Answer:
Year Cashflow [email protected]% PV [email protected]% PV
$ $ $
0 (1,100) 1 (1,100) 1 (1,100)
1-8 47.4 5.3349 252.87 7.0197 332.73
8 1,000 0.4665 465.5 0.7894 789.4
NPV (381.63) NPV 22.13
Kd = LR + NPV1/NPV1+NPV2 x (HR – LR)
Kd = 3 + 22.13/22.13 + 381.63 x (10 – 3)
Kd = 3 + 22.13/403.76 x 7
Kd = 3 + 0.38
Kd = 3.38%
Explanation:
Cost of debt is calculated based on internal rate of return formula. In year 0, we will consider the current market price of the bond as cashflow. In year 1 to 8, we will consider the after-tax coupon as the cashflow. The after-tax coupon is calculated as R(1 - T). R is 6% x $1,000 = $60 and tax is 21%. Thus, we have $60(1 - 0.21) = $47.4. then we will discount the cashflows for 8 years so as to obtain the internal rate of return. The internal rate of return represents cost of debt.
Answer:
<h2>
Hennigan Rentals:</h2>
Hennigan is owed $175 from its customers on December 31.
Explanation:
Accounts Receivable
Date Description Debit Credit Balance
Dec. 8 Cash $75 ($75)
Dec. 20 Earned Rentals $750 $675
Dec. 31 Cash $500 $175
When a rental company accepts payment in advance of its service, it increases the cash balance and reduces the Accounts Receivable. In the same way, when cash is received for services already rendered and invoiced, the cash balance is increased and the Accounts Receivable reduced by the same amount.
Accounts Receivable represents the total amount owed to a company resulting from the provision of goods and services on credit. The balance forms part of the current assets in the company's balance sheet.
A journal entry for a sale on account debits account receivable and credits revenue account. When the customer pays on account, cash is debited while the accounts receivable is credited. At the end of the period, the account is balanced.
Answer:
A. Collateral
Explanation:
A collateral is a valuable item, a property or an asset that is offered by a borrower of a loan to the lender of the loan as a form of loan security, such that the lender can take possession of the asset, monetize the asset and recover the losses. Collateralized loans includes car loans and mortgages.
Lending such as those given in business credit card does not require loan securities
Answer:
Process Costing
Explanation:
Process Costing allows so many units to be in production at the same time which are identical. The cost of each unit can be determined by calculating the average price using to total units produced.
Answer:
The difference in human capital explains $7,863 of the income per worker gap while the difference in physical capital explains $20,181 of the income per worker gap.
Explanation:
Human capital refers to the skills, knowledge, and efforts of the people in producing goods and services. It is also known simply as labor. Physical capital refers to the "man-made" goods that assist in production, including machinery, equipment, and technological items such as computers.
In the given scenario, the income per worker in the United States is $82,359 - $54,315 = $28,044 more than the income per worker in South Korea. This is explained by differences in both the level of technology (i.e. physical capital) and the capability of workers (i.e. human capital).
We are informed that the income per worker in South Korea would be $74,496 if it had the same level of technology as the United States. This means that $74,496 - $54,315 = $20,181 of the income per worker gap between the two countries is explained by differences in physical capital. Hence the remaining difference of $28,044 - $20,181 = $7,863 is explained by differences in human capital between the two countries.