In 2018, the Barton and Barton Company changed its method of valuing inventory from the FIFO method to the average cost method.
At December 31, 2017, B & B’s inventories were $33.2 million (FIFO). B & B’s records indicated that the inventories would have totaled $24.4 million at December 31, 2017, if determined on an average cost basis. Ignoring income taxes, what journal entry will B & B use to record the adjustment in 2018?
1 answer:
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Answer:
The firm's cost of equity is C. 14.05 percent
Explanation:
Hi, we need to use the following formula in order to find the cost of equity of this firm.
Where:
r(e) = Cost of equity
rf = risk free rate
rm = Market rate of return
Everything should look like this.
So, this firm´s cost of equity is 14.05%
Best of luck