The viability and relevancy of insurance products sold to businesses and individual

Venzuela Company’s net income for 2020 is $50,000. The only potentially dilutive securities outstanding were 1,000 options issue

jarptica [38.1K]

Answer:

Answer explained below

Explanation:

GIVEN:

options issued = 1000

exercise per share = $6

market price = $20

net income = $50000

a) Diluted earnings per share

= (Total income - preference dividends) /( outstanding shares + diluted shares)

Amount paid towards shares = Options issued * Exercise price per share = 1,000 * 6 = $ 6,000

Value of options = Amount paid towards shares / Current market price = $ 6,000 /$ 20 = 300

Diluted shares = Options issued - value of options = 1000 - 300 = 700

So Diluted Earnings per share = ( 50,000) / ( 10,000 +700) = $ 4.67 per share.

b) Calculation of diluted shares 700 (same as above )

Weighted average for the period holding i.e, 3 months = 700 *3/12 = 175 shares increased during the period.

Diluted EPS = 50,000 /(10,000 +175) = $ 4.91 per share

5 0

3 years ago

The next three annual dividends paid by XYZ stock are expected to be $2.79 in one year, $7.43 in two years, and $3.05 in three y

Vikentia [17]

Answer:

a. $49.83 (+ or - $0.05).

Explanation:

Given that :

Dividend of the first three years and the terminal value at the end of the year 2, that is the price at the end of year 2.

We know that the price of the share is the preset value of all the future dividends.

So we have to present price at the year 2 which is at present value for the end of the year 2 of the dividends beyond year 2.

To calculate the price of the stocks at present, we :

1. The present value for the price of the year 2 that is pv at the end of the year 2 of the dividend to be received beyond the year 2.

2. The present value of the dividend of the year 1 as well as year 2.

3. Then we add the steps 1 and 2 to get the present value of all the dividends.

Therefore,

The present value of the price at nth year with r rate of return is given by :

$\frac{\text{price at nth year }}{(1+r)^n}$

Hence, the present value of the price at the year 2 with 15.20% rate of return is = $\frac{54.78}{(1+0.1520)^2}$

$=\frac{54.78}{1.327104}$

= $ 41.28

Now present value of dividend of the first 2 years :

Dividend received at the end of the nth year with rate of return r is

= $\frac{\text{dividend}}{(1+r)^r}$

Therefore the present value of the dividend of the first two years is

= $\frac{2.79}{(1+0.1520)^1}+\frac{7.43}{(1+0.1520)^2}$

= 2.10 + 6.45

= $ 8.55

Now , $ 41.45 + $ 8.55

= $ 49.83

Thus, the current price of one share of the XYZ stock is $ 49.83

4 0

3 years ago

When government intervention makes currency worthless, this condition is called

DiKsa [7]

In economics, hyperinflation occurs when a country experiences very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency, and causing the population to minimize their holdings of local money. Hyperinflation<span> is a situation where the price increases are so out of control that the concept of inflation is meaningless.</span>

5 0

3 years ago

Read 2 more answers

In the _____________ stage of a project the product is delivered to the customer and resources are released from the project

murzikaleks [220]

Answer: closing

Explanation:

The project life cycle is referred to as a framework that shows how projects successfully move from the beginning to the end.

It is in the closing stage that the product will be delivered to the customer and the resources are released from the project.

6 0

3 years ago

Mid-South Auto Leasing leases vehicles to consumers. The attraction to customers is that the company can offer competitive price

borishaifa [10]

Answer:

1) sales revenue 61,995.26

2) lease receivables 61,995.26 debit

sales revenue 61,995.26 credit

cost of good sold 56,000 debit

truck inventory 56,000 credit

truck 61,995.26 debit

lease payable 61,995.26 credit

3)

$\left[\begin{array}{cccccc}$Time&$Beg&$Cuota&$Interes&$Amort&$Ending\\0&61995.26&7000&&7000&54995.26\\1&54995.26&7000&1649.86&5350.14&49645.12\\2&49645.12&7000&1489.35&5510.65&44134.47\\3&44134.47&7000&1324.03&5675.97&38458.5\\4&38458.5&7000&1153.76&5846.24&32612.26\\5&32612.26&7000&978.37&6021.63&26590.63\\6&26590.63&7000&797.72&6202.28&20388.35\\7&20388.35&21000&611.65&20388.35&0\end{array}\right]$

For the lessor will be interest revenue while interest expense for the lessee

4)

cash 7,000 debit

interest revenue 1,649.86 credit

lease receivables 5,510.65 credit

--entry for the lessor--

lease payable 5,510.65 debit

interest expense 1,649.86 debit

cash 7,000 credit

--entry for the lessee--

5)

cash 21,000 debit

interest revenue 611.65 credit

lease receivables 20,388.35 credit

--entry for the lessor--

lease payable 20,388.35 debit

interest expense 611.65 debit

cash 21,000 credit

--entry for the lessee--

Explanation:

1) the sales revenue will be the present value of all the lease payments and the residual value of the asset or the bargain-option

Present Value of Annuity-due

$C \times \displaystyle \frac{1-(1+r)^{-time} }{rate}(1+rate) = PV\\$

C 7,000

time 8

rate 0.03

$7000 \times \displaystyle \frac{1-(1+0.03)^{-8} }{0.03}(1+0.03) = PV\\$

PV $50,611.9807

PRESENT VALUE OF LUMP SUM

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 14,000.00

time 7.00

rate 0.03

$\frac{14000}{(1 + 0.03)^{7} } = PV$

PV 11,383.28

PV of the lease: 50,611.98 + 11,051.73 = 61,995.26

2) the lessor will have a lease receivable while the lessee has a lease payable.

$\left[\begin{array}{cccccc}$Time&$Beg&$Cuota&$Interes&$Amort&$Ending\\0&61995.26&7000&&7000&54995.26\\1&54995.26&7000&1649.86&5350.14&49645.12\\2&49645.12&7000&1489.35&5510.65&44134.47\\3&44134.47&7000&1324.03&5675.97&38458.5\\4&38458.5&7000&1153.76&5846.24&32612.26\\5&32612.26&7000&978.37&6021.63&26590.63\\6&26590.63&7000&797.72&6202.28&20388.35\\7&20388.35&21000&611.65&20388.35&0\end{array}\right]$

3 0

3 years ago