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3 years ago

Find the loan to loan ratio for a home appraised at 583,620 that the buyer will purchase for 585,000.

Business

1 answer:

adelina 88 [10]3 years ago

6 0

I assume you mean loan to value ratio. It is a simple ratio: Loan amount divided by the value of the home.

In this instance, this would be 585,000/583,620= loan to value ratio

Most banks like to see no more than a 90% loan to value ratio. This ratio helps the bank know the risk they are incurring by lending you the money to buy the home. The lower the loan to value ratio, the easier it will be for the bank to recoup their investment, therefore usually equals a lower interest rate for the buyer.

In this instance, the loan is more than the value of the home which makes this a risky investment for the bank.

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For purposes of computing the WACC, if the book value of equity exceeds the market value of equity, then: the market value of eq

vagabundo [1.1K]

Answer:

The market value of equity should be used.

Explanation:

Their are only two methods which are book value method or market value method. The market value method is preferred because the reason is that the market value gives the more accurate numerical value that the securities of the company will give which is the required rate of return to its investors. However historic cost data is not useful because the value of stock and bonds keeps changing every second in the stock exchange and their is the risk that the WACC calculated is inaccurate which implies that the project appraised is also incorrect.

So the best way to calculate the weighted cost of capital is that we should use the fair value of the securities.

5 0

3 years ago

Read 2 more answers

The following information pertains to the West Division of Burger Company:

GenaCL600 [577]

Answer:

D) $4,550

Explanation:

Contribution margin = Net Sales - Total Variable cost

Net sales $6,000

Les: Variable costs:

Cost of merchandise sold $1,000

Operating expenses <u> $450 </u>

Contribution Margin $4,550

All other costs are fixed cost which are not used in contribution margin calculation.

So the correct answer is D) $4,550.

3 0

3 years ago

Using the attached sheet (or a spreadsheet if you prefer), prepare a classified balance sheet for the ABC, LLC for the year ende

charle [14.2K]

Answer:

ABC, LLC

Classified balance sheet as at December 31, 2020

ASSETS

Non - Current Assets

Land 25,000

Total Non - Current Assets 25,000

Current Assets

Accounts Receivable 3,000

Cash 20,000

Total Current Assets 23,000

TOTAL ASSETS 48,000

EQUITY AND LIABILITIES

LIABILITIES

Non - Current Liabilities

Notes Payable (due in 5 years) 10,000

Total Non - Current Liabilities 10,000

Current Liabilities

Accounts Payable 4,000

Salaries Payable 5,000

Total Current Liabilities 9,000

TOTAL LIABILITIES 19000

EQUITY

Common Stock 1,000

Preferred Stock 8,000

Treasury Stock 6,000

Retained Earnings 7,000

Paid in Capital in Excess of Par - Common Stock 17,000

Paid in Capital in Excess of Par - Preferred Stock 2,000

TOTAL EQUITY 41,000

TOTAL EQUITY AND LIABILITIES 60,000

Explanation:

A classified balance sheet shows the Assets, Liability and Equity Balances in their respective categories as shown above.

8 0

3 years ago

Assoli18 [71]

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4 0

4 years ago

"3. ERA Company’s controller accidentally erased the 3/1/20 balance for the Accounts Receivable account. However, she can see th

VikaD [51]

Answer:

The multiple choices are:

a.300,000

b.$400,000

c.$800,000

d.$1,300,000

The correct option is C,$800,000

Explanation:

Opening accounts receivable=closing receivables+cash received-credit sales

closing receivables is $500,000

cash received during the month was $1,800,000

credit sales during the month was $1,500,000

Opening accounts receivable =$500,000+$1,800,000-$1,500,000

opening accounts receivable balance =$800,000

This is more like working backwards,as closing closing receivables formula is ;

closing receivables=opening receivable+credit sales-cash received

simply change the subject to opening receivables

opening receivables=cash received+closing receivables-credit sales

6 0

3 years ago