Question 7 (3 points)

Firms U and L each have the same amount of assets, investor-supplied capital, and both have a return on investors' capital (ROIC

Tanya [424]

Answer:

The correct option is a.

Explanation:

In the question, it is given that there are two firms namely U and L who has same same amounts of assets, investor supplied material, and Return on investor capital.

The Firm U is unleveraged which has 100% equity

whereas, Firm L is leveraged firm which has 50% debt and 50% equity

As we have to compare these two firms based on return on equity.

So, based on ROE, Firm U has 100% equity so it have more equity

And, the Firm L have 50% equity which means the firm has low equity as 50% contribution is gone to the debt.

The rest information which is given in the question is irrelevant. So, it is ignored.

Thus, the Firm L has a lower ROE than Firm U

Hence, the correct option is a.

4 0

2 years ago

Nashville Harmonies Inc. and Taylor enter into a contract for Taylor to write six songs for which Nashville agrees to pay her. T

anyanavicka [17]

Answer:

In the transfer of rights, Taylor is an assignor

<u>Explanation:</u>

An assignor is an individual, organization, or other substance that moves rights that they hold to another element. The assignor transfers to the trustee. For instance, a group the assignor that goes into an agreement to sell a bit of property can dole out the returns or advantages of the agreement to an outsider (the chosen one, for example, philanthropy or a trust.

The task of rights regularly happens upon death to deal with the perished home, or through an intensity of lawyer to manage lawful or budgetary undertakings of a person.

5 0

3 years ago

Cramer Corp. issued $20,000,000 of 5-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $19,227,757.

Slav-nsk [51]

Answer:

The journal entry is as follows:

Interest expense $961,388.00

Discount on issue of bond $61,388.00

Cash $900,000.00

Explanation:

In order to prepare the journal entry we have to calculate first the interest expense and the cash.

Therefore, Interest expense= ($19,227,757×10%×6/12)=$961,388.00

Cash=$20,000,000×9%×6/12= $900,000

By difference then, the discount on bond payable=$961,388-$900,000

=$61,388.

Hence, the journal entry is as follows:

Interest expense $961,388.00

Discount on issue of bond $61,388.00

Cash $900,000.00

7 0

3 years ago

The board of directors of a corporation: multiple choice may not also be executive officers of the corporation, due to the separ

Galina-37 [17]

The board of directors take all the decisions of the corporation and are responsible for them. Thus, the correct option is -

are responsible for and have final authority for managing corporate activities.

They have the final authority to carry out the managing activities functions.

8 0

3 years ago

Sommer, Inc., is considering a project that will result in initial aftertax cash savings of $2.3 million at the end of the first

Anuta_ua [19.1K]

Answer:

the maximum initial cost is 25.62674095 million

Explanation:

The computation of the maximum initial cost of the company is shown below:

But before that the discount rate is

= 0.6 ÷ 1.6 × 4.6% + 1 ÷ 1.6 × 10% + 3%

= 10.9750%

Now Maximum initial cost is

=2.3 ÷ (10.975% - 2%)

= 25.62674095 million

Hence, the maximum initial cost is 25.62674095 million

6 0

3 years ago