Will leaving the country make an American businessman immune to U.S. laws?

Maud, a calendar year taxpayer, is the owner of a sole proprietorship that uses the cash method. On February 1, 2019, she leases

gtnhenbr [62]

Answer:

She can deduct the full $120,000. the answer is $120,000.

Explanation:

Therefore, M is following cash basis of accounting , She can deduct the full $120,000 amount. Under cash system, expenses are recorded when cash is paid irrespective of whether it is accrued or not.

5 0

3 years ago

Star, Inc., a prominent consumer products firm, is debating whether or not to convert its all-equity capital structure to one th

Dmitry_Shevchenko [17]

Answer:

Explanation:

1) The earnings per share are:

EPS = $39,100/17,000 shares

EPS = $2.30

Cash flow for the company is:

Cash flow = $2.30 X 150 shares

Cash flow = $345

2) Need to determine the EPS of the firm under the proposed capital structure. The market value of the firm is:

MV = $47*17,000 = $799,000

Under the proposed capital structure, the firm will raise new debt in the amount of D = 0.20*$799,000 = $159,800 in debt. The number of shares repurchased will be:

Shares repurchased = $159,800/$47 = 3400

Under the new capital structure, the company will have to make an interest payment on the new debt. The net income with the interest payment will be:

NI = $39,100 – 0.065*$159,800 = $39100-10,387= $28,713

EPS under the new capital structure will be:

EPS = $28,713/13,600 shares = $2.11

Shareholder cash flow = $2.11*150 shares = $316.5

3) In this case, capital structure is irrelevant because shareholders can create their own leverage or unlever the stock to create different capital structures. This has no connection with the capital structure that firm chooses.

6 0

3 years ago

1. Which advantage is not enjoyed by the owner of a sole proprietorship?

gayaneshka [121]

The correct answer to 1 is the ability to easily raise financial capital.

A sole proprietor is limited to the cash that they personally have, so this is a disadvantage when they need additional capital for the business.

The correct answer to 2 is that their personal property can be used to pay debts.

A partnership is personally responsible for the debts of the company. If the company owes money and cannot pay it, the partners that own the business are personally responsible.

The correct answer to 3 is the shareholders.

The shareholders are the owners of the corporation. They vote for a board of directors who in turn oversee the operation of the corporation.

8 0

3 years ago

What determines the value of an item?

galina1969 [7]

The value of item is determined by its utility to the person who is purchasing it. If an item has high utility, then consumers are willing to pay more and will value the product more. If an item has low utility, it will not be very valuable to the person. People value items differently. the old saying that one's man's trash is another's treasure holds true here.

7 0

3 years ago

The S&P 500 Index is one of the most commonly used benchmark indices for the U.S. equity markets. Consisting of 500 companie

seropon [69]

Answer:

1. Based on my understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher?

Th e correct option is (b). The outlook for the economy and the markets is for improvement.

2. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). What kind of risk will you primarily be exposed to?

Th e correct option is (b). Portfolio risk

3. Generally, investors would prefer to invest in assets that have:

a. A higher-than-average expected rate of return given the perceived risk

Explanation:

1. Based on my understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher?

Th e correct option is (b). The outlook for the economy and the markets is for improvement. If the outlook of the economy and the market prospects of the stocks are for improvements, it then means that the Price Per Earning of the stock will be increasing, which is a positive economic trend.

Moreover, since we are talking about the average P/E it can be inferred that in the very long run, average of the S&P 500 Price to Earnings (PE) ratio (since 1900) is approximately 15.8, and the ratio since 1946 (the post-World War II period) is 17.3, so, it is fair to call a "normal" PE ratio about 16.5, which is relatively stable over the years.

2. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). What kind of risk will you primarily be exposed to?

Th e correct option is (b). Portfolio risk is the chance that the combination of assets or units, within the investments that you own, fail to meet financial objectives. Each investment within a portfolio carries its own risk, with higher potential return typically meaning higher risk. It can be computed as the risk of the two-securities portfolio, first take the square of the weight of 40 Stocks ($100,000.00) and multiply it by square of standard deviation of the 40 stocks. Repeat the calculation for 20 Bonds and a Certificate of Deposit.

3. Generally, investors would prefer to invest in assets that have:

a. A higher-than-average expected rate of return given the perceived risk Yes they will because a higher -than average expected rate of return will inform the investor the type of strategies to adopt to guarantee the expected earnings containing the risk.

5 0

3 years ago