Answer:
$2,225
Explanation:
For computing the interest expense, we need to do the following calculations which are shown below:
Cash interest = Face value × rate of interest × number of months ÷ total number of months in a year
= $185,000 × 6% × 3 months ÷ 12 months
= $2,775
Now
Premium Amortization is
= Premium amount ÷ number of year × number of months ÷ total number of months in a year
= $11,000 ÷ 5 years × 3 months ÷ 12 months
= $550
The $11,000 is come from
= $196,000 - $185,000
So,
Interest expense is
= Cash Interest - premium amortization
= $2,775 - $550
= $2,225
Answer:
$66.67
Explanation:
Using dividend growth model
P0 = 
Where P0 = Current market price of share
D1 = Dividend at year end
Ke = Expected return
g = growth percentage
Since D1 has been provided we will take D1 else formula is D0 + g for calculating D1
Putting the values as provided we have
P0 = 
=
= $66.67
Answer:
Marginal cost is greater than its average cost.
Explanation:
Given that,
Cost of producing 500 graphing calculators = $35,000
Cost of producing 501 graphing calculators =$35,080
Therefore,
The marginal cost = Cost of 501 graphing calculator - Cost of 500 graphing calculator
= $35,080 - $35,000
= $80
Average cost:
= $35,000 ÷ 500
= $70
Therefore, the marginal cost is greater than its average cost.
Answer:
The effect on earnings in the year after after the shares are granted to executives wpuld be that the earnings will be reduced by $80 million.
Explanation:
market price of common shares = $8 per share
number of common shares issued as RSUs = 30 million
total value of common shares issued as RSUs = 30 million*$8
= $240 million
the total compensation to executives is $240 million and the vesting period is 3 years.
Therefore, the total compensation should be expensed over a period of 3 years, this will reduce the earnings of the company by $80 million ($240 million/3) per year for 3 years.
Therefore, The effect on earnings in the year after after the shares are granted to executives wpuld be that the earnings will be reduced by $80 million.
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