Answer:
a. <u>FALSE</u>
b. A contract cannot forbid the assignment of the right to receive <u>funds</u> . Assignments also cannot be restricted for the transfer of <u>real estate</u> , also called a restraint against <u>alienation</u> . A contract cannot prohibit the assignment of checks or promissory notes, also called <u>negotiable instruments</u> . The right to receive <u>damages</u> in a contract for the sale of <u>goods</u> also can be assigned, even if the contract forbids it.
Answer:
C. Insurance expense will increase $2,250
Explanation:
On April 1 2016, the following journal entry will be recorded in respect of the premium paid on a one year insurance policy:
Debit Credit
Prepaid Insurance $3,000
Cash $3,000
The year end given in this question is December 31, 2016 and the insurance premium is for one year and since the insurance premium is paid on April 1, 2016, therefore, only expense in respect of 9 months i.e. from April 1, 2016 to the December 31, 2016 will be recognised in this year. Remaining expense of three months will be recognised in the Year ended December 31,2017.
The following Journal entry will be recorded in respect of insurance expense in accounts on December 31, 2016.
Debit Credit
Insurance expense(3,000*9/12) 2,250
Prepaid Insurance 2,250
So the answer will be C. Insurance expense will increase $2,250
Answer:
B
Explanation:
The value of tax shield is simply given as corporate tax rate times the cost of debt times the market value of debt.
If the debt is constant and perpetual, the company’s tax shield depends only on the corporate tax rate and the value of debt. Then the present value of tax shield equals the discounted value of debt
Answer:
-$240 million
Explanation:
The computation of the net cash flows from operating activities is as follows:
As we know that
Net cash flows from operating activities + net cash flows from financing and investing activities = Net Increase in cash for the year
Net cash flows from operating activities + $600 million = $360 million
So, the net cash flows from operating activities is
= -$240 million
Answer: ER(P) = Rf + β(Rm-Rf)
ER(P) = 1.9 + 1(10.6-1.9)
ER(P) = 1.9 + 1(8.7)
ER(P) = 10.6%
Explanation: In this question, CAPM will be used in determining the expected return of the stock. The risk free rate was not given but it was derived from the difference between overall stock market return and risk-premium ie 10.6%-8.7%, which is equal to 1.9%. In addition, the beta of the stock is 1, which corresponds to market beta. The application of the stated figures in the CAPM formula gives an expected return of 10.06%.
