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Answer:
$14,434
Explanation:
The question is asking to find the future value of making a payment of $7,000 every year for two years
The formula for finding future value =
FV = A x annuity factor
Annuity factor = {[(1+r) ^N ] - 1} / r
A = amount = $7,000
R = interest rate = 6.2%
N = 2
[(1.062) ^2 - 1 ] / 0.062 = 2.062
2.062 x $7,000 = $14,434
I hope my answer helps you
Answer:
$9.26 per stock
Explanation:
using the discounted cash flow model, the value of Scampini Technologies is:
company's value = free cash flow / (required rate of return - growth rate) = $25,000,000 / (13% - 7%) = $25,000,000 / 6% = $416,666,667
since the company does not have any debt, the price of each stock is:
stock price = total value of the company / total outstanding stocks = $416,666,667 / 45 million shares = $9.26 per stock
Answer:
a) issuance of bonds:
Cash/bank $250000
Bonds $250000
b) Interest payment
Interest expense $12500 ($25000×6÷12)
cash/bank $12500
c) Adjusting entry
Interest expense $12500 ($25000×6÷12)
cash/bank $12500
Explanation:
Crane has used bonds as a long-term source of finance. The bonds are redeemable after five years which means Crane will have to create a liability and record cash received. The interest paid each year is coupon rate agreed upon issuance of bonds. Interest is calculated on par value of the bond, therefore the interest payment for the year is $25000 ($250000×10%), payable on a half yearly basis. So the interest payment of $25000 will be split between six months and expense recognized.
The journal entries are as follows:-
a) issuance of bonds:
Cash/bank $250000
Bonds $250000
b) Interest payment
Interest expense $12500 ($25000×6÷12)
cash/bank $12500
c) Adjusting entry
Interest expense $12500 ($25000×6÷12)
cash/bank $12500
Adjusting entries are passed at the year end in order to comply with the accruals concept of accounting which requires entities to recognize expenses and revenues in the year they are incurred and earned. So the remaining interest payment (july to dec) relates to the current financial year and hence entry c (above) is recorded to conclude the financial year.
Answer: best cost strategy
Explanation:
The basic strategic approach that AI Motors decided upon is referred to as best cost strategy.
Best-cost strategy is used when companies offer their customers better value for money through the focus on making a difference to their product and also offering a low cost.
In this situation, Al Motors used the best cost strategy which helps in keeping its prices lower than others and also making its vehicle unique from others.