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Mkey [24]
3 years ago
12

On Jan 15th, Mr. White discovered that the net income for the previous year was understated by $60,000. Mr. Black tells Mr. Whit

e that this net income of $60,000 should be shared in the proportion of their current capital balances. (Mr. White = 150,000/$250,000 = 60% = $36,000; Mr. Black = $100,000/$250,000 = 40% = $24,000). But Mr. White feels that the additional income should be shared in the ratio of 2:1 ($60,000 x 2/3 = $40,000 Mr. White; $60,000 x 1/3 = $20,000 Mr. Black). Who is correct? Why?
Business
1 answer:
vladimir1956 [14]3 years ago
5 0

Answer:

Mr. Black is correct.  There is a basis established by their current capital balances.  Mr. White's ratio of 2 : 1 has not discernible basis, unless that has been their profit sharing ratio.

Explanation:

In the absence of any contrary agreement, partners in a partnership business always share their net income based on their capital contributions.  Sometimes, this may not be strictly followed, especially with changes effected over the years, it becomes necessary to adopt home-grown solutions.  One of such is the current capital balances, instead of the original capital contributions.  This approach takes care of changes and value contributions over a number of years that the business has been in operation, which the current capital accounts will always show.

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The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporat
koban [17]

Answer:

Risk-free rate (Rf) = 8%

Return on market portfolio (Rm) = 15%

Beta (β) = 1.2

Ke = Rf + β(Rm - Rf)

Ke = 8 + 1.2(15 - 8)

Ke = 8 + 1.2(7)

Ke = 8 + 8.4

Ke = 16.40%

Earnings per share (EPS) = $10

Current dividend paid (Do) = 40% x $10 = $4

Retention rate (b) = &6/$10 x 100 = 60% = 0.6

ROE (r) = 20% = 0.2

Growth rate (g) = b x r

                         = 0.6 x 0.2

                         = 0.12 = 12%

Current market price (Po)

= Do<u>(1 + g) </u>  

        Ke - g

= $4<u>(1 + 0.12)</u>

     0.1640 - 0.12

= $4<u>(1.12)</u>

      0.044

= $101.82

             

Explanation:

First and foremost, we need to calculate the cost of equity based on capital asset pricing model. Then, we will determine the growth rate, which is a function of retention rate (b) and return on equity(r).

Finally, we will calculate the current market price, which is dividend paid, subject to growth, divided by the excess of cost of equity over growth rate.

7 0
3 years ago
Which of the following is an example of a capital market instrument? Group of answer choices Banker's acceptances. Commercial pa
stealth61 [152]

Answer:

Preferred stock

Explanation:

The capital market instruments refer to the instrument that involves stock, bonds, debentures, the preferred stock that deals in the securities and come under the capital

Also, the other options that are mentioned are the money market examples

Therefore the correct option is preferred stock and the same is to be considered

8 0
3 years ago
Clarifying the issues of a problem is the _____ step in the problem solving process.
solmaris [256]

Answer:

hii there

The correct answer is option ( A )

8 Step Problem Solving Process

Step 1: Define the Problem. What is the problem?

Step 2: Clarify the Problem.

Step 3: Define the Goals.

Step 4: Identify Root Cause of the Problem.

Step 5: Develop Action Plan.

Step 6: Execute Action Plan.

Step 7: Evaluate the Results.

Step 8: Continuously Improve

Explanation:

Hope it helps

have a nice day

8 0
3 years ago
Accenture's Security practice makes use of a number of accelerators when building solutions for our clients. What is the purpose
Vilka [71]

Answer:

To deploy and integrate security features in a shorter period of time

Explanation:

Given that accelerator in cybersecurity is a means of enhancing the implementation and information of security measures in a very faster way.

Therefore, the purpose of Accenture's Security practice of using several accelerators when building solutions for their clients is "to deploy and integrate security features in a shorter period of time."

6 0
2 years ago
1. Poverty is more than an economic problem, its a source of social discontent and political________; However, economic ________
horrorfan [7]

Poverty is more than an economic problem, it is a source of social discontent and political unrest;  economic development has reduced the proportion of people living below the poverty line.

<h3>What is poverty?</h3>

Poverty is shown as a deficiency of money and profitable resources to support long-term survival.

Hunger and starvation, restricted access to education and other basic services, social prejudice and exclusion, and a disinterest in decision-making are all examples of its expressions.

Poverty is a cause of social dissatisfaction and political upheaval; economic development has lowered the amount of people living in poverty.

Therefore, the poverty is a very big problem than the economic problem.

Learn more about the poverty, refer to:

brainly.com/question/10645433

#SPJ1

8 0
2 years ago
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