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iogann1982 [59]
3 years ago
9

Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0%

debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%. Refer to the data for Eccles Inc. What is the value of the firm according to MM with corporate taxes?
Business
1 answer:
Feliz [49]3 years ago
6 0

Answer:

$587,500

Explanation:

You are required to calculate the value of the levered firm;

vL = vU + Dt, whereby;

vL = Value of levered firm

vU = value of unlevered firm

Dt = debt * tax ; which is the tax shield

Find value of unlevered firm;

vU = [EBIT(1-tax) ]/ rE

    = [100,000(1-0.30)] / 0.16

    = 437,500

Value of levered firm;

vL = 437,500 + (500,000*0.30)

   = 437,500 +150,000

   = $587,500

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BE18.8 (LO 2) Presented below are three revenue recognition situations. a. Groupo sells goods to MTN for $1,000,000, payment due
dem82 [27]

Answer:

a. Groupo sells goods to MTN for $1,000,000, payment due at delivery.

  • transaction price = $1,000,000
  • revenue recognized once the goods are delivered

No journal entry is required until goods are delivered and accepted.

b. Groupo sells goods on account to Grifols for $800,000, payment due in 30 days.

  • transaction price = $800,000
  • revenue recognized immediately since goods were already delivered

The journal entry:

Dr Accounts receivable 800,000

    Cr Sales revenue 800,000

c. Groupo sells goods to Magnus for $500,000, payment due in two installments, the first installment payable in 18 months and the second payment due 6 months later. The present value of the future payments is $464,000.

  • transaction price = $480,000
  • revenue recognized immediately since goods were already delivered

The journal entry:

Dr Notes receivable 500,000

    Cr Sales revenue 480,000

    Cr Discount on notes receivable 20,000

8 0
3 years ago
Ben katchor used _____ to create multiple locations for the production of the slugbearers of kayrol island.
Aleonysh [2.5K]
<span>Ben katchor used projections to create multiple locations for the production of the slugbearers of kayrol island.

Thank you for posting your question here at brainly. I hope the answer will help you. Feel free to ask more questions.
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7 0
3 years ago
which manufacturing strategy can be described as producing products to put into inventory based on a demand forecast
Gwar [14]

The make-to-stock manufacturing (MTS) strategy can be described as producing products to put into stock based on a demand forecast.

In this strategy, companies do not maintain productive stability over a period of time, but adjust their manufacturing strategy according to times when demand can increase or decrease.

Some advantages of the make-to-stock strategy are:

  • Economy of scale.
  • Waste reduction.
  • Efficiency in the use of resources.
  • Increased response time.

So this is an effective manufacturing strategy for companies that can accurately forecast their demand.

Learn more here:

brainly.com/question/24099922

8 0
3 years ago
During June, Buttrey Corporation incurred $72,000 of direct labor costs and $12,000 of indirect labor costs. The journal entry t
romanna [79]

The correct question is:

During June, Buttrey Corporation incurred $67,000 of direct labor costs and $7,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

A)debit to Work in Process of $67,000B)credit to Work in Process of $74,000C)debit to Work in Process of $74,000D)credit to Work in Process of $67,

Answer:

a. debit to Work in Process of $67,000

Explanation:

Labour costs are made up of direct labour cost and indirect labour costs.

An addition of these two items results in amount of money the company will pay as wages to worked (labour).

In the given scenario we will then add direct and indirect labour cost to get wages to be paid.

Wage = 72,000 + 12,000 = $84,000

Wages is credited when raising journal entry

Direct labour will be classified under work in process (that is $72,000)

While indirect labour is manufacturing overhead $12,000)

Work in process and manufacturing overhead are debited when raising journal entry

So one of the entries will be a debit to Work in Process of $67,000

7 0
3 years ago
Which of the following items is not needed to prepare a sales budget by product line?
Illusion [34]

Answer:

D) Expected purchase price of each product.

Explanation:

According to my research a "Sales Budget" is a companies estimation of sales for any given financial period of the year. This being the case we can say that the item that is NOT needed would be the expected purchase price of each product. This is because they already have the overall expenses for that period, and in a sales budget they just need to calculate the selling price and units expected to sell in order to estimate the profit.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

6 0
3 years ago
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