Answer and Explanation:
The journal entries are shown below:
1. Bond interest expense Dr ($3,600,000 × 8% ÷ 2) $144,000
To Cash $144,000
(Being the first interest payment is recorded)
For recording this , we debited the bond interest expense as it increased the expense and credited the cash as it decreased the assets
2. Cash Dr $400,000
To Bond payable $400,000
(being the cash sale of the bond is recorded)
For recording this we debited the cash as it increased the assets and credited the bond payable as it also increased the liabilities
7. What is the advantage of binding things as early as possible? What is the advantage of delaying bindings?
Answer:
1. early binding enhances performance
2. late binding gives flexibility
Explanation:
this is generally the advantage of early binding. early binding gives room for better efficiency
.This is because it would be needless to reanalyze every time whenever something is declared. Early binding is for performance.
meanwhile late binding is known to have better flexibility and gives room for more polymorphism. this binding gives extension to runtime.
Fortune Enterprises is an all-equity firm that is considering issuing $13.5 million of perpetual debt. The interest rate is 10%. The firm will use the proceeds of the bond sale to repurchase equity. Fortune distributes all earnings available to stockholders immediately as dividends. The firm will generate $3 million of earnings before interest and taxes (EBIT) every year into perpetuity. Fortune is subject to a corporate tax rate of 40%. Suppose the personal tax rate on interest income is 55%, and the personal tax rate on equity income is 20%.
What is the annual after-tax cash flow to debt holders under each plan in Q7?
A. Debt holders get $0 mil. under the unlevered plan vs. 1.2 mil. under the levered plan
B. Debt holders get $1.2 mil. under the unlevered plan vs. 0.66 mil. under the levered plan
C. Debt holders get $0 mil. under the unlevered plan vs. 0.66 mil. under the levered plan
D. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan
Answer:
D. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan
Explanation:
interests paid to debt holders = $13,500,000 x 10% = $1,350,000
generally, interest revenue is taxed as ordinary revenue = corporate income tax rate (if debt holder is a business) or personal income tax (if debt holder is an individual).
under the first plan, debt holders get nothing because there is no outstanding debt since the company is an all equity firm.
under the second plan, if the personal tax rate on interest income is 55%, which is really high, the debt holders will earn $1,350,000 x (1 - 55%) = $607,500
Assume that we are in the MM world. The beta of an all-equity firm is 1.4. Suppose the firm changes its capital structure to 40 percent debt and 60 percent equity. What is the equity beta of the levered firm
Answer:
2.3
Explanation:
Levered Beta = Unlevered Beta x (1+D/E)
D/E = Debt-to-Equity Ratio
1.4 x (1 + 04 / 0.6) = 1.4 x 1.667 = 2.3
Exercise C The marketing department of Specialty Coffees estimates the following monthly demand for espresso in these four price-quantity relationships: Demand 1 9,000 cups at $1.00 per cup 2 8,000 cups at $1.25 per cup 3 6,000 cups at $1.50 per cup 4 4,000 cups at $1.75 per cup The fixed costs of $3,000 per month are not affected by the different price-volume alternatives. Variable costs are $0.25 per cup. What price should Specialty Coffees set for espresso
Answer:
It should price the espresso at $1.25
Explanation:
[tex]\left[\begin{array}{ccccc}&D1&D2&D3&D4\\$Sales Price&1&1.25&1.5&1.75\\$Variable Cost&0.25&0.25&0.25&0.25\\$Margin&0.75&1&1.25&1.5\\$Quantity&9,000&8,000&6,000&4,000\\$Contribution&6,750&8,000&7500&6,000\\$Fixed Cost&3,000&3,000&3,000&3,000\\$Income&3,750&5,000&4,500&3,000\\\end{array}\right][/tex]
The best Income is generated at the price of 1.25 dollar
Therefore, this is the amount to Specialty Coffees set for espresso.
Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system has the following seven activity cost pools
Activity Cost Pool Estimated Overhead Cost Expected Activity
Labor-related $ 52,000 8,000 direct labor-hours
Machine-related $ 15,000 20,000 machine-hours
Machine setups 42,000 1,000 setups
Production orders 18,000 500 orders
Product testing $48,000 2,000 tests
Packaging $ 75,000 5,000 packages
General factory 108,800 8,000 direct labor-hours
a. Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)
b. Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predetermined overhead rate based on direct labor-hours. (Round your answer to 2 decimal places.)"
Answer and Explanation:
a. The computation of the activity rate is shown below:
(a) (b) (a ÷ b)
Activity Estimated Expected Activity rate
Cost Pool Overhead Cost Activity
Labor-related $52,000 8,000 $6.50
direct labor-hours
Machine-related $15,000 20,000 $0.75
machine-hours
Machine setups 42,000 1,000 setups $42
Production orders 18,000 500 orders $36
Product testing $48,000 2,000 tests $24
Packaging $75,000 5,000 packages $15
General factory 108,800 8,000 $13.60
direct labor-hours
Total $358,800
b. The company predetermined overhead rate is shown below:
= Total estimated overhead cost ÷ direct labor hours
= $358,800 ÷ 8,000 direct labor hours
= $44.85
To determine the realized return on an investmen, the investor needs to know:________
1. Income received
2. The cost of an investment
3. The sale price of the investment
a. 2 and 3
b. 2 and 4
c. 1 and 4
d. 1 and 3
Answer:
The correct answer all of the above is missing
Explanation:
In order to determine the realized return on investment, for instance, stock, one needs to the income received(dividend) the initial purchase price as well as the sale price of the investment as shown in the formula below:
return on investment=P1-Po+D/Po
P1 is the sale price of investment
Po is the initial cost of investment
D is the income received
The intrinsic value of CSR sees it as an opportunity that can maximize core competencies and identify new competitive ______.
Answer:
"Advantages" is the correct answer.
Explanation:
Intrinsic value can be calculated of what might be valuable of such an object. CSR can indeed be described as combining ethical principles that support cultures, individuals as well as the community with either the commercial management of an organization, a collaborative effort by such a financial institution to based on the assessment that affects mankind.When using the equity method, receipt of cash dividends increases the carrying (book) value of an investment in equity securities.
A. True
B. False
Allowance for Doubtful Accounts has a debit balance of $441 at the end of the year (before adjustment), and Bad Debt Expense is estimated at 3% of sales. If net credit sales are $903,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is a.$26,649 b.$27,531 c.$27,090 d.$441
Answer: $27,090
Explanation:
From the question, we are informed that the allowance for doubtful accounts has a debit balance of $441 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of sales and that the net credit sales are $903,000.
The amount of the adjusting entry to record the estimate of the uncollectible accounts will be 3% of $903,000. This will be:
= 3% × $903,000
= 3/100 × $903,000
= 0.03 × $903,000
= $27,090
Kiley Corporation had these transactions during 2017 Analyze the transactions and indicate whether each transaction is an operating activity, investing acivity, financing activity, ar noncash investing and financing activity
(a) Purchased a machine for $30,000, giving a long term note in exchange
(b) Issued $50,00D par value common stock for cash. 38%
(c) Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000.
(d) Declared and paid a cash dividend of $13,000.
e) Sold a long-term investment with a cost of $15,000 for $15,000 cash
(f) Collected $16,000 from sale of goads.
(g) Paid $18,00D to suppliars.
Answer:
Operating Activities in a business's Cash-flow statement involve activities that have to do with the core business of firm which include the provision of its goods or service to the market. An example would be Revenue.
Investing Activities involve activities related to long term assets as well as securities related to other company's such as ownership of other company stocks and bonds.
Financing Activities refer to how the business raises cash to conduct its operations and this includes Equity transactions (including dividends) and Debt.
Non-cash investing and financing activity are Investing or Financing activities that are done by exchanging one for the other devoid of the use of cash.
A) Purchased a machine for $30,000, giving a long-term note in exchange. - Non-cash Investing and Financing activity
B) Issued $50,000 par value common stock for cash. - Financing Activities
C) Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000. - Non-cash Investing and Financing activity
D) Declared and paid a cash dividend of $13,000. - Financing Activities
E) Sold a long-term investment with a cost of $15,000 for $15,000 cash. - Investing Activities
F) Collected $16,000 from sale of goods. - Operating Activities
G) Paid $18,000 to suppliers. - Operating Activities
A clothing manufacturer produces clothing in five locations in the U. S. In a move to vertical integration, the company is planning a new fabric production plant that will supply fabric to all five clothing plants. The clothing plants have been located on a coordinate system as follows:
Location (X,Y)
A 7,2
B 4,7
C 5,5
D 2,2
E 9,4
Shipments of fabric to each plant vary per week as follows: plant A, 200 units; plant B, 400 units; plant C, 300 units; plant D, 300 units; and plant E, 200 units. What is the optimal location of X for the fabric plant?
Answer:
The optimal location of X for the fabric plant is 4.9
Explanation:
X Y W X.W Y.W
A 7 2 200 1400 400
B 4 7 400 1600 2800
C 5 5 300 1500 1500
D 2 2 300 600 600
E 9 4 200 1800 800
Total = 1,400 6,900 6,100
X= 6,900 / 1,400 = 4.9
Y= 6,100 / 1,400 = 4.4
The Unadjusted Trial Balance columns of a work sheet total $97,500. The Adjustments columns contain entries for the following:
Office supplies used during the period, $5,700.
Expiration of prepaid rent, $2,050.
Accrued salaries expense, $1,850.
Depreciation expense, $2,150.
Accrued service fees receivable, $1,750.
The Adjusted Trial Balance columns total is:
Answer:
The total of adjusted trial balance is $103,750
Explanation:
ADJUSTMENT EFFECT ON TRIAL BALANCE
Office supplies used during the period No change in total balance
Expiration of prepaid rent No change in total balance
Accrued salaries expense Increase in total balance
Depreciation expense Increase in total balance
Accrued service fees receivable Increase in total balance
Hence, Adjusted trial balance total = Unadjusted work sheet total + Accrued salaries expense + Depreciation expense +Accrued service fees receivable
$97,500 + $1,850 + $2,150 + $1,750
= $103,750
Thus, the total of adjusted trial balance is $103,750.
Based on the information given the Adjusted Trial Balance columns total is: $103,250.
Adjusted trial balance
Unadjusted work sheet total $97,500
Add Accrued salaries expense $1,850
Add Depreciation expense $2,150
Add Accrued service fees receivable $1,750
Total Adjusted Trial Balance $103,250
($97,500 + $1,850 + $2,150 + $1,750)
Inconclusion the Adjusted Trial Balance columns total is: $103,250.
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Goods that are specifically made for the buyer and are of such an unusual nature that they are not suitable for trade in the ordinary course of the seller's business are called _____.
Answer:
non-resellable goods
Explanation:
Sometimes goods that are so uniquely customized in order to fit or serve only one client, cannot be sold to anyone else. This type of goods are considered non-resellable since it is very difficult or very unusual for another customer to purchase such a good.
E.g. suppose that you have a lot of money but at the same time like rainbows and decide that you are going to purchase a Porsche, but you are going to customize with a rainbow like paint and interior. This car would be so unique that only you would buy it and drive it.
Functioning as a Bill of Rights for Americans with all types of disabilities, the Worker Adjustment and Retraining Notification Act prohibits discrimination in advancement, discharge, compensation, training, and other terms and conditions of employment.
a. True
b. False
Answer:
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I think it can be A.true
Hope this helps u
Sorry if I am wrong but I tried my best :)))
Can I please get brainliest?
Thanks!!!!
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By: umm me....
Charlie Plumbing Supplies has a return on assets (ROA) of 24%, while the industry average of similar companies is 13%. This means that Charlie Plumbing Supplies' asset turnover is higher than the industry average.
a. True
b. False
1. Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $84,200. The machine's useful life is estimated at 10 years, or 386,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 32,600 units of product. Determine the machine's second-year depreciation and year end book value under the straight-line method.
2. Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $84,200. The machine's useful life is estimated at 10 years, or 386,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 32,600 units of product. Determine the machine's second-year depreciation using the double-declining-balance method.
Answer:
1) Determine the machine's second-year depreciation and year end book value under the straight-line method.
depreciation expense per year = (purchase cost - salvage value) / useful life
depreciation expense per year = ($84,200 - $7,000) / 10 = $7,720
book value at the end of year 2 = $84,200 - ($7,720 x 2) = $68,760
2) Determine the machine's second-year depreciation using the double-declining-balance method.
depreciation year 1 = 2 x 1/10 x $84,200 = $16,840
depreciation year 2 = 2 x 1/10 x $67,360 = $13,472
book value at end of year 2 = $67,360 - $13,472 = $53,888
Which of the following is a reason cash flows may differ from accounting income? The total number of units sold will be different for accounting income and cash flows. Depreciation is a tax-deductible expense but is not a cash outlay. Which of the following best describes incremental cash flows? They are the difference between the cash flows the firm will have if it accepts the project versus the cash flows it will have if it rejects the project. Incremental cash flows are not relevant because they will occur whether or not the project is accepted.
Answer:
1. Depreciation is a tax-deductible expense but is not a cash outlay.
2. They are the difference between the cash flows the firm will have if it accepts the project versus the cash flows it will have if it rejects the project.
Explanation:
1. Depreciation as a non-cash outlay is removed from the Net Income when it is calculated for tax purposes. However, when calculating the Net Cash-flow, it is added back because the Cash-flow statement deals with how much actual money the business has and because depreciation does not actually take any money, it would need to be added back in the cash-flows as opposed to Accounting income where it is removed.
2. Incremental Cash-flows get their name from the fact that they will add income to a firm. This cash-flow comes if the company accepts a project as opposed to rejecting it and the cash they get from this increases their cash-flow making it incremental.
"Morales Corporation produces microwave ovens. The following per unit cost information is available: direct materials $34, direct labor $27, variable manufacturing overhead $15, fixed manufacturing overhead $43, variable selling and administrative expenses $20, and fixed selling and administrative expenses $28. Its desired ROI per unit is $31. Compute the markup percentage using absorption-cost pricing. (Round answer to 2 decimal places, e.g. 10.50%.)"
Answer:
Mark- up = 26.05%
Explanation:
Absorption costing is method of costing where overheads are charged to units produced using volume-based bases. e.g machine hours, labour hours e.t.c. Units are valued using full cost per unit
Full cost per unit= Direct material cost + direct labor cost + variable manufacturing overhead + fixed manufacturing overhead
Note that the selling and administrative expenses are period cost which are not to be considered as production cost, hence they are excluded.
Full cost per unit= 34 + 27 +15 +43 = 119
ROI per unit/profit per unit = 31
Mark- up under absorption costing is profit expressed as a percentage of of the full cost.
Mark- up = 31/119 × 100 = 26.05%
Mark- up = 26.05%
Select a problem that a firm might have bringing out a new product or service and discuss how the firm could overcome that problem.
Explanation:
A potentially serious problem for a company is to launch a new product or service on the market without conducting marketing research to investigate the acceptance of its product to its target audience.
Marketing research is an essential tool for a company to collect relevant data and information about what the consumers' needs and desires are, what benefits they expect from a product or service, what features the product should have, the design, the price, and several other essential variables to help the company better understand the market and make the best decisions when launching a new product
Wikipedia's engagement of readers and the public in developing content, with an emphasis on timeliness and the breadth of content, exemplifies this type of value innovation:
Answer: Raise
Explanation:
The options for the question are:
a. Raise
b. Create
c. Reduce
d. Eliminate
Wikipedia is used by people that are involved in academics or anyone that is seeking information as it gives information regarding different topics and issues.
Wikipedia's engagement of readers and the public in developing content, with an emphasis on timeliness and the breadth of content, exemplifies this type of value innovation raise.
Wikipedia is utilized by academicians and anybody looking for knowledge since it provides information from a wide range of topics and situations.
This form of value innovation raising is shown by Wikipedia's participation of users and the public in producing content, with a concentration on immediacy and breadth of material.
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Karim Corp. requires a minimum $9,900 cash balance. If necessary, loans are taken to meet this requirement at a cost of 2% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $10,300 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow.
July August September
Cash receipts $25,900 $33,900 $41,900
Cash payments 30,850 31,900 33,900
Prepare a cash budget for July, August, and September.
Answer:
Karim Corp.
Cash Budget
For July, August and September
JULY$ AUGUST$ SEPTEMBER$
Beginning cash balance 10,300 9,900 9,900
Cash receipts 25,900 33,900 41,900
Total cash available 36,200 43,800 51,800
Cash payment 30,850 31,900 33,900
Interest on bank loan 0 91 53
Preliminary cash balance 5,350 11,809 17,847
Additional loan(loan repayment) 4,550 -1,909 -2,641
Ending cash balance 9,900 9,900 15,206
Loan Balance
Loan balance - Beginning of month 0 4,550 2,641
Additional loan(loan repayment) 4,550 -1,909 -2,641
Loan balance - End of month 4,550 2,641 0
August Interest on bank loan = 4550 * 2% = $91
September interest on loan = 2641 * 2% = 52.82 = $53
"A municipality has a tax rate of 18 mills. A piece of real property in the municipality is assessed at $180,000 and has a fair market value of $165,000. The annual tax liability on the property is:"
Answer:
$3,240
Explanation:
Calculation for the annual tax liability on the property
Using this formula
Annual tax liability= (Tax rate× Real property )
Where= Tax rate =18 million
Real property=180,000
Let plug in the formula
Annual tax liability=( .018x180000)
Annual tax liability=$3,240
Therefore the annual tax liability on the property is $3,240
From past records it is known that 10% of items from a production line are defective. If two items are selected at random, what is the probability that only one is defective?
Answer:
0.2
Explanation:
The Probability distribution is the function which describes the likelihood of possible values assuming a random variable. The 10% of the items from the production line are assumed to be defective. There is a sample selection of 2 items. The probability that one of the item among the selected sample of two items is found defective is 0.2 (2 items sample *10%)
If the dividend yield for year one is expected to be 5% based on the current price of $50, what will year three dividend (DIV3) be if dividends grow at a constant 4%
Answer:
Div₃ = $2.81
Explanation:
dividend yield = current dividend / current stock price
0.05 = current dividend / $50
current dividend = $50 x 0.5 = $2.50
Div₀ = $.250
Div₁ = $2.50 x 1.04 = $2.60
Div₂ = $2.60 x 1.04 = $2.704 = $2.70
Div₃ = $2.704 x 1.04 = $2.81
John Q. Public spends all of his income on gas and burgers. Draw his budget constraint for these products when the following are true:
A. Graph A: his income is $80, the cost of a CD is $2 and a cost of a burger is $2.
B. Graph B: his income is $120, the cost of a CD is $2 and the cost of a burger is S2.
C. Graph C: his income is $80, the cost of a CD is $5 and the cost of a burger is $2.
D. Add an indifference curve into graph A. How many CDs and burgers will he buy to be at equilibrium?
E. Add an indifference curve into graph B. How many CDs and burgers will he buy to be at equilibrium?
F. Add an indifference curve into graph C. How many CDs and burgers will he buy to be at equilibrium?
G. Does the equilibrium level of CDs and burgers change due to the changes in income and costs?
a. Galaxy Sales has sales of $746,700, cost of goods sold of $603,200, and inventory of $94,300. How long on average does it take the firm to sell its inventory
Answer:
days of inventory on hand if 360 days is used = 360 / 6.396607 = 56.28 days
days of inventory on hand if 365 days is used = 365 / 6.396607 = 57.06 days
Explanation:
We are to determine the days of inventory on hand
days of inventory on hand = number of days in a period / inventory turnover
inventory turnover = cost of goods sold / inventory - $603,200 / $94,300 = 6.396607
days of inventory on hand if 360 days is used = 360 / 6.396607 = 56.28 days
days of inventory on hand if 365 days is used = 365 / 6.396607 = 57.06 days
Bob is evaluating a bond issue to determine the right price for the bond. In his evaluation, he gathers the following information:
N = 8 years INT = .025 or 2.5% PMT = $25 FV = $1,000 (par value)
What is the above bond issue worth in today's dollars?
a. $1,000
b. $1,181.63
c. $1,200.50
d. None of the above
Answer:
The price of the bond is $1000. Thus, option a is the correct answer.
Explanation:
The price of a bond is calculated using the present value of the interest payments made by the bond, which is in the form of an annuity, plus the present value of the face value of the bond. The present value is calculated by discounting the annuity of interest and the face value by the YTM or yield to maturity. In case YTM is not provided, we assume that it is same as or equal to the coupon rate paid by the bond.
The formula for the price of the bond is attached.
Bond Price = 25 * [(1 - (1+0.025)^-8) / 0.025] + 1000 / (1+0.025)^8
Bond Price = $1000
Exhibit 24-4 Price Quantity Demanded Total Fixed Cost Total Variable Cost Total Revenue Total Cost Marginal Revenue Marginal Cost $50 0 $8 $0 (C) (H) 45 1 8 20 (D) (I) (L) (R) 40 2 (A) 30 (E) (J) (M) (S) 35 3 8 55 105 63 (N) (T) 30 4 8 (B) (F) 93 (P) (U) 25 5 8 125 (G) (K) (Q) (V) Refer to Exhibit 24-4. What dollar amounts go in blanks (F), (G), (H), (I), and (J), respectively
Answer:
F = Total Revenue at 4 units
= Price * Quantity demanded
= 30 * 4
= $120
G = Total Revenue at 5 units
= Price * Quantity demanded
= 30 * 5
= $150
H = Total Cost at 0 units
= Fixed Costs + Variable Costs
= 8 + 0
= $8
I = Total Cost at 1 unit
= Fixed Costs + Variable Costs
= 8 + 20
= $28
J = Total Cost at 2 units
= Fixed Costs + Variable Costs
Fixed costs are fixed at $8 so (A) is $8
= 8 + 30
= $38
On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $350,000. On that date. Sales Company's stockholders' equity consisted of common stock, $100,000; other contributed capital, $40,000; and retained earnings, $140,000. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value.
During 2014 Sales Company earned $148,000 and declared and paid a $50,000 dividend. Pert Company used the partial equity method to record its investment in Sales Company.
Required:
1. Prepare the investment-related entries on Pert Company's books for 2014.
2. Prepare the working paper eliminating entries for a working paper on December 31, 2014.
Answer and Explanation:
The journal entries are shown below:
a. For investment related entries
Investment in sales Dr $350,000
To cash $350,000
(being the investment is recorded)
Investment in sales Dr ($148,000 × 85%) $125,800
To Subsidiary income $125,800
(Being the investment in sales is recorded)
Cash Dr $42,500
To Dividend income $42,500
(Being the dividend income is recorded)
b. For work paper eliminating entries
Equity income ($148,000 × 85%) $125,800
To Dividend $42,500
To investment in sales $83,300
(Being the equity income is recorded)
Common stock Dr $100,000
Other contributed capital Dr $40,000
Retained earnings Dr $140,000
Difference between implied and book value Dr $131,765 (Bal figure)
To Investment in S Company $350,000
To Non controlling interest $61,765 ($350,000 ÷ 0.85 × 0.15)
(Being the consolidated items are recorded)
Land Dr $131,765
To Difference between implied and book value Dr $131,765
(Being the land is recorded)
Working note:
Particulars Parent share Non-conrolling interest Total value
Purchase price
& implied value $350,000 $61,765 $411,765
Less:
Book value -$238,000 -$42,000 -$280,000
Difference
amount $112,000 $19,765 $131,765
Less:
Land value -$112,000 -$19,765 -$131,765
Balance $0 $0 $0
Michelle Townsend owns stock in National Computers. Based on information in its annual report, National Computers reported after-tax earnings of $9,700,000 and has issued 7,000,000 shares of common stock. The stock is currently selling for $32 a share. a. Calculate the earnings per share for National Computers. (Round your answer to 2 decimal places.) b. Calculate the price-earnings (PE) ratio for National Computers. (Use the rounded earnings per share from part a. Round your answer to 2 decimal places.)
Answer:
1. Earnings per share = $1.39
2. Price earning ratio = $23.02
Explanation:
1. Earnings per share = After tax income / Number of shares
Earnings per share = $9,700,000 / 7,000,000
Earnings per share = $1.39
2. Price earning ratio = Price per share / Earning per shares
Price earning ratio = $32 / $1.39
Price earning ratio = $23.02