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3 years ago

Riverwood Properties bought three lots in a subdivision for a? lump-sum price. An independent appraiser valued the lots as?

Business

1 answer:

Law Incorporation [45]3 years ago

8 0

Answer:

Explanation:

The cost allocation of each lot is presented below:

(A) (B) (A × B)

Lot Appraised Value Percentage Purchase value Allocated cost

Lot 1 $76,500 15% $355,000 $53,250

Lot 2 $229,500 45% $355,000 $159,750

Lot 3 $204,000 40% $355,000 $142,000

Total $510,000 100% $355,000

Now the journal entry would be

Land - Lot 1 $53,250

Land - Lot 2 $159,750

Land - Lot 3 $142,000

To Cash A/c $355,000

(Being the lots are purchased for cash)

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The shareholder-debtholder conflict refers to:________

Lera25 [3.4K]

Answer:

Explanation:

The shareholder-debtholder conflict usually arises because shareholders would prefer the firm to engage in more risky business activities. This is because this has the potential to increase the income of the firm and as a result, the wealth of shareholders.

On the other hand debtholders would not want the firm to engage in risky activities because it might negatively affect the firm's ability to make its schedules payments to debtholders.

In order to protect themselves, debtholders usually draft a deb covenant which contains allowable activities of the firm

4 0

3 years ago

Assume that in January 2017, Vivendi announced a €1.2 billion bond issuance. The bonds have a coupon rate of 6.75% payable semia

andriy [413]

Answer:

C. The coupon rate on these bonds would have been higher if Standard and Poor's, Moody's, and Fitch had assigned lower credit ratings

Explanation:

Assume that in January 2017, Vivendi announced a €1.2 billion bond issuance. The bonds have a coupon rate of 6.75% payable semiannually. Assume the bonds have been assigned credit ratings of BBB (stable outlook) by Standard and Poor's, Baa2 (stable outlook) by Moody's, and BBB (stable outlook) by Fitch.

Which of the following is not true? The coupon rate on these bonds would have been higher if Standard and Poor's, Moody's, and Fitch had assigned lower credit ratings.

8 0

3 years ago

Harrison Corp. wants to raise its level of service to enhance customer experience. The board of directors sent out an email cont

romanna [79]

Answer:

Downward communication

Explanation:

Downward communication in a formal structure is the flow of information in terms of orders, appreciation, encouragement from higher authority to subordinates across the organization.

Upward communication in the form of feedback and problems flow from lower level employees to upper level. Here, the board of directors are top level employees who have passed the message to the employees to raise the level of service. This is a form of downward communication.

4 0

3 years ago

On January 1, Year 1. a company issues $100.000 of 8% bonds maturing in 10 years when the market rate of interest is 9%. The bon

Margarita [4]

Answer:

b) The company will incur a loss

Explanation:

The market rate at the time of issue = 9%, while coupon rate = 8%, it says bonds provide lesser return when compared to the market rate.

At end of year 2 market rate drops to 6% which is lower than the Bond's coupon rate. Which means the bond's providing high return when compared to the market. So, company to retire the bonds need to pay more than the par value.

As company should retire these bonds more than par value, the company incur a loss.

Option 'B is correct

The company incur a loss

5 0

3 years ago

4.You can buy a machine for $100,000 that will produce a net income, after operating expenses, of $10,000 per year. If you plan

Anon25 [30]

Answer:

$124,966.9

Explanation:

The computation of the market or resale value is shown below:

$100,000 = $10,000 ÷ (1.15^1) + $10,000 ÷ (1.15^2) + $10,000 ÷ (1.15^3) + $10,000 ÷ (1.15^4) + Resale value ÷ (1.15^4)

$100,000 = $8695.65 + $7561.44 + $6575.16 + $5717.53 + Resale value ÷ 1.749006

Resale value ÷1.749006 = $71,450.22

So, the resale value is = $124,966.9

We simply applied the present value formula

3 0

3 years ago