Answer:
$160000
Explanation:
Below is the calculation for the amount that should be recorded.
The actual value of building = $150000
Number of shares = 10000 shares
The stock is traded at the price = $16 per shares
The Kansas company should record the amount of building = total share x Sell price
The Kansas company should record the amount of building = 10000 x 16
The Kansas company should record the amount of building = $160000 (fair market value or price of shares)
Answer:
<u>Procedures</u>
Explanation:
Procedures refer to protocols and guidelines to be adhered to while performing an act.
Those are management rules which determine management action. Procedures are carried out following certain set of rules which are commonly applicable. Procedures could be stringent at times.
In the given case, the employees in order to get something (leaves) from the management, have to follow a prescribed set of rules in a sequence which would lead to the desired outcome.
Though procedures could be cumbersome and time consuming, just like in the given case, those have to be followed and adhered to by an organization and it's people.
Answer:
1. $146,666.67
2. $129,411.76
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
1. For computing the value of the firm, first we have to compute the Expected rate of return which is shown below:
= 5% + 0.5 × (10% - 5%)
= 5% + 0.5 × 5%
= 5% + 2.5%
= 7.5%
Now the value of firm would be
= Expected cash flows ÷ Expected rate of return
= $11,000 ÷ 7.5%
= $146,666.67
2. If beta is 0.7, then the expected rate of return and the value of firm would be
= 5% + 0.7 × (10% - 5%)
= 5% + 0.7 × 5%
= 5% + 3.5%
= 8.5%
Now the value of firm would be
= Expected cash flows ÷ Expected rate of return
= $11,000 ÷ 8.5%
= $129,411.76
