Answer:
b. She should develop herself as the EMV of developing is $1.125 million, which is higher than the EMV of selling.
Explanation:
The probability of discovered oil = 0.25 (25%)
Selling the exploration right= Selling Price + Probability of discovered oil × Royalty% × Future Profit
= $200,000 + 0.25 × 0.25 × $7,500,000 = $668,750
Developing = Probability of finding the oil × Future Profits - Cost of Well
= 0.25 × $7,500,000 - $750,000 = $1,125,000
= $1.125 million
Therefore the EMV for selling the exploration rights is less than the developing, the landowner will develop the site by his own.
Answer:
$32.60
Explanation:
Data provided in the question:
Dividend paid per share = $0.60
Market price per share = $35.75
Required returns, r = 11.5% = 0.115
Now,
Current price = [ Dividend paid per share + Market price per share ] ÷ ( 1 + r )
= [ $0.60 + $35.75 ] ÷ ( 1 + 0.115 )
= $36.35 ÷ 1.115
= $32.60
Answer:
Given:
Sales budget = 5,900 units
Variable selling and administrative expense = $11.20 per unit
Fixed selling and administrative expense = $131,570 per month
Depreciation = $16,520 per month
Therefore, we'll compute cash disbursements for selling and administrative expenses using the following formula:
<em>Cash disbursements = Variable selling and administrative expense × Sales budget + Fixed selling and administrative expense - Depreciation</em>
Cash disbursements = $11.20 × 5,900 + $131,570 - $16,520
<u><em>Cash disbursements = $181,130</em></u>
Answer:
$37,100
Explanation:
Calculation for what Vaughn should report as cash and cash equivalents
Cash in bank $36,200
Petty cash 300
Short-term paper with maturity of 2 months 600
Cash and cash equivalents $37,100
Therefore Vaughn should report cash and cash equivalents of:$37,100
Answer:
Reason : To ensure constant flow of cash
Explanation:
<u>Accrual Basis of accounting</u> records transactions when they meet definition and recognition criteria of Assets, Liabilities,Equity, Expense and Incomes.
This is different from<u> cash-basis accounting</u> which records transactions at the receipt or payment of cash.
Because of <em>timing</em> difference, the cash transactions (cash basis) can happen a late than the day of recognition of the elements (accrual basis).
Hence Revenue services demand that income tax be calculated on accrual basis to ensure a constant flow of cash whenever an entity transact.
