Answer:
Explanation:
The journal entry is shown below:
Cash A/c Dr $255,780 ($261,000 × 98%)
Discount on bonds payable A/c $5,220
To Bonds payable A/c $261,000
(Being the issuance of the bond is recorded)
We assume the par value is $100 but the bond is issued less than the par value i.e $98 so the difference would be debited to the discounts on bond payable
Answer:
Demand is elastic.
Explanation:
The price of hand calculators falls from $10 to $9.
The quantity demanded increases from 100 to 125.
The price elasticity of demand is the measure of the degree of responsiveness of quantity demanded to a change in price.
The price elasticity of demand
= ![\frac{\Delta Q}{\Delta P}](https://tex.z-dn.net/?f=%5Cfrac%7B%5CDelta%20Q%7D%7B%5CDelta%20P%7D)
= ![\frac{\frac{125-100}{100} }{\frac{9-10}{10} }](https://tex.z-dn.net/?f=%5Cfrac%7B%5Cfrac%7B125-100%7D%7B100%7D%20%7D%7B%5Cfrac%7B9-10%7D%7B10%7D%20%7D)
= ![\frac{0.25}{-0.1}](https://tex.z-dn.net/?f=%5Cfrac%7B0.25%7D%7B-0.1%7D)
= -2.5
The price elastcity of demand is more than 1, this implies that the demand is elastic.
Answer:
Explanation:
First, find the YTM of the bond (rD), you can do this with a financial calculator using the following inputs;
Maturity of the bond : N = 20
Annual coupon payment; PMT = 8%*1000 = 80
Face value; FV = 1000
Price of the bond ; PV = -1,050
then CPT I/Y = 7.51% (this is the Pretax cost of debt; the rD)
Next, find the cost of equity (rE) using CAPM;
CAPM; r = risk free + beta (Market risk premium)
rE = 0.0450 + 1.20(0.0550)
rE = 0.0450 + 0.066
= 0.111 or 11.1%
Next, WACC formula = wE*rE + wD*rD(1-tax) whereby;
w = weight of..
rD= pretax cost of debt
WACC = (0.65*0.111) + [0.35*0.0751(1-0.40) ]
WACC = 0.07215 + 0.015771
= 0.0879
Therefore, WACC = 8.79%
Explanation:
The free enterprise system is one influenced by the market, which will determine all economic variables, such as price, products and services, and is a system independent of government control to function.
Therefore, it is correct to state that in a free enterprise system, the offer and demand of the consumer for a product or service that will be the determinant of the success or failure of an organization.
As an example of an entrepreneur, we can mention Steve Jobs, who created one of the largest technology companies in the world, Apple. The free enterprise system was one of the reasons for Apple to succeed in becoming one of the most valued companies in the world, due to the fact that it brought innovative products to the market that became examples of products of value to consumers, which made company to grow and become so successful in the market. If the company operated in a government-controlled market, it would probably have to follow specific rules and restrictions for the production of its products that could limit the company, and its performance could be restricted and not as innovative as the company in the market, which is one of the reasons why it achieved success.