Assume that the acquisition was completed in 5 months (150 days). Assume further that Siegel purchased 300,000 shares of AXYS at an average cost of $4.15, and shorted 29,800 shares of Celera. Siegel funded 70% of his purchase with debt. Celera's share price on the closing date was $27.43. Assuming a borrowing cost of 8%, calculate the return on Siegel's investment for the holding period and on an annualized basis.
Q: Determine the economic useful life of a piece of equipment whose initial cost is $10,000 and its…
A: EAC or equivalent annual cost is the annual cost of owning and maintaning the asset over its entire…
Q: You needed $10,000 and obtained the following loan: Loan specifics: You are expected to pay 24 equal…
A:
Q: Question 10: Jenny is currently 20 years old and is planning for her retirement. She has $10,000 in…
A: Initial amount (I) = $10,000 Annual withdrawal (w) = $80,000 Withdrawal period (p) = 40 years…
Q: PMT r t Payment interval Compounding period FV PV
A: Present Value: It represents the present amount of a future value of an investment. It is…
Q: Your company borrows $500,000 from a bank to finance the purchase of a new machine. The nominal…
A: First let us calculate the 4 equal half yearly payments that need to be made. This can be calculated…
Q: 1. What is the price of a 10% coupon bond that pays annual coupons. Given that Yield is 8%, 10 year…
A: To calculate the price of bond we will use the below formula Price of bond =…
Q: inance what is a pillar of finance?
A: Finance as a subject and as a topic is a vast field and subject and includes different sub topics…
Q: At i = 18%, what is the annual-equivalence amount for the infinite series shown next? 5 Click the…
A: Cash flow (Year 1 - 6) = $2400 $2400 cash flow period (p) = 6 years Cash flow (Year 7 - Infinite) =…
Q: A6) Finance A 3% acquisition fee is paid by investors on mutual funds worth $100,000,000. The mutual…
A: Acquisition fee is also known as purchase fees that is paid while buying the mutual fund. This fees…
Q: Ashley took out a student loan for $12,544. The loan had annual interest of 6.9%. She graduated five…
A: A subsidized loan is a loan where the government provides the interest on the loan for the entire…
Q: Determine the monthly payment for the installment loan. Amount financed (P): $900 Annual Percentage…
A: P = $900 R = 0.075 or 7.5% Monthly rate (i) = 0.00625 (i.e. 0.075 / 12) Monthly period (p) = 36…
Q: 1.) Accounting measures of performance Consider an asset with the following cash flows: Cash flows…
A: Accounting Rate of Return: The average net income an asset is anticipated to provide divided by its…
Q: A company is planning to buy a new truck that will cost P700,000 and will be depreciated on a…
A: Here, Cost of New Truck is P700,000 Book Value of Old Truck is P450,000 Sale Price of Old Truck…
Q: Compare the following two mutually exclusive projects on the basis of Accounting Rate of Return…
A: Accounting rate of return(ARR) is the rate of return calculated by dividing average annual profit by…
Q: For the next few questions, here are the currency rates quoted to you buy ABC Bank, the bank that…
A: Exchange rates between three different pairs of currencies have been given. We have to create the…
Q: Why would a financial institution’s PEP customers be required to provide documentation to evidence…
A: Given, Political Exposed Persons (PEPs) are characterized as high-risk clients who have better…
Q: Orwell building supplies' last dividend was $1.75. Its dividend growth rate is expected to be…
A: The dividend discount model will be used here. As per the dividend discount model the current value…
Q: The firm, Bolta Ltd, manufactures high precision specialized nuts and bolts that are customized for…
A: Weighted average cost of capital (WACC) is used as a discount rate for discounted cash flow…
Q: An investor is considering purchasing a $100 par-value bond with a 6.0% semi-annual coupon and a…
A: Bond Prices: Bond prices are usually quoted in 32nds instead of decimals in the United States. Tick…
Q: Calculate the current yield on a bond with the following characteristics: par value of $1000…
A: Solution:- Current yield means the percentage of annual coupon payments to the current bond price of…
Q: The given mortgage is $100,000, so PV = The 4.3% annual interest rate as a decimal is 0.043, so the…
A: PMT = PV[i/(1-(1+i)^-n)] Where PV = Present value. i = interest. n = number of periods.
Q: A small office building could be purchased for sole use by the corporation at a total price of $5.3…
A: In this question , we would be preparing cashflow statement for the ABC Corporation. Note #…
Q: Jan gives Ted a loan at 4% effective to be repaid by 10 annual payments of 100, followed by 5 annual…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: A company is planning the financing of a major expansion. It will use common stock to fund this…
A: EPS: "Earning per share" By displaying the amount of money a firm produces for each share of its…
Q: Next year the economy will be in an expansion, normal, or recession state with probabilities 0.46,…
A:
Q: Agency costs are _______ costs that are paid to ____ acting on behalf of the principal to minimise…
A: Agency cost are all such cost which will be incurred in order to lower down the conflict of interest…
Q: For a market timer, the ________ will be higher when the market risk premium is higher Select one:…
A: The portfolio beta will be reflective of the systematic risk associated with a particular asset and…
Q: Your company has been approached to bid on a contract to sell 5,200 voice recognition (VR) computer…
A: Here, Tax Rate is 25% Required Return is 13% Variable Cost is $165 Required NPV is $100,000
Q: Darwin is a young entrepreneur trying to keep his business afloat. He has missed two payments to a…
A: We will use the concept of time value of money here. As per the concept of time value of money the…
Q: Find the future value, using the future value formula and a calculator. (Round your answer to the…
A: Future value is the value of present investment in future after considering the rate of interest.…
Q: What is the most we should pay for a bond with a par value of $1000, coupon rate of 4.6% paid…
A: To calculate the price of bond we will use the below formula Value of bond =…
Q: Complete the table below. Show your solution for each item. Write your answer on a piece of paper
A: Simple Interest: It is a method used to compute interest charges on a loan. It is computed by the…
Q: s a member of the FOMC, the U.S. economy is entering a recession with a high rate of inflation.…
A: In this question , as a member of the FOMC , need to write directives to the committee about the…
Q: The following table lists several corporate bonds issued during a particular quarter. Company AT&T…
A: Solution:- When an amount is invested somewhere, it earns interest on it. The amount initially…
Q: Hi, on what does it depend if this statement is true or false? "According to the organizational…
A: Organizational behavior theory refers to the activity to monitor the way and the process of…
Q: Are the following statements true or false? Provide a short justification for your answer. (You re…
A: Risk and return in an investment is highly correlated with each other. If a high return is expected,…
Q: Answers a and b were not correct
A: The concept of time value of money will be applicable here. As per the concept of time value of…
Q: Two debts, the first of $1300 due three months ago and the second of $2000 borrowed two years ago…
A: So you need to repay 2 debts in 1 payment. Let us break this down into 2 calculations. First DebtThe…
Q: Suppose you hold a consol bond (a perpetuity bond) that pays an annual coupon of $80 per year and…
A: Annual coupon bond; Existing yield to maturity = 0.05 or 5% New yield to maturity = 0.15 or 15%…
Q: A firm can purchase a centrifugal separator (5-year MACRS property) for$17,000. The estimated…
A: Given Data: Investment ($) 17000 Useful life 6 Salvage value($) 3000 Tax rate 23% MARR 12%…
Q: An individual borrows ₱150,000 from a bank at 10% annually compounded interest to be repaid in 6…
A: Loan can be amortized by repaying it in equal instalments. Each payment comprises of both interest…
Q: 2) Capital raising involves a firm’s decision in ____________________. Group of answer choices…
A: A firm needs long term finance like common stock, preferred stock, long term debt etc to meet its…
Q: The company wants to sell a Php 69,000,000 worth of bonds with a maturity of 25 years. The coupon…
A: Bonds: Bonds are the liabilities for the company that is issued to generate the funds required for…
Q: what is the price of the Pybus bonds if they receive an A rating will be $ ?
A: Semiannual maturity period (p) = 40 (i.e. 20 years * 2) Semiannual coupon rate = 0.055 (i.e. 0.11 /…
Q: How can a developer create value over and above their project cost when attempting to obtain…
A: Project cost refers to the cost that is incurred on purchasing, acquiring, extending, repairing,…
Q: what risks and capital budgeting issues may arise with international investments and what strategies…
A: Capital budgeting techniques are used to evaluate project proposals, but in the case of…
Q: A piece of production equipment is purchased for an initial cost of $1,200,000. It has a life of 10…
A: Production cost: The production cost is the entire amount spent on the materials, labor, and other…
Q: Compute the yield to maturity for a zero coupon bond with a maturity of 9 years and a face value of…
A: To calculate the yield to maturity of the zero coupon bond we will use the below equation Yield to…
Q: What is the NPV of a project that costs $100,000 provides $23,000 in cash flows annually for 6…
A: NPV is net present value which is the difference between the present value of cash flow and initial…
Q: What are the advantages and disadvantages of a ‘comply or explain’ model of corporate governance?
A: "Comply or explain" model of corporate governance - The purpose of 'comply or explain' model is to…
Step by step
Solved in 2 steps
- Use the following information for Problems 17 through 21:On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows:On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand’s total fair value. The $60,000 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent). On a consolidated balance sheet as of January 2, what should be the amount for each of the following?Stockholders’ equity:a. $80,000b. $90,000c. $95,000d. $130,000Use the following information for Problems 17 through 21:On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows:On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand’s total fair value. The $60,000 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent). On a consolidated balance sheet as of January 2, what should be the amount for each of the following?Noncurrent assets:a. $130,000b. $134,000c. $138,000d. $140,000Use the following information for Problems 17 through 21:On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows:On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand’s total fair value. The $60,000 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent). On a consolidated balance sheet as of January 2, what should be the amount for each of the following?Current assets:a. $105,000b. $102,000c. $100,000d. $90,000
- Madison Corporation purchases an investment in Lake Geneva, Inc. at a purchase price of $20 million cash, representing 40% of the book value of Lake Geneva, Inc. During the year, Lake Geneva reports net income of $3,400,000 and pays $838,000 of cash dividends. At the end of the year, the market value of Madison’s investment is $24 million. What is the year-end balance of the equity investment in Lake Geneva? Select one: a. $21,024,800 b. $24,000,000 c. $20,000,000 d. $22,562,000 e. $21,360,000Champaign Corporation purchases 45% of the common stock of Rockville, Inc. at a purchase price of $17.3 million cash. During the year, Rockville reports net income of $2,368,000 and pays $435, 200 of cash dividends. At the end of the year, the market value of Champaign's investment is $19.0 million. What is the year-end balance of the equity investment in Rockville? Select one: a. $20, 103, 200 b. $18, 169, 760 c. None of these are correct d. $17,300,000 e. $ 20,932,800Use the following information for Problems 17 through 21:On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows:On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand’s total fair value. The $60,000 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent). On a consolidated balance sheet as of January 2, what should be the amount for each of the following?Noncurrent liabilities:a. $110,000b. $104,000c. $90,000d. $50,000
- Use the following information for Problems 17 through 21:On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows:On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand’s total fair value. The $60,000 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent). On a consolidated balance sheet as of January 2, what should be the amount for each of the following?Current liabilities:a. $50,000b. $46,000c. $40,000d. $30,000Suppose that AXE company acquires exactly 25% of the voting common stock of Company SARDAR Inc. for $3,000,000 at the beginning of the year 2020. Pfizer company reports $1,200,000 earnings for the year in its net income and pays $550,000 in cash dividends at the end of the year 2020. 1. Using the cost method, what is the investment income and the balance sheet investment account balance respectively for AXE company? * A) $137,500, $3,000,000 B) $300,000; $3,162,500 C) $137,500; $2,300,000 D) None of the above. 2. Using the equity method, what is the investment income and the balance sheet investment account balance respectively for AXE company? * A) $137,500, $3,000,000 B) $300,000; $3,162,500 C) $137,500; $2,300,000 D) None of the above.Please answer it in next 45mins,it would be a great help. ParCorp spent $720K to acquire all of ChiCorp's stock on January 1, 20X2, when ChiCorp's retained earnings was $300K. Difference between the acquisition price and ChiCorp's underlying book value was attributed to buildings with a remaining economic life of 10 years from the date of acquisition. On December 31, 20X3, ParCorp reported Investment in sub of $756K, while ChiCorp reported common stock of $300K, retained earnings of $360K. Prepare the elimination entry in entry format for consolidation on Dec 31, 20X3.
- As a long-term investment at the beginning of the fiscal year, Florists International purchased 30% of Nursery Supplies Inc.’s 8 million shares for $56 million. The fair value and book value of the shares were the same at that time. The company realizes that this investment typically would be accounted for under the equity method, but instead chooses the fair value option. During the year, Nursery Supplies earned net income of $40 million and distributed cash dividends of $1.25 per share. At the end of the year, the fair value of the shares is $52 million. Required: 1. Would this investment be classified on Florists’ balance sheet as held-to-maturity securities, trading securities, available-for-sale securities, significant-influence investments, or other? Explain. 2. Prepare all appropriate journal entries related to the investment during 2016. 3. Indicate the effect of this investment on 2016 income before taxes.XYZ Corporation arranged a repurchase agreement in which it purchasedsecurities for $4.9 million and will sell the securities back for $5.5 million in 40 days.What is the yield to XYZ Corporation?Kross Company purchases an equity investment in Penno Company at a purchase price of $2.5 million, representing 40% of the book value of Penno. During the current year, Penno reports net income of $300,000 and pays cash dividends of $100,000. At the end of the year, the fair value of Kross’s invest- ment is $2.65 million. What amount of income does Kross report relating to this investment in Penno for the year? Explain.