Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 2, Problem 1FIC
To determine
Identify the cause behind increase in valuation allowance between 2011 and 2012.
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Problem 4.
Consider the following balance sheet for Watchover Savings Incorporated (in millions):
Assets
Liabilities and Equity
Floating-rate mortgages (currently 12%
per annum)
Now deposits (currently 8% per
$ 82 annum)
$ 116
30-year fixed-rate loans (currently 9%
per annum)
5-year time deposits (currently 8% per
101 annum)
29
Equity
38
$ 183 Total
$ 183
Total
a. What is Watchover's expected net interest income at year-end?
b. What will be the net interest income at year-end if interest rates rise by 3 percent?
c. Using the one-year cumulative repricing gap model, what is the change in the expected net
interest income for a 3 percent increase in interest rates?
You are given the following information for Frankenson Pizza Company: Sales = $72,000; Costs = $32,300; Addition to retained earnings = $6,500; Dividends paid = $2,220; Interest expense = $5,200; Tax rate = 23 percent. Calculate the depreciation expense.
Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
Assume coupons are paid annually. Here are the prices of three bonds with 10-year maturities. Assume face value is $100.
Bond Coupon (%) Price (%)
2
4
8
81.62
98.39
133.42
a. What is the yield to maturity of each bond?
b. What is the duration of each bond?
Complete this question by entering your answers in the tabs below.
Required A
Required B
What is the yield to maturity of each bond?
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
Bond Coupon (%)
YTM
2
%
4
8
%
%
Required A
Required R
Required B
What is the duration of each bond?
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
Bond Coupon (%)
Duration
2
years
4
years
8
years
Chapter 2 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 2 - Prob. 1QECh. 2 - Asset Valuation and Income Recognition. Asset...Ch. 2 - Trade-Offs among Acceptable Accounting...Ch. 2 - Income Flows versus Cash Flows. The text states,...Ch. 2 - Prob. 5QECh. 2 - Prob. 6QECh. 2 - Prob. 7QECh. 2 - Prob. 8QECh. 2 - Computation of Income Tax Expense. A firms income...Ch. 2 - Computation of Income Tax Expense. A firms income...
Ch. 2 - Costs to Be Included in Historical Cost Valuation....Ch. 2 - Effect of Valuation Method for Nonmonetary Asset...Ch. 2 - Prob. 13PCCh. 2 - Prob. 14PCCh. 2 - Prob. 15PCCh. 2 - Deferred Tax Assets. Components of the deferred...Ch. 2 - Interpreting Income Tax Disclosures. The financial...Ch. 2 - Interpreting Income Tax Disclosures. Prepaid Legal...Ch. 2 - Interpreting Income Tax Disclosures. The financial...Ch. 2 - Analyzing Transactions. Using the analytical...Ch. 2 - Prob. 21PCCh. 2 - Starbucks The financial statements of Starbucks...Ch. 2 - Prob. 1BICCh. 2 - Prob. 1CICCh. 2 - Prob. 1DICCh. 2 - Prob. 1EICCh. 2 - Prob. 1FICCh. 2 - Starbucks The financial statements of Starbucks...
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