Answer:
The correct answer is letter "B": To compensate for the risk that they will receive less than promised if the firm defaults, investors demand a lower interest rate than the rate on U.S. Treasuries.
Explanation:
U.S. Treasuries are marketable securities issued by the U.S. government and available in increments of $100 per year. The U.S. treasuries have a maturity range of 10 to 30 years with the most common being 30 years. Interest is paid every six (6) months and is tax-free at the state level, but federally taxable.
<em>Investors ask for a higher interest rate compared to the rate on U.S. treasuries to balance the risk of their investment in case firms face economical issues.</em>
Answer: E) The company expects a constant weighted average cost of capital.
Explanation: The explicit forecast period in most organisations are usually made between five to about fifteen years,this is to ensure that enough timeline is given to effectively capture all the necessary information to do proper forecast.
The only option that is not a desirable feature of the steady state is that. The company expects a constant weighted average cost of capital. All other options are desirable feature because they have positive impact on the business and will make a good forcast.
If this change will require employees to break old routines and adopt new role patterns, the preferred strategy for dealing with resistance to this change such as this is learning. The company would want their employees to learn new methods so as to be able to adopt to the change and in a way encourage to their employees.
Answer: 8.23%
Explanation:
Firstly, we will calculate the cost of debt which will be:
= Yield (1-Tax rate)
= 9% × (1-0.34)
= 9% × 0.66
= 5.94%
Then, the Cmcost of preferred stock will be:
= 7/(104-9.40)
= 7/(94.6)
= 7.39%
We will also get the value of the cost of equity which will be:
= (Dividend expected common/Price common) + growth rate
= (2.50/76) + 8%
= 3.29% + 8%
= 11.29%
For Debt:
Cost after tax: 5.94
Weight = 50%
Weighted cost = 5.94 × 50% = 2.97
For Preferred stock:
Cost after tax: 7.39
Weight = 1%
Weighted cost = 7.39 × 10% = 0.74
For Common equity
Cost after tax: 11.29
Weight = 40%
Weighted cost = 11.29 × 40% = 4.52
Weighted average cost of capital = 2.97 + 0.74 + 4.52 = 8.23%
Answer:
b. $588
Explanation:
Terms 2/10, n/30 means that 2% discount for the payment within 10 days and the full amount to be paid within 30 days.
When Larson Company sold merchandise, the following entry was made to recording revenue (sales) and the receivable:
Debit Receivable Account $1,000
Credit Revenue $1,000
On July 20 Stuart Co. returns merchandise, the entry is made to record the decreasing of Receivable Account:
Debit Revenue $400
Credit Receivable Account $400
The balance Receivable Account of Stuart Co. = $1000-$400 = $600
On July 24, Stuart Co. makes the payment, the sales discount was:
$600 x 2% = $12
The amount of cash received = $600-$12=$588
The following entry is made:
Debit Cash: $588
Debit Sales discount: $12
Credit Receivable Account $600