Answer:
4.65%
Explanation:
Data provided in the question:
Amount borrowed = $18,000
Discount Interest rate = 4% = 0.04
Required compensating balance = 10%
Now,
Effective loan rate on Discount Loan with compensating balance is given as
⇒ [ ( Interest rate ) ÷ (1- interest %-Compensating balance%) ] × 100%
⇒ [ 4% ÷ ( 1 - 4% - 10%) ] × 100%
⇒ [ 0.04 ÷ ( 1 - 0.04 - 0.10 ) ] × 100%
⇒ [ 0.04 ÷ 0.86 ] × 100%
⇒ 4.65%
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Answer:
$12,000
Explanation:
For computing the preferred dividend, first we have to find out the yearly dividend which is shown below:
= Number of shares × par value per share × dividend rate
= 4,000 shares × $50 × 5%
= $10,000
In 2017, the dividend was paid of $8,000
Remaining dividend left is $10,000 - $8,000 = $2,000
So, the total preference dividend in 2018 would be
= Yearly dividend + remaining dividend left
= $10,000 + $2,000
= $12,000
Out of $40,000, the $12,000 will be paid to preferred stockholders and the remaining $28,000 will be paid to equity stockholders
Answer:
a. 2.23
b. 3.21
Explanation:
a. Answer to Part A
Payback Period = Investment / Annual Cash Inflow
= 250000 / 112115
= 2.23
Answer to Part B
Payback Period = Investment / Annual Cash Inflow
= 200000 / 62375
= 3.21
Working Note
<em>Particulars Case A Case B
</em>
After Tax Income 72115 39000
Add: Depreciation 40000 23375
Cash Inflow 11,2115 62375
<em>Particulars Case A Case B
</em>
Cost of Machine 250000 200000
Less: salvage Value 10000 13000
Depreciable Value 240000 187000
Life of the Asset 6 8
Annual Depreciation 40000 23375
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