accounting

A Challenge to Capital Budgeting Strategies

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Financing corporate purchases and overall capital budgeting usually requires the finance manager to assess tax rates, dividend payout policy, weighting of capital sources, and more. However, the Modigliani and Miller propositions state that, in most situations, it does not matter if the firm’s capital is raised by issuing stock or selling debt.

As a student you might assume studies of capital budgeting strategies will no longer be reviewed in coursework.

  • Before coming to that conclusion (as stated above), please discuss the principles presented by Modigliani and Miller and explain your agreement or disagreement.

Presentation to the Board of Directors, the Pros and Con of Debt Financing.

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Presentation to the Board of Directors, the Pros and Con of Debt Financing

The calculation of after-tax cost of debt plays a role in managing capital costs. You have been asked to present a few matters related to Debt (Bond) financing to the Board of Directors.

  • Please briefly explain to the Board: 1) the usual collateral position of Bondholders (lenders) versus Equity investors, 2) why common stockholders can demand a higher rate of return than lenders, and 3) why you would suggest debt (or equity) financing.

A Challenge to Capital Budgeting Strategies

Posted on Updated on

Financing corporate purchases and overall capital budgeting usually requires the finance manager to assess tax rates, dividend payout policy, weighting of capital sources, and more. However, the Modigliani and Miller propositions state that, in most situations, it does not matter if the firm’s capital is raised by issuing stock or selling debt.

As a student you might assume studies of capital budgeting strategies will no longer be reviewed in coursework.

  • Before coming to that conclusion (as stated above), please discuss the principles presented by Modigliani and Miller and explain your agreement or disagreement.

Random sampling

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What’s simple random sampling? Is it possible to sample data instances using a distribution different from the uniform distribution? If so, give an example of a probability distribution of the data instances that is different from uniform (i.e., equal probability).

Income statement

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Last month Mont Tremblant Biking, a mountain sporting goods retailer, had total sales of $3,200,000, selling expenses of $110,000, and administrative expenses of $470,000. The company had beginning merchandise inventory of $140,000, purchased additional merchandise inventory for $2,550,000, and had ending merchandise inventory of $180,000.

Prepare an income statement for the company for the month.

Managerial Accounting

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Josh Donaldson is employed by Bringer of Rain Inc. and is directly involved in preparing and packaging the MLB official baseballs. The basic wage rate is $15 per hour and he is paid time-and-a-half for any work in excess of 40 hours per week. Additionally, Bringer of Rain Inc. provides a fringe benefit package that costs the company $5 for each hour of employee time (regular or overtime). During a recent week, Donaldson worked 49 hours but was idle for 3 hours due to a materials shortage.

Assume that Bringer of Rain Inc. treats all fringe benefits as part of manufacturing overhead. Compute Donaldson’s total wages and fringe benefits for the week and indicate how much of his wages and fringe benefits for the week would be allocated to direct labour and how much would be allocated to manufacturing overhead.

Ethical accounting practice

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Preston’s request is an ethical accounting practice. Statues show a wide variation between tax planning and tax avoiding. Prestons idea to avoid tax will not be successful. When you are allowed with deduction of uncollected debts in previous years, business is under compulsory obligation to show it as the income of the year in which it is collected.