Answer:
The actual effective annual rate is <u>3.33%</u>.
Explanation:
Effective Annual Rate (EAR) refers to an interest rate has been adjusted for compounding over specified period of time.
Effective annual rate can therefore be described as the interest rate that paid to an investor in a year after compounding has been adjusted for.
Effective annual rate can be computed using the following formula:
EAR = [(1 + (i / n))^n] - 1 .............................(1)
Where;
i = Annual interest rate claimed by the dealer = 3.28%, or 0.0328
n = Number of compounding periods or months = 12
Substituting the values into equation (1), we have:
EAR = [(1 + (0.0328 / 12))^12] - 1 = 0.0332976137123635
EAR = 0.0333, or 3.33% approximately.
Therefore, the actual effective annual rate is <u>3.33%</u>.
Answer:
effective interest rat = 0.094 or 9.41%
Explanation:
effective rate of interest is given as
borrow interest rate = 8%
compensating rate =15%
effective interest rate = \frac{8%}{1 -15%}
effective interest rat = 0.094 or 9.41%
Answer:
Please find the detailed answer in the explanation section.
Explanation:
CURRENT YEAR SUBSEQUENT YEAR
1. Working Capital Overstated No effect
Current Ratio Overstated No effect
Retained Earnings Overstated No effect
Net Income Overstated Understated
2. Working Capital No effect No effect
Current Ratio Overstated No effect
Retained Earnings No effect No effect
Net Income No effect No effect
3. Working Capital Overstated No effect
Current Ratio Overstated No effect
Retained Earnings Overstated No effect
Net Income Overstated Understated
Answer:
70%
Explanation:
Margin of safety is the amount of sales a company makes in excess of the breakeven point
Margin of safety = (actual sales - break-even sales) / actual sales
Breakeven quantity are the number of units produced and sold at which net income is zero
Breakeven quantity = fixed cost / price – variable cost per unit /
$42000 / (42 -14) = 1500
(5000 - 1500) / 5000 = 70%
Answer:
Preemptive rights mean:
- existing shareholders are guaranteed an opportunity to retain their proportional share of ownership.
- management can preempt the right of shareholders to receive dividends if earnings are down.
Explanation:
Preemptive rights are a clause in an option, security or merger agreement that gives the investor the right to maintain his or her percentage ownership of a company by buying a proportionate number of shares of any future issue of the security.
In that case,
- existing shareholders are guaranteed an opportunity to retain their proportional share of ownership.
- management can preempt the right of shareholders to receive dividends if earnings are down.
