Answer:
Emily has a basis of $60,000 in the shares of Red Corporation.
Explanation:
Emily's basis for Red Corporation's stock = real estate ($40,000) + service ($20,000) = $60,000
Sarah's basis for Red Corporation's stock = computers ($80,000) = $80,000
Even though both Emily and Sarah received 600 shares each, the basis for her tax calculations are different.
Answer:
345,000
Explanation:
accounting rate of return:
The average investment will be the average between the ending and beginning book value of the investment:
In this case, the acquisition of the software and his salvage value at the end of the useful life.
( 630,000 + 60,000 ) / 2 = 345,000
The largest country in the EU is Germany. It makes up almost 16% of the European Union's population.
Answer:
Cost of equity = 8.22%
Explanation:
Cost of equity = Dividend per share /current market value + growth rate of dividend
Cost of equity = 2/90 + 6%
Cost of equity = 0.0222 + 6%
Cost of equity =0.0222 + 0.06
Cost of equity = 0.0822
Cost of equity = 8.22%
Answer and Explanation:
A. Given that Design 1A will cost $1.7 million to build and $175,000 per year to maintain
Given that Design 1B will cost $3.6 million to build and $40,000 per year to maintain
Both designs are assumed to be permanent
To find ROR using AW based rate of return equation, we find present value of each design and equate them:
Each design is permanent so
Present value of perpetuity:
Design 1A= 1700000+175000/r
Design 1B = 3600000+40000/r
=1700000+175000/r=3600000+40000/r
135000/r=1900000
Cross multiply
r=135000/1900000
r= 0.0710
r=7.10%
B Given that ROR=7.10% and MARR is 25%
MARR>ROR
Hence we reject both designs
