What is the NPV of investing $2m per year in years 0 to 5 (at year-end) to generate a $1m cash flow in year 6 growing at 2% per year forever if the cost of capital is 12%?
In: Finance
Consider the following stock price and shares outstanding information.
| DECEMBER 31, Year 1 | DECEMBER 31, Year 2 | |||||||
Price | Shares Outstanding | Price | Shares Outstanding | |||||
| Stock K | $18 | 109,000,000 | $33 | 109,000,000 | ||||
| Stock M | 74 | 2,300,000 | 49 | 4,600,000a | ||||
| Stock R | 35 | 26,000,000 | 39 | 26,000,000 | ||||
| aStock split two-for-one during the year. | ||||||||
Compute the beginning and ending values for a price-weighted index and a market-value-weighted index. Assume a base value of 100 and Year 1 as the base period. Do not round intermediate calculations. Round your answers to two decimal places.
PWIYear 1:
PWIYear 2:
VWIYear 1:
VWIYear 2:
Compute the percentage change in the value of each index during the year. Do not round intermediate calculations. Round your answers to two decimal places.
Percentage change in PWI: %
Percentage change in VWI: %
Compute the percentage change for an unweighted index assuming $1,000 is invested in each stock. Do not round intermediate calculations. Round your answer to two decimal places.
%
In: Finance
Alysha plans to invest $4000 in an equity fund every year end
beginning this year. The expected annual return on the fund is 15
percent. How much would she expect to have at the end of 16
years?
A. $222870
B. $194322
C. $190322
D. $260300
In: Finance
In: Finance
On the first day of the fiscal year, Shiller Company borrowed $85,000 by giving a seven–year, 7% installment note to Soros Bank. The note requires annual payments of $15,772, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $5,950 and principal repayment of $9,822.
Journalize the entries to record the following:
a1. Issued the installment note for cash on the first day of the fiscal year.
a2. Paid the first annual payment on the note. For a compound transaction, if an amount box does not require an entry, leave it blank.
b. How would the nones payable be reported on the balance sheet at the end of the fiscal year?
In: Accounting
Future Value Compute the future value in year 9 of a $440 deposit in year 4 and another $240 deposit at the end of year 5 using a 9% interest rate.
Multiple Choice
$1,015.77
$1,476.89
$964.40
$1,144.40
In: Finance
You have three year loan of 60000. the interest rate is 7% per year, and the loan calls for equal annual payments. What is the amount of principal paid at the end of year 2?
In: Finance
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $16,000 of common stock for cash. Recognized $64,000 of service revenue earned on account. Collected $57,200 from accounts receivable. Paid operating expenses of $36,200. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account. The following transactions apply to Jova for Year 2: Recognized $71,500 of service revenue on account. Collected $65,200 from accounts receivable. Determined that $880 of the accounts receivable were uncollectible and wrote them off. Collected $100 of an account that had previously been written off. Paid $48,300 cash for operating expenses. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 1.0 percent of sales on account. Required Complete the following requirements for Year 1 and Year 2. Complete all requirements for Year 1 prior to beginning the requirements for Year 2. d-1. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Year 1.
In: Accounting
Colton Enterprises experienced the following events for Year 1, the first year of operation:
Acquired $53,000 cash from the issue of common stock.
Paid $13,800 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Year 2.
Performed services for customers on account for $108,000.
Incurred operating expenses on account of $44,000.
Collected $82,500 cash from accounts receivable.
Paid $39,000 cash for salary expense.
Paid $35,200 cash as a partial payment on accounts payable.
Adjusting Entries
Made the adjusting entry for the expired rent. (See Event 2.)
Recorded $6,000 of accrued salaries at the end of Year 1.
Events for Year 2
Paid $6,000 cash for the salaries accrued at the end of the prior accounting period.
Performed services for cash of $57,000.
Purchased $4,600 of supplies on account.
Paid $15,900 cash in advance for rent. The payment was for one year beginning April 1, Year 2.
Performed services for customers on account for $124,000.
Incurred operating expenses on account of $59,500.
Collected $107,000 cash from accounts receivable.
Paid $57,000 cash as a partial payment on accounts payable.
Paid $33,300 cash for salary expense.
Paid a $15,000 cash dividend to stockholders.
Adjusting Entries
Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in Year 1.)
Recorded supplies expense. A physical count showed that $800 of supplies were still on hand.
Record the events and adjusting entries for Year 1 in general journal form.
Post the Year 1 events to T-accounts.
Prepare a trial balance for Year 1.
Prepare an income statement for Year 1.
Prepare a statement of changes in stockholders’ equity for Year 1.
Prepare a balance sheet for Year 1.
Prepare a statement of cash flows for Year 1
Prepare a post-closing trial balance for December 31, Year 1.
In: Accounting
A 2%, 3-year US Treasury is selling at 100.25 . The 5% , 3-year IBM is selling at 100.65. Both bonds pay interest semi-annually. The G-spread in basis points on the IBM bond is closest to
|
a. 264 bps. |
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b. 285 bps. |
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c. 300 bps |
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d. 345 bps |
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e. 435 bps |
In: Finance