Answer: $74100
Explanation:
Based on the information given, the amount of cash expected to be collected in October will be calculated thus:
October, credit sales will be:
= 60% x $247000
= $148200
Since the amount that'll be collected in October will be 50% of the credit sales. This will be:
= 50% × $148200
= $74100
Answer:
Yes, accounting conservatism is appropriate because it makes firms more cautious when registering and reporting financial information. This increased cautiousness is likely to make accounting information more accurate.
Under the principle of accounting conservatism, losses are registered when they are found to be probable, while earnings are only added when they have been fully realized. As a result, this principle results in prudent and more trustworthy financial information for all stakeholders.
Answer:
WACC = 10.50 %
Explanation:
(‘1) Calculation of cost of debt- Cost of debt is nothing but yield to maturity of bond
Yield to maturity is nothing but the rate of return at which all future cash flows will become equal to current market price.
Current Market Price = PV of Coupon payments + PV of FV of bond
1040= 34 [ 1- (1+0.5 YTM)-2 x 30 / 0.5 YTM] + 1000 / ( 1+0.5 YTM )2 x30
YTM = 6.5 %
So cost of debt Rd = 6.5 %
(‘2) Cost of Preferred stock
Rps = Dps / Price
Rps = 5/78 = 6.41 %
(3) Cost of Common Stock
Rs = Risk Free rate + Beta x Market Risk Premium
Rs = 4.80 + 1.14 x 7
Rs = 12.78 %
4. Check the image attached.
WACC = 10.50 %
WACC= Wd x Rd x ( 1- Tax rate) + Wps x Rps + WCE x Rs
Post Tax Debt cost will be considered in WACC
Post Tax cost of debt= Cost x ( 1- Tax Rate )
Post Tax Cost = 6.5 x ( 1-0.38) = 4.03 %
Answer:
1) Auto loan - a lot of people take auto loans to purchase their dream car although it considered as a bad debt as a car usually is very expensive.
2) potential debt I wouldn't mind getting into would probably be something for myself aka self development. investing in yourself by borrowing for more education or to consolidate debt. it can increase your ability to save for the future, build wealth, etc.
Answer:
The minimum selling price = $23
Explanation:
The minimum selling price to be acceptable for the special order be the same as the relevant variable cost of producing a unit.
The relevant variable cost = marginal cost of a unit
Marginal cost = Direct material + Direct labour + Variable manufacturing overhead + shipping cost
Marginal cost = 9+ 7 + (50%× 8) + 3= 23
The minimum selling price = $23
Note : The 50% balance of manufacturing overhead which represents unavoidable fixed costs is irrelevant for this decision. These are costs that would be incurred either way whether or not the special order is accepted.