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Problem - At the beginning of the year Giant Inc.'s management is considering making an offer to buy Micro Corporation. Micro's projected operating income (EBIT) for the current year is $30 million, but Giant believes that if the two firms were merged, it could consolidate some operations, reduce Micro's expenses, and raise its EBIT to $35 million. Neither company uses any debt, and they both pay income taxes at a 35% rate. Giant has a better reputation among investors, who regard it as very well managed and not very risky, so its stock has a P/E ratio of 12 versus a P/E of 9 for Micro. Since Giant's management would be running the entire enterprise after a merger, investors would value the resulting corporation based on Giant's P/E. If Micro has 10 million shares outstanding, by how much should the merger increase its share price, assuming all of the synergy will go to its stockholders?
For the current year ended March 31, Benatar Company expects fixed costs of $1,250,000, a unit variable cost of $100, and a unit selling price of $140. Compute the anticipated break-even sales (units). Compute the sales (units) required to realize in..
XYZ has revenues of $150 million and expenses of $110 million. Can you determine which company is more efficient from these income statements?
Kansas Company uses a standard cost accounting system. In 2014, the company produced 27,500 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $12.00. What were the standard ho..
During a recent accounting period, Marty's shipping department processed 26 orders. Each order typically takes four hours to complete. However, the average time increased to five hours because of various departmental inefficiencies. If shipping labor..
You purchase a Treasury-bond futures contract with an initial margin requirement of 15% and a futures price of $115,098. The contract is traded on a $100,000 underlying par value bond. If the futures price falls to $108,000, what will be the percenta..
What are the importance of economics to an accountant as he been employed to under take an accountancy job in a particular business
Evaluate generally accepted accounting principles (GAAP) and what bodies provide authoritative support for GAAP? and What elements comprise the FASB's conceptual framework?
The total bargain element at the time of exercise was $67,000. For 2018, what is the book-tax difference due to the options exercised?
In reconciling the January bank statement, the Vice President discovered that the bookkeeper had recorded a check written for $454 as $544 in the cash disbursements journal. For the bank reconciliation, the $90 error should be:
Here is a scenario from a prior classmate. Her sister owned her own business and could not figure out why she kept getting NSF fees from her bank. She was constantly transferring money and never knew why this was happening. Imagine you are the bank ..
Atlarge Inc. owns 30% of the outstanding voting common stock of Ticker Co. and has the ability to significantly influence the investee's operations and decision making. What was the balance in the Investment in Ticker Co. account at the end of 2013?
At the end of 2007 Aramis Company has accounts receivable of $800,000 and an allowance for doubtful accounts of $40,000.
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