Answer:
$1,815,000
Explanation:
First we must determine the gross income = $2,000 x 10 units x 12 months = $240,000
minus the vacancy rate = $240,000 x 5% = $12,000
minus the annual expense = $10,200
net income = $240,000 - $12,000 - $10,200 = $217,800
to calculate the maximum amount that the investor should pay we must divide the net income by the expected rate of return = $217,800 / 12% = $1,815,000
When you are calculating a project's price (buying this asset is an investment project), depreciation and debt service are not included in the calculations.
Capitalized interest refers to interest that is added to some kind of debt and that is included in current balance accounts, as opposed to waiting to figure in the cost of interest.
Answer:
E. If the interest rate the companies pay on their debt is more than their basic earning power (BEP), then Company Heidee will have the higher ROE.
Explanation:
Base on the scenario been described in the question, we saw that between the two companies, Heidee and Leaudy, they both have the same total assets, sales, operating costs, and tax rates, and they pay the same interest rate on their debt but company Heidee has a higher debt ratio, this will make company Heidee has a higher ROE because of its higher ratio of debt
Answer:
The material wealth of society is determined by the economy's productive capacity, which is a function of the economy's real assets.
Explanation:
Production capacity or <em>productive capacity</em> is the maximum level of activity that can be achieved with a given productive structure. The study of capacity is essential for business management in that it allows analyzing the degree of use made of each of the resources in the organization and thus have the opportunity to improve them.
<em>Real assets</em> are physical assets that have value due to their substance and properties. Real assets include precious metals, raw materials, real estate, agricultural land, machinery and oil. They are appropriate for inclusion in more diversified portfolios due to their relatively low correlation with financial assets such as stocks and bonds.
Answer: The expected loss is $2.3
Explanation:
Total number of tickets to be sold = 100 tickets
one $450 prize, the expected gain = 450 x (1/100) = $4.5
two $110 prizes, the expected gain = 110 x (2/100) = $2.2
four $25 prizes. the expected gain = 25 x (4/100) = $1
Expected gain (loss) = Total expected gain - Cost of the ticket
= (4.5 + 2.2 + 1 ) - 10
= (2.3)
The expected loss is $2.3
