Fortune Cookie Inc. (FCI) issued $10 million of 10-year, 5% convertible bonds on April 1, Year 5 at 102.5 Coupons are payable on April 1 and October 1. Bonds without conversion privileges would have sold at 101.5. FCI’s fiscal year-end is December 31. Please assume that FCI follows IFRS.
(1) On October 1, Year 10, 30% of these bonds were converted to common shares right after the payment of interest. Determine the amount to be assigned to common shares at the time of conversion. [7 marks]
(2) On December 31, Year 10, additional 30% of these bonds were converted to common shares. Accrued interest was paid at the time of conversion. Determine the amount to be assigned to common shares at the time of conversion.
In: Accounting
(Financial statement analysis) The annual sales for Salco, Inc. were $4.52 million last year. The firm's end-of-year balance sheet was as follows:
Current assets $503,000 Liabilities $994,000
Net Fixed Assets 1,485,000 Owners Equity 994,000
Total Assets: $1,988,000 Total : $1,988,000
Salco's income statement for the year was as follows:
Sales $4,520,000
Less: Cost of goods sold (3,503,000)
Gross profit $1,017,000
Less: Operating expenses (505,000)
Net operating income $512,000
Less: Interest expense (97,000)
Earnings before taxes $415,000
Less: Taxes (35%) (145,250)
Net income $269,750
Please Answer The Following:
A: Calculate Salco's total asset turnover, operating profit margin, and operating return on assets.
B: Salco plans to renovate one of its plants and the renovation will require an added investment in plant and equipment of $1.05 Million. The firm will maintain its present debt ratio of 50% when financing the new investment and expects sales to remain constant. The operating profit margin will rise to 13.3%. What will be the new operating return on assets ratio (i.e., net operating income÷total assets) for Salco after the plant's renovation?
C. Given that the plant renovation in part (b) occurs and Salco's interest expense rises by $52,000 per year, what will be the return earned on the common stockholders' investment? Compare this rate of return with that earned before the renovation. Based on this comparison, did the renovation have a favorable effect on the profitability of the firm?
In: Finance
William, a 42 year old bachelor, pays $450 per month support for his 75-year old mother who is disabled and living in a rest home. She receives a taxable pension of $100 per month and uses the entire $550 per month for routine living expense.
Calculate number of exemptions that could be claimed and the standard deduction that the tax payer is entitled to take in 2019 in the above case.
In: Accounting
1st year Assets 115,028
Liabilities 59,924
2nd year Assets 132,081
Liabilities 42,128
Owner Investment ?
Net Income 15,536
Owner Cash Withdrawl 4690
What is the owner's investment for year 2nd?
Please show complete calculation.
In: Accounting
Interest rates on 4-year Treasury securities are currently 6.4%, while 6-year Treasury securities yield 7.55%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.
In: Finance
Price a 3-year, 2% annual coupon, $1000 par bond using the following calibrated model for one-year interest rate. All rates are expressed on a bond equivalent basis. Assume annual compounding. Round your answer to 2 decimal places. t = 0 t = 1 t = 2 r_2,HH = 0.043 r_1,H = 0.021 r_0 = 0.012 r_2,HL = 0.026 r_1,L = 0.016 r_2,LL = 0.02
In: Finance
Interest rates on 4-year Treasury securities are currently 7%, while 6-year Treasury securities yield 7.4%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.
In: Finance
a)
XYZ Inc entered in a 4 year contract with a client. XYZ will receive following cash flows at the end of each year. If they can earn 6% annual interest, what is the future value of this contract?
0 1 2 3 4
|------------|--------------|---------------|----------------|
0 $800 $1,500 $3,800 $420
Choose the correct answer:
$7,086.21
7,232.87
$6,911.20
$4,521.34
$5,612.94
b)
Bank A is offering a loan of $4,000 at 8% interest rate compounded monthly while Bank B is offering $4,000 loan at 7.98% interest rate compounded daily. Which bank should you take the loan from?
Choose the correct answer:
Bank B as it has a lower effective rate of 8.51%
Bank B as it has a lower effective rte of 8.306099%
Both banks have same effective rate so it does not matter which bank you borrow from
Bank A since it has a lower effective rate of 8.299951%
Bank A as the effective rate is lower at 8.51%
c)
Jake bought an old car from the used car dealer “reliable autos Inc.” for a price of $8,000. Jake paid $2,000 down payment and financed the remaining amount with loan for seven years and monthly payments of $158.04 at the end of each month. what is the rate of this financing (APR)?
Choose the correct answer:
2.22%
17.39%
15.69%
13.59%
26.59%
d)
You need to start making monthly withdrawals of $8,500 at the beginning of each month starting today, for 25 years from your personal account. This account pays 6.5% return compounded monthly, how much money do you need in your account today?
Choose the correct answer:
$1,265,691.80
$2,550,000
$1,258.872.90
1,984,310.92
2,365,124.98
In: Finance
In: Finance
| Calculating Average Payables Period For the past year, Coach, Inc., had a cost of goods sold of $87,386. At the end of the year, the accounts payable balance was $19,472. How long on average did it take the company to pay off its suppliers during the year? What might a large value for this ratio imply? | ||||||
| Cost of Goods Sold | $ 87,386.00 | |||||
| Accounts Payable | $ 19,472.00 | |||||
| Average Payable Period | ||||||
03.27 Using the DuPont Identity Y3K, Inc., has sales of $10,570, total assets of $4,670, and a debt–equity ratio of .25. If its return on equity is 15 percent, what is its net income? | ||||||
| Sales | $ 10,570.00 | |||||
| Total Assets | $ 4,670.00 | |||||
| Debt-Equity Ratio | 0.25 | |||||
| Return on Equity | 15.00% | |||||
| Net Income | ||||||
In: Finance