Answer:
Advertising cost tends to keep increasing compared to other endogenous sunk cost
Explanation:
Sunk cost are defined as cost that have been incurred and cannot be recovered by a business.
Prospective costs on the other hand are those ones a business anticipates it will incur in the future.
Sutton drew a distinction between advertising and other sunk cost because in a competitive market that companies find themselves advertising cost continues to increase to keep the brand visible compared to others.
Companies increasingly invest more in brand awareness.
Other endogenous sunk cost however tend to be relatively constant.
Answer:
d. preemptive right
Explanation:
Preemptive rights refers to the clause that is included in a merger agreement or security that allows an investor to buy a proportionate number of shares to be issued in the future in order to protects him from losing his percentage ownership of a company.
The aim a preemptive right is to avoid a situation whereby the management of the company take over the control of the company by issuing and buying extra shares of the corporation to themselves. It basically aims to prevent the dilution of the value of stockholders.
Answer:
b. Statement of financial position
Explanation:
IFRS accounting standards issued by International Accounting Standards Board (IASB) and the IFRS Foundation. IFRS equivalence of a GAAP's balance sheet is the statement of financial position. It has a T-structure and it is used to record assets, liabilities and shareholders' equity. It is used to determine liquidity and company's ability to meet its debt obligations. Other IFRS financial statements include a statement of profit and loss and a statement of cash flows for the period.
Answer:
$266,760
Explanation:
According to the problem, calculation of the given data are as follows,
Purchase value = $3,600,000
Depreciation for 1st year = 33.33%
Depreciation for 2nd year = 44.85%
Depreciation for 3rd year = 14.81%
So, Book value = Purchase value × ( 1 - depreciation of all years)
By putting the value we get,
Book Value = $3,600,000 × ( 1 - 33.33% - 44.45% - 14.81% )
= $266,760
Answer:
(4) The the actual (or real) free cash flow (after inflation rate is considered)
2021 (First Year): $980.39
2022 (Second Year): $961.17
(5) Present value of the investment (Investment year is 2020) is $1,735.54
Explanation:
Free cash flow in 2021: $1000
Free cash flow in 2022: $1000
WACC (discounting rate): 10%
(4) The the actual (or real) free cash flow (after inflation rate is considered) in 2021 (First Year) and 2022 (Second Year):
FCF in 2021 after considering inflation = $1000/(1+2%) = $980.39
FCF in 2022 after considering inflation = $1000/((1+2%)^2) = $961.17
(5) Present value of the investment (Investment year is 2020)
PV = Cash flow in year 1/(1+ discounting rate) + Cash flow in year 2/(1+ discounting rate)^2
= 1000/(1+10%) +1000/((1+10%)^2)
=1,735.54