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Trava [24]
2 years ago
6

Mesa County contracts with New Construct Inc. to build a courthouse. New Construct hires Odell to excavate the site. Odell’s wor

k damages adjacent properties. Mesa files a suit against the excavator, who argues that the county is not named in his contract with New Construct. Most likely, the court will hold that Odell is:_________
a. not liable because Mesa is not named in Odell’s contract.
b. liable on the ground that Mesa is an incidental third-party beneficiary.
c. liable on the ground that Mesa is an intended third-party beneficiary.
d. not liable because Odell’s contract was with New Construct, not Mesa.
Business
1 answer:
Paraphin [41]2 years ago
3 0

Answer:

c. liable on the ground that Mesa is an intended third-party beneficiary

Explanation:

             In a contract, the third-party beneficiary is a business or a person that benefits from the agreement and the terms of the contract that is made between the two other parties. According to law,  third-party beneficiary have certain rights which they can enforced if the contract is not fulfilled.

            In the context, Mesa is a third party beneficiary. The Mesa County enters into a contract with New Construct Inc. to construct a court house. Now New Construct Inc. again hires the firm Odell to excavate the land site.

            While excavating Odell damages few nearby properties, so Mesa County files a law suit against Odell. But Odell argues that Odell is not in agreement with Mesa County or have not entered into with any contract with the County, so Mesa cannot sue the excavator.

            But the court hold that as Mesa County is the third party beneficiary of the contract and have certain rights, Odell is held liable for the loss and should compensate for the loss to the County.

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Blackstone Technology is planning to invest in some project using external equity. The company has a beta of 1.1. The return on
Salsk061 [2.6K]

Answer:

Cost of equity = 19.1 %

Explanation:

Cost of equity = required rate of return + flotation cost

The Capital assets pricing model would be used to determined  the required rate of return

<em>The capital asset pricing model (CAPM): relates the price of a share to the market risk or systematic risk. The systematic risk is that which affects all the all the economic agents, e.g inflation, interest rate e.t.c  </em>

Using the CAPM , the required rate of return is given as follows:  

E(r)= Rf +β(Rm-Rf)  

E(r) - required return

β- Beta

Rm- Return on market

Rf- Risk-free rate

DATA

E(r) =? , Rf- 3%, Rm-14% , β- 1.1, flotation cost - 4%

E(r) = 3% + 1.1× (14% - 3%) = 15.1 %

Cost of equity = required rate of return + flotation cost

                        = 15.1 % + 4% = 19.1 %

Cost of equity = 19.1 %

7 0
3 years ago
Sheryl’s Shipping had sales last year of $10,000. The cost of goods sold was $6,500, general and administrative expenses were $1
Amiraneli [1.4K]

Answer:

What are earnings before interest and taxes?

To find this figure, we substract the cost of goods sold, general and administrative expenses, and depreciaction expense from the total sales:

Earnings Before Interest and Taxes (EBIT) = $10,000 - $6,500 - $1,000 - $1,000 = $1,500

What is net income?

To find the net income, we take the EBIT we found above, and substract from it the interest expense, which gives us the taxable income:

Taxable Income = $1,500 - $500

                           = $1,000

Now that we have the taxable income, we multiply this figure by the tax rate, to obtain the tax expense.

Tax expense = $1,000 x 35%

                      = $350

Finally, our net income is equal to the taxable income minus the tax expense:

Net Income = $1,000 - $350

                    = $650

What is cash flow from operations?

We add the non-cash expenses to net income to find this figure. In this case, we only have one non-cash expense: depreciation expense.

Cash flow from operations = $650 + $1,000

                                              = $1,650

8 0
3 years ago
Prime Corporation liquidates its ​85% owned subsidiary Bass Corporation under the provisions of Secs. 332 and 337. Bass Corporat
aliya0001 [1]

Answer:

$20000 gain for John Corporation and $10000 loss for Bass Corporation.

Explanation:

John Corporation gain(loss) = FMV of property - Liability assumed - Stock basis

                                               = 55000-10000-25000

                                               = 20000

Bass Corporation gain/loss = 55000-65000

                                              = - 10000

Therefore,  $20000 gain for John Corporation and $10000 loss for Bass Corporation.

5 0
3 years ago
Oscar Clemente is the manager of Forbes Division of Pitt, Inc., a manufacturer of biotech products. Forbes Division, which has $
aliya0001 [1]

Answer:

a. What is Forbes Division's residual income if Oscar does not acquire the new machine?

residual income = $3,550,000 - ($6,160,000 x 12%) = $2,810,800

b. What is Forbes Division's residual income this year if Oscar acquires the new machine?

residual income = $70,000 - ($9,190,000 x 12%) = -$1,032,800

c. If Oscar acquires the new machine and operates it according to specifications, what residual income is expected for next year?

residual income = $5,167,000 - ($5,833,000 x 12%) = $4,467,040

In order to calculate net income, I assumed other depreciation remained the same for both years.

Explanation:

residual income = net income - (capital x cost of capital)

if new machine is not purchased:

net income = $3,550,000

cost of capital = 12%

capital = ($4,060,000 + $5,080,000) - depreciation $2,980,000 = $6,160,000

if new machine is purchased, current year's residual income

net income = $3,550,000 - $3,480,000 loss on disposal = $70,000

capital = ($4,060,000 + $5,080,000 + $6,510,000) - $5,080,000 - $1,380,000 = $9,190,000

if new machine is purchased, calculations for next year

net income:

sales revenue $17,754,000

variable costs ($2,010,000)

Fixed (all cash) ($7,220,000)

depreciation new machine ($1,977,000)

depreciation other ($1,380,000)

loss on disposal new machine ($3,480,000)

net income = $5,167,000

cost of capital = 12%

capital = ($2,680,000 + $6,510,000) - depreciation ($1,380,000 + $1,977,000) = $5,833,000

residual income = $5,167,000 - ($5,833,000 x 12%) = $4,467,040

3 0
3 years ago
Lacy's Linen Mart uses the average cost retail method to estimate inventories. Data for the first six months of 2021 include: be
faust18 [17]

Answer:

Best estimate for inventory =$70,764.85

Explanation:

The closing inventory value at retail

= (Opening inventory + Purchases - sales)  all in retail prices

= $123,000 +  $483,000 - 493,000.

= 113000

Closing inventory value at cost

=113,000 ×  (64,500 + 315,000)/(123,000 +  $483,000)

=70,764.85

Best estimate for inventory =$70,764.85

4 0
3 years ago
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