Suppose you are considering the purchase of a building. The seller is asking $270 comma 000270,000 for a building that cost her $135 comma 000135,000. An appraisal shows the building has a value of $240 comma 000240,000. You first offer $225 comma 000225,000. The seller counter offers with $255 comma 000255,000. Finally, you and the seller agree on a price of $250 comma 000250,000. What dollar amount for this building is reported on your financial statements? Which accounting assumption or principle guides your answer?
In: Accounting
Assume that you are the CFO of a company contemplating a stock repurchase next quarter. You know that there are several methods of reducing the current quarterly earnings, which may cause the stock price to fall prior to the announcement of the proposed stock repurchase.
What course of action would you recommend to your CEO? If your CEO came to you first and recommended reducing the current quarter’s earnings, what would be your response?
Your initial posting should be 250-500 words.
In: Finance
SOLVE BY HAND:
Kevin invested $2000 for 4 years at an annual rate of 10%. Assume there is an annual inflation rate of 4% (first two years) and 6% for (last two years). Currently, a Gucci jacket is worth $2060, and the price is increasing at the rate of inflation each year.
i) Will Kevin be able to purchase/afford the jacket after 4 years?
ii) If Kevin were to pay tax at a rate of 50%, will he be able to purchase the Gucci jacket at the end of 4 years?
In: Finance
Netscape planned to offer 3.5 mln shares at $14 in an IPO. A day before the offering their underwriters suggested to change the offer to 5 mln shares at $28. Netscape had an IPO on August 8th, 1995 -- 5 mln shares at $28 were offered (excluding the 15% overallotment). During the first day of trading, the price of the stock rose to a maximum of $73 and closed the day at $54. How much money did Netscape ‘leave on the table’? For simplicity, disregard the overallotment shares and the underwriter’s spread.
In: Finance
Suppose the government misjudged the natural rate of unemployment to be much lower than it actually is, and thus, undertake expansionary fiscal and monetary policies to try to achieve the lower rate. Explain why these policies might at first succeed and the outcome in the long run. [HINT: SR Philip Curve, and LR Philip Curve]. b). Discuss briefly, the mechanism by which monetary policy affects GDP and the price level in an economy. c). Explain the relationship between tax rates, tax rvenues, and aggregate supply.
In: Economics
Farms Corp. just paid a dividend of $3.20 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a 15 percent return on the stock for the first three years, a 13 percent return for the next three years, and an 11 percent return thereafter. What is the current share price?
Please provide some basic explanations for the calculations. There are similar questions already answered but with no explanation at all, which makes them useless. Thank you!
In: Finance
Iron Maiden became the first heavy-metal band to sell bonds when it arranged a $30 million deal in February 1999. The collateral on the bonds (and source of cash flow for interest and principal payments) consisted of future royalties from the band's albums like "The Number of the Beast." Each bond in the issue had a face value of
$1,000,
a term of
21
years and paid semiannual coupons at the rate of
5%.
The yield to maturity on the bond was
7.75%.
At what price did each of the bonds sell?
In: Finance
d.What is the expected dividend yield, capital gains yield and total return during the first year?
In: Finance
ron Maiden became the first? heavy-metal band to sell bonds when it arranged a? $30 million deal in February 1999. The collateral on the bonds? (and source of cash flow for interest and principal? payments) consisted of future royalties from the? band's albums like? "The Number of the? Beast." Each bond in the issue had a face value of ?$1,000?, a term of 12 years and paid semiannual coupons at the rate of 7.5?%. The yield to maturity on the bond was 7.5?%. At what price did each of the bonds? sell?
In: Accounting
Ellis issues 6.5%, five-year bonds dated january 1, 2015, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% on the issue date.
1.calculate the total bond interest expense over the bond life
2. Prepare a straight-line amortization table like exhibit 14.11 for the bonds' life.
3. Prepare the journal entries to record the first two interest payments.
In: Accounting