Answer:
The discount rate should Honest Abe's use if it considers a project that involves the manufacturing of furniture is 12.46%
Explanation:
In this question, w e use the Capital Asset Pricing model method, which is shown below:
Expected return = Risk-free rate of return + Beta × market risk premium
= 3.5% + 1.12 × 8%
= 3.5% + 8.96%
= 12.46%
In this we use the Integral design beta not the Honest Abe beta
Answer:
the ending balance of the unearned revenue is $3,225
Explanation:
The computation of the ending balance is shown below:
= Amount received from the customer for performing the future service + balance in the account
= $500 + $2,725
= $3,225
Therefore the ending balance of the unearned revenue is $3,225
The above formula should be applied
Answer: In year three the preferred stockholders would receive $7,000 and the common stockholders would receive $25,000.
Explanation: Preferred stockholders are always paid before common stockholders. Since this stock in cumulative it means that when there is not enough income in one year to pay the preferred stock then the company needs to pay them when they have the money in the future.
In this case the preferred stock is 5% of $100 par value and is cumulative. This means that every year the company needs to pay 5% times $100 par value on each stock, and there is 1,000 shares, so the total is $5,000 in preferred stock dividends.
In year one and two they did not declare enough dividends to pay this full amount. In year one they declared $2,000 and year two they declared $6,000. At the end of year two they should have received $10,000, but only received $8,000. In year three they need to pay the preferred stockholders the $2,000 that are in arrears, plus the $5,000 for year three, for a total of $7,000. Since there was $32,000 in dividends declared and $7,000 is going to the preferred stockholders, it means that there is $25,000 left for the common stockholders. $25,000/10,000 shares equals $2.50 dividend per share.
Answer:
Balance in Prepaid insurance as of December 31 is $18,750
Explanation:
<em> </em>Computation of Prepaid Insurance
Insurance 1 ($34,200 * 6/18) $11,400
Insurance 2 ($14,700 * 12/24) <u>$7,350 </u>
Total Prepaid Insurance <u>$18,750</u>
Answer:
$8,000
Explanation:
Given that
Profit = $1,200
Cost = 85% of sales
Profit = 15%
We know that
Sales = Cost + Profit
= 85% + 15%
= 100%
So sales percentage is 100%
Now we use the unitary method to find out the extra sales which would be
= Profit × sales percentage ÷ profit percentage
= $1,200 × 100% ÷ 15%
= $8,000
