The Smith Company currently has 25,000 shares of common stock outstanding. The stock has a par value of $6 per share and a market value of $26 per share – in other words, the price of the stock if you want to buy it is $26 per share.

Please make the journal entry required if the company gives the stockholders an 8% stock dividend.

Please make the journal entry required if the company gives the stockholders a 40% stock dividend instead of an 8% stock dividend.

Suppose that instead of giving the stockholders a stock dividend the company decides to do a 3-for-1 stock split.

Is a journal entry needed for a stock split?

What is the balance of the Common Stock account before the stock split?

How many shares of common stock would there be after the stock split?

What would the par value per share be after the stock split?

What is the balance of the Common Stock account after the stock split?

Did the stock split change the balance of the Common stock account?

The Smith Company currently has 25,000 shares of common stock outstanding. The stock has a par value of $6 per share and a market value of $26 per share – in other words, the price of the stock if you want to buy it is $26 per share.

Please make the journal entry required if the company gives the stockholders an 8% stock dividend.
Please make the journal entry required if the company gives the stockholders a 40% stock dividend instead of an 8% stock dividend.
Suppose that instead of giving the stockholders a stock dividend the company decides to do a 3-for-1 stock split.
Is a journal entry needed for a stock split?
What is the balance of the Common Stock account before the stock split?
How many shares of common stock would there be after the stock split?
What would the par value per share be after the stock split?
What is the balance of the Common Stock account after the stock split?
Did the stock split change the balance of the Common stock account?

company currently has 150k shares outstanding, selling at $64 per share. The firm intends to raise $565k through a rights offering. Management suggests that a discount cannot fall below 11% as outlined in the previous issue, to which existing shareholders did not respond with much enthusiasm. They believe that a 37% discount offer is more appropriate. Also, the CEO is rejecting calls for raising capital through debt or preferred stock.
Net earnings after taxes (EAT) are $649k. Furthermore, a recent corruption scandal involving a number of senior figures in the firm has come to light in the press; soon after the rights offering was announced – in other words, it was already too late. Among the immediate consequences were a fall in stock price by 17.09% and increased capital requirements by 62%. Required: In percentage terms, determine by how much did the dollar value of one right change before and after the consequences described above, together with the 37% discount offer which was simultaneously taking place. Answer

Vora Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.65%. Vora fund charges a front-end load of 2%, but has no 12b-1 fee and an expense ratio of 0.35%. Assume the rate of return on both funds’ portfolios (before any fees) is 6% per year.


a. How much will an investment of $100 in each fund grow to after 1 year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Loaded-Up Fund

Economy Fund

b. How much will an investment of $100 in each fund grow to after 3 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Loaded-Up Fund

Economy Fund

c. How much will an investment of $100 in each fund grow to after 12 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Loaded-Up Fund

Economy Fund

Milliken uses a digitally controlled dyer for placing intricate and integrated patterns on manufactured carpet squares for home and commercial use. It is purchased for $400,000. It is expected to last 8 years and has a salvage value of $30,000. Increased before tax cash flow due to this dyer is $95,000 per year. Milliken's tax rate is 40%, and the after-tax MARR is 12%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after 8 years. Use straight-line depreciation (no half-year convention). Use MACRS-GDS and state the appropriate property class. Use double declining balance depreciation (no half-year convention, no switching). (Round your answer to 2 decimal places for PW and AW. Do not round intermediate computations. Tolerance is +/- 1.00. Round to 2 decimal places and present in percentage format IRR and ERR. Tolerance is +/- 0.02.) PW AW IRR ERR

Three investors invest in the same 10-year 8% annual coupon bond. They bought the bond at the same price ($85.503075 for a par value of $100) and at the same time. A is a buy-and-hold investor (hold till maturity), B will sell the bond after four years, and C will sell the bond after seven years.

1. What is the yield to maturity of this bond?
2. For each of these three investors, find the total cash flow (in dollar amount) at the time of maturity (for A) and at the time of sale (for B and C).
3. After the bond is purchased by the three investors and before the first coupon is received, interest rate go up to 11.4%. What happens to the realized yield of these investors?
4. The Macaulay duration of this bond is: 7.0029 years. The difference between the Macaulay duration of a bond and the investment horizon is called the duration gap. For each of these three investors, find their respective duration gap.
5. Combine answers from ABCD, what are the relations between duration gap, interest rate risk, and reinvestment risk?

Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.80%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and an expense ratio of 0.20%. Assume the rate of return on both funds’ portfolios (before any fees) is 10% per year.

a. How much will an investment of $100 in each fund grow to after 1 year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b. How much will an investment of $100 in each fund grow to after 4 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

c. How much will an investment of $100 in each fund grow to after 14 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

You are close before the end of your Bachelor studies and have two options:

A – Get a job at TOP Management Ltd. after finalising the Bachelor and earn a net annual salary of €25.000. B – Continue your education by adding a one-year Master degree program, and then join TOP Management Ltd. at a higher salary. The one-year Master degree program costs you €15.000. After the first year on the job in alternative A TOP Management Ltd. pays you a 10 % salary increase. However, at the same time after joining the company with a Master degree (alternative B) you would get a higher net salary of €500 per month. During your professional career over 30 years in both options you would get the identical absolute salary increases. Please assume a 6 % discount rate.

Would the investment in a longer education make sense from a NPV point of view? What is the static payback period of the investment into the Master degree ?

The Chung Chemical Corporation is considering the purchase of a chemical analysis machine. Although the machine being considered will result in an increase in earnings before interest and taxes of $35,000 per year, it has a purchase price of $100,000, and it would cost an additional $5,000 to properly install the machine. In addition, to properly operate the machine, inventory must be increased by $5,000. This machine has an expected life of 10 years, after which it will have no salvage value. Also, assume that there is simplified straight-line depreciation and that this machine is being depreciated down to zero, a 34 percent marginal tax rate, and a required rate of return of 15 percent.

a). What is the initial outlay associated with this project?

b). What are the annual after-tax cash flows associated with this project for years 1 through 9?

c).What is the terminal cash flow in year 10 (what is the annual after-tax cash flow in year 10 plus any additional cash flows associated with the termination of the project)?

d). Should this machine be purchased?

On December 31, 2009, Add-On Company acquired 100 percent of the common shares of Venus Corporation for $ 300,000. Information about the Venus balance just before the acquisition is given here:

Cash and Accounts Receivable...............$ 35,000
Inventory .................................................$75,000
Land ........................................................$100,000,
Buildings and Equipment (net) ................$220,000
Total Assets .........................................$ 430,000
Accounts Payable ....................................$ 65,000
Bonds Payable ................................... $150,000
Common Stock .........................................$100,000
Retained earnings ...................................$115,000
Total Liabilities and Stockholders'Equity$ 430,000

At the date of the business combination, the net assets and liabilities of Venus approximated fair value, except for the inventory, which had a fair value of $ 60,000, land that had a fair value of $ 125,000 and buildings and equipment (net). ) Of 250,000 dollars.

(1) How much inventory will be included in the consolidated balance sheet immediately after the acquisition?

(2) What amount of goodwill will be included in the consolidated balance sheet immediately after the acquisition?

(3) What amount will be included as an investment in Venus Corporation in the consolidated balance sheet immediately after the acquisition?