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3 years ago

Which of the following is a drawback of the corporate structure?

2 answers:

5 0

The primary disadvantage of the corporate form is the double taxation to shareholders of transfer-ability, ability to raise capital, and unlimited life.

liberstina [14]3 years ago

5 0

Answer:

C double tax on business earning

Explanation:

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On January 1, 2020, NoDice Corporation issues $540,000, 5-year, 12% bonds for $529,000. Interest is paid semiannually on January

Svet_ta [14]

Answer:

Dr Interest expense $33,500

Cr Discount on bonds payable $1,100

Cr Cash $32,400

Explanation:

Discount on bonds payable=$540,000-$529,000=$11,000

Amortization of discount=discount on bonds issue/period of the bond

period to maturity of the bond is 5 years *2 =10 since the bond pays interest semi-annually

Amortization =$11,000/10=$1,100

Semi-annual interest=$540,000*12%/2=$32,400

the bond semi-annual interest expense=discount amortization+interest payment

the bond semi-annual interest expense=$32,400+$1,100=$33,500

5 0

3 years ago

Cullumber Corporation purchased 37000 shares of common stock of the Sherman Corporation for $52 per share on January 2, 2020. Sh

yawa3891 [41]

Answer:

Revenue from investment = 229,400

Explanation:

Given:

Purchased shares = 37,000

Value per share = $52

Sherman Corporation total shares = 100,000

Cash dividends = $162000

Net income = $620000

Find:

Revenue from investment = ?

Computation:

Revenue from investment = Net income (Purchased shares / Sherman Corporation total shares)

Revenue from investment = $620000 (37,000 / 100,000)

Revenue from investment = 229,400

7 0

3 years ago

Jand, Inc., currently pays a dividend of $1.38, which is expected to grow indefinitely at 5%. If the current value of Jand’s sha

V125BC [204]

Answer:

9.09%

Explanation:

Use Gordon growth model of stock valuation to find the required rate of return;

Price = D1/ (r-g)

this can also be written as $\frac{D0(1+r)}{(r-g)}$

whereby,

Price = $35.41

D0 = Current dividend = 1.38

D1 = Next year's dividend = 1.38(1.05) = 1.449

g = growth rate = 5% or 0.05 as a decimal

r = required return = ?

Rewrite the formula "Price = D1/ (r-g) " to find r;

r = $\frac{D1}{Price} +g$

r = $\frac{1.449}{35.41} + 0.05\\ \\ =0.04092 +0.05\\ \\ =0.09092$

as a percentage, the required return = 9.09%

7 0

3 years ago

Cream and Crimson Foods has a target capital structure of calling for 45.00 percent debt, 4.00 percent preferred stock, and 51.0

allsm [11]

Answer:

9.9702%

Explanation:

After-tax cost of debt=12*(1-tax rate)

= 12* (1-0.4) =7.2%

WACC=Respective cost*Respective weight

=(7.2×0.45)+(10.41×0.04)+(12.38×0.51)

=9.9702%

4 0

3 years ago

Read 2 more answers

Globus Autos sells a single product. 8,300 units were sold resulting in $84,000 of sales revenue, $24,000 of variable costs, a

aliya0001 [1]

Answer:

Margin of safety= 5,364 units

Explanation:

First, we need to calculate the break-even point in units:

Selling price= 84,000/8,300= $10.12

Unitary variable cost= $2.89

New selling price= 10.12 - 1.1= $9.02

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 18,000 / (9.02 - 2.89)

Break-even point in units= 2,936 units

Now, the margin of safety:

Margin of safety= (current sales level - break-even point)

Margin of safety= 8,300 - 2,936

Margin of safety= 5,364 units

8 0

3 years ago