Answer:
D1 = 2.39
Explanation:
Expected Dividend can be found out by solving the following equation attached in the image.
In the formula D1 = expected dividend, Gs = 26%, Gm = 16%, gL = 7%, r =12%
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in 2 sheets with the formulas indications.
Answer:
B. causing the interest expense to be lower than the bond interest paid
Explanation:
Answer:
$77,217
$11,289
Explanation:
Fist we will calculate the present value of $10,000 payment
A fix Payment for a specified period of time is called annuity. The discounting of these payment on a specified rate is known as present value of annuity. The value of the annuity is also determined by the present value of annuity payment.
Formula for Present value of annuity is as follow
PV of annuity = P x [ ( 1- ( 1+ r )^-n ) / r ]
Where
P = Annual payment = $10,000
r = rate of return = 10% / 2 = 5%
n = number of period = 5 years x 2 semiannual payments per year = 10 payments
PV of annuity = $10,000 x [ ( 1- ( 1+ 0.05 )^-10 ) / 0.05 ]
PV of Annuity = $77,217
Now we will use the discounting method to calculate the present value of lump sum payment of $20,000
Present value = Future value x Present value factor
PV = FV x ( 1 + r )^-n
PV = $20,000 x ( 1 + 0.1 )^-6
PV = $11,289
Selling price = p = 520
variable cost per unit = vc = 286
fixed cost = fc = 163,800.
unit sold = x
520 * x = 286 * x + 163,800
520x = 286x + 163,8000
520x - 286x = 163,800
234x = 163,800
x = 163,800 / 234 = 700 units to reach break even point.
unit contribution margin = p - vc = 520 - 286 = 234 per unit.
