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Andre45 [30]
2 years ago
15

Use the following information from separate companies a through d :

Business
1 answer:
Fudgin [204]2 years ago
6 0

Answer:

Company D

Explanation:

The computation is shown below:

As we know that

Times interest earned ratio = Net Income + interest expense + income tax ÷ Interest expense

For company a:

Times interest earned ratio = $119000+ $44000 + $35000 ÷ $44000

= $198000 / $44000

= 4.5 times

For company b:

Times interest earned ratio is

= $135000+ $16000 + $25000 ÷ $16000

 = $176000 / $16000

= 11 times

For company c:

Times interest earned ratio = $138000+ $12000 + $30000 ÷ $12000

= $180000 ÷ $12000

= 15 times

For company d:

Times interest earned ratio = $314000+ $14000 + $50000 ÷ $14000

= $378000 / $14000

= 27 times

As it can be seen that the times interest ratio is higher in company d so it has the strongest ability to pay the interest expense

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Mikey W. Smitty, an emerging rapper, is getting ready to cut his first CD, called "Western Rap." He is looking for a production
Gekata [30.6K]

Answer:

(i) 900 CDs

(ii) Greater than; $1,650

Explanation:

(1) Break-event point will be when the contribution margin from total sales is equal to fixed costs,

Contribution Margin = Selling price - variable cost

                                  = $(21.5 - 9.5)

                                  = $12

Contribution Margin *Number of CDs sold = $10,800

Break-even point for Studio A = 10,800 ÷ 12

                                                    = 900 CDs

(2) Studio A would be more profitable when the extra profit earned from per unit sale of CD exceeds the extra fixed cost given in Studio A.

Extra Contribution margin in Studio A = $(12-10)

                                                               = $2

Extra Fixed cost in Studio A = $(10,800 - 7,500)

                                               = $3,300

Studio A should be chosen if sales is greater than (3300/2) = $1,650.

4 0
3 years ago
You are considering purchasing a put option on a stock with a current price of $26. The exercise price is $28, and the price of
Goshia [24]

Answer: $4.24

Explanation:

According to the Put-Call Parity, the value would be expressed by;

Put Price = Call price - Stock price + Exercise price *e^-(risk free rate *T)

T is 90 days out of 365 so = 90/365

= 2.65 - 26 + 28 * 2.71 ^ (-0.06 * 90/365)

= $4.24

4 0
3 years ago
Read 2 more answers
A 5-year corporate bond yields 9.70%. A 5-year municipal bond of equal risk yields 6.5%. Assume that the state tax rate is zero.
Roman55 [17]

Answer:

c. 32.99%

Explanation:

Risk yield = bond yield*(1 - Federal tax rate)

    6.50% = 9.70%*(1 - Federal tax rate)

1 - Federal tax rate = 6.50%/9.70%

Federal tax rate = 1 - 6.50%/9.70%

                           = 32.99%

Therefore, The federal tax rate that you are indifferent between the two bonds is 32.99%

3 0
3 years ago
Last year Canada’s economy had a surge in exports and increased demand for additional economic outputs. Because of the great dem
Artyom0805 [142]

Answer:

Neoclassic economists believe that both wages and prices are sticky (hard to change) only  int he short run. In the long run, both prices and wages will adjust to new economic conditions.

In this particular case, neoclassic economists will predict that even though wages are starting to rise, in the long run the equilibrium wage will be higher.

Long run and short run are economic concepts that do not refer to a given time period, e.g. long term in accounting means more than 1 year, but long run in economics may take years to come.

Long run refers to the amount of time it takes for an economic variable to adjust to economic changes.

If Canada's increase in labor costs is paired with an increase in productivity (usually new technologies), then the economy should be able to grow since private consumption and investment will increase due to higher wages.

Explanation:

6 0
3 years ago
The net increase or decrease in Retained Earnings for a period is recorded by closing entries.
luda_lava [24]

Answer: True

Explanation: The retained earnings are recorded after closing the accounts of the income statement, the surplus called profit or the missing called loss is transferred to equity through the non-distributed profit item.

This undistributed profit account also closes during the accounting period, to clarify how much was generated in a period, they are not like the balance sheet accounts that are cumulative.

8 0
3 years ago
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