Answer:
The opportunity costs of letting your colleague to extend the loan for another month are:
- invest in oil-well venture = $5,100 x 28% = $1,428
- invest in new IT stock = $5,100 x 45% = $2,295
Your total opportunity cost depends on what you actually decide to do with the money, if you invest all of it on the oil-well venture it is $1,428, or all of it in the new IT stock it is $2,295, but if you invest 50/50 on each, then the opportunity cost would be $1,861.50, or any other possible combination.
Opportunity costs are the extra costs or benefits lost from choosing one investment or activity over another alternative.
Answer:
a. $880.74
b. 13 years
Explanation:
a. Conversion ratio = Current Value of bond / Conversion price = 1,000 / 93.4 = 10.71
Conversion price of bond = 10.71 × 28.60 = $306.31
Coupon = Par value of bond * Coupon rate = $1,000 * 6.4% = $64
Present value of straight debt is calculated below:
Present Value = $64 × [1-(1+7.4%)^-30 / 7.4%] + [$1,000 / (1+7.4%)^30]
= $64*11.93 + $117.46
= $763.28 + $117.46
= $880.74
.
Therefore, the minimum value of bond is $880.74
b. Conversion ratio = 10.71
Current stock price = $28.6
Suppose number of year the stock will take to reach above $1,140 is t.
Conversion value = Current stock price * Conversion ratio*(1+10.8%)^t
$1,140 = $28.6 * 10.71 * (1.108)^t
(1.108)^t = 3.7218
t = 12.8145 year.
t = 13 years
Answer:
Normally a demand curve will have downward sloping shape.
Explanation:
The demand curve is downward sloping, indicating the negative relationship between the price of a product and the quantity demanded.
Answer:
e. $4,500
Explanation:
Year Depreciation overstated Prepaid expense omitted
1 $2,500 $3,000
2 $4,000 $2,000
Year 2's net income = net income (year 2) + overstated depreciation (year 2) + omitted prepaid expenses (year 1) - omitted prepaid expenses (year 2) = $18,000 + $4,000 + $3,000 - $2,000 = $23,000
This means that year 2's net income was understated by $5,000.
But year 1's net income was overstated by = $2,500 - $3,000 = -$500.
The adjustment on the retained earnings account should be $5,000 - $500 = $4,500
Well, first find a number that both denominators in the fraction share, then you multiply whatever number it takes to get that and then multiply the same number to the numerator. Hope this helps!
