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3 years ago

If a contract involves a significant financing component:____________.

Business

2 answers:

Pavel [41]3 years ago

7 0

Answer:

The time value of money is used to determine the fair value of the transaction ( B )

Explanation:

If a contract involves a significant financing component the time value of money is used to determine the fair value of the transaction and this is because the time value of money states that the money at hand ( available money ) is worth more than the identical sum of money in the future due to the earning capacity of the money.

therefore a contract involving a significant financing component ( present monetary component ) would have its fair value determined by the time value of money

dedylja [7]3 years ago

3 0

Answer:

B. the time value of money is used to determine the fair value of the transaction.

Explanation:

The time value of money is important principal in order to identify receiving the money then on later date.

Since the contract is based on Financing, therefore, it is mandatory that the amount will be paid on later date.

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The capital budget forecast for the Santano Company is $725,000. The CFO wants to maintain a target capital structure of 45% deb

postnew [5]

According to the residual dividend policy, the net income comes out to be $948,750 with a dividend payout ratio of 57.97%.

<h3>What is the net income?</h3>

Net income is the value that is determined by deducting the charges from the revenues and can be inferred from the profit or loss statement prepared by the company at the year-end.

Given values:

Capital budget: $725,000

Equity ratio: 55%

Dividends: $550,000

Step-1 Computation of net income as per residual dividend policy:

$\rm\ Net \rm\ Income=(\rm\ Capital \rm\ Budget \times\ \rm\ Equity \rm\ Ratio)+\rm\ Dividends\\\rm\ Net \rm\ Income=(\$725,000\times\55\%)+\$550,000\\\rm\ Net \rm\ Income=\$398,750+\$550,000\\\rm\ Net \rm\ Income=\$948,750$

Step-2 Computation of dividend payout ratio:

$\rm\ Dividend \rm\ Payout \rm\ Ratio=\frac{\rm\ Dividends}{\rm\ Net \rm\ Income} \\\rm\ Dividend \rm\ Payout \rm\ Ratio=\frac{\$550,000}{\$948,750} \\\rm\ Dividend \rm\ Payout \rm\ Ratio=57.97\%$

Therefore, option D is the correct answer.

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1 year ago

1. The following costs were incurred in September:

Nata [24]

Answer:

1) conversion costs = direct labor + manufacturing costs = $29,700 + $21,200 = $50,900

2) prime costs = direct labor + direct materials = $29,700 + $46,600 = $69,900

3) direct labor = 45% of conversion costs

conversion costs = direct labor + manufacturing overhead

manufacturing overhead = 55% of conversion costs

conversion costs = $80,300 / 55% = $146,000

direct labor = $146,000 - $80,300 = $65,700

3 0

3 years ago

Judy Billows, owner of Billows Manufacturing has called a meeting with her department heads. She presents last year's contributi

Stels [109]

Answer:

She Presents Last Year's Contribution Margin Income Statement (see Below), Which Is Based On A Sales Volume Of 100,000 Units (one Product Offering) And Operating Income Of $125,000. ... Judy Billows, owner of Billows Manufacturing has called a meeting with her department heads. She

Explanation:

3 0

3 years ago

Read 2 more answers

In a relatively new neighborhood with 524 homes, 72 houses were sold. The turnover index in this neighborhood is

Makovka662 [10]

Answer:

Turnover index = 13.74

Explanation:

Given that,

Total no. of homes = 524

Sold homes = 72

We need to find the turnover index in this neighborhood. It is defined as the ratio total number of leavers in a month by your average number of employees in a month multiplied by 100.

In this situation,

$\text{turnover index}=\dfrac{\text{sold homes}}{\text{Total no. of homes}}\times 100\\\\=\dfrac{72}{524}\times 100\\\\=13.74$

Hence, the turnover index rate is 13.74.

6 0

3 years ago

The current rates are: (1) Spot exchange rate: $2.00/£; (2) 90-day USD denominated bonds: 2% (8% annual); (3) 90-day UK pound de

Sedaia [141]

Solution and Explanation:

Assume US Investor need 1000 Pound after 90 days:

Option 1: Forward Option:1000 pound = 1000 multiply with 1.98 = $1980

Option 2: Invest in UK:

Need 1000 pound after 90 days

so, Invest in UK pound today 1000 divide by 1.04= 961.5385

to get 961.5385 today he need to pay = 961.5385 multiply with $2 ( Current Spot Rate)

= $1923.077

Option 3 : Invest in US:

Need 1000 Pound after 90 days

so forward Exchange rate 1.98 he need 1000 pound* 1.98 = 1980 $ after 90 days

so invest today 1980/1.02 = $1941.176

Advise: Option 2 is best , Invest in UK Bonds

7 0

3 years ago