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3 years ago

What makes buying a foreclosed property risk

Business

1 answer:

navik [9.2K]3 years ago

4 0

Answer:

You can not check the property beforehand for damages, which is a risk.

Explanation:

A foreclosure property is that property which is being sold off by a lender in order to payoff default.

There are a number of risks involved in buying such property. The process of buying is lengthy and complicated.

Buyers are not allowed to check the property before auction. Often these properties are damaged because the owners can not afford to manage. Or the angry owners may damage the property purposely in order to punish the lenders.

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Turner Company owns 10% of the outstanding stock of ICA Company. During the current year, ICA paid a $5 million cash dividend on

lozanna [386]

Answer:

Turnover Company

The net income of Turnover will increase by $500,000.

Explanation:

a) Data and Calculations:

Turner Company's shareholding in ICA = 10%

ICA pays dividend totalling $5 million

Turner's share of dividend = $500,000 ($5 million * 10%)

b) This is not based on equity accounting. Instead, the investment will be reported at fair value. Equity accounting method will be applied in recording Turner's investments in ICA Company, if the ownership interest is valued at 20–50% of the stock.

c) The $500,000 dividends received from ICA Company will be reported in the Income Statement of Turner Company as other income, unless Turner ordinarily buys and sells stocks. The 10% shareholding does not amount to significant control or influence for the accounts of Turner and ICA to be consolidated.

6 0

2 years ago

Based on market values, Gubler's Gym has an equity multiplier of 1.46 times. Shareholders require a return of 10.91 percent on t

rewona [7]

Answer:

The answer is "5.4% and 15,23,500".

Explanation:

Calculating the capital cost:

$=(1-\frac{1}{1.46})\times 10.91\% \times (1-39\%)+(\frac{1}{1.46})\times 4.84\% \\\\=(\frac{1.46-1}{1.46})\times \frac{10.91}{100} \times (\frac{100-39}{100})+(\frac{1}{1.46})\times \frac{4.84}{100} \\\\ =(\frac{0.46}{1.46})\times \frac{10.91}{100} \times (\frac{61}{100})+(\frac{1}{1.46})\times \frac{4.84}{100} \\\\=\frac{306.1346}{14600}+\frac{4.84}{146} \\\\= 0.021+0.033 \\\\ =0.054\\\\= 5.4\%$

Maximum amount to be spent

$=\frac{277,000\times 100 }{5.4} \times (1-\frac{1}{(1.054)^7})\\\\=\frac{277,000\times 100 }{5.4} \times (1-\frac{1}{1.44})\\\\=\frac{277,000\times 100 }{5.4} \times (1-0.7)\\\\=277,000 \times 100\times 0.055\\\\=\$15,23,500\\$

6 0

2 years ago

When units are moved from one processing department to the next, the cost associated with those units must also be moved from o

KonstantinChe [14]

These costs called as Transferred costs.

<h3><u>Explanation:</u></h3>

The costs that are accumulated during the time of upstream production process in a firm refers to Transferred costs. These are associated with the goods that are transferred to the next department of a business from one department. With this product there will be a continuation of the production process.

These are semi finished goods that are transferred for the purpose of continuing the production process. When these units are moved form the processing department to the next department, these transferred cost will be transferred from one work in process account to the next account.

7 0

2 years ago

____ are long-term, low-interest loans, cash grants, and tax deductions used to develop and protect companies or special industr

Schach [20]

GOVERNMENT SUBSIDIES are long-term, low-interest loans, cash grants, and tax deductions used to develop and protect companies or special industries.

Government subsidies are assistance given by the government to a person or a group of individuals in support of an enterprise that is for the public interest.

3 0

2 years ago

A project that cost $80000 with a useful life of 5 years is being considered. Straight-line depreciation is being used and salva

mina [271]

Answer:

8.13%

Explanation:

Annual return = [ (Total FV/Initial investment)^(1/n) ] -1

n = useful life of the project

Total Future Value = (22650*5) +5000

Total FV = $118,250

Initial investment = $80,000

Annual return = [ (118,250/80,000)^(1/5) ] -1

r = [ (1.478125^(1/5)] -1

r = 1.0813 - 1

r = 0.0813 or 8.13%

6 0

2 years ago