Answer:
Group of choices:
A. There is an ethical dilemma when the CEO of a firm has incentives that are opposite to those of the shareholders.
B. There is a legal issue when the CEO of a firm has incentives that are opposite to those of the shareholders.
C. In this case, you (as the CEO) have an incentive to potentially overpay for another company (which would be damaging to your shareholders) because the value of the combined company will improve.
D. In this case, you (as the CEO) have an incentive to potentially overpay for another company (which would be damaging to your shareholders) because your pay and prestige will improve.
The correct answer is A. There is an ethical dilemma when the CEO of a firm has incentives that are opposite to those of the shareholders.
D. In this case, you (as the CEO) have an incentive to potentially overpay for another company (which would be damaging to your shareholders) because your pay and prestige will improve.
Explanation:
The agency conflict arises when there is a gap between the owners of a company and the management of the management, since it determines that the interests of the shareholders and that of the managers are different. In the case that arises, the CEO evidently becomes a top-notch executive of the combined company, and will have some additional benefits to those that the shareholders may have (mainly return on their investments). At this point an ethical dilemma arises, since the interests of a person cannot overlap with those of a particular organization, and in the event of a purchase being made from the company, it must be ensured that the levels of profitability of the shareholders will increase over time.
Answer:
there is an increase in taxes of $52,192
Explanation:
The computation of the net payment or saving is shown below:
Given that
Book value = $450,000
Sale value = $636,400
since the sales value is more than the book value so here the capital profit is there
Therefore capital profit would be
= $636,400 - $450,000
= $186,400
Now tax would be
= $186,400 × 28%
= $52,192
So there is an increase in taxes of $52,192
Answer:
Avoidable interest is $272,064.
Explanation:
Compute the interest on new notes payable, using the equation as shown below:
Interest = Principalof 13% note payable × Rate of interest
=$1,059,300×13%
=$137,709
Hence, the interest of new notes payable is $137,709.
Compute the interest of outstanding notes payable using the equation as follows:
Interest = Outstanding principal × Weighted average interest rate
=$1,268,700×10.59%
=$134,355
Hence, the interest of outstanding principal which is needed to be considered for the calculation of avoidable interest is $134,355
Avoidable interest is $272,064.
Answer:
Interest = ( 100 + 100 + 100) × 0.07 = $21
The answer reflects 3 increments of $100
Explanation:
Overdraft which is essentially the extension of credit from a bank when an account balance reaches zero. The credit extension allows the accountholder to continue withdrawing money from the account, despite its zero balance.
Answer:
A) $ 1,200
Explanation:
The firm has estimated that one half of one percent of credit sales is uncollectible.
Total credit sales $ 300,000
Estimated uncollectible accounts 0.5 %
Allowance for uncollectible accounts balance
$ 300,000 * 0.5 % $ 1,500
Available balance in allowance for uncollectible account <u> $ 300</u>
Additional amount to be recorded in allowance account <u> $ 1,200</u>
