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natta225 [31]
3 years ago
6

TopChop sells hairstyling franchises. TopChop receives $56,000 from a new franchisee for providing initial training, equipment a

nd furnishings that have a standalone selling price of $56,000. TopChop also receives $35,000 per year for use of the TopChop name and for ongoing consulting services (starting on the date the franchise is purchased). Carlos became a TopChop franchisee on July 1, 2016, and on August 1, 2016, had completed training and was open for business.
How much revenue in 2016 will TopChop recognize for its arrangement with Carlos?
Business
1 answer:
valentina_108 [34]3 years ago
5 0

Answer:

$73,500  is the revenue TopChop will recognize for the arrangement with Carlos.

Explanation:

Revenue is calculated as follows.

= amount received + Use of name

= $56,000 + $35,000 × (1÷2)

= $73,500

New franchise fee can be immediately recognised as income.

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Answer:

-9.92%

Explanation:

P₀ = Div₁ / (Re - g)

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Re =  (Div₁ / P₀) + g

Re = ($0.9912 / $62.91) - 11.5%

Re = 1.58% - 11.5% = -9.92%

Since the cost of equity or required rate of return cannot be negative, I suppose that investors are not worried about Abbott distributing dividends, instead, they prefer that the company reinvests earnings in new projects.

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3 years ago
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3 years ago
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The question is unclear with regards to the requirements. however having dealt with questions of this nature in the past, I will assume the question requires us to calculate the cost of inventory on hand.

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The use of per capita income as an indicator of wealth or economic stability of a territory makes sense because through its calculation national income is interrelated (through GDP in a specific period) and the inhabitants of this place.

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