Answer:
1 $65,000
2 $18,000
3 $47,000
4 $50,000
Explanation:
1. Cash flow from Assets = $65,000
2. Cash flow to Shareholders = Dividend = $18,000
3. Cash flow to Creditors = $47,000
4. Net new long term debt = $50,000
Please find attached explanations to the answers above.
Answer:
Classic Music, Inc.
C. 6.62 times
Explanation:
a) The times-interest-earned (TIE) ratio measures a company's ability to meet its debt obligations based on its current income. It is calculated as earnings before interest and taxes (EBIT) divided by the total interest payable on bonds and other debts.
b) The EBIT is $437,000 (Net Income + Income Tax and Interest Expenses).
c) Therefore, the TIE is equal to 6.62 times ($437,000/$66,000).
Answer: GHI Bonds
Explanation:
All the bonds are of equal maturity so the only relevant variable is the bond yield.
Bond prices are inversely related to the market interest rate for the simple reason that bond yield is fixed. As a result when interest rates go up, they will become less attractive because they will be paying older and lower rates than the newer rates.
This is especially true for bonds with lower yields which is why GHI Bonds will show the greatest change in price.
For instance, suppose interest rates in the economy were 6% and increased to 8%, the attractiveness of the 5% bond would decrease the most because there is a chance to earn 3% more in the market than from that bond.
Answer:
The answer is A.
Explanation:
A letter of credit is a promise given by an issuing bank at the request of its customer in which the bank promises to pay the beneficiary the states amount within a specified period of time. It has three elements – the beneficiary/seller, the buyer/applicant and the issuing bank.
While A banker's acceptance is a short term instrument given by a bank that obligates itself to make a payment at a later date. It is like a post-dated check.
Answer:
The correct answer is B
Explanation:
The amount of equity earnings will be computed as:
Amount of earnings = Frankfort share in net Income of Bradley × Bradley Net Income
where
Frankfort share is 40%
Net Income of Bradley amounts to $1,680,000
Putting the values above in the amount of earnings:
= 40% share × $1,680,000
= $672,000
Therefore, the option B is correct.