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tankabanditka [31]
3 years ago
11

You sell short 300 shares of Microsoft that are currently selling at $30 per share. You post the 50% margin required on the shor

t sale. If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if Microsoft is selling at $27? (Ignore any dividends.)
Business
1 answer:
Lostsunrise [7]3 years ago
4 0

Answer:

20%

Explanation:

Data provided

Currently selling per share = $30

Cost of Microsoft after selling = $27

Margin percentage = 50%

The calculation of rate of return is shown below:-

Rate of return = (Currently selling per share - Cost of Microsoft after selling) ÷ Margin percentage × 100

= ($30 - $27) ÷ 50% × 30

= $3 ÷ 15

= 0.20

or

20%

Therefore for calculating the rate of return we simply applied the above formula.

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Filer Manufacturing has 8 million shares of common stock outstanding. The current share price is $74, and the book value per sha
GaryK [48]

Answer:

10.45%

Explanation:

First find the cost of equity for the company

RE = [$4.60*(1.05) / $74] + 0.05

RE = 0.1153, or 11.53%

Then find the YTM on both bond issues

P1 = $950 = $45*PVIFA(R%,48) + $1,000*PVIF(R%,48)

R = 4.767%

YTM = 4.767%×2

YTM = 9.53%

P2 = $1,080 = $50*PVIFA(R%,16) + $1,000*PVIF(R%,16)

R = 4.298%

YTM = 4.298%×2

YTM = 8.60%

Total Debt = 0.95($80,000,000) + 1.08*($60,000,000)

Total Debt = $140,800,000

Weight of D1 = 76,000,000 / 140,800,000

Weight of D1 = 0.5398

Weight of D2 = 64,800,000 / 140,800,000

Weight of D2 = 0.4602

Weighted Average after-tax cost of debt

RD = (1 – 0.35)*[(0.5398)*(0.0953) + (0.4602)(0.086)]

RD = .0592, or 5.92%

Market value of equity = 8,000,000*($74) = $592,000,000

Market value of debt = $140,800,000

Total market value of the company = $592,000,000 + 140,800,000 = $732,800,000

Weights of equity and debt

E/V = $592,000,000 / $732,800,000 = 0.8079

D/V = 1−E/V = 0.1921

WACC = 0.8079(0.1153) + 0.1921(0.0592)

WACC = 0.1045, or 10.45%

7 0
3 years ago
Superstition Industries has a $2,000,000 asset investment and is subject to a 30% income tax rate. Cash inflows from the project
nekit [7.7K]

Answer:

12.25%

Explanation:

Calculation to determine what The company's after-tax accounting rate of return on this investment is:

Using this formula

After-tax accounting rate of return =Avarage income/Average investment

Let plug in the formula

After-tax accounting rate of return=($350,000*70%)/$2,000,000

(100%-30%=70%)

After-tax accounting rate of return=$245,000/$2,000,000

After-tax accounting rate of return=0.1225*100

After-tax accounting rate of return=12.25%

Therefore The company's after-tax accounting rate of return on this investment is:12.25%

6 0
3 years ago
You are opening a savings account that earns compound interest. Which compounding frequency will earn you the most money?
mojhsa [17]

Answer:

4. compounding daily

Explanation:

The higher the compounding rate , the higher the compound interest. Compounding daily would therefore yield the highest amount of money.

I hope my answer helps you

5 0
2 years ago
When companies offer new equity security issues, they publicize the offerings in the financial press and on Internet sites.
I am Lyosha [343]

Solution:

Common stock: These are the common shares that a company issues to creditors to raise funds. In return, creditors are entitled to a dividend share of the profits received by the firm.

Par value: It refers to the worth of a share suggested by the charter of the company. Often referred to as a portfolio face value.

Record the sale of common stock in the books of ANIT Corporation.  

Date     Account Titles and Explanation    Debit (S)     Credit (S)

                        Cash (1)                             101,595,000

                 Common Stock (2)                                          7500

   Paid-in Capital in Excess of Par value (3)               101,587,500

(To record safe of .5 million shores of $0.001 par value per share in excess of Par)  

Compute the amount of cash received from common stock issue.  

Cash received = Number of shares issued x Price per share

                        = 7.500,000 shares x $13.546

                        =$101,595,000  

Compute common stock value.  

Common H= 'Number of shares v Par value of common stock stock value  

                  = 7,500,000 shares x SO 001 per share

                  = $7,500  

Compute paid-in capital in excess of par value.  

Paid-in capital in = I (Cash received—excess of par value Common stock value

                           =$101,595.000(1) — S7,5001.2)

                           = $101,587,500  

3 0
3 years ago
On January 1, 2016, the Accounts Receivable balance was $22,600 and the balance in the Allowance for Doubtful Accounts was $2,20
almond37 [142]

Answer:

$19,780

Explanation:

Net realizable value of accounts receivable = Accounts Receivable balance - Balance in the Allowance for Doubtful Accounts - Uncollectible account was written-off

Therefore, we have:

Net realizable value of accounts receivable = $22,600 - $2,200 - $620 = $19,780.

Therefore, the net realizable value of accounts receivable immediately after the write-off is $19,780.

4 0
3 years ago
Read 2 more answers
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