2. Financial ratios: The following information is available about Rhine Company.

ABC Company’s outstanding stock consists of 1,900 shares of noncumulative 5% preferred stock with a $100 par value and 11,900 sh

nekit [7.7K]

Answer:

Preferred dividends paid = $22,900

Common dividends paid = $32,300

Explanation:

As per the data given in the question,

Total value of preferred shares = 1,900 × $100

= $190,000

Annual preferred dividend = $190,000 × 5%

= $9,500

Until $9,500 is not paid in dividends to the preferred shareholders, dividends will not be paid to the common stockholders.

The preferred stock is non-cumulative which indicates, in any year if no preferred dividends are paid or preferred dividends of less than $9,600 is paid in any year, the balance of preferred dividends will not be carried to next year.

So,

Preferred dividends paid = $3,900 + $9,500 + $9,500

= $22,900

Common dividends paid = ( $3900 + $9,800 + $41,500) - $22,900

= $32,300

3 0

4 years ago

On february 3, smart company, inc. sold merchandise in the amount of $5,800 to truman company, with credit terms of 2/10, n/30.

Aneli [31]

<span>The possible journal entry that would be in Truman's tracking inventory would be:
Cash
4,171
Sales discounts
129
Accounts receivable
4,300

This is because the amount of 5,800 had a credit or an excess amount. Originally the costs of the items are 4,000 and it happened to be increased using the 2/10 and n/30 method of the calculation.</span>

7 0

4 years ago

IBM wants to issue new 20-year bonds. The company currently has 8.5 percent bonds with face value of $1000 on the market that se

alexandr1967 [171]

Answer: 8.62%

Explanation:

Based on the information given, the coupon rate on the new bonds if the firm wants to sell them at par will be calculated thus:

The following information can be gotten from the question:

Par Value = $1,000

Current Price = $994

Time to Maturity = 7 years

Annual Coupon Rate = 8.50%

Semiannual Coupon Rate = 8.50%/2 = 4.25%

Semiannual Coupon = 4.25% × $1,000 = $42.50

Semiannual Period to Maturity = 7/½ = 14

Let the semiannual Yield to maturity be represented by x Therefore,

994 = 42.50 × PVIFA(x, 14) + 1,000 × PVIF(x, 14)

Then, we'll use the financial calculator where,

N = 14

PV = -994

PMT = 42.50

FV = 1000

Based on this, the value of x will be 4.308%.

Since the Semiannual YTM is 4.308%, then the Annual YTM will be:

= 2 × 4.308%

= 8.616%

= 8.62%

Therefore, the coupon rate should be 8.62%

8 0

3 years ago

A stock with a beta of 0.6 has an expected rate of return of 13%. If the market return this year turns out to be 10 percentage p

vlada-n [284]

Answer:

what is your best guess as to the rate of return on the stock?

12,2%

Explanation:

Stock Beta Return

$ 1 0,60 13,0%

Market

-10% -6% 12,2%

5 0

3 years ago

A bank loan has been given to a customer at a bank with a FIXED nominal interest rate of 13%. The real

dmitriy555 [2]

Answer:

The new real interest rate is 15%

and the lender was hurt.

O 15%; lender

Explanation:

a) Data and Calculations:

Fixed nominal interest rate = 13%

Real interest rate for the bank's profit margin = 10%

Inflation rate = 3% (13% - 10%)

Unanticipated inflation rate = 7%

Nominal interest rate = 17% (10% + 7%)

But the bank could not increase its fixed nominal interest rate to match the nominal interest rate.

6 0

3 years ago