Answer:
Journal entry that Parent will make on the date of acquisition to record the investment in Son Inc. is <u>$1035000.</u>
Explanation:
Journal entry Parent make on the date of acquisition to record the investment in Son Inc.
The net worth of Son’s Inc. is $ 1150000. The parent acquires 90 % of it . So we assume that 90 % stock is held by parent for $ 1035000.
Answer:
$38,933
Explanation:
A=P( 1 + r/100)^n
A= amount
r= rate(4%)
n=period (5)
A=32,000 ( 1 + 4/100)⁵
A=32,000 (1.04)⁵
A=38,932.89
A=$38,933( nearest whole number)
Answer:
At a discount rate of zero percent this investment has a net present value of 6000, but at the relevant discount rate of 17 percent the project's net present value is -5739.
Explanation:
See document attached. To get the net present value, we make a cash-flow in excel.
At moment the investment is =$-36,000
Moment 1 and 2 = $12,000 /moment 3 =$18000
We calculate the Net cash flow (that is the difference between benefits and cost).
To get net present value, we use VNA formula.
=VNA(required rate of return; Net cash flow from moment 0 to moment 3 )+Net cash flow at moment 0
Situation 1
Interest rate 0%
Net Present Value (NPV) 6000
Situation 2
Interest rate 17%
Net Present Value (NPV) -5739
Answer:
$0.008891/Yen
Explanation:
The computation of arbitrage free rate is shown below:-
Fair forward rate = Spot rate × (1 + Interest rate US) ÷ (1 + Interest Rate Japan)
= 0.008828 × (1 + 5.25%) ÷ (1 + 4.5%)
= $0.00889135885/Yen
or
= $0.008891/Yen
Therefore for computing the arbitrage free rate we simply applied the above formula.