Answer:
Given that,
Value of promissory note = $11,700
Time period = 60 days
Interest rate = 14%
Interest revenue:
= Note value × Interest rate × Time period
= $11,700 × 0.14 × (60/360)
= $273
Therefore, the journal entry is as follows:
Accounts receivable A/c Dr. $11,973
To Interest revenue $273
To Notes receivable $11,700
(To record the dishonored note)
Answer: Statement D
Explanation: If a company accept a special order then it must be doing so in order to gain or maximize its profits and the profits will only increase when there is an increase in net income.
Thus, statement D is correct implying that net income will increase when the sales price in greater than the variable cost.
Answer:
Explanation:
Dividend discount model (DDM) is a method of calculating the cost of equity. The formula is as follows;
cost of equity; r = (D1/P0) +g
whereby, D1= next year's dividend
P0 = Current price of the stock = 27
g = the stock's dividend growth rate = 8% or 0.08 as a decimal
D1 = D0 (1+g)
D1 = 2 (1+0.08) = 2.16
Next, plug in the numbers to the formula
r = (2.16/27)+0.08
r = 0.08 + 0.08
r = 0.16 or 16%
<u>Cost of equity using CAPM</u>
CAPM is Capital asset pricing model. It is also used to estimate the cost of equity.
CAPM; r = risk free + beta ( market risk premium)
r = 0.10 +1.2(0.05)
r = 0.10 + 0.06
r = 0.16 or 16%
Therefore, DDM and CAPM give the same cost of equity.
Answer: $88,844
Explanation:
Financing activities relate to those activities that the company gets into in relation to Equity and debt as these are what finance the operation of the business.
Net Cash from Financing activities = Net inflow - Net Outflow
= New Debt Capital - Repaid debt - Treasury stock purchase
= 913,545 - 773,200 - 51,501
= $88,844
If this is a true/false question, the answer is FALSE. Usually creating an international division comes after some time and the international ventures have gotten a foothold in the respective country.
