Answer:
Comment for statement A - The firm must still compare the IRR with the opportunity cost of capital when using the IRR rule. Therefore, even with the IRR method, the appropriate discount rate must still be specified.
Comment for statement B - There should be a higher discount rate on risky cash flows than the rate used to discount less risky cash flows.
Making use of the payback rule is equivalent to using the NPV rule with a zero discount rate for cash flows before the payback period and an infinite discount rate for cash flows thereafter.
Explanation:
a)
“I like the IRR rule. I can use it to rank projects without having to specify a discount rate”
The firm must still compare the IRR with the opportunity cost of capital when using the IRR rule. Therefore, even with the IRR method, the appropriate discount rate must still be specified.
b.
“I like the payback rule. As long as the minimum payback period is short, the rule makes sure that the company takes no borderline projects. That reduces risk”
There should be a higher discount rate on risky cash flows than the rate used to discount less risky cash flows.
Making use of the payback rule is equivalent to using the NPV rule with a zero discount rate for cash flows before the payback period and an infinite discount rate for cash flows thereafter.
Answer:
Common Stock $10,000 and Paid-in Capital in Excess of Par Value $2,000
Explanation:
The journal entry to record the issuance of common stock is presented below:
Cash A/c Dr $12,000 (1,000 shares × $12)
To Common Stock $10,000 ($1,000-× $10)
To Additional Paid-in Capital in excess of par - Common Stock $2,000
(Being the issuance of stock is reported and the remaining balance i.e $2,000 is credited to the additional paid-in capital account)
While issuing the stock, we debited the cash account as there is a cash inflow and credited the common stock and additional paid-in capital account as the share is issued which affect the stockholder equity
The issues of training, absenteeism , productivity and morale should be agreed upon at the first level of supervisors.
The first line supervisor can manage concerns like as training, absenteeism, productivity, and morale . With the growth of unions, hiring and firing have grown increasingly difficult for first-line supervisors to handle. Hiring and, more crucially, dismissal should be prioritized to avoid disputes. Disciplinary action is often handled by first line supervision in a non-union context. It should be elevated in a union setting. Elevation would guarantee that all of the ducks are in a row to avoid a complaint and save the company money on any monetary settlements.
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Answer:
Dollar profit loss = $3
Holding period return = negative 9%
Explanation:
In order to find the dollar profit or loss return we will add the dividend and selling price because that the dividend plus the selling price is the cash that Travis receives or the positive cash and we will subtract the buying price from it because it is the negative cash flow. So we will add all the positive cash flows and subtract negative cash flow from it in order to find the dollar profit loss or return.
Selling price = 27.65
Dividend = 0.85
Selling price + Dividend= 28.5
Selling price = 31.50
Dollar profit loss or return = 28.50-31.5=-3
Loss= $3
In order to find the holding period return we will divide add the dividend and selling price , subtract buying price from it and then divide it by buying price.
(27.65+0.85-31.5)/31.5= -0.09 = -9%
Holding period return = negative 9%
