Answer:
the rate of return required by investors to incentivize them to invest in a company
Explanation:
In finance, the cost of equity is the Cost of Equity is the rate of return which an organization pays those that invested in equity. The organization uses cost of equity to check how attractive investments are.
It can be calculated by using the CAPM which is Capital Asset Pricing Model
Answer:
WACC = 7.48%
Explanation:
We can calculate the Firm's WACC by using Excel.
Let's assume this is our Excel Blank Sheet.
A B C D
1 Particulars Rate Weight Weighted rate
2 Debt = 7.75%(1 - 40%) 0.45 =B2×C2
= 4.65%
3 Equity = (0.65/(19 × (1 - 10%)))+6%
= 9.80% 0.55 = B3×C3
4 WACC =SUM(D2:D3)
<h3>
Output:</h3>
A B C D
1 Particulars Rate Weight Weighted rate
2 Debt = 4.65% 45% 2.09%
3 Equity = 9.80% 55% 5.39%
4 WACC 7.48%
Answer:
c. $ 95,000 $ 0
Explanation:
<u>Calculation of cost of land acquired</u>
For the purpose of recording of land acquired in the books of accounts, the accounting values of consideration paid shall be considered as per the generally accepted accounting principles as well as as per International accounting standard (IAS) - 16 'Property, plant and equipment'. Hence the land shall be recorded as per the following amounts:
Consideration paid in cash (A) = $ 5,000
Consideration in kind (land) (B) = $ 90,000 (Refer Note 1)
Total cost of new land (A+B) = $ 95,000
<em>Note 1</em>
Fair value is irrelevant for the purpose of capitalization of asset (IAS-16)
<u>Calculation of Gain/loss on disposal of land</u>
No gain/loss needs to be recorded as the new asset shall be recorded in terms of the book value of old asset (i.e. net impact is already taken into account during the exchange transaction)
Answer and explanation:
The Annual Rate of Return or Yearly Rate of Return is the amount of money obtained in the course of an investment over one year. It is usually defined as a percentage and takes into account capital appreciation and dividend payments. The formula for calculating the annual rate of return is:
Annual Rate of Return = (EYP - BYP)/BYP X 100%
Where:
EYP = End of year price
BYP = Beginning of year price
