<u>Solution and Explanation:</u>
Answer a The following formula will be used to calculate the return on the equity.
Return on equity = Net income divide by Average equity
The return on equity is equal to Thus, return on equity is equal to 44.82% Answer b Correct answer is the option: ROE usually increases since the repurchase of shares reduces the denominator (avg. stockholders' equity)
Answer c Correct answer is the option: Companies repurchase their own stock if they feel it undervalued by the market.
Answer:
$105,547
Explanation:
Original cost of machine = $270,000
Machine sold for = $150,000
Book value = $120,000
Down payment = $30,000
$60,000 payable on December 31 each of the next two years
.
Present value of an ordinary annuity of 1 at 9% for 2 years = 1.75911
The amount of the notes receivable net of the unamortized discount:
= Amount paid on December 31st × Present value of an ordinary annuity
= $60,000 × 1.75911
= $105,547
Categorial grants typically allocate federal dollars based upon population. Categorial grants are also know as conditional grants. These grants are given out and issued by the federal government however, they have contigencies as to the conditions of the grants. The federal government controls these grants fully.
Answer:
A) Tony's opportunity cost for spending 10 hours planting seeds is $250, since that is the amount he could earn be teaching guitar lessons.
B) Tony's accountant will calculate the cost of planting seeds at $130, since it includes only the cost of the seeds
C) Tony's accounting profit is $170 (= $300 - $130). Revenue from selling wheat - accounting cost of planting wheat seeds.
D) Tony's economic loss is $80 [= $300 - ($130 + $250)]. Economic profit or loss is calculated with the formula: economic profit = total revenue - (accounting costs + opportunity costs)
Answer:
The right project will be sorted by the use of the Profitability Index.
Explanation:
Since all three capital investment proposals have a positive Net Present Value, we have to use profitability index to ascertain which project is most profitable by following the steps below.
1. Divide the N.P.V of each project by the initial investment of the project
2. Rank the answer from the highest ratio to the least.
3. The project with the highest Profitability Index is to be selected for the investment.