Business, 08.02.2021 19:10 daijahbuck

QC ltd operates under ideal conditions of uncertainty. On january 1, 2015, it purchased a capital asset that will last for two full years and then will be retired with zero salvage. The purchase price was financed with an issue of common stock. QC Ltd plans to pay no dividends until after the end of 2016. The interest rate in the economy is 6%. QC Ltd is certain that net cash flow from its only asset will be $100 in 2015. However, net cash flow in 2016 is uncertain. Net cash flows in 2016 will be $200 with objective probability of 0.6 and $50 (low state) with objective probability of 0.4 all cash flows are received at year ends. At the end of year 2 the high state is realized. Required:
a. How much did QC Ltd. pay for its capital asset at the beginning of 2015? Show calculations.
b. Prepare, in good form, an income statement for QC Ltd. for the second year of operations—that is, 2016.
c. Prepare, in good form, a balance sheet for QC Ltd. at the end of 2016 (before any dividend payments).

Answers: 1

Show answers

Another question on Business

Business, 22.06.2019 11:10

An insurance company estimates the probability of an earthquake in the next year to be 0.0015. the average damage done to a house by an earthquake it estimates to be $90,000. if the company offers earthquake insurance for $150, what is company`s expected value of the policy? hint: think, is it profitable for the insurance company or not? will they gain (positive expected value) or lose (negative expected value)? if the expected value is negative, remember to show "-" sign. no "+" sign needed for the positive expected value

Answers: 2

Answer

Business, 22.06.2019 21:00

Identify whether the statements are true or false by dragging and dropping the appropriate term into the bin provided. long-run economic growth is unlikely to be sustainable because of finite natural resources. in the modern economy, countries that possess few domestic natural resources essentially have no chance to develop economically. finding alternatives to natural resources will be very important to long-term economic growth. in the modern economy, human and physical capital are generally less important in productivity than natural resources. in the 19th century, countries with the highest per capita gdp were nearly always abundant in minerals and productive farming land.

Answers: 1

Answer

Business, 22.06.2019 22:00

What tax is paid by the most people in the united states

Answers: 1

Answer

Business, 23.06.2019 00:10

Warren company plans to depreciate a new building using the double declining-balance depreciation method. the building cost $870,000. the estimated residual value of the building is $57,000 and it has an expected useful life of 20 years. assuming the first year's depreciation expense was recorded properly, what would be the amount of depreciation expense for the second year?

Answers: 2

Answer

You know the right answer?

QC ltd operates under ideal conditions of uncertainty. On january 1, 2015, it purchased a capital as...

Questions