Answer:
c. Christopher will have a dual basis for income tax purposes.
Explanation:
Due to the fact that the basis of Jane in the specific property was higher than the FMV of the property on the specific date that she gave out the property, therefore, the double basis principle will apply to Christopher. In addition, Christoper will not collect any additional basis for the tax paid on the gift. The correct answer is option c.
The return on investment for this division is (B) 20%.
<h3>
What is the return on investment (ROI)?</h3>
- Return on investment (ROI) or return on costs (ROC) is a ratio of net income to investment over time (costs resulting from an investment of some resources at a point in time).
- A high ROI indicates that the benefits of the investment outweigh the costs.
- ROI is used as a performance indicator to evaluate the efficiency of an investment or to compare the efficiencies of several investments.
- It is one method of connecting profits to capital invested in economic terms.
<h3>To find the return on investment for this division:</h3>
= income/average invested assets
= $40,000/$200,000
= return on investment
= 20%
Therefore, the return on investment for this division is (B) 20%.
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Correct question:
The Midwest Division of Grainger Company has an investment center average invested assets of $200,000 and an investment center income of $40,000. What is the return on investment for this division?
(A) 500%
(B) 20%
(C) 25%
(D) 80%
Answer:
D. 9.44%
Explanation:
The computation of the weighted average cost of capital is shown below:
Weighted average cost of capital is
= Cost of debt × (1 - tax rate) × weight of debt + cost of equity × weight of equity
= 8% × (1 - 0.30) × 40% + 12% × 60%
= 2.24% + 7.2%
= 9.44%
Hence, the weighted average cost of capital is 9.44%
Therefore the right option is D.
Answer:
$4,650,000,000
Explanation:
We will use the formula below to calculate the enterprise value of Correct inc.
Enterprise value = Market value capital and debts - Cash and investments
= 100 million diluted shares × 37.50 per share + $1 billion of debt outstanding - $100 million cash
= $3750m + $1000m - $100m
= $4,650,000,000.
