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Case Study - Risk Analysis
Task
You recently joined a small investment company in Sydney as an intern. As part of your first assignment you've been given an opportunity to invest $10,000 of a not so sophisticated investor to the following alternatives:
Your client's required rates of return for these investments are 6% for the bond, 7% for preference shares and 15% for the ordinary shares. Using the above information, answer the following questions:
1. Calculate the value of each investment based on the required rate of return.
2. Which investment would you recommend and why? Research on the current trends and future prospects on each of the industries and include a summary.
3. Assume Southern Cross Electricals' Chief Finance Officer expects an earning downturn and a resulting decrease in growth of 3%. How does this affect your recommendation?
4. What required rates of return would make your recommendation indifferent to all three options?
On 2 May 19, Integrity Repair Service extended an offer of $335,000 for land that had been priced for sale at $363,000. At what value should the land be recorded in Integrity Repair Service's records?
Explain how would your answer to part a change if Randall originally organized Silver Fox Corporation, capitalizing it with $250,000 of cash and assuming Silver Fox qualifies as a small business corporation?
A holder of a negotiable promissory note would be least likely be a holder in due course if:
Demonstrate an understanding of basic accounting concepts and how these apply apply to business, outline and contrast cash and accrual bases on accounting and prepare a range of financial statements
On December 1, 2013 Nilo Corp declared a property dividend to be distributed on December 31, 2013. On December 1, 2013, the property to be transferred had a carrying amout of $60,000 and a fair value of $78,000.
International Financial Reporting Standards are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries - outline the justifications and controversy of IF..
audit client considerationslanny beaudean joined the cpa firm of cardinal amp coyote llp in 2008 after working for two
How would your answer modify if Engco sold its goods with title passing at the customer's location?
Vasquez Publishing Company sold 1,000 two-year subscriptions to a monthly magazine. The subscriptions sold for $18 each.
Master Designs Decorators issued an 180-day, 4% note for $76,800, dated May 14, 2016, to Morgan Furniture Company on an account.
Management is considering using $3,000,000 of excess cash to prepay $3,000,000 of outstanding bonds. Illustrate what effect, if any, would prepaying the bonds have on the company's debt-to-equity ratio?
Wallace Inc., a developer of radiology equipment, has stock outstanding as follows: 30,000 shares of cumulative preferred 2% stock, $90 par and 125,000 shares of $10 par common. During its first four years of operations, the following amounts were di..
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