Answer:
The correct answer is letter "B": A company elects to use this method as one of several alternatives.
Explanation:
The direct write-off method is one of two main approaches used to recognize bad debts being the other the allowance method. Using the direct write-off method implies straight recognizing an account as uncollectible as soon as the firm determines there will not be payment for it. There is no allowance account created for the debt. The bad debt, in either case, diminishes the company's period revenue.
Answer:
The Dean will pay up to 43,810.65 considering the copy-machine cash flow and required return.
Explanation:
17,000 incremental cash flow per year with a three year useful life
we are asked for the present value considering 8% as discount rate:
we have to sovle for the present value of this annuity.
C 17,000.00
time 3
rate 0.08
PV $43,810.6488
Answer:
Ki = 0.063 or 6.30%
Explanation:
The CAPM or Capital asset pricing model is an approach to calculate the required rate of return of a stock. The required rate of return or cost of equity is the minimum return required by the investors o invest in a stock based on the systematic risk of the stock. The formula to calculate the required rate of return of a stock using the CAPM is,
Ki = Rf + β * (Km - Rf)
Where,
- Rf is the risk free rate
- β is the beta of the stock
- Km is the expected return on the market
Ki = 0.03 + 1.1 * (0.06 - 0.03)
Ki = 0.063 or 6.3%
