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3 years ago

Why must real options have positive value? (Select all the choices that apply.)

Business

1 answer:

yarga [219]3 years ago

5 0

Answer:

A. Real options must have positive value becasue they are only exercised when doing so would increase the value of the investment.

B. If exercisung the real option would reduce value, managers ca allow the option to go unexercised.

D, Having the real option but not the obligation to act is valuabale.

Explanation:

Because real option are options or choices made available to managers of a firm concerning investment their choices are meant to bring about a positive growth and return on the investments.

So if any of the choices presented to these managers are going to reduce the values or have other negative impacts on the investment and its value, then the option which is the real option or ideal option canbe forgone.

Cheers.

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Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The com

Salsk061 [2.6K]

Answer:

$28,250

Explanation:

Chapman Company Statement of Cashflow using Indirect method

Cash flow from Operating Activities:

Net income$130000

Adjustment to reconcile net income to cash basis:

Depreciation expense $25000

Increase Account receivable ($17000)

Decrease Inventory$30000

Increase Prepaid Expense ($2000)

Increase Account payable $8000

Decrease Salaries & Wages Payable ($24750)

Increase Interest payable $2000

Balance $21250

Cash flow from Operating Activities $151250

Cash flow from Investing Activities:

Cash paid for purchase of plant assets ($28000)

Cash flow from Investing Activities ($28000)

Cash flow from Financing Activities:

Issue common stock (2000 * $10)$20000

Repaid Bonds($30000)

Cash dividend paid ($105000)

Cash flow from Financing Activities ($115000)

Net cash Increase/(decrease) $8250

Add: Beginning Cash Balance $20000

Ending Cash Balance $28,250

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3 years ago

In double-entry bookkeeping, what goes in the left

Nadya [2.5K]

Answer:Double-entry bookkeeping, in accounting, is a system of bookkeeping where every entry to an account requires a corresponding and opposite entry to a different account. The double-entry has two equal and corresponding sides known as debit and credit. The left-hand side is debit and right-hand side is credit.

Explanation:

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3 years ago

Disposal of Fixed Asset

andreev551 [17]

Answer:

$328000

Explanation:

Given: Cost of machine= $880000

Residual value= 60000

Estimated life= 10 years

Company use straight line depreciation method.

∴ Depreciation = $\frac{\textrm{cost of machine- residual value}}{estimated\ useful\ life}$

⇒ Depreciation= $\frac{880000 - 60000}{10} = \frac{820000}{10}$

∴ Depreciation= $\$ 82000$ per year.

Now, lets find the value of depreciation.

∵ Machine is sold on December 31, 2019, which is 6 years after it is installed.

∴ Depreciation value after 6 years= $\textrm{Depreciation value every year \times number of years used}$

Depreciation value after 6 years= $82000\times 6 = \$ 492000$

Next, finding the value of machine after 6 years of depreciation.

Value of machine after 6 years= $820000 - 492000= \$ 328000$

∴ Disposal value of machine after 6 years of usage is $\$ 328000$ , however, machine was sold at $225000.

4 0

3 years ago

Gramps purchased a joint survivor annuity that pays $500 monthly over his remaining life and that of his wife, Gram. Gramps is 7

Bezzdna [24]

Answer:

$150

Explanation:

Calculation of how much income that Gramps will recognize on the first payment.

Since joint survivor annuity has 23.1 as the annual return multiple .

Calculation for Expected return

Expected return =Annual payment *Return multiple

($500*12) =$6,000

$6,000×23.1

=$138,600

Therefore :

$97,020/$138,600

=0.7×100

=70%

The 70% of each of the payment will be the return of capital while the 30%(100%-70%) will be the income.

Hence the first payment be:

30%×500

=$150

Therefore the amount of income that Gramps will recognize on the first payment will be $150

6 0

4 years ago

g A REIT with 100 shares outstanding earns $1,000 in rent and incurs operating expenses of $400. In addition, the REIT owns prop

anygoal [31]

Answer: $1.90

Explanation:

The dividend payment that has to be made needs to be less than the Earnings per share in order for the REIT to maintain its tax exempt status.

EPS = (Net income - Expenses) / Number of shares

Expenses = Operating expenses + Depreciation

= 400 + (6,000 / 15 years)

= $800

EPS = (1,000 - 800) / 100

= $2.00

<em>The only option less than $2.00 is the first option of $1.90 so this is correct. </em>

5 0

3 years ago

Why must real options have positive​ value? ​(Select all the choices that​ apply.)

Why must real options have positive value? (Select all the choices that apply.)