Answer:
1. B. 3.14
2. C. 1.12
Explanation:
1. Times Interest Earned ratio
Measures how well a company is able to cover it's debt obligations using it's earnings.
The formula is simply,
= Earning before Interest and Tax / Interest Expense
Therefore,
Times Interest Earned ratio = 116/37
= 3.14
HHF's times interest earned ratio is Option B, 3.14.
2. Debt to Equity Ratio
This ratio compares the debt used to fund a company vs it's equity. It measures how much of either way used to fund the company.
The formula is,
= Total Debt / Total Equity
= 540/484
= 1.12
HHF's Debt to Equity ratio is 1.12, Option C.
The following accounts which are classified as shareholders' equity are Additional paid-in capital, Common stock ,Retained earnings.
Option A, B, C is correct.
<h3>
Shareholder Equity:</h3>
Shareholder Equity is the amount invested in the business by the owner of the business. This includes the money they have invested directly and the accumulation of earnings earned by the company that has been reinvested since its inception.
<h3>Is equity a liability or an asset?</h3>
Equity is the company's total assets minus total liabilities. It can be defined as the total amount of dollars that a company would be left with if it liquidated all its assets and paid off all its liabilities. This is then distributed to shareholders.
Learn more about shareholder equity:
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Answer:
When using a financial calculator to compute the issue price of the bonds, the applicable periodic interest rate ("I") is 3.923%
Explanation:
Hi, first, the discount interest rate that you have to choose is 8%, because 9% is the coupon rate (which in our case would be 9%/2=4.5% and this is used only to find the amount to be paid semi-annually).
Now we know we have to choose 8%, but this is an effective rate (I know this is an effective rate because no units were mentioned), and by definition it is a periodic rate, but it is not the rate that we need since the payments are going to be made in a semi-annual way, therefore we need to use the following equation.
![r(semi-annual)=[1+r(annual)]^{\frac{1}{2} } -1](https://tex.z-dn.net/?f=r%28semi-annual%29%3D%5B1%2Br%28annual%29%5D%5E%7B%5Cfrac%7B1%7D%7B2%7D%20%7D%20-1)
So, everything should look like this.
![r(semi-annual)=[1+0.08]^{\frac{1}{2} } -1=0.03923](https://tex.z-dn.net/?f=r%28semi-annual%29%3D%5B1%2B0.08%5D%5E%7B%5Cfrac%7B1%7D%7B2%7D%20%7D%20-1%3D0.03923)
Therefore, the periodic interest that yuo have to use to calculate the price of the bond is 3.923%
Best of luck.
Answer:
There are at least 2 opportunity costs associated with of letting your colleague have another month:
- if you invested in the oil-well venture, you could have earned $5,100 x 36% = $1,836 in one year
- if you invested in the new IT stock, you could have earned $5,100 x 48% = $2,448 in one year
You could invest in one of these options, or divide your money and invest in both options, e.g. invest $2,000 in the oil company and $3,000 in the IT company. Each different investment proportion results in a different opportunity cost.
Explanation:
Opportunity costs are the benefits lost or extra costs associated to carrying out an investment or activity instead of another alternative. Sometimes you might have several opportunity costs for one investment, e.g. invest in the IT company which is risky, invest in corporate bonds which is less risky or invest in US securities which is a safe investment.
Answer:
$56.89
Explanation:
The computation of the current price of this preferred stock is shown below:
= Annual dividend ÷ required rate of return
where,
Annual dividend equal to
= Quarterly dividend × number of quarters in a year
= $1.65 × 4 quarters
= $6.6
And, the required rate of return is 11.6%
Now put these values to the above formula
So, the price would equal to
= $6.6 ÷ 11.6%
= $56.89
