Cost of Capital. Blues, Inc. is an MNC located in the U.S. Blues would like to estimate its weighted average cost of capital (WACC). On average, bonds issued by Blues yield 7 percent. Currently, Treasury security rates are 2 percent. Furthermore, Blues’ stock has a beta of 2, and the return on the Wilshire 5000 stock index is expected to be 8 percent. Blues’ target capital structure is 40 percent debt and 60 percent equity. If Blues is in the 30 percent tax bracket, what is its weighted average cost of capital?
Hint Use: and then
Slater Co. is a U.S.-based MNC that finances all operations with debt and equity. It borrows U.S. funds at an interest rate of 6 percent per year. The long-term risk-free rate in the U.S. is 3 percent. The stock market return in the U.S. is expected to be 10 percent annually. Slater’s beta is 1.5. Its target capital structure is 30 percent debt and 70 percent equity. Slater Co. is subject to a 30% corporate tax rate. Estimate the cost of capital to Slater Co.
Hint Use: and then
In: Finance
Consider the exchange rate between the U.S. $ and the U.K. £. Suppose the exchange rate E ∗ is defined as £/$. (a) Denote the one-year forward exchange rate (at time t) for time t+1 by F ∗ t+1. Suppose the nominal interest rate in the U.S. is 8%, the nominal interest rate in the U.K. is 5%, the current exchange rate E ∗ t is £0.67/$, and the forward exchange rate F ∗ t+1 is £0.625/$. Are the numbers given here consistent with the interest rate parity equation? Clearly show all calculations. Based on this information, would you prefer to invest in the U.S. or in the U.K.?
(b) What effect will the difference between the effective rate of return in the two countries (if any) from part (a) have on the exchange rate (E ∗ ). Clearly show all calculations, and illustrate your answer using a well-labeled graph.
(c) Consider the exchange rate determined in part (b). Suppose that the Fed (the U.S. central bank) adopts a policy to lower the inflation rate by 2% in the U.S. Explain the effect of such a monetary policy on the exchange rate (E ∗ ). Clearly explain your answer, and illustrate your answer using a well labeled graph.
In: Economics
6. Throughout the ages countries have implemented impediments to trade. a. What is a tariff? b. Why would the U.S. impose steep tariffs on Chinese solar panels? i. Explain how this would work to accomplish the U.S. objective. c. Given the current trade war with China and other nations, please explain which industries are being hurt by higher tariffs against America, and explain how the customers of those industries are being impacted. Please provide thorough explanations. d. What is an import quota? e. Identify 3 cases where the U.S. has imposed import quotas on another country and explain why they were implemented i. Google can help you. f. What are non-tariff barriers (don’t use embargos or import quotas)? g. Identify 3 examples of non-tariff barriers imposed by the U.S., why they were implemented, and their impact on the U.S. and other countries. i. Google can help you. i. What could happen to the domestic economy of a country when trade barriers are eliminated and why? ii. Explain what would happen to GDP, employment, and national income, and why.
In: Economics
On June 1, Alexander Corporation sold goods to a foreign customer at a price of 1,110,000 pesos and will receive payment in three months on September 1. On June 1, Alexander acquired an option to sell 1,110,000 pesos in three months at a strike price of $0.055. Relevant exchange rates and option premiums for the peso are as follows:
| Date | Spot Rate |
Put Option Premium for September 1 (strike price $0.055) |
||||
| June 1 | $ | 0.055 | $ | 0.0021 | ||
| June 30 | 0.059 | 0.0017 | ||||
| September 1 | 0.054 | N/A | ||||
Alexander must close its books and prepare its second-quarter financial statements on June 30.
a-1. Assuming that Alexander designates the foreign currency option as a cash flow hedge of a foreign currency receivable, prepare journal entries for these transactions in U.S. dollars.
Record the sale of merchandise.
2
Record the foreign currency option.
3
Record the entry for changes in the exchange rate.
4
Record the change in the fair value of the option.
5
Record the gain or loss on the option.
6
Record the option expense.
7
Record the entry for changes in the exchange rate.
8
Record the change in the fair value of the option.
9
Record the gain or loss on the option.
10
Record the option expense.
11
Record receipt of pesos.
12
Record the exercise of the option.
a-2. What is the impact on net income over the two accounting periods?
b-1. Assuming that Alexander designates the foreign currency option as a fair value hedge of a foreign currency receivable, prepare journal entries for these transactions in U.S. dollars.
Record the sale of merchandise.
2
Record the foreign currency option.
3
Record the entry for changes in the exchange rate.
4
Record the change in the fair value of the option.
5
Record the gain or loss on the option.
6
Record the option expense.
7
Record the entry for changes in the exchange rate.
8
Record the change in the fair value of the option.
9
Record the gain or loss on the option.
10
Record the option expense.
11
Record receipt of pesos.
12
Record the exercise of the option.
b-2. What is the impact on net income over the two accounting periods?
In: Accounting
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In: Accounting
Acquired (adaptive) immunity allows the immune system to respond to a large number of antigens with a strong targeted response. Please briefly explain this statement
In: Anatomy and Physiology
Discuss artificially acquired active immunity. Give at least 5
reason why or why not vaccines are a good solution for controlling
infectious diseases.
In: Biology
Is new learning only acquired through classical and operant conditioning? Explain. Provide an example of classical or operant conditioning in your own life.
In: Psychology
In: Nursing
i needhome / study / business / accounting / accounting questions and answers / At December 31, 2017, Cord Company's Plant Asset And Accumulated Depreciation And Amortization ...
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Question: At December 31, 2017, Cord Company's plant asset and accumulated depreciation and amortization ac...
At December 31, 2017, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows:
| Category | Plant Asset |
Accumulated Depreciation and Amortization |
|||||
| Land | $ | 180,000 | $ | — | |||
| Buildings | 1,750,000 | 333,900 | |||||
| Machinery and equipment | 1,375,000 | 322,500 | |||||
| Automobiles and trucks | 177,000 | 105,325 | |||||
| Leasehold improvements | 226,000 | 113,000 | |||||
| Land improvements | — | — | |||||
Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Machinery and equipment—Straight line; 10 years.
Automobiles and trucks—150% declining balance; 5 years, all
acquired after 2014.
Leasehold improvements—Straight line.
Land improvements—Straight line.
Depreciation is computed to the nearest month and residual values
are immaterial. Transactions during 2018 and other information:
On January 6, 2018, a plant facility consisting of land and building was acquired from King Corp. in exchange for 30,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $40 a share. Current assessed values of land and building for property tax purposes are $160,000 and $640,000, respectively.
On March 25, 2018, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $222,000. These expenditures had an estimated useful life of 12 years.
The leasehold improvements were completed on December 31, 2014, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2020, was renewable for an additional four-year term. On April 30, 2018, Cord exercised the renewal option.
On July 1, 2018, machinery and equipment were purchased at a total invoice cost of $330,000. Additional costs of $12,000 for delivery and $55,000 for installation were incurred.
On August 30, 2018, Cord purchased a new automobile for $13,000.
On September 30, 2018, a truck with a cost of $24,500 and a book value of $10,000 on date of sale was sold for $12,000. Depreciation for the nine months ended September 30, 2018, was $2,250.
On December 20, 2018, a machine with a cost of $19,500 and a book value of $3,100 at date of disposition was scrapped without cash recovery.
Required:
1.
Prepare a schedule analyzing the changes in each of the plant asset
accounts during 2018. Do not analyze changes in accumulated
depreciation and amortization.
2. For each asset category, prepare a schedule
showing depreciation or amortization expense for the year ended
December 31, 2018.
I need help with the second requirement.
In: Accounting