Answer:
c. Payback is the amount of time to recover the initial investment. No discounting occurs and all cash flows after the payback period are not accounted for. The rule is intuitive and used by small business owners
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested. The NPV does account for all cash flows as well as time value of money.
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested
. The IRR does account for all cash flows.
The discounted payback period discounts cash flows
Size of the organization, business model, nature of business and location are key factors in determining an organization's structure.
Answer:
5,110,000 and 5,170,000.
Explanation:
earnings per share EPS = (net income - preferred dividends) / weighted average of outstanding shares
- 4,800,000 at the beginning of the year
- 200,000 issued April 1 = 200,000 x 9/12 = 150,000
- 480,000 issued September 1 = 480,000 x 4/12 = 160,000
weighted average outstanding shares = 4,800,000 + 150,00 + 160,000 = 5,110,000
diluted shares = ($6,000,000 / $1,000) x 40 x 3/12 = 60,000
diluted EPS = (net income - preferred dividends) / (weighted average of outstanding shares + diluted shares)
weighted average of outstanding shares + diluted shares = 5,110,000 + 60,000 = 5,170,000 shares
Answer:
interest rate is 2.25 %
Explanation:
given data
sell bond = $715
bond matures = 15 years
redeem = $1,000
solution
we apply here formula that is
amount = principal × 
................1
here put value and we get
1000 = 715 × (1+r)^{15}
= 
solve it we get
r = 0.022617
so rate is 2.25 %
Answer:
a. A Ba1 corporate bond <u>2 (not investment grade)</u>
b. A ten-year BBB- corporate bond with a YTM of 7% <u>3 (medium risk but still investment grade)</u>
c. A secured loan from Argosy Gaming, which is a B- rated firm <u>4 (less risky since it is backed by a collateral)</u>
d. A senior subordinated bond from Argosy Gaming <u>1 (highest risk)</u>
Explanation:
There are two major bond rating agencies in the US: Moody's and Standard & Poor's.
Their rankings are very similar, although the letters vary a little:
AAA: safest
AA: low risk
A: low risk
BBB: medium risk
BB: a little bit more riskier
B: risky
CCC: very high risk
CC: even riskier
C: riskiest
D: junk, in default
