Amortization Expense For each of the following unrelated situations, calculate the annual amortization expense and prepare a jou

Answer:

Option (B) is the right choice.

Explanation:

Profit before taxes:

= Sales - Operating costs - Depreciation

= $40,000 - $10,000 - (50,000 × 33%)

= $40,000 - $10,000 - $16,500

= $13,500

Profit after taxes:

= Profit before tax - Tax at 40%

= $13,500 - $5,400

= $8,100

Thus,

Year 1 operating cash flow for the 911 Wings project:

= Profit after tax + Depreciation

= $8,100 + $16,500

= $24,600

The risks generally examined in the context of project financing include: construction and completion risk, political and regulatory risk, and expropriation and nationalization risk, along with environmental risk.

Answer:

(a) 0.75

(b) 0.2

(c) 0.6

Explanation:

(a) For the Sharpe ratio calculation -

Given:

Expected return = 20%,

Risk-free rate = 5%,

Volatility = 20%

Sharpe ratio = (Mean portfolio return - Risk-free return) ÷ Standard deviation of portfolio

Sharpe Ratio = (20% - 5%) ÷ 20%

= 0.75

(b) Given:

Standard deviation = 40%,

Portfolio return = 11%,

The risk-free return remains at 5%

Sharpe Ratio of eBay = (11% - 5%) ÷ 40%

Sharpe Ratio of eBay = 0.15

Correlation of eBay with Optima fund:

= Sharpe ratio of eBay ÷ Sharpe ratio of Optima fund

= 0.15 ÷ 0.75

= 0.2

(c) The correlation of the Sub-Optima fund with the Optima fund is 80%,

Sharpe ratio for the Optima = 0.75

Correlation of the Sub-Optima fund with the Optima fund:

= Sharpe ratio of Sub-Optima fund ÷ Sharpe ratio of Optima fund

0.80 = Sharpe ratio of Sub-Optima fund ÷ 0.75

Sharpe ratio of the Sub-Optima fund = 0.80 × 0.75

= 0.6

Response:

The total value of Treasury stock at the end amounts to $85,000

Clarification:

Data Provided:

The amount of treasury stock purchased = 15,000 at $17 each

and the number of treasury stock sold = 10,000

Calculations:

Total cost of purchased treasury stock = 15,000 × $17

which equals $255,000

The proceeds from selling the treasury stock = 10,000 × Purchase price

which is 10,000 × $17

leading to $170,000

To compute the final dollar amount of Treasury stock:

Dollar amount of Treasury stock at the end = Total purchased - Total sold

which simplifies to $255,000 - $170,000

thus resulting in a final amount of $85,000