<span>Given that a
firm has return on assets (roa) of 15 percent, and debt-equity ratio of
60 percent.
Then, equity multiplier = 1 + Debt-equity ratio = 1 + 60/100 = 1 + 0.6 = 1.6
Return on equity (roe) is given by return on asset multiplied by the equity multiplier.
Therefore, the firm's return on equity is 1.6 x 0.15 = 0.24 = 24%.
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Answer:
Its very simple, the required return would be 12% of the amount invested today. And this can be explained by the use of DVM (Dividend valuation Model), which is as under:
For ordinary shares r = (Dividend after one year / Share price now)
Dividend after one year = Required return * Share Price Now
Assuming no growth in the dividends, we can say that the required return would be 12% of the amount invested now which is the share price of the ordinary shares.
Answer:
Dr Cash 254,430
Dr Discount on bonds payable 2,570
Cr Bonds payable 257,000
Explanation:
Preparation of the journal entry to record the sale of these bonds on March 1, 2022
Based on the information given we were told that Brothers Inc. issues the amount of $257,000 that includes 10-year and 8% bonds at 99 which means that the journal entry to record the sale of these bonds on March 1, 2022 will be :
March 1, 2022
Dr Cash 254,430
(257,000*99%)
Dr Discount on bonds payable 2,570
([$257,000*(100%-99%)]
Cr Bonds payable 257,000
(Being to record the sale of bonds)
Answer:
A. for government to provide the good and then pay for its production through taxation.
Explanation:
Free Riding is an economic problem implying usage of 'non excludable' good, by people not contributing to pay for it.
Example : Roads, Bridges etc.
One most suitable solution to free rider problem is : Providing it through government and treating all prospective beneficiaries as unified consumers set , dividing the entire total cost equally between all of them - through mechanism of taxation
Answer:
$113,465
Explanation:
Calculation to determine difference in total dollars that will be paid to the lender under each loan
First step is to Calculate the difference in payments on a 30-year mortgage at an interest rate of .75% a month
$100,000 = PMT([1 / (0.0075)] − 1 / {(0.0075)[(1.0075)]^30 × 12})
PMT = $804.62
Second step is to Calculate the difference in payments on a 15-year mortgage at an interest rate of .7% a month
$100,000 = PMT([1 / (0.007)] − 1 / {(0.007 )[ 1.007)]^15 × 12})
PMT = $ 978.87
Now let determine the Total difference
Total difference = ($804.62 × 12 × 30) − ($978.87 × 12 × 15)
Total difference= $113,465
Therefore difference in total dollars that will be paid to the lender under each loan is $113,465
