Annual Dividends<br><br> Question 4 Attached

How did speculative investing weaken the stability of the stock market

Lena [83]

The main way in which speculative investing weakened the stability of the stock market was that it it led to high overvaluation of a company's worth, meaning that people began to divest quickly, leading to a run on the banks.

7 0

2 years ago

Crane Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on lar

Novay_Z [31]

Answer:

The company should replace the equipment.

Explanation:

The cost analysis is calculated as follows;

Retain Replace Net Income

Equipment Equipment Increase (Decrease)

Operating expenses $146,400 0 $146,400

($24,400*6)

Repair costs $39,000 0 $39,000

Rental revenue 0 -$60000 $60,000

($10,000*6)

New machine cost 0 $166,500 -$166,500

Sale of old machine 0 -$24,500 $24,500

Total cost $185,400 $82,000 $103,400

From the calculation above, the equipment should be replaced as it incur a lesser cost compare to when it is retained.

8 0

2 years ago

The required return on the stock of Moe's Pizza is 10.8 percent and aftertax required return on the company's debt is 3.40 perce

garik1379 [7]

Answer:

The required return for the new project is 6.87%

Explanation:

In order to calculate the required return for the new project we would have to calculate the Weighted Average Cost of Capital (WACC) adjusted by risk adjustment factor .

The Weighted Average Cost of Capital (WACC) = [After Tax Cost of Debt x Weight of Debt] + [Cost of equity x Weight of Equity]

After -tax Cost of Debt = 3.40%

Cost of Equity = 10.80%

Weight of Debt = 0.39

Weight of Equity = 0.69

Therefore, the Weighted Average Cost of Capital (WACC) = [After Tax Cost of Debt x Weight of Debt] + [Cost of equity x Weight of Equity]

= [3.40% x 0.39] + [10.80% x 0.69]

= 1.32% + 7.45%

= 8.77%

The required return for the new project = Weighted Average Cost of Capital – Risk Adjustment Factor

= 8.77% - 1.90%

= 6.87%

The required return for the new project is 6.87%

8 0

3 years ago

In 2016, Raleigh sold 1,000 units at $500 each, and earned net income of $40,000. Variable expenses were $300 per unit, and fixe

labwork [276]

Answer:

1,118 units.

Explanation:

The computation of number of units to be sold is shown below:-

For the Year 2016

Number of Units Sold = 1,000 units

Unit selling price = $500 per unit

Total Sales = $500 × 1,000 = $500,000

Variable Costs = $300 × 1,000

= $300,000

Contribution = $500,000 - $300,000

= $200,000

Fixed Costs = $160,000

Net Income = $200,000 - $160,000

= $40,000

For the Year 2017

Unit Selling Price = $500 per unit

Unit Variable Cost = $300 × 1.10

= $330 per unit

Contribution per unit = $500 - $330 = $170 per unit

Fixed Cost = $160,000 - $10,000 = $150,000

Now, to maintain the same income of $ 40,000 the Company have a total contribution

$150,000 + $40,000

= $190,000

Number of units to be sold = Total contribution ÷ Contribution per unit

= $190,000 ÷ $170

= 1,117.64

or

1,118 units.

4 0

2 years ago

A customer buys $10,000 of 30 year corporate bonds with 10 years left to maturity at 92. The customer elects not to accrete the

natta225 [31]

Answer:

no capital gain or loss

Explanation:

A customer buys $10,000 of 30 year corporate bonds with 10 years left to maturity at 92. The customer elects not to accrete the discount annually. At maturity, the customer will have no capital gain or loss.

5 0

2 years ago

Annual Dividends Question 4 Attached