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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

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Next to the following list of eight characteristics of business organizations, select a brief description of how each characteri
Gemiola [76]

Answer:

1. Owner authority and control - one vote per share, readily transferred

2 Ease of formation - requires government approval

3. Transferability of ownership - readily transferred

4. Ability to raise large amounts of capital - high ability

5. Duration of life - Unlimited

6. Owner liability - limited

7. Legal status - separate legal entity

8. Tax status of income - corporate income is taxed

Explanation:

A corporation is a business type :

1. Ownership of a corporation can be acquired by acquiring shares of the corporation.

2. A corporation requires government approval and a lot of legal requirements before it can be formed.

3. A corporation can raise capital through issuing shares, bonds and borrowing from financial institutions .

4. The liability of shareholders who are the owners are limited to the amount invested.

5. Corporate income is taxed and profit distributed to shareholders are also taxed.

6. A corporation is a separate legal entity.

7. The life of a corporation can be unlimited.

8. One share is equal to one voting right.

I hope my answer helps you

4 0
3 years ago
A manufacturer has modeled its yearly production function P (the monetary value of its entire production in millions of dollars)
Vinvika [58]

Answer: P(120,30)= $1,218,365.5

So when the manufacturer invests $30 million in capital and 120,000 hours in labour yearly, the monetary value of production is about $1.2 million.

Explanation:

The Cobb-Douglas production function expresses the technological relationship between two inputs (labour and capital).

Since  

P(L,K)=1.47L^0.65 K^0.35 (equation 1)

we simply substitute L=120,000 and K=30,000,000 into equation 1.  

Thus, P(120,30)= 1.47(120,000)^0.65 (30,000,000)^0.35

<em>(Recall that L is in thousand of hours and K is in millions of dollars).</em>

P(120, 30)= 1.47(2002.02)(413.99)

Thus, P(120,30)= 1218365.475

P(120,30)= $1,218,365.5

P(120, 30)= $1.2 million

So when the manufacturer invests $30 million in capital and 120,000 hours in labour yearly, the monetary value of production is about $1.2 million

7 0
2 years ago
Ice Cream Corporation uses the weighted-average method in its process costing system. Data concerning the first processing depar
olya-2409 [2.1K]

Answer:

Ice Cream Corporation

The cost per equivalent unit for materials for the month in the first processing department is closest to:

= $14.30.

Explanation:

a) Data and Calculations:

                                                  Units       Materials        Conversion

Beginning work in process     2,400      $ 14,500           $ 6,600

Percentage of completion

Beginning work in process                        75%                   20%

Started into production          11,100

Units in production               13,500

Completed and transferred 10,000

Ending work in process         3,500         90%                  30%

Costs added during the month             $173,600       $243,600

Total costs of production

Beginning work in process          $ 14,500           $ 6,600

Costs added during the month    173,600          243,600

Total costs of production            $188,100        $250,200

Equivalent units of production:

Completed and transferred 10,000   10,000 (100%)   10,000 (100%)

Ending work in process         3,500     3,150 (90%)       1,050 (30%)

Equivalent units of production            13,150                11,050

Cost per equivalent unit:

Total costs of production            $188,100        $250,200

Equivalent units of production        13,150              11,050

Cost per equivalent unit                 $14.30            $22.64

5 0
3 years ago
Troy has $50 a month transferred electronically from his checking account to his savings account. This is an example of:
kupik [55]

Answer:

Saving plan

Explanation:

The saving plan are the life insurance plans that offers the various opportunity to an individual in order save and accumulated the fund for the upcoming future

Since Troy has $50 a month and the same is transferred electronically from his checking account to his saving account so automatically he saves each month

Therefore the same represent the saving plan

7 0
3 years ago
A newly created design​ business, Teri's​ Art, is finishing its first year of operations. During the​ year, credit sales were $4
Vikentia [17]

Answer:

the bad debt expense is $900

Explanation:

The computation of the bad debt expense is shown below:

bad debt expense is

= Written off amount + estimated uncollectible amount at the year end

= $650 + $250

= $900

We simply added the above two items so that the amount of the bad debts for the first year could come

Hence, the bad debt expense is $900

7 0
2 years ago
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