The Simon Company (SIMON) currently has $300,000 market value (and book value) of perpetual debt outstanding carrying a coupon r
1 answer:
Answer:
The answer is "4,750"
Explanation:
They have indeed been given the information that we require.
The current market cap for Simon Company (SIMON) is $300,000.
rate= 6%
EBIT=$150,000
The business has no plans to expand.
The current cost of capital is 8.8%,
The tax rate is 40%.
The company has 10,000 shares of common stock mostly on market.
The stock is being offered at a $90.00 per share price.
Assume SIMON is considering switching in its current financial performance to one that results in a share price of $96 per share.
The resultant capital structure would have a combined valuation of $504,000 in capital and $756,000 in equity.
Remaining Shares= equity market value / per share price
The initial number of shares minus the resultant number of shares equals the number of repurchased shares:
AJC will buy back a certain number of shares.
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Answer:
The answer is well illustrated as below
Explanation:
Remember: Five factors affects the Pension Liability and Plan assets.
1 & 2. Expenses which includes service cost and interest cost
The increase in expense always increases the pension liability so the entry would be:
Dr Service cost $27,100
Dr Interest Cost $30,300 ...... $303,000 Opening Pension Liability * 10%
Cr Pension Liability $57,400
3. Actual return increases the Plan Asset
The Actual return on investment received would increase the Assets worth, which means the journal entry must be passed which would increase the Investment Value (Plan Asset). So the entry would be:
Dr Plan Asset $25,700
Cr Actual return $25,700
4. Contributions made increases the Plan Asset because it is an increase in the investment.
So the journal entry would be:
Dr Plan Asset $20,000
Cr Cash Asset $20,000
5. The benefits paid to employees are decrease in both pension asset and the pension liability. (We had actually borrowed money from the employees and had invested that money so paying off the benefits actually decreases the pension liability and assets).
So the double entry would be:
Dr Pension Liability $17,700
Cr Pension Assets $17,700
Kindly input the above values in the following worksheet:
