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2 years ago

What factors make capital appreciation bonds (CABs) a controversial method for local governments to finance projects

1 answer:

5 0

The factors that make capital appreciation bonds (CABs) a controversial method for local governments to finance projects include "Local governments tend to owe investors way above the amount borrowed."

Another factor that makes capital appreciation bonds (CABs) a controversial method for local governments to finance projects is that they enable local governments to fund new projects without raising taxes.

Capital appreciation bonds (CABs) is often described as a form of municipal security whereby its interest on principal rises and compounds until maturity.

Capital appreciation bonds (CABs) allows investor earns a sole payment indicating the face value of the bond and all accrued interest.

Hence, in this case, it is concluded that Capital appreciation bonds (CABs) are a controversial method of financing projects.

Learn more here: brainly.com/question/14325978

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Torch Industries can issue perpetual preferred stock at a price of $58.50 a share. The stock would pay a constant annual dividen

Snezhnost [94]

Answer:

11.96%

Explanation:

Calculation for Torch Industries company's cost of preferred stock,

Using this formula

Cost of preferred stock = Dividend / Stock Price * 100

Where:

Dividend =$7.00

Stock Price = $58,50

Hence,

= $7 / $58.50 * 100

= 11.96%

Therefore the company's cost of preferred stock will be 11.96%

3 0

3 years ago

Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for th

Ksenya-84 [330]

Answer:

For Department A, the manufacturing overhead allocation rate is : 300%

For Department B, the manufacturing overhead allocation rate is : 50%

Manufacturing overhead costs allocated to Job #432 : $30,000.

Explanation:

Apple Valley Corporation uses job cost system and it allocates overhead cost to job on basis of manufacturing labor cost.

1. To identify the manufacturing overhead allocation rate for department A:

(Manufacturing Overhead department A / Direct Manufacturing Labor Department A) * 100

= ($600,000 / $200,000) * 100

= 300%

2. To identify the manufacturing overhead allocation rate for department B:

(Manufacturing Overhead department B / Direct Manufacturing Labor department B) * 100

= ($400,000 / $800,000) * 100

= 50%

3. To calculate the manufacturing overhead costs allocated to Job #432:

[(Department A direct labor * Manufacturing Overhead department A) / Direct Manufacturing Labor of department A ] + [(Department B direct labor * Manufacturing Overhead department B) / Direct Manufacturing Labor of department B ]

= [( $8,000 * $600,000) / $200,000] + [( $12,000 * $400,000) / $800,000]

= $30,000.

4 0

3 years ago

. How does analyzing fixed and variable costs help you to set a sale price that will generate profit? 2. How is profit affected

ELEN [110]

Answer:

1. Apart from helping to know the average cost of a product, analyzing fixed and variable cost will help to derive the break even point.

2. Profit will go down

Explanation:

1. The size of the selling price and the variable cost determine contribution per unit of a product. Contribution per unit is Price minus variable cost. This shows the contribution of sales revenue towards covering the fixed cost of a product.

2. Relevant range is the estimated or budgeted activity level which defines a business volume of production or operation, it is both maximum and minimum threshold within which the entity must operate to expect certain level of cost and revenue.

Sometimes fixed costs are fixed within a relevant range of activities and outside such range, fixed cost may become variable, which will all things being equal impact negatively on the price.

Also, within relevant range volume discount may be achieved and outside such range, this may be forfeited which, will also reduce profit all things being equal.

4 0

3 years ago

For the most recent year, Camargo, Inc., had sales of $546,000, cost of goods sold of $244,410, depreciation expense of $61,900,

Dovator [93]

Answer:

Explanation:

As we know that time interest earned ratio = Income before interest and taxes / interest expense.

Sales = 546000

less: cost of goods sold = (244410)

Gross profit 301590

Less: expenses

Depreciation expense =( 61900 )

Profit before interest and taxes 239690

Less: tax

(239690 * 23%) = (55128)

Profit 184562

Profit - Retained earning Addition = Interest

184562 - 74300 = 110262.

Interest earned ratio = 239690 / 110262 = 2.17 times

7 0

3 years ago

Suppose the U.S. yield curve is flat at 4% and the euro yield curve is flat at 3%. The current exchange rate is $1.50 per euro.

lianna [129]

Answer:

$4.24287 million per year

Explanation:

Missing question: The swap will call for the exchange of 1 million euros for a given number of dollars in each year.

For structured three separate forward contracts of the exchange of currencies, the forward price could be found as follows

Forward exchange rate * $1 million error = Dollar to be received

Year 1 = 1.50*(1.04/1.03) * 1 million euros

Year 1 = 1.514563106796117 * 1 million euros

Year 1 = $1.5145 million

Year 2 = 1.50*(1.04/1.03)^2 * 1 million euros

Year 2 = 1.529267602978604 * 1 million euros

Year 2 = $1.5293 million

Year 3 = 1.50*(1.04/1.03)^3 * 1 million euros

Year 3 = $1.5441 million

The number of dollars each year is determined by computing the present value:

= 1.5145 / 1.04 + 1.5293 /(1.04)^2 +1.5441 / (1.04)^3

= 1.45625 + 1.41392 + 1.3727

= $4.24287 million per year

3 0

3 years ago