Answer:
EBIT = $2.076 million
Explanation:
<em>The market value can be ascertained by discounting the earnings after tax by the weighted average cost of capital (WACC).</em>
So we put dis in an equation;
Market Value = Earnings after tax /WACC
<em>Earnings after tax = (1-tax rate ) × EBIT</em>
<em>Note EBIT means earning before interest and tax. And we don't have this figure. So we denote it with letter " y "</em>
Earnings after tax = (1-0.25) × y
= 0.75y
<em>Substitute this into the market value equation, then we have;</em>
Market Value = Earnings after tax /WACC
17.5 = 0.75y/0.089
0.75y = 17.5× 0.089
y = (17.5 × 0.089)/0.75
y = $2.076 million
EBIT = $2.076 million
Answer:
A Contingent liability is recorded in the books if the loss is probable and the amount can be estimated.
a. The loss is probable and the amount can be estimated:
DR Loss $1,200,000
CR Contingent Liability $1,200,000
b. Loss is probable and the amount is estimated in a range. Take the <u>lower limit of the range:</u>
DR Loss $1,000,000
CR Contingent Liability $1,000,000
c. Loss is not probable but rather reasonably possible. Contingent liability i<u>s not recorded but disclosed in full in the footnotes</u>.
d. Loss is remote. <u>Do not record in books and Disclosure is not required.</u>
The correct answer for this question is this one: "YES" A business driver which focuses on ways to achieve better efficiencies to increase profits. In this way, that business driver is playing game securely. Hope this helps answer your question and have a nice day ahead.
Answer:
Expected NPV=$666.67
Explanation:
Initial Cost=$100
NPV in case cash inflow is $5=-100+5/1%=$400
NPV in case cash inflow is $8=-100+8/1%=$700
NPV in case cash inflow is $10=-100+10/1%=$900
Expected NPV=(1/3)*400+(1/3)*700+(1/3)*900=$666.67
