Answer:
$1,420
Explanation:
The computation of the bad debt expense is shown below:
As we know that
Ending balance of allowance for uncollectible accounts = Beginning balance of allowance for uncollectible accounts + bad debt expense - written off amount
$1,280 = $1,325 + bad debt expense - $1,465
So, the bad debt expense for the year 2022 is $1,420
Basically we applied the above formula to find out the bad debt expense
Answer:
At the end of the sixth year, you will have:
= $8,487.17.
Explanation:
a) Data and Calculations:
Annual savings = $1,000
Interest rate per year = 10%
Period of savings = 6 years
First deposit = today
From an online financial calculator:
N (# of periods) 6
I/Y (Interest per year) 10
PV (Present Value) 0
PMT (Periodic Payment) 1000
Results
FV = $8,487.17
Sum of all periodic payments $6,000.00
Total Interest $2,487.17
Answer: Covered Call
When a person holds a stock and writes (sells) calls on the same stock, the strategy is known as a covered call.
A person can opt for this strategy if he has a neutral view on the stock, but wants to generate an income stream by receiving premiums by writing the call option.
The risk involved in this strategy occurs when the stock price moves above the strike price. In this scenario, the covered call writer has to deliver the shares when the call is exercised. He doesn’t benefit from an increase in price.
Answer:
1. $146,666.67
2. $129,411.76
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
1. For computing the value of the firm, first we have to compute the Expected rate of return which is shown below:
= 5% + 0.5 × (10% - 5%)
= 5% + 0.5 × 5%
= 5% + 2.5%
= 7.5%
Now the value of firm would be
= Expected cash flows ÷ Expected rate of return
= $11,000 ÷ 7.5%
= $146,666.67
2. If beta is 0.7, then the expected rate of return and the value of firm would be
= 5% + 0.7 × (10% - 5%)
= 5% + 0.7 × 5%
= 5% + 3.5%
= 8.5%
Now the value of firm would be
= Expected cash flows ÷ Expected rate of return
= $11,000 ÷ 8.5%
= $129,411.76
The main purpose was to rebel against
