Ordinary share capital sh.100 par Reserves 40,000 15,000 12% debenture (sh.100par) 25,000 10% preference shares (sh. 20 par) 20,000 Total 100,000 Sh. 000 dditional information:
Q: Usually ground leases are for relatively short periods of time. True or False
A: That statement is somewhat False. Ground leases can vary in duration, ranging from relatively short…
Q: For an unlevered firm, the cost of capital can be determined by using the ________. A.…
A: The objective of the question is to identify the correct method to determine the cost of capital for…
Q: Asume that you are the portfolio manager of the SF Fund, a $3 million hedge fund that contains the…
A: Return for Stock A =1.5%+1.2*(10%-1.5%) =11.70%Return for Stock B =1.5%+0.5*(10%-1.5%) =5.75%Return…
Q: Stenback, Inc. is evaluating two possible investments in depreciable plant assets. The company uses…
A: Payback period is the time required to recover initial investment made in project.It is computed by…
Q: If the stock rises exactly as you expect, but it takes 10 weeks, what is the gain on your options…
A: An option is an agreement between two parties granting one the opportunity to purchase or sell a…
Q: Suppose you bought a bond with an annual coupon rate of 7.5 percent one year ago for $898. The bond…
A: Bonds serve as debt instruments where investors lend money to entities, such as governments or…
Q: what is the new NPV of the project?
A: Information on Original problem:Cash inflows:If the franchise is awarded − $8mIf the franchise was…
Q: What is the importance of financial information for entreprenuers? Briefly describe the key…
A: Importance of financial information:Identify business problems: Financial information helps to…
Q: If the tax rate is 23 percent, what is the NPV of the new plant? Note: A negative answer should be…
A: Net present value (NPV):Net present value (NPV) is a financial metric used to evaluate the…
Q: Multiple Choice Question On October 1, year 1, Kirby Corp. purchased equipment for $100,000. The…
A: Depreciation per year in case of straight line method is computed as follows:-Depreciation per year…
Q: A property was purchased for $5170.00 down and payments of $1588.00 at the end of every three months…
A: Purchase price refers to the price at which the property is to be purchased by the purchaser from…
Q: Assume that you have shorted a call option on Intuit stock with a strike price of $40. The option…
A: Pay off refers to the gain or loss that buyers make from trading a stock option. There are three…
Q: Ford Motor Company had realized returns of 10%,20%,-15%, and -10% over four quarters. What is the…
A: Standard deviation is the measure of risk of the stock and is measured as the deviation from the…
Q: The cost of installing new equipment would be debited to which of the following accounts? Oa. Land…
A: Capital costs refer to the expenses incurred in acquiring or constructing physical assets, such as…
Q: our mining company is considering an expansion of operations into iron ore. Your engineers surveyed…
A: The NPv or net present value refers to the current value of all future operating cash flows less the…
Q: 3. Problem 11.03 (MIRR) 1 eBook H Problem Walk-Through Project L requires an initial outlay at t 0…
A: Numerous capital budgeting tools can be used by an investor to assess an investment proposal's…
Q: The futures price for an asset is $60. Expiration is in 3 months, and the risk free rate is 4%. If…
A: Arbitrage is the practice of simultaneously buying and selling an asset in different markets to take…
Q: You are the manager of the petroleum refining division of a large international conglomerate. You…
A: The objective of the question is to estimate the cost of capital for the project of building an oil…
Q: Stoneheart Group is expected to pay a dividend of $2.89 next year. The company's dividend growth…
A: The price of the stock can be determined by using the dividend discount model. The dividend discount…
Q: As a settlement for an insurance claim, Craig was offered one of two choices. He could either accept…
A: Lump Sum Amount = $11,235Compound = Monthly = 12Monthly Payment = p = $140Time = t = 9 * 12 =…
Q: Gasworks, Incorporated, has been approached to sell up to 4 million gallons of gasoline in three…
A: A two-state model refers to the method of calculating the price of the option where the final value…
Q: Your client has $103,000 invested in stock A. She would like to build a two-stock portfolio by…
A: A lower standard deviation indicates less risk in a portfolio. Therefore, when considering…
Q: Your portfolio invests in the stock of two companies. Company A’s stock has a variance of 0.25,…
A: The objective of the question is to calculate the standard deviation of a portfolio that is invested…
Q: Homeowners 3 (Special Form) is an all-risks policy that insures the dwelling and other structures…
A: Homeowners 3 (Special Form) is a comprehensive insurance policy designed to protect homeowners from…
Q: A firm evaluates the following projects, when interest rates are 12% for every maturity: Year A B с…
A: When a company has projects which are not mutually exclusive and a budget available for more than 1…
Q: Reduction in mailing time = 1.5 day Reduction in clearing time = 1.5 day Reduction in firm…
A: Cost associated with lockbox=Number of payments * Fees / Daily interest rate
Q: Transactions Costs and the Efficiency of Alternative Remedies Scenario 1 (Assume it costs $300 to…
A: Transaction costs play a significant role in determining the efficiency of economic transactions and…
Q: The accounts receivable turnover rate for Tiger Uniform has gone from an average of 141 times to…
A: accounts receivable period= 365/ accounts receivable turnover rate
Q: There is a zero coupon bond that sells for $4,432.06 and has a par value of $10,000. If the bond has…
A: The yield to maturity on the zero coupon bond is calculated using the following equationWhere, FV is…
Q: You are attempting to value a put option with an exercise price of $108 and one year to expiration.…
A: Option contract can be of two types namely call option and pit option. Put option means an option to…
Q: Labeau Products, Limited, of Perth, Australia, has $35,000 to invest. The company is trying to…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: When a company collects the face value of a bond investment at maturity, total assets increase. O…
A: Given statement:When a company collects the face value of a bond investment at maturity, total…
Q: Candyland Inc. has 400,000 shares outstanding that sell for $33 a share. It also has a current…
A: The objective of the question is to calculate the pre-tax Weighted Average Cost of Capital (WACC)…
Q: years. The interest rate is i(12) = 8.750%. What is the outstanding balance on the loan just after…
A: The time value of money recognizes the idea that the value of an amount of money today differs from…
Q: You are an analyst at Apex Innovations, known for its cutting-edge technology in the renewable…
A: Beta represents the systemic risk of the company, it takes into account the returns of the company's…
Q: Stock prices over 5 months are observed to be $110.00, $115.00, $98.00, $107.00, and $112.00. What…
A: The annualized standard deviation for the given prices of the stock over the months can be found by…
Q: Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the…
A: Answer a.Weight of Stock A = 0.40Weight of Stock B = 0.40Weight of Stock C = 0.20Boom:Expected…
Q: GTO Incorporated is considering an investment costing $259,800 that results in net cash flows of…
A: IRR is also known as Internal rate of Return. It is a capital budgeting technique which helps in…
Q: A forklift Currency cost $39,000. You estimale that you will need to replace this forklift in w…
A: Variables in the question:PV=$ 39000n=10 yearsIncrease in the cost of forklift cost per year (r)=3%
Q: How much should be deposited now into an account earning 8.4 % interest per year, compounded every 6…
A: Compound = 6 months = Semiannually = 2Interest Rate = r = 8.4 / 2 = 4.2%Payment = p = $1500Time = t…
Q: Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years…
A: The objective of the question is to calculate the after-tax cost of debt for Jakob Company, which…
Q: A $34,000 new car loan is taken out with the terms 9% APR for 48 months. How much are monthly…
A: We can use the present value of annuity formula:PV = PMT × [1 - 1/(1+r)n] / rWhere:PV is the present…
Q: Davis and Davis have expected sales of $490, $465, $450, and $570 for the months of January through…
A: Accounts receivable (AR) refers to the money owed to a business by customers for goods or services…
Q: A firm issues 10-year bonds with a coupon rate of 4.5%, paid semiannually. The credit spread for…
A: Variables in the question: Coupon rate=4.5% (paid semiannually)Credit spread=1.2%YTM of…
Q: What is the coupon rate of a ten-year, $10,000 bond with semiannual coupons and a price of…
A: A bond's coupon rate is the fixed annual interest rate paid to the bondholder, expressed as a…
Q: Valence Electronics has 215 million shares outstanding. It expects earnings at the end of the year…
A: We need to use constant growth model to calculate stock value. The equation of constant growth model…
Q: Long-Term Financing Needed At year-end 2018, Wallace Landscaping's total assets were $1.91 million,…
A: a. Total assets = $1.91 millionAccounts payable = $525,000Common stock = $530,000Retained earnings =…
Q: Problem 13-9 Preferred stock In 2021, Beta Corporation earned gross profits of $820,000. a. Suppose…
A: The company considers its debt as a loan, allowing for tax deductions on the interest payments.…
Q: Robinson Robotics is considering two mutually exclusive projects, Project A and Project B. The…
A: NPV (Net Present Value) is a financial metric used to evaluate the profitability of an investment by…
Step by step
Solved in 3 steps with 3 images
- Problem 2: (Book Value per share with Two Classes of Preference Shares)TINT Corporation presents the following condensed statement of financial position as of the close of the year:Cash ₱ 520,000 Accounts Payable ₱ 550,000Other Assets 1,333,000 Ordinary Share Capital 550,0005% Preference Share Capital 330,0007% Preference Share Capital 220,000Accumulated Profits 203,000Total Assets ₱ 1,853,000 Total Equities ₱ 1,853,000The 5% preference share capital is cumulative, the 7% preference share capital is non-cumulative, but both are fully participating. The par value of all shares is ₱100. Requirements:C. Compute for the book value per share for: 5. Ordinary shares6.a. 5% Preference shares b. 7% Preference sharesItem Nos. 14 and 15 are based on the following information: revealed the following information: Preference Share Capital, par P 100 Preference Share Premium- Ordinary Share Capital- Ordinary Share Premium-- Subscribed Ordinary Shares Retained Earnings Ordinary Subscriptions Receivable 000.00S The shareholders' equity section of Charlie Company's balance sheet P 2,300,000 805,000 5,250,000 2,750,000 50,000 -- 1,900,000 400,000 - _____The Shareholders' Equity section of BFAR Corp. statement of financial position shows the following: Preference Share Capital, P100 par Ordinary Share Capital, P10 par Treasury Shares - ordinary, P12 cost/share Share Premium - Ordinary Share Premium - Preference Subscribed Ordinary Share Capital Subscription Receivable (2 years collectability) Share Premium on Subscribed Ordinary shares Share Premium on Treasury shares Accumulated Profits - Unappropriated (unadjusted) - beg 2,800,000 6,000,000 960,000 1,640,000 1,020,000 750,000 600,000 625,000 610,000 7,040,000 Dividends declared during the year is P500,000. Profit for the year is P800,000. Compute the Total Shareholders' Equity.
- A.) The following information was extracted from the books of ABC limited as at 31/12/2021 Description sh. ordinary shares capital (par value Sh. 25) 8,000,000 8% preference share capital (Par value sh. 24) 6,000,000 10% preference share capital (par value sh. 20) 4,000,000 10% debentures 4,000,000 Total 22000 Additional information. The market value of the 10% debentures on 31/12/2021 was sh. 500,000 The share market prices as at 31/12/2021 was as follows 8% preference shares @ sh. 8 10% preference share @ sh. 25 ordinary shares @ sh. 30 The company has maintained payments of an ordinary divinded per share of sh. 3.80 over the past five years. The corporation tax rate at 30%. Required Calculate the weighted average cost of capital B.) If ABC limited is expected to pay DPS of Sh. 6 on one year time. the divided payout ratio is 60% and Return on Equity is 15%. Determine wether the shares is overvalued if the MPS is Sh. 40.The following is the capital structure of company ABC as at 31/12/2017 Ordinary share capital Sh. 10 par value ksh. 400,000,000 Retained earning Ksh. 200,000,000 10% preference share capital sh. 20 par value Ksh. 100,000,000 12% debentures sh. 100 par value Ksh. 200,000,000 Preference share was issued 10 years ago and are still selling at par value MPS=Par value. The debentures is currently selling at sh. 90 in the market. Curently the firm has been paying divinded per share of sh. 5. The DPS is expected to grow at 5% p.a in future. The current market price per share (MPS) is sh. 40. The corporate tax rate is 30% A. Compute the cost of each capital component. B. Determine the WACC of the firm2. An entity showed the following data:Share capital, par value P10, 25,000 shares issued 250,000Share Premium 50,000Retained Earnings 150,000Market value of share on declaration date 20Market value of share on distribution date 40a. If a 10% share dividend will be declared, what amount of retained earnings will be capitalized? Prepare the entries on declaration and distribution date.b. If a 25% share dividend will be declared, what amount will be charged to retained earnings? Prepare the entries on declaration and distribution date
- Answer with computation and explanation If the total authorized share capital is P1,000,000 at P10 par, the unissued share capital is 25,000 shares, and all the issued shares were sold at P15, then the total shareholders' equity before any operation activities is a 2 750,000. b P1,125,000 c. P375,000. d. P250,000.On 1 January 2021, Jasmine Bhd's capital structure was as follows: RM 120,000 192,000 Ordinary share capital 80,000 units of shares Retained Earnings In March the company made a rights issue of I share for every 2 held at RM2.00 per share. This was fully taken up. In July the company made a bonus issue of 1 share for every 6 held at RM1.50 per share, using the retained account to finance this issue. An interim dividend of RM0.03 per share was paid on 30 September 2021. All transaction was through the bank. Required: 1. Prepare the ordinary share capital account for the year. 11 Prepare the Retained Earnings account for the year. A& NO.3 The following is the capital Strudhure of ABC Ltd. Snare Specific dc. 11%0 Amount 2quity share capital (2,00,000 shares of Rs- ID each). Preference share capital (So.00D shares of Rs.10 each) Retained Farnings 7.5% Debentures of Rs 1000 each. R$ 20,00,000 Bs S,D0,000 Rs 1D.00,000. 11% Bs IS,00,00. Presently the debentures are being traded at 94% , Preference dhares at par and the equithy shares at R6.13 þer share. Pind out the WACC based on the book value weights and market value loeights.
- 4. An entity showed the following data:Share capital, par value P50 5,000,000Share premium 200,000Retained Earnings 2,000,000Market value of share on declaration date 75Market value of share on distribution date 85Treat each item independently: a. If the entity would declare a 1 for 5 share dividend, what amount would be charged to retained earnings? b. What amount will be credited to share premium if the entity would declare 15% share dividend?12. Charice Company revealed the following shareholder's equity at year end: Preference share capital, P100 par 2,300,000 Share premium - PS 805,000 Ordinary share capital, P15 par 5,250,000 Share premium 2,750,000 Subscribed ordinary share capital 500,000 Retained earnings 1,900,000 Note payable 4,000,000 Subscription receivable - ordinary 400,000 How much is the legal capital? a. 8,050,000 b. 7,650,000 c. 9,950,000 d. 11,605,000Following is the Balance Sheet of Redeemable Limited: 24 I. Equity and Liabilities (1) Shareholders' Funds (a) Paid-up Share Capital : 10% 1,000 Redeemable Preference Shares of $ 100 each fully called up Less : Calls in Arrears on 50 Shares @ $ 20 each 1,00,000 1,000 99,000 5,00,000 50,000 Equity Shares of $10 each (b) Reserves and Surplus : Development Rebate Reserve General Reserve 50,000 1,00,000 1,50,000 1,51,000 (2) Other Liabilities Total Equity and Liabilities 9,00,000 II. Assets Other Assets 8,10,000 90,000 Bank Total Assets 9,00,000 The Redeemaule Preference Shares were redeemed on the following basis : (1) Further 4,500 equity shares were issued at a premium of 10 per cent; (2) of the 50 Preference Shares, holders for 40 shares paid the call before the date of redemption. The balance 10 shares were forfeited for non-payment of calls before redemption. The forfeited shares were reissued as fully paid on receipt of $500 before redemption; (3) Preference shares were redeemed at…
