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4 years ago

Why do you think tobacco companies are prohibited from displaying themselves on clothing?

1 answer:

6 0

Tobacco is highly an addictive drug and I don’t think it’s appropriate to display it on clothing if they’re selling it for kids or young teens.

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On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $784,000 cash. At Janua

stiv31 [10]

Answer:

a) Consolidated net income for Phoenix and Sedona for 2018

Phoenix revenues $648,000

-Phoenix expenses ($412,000)

Phoenix Net Income $236,000

2018 Income from Sedona $54,075

Consolidated net income for $290,075

Phoenix and Sedona for 2018

b) Phoenix’s consolidated retained earnings balance at December 31, 2018

Phoenix’s consolidated retained earnings balance at December 31, 2018 = $347,075.00 (same as Phoenix because of equity method use)

c) What amount should Phoenix report for Sedona’s customer list?

Consideration transferred at fair value $784,000

Book value acquired ($548,800)

Excess fair over book value $235,200

To Equipment $95,000

To customer list (4 year life) $140,200

Three years since acquisition of customer list = $140,200/4 years = $35,050. Hence, Phoenix report $35,050 as Sedona’s customer list.

4 0

3 years ago

Which of the following statements is CORRECT?A. Shareholder's equity is the residual value of a firmB. Net working capital must

olga55 [171]

Answer:

The correct answer is letter "A": Shareholder's equity is the residual value of a firm.

Explanation:

Shareholders' equity is a measure of a company's net worth. I can be calculated by subtracting the company's total liabilities from its assets. It is also understood as the funds remaining after all creditors and debts are paid that is why we could say it is the residual value of the firm.

4 0

3 years ago

Lew just purchased $67,600 of equipment that is classified as 5-year MACRS property. The MACRS rates are 20 percent, 32 percent,

Nat2105 [25]

Answer:

The book value of this equipment at the end of four years if he ignores bonus depreciation $26,290.

Explanation:

Cost of property = $67,600

Balance Depreciation

Year 1 67,600 13520

Year 2 54,080 17,306

Year 3 36,774 7,061

Year 4 29,713 3,423

Book vaue at the end of year 4 = 29,713 - 3423 = $26,290

6 0

3 years ago

What is the weighted average cost of capital and it's purpose?

Alenkinab [10]

The weighted average cost of capital is the rate that a company is expected to pay on average to finance their operation/assets
The purpose of this financial measurement would be for the budgeting process. It can be used to estimate future cash outflow that the company made for the operating period.

5 0

3 years ago

You are attempting to value a call option with an exercise price of $100 and one year to expiration. The underlying stock pays n

natka813 [3]

Answer:

$18.18

Explanation:

Calculation to determine the call option's value using the two-state stock price model

Based on the information given since the two possible stock prices are: S+ = $130 Increase and and S- = $70 decrease which means that If the exercise price is the amount of $100 the first step will be to determine the corresponding two possible call values.

First step is to determine the corresponding two possible call values.

Hence, the corresponding two possible call values are:

Cu = ($130-$100) and Cd = $0

Cu = $30 and Cd = $0

Second step is to Calculate the hedge ratio using this formula

Hedge ratio= (Cu - Cd)/(uS0 - dS0)

Hedge ratio= (30- 0)/(130 - 70)

Hedge ratio=30/60

Hedge ratio= 0.50

Third step is form the cost of the riskless portfolio and end-of-year value

Cost of the riskless portfolio = (S0 - 2C0)

Cost of the riskless portfolio = 100 - 2C0

End-of-year value =$70

Fourth step is to calculate the present value of $70 with a one-year interest rate of 10%:

Present value=$70/1.10

Present value= $63.64

Now let estimate the call option's value by first Setting the value of the hedged position to equal to the present value

Call option's value=$100 - 2C0 = $63.64

Hence,

C0=$100-$63.64/2

C0=$36.36/2

C0=$18.18

Therefore the call option's value using the two-state stock price model will be $18.18

3 0

3 years ago