1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
kramer
3 years ago
5

Dirty Don's Bicycle Shop is current financed with 100% equity. The firm currently has 100,000 shares of common stock outstanding

, selling for $50 per share. Don is considering a capital restructuring project, where the firm would be financed with 45% debt and 55% equity. How many bonds would Don have to sell at par value? (Remember that par value of a bond is $1,000).
Business
1 answer:
Stella [2.4K]3 years ago
6 0

Answer:

Number of bonds to raise = 2250

Explanation:

given data

current financed = 100% equity

common stock outstanding = 100,000 shares

selling = $50 per share

debt = 45%

equity =55%

par value of a bond = $1,000

to find out

How many bonds would Don have to sell at par value

solution

we get here first the value of equity that is express as

value of equity = Number of shares × Price per share .................1

put here value

value of equity = 100,000 × $50

value of equity = $5,000,000

and

financed with bonds = 45 % of value of equity

financed with bonds = 45 % × $5,000,000

financed with bonds = $2,250,000

so

Number of bonds to raise is express as

Number of bonds to raise = \frac{2,250,000}{1000}

Number of bonds to raise = 2250

You might be interested in
The measure of a​ company's ability to collect cash from its customers who purchase on account is the A. accounts payable turnov
BigorU [14]

Answer:

D. accounts receivable turnover.

Explanation:

Accounts receivable turnover is the a financial indicator that shows the number of times that an entity collects its average accounts receivable in a year. It is used to assess the company's to ability to makes sales on account to its customers and collect payments from them timely.

It is calculated as

Accounts receivables turnover

= Net Annual Credit Sales / ((Beginning Accounts Receivable + Ending Accounts Receivable) / 2)

6 0
3 years ago
The postal service of St. Vincent, an island in the West Indies, obtains a significant portion of its revenues from sales of spe
klemol [59]

Answer:

It is more profitable to maintain the price at $10

Explanation:

Giving the following information:

The souvenir sheets cost the postal service $1.15 each. St. Vincent has been selling these souvenir sheets for $10.00 each and ordinarily sells about 61,000 units. To test the market, the postal service recently priced a new souvenir sheet at $11.00 and sales dropped to 51,000 units.

We need to calculate the actual revenue and decide whether it is more convenient to increase the price or leave it as it is.

Actual revenue= 61,000 units* (10 - 1.15)= $539,850

New revenue= 51,000 units*(11 - 1.15)= $502,350

It is more profitable to maintain the price at $10

8 0
2 years ago
Assume that Thomas can afford to buy as many candy bars and ice cream cones as he wants. He would continue to consume both candy
deff fn [24]

Answer:

Marginal utility of each becomes negative

Explanation:

Utility is defined as the level of satisfaction that a person gets from consuming a product.

The person keeps on consuming the item until the level of marginal utility for the product becomes less than zero.

That is there is no satisfaction anymore in consuming the product.

In the given instance Thomas will continue to consume both candy bars and ice cream until the level of satisfaction (marginal utility) is now less than zero or negative

3 0
3 years ago
Gomez runs a small pottery firm. He hires one helper at $11,500 per year, pays annual rent of $7,000 for his shop, and spends $2
madreJ [45]

Answer:

in this problem, we need to calculate Gomez's accounting and economic profit. To do this, let us first classify and list the explicit and implicit costs. Revenue: Sales: $85,000 Explicit costs: Cost of one helper: $18,000 Rent: $8,000 Materials: $24,000 These are the costs that require an outlay of cash. Implicit costs: Opportunity cost of funds invested in equipment: $7,000 Gomez could have invested the funds in another asset that could earn him $7,000 Opportunity cost of working as a potter in his own shop: $20,000 Gomez could have worked as a potter for a competitor that could earn him $20,000. This is the worth of Gomez's skill as a potter. Entrepreneurial talent: $4,000 This is the worth of Gomez's talent in running the business. These costs do not require an outlay of cash. These are the implicit costs. Now, we are ready to calculate both the accounting and economic profit of Gomez. a. Calculate the accounting profit for Gomez's pottery firm. $_ Accounting profit = Total Revenue − Total Explicit Costs Accounting profit = $ 85 , 000 − ( $ 18 , 000 + $ 8 , 000 + $ 24 , 000 ) Accounting profit = $ 85 , 000 − $ 50 , 000 Accounting profit = $ 35 , 000 The accounting profit is equal to $35,000. b. Now calculate Gomez's economic profit. $_ Economic profit = Total Revenue − Total Explicit and Implicit Costs Economic profit = $ 85 , 000 − ( $ 18 , 000 + $ 8 , 000 + $ 24 , 000 + $ 7 , 000 + $ 20 , 000 + $ 4 , 000 ) Economic profit = $ 85 , 000 − $ 81 , 000 Economic profit = $ 4 , 000 The economic profit is equal to $4,000.

8 0
3 years ago
Pamela, a 1/3 partner, has an adjusted basis of $100,000 for her partnership interest. If Pamela sells her entire partnership in
creativ13 [48]

Answer: Capital gain = $10,000 ; Ordinary income = $25,000

Explanation:

Here is the complete question:

The PLM Partnership balance sheet includes the following assets on December 31 of the current year:

Basis FMV

Cash $230,000 $230,000

Accounts receivable 0 75000

Land 70,000 100,000

Total $300,000 $405,000

Pamela, a 1/3 partner, has an adjusted basis of $100,000 for her partnership interest. If Pamela sells her entire partnership interest to Emma for $135,000 cash, how much capital gain and ordinary income must Pamela recognize from the sale?

The following can be calculated based on the question above:

Pamela's share of the unrealized receivables will be the ordinary income which will be the unrealized receivables of $75000 which is then multiplied by 1/3 which is the interest. This will be:

Ordinary income = 1/3 × $75,00

= $25,000

The capital gain will be the difference that occurs between total gain and ordinary income.

Total gain difference

= $135,000 - $100,000

= $35,000

Ordinary Income = $25,000

Capital gain = $35,000 - $25,000

= $10,000

5 0
3 years ago
Other questions:
  • International Imports (I2) pays an annual dividend rate of 10.40% on its preferred stock that currently returns 13.94% and has a
    10·1 answer
  • An arbiter is consulted when
    12·1 answer
  • In making rational choices, which of the following is true? We respond to marginal benefits and marginal costs. We do not have t
    9·1 answer
  • Jean paid $18,489 for a new car. calculate the total cost of the car if she financed it at an interest rate of 3.5% for 4 years.
    15·2 answers
  • A national restaurant chain has just opened a sit-down location at Chicago’s O’Hare International Airport. Next to the sit-down
    7·1 answer
  • Around the world, consumers are showing a robust appetite for the sharing-based economy. The presence of a few dominant companie
    5·1 answer
  • Companies engaged in a single line of business most commonly utilize an organizational structure that can be:_______.
    8·1 answer
  • Keesha Co. borrows $275,000 cash on December 1 of the current year by signing a 180-day, 9%, $275,000 note.
    12·1 answer
  • Read the following statements and decide in which one you think it is ?
    8·1 answer
  • Use the following information (presented in random order) to complete an Income Statement and Balance Sheet. The name of the bus
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!