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lbvjy [14]
3 years ago
5

Boss asks you to explain the difference between the Cost of Capital and DiscountRate in a multi-year Net Present Value analysis

of a single project. You correctly point out that typically…
Business
1 answer:
babymother [125]3 years ago
6 0

Answer:

Cost of capital is the overall rate of return expected by investors while the discount rate is the minimum rate of return used for appraising a project in order to obtain the net present value.

Explanation:

Cost of capital is calculated as cost of equity multiplied by the proportion of equity in the capital structure plus cost of debt multiplied by the proportion of debt in the capital structure plus cost of preferred stock multiplied by the proportion of preferred stock in the capital structure.

Discount rate is the rate used for determining the attractiveness of a project. This rate is used for determining the net present value of a project.

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During 2019, $27,000 of cash dividends were declared and paid. A patent valued at $80,000 was obtained in exchange for land. Equ
nadezda [96]

Answer:

a. Change in Cash that occurred during 2019:

Cash outflow $27,000

Cash inflow = $13,000

Net outflow = $14,000

b. Statement of Cash Flows for the year ended December 31, 2019:

Investing activities:

Sale of Equipment         $13,000

Financing activities:

Payment of dividends ($27,000)

Net cash outflow =        $14,000

Explanation:

a) Data and Calculations:

Cash dividends paid during 2019 = $27,000

Patent purchased = $80,000

Land sold in exchange of patent = $80,000

Sale of equipment = $13,000

Sales of Bonds Payable = Cost of Building Improvements

7 0
3 years ago
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follow
Anestetic [448]

Answer:

3.

DR Selling and Administrative Salaries               $240,000

      Manufacturing Overhead                                $150,000

      Work in Process                                                $600,000

CR Wages Payable                                                                      $990,000

4.

Manufacturing Overhead Applied

= 41,000 hours * 16.25

= $666,250

5. Total Manufacturing cost to be added = Raw Materials + Direct Labor + Manufacturing Overhead

= 480,000 + 600,000 + 666,250

= $1,746,250

6.

DR Finished Goods                                             $1,680,000

CR Work in Process                                                                $1,680,000

7.

Ending Balance = Beginning balance + Raw materials + Direct labor + Manufacturing Overhead - Cost transferred to Finished goods

= 18,000 + 480,000 + 666,250 + 84,250 - 1,680,000

= $84,250

9. Predetermined overhead cost - Actual cost = 666,250 - 650,000 = $16,250.

<u>Overapplied</u> as predetermined cost was more than Actual.

12. Finished goods = Beginning balance + Cost transferred from WIP - Cost of goods sold

= 35,000 + 1,680,000 - 1,690,000

= $25,000

13.

Adjusted Cost of Goods sold = Cost of goods sold - Overapplied

= 1,690,000 - 16,250

= $1,673,750

14. Gross Margin = Sales - Adjusted COGS

= 2,800,000 - 1,673,750

= $1,126,350

15. Net Operating Income

= Gross Margin - Selling and Administrative salaries - Selling and Administrative expenses

= 1,126,350 - 240,000 - 367,000

= $519,250

6 0
3 years ago
Rachel's Recordings reported net income of $270,000. Beginning balances in Accounts Receivable and Accounts Payable were $17,000
Cloud [144]

Answer:

Cash flow from operating activities 284,500

Explanation:

net income                                    270,000

change in AR

17,000- 9,500  =           7,500(A)

change in AP

28,000 - 21,000 =        7.,000(B)

total change in working capital        14,500

Cash flow from operating activities 284,500

(A)

The account receivable decrease over time this means the account were collected, whch increase cash

(B)

The account payable increase, which means the company receive cash or delay the payment of cash for this period of time. Therefore, the cash increase.

3 0
3 years ago
Prices usually allocate resources efficiently because they allocate:
Arisa [49]

Answer: Option (B) is correct.

Explanation:

Correct Option: Resources to the highest value good or service.

Prices normally are able allocate scarce resources efficiently because they will allocate resources in a better way, so that there can be a full utilization of resources.

If the resources are used efficiently and effectively then this will lead to an optimal utilization of the limited resources.

6 0
3 years ago
Read 2 more answers
In a fixed exchange rate​ system, how do countries address the problem of currency market pressures that threaten to lower or ra
Jet001 [13]

Answer: D. A and B only

Explanation:

In a fix exchange rate, the country can address problem of currency market pressure that threaten yo lower or raise the value of its currency by this under listed measures;

1. if demand falls, then countries must increase demand by buying up the excess supply with domestic currency

2. if demand rises, countries must fill the excess demand for foreign currency by selling their reserves.

5 0
3 years ago
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