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klemol [59]
2 years ago
13

Twelve years ago, the Archer Corporation borrowed $6,200,000. Since then, cumulative inflation has been 80 percent (a compound r

ate of approximately 5 percent per year).
a. When the firm repays the original $6,200,000 loan this year, what will be the effective purchasing power of the $6,200,000? (Hint: Divide the loan amount by one plus cumulative inflation.) (Do not round intermediate calculations and round your answer to the nearest whole dollar.)
b. To maintain the original $6,200,000 purchasing power, how much should the lender be repaid? (Hint: Multiply the loan amount by one plus cumulative inflation.) (Do not round intermediate calculations and round your ans
Business
1 answer:
leonid [27]2 years ago
5 0

Answer:

The effective purchasing purchasing power of the initial loan of $6,200,000 when the firm repays is  $3,444,444  

If the original purchasing power of the $6,200,000 is to be maintained the firm must repay $ 11,160,000

Explanation:

In computing the figures above, I adhered strictly to the hints given in the question the purchasing of the original should be calculated by dividing the original amount by 1 plus cumulative inflation rate of 80% and that the amount should be multiplied by 1 plus cumulative inflation rate to arrive the amount needed as repayment to maintain the purchasing of the initial loan amount.

Find attached for detailed computations

Download xlsx
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Answer:

$22,000 Credit balance

Explanation:

Calculation to determine the ending balance

First step is prepare the Journal entries

Dr Treasury stock $416,000

Cr Cash $416,000

(26,000 shares*$16 per share)

Dr Cash $161,000

(7,000*$23)

Cr Teasury stock $112,000

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Cr Additional Paid-in Capital $49,000

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Dr Cash $117,000

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Dr Additional Paid-in Capital $27,000

($144,000-$117,000)

Cr Teasury stock $144,000

($16*9,000)

Now let calculate the Ending balance

Ending balance=-$49,000+$27,000

Ending balance=-$22,000 Credit balance

Therefore the Ending balance is $22,000 Credit balance

4 0
3 years ago
Here are data on two stocks, both of which have discount rates of 8%: Stock A Stock B Return on equity 8 % 5 % Earnings per shar
AfilCa [17]

Answer:

Please sew solution below

Explanation:

a. What are the dividend payout ratios for each firm

Dividend payout ratio = Dividend / EPS

• Payout ratio stock A = $1.30 / $2.6 = 0.5= 50%

• Payout ratio stock B = $1.3 / $1.8 = 0.72222 = 72.22%

b. What are the expected dividend growth rates for each stock.

Growth rate = ROE × (1 - dividend payout ratio)

•Growth rate stock A = 0.08 × (1 - 50%) = 0.04 = 4%

• Growth rate stock B = 0.05 × (1 - 72.22%) = 0.01389 = 1.39%

c. What is the proper stock price for each firm

• Stock A

Price = D1 / (Re - g)

D1= $1.30 * (1 + 0.04)

= 1.352

Stock B

Price = D1 / (Re - g)

D1= $1.30 * (1 + 0.013)

= 1.3169

Therefore,

• Stock A's proper price = $1.352 / (0.08 - 0.04) = $33.8

• Stock B's proper price = $1.3169 / ($0.08 - $0.013) = $19.66

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3 years ago
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Explanation:

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Answer:

Correct Answer:

4. Build beyond the property line of the land

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kotykmax [81]

Answer:

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Explanation:

In order to calculate what will be Priscilla's homemade dividend per share be in 2017 we would have to use the following formula:

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