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rewona [7]
3 years ago
15

Amy agreed to a contract price of $100,000 for a home and secured a mortgage loan for $80,000. If the appraised value is $110,00

0, what is the loan to value ratio?
Business
1 answer:
AysviL [449]3 years ago
6 0

Answer:

loan to value =  80%

Explanation:

given data

contract price = $100,000

mortgage loan = $80,000

appraised value = $110,000

solution

we get here loan to value ratio that is

loan to value = \frac{loan}{contract\ price}   .................1

here lender use less of contract price or appraised value

so put here value in equation 1 we get

loan to value = \frac{80000}{100000}  

loan to value = 0.80

loan to value =  80%

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Claremore Company received $7,000 as payment from Tulsa Company for a sale made on account in the previous month. Which of the f
Inessa [10]

Answer:

a. Cash 7,000 Accounts Receivable 7,000

Explanation:

As for the information provided, the payment is received for a sales made in last month, and thus entry at the time of sales shall be:

Accounts Receivables A/c Dr.  $7,000

                    To Sales                               $7,000

Therefore, when the amount is collected today it will increase cash by debiting cash for the same amount.

Further, balance of accounts receivables will be decreased by crediting such account.

Therefore, correct option is

a. Cash 7,000 Accounts Receivable 7,000

7 0
2 years ago
What is a natural risk that businesses should consider when establishing their information-management procedures
sukhopar [10]
Data security issues such as: Information leaks, Breach of the GDPR law, hacking
4 0
2 years ago
For​ 2018, Rest-Well Bedding uses​ machine-hours as the only overhead​ cost-allocation base. The direct cost rate is​ $6.00 per
maria [59]

Answer:

Predetermined manufacturing overhead rate= $6.875 per machine-hour

Explanation:

Giving the following information:

The estimated manufacturing overhead costs are​ $275,000 and an estimated​ 40,000 machine hours.

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 275,000/40,000

Predetermined manufacturing overhead rate= $6.875 per machine-hour

3 0
2 years ago
The Corner Bakery has a bond issue outstanding that matures in 7 years. The bonds pay interest semi-annually. Currently, the bon
MaRussiya [10]

Answer:

Ans. The after tax cost of this bond is 2.09%

Explanation:

Hi, first we need to establish the cash flow of the bond, so we can find the after tax cost of the bond. After we find the after tax cash flow of the bond, we must use the IRR function of MS Excel to find the semi-annual cost of this debt, but, all after tax debts should be presented in annual basis. Let me walk you through the process. First, let me show you how it should look.

Face Value      100  

price              101,4  

years                7 years  

Coupon                9%  

Coupon                4,5% semi-annually  

tax                      30%  

   

Per       Cash Flow After Tax  

0                 101,4 101,4  

1                   -4,5 -3,15  

2                   -4,5 -3,15  

3                   -4,5 -3,15  

4                   -4,5 -3,15  

5                   -4,5 -3,15  

6                   -4,5 -3,15  

7                   -4,5 -3,15  

8                   -4,5 -3,15  

9                  -4,5 -3,15  

10                  -4,5 -3,15  

11                  -4,5 -3,15  

12                  -4,5 -3,15  

13                  -4,5 -3,15  

14               -104,5 -73,15  

   

Cost of Debt 1,04% semi-annually

Cost of Debt 2,09% annually

Ok, now, as you can see, there are 14 periods, that is because the coupon is paid semi-annually, the way to find the cash flow (I mean, the bond´s coupon) is:

Coupon (semi-annual)=(Face Value)x\frac{0.09}{2} =4.5

At the end (period 14), we need to add the face value and the coupon, that is $100+$4.5=$104.5

Now, to find the value of the third column (after-tax cost), we do the following.

After-tax-Cost=Couponx(1-taxes)=4.5(1-0.3)=3.15\\

Now, consider this, you are receiving 101.4 for every 100 of debt, that means that you are receiving more money than the emission value, and paying interests over 100 instead of 101.4, that is why we have to use the IRR excel function to find out the semi-annual cost of debt. That is, 1.04%.

Now, to make this an effective annual rate, we calculate it like this.

EffectiveAnnualRate=(1+semi-annual Rate)^{\frac{1}{2} }  -1=(1+0.0104)^{\frac{1}{2} } -1=0.0209

Finally, the after-tax cost of this debt is = 2.09%

Best of luck.

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Lapatulllka [165]

Explanation:

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3 years ago
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