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algol13
3 years ago
7

Mountain Products has decided to raise $6 million via a rights offering. The company will issue one right for each share of stoc

k outstanding. The subscription price is set at $20 per share. The current market price of the stock is $25.20 and there are 1,500,000 shares currently outstanding. What is the value of one right?
Business
1 answer:
Scorpion4ik [409]3 years ago
6 0

Answer:

 Value of  one right   = $2.63

Explanation:

<em>A right issue is the issue of additional new shares to existing shareholders in proportion to their existing shareholdings at a price less than the current market price.</em>

<em>The value of rights is the difference between the theoretical ex-right price and the right price . </em>

Value of rights= Theoretical ex-right price - Right price

<em>The theoretical ex-right price is the price at which a share is expected to settle after the right issue assuming all the rights are taken</em>

Theoretical ex-rights price = Total value of shares after right issue/Number of shares after right issues

<em />

1 unit  of old share       at   $25.25 =  $25.25

I unit of right share   at       $20.00= <u>$20.00</u>

Total value of 2 shares                     <u>$ 45.25</u>

Theoretical ex-rights price  = 45.25/2 =$22.63

Theoretical ex-rights price=$22.63

Value of rights= Theoretical ex-right price - Right price

                       =  22.63 - 20.00

 Value of  one right   = $2.63

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Marigold Corp. self-insures its property for fire and storm damage. If the company were to obtain insurance on the property, it
DENIUS [597]

Answer:

loss on fire and storms 710,000

insurance expense zero as the firm didn't acquire any

Explanation:

Notice it state <u><em>"if the company were to obtain insurance"</em></u> Which means it currently has none insurance.

If the firm had an insurance the amount of losses would be deducted from the insurance policy but there is none so we disclosure the entire loss as a result of the period.

Hence, we should recognize the entire loss on fire and storm damage of 710,000 during the year and no insurance expense.

8 0
3 years ago
Creating a chant that rhymes to remember information is a memorization technique.
jolli1 [7]

Answer:

OT

Explanation:

BECAUSE I AM SMART AND BECAUSE I TOOK THAT SAME CLASS

6 0
2 years ago
Myriad Solutions, Inc. issued 12% bonds, dated January 1, with a face amount of $420 million on January 1, 2021, for $375,505,45
faust18 [17]

Calculation

Period   Cash Interest   Bond Interest    Discount     Carrying  

 End          paid            Expense         Amortization     Value

 01-Jan-21                                                            $375,505,452            

30-Jun-21 $25,200,000 $26,285,38 $1,085,382 $376,590,834

1-Dec-21 $25,200,000   $26,361,358  $1,161,358  $377,752,192

Total    $50,400,000     $52,646,740

3 0
3 years ago
Read 2 more answers
The company intends to classify these costs and expenses into the following categories: (a) direct materials, (b) direct labor,
postnew [5]

Answer:

Property taxes on the factory building - period costs.

Property taxes are period costs because it is a cost associated with a particular period of time (tax season), and because this cost cannot be capitalized in inventory, fixed assets, or prepaid expenses.

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The salaries of management workers such as superintendents are period costs because they are not direct labor.

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The memory boards and chips are direct materials used to assemble the computers, therefore, they are a direct materials cost.

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Depreciation is a period cost because it cannot capitalized in fixed assets, since it actually reduces the value of those.

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A sale commission is a period cost because it is a selling expense. The comission is an incentive for sellers to perform better, by it is not in itself a part of the cost of goods sold.

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7 0
3 years ago
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Julli [10]

Answer:

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Explanation:

Giving the following information:

Standard quantity 7.5 liters per unit Standard price $ 2.00 per liter

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<u>To calculate the direct material quantity variance, we need to use the following formula:</u>

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (7.5*3,400 - 26,200)*2

Direct material quantity variance= (25,500 - 26,200)*2

Direct material quantity variance= $1,400 unfavorable

5 0
3 years ago
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