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3 years ago

Consider the relative liquidity of the following assets:

Business

1 answer:

NeTakaya3 years ago

4 0

Answer:

1. A $20 bill

2. A bond issued by a publicly traded company

3. The funds in a money market account

4. Your car

Explanation:

Liquidity means that how easily an asset can be converted into cash.

1. Currency is the most liquid means of medium of exchange, so $20 bill is highly liquid asset.

2. A publicly traded bond can be converted into cash within a couple of days, so it is second most liquid asset.

3. The funds invested in the money market can be withdrawn within agreed period of time which can be in months or days so it can be at seconf or third most liquid asset.

4. A car can take more than a month to locate a customer to sell it at appropriate price so it is the least liquid asset.

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Feldspar Inc. is considering the capital structure for a new division. Management has been given the following cost information:

34kurt

Answer:

Option 4

Explanation:

In this question ,we have to compute the WACC which is shown below:

= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of common stock) × (cost of common stock)

For Option 1, it would be

= (0.3 × 10%) × ( 1 - 40%) + (0.7 × 12.5%)

= 1.8% + 8.75%

= 10.55%

For Option 2, it would be

= (0.4 × 10.5%) × ( 1 - 40%) + (0.6 × 13%)

= 2.52% + 7.8%

= 10.32%

For Option 3, it would be

= (0.5 × 11%) × ( 1 - 40%) + (0.5 × 13.5%)

= 3.3% + 6.75%

= 10.05%

For Option 4, it would be

= (0.6 × 11.7%) × ( 1 - 40%) + (0.4 × 14.2%)

= 4.212% + 5.68%

= 9.89%

For Option 5, it would be

= (0.7 × 13%) × ( 1 - 40%) + (0.3 × 15.5%)

= 5.46% + 4.65%

= 10.11%

So based on this, the management should accept option 4 as it derives the best debt asset ratio

The weightage of equity would be come

= 1 - weightage of debt

8 0

3 years ago

Three Guys Burgers, Inc., has offered $18 million for all of the common stock in Two Guys Fries, Corp. The current market capita

Pavlova-9 [17]

Answer:

Annual synergy gain = $ 178,500

Explanation:

Value of synergy gain from acquisition = 18 - 15.9 = 2.1 million

Annual synergy gain = 2.1 *.085 = .1785 million or $ 178,500

Annual synergy gain = $ 178,500

3 0

3 years ago

The compensation associated with restricted stock units (RSUs) under a stock award plan is: A. The book value of an unrestricted

pantera1 [17]

Answer:

Allocated to expense over the service period which usually is the vesting period.

Explanation:

The compensation associated with restricted stock units (RSUs) under a stock award plan is Allocated to expense over the service period which usually is the vesting period.

The compensation associated with restricted stock units (RSUs) under a stock award plan is computed as

Number of shares represented by the RSUs * market price of an unrestricted share of the same stock.

5 0

3 years ago

Sales total $500,000, and fixed costs total $300,000. The contribution margin ratio is 68%. Profit = $

marin [14]

Profit = $40,000

Given,

Total sales are $500,000

Total fixed costs are $300,000

Contribution margin ratio is 68%

Solution:

Profit = Total Sales × Contribution margin ratio − Total Fixed costs

= $500,000 × 68% − $300,00

=$340,000 −$300,000

Profit =$40,000

Profit:

Profit; also known as net income is the financial gain acquired when the amount of revenue generated by a company exceeds costs and expenses. Profit is the bottom line of a company′s income statement that shows the financial performance during the period.

Learn more about contribution margin :

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8 0

1 year ago

When the interest rate in an economy increases, it is likely the result of either: an increase in the government budget surplus

SIZIF [17.4K]

Answer: c). a decrease in the government's budget surplus or an increase in its budget deficit.

Explanation: Budget surplus refers to the excess of government revenue from taxes and other sources over its expenditure. While, budget deficit refers to the excess of government expenditures over its revenue.

BS= T>G

BD= G>T

A decrease in the government's budget surplus or an increase in its budget deficit leads to an increase in the interest rate in the economy. Thus the correct option is c.

5 0

3 years ago