Answer:
No options presented but the entry below should be right.
$2,600 worth of merchandise was purchased but $600 was returned so Net accounts receivable:
= 2,600 - 600
= $2,000
Company paid the full amount on July 12 which is within the 10 days required for a discount so they get a 3% discount:
= 2,000 * ( 1 - 3%)
= $1,940
Date Account details Debit Credit
July 12 Accounts Payable $2,000
Cash $1,940
Merchandise inventory $60
Answer:
If the Federal Reserve buys bonds in the open market, it increases the money supply in the economy by swapping out bonds in exchange for cash to the general public. Conversely, if the Federal Reserve sells bonds, it decreases the money supply by removing cash from the economy in exchange for bonds.
Answer:
1. None of the above
2. Using tools and equipment for safety or maybe it's exit if there's a fire of any emergency concern
3. Computer
Answer:
In general, the <u>higher</u> the risk of a firm as perceived by its existing and potential investors, the greater is the firm’s weighted average cost of capital (WACC).
- If a firm is considered to be risky, they will get debt at a high rate to compensate for the risk making WACC greater.
The calculation of a firm’s weighted average cost of capital should be based on the <u>after-tax</u> cost of the dollar of financial capital raised.
- Interest is tax deductible so WACC is calculated net of taxes to cater for this.
It is generally believed that the proportions, or weights, used in the calculation of a firm’s weighted average cost of capital should be based on the market values of the firm’s capital sources. This is because the market value weighting system is more consistent with maximizing the value of the firm’s <u>Shareholder wealth.</u>
- Market Values are the true reflection of shareholder wealth and this is what the company should aim to maximise.
Although the use of market value weights is theoretically superior to the use of book value weights in the calculation of a firm’s weighted average cost of capital (WACC), firms often use book value weights due to their relative stability compared to the daily changes in market values. <u>True</u>
- Market values tend to fluctuate quite often so it is easier for companies to use book value amounts.
A firm’s new investments, existing assets, and capital structure affect its overall degree of risk and, in turn, its weighted average cost of capital. <u>True</u>
- The assets and potential assets that a company has as well as how it funded those assets determine just how risky the company is and as earlier mentioned, the riskier the firm, the higher the WACC so risk does have an effect on WACC.
Answer:
d. the firm has no individual effect on the market price.
Explanation:
Price taker -
It refers to the company or an individual who need to get the prevailing price of the market and have lesser market share , is referred to as price taker .
The price taker does not have the capability to alter the market price , because it does not have enough power to do the same .
A price taker can be any one in the economy , and can freely take entry and exit .
Hence, from the given information of the question,
The correct option is d.
