Answer:
$12,000
Explanation:
The reason is that the 10% of the amount $120,000 is $12,000 which is the rate of return which the Montana Furniture Mart has earned due to the sales of the furniture, so the amount that must be debited as interest income at the end of year would be:
Dr Interest Income $12000
Cr Cash or Bank Accout $12,000
Answer:
Discount rate is the correct answer.
Explanation:
There are two different definitions of the discount rate. It refers to the commercial banks and other institutions for the loan which they have taken from the federal reserve bank via the discount window loan process. The interest rate which is used in the discounted cash flow analysis for determining the present value of future cash flows is the other definition of the discount rate.
Answer: 5000 overstated
Explanation:
The net income is an accounting term that is gotten when depreciation, cost of goods sold, amortization, taxes, interest and expenses are deducted from the income of an entity.
I'm the above question, the net income will be the fair value adjustment that was made which will be:
= 94,000 – 89,000
= 5,000
Therefore, the answer is 5,000 overstated
Answer: The present value of the new drug is $19.33 million
We follow these steps to arrive at the answer:
Expected Revenues from the drug in year 1(P) $2 million
Growth Rate (g) 2% p.a.
No. of years (n) 17 years
Discount rate (r) 9% p.a.
Since the revenues are expected to grow at a constant rate of 2% p.a, we can treat this series of cash flows as a <u>growing annuity. </u>
We calculate the Present Value of a growing annuity with the following formula:
![PV = \frac{P}{r-g}*\left [ 1- \left (\frac{1+g}{1+r}\right)^{n}\right]](https://tex.z-dn.net/?f=PV%20%3D%20%5Cfrac%7BP%7D%7Br-g%7D%2A%5Cleft%20%5B%201-%20%5Cleft%20%28%5Cfrac%7B1%2Bg%7D%7B1%2Br%7D%5Cright%29%5E%7Bn%7D%5Cright%5D)
Substituting the values we get,
![PV = \frac{2}{0.09-0.02}*\left [ 1- \left (\frac{1+0.02}{1+0.09}\right)^{17}\right]](https://tex.z-dn.net/?f=PV%20%3D%20%5Cfrac%7B2%7D%7B0.09-0.02%7D%2A%5Cleft%20%5B%201-%20%5Cleft%20%28%5Cfrac%7B1%2B0.02%7D%7B1%2B0.09%7D%5Cright%29%5E%7B17%7D%5Cright%5D)
![PV = \frac{2}{0.07}*\left [1- 0.323558233\right]](https://tex.z-dn.net/?f=PV%20%3D%20%5Cfrac%7B2%7D%7B0.07%7D%2A%5Cleft%20%5B1-%200.323558233%5Cright%5D)


Answer: c. Is equal to the market value of the land
Explanation:
When deciding the cost of using an asset such as land for something, the best cost to use is the opportunity cost of the land. What would the US Government be doing with the land if they were not turning it for use for the black-tailed prairie doga.
As there are no other alternatives, this cost will therefore be the market value of the land because this is the amount that the Government could get for the land if they sold it instead of using it for the black-tailed prairie doga.