The Bank of America is considering its dividend policy. It can either choose to pay a total dividend of US$8,500 each quarter for the next two quarters or it can pay US$8,000 in this quarter, reinvest US$500 in the firm. The required return is 15% per annum. What will be the value of The Bank’s stock if it opts to pay US$8500 as total dividend each quarter?
Q: Entry for Uncollectible Accounts Outlaw Bike Co. is a wholesaler of motorcycle supplies. An aging…
A: Introduction: In the allowance method of uncollectible accounts, bad debt expenses are recognized…
Q: ABC prepares statements on the cash basis. The balance sheet as of December 31, 2021 and income…
A: Profit should be calculated on accrual basis of accounting 1) Depreciation expenses for the year =…
Q: In Bonita Company Treasury Stock increased $20800 from a cash purchase, and Retained Earnings…
A: Lets understand the basics. Cashflow from financing activity activity include activity which deals…
Q: Accounts Receivable Salary Advance Expense Reimbursements Service Revenue Prepaid Services Retained…
A: All the assets, expenses, and losses have nominal debit balances, and all liabilities, income, and…
Q: Q2 The following was extracted from the accounting records of a trader on 28 February 2015:…
A: Ratio analysis is very important technique of decision making. Under this several ratios are…
Q: Find the property tax on a vacant lot with an assessed value of $32,900 and a tax rate of $4.52 per…
A: For calculating property tax value, we need to use below formula. Property tax = Assessed value *…
Q: A 3-year bond with 10% compound rate and P1000 face value yields 8%. Assuming annual compounding…
A: A 3 Year Bond with 10% Annual Compounding rate having face value 1000 Annual Interest = 1000*10% =…
Q: Mr Required information PA8-4 (Algo) Accounting for Accounts and Notes Receivable Transactions [LO…
A: Answer-solution in this question step2.
Q: Gusion Corporation has provided the following financial data (in thousands of dollars): Total…
A: The dividend per share indicates the amount divided per share, It means how much is the dividend…
Q: he following adjusted trial balance contains the accounts and year-end balances of Cruz Company as…
A: Closing entries are prepared at the end of the year to transfer and close the revenue accounts,…
Q: ABC prepares statements on the cash basis. The balance sheet as of December 31, 2021 and income…
A: Accrual basis: Under accrual basis accounting, revenue and expenses are recognized when they are…
Q: Illustration 2. Business Combination Achieved in Stages and without transfer of consideration On…
A: In most cases, the transferred consideration is appraised at its fair market value. The communicated…
Q: Sales Contribution margin Total direct fixed costs Total operating assets Jan. 1, 2022 Total…
A: Return On Investment (ROI) : This ratio is the relationship of profit before interest and taxes and…
Q: Analyze the following: I – The features most frequently associated with preference shares exclude…
A: Preference shares are one of the type of shares. These are the shares who get the benefit of…
Q: Required information PA8-4 (Algo) Accounting for Accounts and Notes Receivable Transactions [LO 8-2,…
A: The journal entries are prepared to keep the record of day to day transactions of the business on…
Q: Solve the following three independent scenarios: A grocery store is considering the purchase of a…
A:
Q: The manager of the Bank of Mount Royal just phoned Daniel and offered the company same-day deposit…
A: 1. Net 30 is a trade credit policy under which payments should be due 30 days after the…
Q: On January 1, ABC Company has 100,000 outstanding ordinary shares. During the year, ABC reported net…
A: Earnings per share indicate the profits per share of common stockholders. It can be calculated by…
Q: Overton Company uses a perpetual inventory system for its single product. Its beginning inventory,…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Darren corp has the following details for one of its subsidiaries: Long-term debt: 9% payable for…
A: Earnings per share= Net Income earned - Preferred dividends paid * / Weighted average number of…
Q: On May 1, 2020 Setup Inc, sold an issue of 5%, 1000 bonds dated January 1, 2020, to yield 5%. The…
A: Bonds are an obligation on the entity. These are issued for raising funds from the market. The…
Q: Question 1: Which statement about budgets is incorrect? Answer: A. B. C. D. O They determine the…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Cost items Flour Depreciation on cooking vats Cooking oil Sugar Wages of a donut cook Repair of a…
A: Costs are the amounts that are incurred for the production of goods and services. They are of…
Q: Mazin and Marwan commenced business as partners on Jan 1, 2020. They contributed RO 60,000, RO…
A: Since nothing is given we will provide interest on beginning capital . Interest on capital = Capital…
Q: Bradley Company manufactures a single product that sells for $510 per unit and whose variable costs…
A: Break-even point (BEP): Breakeven is the point where total expenses are equal to total revenue. at…
Q: On January 2, 2019, Whistler Company purchased land for $480,000, from which it is estimated that…
A: Depletion refers to the measure which is linked with the depletion amount of the extraction of the…
Q: Moss County Bank agrees to lend the Sandhill Co. $635000 on January 1. Sandhill Co. signs a $635000,…
A: Introduction: Journals: All the business transactions are to be recorded in Journals. Journals are…
Q: 12. One of the primary purposes of preparing a trial balance is to OA. rearrange the accounts in…
A: Trail balance is a statement of account in which the closing balances of all the general ledger…
Q: Analyze the following: I – All entities that issue an annual report may issue interim financial…
A: An entity prepares financial statement at the year-end which shows many components in summaries or…
Q: I – Non-adjusting event falling after date of authorization of FS issuance may or may not be…
A: Correct option is (d) Only statement II is true. It is recommended by the Standard that at most,…
Q: a. Prepare the annual pro forma financial statements that you would expect Mary to prepare based on…
A: Income statements are necessary for businesses since they benefit both the company and its…
Q: Gibson Corporation’s balance sheet indicates that the company has $580,000 invested in operating…
A: Note: As per our guidelines, we will solve the first three subparts for you. 1. Sales =…
Q: PA8-1 (Algo) Recording Accounts Receivable Transactions Using the Aging Method [LO 8-2] Grouch Mayor…
A: Allowance for Doubtful debt: Because it lowers the total value of an asset, in this example the…
Q: A company has an EPS of US$12 per share. It pays out its entire earnings as dividend. It has a…
A: The Price of Share will be calculated with the help of Gorden's Model P0 = D1 ÷ (ke - g) Where, Ke…
Q: Cash $655,500 759,000 Marketable securities Accounts and notes receivable (net) 310,500 Inventories…
A: Working capital is the amount of capital needed for daily operations of the business. This is…
Q: If management’s assumptions hold, what is the expected per-share market price after repurchase?
A: Expected market price per share is the share price which is the price on which the shares of the…
Q: A company has the following payment options to settle a loan: ■ Option A: To pay $19,000 today, or ■…
A: The question requires us to suggest a better payment option to settle the loan among the 2 given…
Q: Beginning inventory Purchase (April 3) Sale (April 10) Purchase (April 18) Purchase (April 23) Sale…
A: Ending inventory refers to the inventory value which remains at the end of the fiscal year or…
Q: The manager of the Bank of Mount Royal just phoned Daniel and offered the company same-day deposit…
A: 1. Average daily collection float = (Credit sales) / 365 = ($3,500,000 x 0.70) x17 / 365 =…
Q: What price should the company charge for its Hiwot Trust condoms, if the company decides to use…
A: Given in the question: Estimated Fixed Cost = 200,000 birr Total Variable Cost = 50,000 birr…
Q: Inventories Materials Work in process Finished goods Advertising expense Depreciation expense-office…
A: Cost of goods sold was associated with cost of manufacturing an product which includes materials,…
Q: On April 30, the bank reconciliation of Metlock, Inc. shows three outstanding checks: no. 254, $630;…
A: Introduction: A check that has not been cashed or placed by the payee is considered an outstanding…
Q: Cloud Shoes Direct Materials Budget For the Month of March 2019 Terms March
A: Introduction: Direct material budget is a useful tool in analyzing and fulfilling production…
Q: 12 Marites Company, which is subject to 30% tax, had the following operating data for the period…
A: Given that P90,000 packaging machine. Maris will depreciate the machine over a 5-year period with no…
Q: Assignment Chirac & Partners is a Quebec based public accounting partnership specialising in audit…
A: Direct cost is the one which is allocated directly to the product and vice versa to this, indirect…
Q: 20. The order in which accounting procedures are performed is OA. 1) recording in the journal. 2)…
A: The transactions are first recorded in the journal, then posted to the individual accounts. The…
Q: What is the asset turnover for 2021?
A: Introduction:- Ratio analysis used to analysis business performance. Ratios express the numerical…
Q: The Bomb Pop Corporation sold ice cream equipment for $18,500. The equipment was originally…
A: Introduction: Depreciation: Decreasing value of fixed assets over its useful life period called as…
Q: Units Cost Beginning inventory Purchase (April 3) Sale (April 10) Purchase (April 18) Purchase…
A: LIFO is last in first out inventory valuation method which says that inventory which is purchased…
Q: E. Identify which of the following costs of a product manufacturer would be included in inventories:…
A: For a manufacturer, costs which are directly related with the production and manufacturing of the…
The Bank of America is considering its dividend policy. It can either choose to pay a total dividend of US$8,500 each quarter for the next two quarters or it can pay US$8,000 in this quarter, reinvest US$500 in the firm. The required return is 15% per annum. What will be the value of The Bank’s stock if it opts to pay US$8500 as total dividend each quarter?
Step by step
Solved in 3 steps with 1 images
- Suppose SBD Bank has RSA of $150m and RSL of $140m. If interest rates rise by 1 percent on both RSAs and RSLs, what would be the expected annual change in net interest income (ΔNII) based on $GAP? Show your work. ( How a commercial bank’s value would be affected by an increase in economic growth?Sefton Villa will be worth either €60 million, €80 million or €100 million in one year with equal probabilities. The firm has bonds outstanding with a promised payment of €75 million in one year at an expected rate of 6% and the required rate of return on the assets is 12%. What is the company's equity cost of capital? What is the expected payoff of the debt? What is the debt’s promised rate of return?Happy Time Inc. is expected to generate the following cash flows for the next year, as shown in the table below. Happy Time now only has one outstanding debt with a face value of $110 million to be repaid in the next year. The current market value for the debt is $67 million. The tax rate is zero. If the firm is financed by common equity and debt, what is the expected value of common equity next year? Cash flow in the next year Probability Amount Economy Boom 0.3 $110 million Normal 0.4 $101 million Recession 0.3 $61 million $26.8 million $24.7 million $0 -$18.3 million
- Golf Ball Inc. expects earnings to be $10,000 per year in perpetuity if it pays out all of its earnings in dividends. Suppose the firm has an opportunity to invest $1,000 of next year's earnings to upgrade its machinery. It is expected that this upgrade will increase earnings in all future years (starting two years from now) by $140. Assume that Golf Ball's next dividend is one year from now. The required rate of return is 12%. What is the value of Golf Ball Inc. if it undertakes the upgrade?A firm’s current profits are P550,000. These profits are expected to grow indefinitely at a constant annual rate of 5 percent. If the firm’s opportunity cost of funds is 8 percent, determine the value of the firm: a. The instant before it pays out current profits as dividends: b. The instant after it pays out current profits as dividends.Hollywood Shoes would like to maintain their cash account at a minimum level of $67,000, but expect the standard deviation in net daily cash flows to be $5,700; the effective annual rate on marketable securities to be 6.50 percent per year; and the trading cost per sale or purchase of marketable securities to be $270 per transaction. What will be their optimal cash return point? (Round your answer to 2 decimal places.)
- Mexican Motors’ market cap is 250 billion pesos. Next year’s free cash flow is 9.5 billion pesos. Security analysts are forecasting that free cash flow will grow by 8.50% per year for the next five years.a. Assume that the 8.50% growth rate is expected to continue forever. What rate of return are investors expecting? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b-1. Mexican Motors has generally earned about 13% on book equity (ROE = 13%) and reinvested 50% of earnings. The remaining 50% of earnings has gone to free cash flow. Suppose the company maintains the same ROE and investment rate for the long run. What will be the growth rate of earnings? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal places.) b-2. What would be the rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)Mexican Motor's market cap is 200 billion pesos. Next year's cash flow is 8.6 billion pesos. Security analyst are forecasting that free cash flow will grow by 7.60% per year for the next five years. a. Assume that the 7.60 growth rate is expected to continue forever. What rate of return are investors expecting? b1. Mexican Motors has generally earned about 10% on book equity (ROE= 10%) and reinvested 50% of earnings. The remaining 50% of earnings has gone to free cash flow. Suppose the company mantians the same ROE and investment rate for the long run. What will be the growth rate of earnings? b2. What would be he rate of return?Happy Time Inc. is expected to generate the following cash flows for the next year, as shown in the table below. Happy Time now only has one outstanding debt with a face value of $110 million to be repaid in the next year. The current market value for the debt is $67 million. The tax rate is zero. If you invest in the corporate debt of Happy Time Inc. today, what is your expected percentage return on this investment? Cash flow in the next year Economy Probability Amount Boom 0.3 Normal 0.4 Recession 0.3 O 36.87% O -26.37% 64.8% O-16.63% $110 million $101 million $61 million
- Your firm currently has net working capital of $115,000 that it expects to grow at a rate of 4.0% per year forever. You are considering some suggestions that could slow that growth to 3.0% per year. If your discount rate is 16.0%, how would these changes impact the value of your firm? Firm value would increase by $ (Give answer to nearest dollar) CheckCan I get help with....A Security Company produces a cash flow of $210 per year and is expected to continue doing so in the infinite future. The cost of equity capital is 15 percent, and the firm is financed entirely with equity. Management would like to repurchase $100 in shares by borrowing $100 at a 10 percent annual rate (assume that the debt will also be outstanding into the infinite future). Using Modigliani and Miller’s Proposition 1 answer the following questions.What is the value of the firm today? Value of the firm $enter the dollar value of the firm What is the value of equity after the repurchase? Value of the equity $enter the dollar value of the equity What will be the rate of return on common stock required by investors after the stock repurchase? (Round answer to 2 decimal places, e.g. 17.54%.) Rate of return on common stock enter the rate of return on common stock in percentages rounded to 2 decimal places %Galaxy Mobile expects an EBIT of $20,000 every year in perpetuity. The firm currently has no debt, and its cost of equity is 15 percent. The tax rate is 40 percent. The firm plans to borrow money to repurchase its stock such that the debt-value ratio after the restructuring becomes 50 percent permanently. What is the firm value if the firm borrows at 8 percent? $100,000 $80,000 $110,000 $160,000