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DanielleElmas [232]
4 years ago
9

The Latimore Company invested $8.5 million in a new plant in Italy when the exchange rate was 1.1500 euros to the dollar. At the

end of the year, the rate was 1.2000 euros to the dollar. (Indirect quotes.)
a. Did Latimore make or lose money on the exchange rate movement? If so, how much?

b. What kind of exchange rate gain or loss was it?

c. What was the tax impact if Latimore’s marginal tax rate is 40%?
Business
1 answer:
Maurinko [17]4 years ago
3 0

Answer:

Latinmore made money on the exchange rate movement. It was an exchange rate gain of $369,566. The marginal tax impact was $147,826.

Explanation:

Since the standard practice in accounting is to reflect the current situation of the company, any change in the exchange rate that affects the assets of the company abroad must be recognized. The financial income of exchange gains are registered in the Income Statement and affects the base to pay income tax.

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A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units)
RoseWind [281]

Answer:

d.$38,000

Explanation:

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= (Total cost and expenses amount ÷ number of units produced) × unsold units

= ($380,000 ÷ 10,000 units) × 1,000 units

= $38,000

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4 0
4 years ago
E-Eyes just issued some new preferred stock. The issue will pay an annual dividend of $18 in perpetuity, beginning 7 years from
barxatty [35]

Answer:

price of preferred stock = $465.65

Explanation:

given data

annual dividend = $18

return = 3.2 percent = 0.032

solution

we know prefer stock price is express as

prefer stock price Vp = \frac{d}{Kp}

here Vp is value of preference share and d is constant dividend and Kp is rate

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prefer stock in 6th year will be = \frac{18}{0.032} = $562.50

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