Answer:
C) reciprocity
Explanation:
Based on the information provided within the question it can be said that this scenario is an example of reciprocity. This term refers to exchanging one thing for another in which both parties benefit in their own unique way. Which is the case since Bob buys equipment from Allied Tools which generates revenue for Allied Tools thus benefiting them, and Allied Tools hires Bob periodically which generates revenue for Bob thus benefiting him.
Answer:
Fixed budget.
Explanation:
A fixed budget can be regarded as financial plan which is not been modified for any variations that could come up in actual activity. In most times some companies may have experience of substantial variations as regards their expected activity levels within the encompassed period of budget as well as the amounts in that budget. The budget cost allowances in a fixed budget for each cost item cannot be changed as regards the variable items. It should be noted that in Fixed budget the master budget is based on a single prediction for sales volume, and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur.
Answer:
$0
Explanation:
Data provided in the question
Borrowed amount from the bank = $90,000
Annual interest rate = 8%
Maturity date = March 31, 2019
Since it is mentioned in the question that, the interest and the principal were paid in cash on the maturity date so for the amount of cash that Abardeen had to pay for 2018 interest would be zero as the principal and the interest is paid for 2018
Answer:
d) The value of equity is $0
Explanation:
Bank loans are classified as performing and nonperforming loans. Nonperforming loans that stay for over a long period (usually 12 months) are considered to be a loss.
When a bank makes a loss on loans (loan goes bad due to nonrepayment) they make provisions and debit the business equity for the loss.
The given loan amount is $800 and the bank had to provision 5% of that amount.
Loss from loan= 800* 0.05= $40
This is deducted from equity= 40- 40= $0
Answer:
The cost of equity is 12.49 percent
Explanation:
The price per share of a company whose dividends are expected to grow at a constant rate can be calculated using the constant growth model of the DMM. The DDM bases the price of a stock on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D1 / r - g
Where,
- D1 is the dividend expected for the next period
- r is the cost of equity
- g is the growth rate in dividends
As we already know the P0 which is price today, the D1 and the growth rate in dividends (g), we can plug in the values of these variables in the formula to calculate the cost of equity (r)
100.81 = 8.76 / (r - 0.038)
100.81 * (r - 0.038) = 8.76
100.81r - 3.83078 = 8.76
100.81r = 8.76 + 3.83078
r = 12.59078 / 100.81
r = 0.12489 or 12.489% rounded off to 12.49%
