Answer:
Present Value= $978.83
Explanation:
Giving the following information:
An investment will pay $150 at the end of each of the next 3 years, $100 at the end of Year 4, $400 at the end of Year 5, and $450 at the end of Year 6.
i= 0.09
We need to use the following formula:
PV= FV/(1+i)^n
For example:
Year 1= 150 / 1.09= 137.61
Year 4= 100/1.09^4= 70.84
Year 6= 450/1.09^6= 268.32
PV= 978.83
Answer:
Correct option is C ; the DTA - Deferred tax asset is $300,000
Explanation:
For losses of Year 2015 DTA should be created at 31/12/2015 as due to this loss future income will get reduced and consequently company's tax liability will get reduced.
DTA = 750,000 x 40% = 300,000
In year 2016 tax rate is 40% so DTA will be at this rate as after setting off the loss of year 2015 with income of 2016 the company will benefit by 750000 x 40%=300000 due to lesser income tax liability.
Hence the DTA - Deferred tax asset is $300,000
Answer:
Explanation:
Project A:
Has a certain payoff of $50 in 1 year
Project B:
Has a 50% chance (0.5 probability) of generating $100 in a year and the remaining 50% probability that it generates $0 in a year.
Also, the company has an outstanding debt of $50.
(1) Which project will shareholders prefer?
Shareholders will prefer Project B
Why?
A shareholder is not a salary earner or employee in the firm. The focus of a shareholder is dividends. Dividends come to shareholders when the company makes good sales or profits. Now, business isn't good all the time (internal and/or external factors affect profits either positively or negatively, at different times). Shareholders will prefer to benefit from the 50% probability case of $100 generation and also lay low if the other probability of $0 occurs.
(2) Debt holders will prefer Project A.
Because a $50 payoff is sure every year, in Project A, debt holders will prefer Project A. If project B were to be invested in and the $0 probability occurs, debt holders will be held strongly to pay their debts.
(3) Which project will the financial manager prefer?
Project B
Why?
Because if $100 is made in a year, he/she will be able to plan with it, and gauge the company for when there'll be $0 generation.
Answer:
The cash balance at the end of the period is b. $355,000
Explanation:
<em>Step 1 Calculate the Cash flow Changes during the year: Open a Cash flow Statement</em>
Net cash flow from operating activities 185,000
Net cash flow used for investing activities (43,000)
Net cash flow used for financing activities (97,000)
Cash flow Changes during the year 45,000
<em>Step 2 Prepare a Reconciliation of Cash and Cash Equivalent Balances at the end of the period</em>
Cash balance at the beginning of the period <em>310,000</em>
Cash flow Changes during the year 45,000
cash balance at the end of the period 355,000
Answer:
rises whenever the debt rises
Explanation:
The Debt to GDP ratio is a financial metric that compares the debt of a country to its GDP It measures the ability of a country to repay its debt using its GDP
Debt is the total money a country owes to its lenders
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Debt to GDP ratio = total debt of country / total GDP of a country
If total debt = $50 million and total GDP = 100 million
Debt GDP ratio = $50 million / $100 million = 0.5
the higher Debt is, the higher the ratio. The lower debt is, the lower the ratio
