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olga55 [171]
3 years ago
13

Nancy refinances her home mortgage on June 1 of the current year. She obtains a 30-year mortgage at 5%. As part of the refinanci

ng, she pays points of $3,600 (a customary practice in her location). What amount, if any, of the points are deductible ____________?
Business
1 answer:
mylen [45]3 years ago
4 0

Answer:

Nancy  will be able to deduct $70 points.

Explanation:

the deduction is allowed in the year of payment if the following requirements are met:

- your main home is the security for your loan

- cash method of accounting is used

- points are not paid out of borrowed funds.

if Nancy  does not fulfill the requirements, then the points will be allowed to be deducted over the life of the loan..

Therefore, $3600 will be spread over 30 years, Nancy  will be able to deduct $70 points.

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You have been hired by the CFO of Lugones Industries to help estimate its cost of common equity. You have obtained the following
LekaFEV [45]

Answer:

Under CAPM:

Re = Rf + Beta(Rm - Rf)

Rf = 5%

Rm - Rf = 6%

Beta = 1.25

Re = 5% + (1.25 x 6%) = 12.5%

Under dividend discount model:

Re = (Div₁ / P₀) + g

Div₁ = $1.20

P₀ = $35

g = 8%

Re = ($1.20 / $35) + 8% = 11.43%

Under bond yield plus risk premium approach:

Re = Pre-tax cost of debt + risk premium over its own debt

Pre-tax cost of debt = 7%

risk premium over its own debt = 4%

Re = 7% + 4% = 11%

The highest cost of equity results from the CAPM model and it is 12.5% while the lowest results from using the bond yield plus risk approach (11%), the difference is 1.5% between them.

7 0
3 years ago
Stu's Mellow Meter Miser (MMM) has recently experienced a sales decline due to the entry of a lower-priced competitor, Kelly's C
qaws [65]

Answer:

<u>New York Times (NYT) Cost per Thousand Impressions (CPM): </u>

Cost per Thousand Impressions = Advertisement Cost / (Impressions / 1000)

Cost per Thousand Impressions = $12,000 / (251,000 /1000)

Cost per Thousand Impressions = $12,000 / 251

Cost per Thousand Impressions = $47.8

<u>NYT CPM for College Professors: </u>

Impressions generated = 251,000 × 11%  

Impressions generated = 27610

CPM = Advertisement Cost / (Impressions / 1000)

CPM = $12,000 / (27610 / 1000)  

CPM = $12,000 / 27.61  

CPM = $434.6

7 0
2 years ago
A financial asset is: a physical asset like a car. a claim that entitles the owner to future income from the seller. the value o
stira [4]

Answer:

The correct answer is letter "B": a claim that entitles the owner to future income from the seller.

Explanation:

Financial assets are intangible resources that represent an entity's ownership claim or contractual rights to future payments. Common types of financial assets are cash, stocks, bonds, bank deposits, options, futures contracts, and derivatives. The value of an asset depends on supply and demand and its underlying value.

6 0
3 years ago
Southwest and Delta both compete in the airline industry, but they follow different business strategies. Delta’s transportation
Butoxors [25]

Answer:

Broad Cost Leadership

Explanation:

There are 4 generic business strategies in M. Porter's Model:

- Cost leadership ( Competitive advantage: Cost / Broad markets)

- Cost  Focus ( Competitive advantage: Cost / Narrow markets)

- Diferentiation Leadership ( Competitive advantage: Differentiation / Broad markets).

. Differentiation focus: ( Competitive advantage: Differentiation / Narrow markets)

In the case of cost leadership is a set of actions designed to have lower cost in the market based on efficiency

In this case,the market is  the airline industry  where Southwest is compiting but its strategy is to have a basic quality product based in its cost efficient proposal.

6 0
3 years ago
Read 2 more answers
Cullumber Company issued $445,000, 15-year, 8% bonds at 96. (a) Prepare the journal entry to record the sale of these bonds on J
Stolb23 [73]

Answer:

Dr Cash $427,200

Dr Discount on Bonds payable $17,800

Cr Bondss payable $445,000

Explanation:

Preparation of the journal entry to record the sale of these bonds on January 1, 2022

Dr Cash $427,200

($445,000 × 0.96)

Dr Discount on Bonds payable $17,800

($445,000-$427,200)

Cr Bonds payable $445,000

(Being to record the sale of the bond )

6 0
3 years ago
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