Answer: Current Price $26.65
Explanation:
Rate of return = 12.5%
dividends = $1.98
Expected Price (in a year from now) Pe= $28
Current price = Pc
R = (Pe - Pc + D)/Pa
0.1250 = (28 - Pc + 1.98)/Pc
28 - Pc + 1.98 = 0.1250Pc
-Pc - 0.1250Pc = - 28 - 1.98
- 1.125Pc = -29.98
Pc = -29.98/(-1.1250Pc) = 26.64888889
Pc = $ 26.65
Answer:
The correct answer to the following question is option E) 9.06% .
Explanation:
Here the cost of equity given is - 11.8%
Pre tax cost of debt- 6.9%
Tax rate- 35%
So the after tax cost of debt - 6.9% x 65%
= 4.485%
The debt to equity ratio - .6
So the weight of debt - .6 / ( 1 + .06 )
= .375
Weight of equity - 1 / ( 1 + .06 )
= .625
Weighted average cost of capital =
Debts cost x weight of debt + Equity cost x weight of equity
= 4.485 x .375 + 11.8 x .625
= 1.681875 + 7.735
= 9.06%
Explanation:
Suppose Mary is willing to pay up to $15,000 for an used Ford pick-up truck. If she buys one for $12,000, her ______ would be ______.
Select one:
a. benefit; $12,000
b. cost; $15,000
c. economic surplus; $3,000
d. economic surplus; $12,000
Answer,
World Bank and International Monetary Fund.
Explanation,
World Bank is an organization with 186 member countries.It provides monetary and technical support to developing countries.International Monetary Fund has 186 member countries .Its purpose is to promote financial responsibility,prevent and solve economic crises ,encourage growth.It halso helps to eradicate poverty by encouraging countries to adopt responsible economic policies.It lends money to developing countries and provide training such as banking regulations.
Answer:
The journal entry to record the issuance of bond is shown as:
Dr Bank $783,845
Cr Bonds payable $700000
Cr Bonds premium $83845
Being issuance of bonds for cash
Subsequently,coupon interest is calculated is on the par value of $700000 at 11% while effective interest of 8% is calculated on $783,845
Explanation:
Upon issuance of the bonds,the receipt of cash of $783,845 is debited to bank account as an increase in asset.
The obligation to redeem the bond on 1 January 2025 is credited to bonds payable at par value of $700000(an increase in liability)
However, cash received is more by $83,845 which is credited to bonds premium account.
