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mrs_skeptik [129]
4 years ago
14

Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take three rights to buy a

new share in the offering at a subscription price of $53. At the close of business the day before the ex-rights day, the company’s stock sells for $80 per share. The next morning, you notice that the stock sells for $65 per share and the rights sell for $2 each.
Required:
a. Are the stock and the rights correctly priced on the ex-rights day?
b. Describe a transaction in which you could use these prices to create an immediate profit.
Business
1 answer:
bekas [8.4K]4 years ago
3 0

Answer:

a. Are the stock and the rights correctly priced on the ex-rights day?

stock price at ex-right = [(3 x $80) + $53] / 4 = $73.25

cost of ex-right = $80 - $73.25 = $6.75

the rights are underpriced since they are sold at $2, and they should sell at $6.75

b. Describe a transaction in which you could use these prices to create an immediate profit.

You can purchase 3 rights at $6 and then pay subscription price ($53) and you would have an stock at $59. Your profit = $65 - $59 = $6 per stock.

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Procedural fairness while implementing changes is especially important when ________.A) the organization is facing intense compe
balu736 [363]

Answer:

The correct answer is letter "C": the employees perceive the outcome as negative.

Explanation:

Procedural fairness requires high-rank executives to make decisions without showing any preference. In the labor field, given the case that during a process of change the employees see the results as nonproductive, procedural fairness comes into place to find out what is bothering the employees and if there is a way to change it, to implement it for the good of the organization.

3 0
3 years ago
In 2018, it was discovered that Jenson Technologies had debited an expense account for the $400,000 cost a computer purchased on
satela [25.4K]

Answer:

Explanation:

journal entry will Jenson use to correct the error

Date       Account Titles And Explanation          Debit           Credit

                                     Computer                                $400,000  

              Accumulated depreciation ($100,000 × 2 years)     $200,000

       Retained earnings ($400,000 - $200,000)                       $200,000

Annual depreciation = (Cost - Salvage Value) / 4

                               = ($400,000 - 0) / 4

                               = $100,000

6 0
3 years ago
An Economy That Is Neither Growing Nor Shrinking Is Said To Be In A Period Of
ludmilkaskok [199]

An economy that is neither growing nor shrinking is usually said to be in a period of stagnation.

5 0
3 years ago
Terry's father loaned her $15,000 for college expenses. Terry agreed to repay the $15,000 in a lump sum 5 years after graduation
Inga [223]

Answer:

PV= $8,511.40

Explanation:

Giving the following information:

Final value= 15,000

Number of years= 5 years

Interest rate= 12%

We need to calculate the present value of the $15,000. We will use the following formula:

FV= PV*(1+i)^n

Isolating PV:

PV= FV/(1+i)^n

PV= 15,000/1.12^5

PV= $8,511.40

8 0
3 years ago
Freight Terms Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for
Reika [66]

Answer and Explanation:

The computation of the amount is shown below:

a. For FOB destination

=  Merchandise price - Returns and allowances - discount

= $6,700 - $1,750 - ($6,700  - $1,750 )× 2%

= $6,700 - $1,750 - $99

= $4,851

b. For FOB shipping point

= Merchandise price - Returns and allowances - discount + Freight In

= $3,300 - $1,200 - ($3,300 - $1,200) × 1% + $200

= $3,300 - $1,200 - $21 + $200

= $2,279

7 0
3 years ago
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