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hichkok12 [17]
3 years ago
13

True or false: No gain or loss is reported when treasury stock is reissued because GAAP does not consider transactions between a

corporation and its owners to be profit-making activities.
Business
1 answer:
Likurg_2 [28]3 years ago
6 0

Answer:

The statement is:  True.

Explanation:

When a firm purchases its own shares they become part of the company's treasury stock. This usually happens when the organization intends to sell those shares in the future. According to the General Accepted Accounting Principles (<em>GAAP</em>), the transactions between a firm and its owners are not considered as profit-making. Thus, when a company reissues the treasury stock shares no revenues or losses are recorded.

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Assume that Lucas's marginal tax rate is 32 percent and his tax rate on dividends is 16 percent. If a dividend-paying stock (wit
kipiarov [429]

Answer:

The correct answer to the problem is 7.728%

Explanation:

Lucas marginal tax rate = 32 percent

Tax rate on dividends = 16 percent

Dividend yield of a dividend-paying stock (with no growth potential) = 9.20 percent.

To determine the interest rate a municipal bond have to offer for Lucas to be indifferent between the two investments from a cash flow perspective =

Dividend yield multiplied by ( 1- tax rate on dividends)

= 9.20% × (1 - 16%)

= 0.092 × (1 - 0.16)

= 0.092 × 0.84

= 7.728%

3 0
3 years ago
What role do pawnshops playy in American economy
RUDIKE [14]
Getting rid of old stuff to people who want it instead of throwing it away.
4 0
3 years ago
You are considering two investment alternatives. The first is a stock that pays quarterly dividends of $0.32 per share and is tr
MrMuchimi

Answer:

The 1-year HPR for the second stock is <u>12.84</u>%. The stock that will provide the better annualized holding period return is <u>Stock 1</u>.

Explanation:

<u>For First stock </u>

Total dividend from first stock = Dividend per share * Number quarters = $0.32 * 2 = $0.64

HPR of first stock = (Total dividend from first stock + (Selling price after six months - Initial selling price per share)) / Initial selling price = ($0.64 + ($31.72 - $27.85)) / $27.85 = 0.1619, or 16.19%

Annualized holding period return of first stock = HPR of first stock * Number 6 months in a year = 16.19% * 2 = 32.38%

<u>For Second stock </u>

Total dividend from second stock = Dividend per share * Number quarters = $0.67 * 4 = $2.68

Since you expect to sell the stock in one year, we have:

Annualized holding period return of second stock = The 1-year HPR for the second stock = (Total dividend from second stock + (Selling price after six months - Initial selling price per share)) / Initial selling price = ($2.68+ ($36.79 - $34.98)) / $34.98 = 0.1284, or 12.84%

Since the Annualized holding period return of first stock of 32.38% is higher than the Annualized holding period return of second stock of 12.84%. the first stock will provide the better annualized holding period return.

The 1-year HPR for the second stock is <u>12.84</u>%. The stock that will provide the better annualized holding period return is <u>Stock 1</u>.

6 0
3 years ago
You want to buy a house that costs $140,000. You have $14,000 for a down payment, but your credit is such that mortgage companie
rodikova [14]

Answer:

Kindly check explanation

Explanation:

Given the following :

Cost of house = $140,000

Down payment = $14000

Take back mortgage = 126000 = PV

Rate (r) = 5%

Yearly payment one can afford = 22000

a. If the loan was amortized over 3 years, how large would each annual payment be? Could you afford those payments?

Number of period = 3

Using the relation:

PMT = r(PV) / 1 - (1 + r)^-n

PMT = 0.05(126000) / 1 - 1.05^-3

PMT = 6300 / (1-0.8638375)

PMT = 46,268.23

He won't be able to afford it, as the monthly payment is larger than the affordable amount of $22000

b. If the loan was amortized over 30 years, what would each payment be? Could you afford those payments?

PMT = r(PV) / 1 - (1 + r)^-n

PMT = 0.05(126000) / 1 - 1.05^-30

PMT = 6300 / (1-0.2313774)

PMT = 8196.48

He would be able to afford it, as the monthly payment is lower than the affordable amount of $22000

c. To satisfy the seller, the 30-year mortgage loan would be written as a balloon note, which means that at the end of the third year, you would have to make the regular payment plus the remaining balance on the loan. What would the loan balance be at the end of Year 3, and what would the balloon payment be?

Present value of remaining balance after the 3rd year:

Present Value (PV) = PMT[(1 - (1 + r)^-n) / r]

Where

PMT = periodic payment = 8196.48

r = Interest rate = 5% = 0.05

n = number of periods = 30 - 3 = 27

PV = 8196.48[(1 - (1 + 0.05)^-27) / 0.05]

PV = 8196.48[(1 - (1. 05)^-27) / 0.05]

PV = 8196.48[0.7321516 / 0.05]

PV = 120,021.32

Balloon payment :

120,021.32 + 8196.48 = 128,217.80

4 0
3 years ago
Digital marketing has become an increasingly important element of the​ marketer's toolbox. according to a survey conducted by pe
Rasek [7]

Answer:

73%

Explanation:

Digital marketing is promotion of goods and services using digital tools such as email, search engines, social media, and websites on the internet.

The trend is on the increase and there is more emphasis on developing digital marketing tools, so marketers use services like web design, search engine optimisation, and ecommerce.

Digital marketing has the advantage of always being available so your business never sleeps.

6 0
3 years ago
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