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anzhelika [568]
3 years ago
7

Active Alarm is replacing its old device manufacturing machine with a new one. The old machine is being sold for $200,000 and it

has a book value of $50,000. The tax rate for Active Alarm is 40%. How much cash will Active Alarm net from the sale of the old machine?
Business
1 answer:
Aleks04 [339]3 years ago
4 0

Answer:

The sale of the machine will generate an after-tax income of 90,000

Explanation:

The company will be paying a tax income for the diference between the sales price and the book value at a rate of 40%

200,000 - 50,000 = 150,000 x 40% = 60,000 tax income

150,000 gross profit - 60,000 tax income = 90,000 net gain from sale of machine

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sergejj [24]

Answer:

Edibles Inc.

This arrangement whereby Croissants Corporation and Donuts Company transfer their assets to Edibles Inc. is called:

d. a business trust.

Explanation:

Edibles Inc., as a trustee, carries out business transactions on behalf of Croissants Corporation and Donuts Company, who are regarded as the trust's members (or beneficiaries).  It is a formal structure that safeguards an entity's assets against creditors and ensures that the business is professionally run in line with accepted practices.

5 0
3 years ago
The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporat
koban [17]

Answer:

Risk-free rate (Rf) = 8%

Return on market portfolio (Rm) = 15%

Beta (β) = 1.2

Ke = Rf + β(Rm - Rf)

Ke = 8 + 1.2(15 - 8)

Ke = 8 + 1.2(7)

Ke = 8 + 8.4

Ke = 16.40%

Earnings per share (EPS) = $10

Current dividend paid (Do) = 40% x $10 = $4

Retention rate (b) = &6/$10 x 100 = 60% = 0.6

ROE (r) = 20% = 0.2

Growth rate (g) = b x r

                         = 0.6 x 0.2

                         = 0.12 = 12%

Current market price (Po)

= Do<u>(1 + g) </u>  

        Ke - g

= $4<u>(1 + 0.12)</u>

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= $4<u>(1.12)</u>

      0.044

= $101.82

             

Explanation:

First and foremost, we need to calculate the cost of equity based on capital asset pricing model. Then, we will determine the growth rate, which is a function of retention rate (b) and return on equity(r).

Finally, we will calculate the current market price, which is dividend paid, subject to growth, divided by the excess of cost of equity over growth rate.

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valentina_108 [34]
Or think about it it’s easy
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Berta, the manager of an automobile showroom, announces a new scheme wherein the company offers an all-expenses paid trip to the
Alja [10]

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5 0
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Answer:

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8 0
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