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3 years ago

Which of the following transactions would qualify as an "arm's length transaction"?

1 answer:

8 0

Which of the following transactions would qualify as an "arm's length transaction"? The arms length transaction concerns both parties within a transaction and how they committed they both are to the transaction. This protects any false pretenses that there is pressure from either side of the party to make the transaction happen. If they notice there is any conditions or pressure from either side they can get in trouble and potentially make the transaction null.

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A property is purchased for $200,000 with an 80 percent LTV. After five years, the owner's equity is $80,000. What would be the

sweet-ann [11.9K]

Answer:

14.57%

Explanation:

Data provided in the question:

Purchasing cost of the property = $200,000

LTV = 80%

Time, n = 5 years

owner's equity = $80,000

Now,

Loan amount = Purchasing cost × LTV

Loan amount = $200,000 × 80%

Loan amount = $160,000

Thus,

Annual EAHE = $(\frac{\textup{Loan}}{\textup{Equity}})^{\frac{1}{n}}-1$

Annual EAHE = $(\frac{\textup{160,000}}{\textup{80,000}})^{\frac{1}{5}}-1$

Annual EAHE = 0.1487

Annual EAHE = 0.1457 × 100% = 14.57%

7 0

3 years ago

Seattle Inc. identifies an investment opportunity, which will yield cash flows of $30,000 per year in Years 1 through 4, $35,000

vladimir2022 [97]

Answer:

the payback period = 4.86 years

Explanation:

Seattle's cash flows are as following:

Year Cash flow Accumulated cash flows

0 -$150,000 -$150,000

1 $30,000 -$120,000

2 $30,000 -$90,000

3 $30,000 -$60,000

4 $30,000 -$30,000

5 $35,000 $5,000

6 $35,000 $40,000

etc.

The payback period is between year 4 and 5:

4 years + ($30,000 / $35,000) = 4.86 years or
year 4 + [($30,000 / $35,000) x 365 days] = 4 years and 313 days

6 0

2 years ago

What is an interest rate usually shown as?

SCORPION-xisa [38]

Percentage, hope that helps

7 0

3 years ago

Question 19 A company just starting in business purchased three merchandise inventory items at the following prices. First purch

Lunna [17]

Answer:

Answer is A. USD 80/-

Explanation:

Using FIFO costing, we get:

Gross Profit = Sales - Cost of Goods Sold

COGS (Cost of Goods Sold) for two units,

COGS = First purchase + Second purchase

COGS = $70 + $80

COGS = $150

Sales = $230

Calculating the Gross Profit:

GP (Gross Profit) = Sales - Cost of Goods Sold

GP = $230 - $150

GP = $80

7 0

3 years ago

Read 2 more answers

Grecian Tile Manufacturing of Athens, Georgia, borrows $1,500,000 at LIBOR plus a lending margin of 1.25 percent per annum on a

shtirl [24]

Answer: 92812.50

Explanation:

The following information can be derived from the question:

Loan principal = $1,500,000

LIBOR for 1st 6 months = 4.50%

LIBOR for last 6 months = 5.375%

Lending margin per annum = 1.25%

The interest will then be:

= 1,500,000 × [(4.50% + 1.25%)/2] + 1,500,000 × [(5.375% + 1.25%)/2]

= 1,500,000 × [(0.045 + 0.0125)/2] + 1,500,000 × [(0.05375 + 0.0125)/2]

= 92,812.50

Therefore, the interest is 92812.50.

8 0

2 years ago