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3 years ago

Based on M&M Proposition 2 with taxes, the weighted average cost of capital:

Business

1 answer:

balu736 [363]3 years ago

7 0

Answer:

The correct answer is D

Explanation:

The M and M proposition 2 states the cost of equity of the company. The rate of return required or needed which is grounded or based on the risk level linked or associated with the investment the historical volatility.

The M and M proposition 2 states with the taxes, the weighted average cost of capital decreased or reduced as the ratio of debt to equity increases.

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Listed below are transactions that might be reported as investing and/or financing activities on a statement of cash flows. Poss

andrew-mc [135]

Answer:

Investing Activities refer to cashflow activities that have to do with Fixed assets as well as the ownership of the securities of other companies.

Financing Activities refer to cashflow activities that have to do with how the company sources funds for the company so this includes Equity related activities and long term liabilities.

1. Sale of land. +I

2. Issuance of common stock for cash. +F

3. Purchase of treasury stock. -F

4. Conversion of bonds payable to common stock. N

5. Lease of equipment. N

6. Sale of patent. +I

7. Acquisition of building for cash. -I

8. Issuance of common stock for land. N

9. Collection of note receivable (principal amount). +I

10. Issuance of bonds. +F

11. Issuance of stock dividend. X

12. Payment of property dividend. X

13. Payment of cash dividends. -F

14. Issuance of short-term note payable for cash. +F

15. Issuance of long-term note payable for cash. +F

16. Purchase of marketable securities ("available for sale"). -I

17. Payment of note payable. -F

18. Cash payment for five-year insurance policy. X

19. Sale of equipment. +I

20. Issuance of note payable for equipment. N

21. Acquisition of common stock of another corporation. -I

22. Repayment of long-term debt by issuing common stock. N

23. Payment of semiannual interest on bonds payable. X

24. Retirement of preferred stock. -F

25. Loan to another firm. -I

26. Sale of inventory to customers. X

27. Purchase of marketable securities (cash equivalents). X

6 0

3 years ago

Assume that you have entered into a swap agreement for a notional of 100M USD under which every 6 months you agree to pay LIBOR

hodyreva [135]

Answer:

C) 0.5 USD

Explanation:

Swap is an arrangement in which two parties exchange their interest rates for mutual benefit. One party may receive fixed rate and other will receive floating rate based on LIBOR. In the given scenario the swap agreement was originated when the LIBIOR was 3%. The fixed rate was set to be at 4% so the net gain at the time of inception was 1%. When LIBOR increased after six month the net gain declined to only 0.5%.

4 0

3 years ago

An insurance policy written after 1988 that fails to pass the seven-pay test is known as

Zigmanuir [339]

The answer to this question is a modified endowment contract. A modified endowment contract or MEC is a type of life insurance policy where in the policy/ insurance is being funded with more money or the insurance premium payment exceeds the amount allowed under the federal law. The modified endowment contracts are taxable.

3 0

3 years ago

An office building owned by Milo was destroyed by Hurricane Mel on September 25, Year 4. On October 2, Year 4, the President of

Anon25 [30]

Answer:

December 31, year 9

Explanation:

Here, we want to state that date that is possible for Milo to acquire qualified replacement property.

In order to avoid being taxed on a gain resulting from an involuntary conversion, the property subject to the conversion must be replaced within a specified time, measured from the end of the calendar year in which the proceeds are received.

Generally, the period is 2 years, but it is 3 years when the involuntary conversion results from government condemnation or eminent domain and is extended to 4 years when the loss is in connection with a declared federal disaster area.

We are told from the question that Milo received the recovery on January 2, Year 5, the property would have to be replaced within 4 years from the end of Year 5 or by December 31, Year 9

3 0

3 years ago

The Balance sheet of Mister Ribs Restaurant reports current assets of $30,000 and current liabilities of $15,000.a. Calculate th

Pani-rosa [81]

Answer:

Current Ratio = 2; Yes

Explanation:

First, to solve for current ratio, simply divide the current assets by the current liabilities.

So the current ratio would be $30,000 / $15,000 resulting to 2

Now, a current ratio greater than one means that Mister Ribs will be able to pay its current liabilities as they come due in the next year.

However, because the current ratio at any one time is just a snapshot, it is usually not a complete representation of a company’s liquidity or solvency.

4 0

4 years ago