A risky $500,000 investment is expected to generate the following cash flows:? Year 1 2 3 $250,000 $266,667 $285,715. ? The probability of receiving each cash inflow is 80, 75, and 70 percent, respectively. If the firm's cost of capital is 10 percent, should the investment be made?
What will be an ideal response?
The risk-adjusted cash inflows are (0.80)($250,000) = $200,000 (0.75)($266,667) = 200,000 (0.70)($285,715) = 200,000?The present value of the cash inflows is $200,000(PVAIF, 10I, 3N) = $200,000(2.487) = $497,400?(FV = 0; PMT = 200000, I = 10; N = 3; PV = ?. PV = -497370.)?Since the net present value is negative [$497,400 - 500,000 =($2,600)], the investment should not be made.?
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On January 1, $362,400 of par value bonds with a carrying value of $388,000 is converted to 60,400 shares of $5 par value common stock. The entry to record the conversion of the bonds includes all of the following entries except:
A. Debit to Premium on Bonds Payable $25,600. B. Debit to Bonds Payable $362,400. C. Credit to Paid-In Capital in Excess of Par Value, Common Stock $86,000. D. Debit to Bonds Payable $388,000. E. Credit to Common Stock $302,000.
Using someone else’s language, ideas, or other material as your own without giving them credit is known as ______.
a. plagiarism b. stealing c. research d. interpretation
At December 31 . 2013 . Joplin Company had 350 shares of common stock outstanding. On October 1 . 2014, an additional 150 shares of common stock were issued. In addition, Joplin had $40,000 of 8 percent convertible bonds outstanding at December 31 . 2014, which are convertible in 225 shares of common stock. No bonds were converted into common stock in 2014 . Net income for the year ended December
31 . 2014, was $14,000 . Assuming an income tax rate of 50%, the basic earnings per share for the year ended December 31 . 2014, would be a. $27.84 b. $36.08 c. $44.32 d. $50.91
Nathan writes his classroom speech in plenty of time, but he doesn’t practice it until the night before the speech is due. He works until after midnight to put the finishing touches it on his keyword outline, and then he practices the speech six times. What is likely to be the result of Nathan’s speech preparation technique?
a. He will be more nervous than if he had spread out his practice sessions. b. His performance will suffer because he will forget what he wants to say. c. He will deliver his speech in an unnatural way because he has memorized it. d. He is likely to have trouble conveying enthusiasm because he is tired.