Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipm
ent from International Machines at a cost of $168,120. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $22,500 at the beginning of each period Economic life of asset 2 years Fair value of asset $168,120 Implicit interest rate 8% (Also lessee’s incremental borrowing rate)
Required:
Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. Amortization of the right-of-use asset is recorded at the end of each fiscal year (December 31) on a straight-line basis.
Required:
Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. Amortization of the right-of-use asset is recorded at the end of each fiscal year (December 31) on a straight-line basis.
1 answer:
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Answer:
P1=$8.43
Explanation:
The value of the stock is equal to the present value of all cash-flows expected from holding the stock. At the end of year 1, the value of the stock is found by calculating the present value of the remaining dividends i.e D2, D3, D4, D5 etc till infinity.
Therefore price equals
given the values of Dividends calculated above and ke= 15% :
Answer:
a) If you borrow $1,000, the EV is $1,100 and the standard deviation is $990.
b) If you borrow $2,000, the EV is $1,150 and the standard deviation is $1,485.
Explanation:
The expected value is the average return of the investment.
In this case there are only 2 chances: Low ($700 per $1,000) and High ($1,400 per $1,000). Both have 50% chances of happening.
So the expected value is:
The standard deviation can be calculated as
Case 1: If you borrow $1,000, invest, and then return the $1,000
Low return: 2000*(700/1000)-1000 = 2000*0.7-1000 = 400
High return: 2000*(1400/1000)-1000 = 2000*1.4-1000 = 1800
So the expected value is:
The standard deviation can be calculated as
Case 1: If you borrow $2,000, invest, and then return the $2,000
Low return: 3000*(700/1000)-2000 = 3000*0.7-2000 = 100
High return: 3000*(1400/1000)-2000 = 3000*1.4-2000 = 2,200
So the expected value is:
The standard deviation can be calculated as