Answer:
Cost-based contract
Explanation:
A cost-based contract is tied to various factors which can change the overall price of a good or service. Likewise, the only difference between the cost-based contract and the fixed-price contract is the change in the price during the contract. A price can change in a cost-based contract because of inputs and economic factors such as exchange rate or interest rate.
Answer: A) $0 $30,000
Explanation:
The question states 'amount in gain recognized'
In Year 4, Carac sells to Cannoli land worth $90,000, therefore, in year 3 Carac would report $0
In year 6 Cannoli sells the land to an unrelated third party for $120,000.
Therefore, $120,000 - $90,000 = $30,000 of gain will be reported by Cannoli.
Answer:
A. 1.59%
Explanation:
Return on equity is a measure of profitability of a company in relation to the equity which is assets less liabilities.
Using Du Point analysis,
ROE = Net profit margin × Asset Turnover × Equity multiplier.
Therefore,
ROE of A = 2.2 × 1.7 × 5.0
= 18.7%
For ROE of B to match A
Asset turn over of B = ROE of A / profit margin of B × equity multiplier of B.
NOTE:
This was gotten from from equating ROE of A to ROE of B and making asset turn over of B subject of the formula.
Therefore,
Given that,
ROE of A = 18.7%
Profit margin of B = 2.5%
Equity multiplier of B = 4.7
We then have,
Asset turnover of B = 18.7 ÷ ( 2.5 × 4.7)
= 18.7 ÷ 11.75
=1.59 %
Therefore B needs 1.59% asset turn over to match manufacturers A ROE
<span>For the amount invested in the 20 year annuity immediate,
the return will be;
r/(1 - (1+r)^-n) = 0.05/(1- 1.05^-20)
= 0.0802425872
= 8.02425872%
Now, return on perpetuity-immediate = 5%
So, 5% + </span>8.02425872% = 13.02425872<span>
for equal returns from both investments,
X = 5/(13.02425872) x 640,000
= $245,695.365
= $ 245,695.36 </span>
