True or False:

Money, Inc., a calendar year S corporation in Denton, Texas, has two unrelated shareholders, each owning 50% of the stock. Each

ratelena [41]

Answer:

See below

Explanation:

a. At the end of the year, before distribution, each shareholder's basis

= $400,000 + $100,000 + $50,000

= $550,000

b. After the distribution, each shareholder's basis is

= $300,000 + $200,000

= $500,000

c. Therefore, each shareholder has

$250,000 worth of dividend income.

3 0

3 years ago

During a certain year, the nominal interest rate was 7 percent, the real interest rate was 4 percent, and the CPI was 198.3 at t

Dima020 [189]

Answer:

CPI at the beginning of the year = 192.52

Explanation:

given data

nominal interest rate = 7 percent

real interest rate = 4 percent

CPI = 198.3

to find out

CPI at the beginning of the year

solution

we know that according to fisher equation

1 + r = $\frac{1+n}{1+i}$ ....................1

and for smaller values is equivalent to r

r = n - i .....................2

here r is real interest rate and n is nominal interest rate and i is inflation rate

so from equation 2

4 = 7 - inflation rate

inflation rate = 3 percent

so

Rate of inflation = (CPI at the end of the year - CPI at the beginning of the year) × 100 ÷ CPI at the beginning of the year

put here value

3% = (198.3 - CPI at the beginning of the year) × 100 ÷ CPI at the beginning of the year

CPI at the beginning of the year = $\frac{19830}{103}$

CPI at the beginning of the year = 192.52

7 0

3 years ago

Legislation defining the mission of the Federal Reserve states: "The Board of Governors of the Federal Reserve System and the F

jeka57 [31]

Answer:

dual mandate.

Explanation:

dual mandate -

It is the practice in which the elected officials serves in more than one elected or public position .

In Britain , this term is also referred to as double jobbing .

In some cases , the dual mandate is prohibited by the law , as in the case of the federal states , because the federal office holders are not allowed to hold state office .

Hence from the question information , the correct option is dual mandate .

5 0

3 years ago

A firm wishes to maintain an internal growth rate of 8 percent and a dividend payout ratio of 36 percent. The current profit mar

Anon25 [30]

Answer:

2.16 times

Explanation:

Given that,

Internal growth rate = 8 percent

Dividend payout ratio = 36 percent

Current profit margin = 5.8 percent

Therefore,

Internal Growth Rate = (1 - Dividend Payout Ratio) × ROA

8% = (1 - 36%) × ROA

0.08 = 0.64 × ROA

ROA = 0.08 ÷ 0.64

= 0.125

ROA = Profit Margin × Total Asset Turnover

0.125 = 0.058 × Total Asset Turnover

Total Asset Turnover = 0.125 ÷ 0.058

= 2.16 times

6 0

3 years ago

Assume that the risk-free rate of interest is 3% and the expected rate of return on the market is 15%. I am buying a firm with a

kondor19780726 [428]

Answer:

The correct solution is "$6,564.01". A further solution is given below.

Explanation:

The given values are:

beta,

= 1.6

market return,

= 15%

cash flow,

= $2,000

risk free rate of interest,

= 3%

Now,

The stock return will be:

= $3+ 1.6\times (15-3)$

= $3+ 1.6\times 12$

= $22.2 \ percent$

The actual worth of the firm will be:

= $\frac{cash \ flow}{rate \ of \ return}$

= $\frac{2000}{22.2 \ percent}$

= $\frac{2000}{0.222}$

= $9,009$

With 0.8 beta, the stock return will be:

= $3+ 0.8\times (15-3)$

= $3+ 0.8\times 12$

= $12.6 \ percent$

So that I'm paying for the firm,

= $\frac{2000}{12.6 \ percent}$

= $\frac{2000}{0.126}$

= $15,573.01$ ($)

Hence,

I'm paying,

= $15,573.01-9,009$

= $6,564.01$ ($)

6 0

3 years ago