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Economic income measures change in value while permanent income is proportional to value itself. Explain this statement.
Both convertibility and warrants attached to debt aim at increasing the attractiveness of debt securities and lowering their interest cost. Describe how the costs of these two features affect incom
Calculate the loan balance at the end of years 1, 2, 3, and 4. (Note: the unpaid mortgage balance at any time is equal to the present value of the remaining payments, discounted at the contract
Critique the analogy of accrual accounting to "nail soup."
Do you agree or disagree with this statement? Explain. How does accrual accounting provide superior information to cash flows? What are the imperfections of accrual accounting? Is it possible for accr
Calculate the net present value of this investment, assuming no mortgage debt. Should you purchase? Why? Calculate the internal rate of return of this investment, assuming no debt. Should you purchase
Evaluate and comment on both (a)the earnings quality and (b)the relative performance of American Express in the most recent quarter relative to the same quarter of the prior fiscal year.
The FASB in SFAS No. 123, "Accounting for Stock-Based Options," encourages (but does not require) companies to recognize compensation expense based on the fair value of stock options awarded to thei
The firm's net capital spending for 2014 was $1,030,000, and the firm reduced its net working capital investment by $132,000. What was the firm's operating cash flow during 2014?
Describe how Emerson"s earnings strategy is applied in good years and bad. Identify years where Emerson likely built hidden reserves and the years it probably drew upon hidden reserves.
Calculate, for the first year of operations, the: (1) overall (cap) rate of return, (2) equity dividend rate, (3) gross income multiplier, (4) debt coverage ratio.
Discuss this observer"s misgivings on the role of the accountant in financial reporting. Discuss what type of omitted information the business observer is referring to.
Assess and critique the positions of both the skeptics and proponents of this new paradigm.
In a discussion of corporate income, a user of financial statements alleges that "One of the real problems with income is that you never really know what it is. The only way you can find out is to l
Discuss how the lessee reflects the cost of leased equipment in the income statement for (a) assets leased under operating leases and (b) assets leased under capital leases.
Companies use various financing methods to avoid reporting debt on the balance sheet. Identify and describe some of these off-balance-sheet financing methods.
Explain how analysis of financial statements is used to evaluate a company"s liabilities, both existing and contingent.
What is the net present value of this investment, assuming a 12 percent required rate of return on levered cash flows? What is the levered internal rate of return?
What is the IRR on the project? If the required going-in levered rate of return on the project is 10 percent, should the project be undertaken?
Companies that follow IFRS to prepare a statement of financial position generally use the following order of classification:
If you deposit $50 per month in a savings and loan association at 10 percent interest, how much will you have in your account at the end of the 12th year?
Describe ways in which society has brought pressure on accountants to better serve its needs. Describe how the accounting profession has responded to these pressures. Could the profession have better
If you deposit $1 at the end of each of the next ten years and these deposits earn interest at 10 percent, what will the series of deposits be worth at the end of the 10th year?
Describe what is meant by measurement in accounting. According to this editor, what are the kinds of measurements investors want?
If the property is expected to be worth $50,000 when you receive it, what is the present value of your interest, discounted at 10 percent?