Gangland Water Guns, Inc. is expected to pay a dividend of $2.10 one year from today. If the firm's growth in dividends is expec
1 answer:
Answer:
15%
Explanation:
Use Dividend discount model to find the required return of equity or cost of equity capital;
Return r formula;
whereby; D1 = Next year's dividend = $2.10
P0 = Current price = $17.50
Growth rate; g = 3% or 0.03 as a decimal
Next, plug in the numbers to the formula above to calculate the cost of equity;
r
r = 0.15 or 15%
Therefore, cost of equity is 15%
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Answer:
The question requires the answering party to pick all that apply as found in the attached.
A. The initial payment will be recorded as an increase to a Prepaid Insurance account.
B. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset.
C. As a portion of the policy expires, the expired portion will be removed and transferred to an expense account.
Explanation:
The initial payment will be recorded as increase to an asset account,prepaid insurance is a correct statement,pending when the insurance cost is cost,
Subsequently,the expired the portion of the prepayment would be removed from the account,hence point B is also correct.
Finally,when the expired portion is removed from prepaid insurance account,it is transferred to insurance expense account,point C is also on point.
