Fargus Corporation owned 61% of the voting common stock of Sanatee, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition price. On January 1, 2020, Sanatee sold $1,800,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 40% of these bonds on April 1, 2022, for 95% of the face value. Both companies utilized the straight-line method of amortization. a. Prepare amortization tables for Fargus (4/1/2022 to 12/31/2023) and Sanatee (1/1/2020 to 12/31/2023) b. Determine whether this is gain/loss on retirement of bond on April 1 2022 c. Determine the consolidated interest expense on Dec 31 2022 d. If Fargus has net income $200,000 and Sanatee has net income $50,000 in 2022, how much is the consolidated net income
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Security a has a higher standard deviation of returns than security b. we would expect that: (i) security a would have a risk premium equal to security b. (ii) the likely range of returns for security a in any given year would be higher than the likely range of returns for security b. (iii) the sharpe ratio of a will be higher than the sharpe ratio of b. (a) i only (b) i and ii only (c) ii and iii only (d) i, ii and iii
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Business, 22.06.2019 14:50
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Kelso electric is debating between a leveraged and an unleveraged capital structure. the all equity capital structure would consist of 40,000 shares of stock. the debt and equity option would consist of 25,000 shares of stock plus $280,000 of debt with an interest rate of 7 percent. what is the break-even level of earnings before interest and taxes between these two options?
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Fargus Corporation owned 61% of the voting common stock of Sanatee, Inc. The parent's interest was a...
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