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astra-53 [7]
3 years ago
5

Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero-interest-bearing note to Equinox Inc. The market rate o

f interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck
Business
1 answer:
Yuliya22 [10]3 years ago
3 0

Answer: See explanation

Explanation:

The journal entry to record the purchase of the truck will be:

Dr Trucks $54641

Dr Discount on Notes Payable $25359

Cr Notes Payable $80000

Note:

Face value of Note = $80000

× PV factor = 1/1.10⁴ = 0.68301

Present value of Face value of Note = $54641

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2 years ago
The firm projected its proforma of financial statements using AFN method and finds that next year its AFN is $2 million. Its tot
Varvara68 [4.7K]

Answer:

Its earnings per share will decrease.

Its return on equity will go down.

Its equity multiplier will go down.

Explanation:

Since net income remains the same, earnings per share will decrease. This happens because there will be more stocks outstanding (the denominator in the EPS formula), so the result will be lower.

Return on equity will also decrease, since net income will remain the same while equity increases (same logic as EPS).

Unless this company is 100% financed through equity, it will have some debt (liabilities). The equity multiplier = total assets / total equity. E.g. total assets increase from $20 to $22 million, and total equity increases from $30 to $32 million.

Original equity multiplier = $40 / $30 = 1.333

Equity multiplier after issuing more stocks = $42 / $32 = 1.3125

C. Its equity multiplier will go down.

D. Its current ratio will go down.

E. Its quick ratio will go down.

5 0
3 years ago
Which of the following statements is CORRECT?a. An investment that has a nominal rate of 6% with semiannual payments will have a
andreyandreev [35.5K]

Answer:

c. If a loan has a nominal annual rate of 7%, then the effective rate will never be less than 7%

<em>CORRECT</em>

as at least is recive 7% of the investment. If payment are made in shorter period (semiannually, quarterly, etc)

Then the effective rate will be higher, not lower.

Explanation:

a. An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%

FALSE the effective rate will be higher as there is compounding effect.

b. The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due

FALSE the annuity-due is discounted for one period less, as the payment are made at the beginning of the period therefore; his V is greater.

d. If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different

FALSE if it mades annual payments they will be equal

e. The proportion of the payment that goes toward interest on a fully amortized loan increases over time.

FALSE the interest will decrease over time as there is a portion of principal which is being paid each installment

3 0
2 years ago
A country has a noninstitutionalized population of 243 million people. out of that number, 38 million are under the age of 16 70
rosijanka [135]

Answer:

The answer is 60%

Explanation:

Labor force is the total number of people that have job(employed) and the number of people who are willing, able and actively searching for job(unemployed) in a population.

Labor force participation rate is calculated by dividing the labor force by the noninstitutionalized population.

Labor force = employed + underemployed + unemployed

= 96 + 31 + 8

=135 million

So we have:

(135 ÷ 243) x 100 percent.

60% (the nearest whole percentage)

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2 years ago
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