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3 years ago

A. How much would you pay for a Treasury bill that matures in 182 days and pays $10,000 if you require a 1.8% discount rate?

Business

1 answer:

Sonja [21]3 years ago

4 0

Answer: $9909

Explanation:

Let the amount that will be paid be represented by y. The question can now be solved as:

(10000 - y)/10000 × 360/182 = 0.018

(10000-y)/10000 = 0.018 × 182/360

(10000 - y)/10000 = 0.0091

10000-y = 0.0091 × 10000

10000 - y = 91

y = 10000 - 91

y = $9909

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2 years ago

The Vogt corporation paid a dividend of $4.20 on its stock in the year just ended. If the dividends are projected to grow at a r

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Answer:

cost of equity = 13%

Explanation:

With the info given, we will use cost of equity formula from Dividend Growth Model. THis is given by:

$k_e=\frac{D_1}{P_0}+g$

Where D_1 is the next year dividend or D_1 = D_0(1+g)

P_0 is current stock price

g is the growth rate

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$D_1=D_0(1+g)=4.2(1+0.064)=4.47$

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Hence,

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3 years ago

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3 years ago

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3 years ago

Mark or Make is a bourbon distillery. Sales have been steady for the past three years, and operating costs have remained unchang

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Answer:

a. No allocation

2019 2020 2021

Gross Profit on Sales 350,000 349,000 351,000

Less: Operating Expense 210,000 210,000 210,000

Gross Revenue 140,000 139,000 141,000

Rent (Prepaid) 0 0 0

Revenue after Rent paid 140,000 139,000 141,000

Less: Corporate Taxes at 30% 42,000 41,700 42,300

Net Income $98,000 $97,300 $98,700

Considerations for No Allocation

- Taxes are to be deducted from Gross Profit.

- Rent not to be deducted from Gross Profit.

b. Comprehensive Allocation

2019 2020 2021

Gross Profit on Sales 350,000 349,000 351,000

Less: Operating Expense 210,000 210,000 210,000

Gross Revenue 140,000 139,000 141,000

Rent (Prepaid) 60,000 60,000 60,000

Revenue after Rent paid 80,000 79,000 81,000

Less: Corporate Taxes at 30% 24,000 23,700 24,300

Net Income 56,000 55,300 56,700

Considerations for Comprehensive Allocation

- Taxes are to be deducted from Gross Profit.

- Rent is to be deducted from Gross Profit.

c. No allocation distorts Mark or Make’s Net Income for all three years. This is because if Rent is not allocated taxes will be calculated on Gross Revenue. That is to say, Rent is a Non-Operating Expense and hence is to be deducted from Revenue to Calculate the Taxes. When Revenue is reduced, obviously, the taxes will be reduced. Hence, less income is seen in Comprehensive Income Statement and more Revenue is seen in Simple - Non Comprehensive Statement.

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2 years ago