Answer:
1. Authorized shares = 300,000 shares
2. Issued shares = 160,000 shares
3. Outstanding shares
= Issued shares- Shares repurchased
= 160,000 - 25,000
= 135,000 shares
Explanation:
Authorized shares are shares that a firm is allowed by law to issue to the public.
Issued shares are shares that a company offers to the public for subscription.
Outstanding shares are shares remaining after the share repurchase.
Answer:
The cost of equity using the DCF method: 4.39%.
The cost of equity using the SML method: 15.01%.
Explanation:
a. The cost of equity using the DCF method:
We have: Current stock price = Next year dividend payment / ( Cost of equity - Growth rate) <=> Cost of equity = Next year dividend payment/Current stock price + Growth rate = 0.3 x 1.04/80 + 4% = 4.39%.
b. The cost of equity using the SML method:
Cost of equity = Risk free rate + beta x ( Market return - risk free rate); in which Risk free rate is rate on T-bill.
=> Cost of equity = 6.3% + 1.3 x ( 13% -6.3%) = 15.01%.
Answer: Contract manufacturing.
Explanation:
Contract manufacturing is the outsourcing of some production activities that were formerly done by the producer to a third party. An organization may outsource certain parts for a product.
Contract manufacturing is the practice of giving out part of a work to outside sources rather than completing all the work within the company. It results in lower expenses and costs.
Answer:
Dr Available for sale securities 11,500
Cr Unrealized gains - AFS securities 11,500
Explanation:
The securities cost is $420,000 while the fair market value is $431,500, so the difference is an unrealized gain of = $431,500 - $420,000 = $11,500.
Unrealized gains are included in Other comprehensive income account, which belongs under stockholder equity. When unrealized gains increase, then they should be credited.
Since the securities are held as investment assets, they should also increase by debiting the account.