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N76 [4]
3 years ago
9

Emerald Energy is an oil exploration and production company that trades on the London stock market.Assume that when purchased by

an international investor the stock's price and the exchange rate were £5 and £0.64/$1.00 respectively. At selling time, one year after the purchase date, they were £6 and £0.60/$1.00. Calculate the investor's annual percentage rate of return in terms of the U.S. dollars.
a) 0.20%
b) 20.00%
c) 1.28%
d) 28.00%
Business
1 answer:
xeze [42]3 years ago
6 0

Answer:

Option D is correct

Explanation:

Price of stock = €5

Convert stock price to dollar at the begging of year using the exchange rate of €0.64/$1 = 5/0.64 = $7.81

Value of stock at the end of year = €6

Convert value to dollar using the present exchange rate of €0.6/$1 = 6/0.6 = $10

APR = (EYP -BYP)/BYP *100%

Where APR = annual percentage rate, EYP = end of year price

BYP = beginning of year price

APR = (10 - 7.81)/7.81 *100% = 28.04% (D)

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Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose its discount rate of 8% based
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3 years ago
Using the indirect method calculate the amount of net cash flows from operating activities from the following data.
e-lub [12.9K]

Answer:

Net cash: $199,600

Explanation:

First, we need to identify the increase and decrease in accounts:

+) Decrease in Account Payable = Beginning Account Payable - Ending Account Payable = 12,000 - 11,200 =$8,000

+) Decrease in Account Receivable = Beginning Account Receivable - Ending Account Receivable = 20,000 - 17,600 = $2,400

+) Increase in Prepaid Expense = Ending - Beginning = $5,600 - $4,000 = $1,600

Net cash flows from operating activities of the company can be calculated in indirect method as follow:

Net income               $166,000

<em>Adjustments to reconcile the net income to net cash flow from operating activities:</em>

Decrease in account payable              ($11,200)

Depreciation Expense                          $40,800

Amortization of intangible assets         $3,200

Decrease in Account Receivable         $2,400

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=> Net cash provided = Net income - Decrease in accountable + Depreciation Expense + Amortization of intangible assets + Decrease in Account Receivable - Increase in Prepaid Expense  

= 166,000 - 11,200 + 40,800 + 3,200 + 2,400 - 1,600 = $199,600

Net cash: $199,600

3 0
3 years ago
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