Answer:
see below
Explanation:
Revenue is the money a business receives by engaging in its normal trading activities. It is the money paid to the business for selling goods or services to clients. For a business to be profitable, its revenues must exceed expenses.
If the business owner has revenue of $2000 and is finding it difficult to stay in business, it means the expenses are almost or more than $2000. Revenue, as stated, is generated from sales. Expenses refer to the costs incurred in generating revenue. They include the cost of materials, rent, wages, and all other business-related expenses.
When the expenses are more than revenue, the business suffers losses. This business owner is probably incurring losses; that's why they have a challenge in staying open.
Answer:
a. Debt holders have first claim on corporate value. The Preferred stockholders then have next claim and remaining is left for common stockholders.
b. The value of a financial asset is equal to present value of future cash flows which is provided by the asset. When investor buys a share of stock, (s)he typically expects to receive cash in the form of dividends and to sell the stock to receive cash from sale. However, the price any investor receives is highly dependent upon the dividends which the next investor expects to receive, and so on. Thus, the stock's value depends on cash dividends that the company is expected to provide and the discount rate used to find the present value of those dividends.
d. The formula to calculate present value of expected free cash flows is:
PVn=CFn(1+in)n
The formula for the present value of expected free cash flows when discounted at WACC is:
PV=∑Nn=0CFn(1+in)n
Explanation:
a. Debt holders have first claim on corporate value. The Preferred stockholders then have next claim and remaining is left for common stockholders.
b. The value of a financial asset is equal to present value of future cash flows which is provided by the asset. When investor buys a share of stock, (s)he typically expects to receive cash in the form of dividends and to sell the stock to receive cash from sale. However, the price any investor receives is highly dependent upon the dividends which the next investor expects to receive, and so on. Thus, the stock's value depends on cash dividends that the company is expected to provide and the discount rate used to find the present value of those dividends.
d. The formula to calculate present value of expected free cash flows is:
PVn=CFn(1+in)n
The formula for the present value of expected free cash flows when discounted at WACC is:
PV=∑Nn=0CFn(1+in)n
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Answer:
b. number of shares issued is 80,000
Explanation:
In the question, the common stock par value and the total amount is given. Moreover, paid-in capital is also given.
So, if we compute it, then it gives the number of shares issued because it contains a formula which is shown below:
Number of shares issued = (Common stock ÷ Par value)
= ($80,000 ÷ $1)
= 80,000 shares
So, paid-in capital is not relevant in the computation part, and therefore, the other options are wrong except b. option.
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Hope this helps!
