Pauline Company issued 240,000 shares of P10 par common stock with a fair value of P5,100,000 for the net assets of Saltine Company. In addition, Pauline incurred the following acquisition- related costs: Legal fees to arrange the business combination Cost of SEC registration of shares Cost of issuing stock certificates Documentary stamp tax 50,000 24,000 6,000 40,000 Immediately before the business combination in which Saltine Company was dissolved, Saltine's assets and equities were as follows (in thousand): Book value Fair value Current assets 4,000 3,000 2,200 4,400 Plant assets Liabilities 600 600 Common stock 4,000 Retained earnings 400

Pauline Company issued 240,000 shares of P10 par common stock with a fair value of P5,100,000 for the net assets of Saltine Company. In addition, Pauline incurred the following acquisition- related costs: Legal fees to arrange the business combination Cost of SEC registration of shares Cost of issuing stock certificates Documentary stamp tax 50,000 24,000 6,000 40,000 Immediately before the business combination in which Saltine Company was dissolved, Saltine's assets and equities were as follows (in thousand): Book value Fair value Current assets 4,000 3,000 2,200 4,400 Plant assets Liabilities 600 600 Common stock 4,000 Retained earnings 400

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Hello.thank you for replying. May i ask why did u choose the cost of capital between 22 and 25%. I know u need an positive npv and a negative one. U already have a positive npv of 51,81 with 12% cost of capital. Why u didnt used that one like a positive npv and to add just one cost of capital fir a negative npv? Thank you
3. Company cost of capital (S9.1) Quark Productions ("Give your loved one a quark today.") uses its company cost of capital to evaluate all projects. Will it underestimate or overestimate the value of high-risk projects?
Subject:- Accouning
I'm not sure if I am doing this correctly, also not sure which ones to choose for the last question.
You and another analyst are asked to choose between two projects. Your manager tells you that the opportunity cost of capital is 10%. The other analyst points out that Project B has an IRR of 37.3%, which is much higher than Project A’s IRR of 24.7%, so he thinks Project B is the better project. Do you agree or disagree? Explain your answer. If you disagree with the intern, explain why the other analyst’s logic is incorrect.
Explain briefly what risk-neutral asset pricing is and how it is implemented in words to laymen. I cannot use jargon, algebra/equations, or diagrams. Ideally around 350 words?
Hello, I can't figure out the answer to a question. I have attached a screen shot of the question. I am able to calculate part A correctly as shown, but I can not get part B. The answer I got in part b about factory worth was $599,348.18. I have followed the formulas shown exactly. On this problem I did =PV(0.09,4,-185000,0) in excel. I have done this problem multiple times with different numbers and always get part A, but not part B. Getting part A correct tells me all my input numbers are correct, so what am I doing wrong for part B? I have also attached screen shot of my excel sheet and you can see formula I entered in the bar above
Use the information provided to answer the questions.Use the information provided below to calculate the following. Where applicable, use the presentvalue tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. QUESTION) Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to twodecimal places). INFORMATION Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest inone of them. You are given the following projected data:Project A Project BInitial cost R300 000 R300 000Scrap value R40 000 0Depreciation per year R52 000 R60 000Net profitYear 1 R20 000Year 2 R30 000Year 3 R50 000Year 4 R60 000Year 5 R10 000Net cash flowsYear 1 R90 000Year 2 R90 000Year 3 R90 000Year 4 R90 000Year 5 R90 000 Additional informationThe discount rate used by the company is 12%. Transcribed Image Text:Number of Periods 1 2 3 4 5 6 7 8 m 10 11 12 13 14 15 1% 2% 0.9901 0.9804 0.9709 3% 3.9020 3.8077…
During the past few years, Super Technologies has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department. As the assistant to the financial vice-president, it is your task is to estimate Super’s weighted average cost of capital (WACC). The VP has provided you with the following information: The firms’ tax rate is 40%. The current market price of Super’s outstanding bonds is $1,153.72. The bonds have an annual coupon rate of 12% and make coupon payments semiannually. The bonds mature in 15 years and have a par value of $1,000. The current price of the firm’s preferred stock is $113.10 per share. The stock has a $100 par value and a 10% annual dividend rate (paid annually). The current price of the firm’s common stock is $50 per share.…
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