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2 years ago

Which component is more likely to be biased if book values are used in the calculation of wacc rather than market values?

1 answer:

5 0

<u>Common Stock</u> is more likely to be biased if book values are used in the calculation of WACC rather than market values.

<h3><u /></h3><h3><u>How Does Common Stock Work?</u></h3>

Security called common stock serves as a proxy for a company's ownership. Common stockholders decide on corporate policies and elect the board of directors. Usually, long-term returns from this type of stock ownership are higher.

Common shareholders, however, do not have any rights to a company's assets in the case of liquidation until all bondholders, preferred shareholders, and other debt holders have been fully compensated. On a company's balance sheet, common stock is listed under stockholders' equity.

<u>How Do I Cast a Ballot Using Common Stock at Corporate Meetings?</u>

Ordinary common shares typically have one vote per share, giving shareholders the ability to cast a ballot on corporate decisions, which are frequently made at a company's annual meeting of shareholders. If you're unable to vote in person, you can choose to have a representative vote on your behalf if you choose (along with others who cannot attend).

Votes may be taken on matters like whether to merge with or purchase a business, elect board members, or consent to dividends or stock splits.

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Bird Brain Co. reported net income of $46,300 for the year ended December 31, 2018. January 1 balances in accounts receivable an

Galina-37 [17]

Answer:

d. $52,100

Explanation:

Operating activities: It includes those transactions which affect the working capital after net income. The increase in current assets and a decrease in current liabilities would be deducted whereas the decrease in current assets and an increase in current liabilities would be added.

These changes in working capital would be adjusted. Moreover, the depreciation expense is added to the net income

The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $46,300

Adjustment made:

Add: Decrease in accounts receivable $2,200 ($23,800 - $21,600)

Add: Increase in accounts payable $3,600 ($24,500 - $28,100)

Total of Adjustments $5,800

Net Cash flow from Operating activities $52,100

3 0

4 years ago

Refer to the diagrams, which pertain to a purely competitive firm producing output q and the industry in which it operates. In t

Katena32 [7]

Based on the fact that the purely competitive firm is producing at point q, in the long run we should expect firms to leave the industry and market supply to fall so that product price rises.

<h3>What will happen in the long run?</h3><h3 />

At point Q, the firm is making losses as total costs are more then price. Firms will therefore leave the market to avoid making losses.

This decrease in production will lead to reduced supply which will push the prices back up to a $0 profit level.

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7 0

2 years ago

g Coronado Industries sold some of its plant assets during 2021. The original cost of the plant assets was $902000 and the accum

Elodia [21]

Answer and Explanation:

Since the following information is mentioned in the question

The purchase cost is $902,000

Accumulated depreciation is $842,000

The proceeds from the sale of plant asset is $89,800

So based on the above information, the sale of the plant asset would be shown in the investing activities of the cash flow statement in a positive amount

Hence it would be reported under the investing activities section

6 0

3 years ago

Consumer surplus is the difference between the ___ price a consumer is willing to pay for a product and the price paid.

shusha [124]

Consumer surplus is the difference between the highest price a consumer is willing to pay for a product and the price paid.

A consumer is someone or a group who intends to order, orders, or uses purchased goods, products, or services basically for private, social, family, household and comparable desires, not at once related to entrepreneurial or business sports.

Any individual who purchases services or products for his non-public use and no longer for manufacturing or resale is called a purchaser. A customer is one who's the selection-maker whether or now not to buy an object at the store or a person who is stimulated by using advertisement and advertising

Purchasers represent the top trophic levels. unlike manufacturers, they cannot make their own meals.

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4 0

1 year ago

Clearcopy, a printing company, acquired a new press on January 1, 2019. The press cost $173,400 and had an expected life of 8 ye

Andrei [34K]

Answer:

Straight-line method

Depreciation expense: $19,800

Book value : $153,600

b. Double-declining-balance method.

Depreciation expense: $43,350

Book value : $130,050

c. Units-of-production method

Depreciation expense: $23,760

Book value : $149,640

Explanation:

Straight line depreciation expense = (cost of asset - residual value) / useful life

($173,400 - $15,000) / 8 = $19,800

The straight line depreciation method allocates the same deprecation expense for each year of the useful life of the asset.

So, deprecation expense in 2009 would be

$19,800.

Book value = Cost of asset - deprecation expense

$173,400 - $19,800 = $153,600

Depreciation expense using the Double declining method = depreciation factor × cost of asset

Deprecation factor = 2 x (1/useful life) = 2 x (1/8) = 0.25

0.25 x $173,400 = $43,350

Book value = $173,400 - $43,350 = $130,050

Deprecation expense using the unit of production method = deprecation factor × (cost of asset - Salvage value)

Depreciation factor = Total pages printed in 2009 / total pages that can be printed by the machine

675,000 /4,500,000 = 0.15

0.15 x ($173,400 - $15,000) = $23,760

Book value at the end of 2009 = $173,400 - $23,760 = $149,640

I hope my answer helps you

4 0

3 years ago