Hence, $ 250 balance in under applied overhead is added to the cost of goods sold for the month.

5 0
3 years ago
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