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ruslelena [56]
3 years ago
10

If a firm goes out of business because of negative economic​ profits, its books

Business
1 answer:
Rainbow [258]3 years ago
8 0

Answer:

The answer is B.

Explanation:

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Kimona Company hired you as a consultant to help estimate its cost of common equity. You have obtained the following data: D0 =
nlexa [21]

Answer:

-2.23%

Explanation:

The formula to compute the cost of common equity under the DCF method is shown below:

= Current year dividend ÷ price + Growth rate

In first case,

The current dividend would be

= $0.85 + $0.85 × 5%

= $0.85 + $0.0425

= $0.8925

The other things would remain the same

So, the cost of common equity would be

= $0.8925 ÷ $20 + 5%

= 0.044625 + 0.05

= 9.46%

In second case,

The price would be $40

The other things would remain the same

So, the cost of common equity would be

= $0.8925 ÷ $40 + 5%

= 0.0223125 + 0.05

= 7.23%

The difference would be

= 7.23% - 9.46%

= -2.23%

4 0
3 years ago
When demand shocks lead to recessions, it is mainly due to unexpected changes in the:________.
Alexeev081 [22]

Answer:

When demand shocks lead to recessions, it is mainly due to unexpected changes in the:

the inability of government policy to affect demand.

Explanation:

Government has every right to make policies that would strictly affect price, if this is not done and there is inflation of price it would lead to recession.

8 0
3 years ago
Read 2 more answers
Beta Company leased equipment from Summer Industries. The lease agreement qualifies as a finance lease and requires annual lease
Tamiku [17]

Answer:

Total increase in pretax earnings on Summer’s December 31, 2019, income statement is $20,253

Explanation:

Fair value of asset sold on lease = Present value of lease payments = $50,000 * Cumulative PV factor at 6% for 8 periods of annuity due

= $50,000 * 6.20979

= $310,490

Interest income for 2019 = ($310490 - $50,000) * 6% = $15,629

Total increase in pretax earnings on Summer’s December 31, 2019, income statement = $310490 - $300,000 + $15,629 - 5866 = $20,253

3 0
2 years ago
Mo has a credit card that gives a 3% discount on every purchase. The annual percentage rate on the card is 12%. He is purchasing
Luden [163]

Answer:

If Mo pays cash, the cost of the purchase will be $140.

If Mo uses the credit card and pays the full balance during the billing cycle, the cost of the purchase will be $135.80.

Explanation:

If Mo pays cash, it implies that she does not get the 3% discount she is entitled to, with the use of her credit card.  Therefore, she will bear the full cost.  However, if she uses the credit card, the discount is $4.20 ($1540 * 97%) and she will pay only $135.80 as the discounted price of the electronic reader.

5 0
3 years ago
Read 2 more answers
The following transactions occur for Cardinal Music Academy during the month of October: Provide music lessons to students for $
Masteriza [31]

Answer:

a. Journal entry to record music lesson

Date         Account title and Explanation     Debit     Credit

October   Cash                                              $12,500

                       Service revenue                                    $12,500

                (To record music lesson for cash)

b. Journal entry to record prepaid insurance purchase

Date         Account title and Explanation     Debit     Credit

October   Prepaid insurance                         $3,660

                       Cash                                                        $3,660

                 (To record  prepaid insurance paid for next year)

c. Journal entry to record musical equipment purchased

Date         Account title and Explanation     Debit     Credit

October    Equipment                                    $15,500

                        Cash                                                      $15,500

                  (To record musical equipment purchase for cash)

d. Journal entry to record

Date         Account title and Explanation     Debit     Credit

October    Cash                                              $21,000

                        Notes payable                                       $21,000

                  (To record loan taken by signing a note)

6 0
3 years ago
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