Answer:
d.) I and II
Explanation:
The first proposition can be regarded as proposition that gives a clam that capital structure of a company has no impact on the value. The value of a company is been known as present value of future cash flows when it's calculated, then it cannot be affected by capital structure. It should be noted that MM Proposition I with corporate taxes states that capital structure can affect firm value by an amount that is equal to the present value of the interest tax shield.
Answer:
$77,217
$11,289
Explanation:
Fist we will calculate the present value of $10,000 payment
A fix Payment for a specified period of time is called annuity. The discounting of these payment on a specified rate is known as present value of annuity. The value of the annuity is also determined by the present value of annuity payment.
Formula for Present value of annuity is as follow
PV of annuity = P x [ ( 1- ( 1+ r )^-n ) / r ]
Where
P = Annual payment = $10,000
r = rate of return = 10% / 2 = 5%
n = number of period = 5 years x 2 semiannual payments per year = 10 payments
PV of annuity = $10,000 x [ ( 1- ( 1+ 0.05 )^-10 ) / 0.05 ]
PV of Annuity = $77,217
Now we will use the discounting method to calculate the present value of lump sum payment of $20,000
Present value = Future value x Present value factor
PV = FV x ( 1 + r )^-n
PV = $20,000 x ( 1 + 0.1 )^-6
PV = $11,289
Answer:
Dr interest expense 74,812.50
Cr Cash 71,820
Cr Discount on bonds payable 2,992.50
Explanation:
the cash interest payments = principal x coupon rate x 1/2 (semiannual) =$1,197,000 x 12% x 0.5 = $71,820
since the bonds were sold at a discount, we must add the discount amortization = [($1,197,000 x 5%) / 10 years] x 1/2 = $5,985 x 0.5 = $2,992.50
total interest expense = $71,820 + $2,992.50 = $74,812.50
So the journal entry should be:
Dr interest expense 74,812.50
Cr Cash 71,820
Cr Discount on bonds payable 2,992.50
Answer:
The answer is: 1,375 balloon bundles
Explanation:
We can calculate how many balloon bundles must be sold using the following formulas:
- contribution margin per unit = Selling price per unit – Variable cost per unit
- Units = (Fixed costs + Target profit) / (contribution margin per unit)
Contribution margin per unit = $10 - $2 = $8
units = ($5,000 + $6,000) / $8 = $11,000 / $8 = 1,375 units
Answer:
Marginal benefits and marginal costs.
Explanation:
