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4 years ago

Analyzing and Interpreting Equity Method Investments

Business

1 answer:

Anarel [89]4 years ago

3 0

Answer and Explanation:

According to the scenario, computation of the given data are as follows:-

a) Reported amount in balance sheet

Particular Amount ($)

Investment in company $2,000,000

Add - Net income($3,00,000 × 30 ÷ 100) $90,000

Less - Dividend paid($90,000 × 30 ÷ 100) (-$27,000)

Total Reported Amount in Balance Sheet $2,063,000

b) Amount of income from investment is $90,000

c) Choose option 1 is not reflected on either its income statement or balance sheet.

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On March 1, 2018, E Corp. issued $1,400,000 of 8% nonconvertible bonds at 103, due on February 28, 2028. Each $1,000 bond was is

Anvisha [2.4K]

Answer: $126,000

Explanation: Shareholders equity can be defined as the total amount of investment done by the shareholders in the company. This investment can be done through various kinds of securities like common stock, preference shares.

As per this problem shareholder equity would be

= (no. of shares to be collected by warrant holders)*(price of each warrant)

and,

no. of shares to be collected = (1400 bonds) * (30 shares)

= 42,000 shares

therefore, equity :-

(42,000 shares) ( $3 ) = $126,000

6 0

4 years ago

Miller Farm Products is issuing a 15-year, unsecured bond. Based on this information, you know that this debt can be described a

Rzqust [24]

Based on this information Miller Farm Products' debt can be described as a debenture.

<h3>What is Debenture?</h3>

A bond or other sort of financial instrument that is secured by collateral is referred to as a debenture.
Debentures must rely on the issuer's trustworthiness and reputation for support because they lack a collateral backstop.
Debentures are commonly issued by both businesses and governments to raise cash or money.
Debentures, like the majority of bonds, may issue periodic interest payments known as coupon payments. Debentures are described in an indenture, much like other kinds of bonds.
A binding legal agreement between bond issuers and bondholders is known as an indenture.
The agreement details the terms of a debt issue, including the maturity date, the frequency of interest or coupon payments, the formula for calculating interest, and other details.
Debentures may be issued by both governments and corporations.

To learn more about Debenture refer to:

brainly.com/question/13036443

#SPJ4

7 0

2 years ago

If the interest rate is 7.5 percent, then what is the present value of $4,000 to be received in 6 years?

AlekseyPX

Answer:

d. $2,591.85

Explanation:

To solve we can use the present value formula defined by

$PV=\frac{FV}{(1+r)^t}$

where PV is present value, FV is future value, t is time and r is the interest rate , we can replace the values given in the question. Where 4000 is the future value, the time is t=6 years, and the interest rate is r=0.075, so we get

$PV=\frac{4000}{(1+0.075)^6}=2,591.85$

4 0

4 years ago

The city of Modesto, California needs more water. The town engineer has selected two plans for comparison: a gravity-based plan

o-na [289]

Answer:

a pumping plan (pump water from a closer water source to the city) is prefered.

the breakeven investment cost in year 10 is $1311018. 802 in order to make these two projects equally preferable

Explanation:

From the given information; we are to :

(a) Use an annual cash flow analysis to find out which plan is preferred

(b) What is the breakeven investment cost in year 10 to make these two projects equally preferable?

The two plans selected by the engineer are:

a gravity-based plan (divert water from the Sierras and pipe it by gravity to the city)

a pumping plan (pump water from a closer water source to the city).

In order to achieve that; let's find out the Present Value for each plan.

The Present Value (PV) of cost related to a gravity-based plan is:

$PV = 2800000 +1000 a_{40} _{\urcorner}$ at 10%

$PV = 2800000 +97790.50$

PV = $2897790.5

The Present Value (PV) of cost related to a pumping plan

$PV = 1400000+ \dfrac{200000}{(1+i)^{10}}+ 25000 a_{40}_{\urcorner}+5000 a_{10}_{\urcorner} + \dfrac{100000 a_{30} _{\urcorner}}{(1+i)^{10}}$ at 10%

PV = 1400000 + 77108.66 + 244476.27 + 307228.36+363448.36

PV = $2392261.65

Thus; we consider the PV with lower value in order to determine which plan is prefered.

Thus; a pumping plan (pump water from a closer water source to the city) is prefered.

(b).

What is the breakeven investment cost in year 10 to make these two projects equally preferable

Let assume that I = the break even investment cost in year 10 for the prefered pumping plan.

Then;

$2897790.5 = $2392261.65 + (I/(1+i)¹⁰) at 10%

$2897790.5 - $2392261.65 = (I/(1+i)¹⁰) at 10%

$505528.85 = (I/(1+i)¹⁰) at 10%

0.3856 I = 505528.85

I = 505528.85/0.3856

I = $1311018.802

Thus; the breakeven investment cost in year 10 is $1311018.802 in order to make these two projects equally preferable

3 0

3 years ago

in what ratio must tea RS.60 per KG be mixed with tea at 72 per kg so that the mixture must be worth Rs 64.5 per KG solver can

kvasek [131]

Answer:

1x : 1 6667y

Explanation:

Let :

unit of Rs. 60 per kg = x

Unit of Rs. 72 per kg = y

60x + 72y = 64.5(x + y)

60x + 72y = 64.5x + 64.5y

60x - 64.5x = 64.5y - 72y

-4.5x = - 7.5y

Divide both sides by - 1.5

3x = 5y

x = 5/3y

It could be mixed in the ratio ;

1x : 1.6667y

3 0

3 years ago