Answer:
Credit Treasury Stock $20,000
Explanation:
When the company reissued the shares, the Treasury Stock account is credited by the same price they were acquire. i.e. in this case we acquire the treasury stock at a price of $20.
Cash (1,000 * 12) 12,000
Additional Paid in Capital 8,000
Treasury Stock (1,000 * 20) 20,000
Stress :( (hope this helps)
Answer:
Irrelevant to the decision of whether to discontinue a product line because they will not differ between alternatives.
Explanation:
Unavoidable fixed costs can be defined as the costs that is sustained by an organization irrespective of if an activity is carried out or not.
Unavoidable costs are the costs that are encountered by a lot of businesses, this cost cannot be prevented even though production activities in the company are suspended in the short-run. These fixed costs are unavoidable and uncontrollable.
Unavoidable fixed costs is as a result of the various risks incurred by an organization inorder to stay relevant in the market. Example of unavoidable costs include tax payment, rental payments.
Answer:
$1,107,793.41
Explanation:
The value of the payment today can be ascertained using the present value of an annuity due formula since the first payment is immediate as shown thus:
PV=monthly payment*(1-(1+r)^-n/r*(1+r)
monthly payment=$12,500
r=monthly interest rate=6.48%/12=0.0054
n=number of monthly payments in 10 year=10*12=120
PV=$12,500*(1-(1+0.0054)^-120/0.0054*(1+0.0054)
PV=$12,500*(1-(1.0054)^-120/0.0054*(1.0054)
PV=$12,500*(1-0.524003627
)/0.0054*1.0054
PV=$12,500*0.475996373
/0.0054*1.0054
PV=$1,107,793.41
Answer:
A) 10.15%
Explanation:
Cost of equity (Re) = 14.06% or 0.1406
cost of preferred stock (Rp) = 7/65 = 0.10769
cost of bonds (Rb) = 7.5% or 0.075
outstanding shares = 2.5 million shares x $42 = $105 million
bonds outstanding = $1,000 x 80,000 bonds = $80 million
preferred stock = $65 x 750,000 = $48.75 million
corporate tax rate = 38% or 0.38
total market value of equity + debt (in millions) = $105 + $48.75 + $80 = $233.75
WACC = [(outstanding shares / total market value) x Re] + [(preferred stock / total market value) x Rp] + {[(bonds outstanding / total market value) x Rb] x (1 - tax rate)}
WACC = [($105m / $233.75m) x 0.1406] + [($48.75m / $233.75m) x 0.10769] + {[($80m / $233.75m) x 0.075] x (1 - 0.38)}
WACC = 0.06316 + 0.02246 + 0.01591 = 0.10153 or 10.15%
