Answer:
a. 10.04%
b. $82.78
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
a. Expected rate of return or market capitalization = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 5% + 0.72 × (12% - 5%)
= 5% + 0.72 × 7%
= 5% + 5.04%
= 10.04%
The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.
b. Now the intrinsic value would be
= Expected dividend ÷ (Required rate of return - growth rate)
= $5 ÷ (10.04% - 4%)
= $5 ÷ 6.04%
= $82.78
Answer:
balance sheet, income statement, statement of cash flows, and the statement of changes in stockholders' equity.
Explanation:
Financial accounting is an accounting technique used for analyzing, summarizing and reporting of financial transactions like sales costs, purchase costs, payables and receivables of an organization using standard financial guidelines such as Generally Accepted Accounting Principles (GAAP). Examples of financial statements includes Balance sheet, cash-flow and income statement.
Financial statements can be defined as a document used for the formal communication or disclosure of financial information and statements to present and potential users such as investors and creditors. These includes balance sheet, statement of retained earnings and income statement.
An auditor refers to an authorized individual who review, examine and verify the authenticity and accuracy of business financial records or transactions.
Thus, an audit of historical financial statements most commonly includes the balance sheet, income statement, statement of cash flows, and the statement of changes in stockholders' equity.
<span>They are considered decreasing term policies. In these policies, the benefits usually decrease over the life of the policy: that is, the closer one gets to the end of the policy term, the less the benefit will typically be. At the end of the term, there is no option to renew for the same premiums, and the policy simply expires.</span>
Answer:
$37,000
Explanation:
The computation of the bad debt expense is shown below:
= Amount estimated as uncollectible + written off amount - credit balance of allowance for bad debts
= $28,000 + $15,000 - $6,000
= $37,000
We simply applied the above formula to determine the bad debt expense. Hence, all other information which is given is not relevant therefore, ignored it
Answer:
cash 96,535 debit
discount on BP 3,465 debit
Bonds Payable 100,000 credit
Explanation:
We need to determinate the price at which the bonds were issued:
Which is the present value of the coupon payment and maturity
Coupon payment: 100,000 x 10% / 2 = 5,000
time 4 (2 years x 2 payment per year)
rate 0.06 (12% annual / 2 = 6% semiannual)
PV $17,325.5281
Maturity (face value) $100,000.00
time 4.00
rate 0.06
PV 79,209.37
PV c $17,325.5281
PV m $79,209.3663
Total $96,534.8944
As the bonds are issued below face value there is a discount:
100,000 - 96,535 = 3,465
the entry will recognize the cash procceds and the creation of a liaiblity
we will also use an auxiliar account for the discount on the bonds
