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Inga [223]
3 years ago
9

You are comparing two companies in the same industry. You have determined that Gore Corp. depreciates its plant assets over a 40

-year life, whereas Ross Corp. depreciates its plant assets over a 20-year life. Discuss the implications this has for comparing the results of the two companies.
Business
1 answer:
love history [14]3 years ago
5 0

Answer:

Gore Corp. is depreciating over a longer term than Ross Corp. This means that on a yearly basis, they will have less depreciation expenses. This would give them a higher net income than Ross Corp but as a result they will then have to pay a higher tax.

Ross Corp on the other hand will be depreciating over a shorter term so this would mean that they are recognizing a higher depreciation expense per year. This would mean that their net income will be lower and by extension their taxes will be lower as well.

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A firm expects to increase its annual dividend by 20 percent per year for the next two years and by 15 percent per year for the
Law Incorporation [45]

Answer:

Current price = $20.50

Explanation:

Data provided in the question;

Growth rate, g = 20% = 0.2 for the 2 years

Growth rate, g' = 15% = 0.15 for the following 2 years

after 4 years annual dividend = $3

Last dividend paid, D0 = $1

Required rate of return, r = 12% = 0.12

Now,

D1 = D0 × (1 + g)

= $1 × (1 + 0.2)

= $1.2

D2 = $1 × (1 + 0.2)²

D3 = $1 × (1 + 0.2)² × (1 + 0.15)

D4 = $1 × (1 + 0.2)²  × (1 + 0.15)²

D5 = 3

Therefore,

Current price = \frac{1.2}{(1 + 0.12)} + \frac{\$1\times(1 + 0.2)^2}{(1 + 0.12)^2} + \frac{\$1\times(1 + 0.2)^2\times(1 + 0.15)}{(1 + 0.12)^3} + \frac{\$1\times(1 + 0.2)^2\times(1 + 0.15)^2}{(1 + 0.12)^4} + \frac{\frac{\$3}{0.12}}{(1+0.12)^4}

⇒ Current price = $20.50

6 0
3 years ago
A contingency reserve is money assigned to the project and allocated for identified risks for which contingent responses are dev
Rudik [331]

Answer:

The correct answer is letter "A": True.

Explanation:

Contingency reserves are funds that companies save to face economic hardships. In some cases, those negative situations can be expected while in some other cases they cannot -such as acts of God. Contingency plans come along with the contingency reserve to have an idea of what the company is going to do with the funds.

3 0
3 years ago
Khalid has just found out that his friend Jason is terminally ill.This has made him feel sad and lonely at the thought of living
Paha777 [63]

Answer:

B) Anticipatory Grief

Explanation:

As Khalid has found out that his friend Jason is terminally ill. This has made him feel sad and lonely at the thought of living life without his friend. Khalid's feelings best represent the concept of anticipatory grief which refers to the feeling of sadness and grief occurring before the actual happening of that loss. We become sad and emotional even before the actual happening of some incident. For example, when our dear friend is in hospital after a sever accident, then we start feeling this anticipatory grief that the chances are more that he will be dead soon so we feel more grief and sadness.

6 0
3 years ago
At Nick's Bakery, the cost to make homemade chocolate cake is $3 per cake. As a result of selling three cakes, Nick experiences
Sveta_85 [38]

Answer:

c. $9.50 each.

Explanation:

For computing the selling price, first we have to compute the total price of three cakes which is shown below:

The sale value of three cakes would be

= $3 per cake × 3 cakes

= $9

And, the producer surplus is $19.50

So, the total price of cake equals to

= $9 + $19.50

= $28.50

And, the number of cake is 3

So, the selling price would be

= $28.50 ÷ 3 cakes

= $9.50 each

8 0
3 years ago
Other things the same, an increase in the U.S. interest rate causes U.S. net capital outflow to a. rise, so supply in the market
Aleksandr [31]

Answer:

b. rise, so demand in the market for foreign-currency exchange shifts right.

Explanation:

  • An increase in the interest rates leads to a rise in the capital outflow as savings and investment lead to more net capital outflow.
  • This is the movement of the assets on the company and is considered to be bad for the economy and leads to undesirable changes in the supply of the foreign currency as a shift in the demands of the consumers. This may result in political and economic instability.
8 0
3 years ago
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