Answer:
Multiple choices below are missing:
A) purchase Bond A
B) purchase Bond B
C) purchase neither A nor B at this time
D) negotiate a higher rate on Bond A
The correct option is A,purchase bond A.
Explanation:
By purchasing Bond A,Lee is assured interest payment of 7.5% for a period of twenty years,hence the issuer cannot call the bond if interest rate drops by 2% in order to issue a lower interest-bearing bond which would be cheaper cost-wise.
However, if Lee purchases Bond B with current coupon of 8.25%,the interest is only guaranteed for a period of two years,since the issuer has the prerogative of calling back the bond after two years should interest fall in order to issue another bond that commands lower interest rate.
Due to the greatest cost of goods sold, the LIFO (Last In Last Out) technique displays the lowest net profitability. Compared to the other techniques of inventory valuation, the cost of goods sold for the LIFO approach is the greatest.
<h3>Which technique of inventory valuation will result in the lowest net profit?</h3>
The application of LIFO will produce the lowest net income and the greatest estimated cost of goods sold among the three options during periods of inflation.
<h3>Which method of inventory has the lowest income tax rate?</h3>
LIFO is the inventory cost flow method that yields the lowest income tax liability. A form of inventory cost flow mechanism called last-in-first-out (LIFO) operates under the presumption that the last item acquired will be the first item to be sold.
<h3>In an era of inflation, which inventory method results in the lowest income tax?</h3>
Due to increasing COGS, LIFO leads to reduced net income (and taxes). However, under LIFO during inflation, there are fewer inventory write-downs. Results from average cost are in the middle of FIFO and LIFO.
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Answer:
EPS = $4.50
diluted EPS = $2.46
Explanation:
no option is correct since EPS = $4.50, and the rest of the options are all higher amounts. Diluted EPS are always smaller than EPS.
common stock outstanding = 1,000 stocks
bonds shares (diluted) = 1,000 stocks
net income = $4,500
bond interest = $10,000 x 6% x (1 - 30%) = $420
diluted earnings per share = ($4,500 + $420) / (1,000 shares + 1,000 shares) = $4,920 / 2,000 shares = $2.46
