Answer:
False. If interest rates are positive, the future value will always be more than the present value.
Explanation:
Future value is given by:
FV = PV 
wherein, FV= Future Value
PV= Present Value
i = rate of interest per period
n = number of periods
So, if interest rates are positive, the current investment shall be compounded to arrive at Future value which would turn out to be more than the present value.
For example, $ 100 invested today at 10% per annum, after an year would yield $110. This represents future value.
In case future value is provided as 110$ and rate of interest is given as 10% per annum, such future value discounted at 10% would give $100 today which represents the present value.
Thus, Future value will always be more than the present value if interest rates are positive.
Answer:
Current price of the stock of Jameson company is $18.62. Therefore, the correct option is A
Explanation:
The formula of required rate of return is:
Required rate of return = Risk free rate + Beta × Market risk premium
= 4% + 1.15 × 5%
= 4% 5.75%
= 9.75%
Computation of current stock price is:
Current stock price = Expected dividend per share / (Required rate of return - Growth in dividend)
= (0.75 + [5.50% × 0.75] ) / (0.0975 - 0.055)
= 0.79125 / 0.0425
= $18.62
Answer:
1. Jim Marley is the sole owner of Marley's Appliances. Jim borrowed $100,000 to buy a new home to be used as his personal residence This liability was not recorded in the records of Marley's Appliances
- ECONOMIC ENTITY PRINCIPLE: the activities of a business must be kept separate form the activities of its owners
2. Apple Inc. distributes an annual report to its shareholders
- TIME PERIOD PRINCIPLE: companies must report their financial statements over standard or fixed periods of time, e.g. monthly, quarterly or annually
3. Hewlett-Packard Corporation depreciates machinery and equipment over their useful lives
- EXPENSE RECOGNITION: expenses must be recorded during the time periods that they actually occur
4. Crosby Company lists land on its balance sheet at $120,000, its original purchase price, even though the land has a current fair value
- HISTORICAL COST PRINCIPLE: assets must be recorded at purchase cost and the only adjustment can be accumulated depreciation
5. delivered to customers, even though the cash has not yet been
- THIS PART IS INCOMPLETE, BUT I BELIEVE IT REFERS TO THE REVENUE RECOGNITION PRINCIPLE: revenue must be recognized once the earning process has been completed and not necessarily when the cash is received.
6. Liquidation values are not normally reported in financial statements of $200,000 Honeywell International Inc. records revenue when products are received even though many companies do go out of business
- GOING CONCERN PRINCIPLE: this principle assumes that the business will continue to operate in the foreseeable future
7. IBM Corporation, a multibillion dollar company, purchased some small tools at a cost of $800. Even though the tools will be used for a number of years, the company recorded the purchase as an expense
- MATERIALITY: a company must record all the transactions that may affect the decision making processes. In this case, a tool will not make any difference on a multibillion dollar company.
Answer:
Zork's cost of equity capital is 12.85%
Explanation:
Cost of equity=Rf+Beta* Mrp
Rf is the risk-free rate of 4.6% which is rate of return on government security
Beta of the stock is 1.13
Mrp is the market risk premium which is the incentive given over and above the risk free rate in order to compensate investors for risk taken by investing in stock i.e 7.3%
cost of equity=4.6%+(1.13*7.3%)=12.85%
Money is deducted from your paycheck before taxes are taken out.
Answer: Option A
<u>Explanation:</u>
The major advantage of the tax investing is making a contribution to a retirement account before pre-tax. The money as to be deducted from before taxes are taken out.
The more popular as workers started to take control of their own retirement savings, the investing retirement account offers individuals an opportunity to save for retirement in a tax advantages account. For example, the government allows taxable income to be reduced by the amount of the contribution to a retirement plan.
