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Answer:
g = 16%
dividends yield:
Year 1 4.60%
Year 3: 4.78%
<u>expected rate of return: </u>
year 1 20.6%
year 3 20.78%
<u></u>
Explanation:
<u>grow rate:</u>
D1 /D0 = g
1.16/1.00 - 1 = 0.16
1.3456/1.16 - 1 = 0.16
the grow rate is 16%
<u>dividend yield:</u>
dividends/stock price = dividend yield
1/21.7 = 0,0460 = 4.60%
1.3456/28.15 = 0,04780 = 4.78%
<u>expected rate of return: </u>
dividend yield + grow rate
4.60% + 16% = 20.6%
4.78% + 16% = 20.78%
Answer:
August 2 Notes Receivable 8000 Dr
Accounts Receivable- Ryan 8000 Cr
October 30 Interest receivable 220 Dr
Interest Revenue 220 Cr
October 31 Cash 8220 Dr
Notes Receivable 8000 Cr
Interest Receivable 220 Cr
Explanation:
When we receive the Note against the Accounts Receivable, we will credit the Accounts Receivable to close the account of Ryan and create a new current asset account of Notes Receivable on August 2.
On October 30, 90 days period of Note is complete so we will record the interest that is receivable for us on this note.
- Interest Receivable = 8000 * 11% * 90/360 = $220
We record this as Interest Receivable as we have not received this and credit Interest revenue as it is our income.
On 31 October, when we receive cash it will be total of Notes payable and Interest so we will debit cash by 8220 and credit the Notes payable and interest receivable.