Answer:
Blue Co. Shall report $396,000 as gain before income taxes on disposal of the stock.
Explanation:
Book value per share of Red Inc = $1.20 per share
As the value of share is revised just after the declaration but before distribution there will be gain on sale of investment.
Net gain = Sale price - Book value
= $3.40 - $1.20 per share = $2.2 per share
Total gain for the year end on June 30 will be
= $2.2 per share X 180,000 shares = $396,000 shares
Thus Blue Co. Shall report $396,000 as gain before income taxes on disposal of the stock.
Answer:
a. Premium
b. Discount
c. Discount
Explanation:
a. Valley issued $300,000 of bonds with a stated interest rate of 7 percent. At the time of issue, the market rate of interest for similar investments was 6 percent.
Premium (discount) = Bond's stated interest rate - Market rate of interest for similar investments = 7% - 6% = 1% premium
Therefore, Valley's bond will sell at a premium.
b. Spring issued $220,000 of bonds with a stated interest rate of 5 percent. At the time of issue, the market rate of interest for similar investments was 6 percent.
Premium (discount) = Bond's stated interest rate - Market rate of interest for similar investments = 5% - 6% = -1% discount
Therefore, Spring's bond will sell at a discount.
c. River Inc. issued $150,000 of callable bonds with a stated interest rate of 5 percent. The bonds were callable at 102. At the date of issue, the market rate of interest was 6 percent for similar investments.
Premium (discount) = Bond's stated interest rate - Market rate of interest for similar investments = 5% - 6% = -1% discount
Therefore, River Inc.'s bond will sell at a discount.
Answer:
17 million
Explanation:
The computation of the outstanding common shares is shown below:
= Number of common shares outstanding - treasury common stock
where,
Number of common shares outstanding = Total value of the common shares ÷ par value of the share
= $105 million ÷ $5
= 21 million
And, the treasury common stock is 4 million
Now put these values to the above formula
So, the value would equal to
= 21 million - 4 million
= 17 million
Answer:
44
Explanation:
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
2.2 / 0.1 - 0.05 = 44
Answer:
1. Supply will decrease
Explanation:
Due to the basic economic principle that when supply superceeds the demand for goods and services, the prices of such goods and services fall. As a result of this, and an expected increase in future prices, the supply of coffee beans by coffee merchants to the markets will decrease.
This is because the merchants want to receive higher profits and to do so, they will withhold supply to sell in the next six months when the price is higher.
