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WINSTONCH [101]
3 years ago
5

Rob Lowe would like to invest $100,000 in Franklin Inc., which is offering common stock, preferred stock, and bonds on the open

market. The common stock has paid $1 per share in dividends for the past three years, and the company expects to be able to double the dividend in the current year. The current market price of the common stock is $10 per share. The preferred stock has an 8% dividend rate. The bonds are selling at par with a 5% stated rate.Required1. Explain Franklin’s obligation to pay dividends or interest on each instrument.2. Recommend one type of investment over the others to Rob and justify your reason.
Business
1 answer:
jeka57 [31]3 years ago
8 0

Answer:

1. Franklin Inc. is not under any legal obligation to pay divided to common stock holders. A company can only pay dividend when it makes profit. A company may not pay dividend even when it makes profit because payment of dividend at the discretion of board of directors. Dividends on common stocks are not fixed.

Payment of dividend to preferred stock holders is fixed because preferred stocks are fixed income securities. Dividend in this case does not depend on the financial fortune of a company. In case of cummulative preferred stocks, arrears of dividend in a given year can be carried forward to another year.

Franklin Inc is under a legal obligation to pay interest to debenture holders because the company is under bond to pay principal and interest as and when due. Bonds are also fixed income securities in which interest is fixed regardless of whether the company makes profit or not.

2. Rob Lowe is advised to invest in bonds because he is guaranteed of his principal and interest as and when due since the interest on bond and principal do not depend on the financial fortune of the company.

Explanation:

In the first case, explanations were made on the obligation of the company to pay dividend or interest.

In the second case, explanations were provided on the appropriate investment to undertake.

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ints) During 2018, Falwell Inc. had 500,000 shares of common stock and 50,000 shares of 6% cumulative preferred stock outstandin
Butoxors [25]

Answer: $4.34

Explanation:

The net income for diluted earnings per share will be calculated as:

Net income: $2,500,000

Less: preferred dividend: $300,000

= $2,200,000

To calculate the number of shares goes thus:

Total shares of stock options = 10,000 × 20 = 200,000 shares

Proceeds = 200,000 × $29

= $580,000

Shares of treasury stock will be:

= $580,000/$30

= 193,333 shares

Net shares added will be:

= 200000 - 193333

= 6667

Tge total shares for the diluted earnings per share will now be:

= 500,000 + 6667

= 506,667

The diluted earnings per share:

= $2,200,000/506667

= $4.34

8 0
3 years ago
Suppose a consumer has an income of $16, the price of a is $2, and the price of b is $1. which combination is on the consumer's
Crazy boy [7]

The combination is on the consumer's budget line. is Option B. 5A and 6B.

The budget line is a graphical delineation of all possible mixtures of the 2 commodities that can be bought with provided profits and price in order that the charge of each of these combos is equal to the financial income of the patron.

In economics, a budget line constraint represents all of the mixtures of products and services that a customer may also buy given modern-day expenses within his or her given earnings. consumer idea makes use of the principles of a budget constraint and a desire map as equipment to observe the parameters of purchaser choices.

A consumer has an income  = of $16

A = $2

B = $1

The sum of the total will be less than $16

Hence. option B  5A and 6B.

Learn more about the budget line here:-brainly.com/question/14524034

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Disclaimer: your question is incomplete, please see below for the complete question.

A. 6A and 5B

B. 5A and 6B.

C. 5A and 5B

D. 4A and 6 B

5 0
1 year ago
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost
Llana [10]

Answer:

$89,350

Explanation:

Calculation to determine the outstanding balance of the lease liability in Lone Star's December 31, 2018, balance sheet

First step is to calculate the Balance after first payment

Initial lease liability $130,000

Less: First payment $23,000

Balance after first payment $107,000

Second step is to calculate the Interest expense for June 30,2021

Interest expense for June 30,2021= $107,000*5%

Interest expense for June 30,2021=$5,350

Third step is to calculate the Principal payment for June 30,2021

Principal payment for June 30,2021=$23,000-$5,350

Principal payment for June 30,2021=$17,650

Now let calculate the Outstanding balance on June

Balance after first payment. $107,000

Less: Principal payment for June $17,650

Outstanding balance on June $89,350

Therefore the outstanding balance of the lease liability in Lone Star's December 31, 2018, balance sheet is $89,350

8 0
3 years ago
1. Which of the following questions would be permissible to ask during an interview with a candidate who
Marina CMI [18]

Answer:

I would say the first one

Explanation:

beacuse you do need to know if there is anything that could be hard for them to do and make it where they cant do there job it also might depnd on the job of what you would ask them but I would say the fist one so it gets to the point and isent rude hope this helps :)

7 0
3 years ago
Read 2 more answers
If the project's performance is expressed by this graph, which of the following is true about the project performance
joja [24]

If this graph expresses the project's performance.  the statement the project is performing behind schedule and under budget is true.

In discrete mathematics, a graph is a collection of points called vertices and lines between those points called edges. There are different types of charts, including B, Connected and disconnected charts, bipartite charts, weighted charts, directed and undirected charts, and simple charts. Graphs are a common way to show relationships in data visually. The purpose of charts is to display data that is too large or too complex to adequately explain with less text or space.

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5 0
1 year ago
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