Answer:
a. Increase
Explanation:
The price earnings ratio is calculated by dividing the market value per share by the earning per share. This means that the price of the share is in the numerator and the earnings per share is in the denominator. If the denominator increases the ratio will decrease and if the numerator increases the ratio will increase. In this case the price of the stock which is the numerator increases from 15 to 18 whereas the earnings which is the denominator remains the same, this means that the price earnings ratio will increase. We can see this example numerically
We know the price of the stock was $15, lets assume the earnings were $1. So before the price change the earnings per share ratio would be 15/1= 15.
When price increases to $18 and earnings remain the same the new price earnings ratio will be 18/1=18. This proves that when earnings are constant and price per share increases the price earning ratio increases.
The type of error committed by Mr Imran is the error of principle.
<u>Explanation:</u>
An error of principle is a mistake done in the accounting. Because of this mistake, the entry is done in the wrong account. As a result of this, there is violation in the fundamental principles of Accounting. The meaning of this principle is that the value recorded was correct but the account in which it was recorded was not correct.
In the example given in the question, as a result of the error of principle, there is understatement of the assets of the firm of Mr Hamid because the value that was to be recorded in the assets account is recorded somewhere else, in the account of charges of plant and machinery.
In order to calm down irate members and hopefully resolving it to everyone’s satisfaction is to remain calm, apologize and probe for details, use the best listening skills, actively sympathize, diagnose the entire, find a solution and devise an action plan.
Answer:
Present value = $5,803.50 (Approx)
Explanation:
Given:
Future value = $10,000
Number of year = 10
Rate of return = 7% = 0.07
Find:
Present value = ?
Computation:
Present value = $5,803.50 (Approx)