The return on equity of Oscar's dog house is 18.6% (=12.5%*1.49) based on the information shown on the question above. This problem can be solved using the DuPont identity which stated as Return on Equity = profit margin * asset turnover * equity multiplier and in this problem, we do not have the asset turnover ratio. We can make a simple alteration to the formula because of Return on asset = profit margin * asset turnover. Therefore, we will find a new formula which stated as RoE = (Return on asset*equity multiplier).
<span>The shift will be equal to the increase in the amount multiplied by the spending multiplier. This multiplier is found by dividing (1 / marginal propensity to consume). The MPC is the value that shows how much of the new money injected into the economy will be spent by consumers and, thus, is the basis for the multiplier.</span>
Answer:
Goodwill allocations
Goodwill attributed to Vacker co. - 70% = $104000
Goodwill attributed to non-controllable interest - 30% = $36000
Explanation:
Showing the acquisition date FV allocation , which includes detailed steps such as allocation to BV,FV over BV and Goodwill allocation, between controlling and nocontrolling interests
$28000 was set out as the fair value of the building and will be amortized within ten years remaining
$80000 were to be recognized and amortized over 20 years
Amortized assets are : building and copyright
Goodwill = fair value of the assets acquired - controlling interests
The assets acquired include : copyright, common stocks , retained earnings and buildings
controlling interests = non-controlling interest * 30%
Goodwill allocations
Goodwill attributed to Vacker co. - 70% = $104000
Goodwill attributed to non-controllable interest - 30% = $36000
Answer:
C) The expected rate of return must be equal to the required rate of return; that is, r~ = r.
Explanation:
In order for markets to be in equilibrium, each stock's expected rate of return should equal the investors' required rate of return.
If the investors' required rate of return is higher than the stock's expected rate of return, then the price will be pressured downwards. If the investors' required rate of return i slower than the stock's rate of return, then the price will be pressured upwards.
