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emmasim [6.3K]
3 years ago
8

A bond that pays interest annually yields a rate of return of 7.50 percent. The inflation rate for the same period is 2 percent.

What is the real rate of return on this bond?
Business
1 answer:
Jlenok [28]3 years ago
7 0

Answer:

5.39%

Explanation:

Given that,

Bond that pays interest annually yields a rate of return = 7.50 percent

Inflation rate for the same period = 2 percent

Real rate = [(1 + nominal rate) ÷ (1 + inflation rate)] - 1

Real rate = [(1 + 0.0750) ÷ (1 + 0.02)] - 1

               = (1.075 ÷ 1.02) - 1

               = 1.0539 - 1

               = 0.0539 or 5.39%

Therefore, the real rate of return on this bond is 5.39%.

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The numerator of the return on common stockholders' equity is_____________. a.income before income tax b.operating income minus
elena-s [515]

The numerator of the return on common stockholders' equity is net income minus preferred dividends.

Option d

<u>Explanation:</u>

Return on common stockholders' equity which is also named as return on equity (ROE) ratio evaluates the accomplishment of a company in resulting income for the benefit of common stakeholders.

<em>Use of return on equity:</em>

  • Isolates common equity returns
  • Can be used to evaluate dividends
  • Evaluates the use of capital by the management

It is calculated by income available for stockholders divided by the total number of common stock and is expressed or represented in percentage. Income available for common stockholders can be arrived by reducing preference dividends from Net income.

That is, \text { Net income }-\text { Preference dividends }=\text { Equity available for common stockholder }

Hence, net income minus preferred dividends is the right answer.

3 0
3 years ago
Jilk Inc.'s contribution margin ratio is 61% and its fixed monthly expenses are $47,500. Assuming that the fixed monthly expense
JulsSmile [24]

Answer:

$36,070

Explanation:

Given that,

Contribution margin ratio = 61%

Fixed monthly expenses = $47,500

sales = $137,000

Contribution margin:

= Sales × Contribution margin ratio

= $137,000 × 61%

= $83,570

Net income = Contribution margin - Fixed monthly expenses

                    = $83,570 - $47,500

                    = $36,070

Therefore, the best estimate of the company's net operating income in a month is $36,070.

8 0
3 years ago
(TCO 2) An object of interest to the end user is
emmasim [6.3K]

An object of interest to the end user is <u>entity</u>.

<u>Explanation:</u>

An entity is a real world object or thing that has an independent existence. Entity is distinguishable from the other objects. The attributes of an entity are the properties of the entity which make the entity distinguishable from the other objects.

The examples of entity are a car, a book or any other product. A set of an entity is known as the entity set. Entity may be an object with physical existence or it may be with a conceptual existence.

6 0
2 years ago
The following transactions are for Kingbird Company.1. On December 3, Kingbird Company sold $450,000 of merchandise to Blossom C
SpyIntel [72]

Answer:

Kingbird Company or Mack Company

Journal Entries:

Dec. 3:

Debit Accounts Receivable (Blossom Co.) $450,000

Credit Sales Revenue $450,000

To record the sale of goods on account, terms 1/10, n/30.

Debit Cost of Goods Sold $310,000

Credit Inventory Account $310,000

To record the cost of goods sold.

Dec. 8:

Debit Sales Allowance $22,000

Credit Accounts Receivable (Blossom Co.) $22,000

To record the allowance granted.

Dec. 13:

Debit Cash Account $423,720

Debit Cash Discount $4,280

Credit Accounts Receivable (Blossom Co.) $428,000

To record the settlement of account.

Explanation:

Journal entries are used to record transactions that occur on a daily basis.  They are usually the first set of records made in the accounting books.  They show the accounts to be debited and the accounts to be credited.  Each transaction is usually debited in one account and credited in another to reflect the double entry system of accounting and to keep the accounting equation in balance.

7 0
2 years ago
Walmart is thinking about offering a 25% discount on a brand of shoes. If the elasticity of demand is two, then the discount wou
vitfil [10]
Elasticity of demand is a measurement used in economics to show how people respond and demand a product or service when nothing but the price changes. 

If Walmart were to discount a shoe by 25% and the demand of the shoes is two pair, sales would increase by 50%. People are purchasing two pairs at this price and receiving 25% off of each pair.
5 0
3 years ago
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