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3 years ago

How is the balance sheet used to record amortization and why might it be useful as coupon payments are made?

Business

1 answer:

MrMuchimi3 years ago

4 0

Answer:

An intangible asset's annual amortization expense reduces its value on the balance sheet, which reduces the amount of total assets in the assets section of the balance sheet. This occurs until the end of the intangible asset's useful life.

Explanation:

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Salmon Inc. has debt with both a face and a market value of $227,000. This debt has a coupon rate of 7 percent and pays interest

Dahasolnce [82]

Answer:

14.27%

Explanation:

Unlevered value = [Expected earnings before interest and taxes × (1- tax rate)]/Unlevered cost of capital

Unlevered value = [$87,200 x (1- 0.35)]/0.12 = $472,333.33

Levered value = Unlevered value + (Tax rate × Debt market value)

Levered value = $472,333.33 + (0.35 x $227,000) = $551,783.33

Value of equity = Levered value - Debt market value

Value of equity = $551,783.33 - $227,000 = $324,783.33

Cost of equity = Unlevered cost of capital + [(unlevered cost of capital - coupon rate) × (Debt market value/Value of equity) × (1 - Tax rate)]

Cost of equity = 0.12 + [(0.12 - 0.07) × ($227,000/$324,783.33) × (1 - 0.35)] = 0.1427, or 14.27%

Therefore, the firm's cost of equity is 14.27%

7 0

2 years ago

"interest payments are payments made – current owners of –. because these payments are determined by the level of government – a

lorasvet [3.4K]

To
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debt
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5 0

3 years ago

Read 2 more answers

Which of the following is true of entrepreneurial organizational structures? Choose all that apply.

frosja888 [35]

Answer: A. They are flat.

C. They are common to start-up businesses.

D. A single leader makes most decisions.

Explanation:

Entrepreneurial business structure is a structure whereby, the owner of the bsuniess makes every decisions. It is often a start up company or a small company and there's a direct mean of communication as the owner has few workers.

The structure is typically flat and the roles are not well defined. It also give rooms for promotion of ideas as workers can give opinions on certain issues.

5 0

2 years ago

Read 2 more answers

Consider the following information: Portfolio Expected Return Beta Risk-free 5 % 0 Market 11.2 1.0 A 9.2 1.9 a. Calculate the re

tatiyna

Answer:

The calculations are shown below:

Explanation:

The calculations are shown below:

a. The expected rate of return is

Return = Risk free return + Beta × (Market return - risk free return)

= 5% + 1.9 × (11.20% - 5%)

= 5% + 11.78%

= 16.78%

b. Now the alpha is

Alpha = Actual rate of return - Expected rate of return

= 9.2% - 16.78%

= - 7.58%

c. No , the CAPM is not valid as the expected rate of return is more than the actual rate of return

6 0

3 years ago

Emphasizing the negative consequences that may occur unless a consumer changes behavior is called ________.

Andre45 [30]

Answer:

a fear appeal

Explanation:

Fear appeal is the strategy that induces fear in an individual with the aim of preventing a particular behaviour.

Usually a risk is presented to person and the consequences of taking a particular action is highlighted.

Fear appeal emphasises the negative aspects of a situation to discourage the participants from acting a particular way.

It is an important tool in malong positive change in an individual's attitudes, intentions, and behaviours.

7 0

2 years ago