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sleet_krkn [62]
3 years ago
6

Today, you buy one share of stock costing $50. The stock pays a $2 dividend one year from now. Also one year from now, you purch

ase a second share of stock for $53. Two years from now you collect a $2 per share dividend and sell both shares of stock for $54 a share. What is your dollar-weighted return?
Business
1 answer:
grin007 [14]3 years ago
3 0

Answer:

weighted return = 0.0781 = 7.81%

Explanation:

Given data:

stock cost is $50

dividend on stock is $2

cost of new stock $53

share dividend cost from 2 year now = $2

total selling cost for both stock is $54

holding period return for 1st year

HPR_1 = \frac{(53 - 50) + 2}{50} = 0.10 = 10%

HPR_2 =\frac{(53 - 50) + 2*2}{2*53} = 0.0566 = 5.66%

weighted return = [(1 +HPR_1) *(1 +HPR_2)]^{1/2} -1

weighted return = [(1+ 0.10) *(1+0.0566)]^{1/2} -1

weighted return = 0.0781 = 7.81%

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Metcalf Company leases a machine from Vollmer Corp. under an agreement which meets the criteria to be a finance lease for Metcal
tresset_1 [31]

Answer:

the lease asset is $723,943

Explanation:

The computation of the lease asset is shown below;

= (Lease payment - per year maintenance charges) × present value of an annuity due of 1 for six years at 8%

= ($170,000 - $25,000) × 4.99271

= $145,000 × 4.99271

= $723,943

hence, the lease asset is $723,943

The same would be considered

4 0
3 years ago
Pretzelmania, Inc., issues 7%, 10-year bonds with a face amount of $70,000 for $70,000 on January 1, 2021. The market interest r
AlexFokin [52]

Answer:

Pretzelmania, Inc.

1. Records:

Debit Cash $70,000

Credit Bonds Liability $70,000

To record the issuance of 7% bonds at face value.

June 30:

Interest Expense $2,450

Cash payment for interest $2,450

To record the first interest expense and payment.

(No amortization of discounts or premiums)

December 31: (not required but showed for emphasis)

Debit Interest Expense $2,450

Credit Cash payment for interest $2,450

To record the second interest expense and payment.

(No amortization of discounts or premiums)

2. Records:

Debit Cash $63,948

Bonds Discounts $6,052

Bonds Liability $70,000

To record the issuance of 7% bonds at discounts.

June 20, 2015:

Debit Interest Expense $2,557.92

Credit Amortization of bonds discounts $107.92

Credit Cash payment for interest $2,450

To record the first interest expense and payment, including amortization of bonds discounts.

December 31, 2015: (not required but showed for emphasis)

Debit Interest Expense $2,562.24

Credit Amortization of bonds discounts $112.24

Credit Cash payment for interest $2,450

To record the second interest expense and payment, including amortization of bonds discounts.

3. Records:

Debit Cash $76,860

Credit Bonds Liability $70,000

Credit Bonds Premium $6,860

To record the issuance of 7% bonds at premium.

June 30, 2015:

Debit Interest Expense $2,305.80

Debit Amortization of bonds premium $144.20

Credit Cash payment for interest $2,450

To record the first interest expense and payment, including amortization of bonds premium.

December 31, 2015: (not required but showed for emphasis)

Debit Interest Expense $2,301.50

Debit Amortization of Bonds Premium $148.50

Credit Cash payment for interest $2,450

To record the second interest expense and payment, including amortization of bonds premium.

Explanation:

1.  issues 7%, 10-year bonds with a face amount of $70,000 for $70,000 on January 1, 2021. The market interest rate for bonds of similar risk and maturity is 7%. Interest is paid semiannually on June 30 and December 31.

a) Data and Calculations:

Face value of bonds = $70,000

Issuance value = $70,000

Interest rate on bonds = 7%

Market interest rate = 7%

Period of bonds = 10 years

Payment period = semiannually

Issue date = January 1, 2021

June 30:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,450 ($70,000 * 3.5%)

Cash payment for interest = $2,450

No amortization of discounts or premiums

December 31:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,450 ($70,000 * 3.5%)

Cash payment for interest = $2,450

No amortization of discounts or premiums

2. Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $63,948 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is 8%. Interest is paid semiannually on June 30 and December 31.

a) Data and Calculations:

Face value of bonds = $70,000

Issuance value = $63,948

Bonds discounts = $6,052 ($70,000 - $63,948)

Interest rate on bonds = 7%

Market interest rate = 8%

Period of bonds = 15 years

Payment period = semiannually

Issue date = January 1, 2015

June 30, 2015:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,557.92 ($63,948 * 4%)

Amortization of bonds discounts = $107.92 ($2,557.92 - $2,450)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

December 31, 2015:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,562.24 (($63,948 + 107.92) * 4%)

Amortization of bonds discounts = $112.24 ($2,562.24 - $2,450)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

3. Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $76,860 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is 6%. Interest is paid semiannually on June 30 and December 31.

a) Data and Calculations:

Face value of bonds = $70,000

Issuance value = $76,860

Bonds premium = $6,860 ($76,860 - $70,000)

Interest rate on bonds = 7%

Market interest rate = 6%

Period of bonds = 15 years

Payment period = semiannually

Issue date = January 1, 2015

June 30:

Semiannual interest rate = 3.5% (7%/2)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

Interest Expense = $2,305.80 ($76,860 * 3%)

Amortization of bonds premium = $144.20 ($2,450 - $2,305.80)

December 31:

Semiannual interest rate = 3.5% (7%/2)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

Interest Expense = $2,301.50 (($76,860 -144.20) * 3%)

Amortization of bonds premium = $148.50 ($2,450 - $2,301.50)

(Record bond issue and related semiannual interest)

3 0
3 years ago
When the housing market collapsed in 2007, the demand for loanable funds decreased and caused interest rates to decrease.
o-na [289]

It is False When the housing market collapsed in 2007, the demand for loanable funds decreased and caused interest rates to decrease.

Because Interest rates typically decline during recessions as loan demand slows, bond prices rise and the central bank eases monetary policy. During recent recessions, the Federal Reserve has cut short-term rates and eased credit access for municipal and corporate borrowers. No price in the economy is as important as the price of money. Interest rates arguably drive the business cycle of expansion and contraction.

Interest rate is the amount a lender charges a borrower and is a percentage of the principal the amount loaned.

Recession is a period when the business and industry of a country is not successful.

Corporate is formed into an association and endowed by law with the rights and liabilities of an individual.

To know  more about the Interest Rate here

brainly.com/question/13324776

#SPJ4

4 0
1 year ago
Which statements about Section 1231 assets are true? Pick all that apply!!
dem82 [27]

Answer:

The answer is below

Explanation:

Given that Section 1231 assets are a term that is used to describe the real or depreciable trading property acquired for more than a year. For example, landed property, buildings, etc.

Hence, in this case, the correct answer or statement to the question are:

1. If Section 1231 assets are sold and the taxpayer has a realized loss, the loss is a fully deductible ordinary loss

2. If Section 1231 assets held long-term are sold for a realized gain, the taxpayer has a potential long term capital gain that may be taxed at favorable capital gains rates but this result often does not occur

4 0
3 years ago
Fredrick purchased a property worth $150,000 on mortgage. He paid $30,000 as a down payment on this property. However, a recent
Eva8 [605]

Answer:

Real estate short sale

Explanation:

Real estate is defined as a piece of land and any attached property that is constructed on it.

In real estate business a real estate short sale occurs when the person that owns a property decides to sell the property at a price that is less than the amount on the mortgage.

This usually occurs as a result of financial distress of the owner.

In the given scenario the property has a mortgage value of $150,000 and down payment of $30,000 has been made.

The mortgage amount is now $150,000 - $30,000 = $120,000

However they now sell the property for $115,000 which is less than the remaining mortgage value of $120,000.

This is and example of real estate short sale.

5 0
3 years ago
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