Cion 3

Today is January 1, 2009. The state of Iowa has offered your firm a subsidized loan. It will be in the amount of $10,000,000 at

erastova [34]

Complete question:

Today is January 1, 2009. The state of Iowa has offered your firm a subsidized loan. It will be in the amount of $10,000,000 at an interest rate of 5 percent and have ANNUAL (amortizing) payments over 3 years. The first payment is due today and your taxes are due January 1 of each year on the previous year's income. The yield to maturity on your firm's existing debt is 8 percent. What is the APV of this subsidized loan? If you rounded in your intermediate steps, the answer may be slightly different from what you got. Choose the closest.

A. -$3,497,224.43 B. $417,201.05 C.$840,797 D. None of the above

Answer:

$840,797 is the APV of this subsidized loan

Solution:

Input the loan in a financial equation first and resolve the payment:

PV=10,000,000

N= 3I = 5%

PMT = 3,672,085

Now, find the APV of the loan:

CF0 = $10,000,000

CF1= -$3,502,085

= -$3,172,085 - .66 * $500,000CF2

= -$3,556,011CF3

= -$3,612,632I

= 8%

APV = $840,797

5 0

4 years ago

Douglas Industries produced 5,500 units of product that required 2.5 standard hours per unit. The standard fixed overhead cost p

taurus [48]

Answer:

$550 favorable

Explanation:

Douglas industries was involved in the manufacturing of 5,500 units of a product which required 2.5 standard hours per unit.

The standard fixed overhead cost per unit is $2.20 for each hour at 13,500 hours

Therefore, the fixed factory overhead volume variance can be calculated as follows

= (13,500-(5,500×2.5hours)×$2.20

= (13,500-13,750)×$2.20

= -250 × $2.20

= -$550

= $550 favorable

Hence the fixed factory overhead volume variance is $550 favorable

3 0

4 years ago

The amount you owe in state income tax is based on:

artcher [175]

<span>A. Your yearly earnings. </span>

7 0

3 years ago

Read 2 more answers

On July 1, 2020, Sheffield Co. pays $10,480 to Tamarisk Insurance Co. for a 2-year insurance policy. Both companies have fiscal

Gwar [14]

Answer:

Explanation:

The journal entry is shown below:

On July 1

Prepaid Insurance A/c Dr $10,480

To Cash A/c $10,480

(Being prepaid insurance is paid)

On December 31

Insurance expense A/c Dr $2,620

To Prepaid Insurance $2,620

(Being prepaid insurance is adjusted)

The computation is shown below:

= $10,480 ÷ 2 years × 6 months ÷ 12 months

= $2,620

5 0

3 years ago

Emma, Inc. reacquired 166,326 of its shares at $22 per share as treasury stock. Last year, for the first time, Emma sold 37,992

Lesechka [4]

Answer:

The correct answer is $152,949.

Explanation:

According to the scenario, the given data are as follows:

Reacquired shares = 166,326

Per share price = $22

So, we can calculate the retained earning decline by using following formula:

Retained earning decline = Cost of Treasury shares - Sales price - Paid in Capital from stock

Where, Cost of treasury shares = 48,987 × $22 = $1,077,714

Now Sales Price = 48,987 × $15 = $734,805

and Paid in Capital from stock = 37,992 × ( $27 - $22) = $189,960

By putting the value in the formula, we get:

Retained earning decline = $1,077,714 - $734,805 - $189,960

= $152,949

6 0

3 years ago