Q: All of the following are advantages of buying put options instead of stock EXCEPT: Group of answer…
A: In this question we have advantages of buying put options instead of Stock except: The Group of…
Q: Number of years needed to accumulate a future amount For the following case, determine the number of…
A: Initial Deposit = p = $300Future Value = fv = $1000Interest rate = r = 7%Time = n = ?
Q: The expected return on a stock is called the __ from the investor's perspective, and the __ from the…
A: The expected return for the stock is an important concept. To calculate the expected return for the…
Q: REQUIRED Use the information provided below to calculate the following: 5.1 Payback period of both…
A: NPV, IRR and payback period are capital budgeting tools to decide on whether the capital project…
Q: Bond J has a coupon rate of 4 percent and Bond K has a coupon rate of 10 percent. Both bonds have 12…
A: BondBond is a financial instrument where its holder gets a series of equal coupon payment at equal…
Q: An investment portfolio has 45% invested in stock A and 55% invested in stock B. The standard…
A: Weight of Stock A = Wa = 45% or 0.45Weight of Stock A = Wb = 55% or 0.55Standard deviation of Stock…
Q: What is the Cost of capital (WACC) for Furness Corporation? (round up to 2 decimal points):
A: First I'm going to list the formula used to compute the WACC.Weight of each source of capital =…
Q: You've uncovered the following per-share information about a certain mutual fund: On the basis of…
A: According to bartleby guidelines , if question involves multiple sub parts , then 1st sub 3 parts…
Q: You just deposited $6,500 in a bank account that pays a 4.0% nominal interest rate, compounded…
A: Future value represents the value of an investment or asset at a future point in time, based on a…
Q: Marin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon…
A: Bond price is the current worth of the future payments to be made. Future payments include coupon…
Q: Lorna deposited $1,600, at the beginning of every six months for 10 years, in an account at her…
A: Future value is a value of an investment or asset on a specific date in the future based on growth…
Q: Suppose that on January 1 you have a balance of $2800 on a credit card whose APR is 17%, which you…
A: Compound = monthly = 12Credit card balance=Present Value = PV = $2500APR= 17%Time = t = 1 * 12 = 12
Q: A bond has a face value of $10,000. The bond has a coupon Pate of annually. The bond matures in 10…
A: Price of the bond is the PV of all future coupons and par value discounted at the YTM. We can…
Q: A venture capital company buys 400,000 new shares of a start-up’s stock for $6.40 million. If the…
A: Number of New shares=400,000Start-up stock value=6.4millionNumber of shares outstanding prior to…
Q: Find the monthly payment for the loan. (Round your answer to the nearest cent.) New-car financing…
A: To amortize means to spread out the cost of a loan or intangible asset over a specific period by…
Q: Find the monthly payment for the loan. (Round your answer to the nearest cent.) Finance $650,000…
A: A loan is a sum of money that is taken out from a lender and usually paid back over time through…
Q: Profitability analysis) Last year Trangular Resources named $53 million in net operating income and…
A: Asset Turnover ratio is that which shown the relation ship between the sales of the company and…
Q: Suppose Heather borrows $3000 at an interest rate of 11% compounded each year. Assume that no…
A: Future value is the estimation of future cash value which is likely to be received in the future…
Q: After successfully completing your corporate finance class, you feel the next challenge ahead is to…
A: Straight voting refers to the voting scheme in which directors are to be elected by the shareholders…
Q: Yates Inc. is currently an all equity firm, but the company can borrow at 7.9 percent interest. The…
A: WACC=9.7%Cost of Debt=7.9%Number of shares outstanding=1 millionTax rate=35%Debt…
Q: Find the monthly payment for the loan. (Round your answer to the nearest cent.) A $519,000 home…
A: When the lender lends a loan to the borrower, he charges a rate of interest on the borrowed amount.…
Q: Use a calculator to evaluate the amortization formula P(=) 1-(1+4) m= $ -nt for the values of the…
A: When the lender lends a loan to the borrower, he charges a rate of interest on the borrowed amount.…
Q: sporting goods manufacturer has decided to expand into a related business. Management estimates that…
A: (M&A) Mergers and Acquisitions is the corporate action when two separate corporation entities…
Q: Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 9.4 percent, a…
A: A premium bond is a bond that has a market price greater than its par value.Premium bonds trade at a…
Q: Helen recently received a credit card with a nominal interest rate of 21 percent. With the card,…
A: We can determine the time taken for Helen to repay back the loan by rearranging the PV of ordinary…
Q: Faleye Consulting is deciding which of two computer systems to purchase. It can purchase…
A: The equivalent annuity approach is a capital budgeting technique for comparing two projects with…
Q: Valuation Using Price-Earnings Multiples The Claremont Company is planning an initial public…
A: Data given: FirmP/E RatioA18B22C14D26Most recent EPS=$1.65Consensus forecast EPS=$1.85
Q: Suppose that the spot price of gold is US$1,700 per ounce. The quoted 1-year forward price of gold…
A: 1. Forward contract is contract to buy or sell underlying asset at a predetermined price known as…
Q: The following questions are Multiple Choice: You have been asked by the president of your company to…
A: NPV is Net present value which can be determined by discounting all future cash flows at required…
Q: An insurance company is offering a new policy to its customers. Typically, the policy is bought by a…
A: Future value refers to the value of the current asset at some future date affected by interest and…
Q: An analyst gathers the following data: * Expected (estimated) rate of return on the market = 15% *…
A: Expected (estimated) rate of return on the market = Rm =15%Risk Free Rate = Rf = 8%Expected…
Q: Rentz Corporation is investigating the optimal level of current assets for the coming year.…
A: Return on equity:This ratio helps to determine the financial position of the company, it helps to…
Q: The directors of Raga Limited are considering a new business opportunity. This involves the purchase…
A: The payback period refers to the period which is required to meet the initial investment with the…
Q: Q8. Required information A new advertising campaign by a company that manufactures products that…
A: The external rate of return is computed by making an assumption that excess revenues are reinvested…
Q: Hadley Zavis Inc. started its unicycle manufacturing business in 2020 and acquired $600,000 of…
A: Depreciation is the reduction in value of fixed assets over the period. Under straight line method,…
Q: 6. Future values (S2.1) If you invest $100 at an interest rate of 15%, how much will you have at the…
A: Future value is computed by following formula-FV = A × (1+ r)nwhere,FV = future value A = Amount…
Q: Both Bond Sam and Bond Dave have 12.2 percent coupons, make semiannual payments, and are priced at…
A: A bond is a kind of debt securities issued by governments and private companies to raise funds from…
Q: Tanja wants to establish an account that will supplement her retirement income beginning 25 years…
A: The future value is the worth of an investment or asset at a particular future date, computed based…
Q: a. Call option, X = 140 b. Put option, X= 140 c. Call option, X= 145 d. Put option, X= 145 Payoff…
A: Options are derivative products they derive value from underlying assets and these give opportunity…
Q: Yan Yan Corporation has a $2,000 par value bond outstanding with a coupon rate of 4.3 percent paid…
A: Present Value It represents the amount of money that needs to be invested or deposited today to…
Q: Assume a company has ane oubilarding bond or with a coupon paid semiannually years to maturity, a…
A: Equity gives ownership rights to investors in the company and is subject to a greater risk than the…
Q: Your brother has offered to give you either $60,000 today or $120,000 in 10 years. If the interest…
A: When an amount is receivable, every person will choose to receive higher amount. So, in the given…
Q: Ро = P = D₂ D₁ (1+k) (1+k₂)² C C -+ + C + D3 (1+k₂)³ +...+ C + D₂ P (1+k)" (1+k)" F +
A: The DDM (Dividend discount model) is to value a share of stock as shown below.
Q: Declining perpetuities and annuities (S2.3) You own an oil pipeline that will generate a $2 million…
A: The PV of an annuity refers to the total value of its cash flows assuming that they are discounted…
Q: Flying Tigers, Inc., has net sales of $762,000 and accounts receivables of $154,000. What is the…
A: The amount owing to a business by its customers or clients for products sold or services provided on…
Q: 3 5 674110 47 You purchased a bond from Evans Limited for $3,000. The bond has a par value of…
A: Bonds are debt instruments issued by companies.The issuing company pays fixed periodic…
Q: In the summation (cost) method of valuation, which of the following steps is the ONLY one that a…
A: The summation method of valuation or cost method of valuation is the technique that is used to make…
Q: d. If the opportunity cost of capital is 10%, which projects have positive NPVs? e. “If a firm uses…
A: Businesses utilise net present value to describe how much future cash flows are worth in terms of…
Q: 15. Present values and opportunity cost of capital (S2.1) Halcyon Lines is considering the purchase…
A: Net present value is the technique used in capital budgeting to evaluate the acceptability of the…
Q: According to the definition of a liquid financial firm, when should it have access to funds? At any…
A: Liquidity is the ability to convert the funds into cash as quickly as possible.
Identify the incorrect statements with regard to the Canada Pension Plan (CPP).
I. A drop-out provision covers 20% of the lowest earning months when calculating average pensionable earnings.
II. The contributory period starts at age 18 and ends at age 65.
III. The year’s basic exemption (YBE) is $3,500 and has remained at this level for several years.
Select one:
a. II and III, only
b. I and II, only
c. I and III, only
d. I, II and III
Step by step
Solved in 3 steps
- The Pension Protection Act of 2006 requires companies to correct funding shortfalls in their defined benefit plans within: A. 5 years B. 3 years C. 10 years D. 20 years E. 1 yearYou have the following information related to Chalmers Corporation's pension plan: Use the PV of 1, PVAD of 1, and PVOA of 1 tables where appropriate. (Use the appropriate factor(s) from the tables provided.) a. Defined benefit, noncontributory pension plan. b. Plan initiation, January 1, 20X3 (no credit given for prior service). c. Retirement benefits paid at year-end with the first payment one year after retirement. d. Assumed discount rate of 7%. e. Assumed expected rate of return on plan assets of 9%. f. Annual retirement benefit equals years of credited service × 0.02 x highest salary. g. Chalmers made $1,200 contributions to the pension fund at the end of each year. h. The actual returns were $0 and $48 in 20X3 and 20X4, respectively. i. Information for Frank Bullitt, the firm's only employee, follows: January 1, 20X0 December 31, 20Y7 (15 years from plan inception) Start date Expected retirement date Expected number of payments during retirement 20 Selected actual and expected…Quebec's prepaid pension cost at December 31, 2002 is Quebec Company adopted a defined benefit pension plan on January 1, 2002. Quebec amortizes the past service cost over 16 years and funds past service cost by making equal payments to the fund trustee at the end of each of the first ten years. The current service cost is fully funded at the end of each year. The following data are available for 2002: Current service cost for 2002 P220,000 Past service cost: Amortized Funded 83,400 114,400 (a) P114,400 (b) P83,400 (c) P31,000 (d) P 0
- Martin Services Company provides its employees vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $42,000 for the period. The pension plan requires a contribution to the plan administrator equal to 6% of employee salaries. Salaries were $400,000 during the period. a. Provide the journal entry for the vacation pay. If an amount box does not require an entry, leave it blank. b. Provide the journal entry for the pension benefit. If an amount box does not require an entry, leave it blank.Martin Services Company provides its employees vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $40,000 for the period. The pension plan requires a contribution to the plan administrator equal to 10% of employee salaries. Salaries were $500,000 during the period. a. Provide the journal entry for the vacation pay. If an amount box does not require an entry, leave it blank. Vacation Pay Expense fill in the blank 5e6293fdafbafdb_2 fill in the blank 5e6293fdafbafdb_3 Vacation Pay Payable fill in the blank 5e6293fdafbafdb_5 fill in the blank 5e6293fdafbafdb_6 b. Provide the journal entry for the pension benefit. If an amount box does not require an entry, leave it blank. Pension Expense fill in the blank 30546afde038fc5_2 fill in the blank 30546afde038fc5_3 Cash fill in the blank 30546afde038fc5_5 fill in the blank 30546afde038fc5_6Vacation Pay and Pension Benefits Harvey Company provides its employees with vacation benefits and a defined benefit pension plan. Employees earned vacation pay of $47,800 for the period. The pension formula indicated a pension cost of $345,220. Only $299,500 was contributed to the pension plan administrator. Required: a. Provide the journal entry for the vacation pay. If an amount box does not require an entry, leave it blank. 8 b. Provide the journal entry for the pension benefit. If an amount box does not require an entry, leave it blank. 18
- Sunshine company has a defined benefit pension plan. Using the data available related to pension, calculate the amount of amortization of the net loss or gain that should be included as a component of pension expense for the current year? Average remaining service period of active employees Net gain, January 1 PBO, January 1 Plan assets, January 1 12 years $214,600 $1,630,000 S1,930,000 a. $21,600 b. $1,800 c. $51,600 d. $4,300the end of Year 1, Carrot Company revised the pension benefit formula for its defined benefit pension plan to crease benefits earned in prior years. The actuarial present value of the increased benefits is $200, the average maining service life of the employees affected by the change is 10 years, and Carrot will use the average emaining service life method for this change. Which of the following will be included in the journal entry to record this change to the pension? O Credit to prior service cost for $20 Debit to projected benefit obligation for $200 O Credit to projected benefit obligation for $20 O Debit to prior service cost for $200 O Debit to pension expense for $200At the end of the current year, Eastern Electric received the following information from its actuarial firm. Pension expense Postretirement benefits expense The pension plan is fully funded. Eastern Electric has funded only 40 percent of the nonpension postretirement benefits this year. a-b. Record pension expense and nonpension postretirement benefit expenses for the entire year. (If no entry is required for a transaction/event, select "No journal entry required" In the first account field.) View transaction list Journal entry worksheet < 12 Record the payments to a fully funded pension plan. Note: Enter debits before credits. Transaction a. $3,500,000 850,000 General Journal Debit Credit
- Urban Life Ltd. sponsors a defined benefit pension plan for its employees. It is now the 20X9 fiscal year. An appropriate interest rate for long-term debt is 7%. Information with respect to the plan is as follows: Fair value of plan assets, 31 December 20X8 Defined benefit obligation, 31 December 20X8 Actual return on plan assets for 20X9 Past service cost from amendment dated 1 January 20x9, liability is reduced because benefits were reduced. Actuarial revaluation dated 31 December 20X9; liability is reduced because of changed mortality assumptions. Funding payment at year-end 20X9 Benefits paid to retirees during 20X9 Current service cost for 20x9 $5,473,000 6,649,000 62,600 (218,200) (618,700) 525,000 120,000 257,900 Required: 1. Calculate the SFP net defined benefit pension liability as of 31 December 20X8. Net defined benefit pension liability, 31 December 20X8Vacation Pay and Pension Benefits Putnam Company provides its employees vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $24,000 for the period. The pension formula calculated a pension cost of $257,000. Only $15,420 was contributed to the pension plan administrator. (a) Provide the journal entry for the vacation pay. If an amount box does not require an entry, leave it blank. (b) Provide the journal entry for the pension benefit. If an amount box does not require an entry, leave it blank.Harvey Company provides its employees vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $20,500 for the period. The pension formula calculated a pension cost of $238,000. Only $14,280 was contributed to the pension plan administrator. (a) Provide the journal entry for the vacation pay. If an amount box does not require an entry, leave it blank. (b) Provide the journal entry for the pension benefit. If an amount box does not require an entry, leave it blank.
