Finance Answers

In 2012, Larry creates a trust with Ted as trustee. Ted (as trustee) may distribute income and principal to Susie, Jeff and Leon to provide for their health, education, maintenance and support at his discretion. In 2012, the trust has $15,000 of interest and $15,000 of dividends. Additionally, the trust received $115,000 for the sale of an asset with a basis of $100,000. In 2012, $15,000 is distributed to Susie, $10,000 is distributed to Jeff and $5000 is distributed to Leon. How much income does each of Jeff, Susie, Leon and the trust report for 2012 and why?

In 2001, Larry creates a trust with Ted as trustee. Ted (as trustee) must distribute all income to Jeff and Susie equally. Additionally, distributions of principal may be made to Jeff, Susie, and Leon at Ted's discretion. In 2012, the trust has $10,000 of interest and $10,000 of dividends. Additionally, the trust received $100,000 for the sale of an asset with a basis of $90,000. In 2012, $20,000 is distributed to Jeff, $30,000 is distributed to Susie and $40,000 is distributed to Leon. How much income does each of Jeff, Susie, Leon and the trust report and why

You are buying a house and will borrow $225,000 on a 30-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4.3 percent. Alternatively, she tells you that you can “buy down” the interest rate to 4.05 percent if you pay points up front on the loan. A point on a loan is 1 percent (one percentage point) of the loan value. You believe that you will only live in the house for eight years before selling the house and buying another house. This means that in eight years, you will pay off the remaining balance of the original mortgage. How many points, at most, would you be willing to pay to buy down the interest rate?

A manufacturing company is examining a proposed project to increase productivity. This project involves buying a machine that will have a cost of $32561 and will have a useful life of 7 years. At the end of the machine's useful life, the company expects to sell it for $2,500. The annual benefits are going to be $22,000 for the first year but will increase by $700 each year until the machine is no longer useful. The estimated operating and maintenance costs are going to be $12,600 for the first year but will increase by $1,000 each year after that. The analysis will use an interest rate of 8%. Calculate this project's net present value or net present worth.

Gemini completed these transactions during 2015:

March 1 The directors declared a $0.75 per share cash dividend payable on March 31, to the March 15 shareholders of record.
June 1 Issued 12,000 common shares at $6.50 per share.
October 1 Issued 8,000 common shares at $4.75 per share.
December 1 The directors declared a $1.25 per share cash dividend payable on January 2, 2016, to the December 15 shareholders of record.
December 31 Net income for the year is $245,000.
Required:
2. Prepare the equity section of Gemini’s balance sheet at December 31, 2015.

March 1 The directors declared a $0.75 per share cash dividend payable on March 31, to the March 15 shareholders of record.
June 1 Issued 12,000 common shares at $6.50 per share.
October 1 Issued 8,000 common shares at $4.75 per share.
December 1 The directors declared a $1.25 per share cash dividend payable on January 2, 2016, to the December 15 shareholders of record.
December 31 Net income for the year is $245,000.

Required:

1. Use the T-account format below to record the effect of the 2015 transactions on shareholders’ equity accounts. (5 marks

On January 1, 2015, Oskar, Lucy and Dexter agreed to dissolve their partnership. Their partnership agreement allocates profit and losses equally among the partners. The current period’s ending capital account balances are Oskar, $15,000, Lucy, $10,000, and Dexter, $(6,000). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $19,000 in cash to be distributed.
REQUIRED:
Prepare the journal entries to end the partnership under each of the following unrelated assumptions. Explanation is not required.
a) Dexter pays $6,000 to cover the deficiency in his account.

Galaxy Inc. has issued and outstanding a total of 30,000 shares of $3 preferred shares and 185,000 common shares. The company began operations and issued both classes of shares on January 1, 2012. It has declared and paid dividends each year as shown below.
Required:Using the table below, calculate the total dividends distributed to each class of shareholder, assuming:
a. The preferred shares are cumulative.
b. The preferred shares are non-cumulative

your friend saved 12,000 sar during his studies in ksu. he wants to invest and he wants your help to choose one of the following two alternative investment opportunities. the first is buying 10 ounces of gold or buying 1,200 call options. the current price of gold is 1200 sar, and the 6- month european call option with a strike price 1185 sar is 12 sar. he strongly feels that the price of gold will increase. what is your advice to your friend (explain your advice)?

A debt of P15,000 was paid for as follows: P4,000 at the end of 3 months, P5,000 at the end of 12 months, P3,000 at the end of 15 months, and a final payment F at the end of 21 months. If the rate of interest was 18% compounded quarterly, find the final payment.