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The Johnson Co. grants options on 5,000 shares of its common stock. The fair market value of each option on the grant date is $3 per share. The exercise price is $2. The tax rate (all years) is 20%. The options were exercise at the end of the current year. At the beginning of the current year Paid-in capital tax effect of stock options had a credit balance of $10,000.
1. What is the ending balance of Paid-in capital tax effect of stock options if the fair market value of the stock on the exercise date was $3 per share?
2. What is the balance of Paid-in capital tax effect of stock options at the end of the current year if the fair market value of Johnson's stock on the exercise date was $11 per share?
3. What is the ending Paid-in capital tax effect of stock options, if the market price of the stock on the exercise date is $5.
Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 8%, and its common stock currently pays a $2.75 dividend per share (D0 = $2.75). The stock's price is currently $30.50, its dividend is expected t..
How could the performance reporting system be improved to encourage more appropriate behavior on the part of the purchasing manager?
A quasi-subjective project scoring approach to capital budgeting decisions:
A stock is expected to pay a dividend of $1.75 the end of the year (that is, D1 = $1.75), and it should continue to grow at a constant rate of 10% a year. If its required return is 14%, what is the stock's expected price 4 years from today? Round you..
A project has an initial cost of $41,100.00, expected net cash inflows of $9,500.00 per year for 8 years, and a cost of capital of 12.25%. What is the project's payback period?
You have a $22,500 line of credit which charges an annual percentage rate of prime rate plus 5%. Your starting balance on April 1 was $6,750. On April 5, you made a payment of $2,500. On April 14, you borrowed $5,100, and on April 17, you borrowed $3..
1.most of the worldrsquos population lives outside the united states. however many u.s. companies especially small
Use the information in Exhibit 1.10 to explain what amounts and proportions of Bank of America's earnings come from each different line of business. Which lines of business likely produce the most predictable or stable earnings?
Suppose the real rate is 3.4 percent and the inflation rate is 5.0 percent. What rate would you expect to see on a Treasury bill?
Suppose that the exchange rate is 1 dollar for 120 Yen. The dollar interest rate is 5%(continuously compounded) and the yen rate is 1%(continuously compounded). Consider an at the money American dollar call that is yen-denominated. The option has 1 y..
A project's expected return is 15%, which represents a 35% return in a booming economy and a 5% return in a stagnant economy. What is the probability of a booming economy occurring if these are the only two economic states?
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.82 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be w..
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