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zubka84 [21]
3 years ago
9

Sue purchased a 3.5 percent, $100,000 U. S. Treasury bond 6 months ago when the bid quote was 124.1850 and the asked quote was 1

24.2025. Today, she sold that bond when the bid quote was 124.2175 and the asked quote was 124.2225. What was her total dollar return on this investment?
Business
2 answers:
Katena32 [7]3 years ago
8 0

Answer:

The total dollar return on this investment is $1765

Explanation:

The total dollar return on the investment by Sue is a sum of the interest earned by Sue during this period and the profit due to the increase in bid/ask price of the bond.

Interest earned = [(0.035/2) x $100,000] = $1750;  

The selling price by Sue today will be the bid quote today and for the purchase price on which Sue bought the bond we will take the asked quote on purchase.

bid quote today = 124.2175

asked quote on purchase = 124.2025

Profit earned on selling = (Bid quote today - Asked quote on purchase) * $100,000

= [(124.2175 - 124.2025) x $100,000] = $15

Total return = $1750 + $15 = $1765

12345 [234]3 years ago
5 0

Answer:

total return 1,765

Explanation:

the bonds will be purcahse at ask quote (dealer is willing to sale at 124.2025

and sale at bid price (dealer purchase at 124.2175)

we also have  gain the interest for the period:

principal x rate x time = interest

as the rate is annual then, time is express as the portion of a year

100,000 x 0.035 x 6/12 months = 1,750

100,000 x 124.2025 = 124,202.5 purchase price

100,000 x 124.2175 = 124,217.5 sale price

capital gain: (diffeence between sale and purchase: 15

total return 1,765

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3 years ago
You are taking a $6,226 loan. You will pay it back in four equal amounts, paid every year, with the first payment occurs at the
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Answer:

annual payment = $2,362.88

Explanation:

we must first calculate the future value of the loan at the end of year 4 = $6,226 x (1 + 11%)⁴ = $9,451.51

using the present value of an annuity formula we can determine the annual payment:

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annual payment = $9,451.51 / 3.1024 = $2,362.88

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2 years ago
How physical assets valuation and development and research pose risk.<br>​
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Answer:

The differences between US GAAP and IFRS pose an extra cost because international corporations must prepare two separate accounting statements. But besides that, other potential risks include paying higher taxes than what the companies should pay int their home countries and the uncertainty generated by changing rules.

Not only do current tax rates affect potential investments, e.g. currently companies in the US pay relatively low corporate taxes (Tax Cuts and Jobs Act of 2017) but these benefits end on 2025. But also different methods for valuating physical assets and R&D costs can represent higher than expected taxes. E.g. depending on a company's needs, it may be beneficial to expense all R&D costs right away, or maybe it would be better to capitalize some of them after technical feasibility is achieved (IFRS).

The main advantage of having uniform rules (e.g. UCC) is that all the companies know exactly what to expect and how to act. Certainty decreases risk, and less risk reduces costs.

Explanation:

In the US, the vast majority of firms use US GAAP as their accounting method, but around the world the IFRS method is used.

Physical asset valuation is the process of determining the value of your physical assets including P, P & E, and also inventories.

  • When valuing inventories IFRS uses FIFO, while US GAAP allows FIFO, LIFO or weighted average costing methods. US GAAP also values inventory at lesser of cost or market value, while IFRS values inventory at lesser of cost or net realizable value.
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Research and development must be expensed right away under US GAAP, while IFRS basically requires the same, it allows some capitalization of development expenditures if certain criteria is met (technical feasibility is achieved).

7 0
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The following balance sheet accounts of a foreign subsidiary at December 31, 2017, have been translated into U.S. dollars as fol
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Answer:

$1,300,000

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