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Rzqust [24]
3 years ago
14

Purple Lemon Fruit Company has two divisions: one is very risky, and the other exhibits significantly less risk. The company use

s its investors’ overall required rate of return to evaluate its investment projects. It is most likely that the firm will become:
Business
1 answer:
lorasvet [3.4K]3 years ago
7 0

Answer: b. Riskier over time, and its value will decrease

Explanation:

Because the company is using the investor's required rate of return instead of one that takes into account the riskiness of the two division, you find that risk is not being adequately accounted for.

This would lead to a situation where the company becomes riskier because it is not accounting for its risk properly. With higher risk, the company will be unable to seek funding easily which would lead to lower investments being undertaken and an overall decrease in company value.

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Universal Foods issued 10% bonds, dated January 1, with a face amount of $260 million on January 1, 2018. The bonds mature on De
kondaur [170]

Answer:

The bonds were issued at $220,879,628.13

This is lower than the face value to compensate for the lower coupon payment.

cash               220,879,628.13   debit

discount on BP  39,120,371.87   debit

   bonds payable      260,000,000 credit

--to record the issuance of the bonds--

Interest expense 13,252,777.69 debit

Discoun on BP               252,777.69 credit

 cash          13,000,000      credit

--to record the first interest payment--

Interest expense 13,267,944.35 debit

        Discount on BP                267,944.35 credit

 Cash          13,000,000     credit

--to record second interest payment--

Interest expense 13,539,156.67 debit

Discount on BP              539,156.67 credit

cash                   13,000,000.00 credit

--to record Dec 31st, 2025 payment--

Explanation:

To determinate the price we will solve for the present value of the coupon payment and maturity at the market rate of %12

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

Coupon payment:

260,000,000 x 10% x 1/2 =13,000,000.000

time 20 years x 2 payment per year 40

yield to maturity  12% / 2 = 6%

13000000 \times \frac{1-(1+0.06)^{-40} }{0.06} = PV\\

PV $195,601,859.3298

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   260,000,000.00

time   40.00

rate  0.06

\frac{260000000}{(1 + 0.06)^{40} } = PV  

PV   25,277,768.80

PV c $195,601,859.3298

PV m  $25,277,768.8042

Total $220,879,628.1340

For the journal entries, we will multiply this current market price of the bonds by the market rate (YTM) the difference between this and the actual cash obligation generate by the bond is the amortization of the discount.

<u>first interest payment </u>

$220,879,628.13 x 6% = 13,252,777.69

less actual cash outlay:  13,000,000

amortization                          252,777.69

<u>second interest payment</u>

($220,879,628.13- $252,777.69) x 6% = 13,267,944.35

less actual cash outlay:                      <u>     13,000,000.00</u>

amortization                                                   267,944.35

December 31st, 2025:

This will be payment 14th

after building the schedule until that date we got:

8 0
3 years ago
Book store owner, Sandra Walker, has a personal check from one of her customers, payable to The Book Nook. Sandra wants to depos
german

Answer:

see below

Explanation:

Endorsing a check is communicating to the bank how a check is to be cashed. A restrictive endorsement puts limits on how a check or other financial instruments are to be used.

The most common type of restrictive endorsement is for the payee to write the words" for deposit only" at the back of the check. The payee then signs and indicates their account number. This instructs the banks to pay the check amount to that account.

Sandra walker should write the words "for deposits only" at the back of the check. She has to indicate the bank account number for The Book Nook and sign at the back.

4 0
2 years ago
Jan is attending college and studying to be an investment broker. To improve her chances of employment following​ college, she h
Alexeev081 [22]

Answer:

C is the correct option

Explanation:

Human capital can be defined as an asset that is not listed on the company's balance sheet. It is the economic value of an employee's work experience and skills. It includes education, training, intelligence, skill, health, loyalty and punctuality.

According to the concept of human capital, all labor is not equal and the quality of employers can be improved by investing in their training, education, and abilities. Human capital is important because it is considered to increase the productivity and profitability and the economic values of the employers.

3 0
3 years ago
A $200 petty cash fund has cash of $20 and receipts of $177. The journal entry to replenish the account would include a credit t
IRISSAK [1]

A $200 petty cash fund has cash of $20 and receipts of $177. The journal entry to replenish the account would include a credit to:

d. Cash for $180

Explanation: As observed above the petty cash receipts are falling short of $3, But that will be adjusted with expenses as its a small amount and balance of $200 needs to be maintained in the petty cash.

6 0
3 years ago
Read 2 more answers
A responsibility chart is used in operations consulting in planning the task responsibilities for a project. True False
KonstantinChe [14]

Answer:

True.

Explanation:

A responsability chart is useful for describing the participation of persons  completing labors and deliverables for a project or a business process. Some of the information considered in this type of chart is:

  • Labor or procedure.
  • Responsible.
  • Supervisor.
  • delivery date.
7 0
3 years ago
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