Answer:
a.Year Cashflow [email protected]% PV [email protected]% PV
$ $ $
0 (1,000) 1 (1,000) 1 (1,000)
1-15 72 11.1184 800 7.6061 548
15 1,000 0.5553 555.3 0.2394 239
NPV 355.3 NPV 213
Kd = LR + NPV1/NPV1 + NPV2 x (HR – LR)
Kd = 4 + 355.3/355.3 + 218 x (10 – 4)
Kd = 4 + 355.3/573.3 x 6
Kd = 7.72%
b. Kp = D/Po
Kp = $100/$1,111
Kp = 0.09 = 9%
c. Ke = D1/Po (1 – FC) + g
Ke = $4.3995/$50(1-0.15) + 0.05
Ke = $4.3995/$42.50 + 0.05
Ke = 0.1535 = 15.35%
WACC = Wdrd(1 – T) + Wprp + Were
WACC = 0.3(7.72)(1-0.4) + 0.1(9) + 0.6(15.35)
WACC = 1.39 + 0.9 + 9.15
WACC = 11.44%
Explanation:
In this case, we need to calculate cost of debt, cost of preference shares and cost of equity. Cost of debt is calculated based on internal rate of return. Cost of preferred stock is the ratio of dividend paid to the market price. Cost of equity is a function of D1 divided by current market price after floatation cost plus growth rate. WACC is equal to cost of each source multiplied by respective weights.
Answer:
0.32 %
Explanation:
Demand is the quantity that buyers are able & willing to buy, at a particular price & period of time. It is inversely related to price, as per law of demand.
Demand function is a regression equation that shows the relationship between dependent variable (demand) & independent variable (price)
Q = A - BP
where Q = Demand, A = Autonomous Demand, P = Price, B = Change in demand per unit change in price
Change in Quantity = B x Change in Price
Example : Considering Q = 50 - 0.5 P
Q {At previous P} = 50 - 0.5 (8.6) → = 50 - 4.3
= 45.7
Q {At new P} = 50 - 0.5(8.3) → = 50 - 4.15
= 45.85
Change in Quantity = 45.85 - 45.7 → = 0.15
Alternative Method : ΔQ = B x ΔP → = (0.30) x (0.5) → = 0.15
Percentage Change in Quantity = [Change IN Quantity / Old Quantity] x 100
[ΔQ/Q] x 100 → = [0.15 / 45.7] x 100 → = 0.32 %
Answer:
$858.45
The proration will appear in this format:
Debit seller $858.45, Credit buyer $858.45
Explanation:
$1,485 ÷ 365 = $4.07 per day $4.07 x 211 days (January 1 to July 30) = $858.45.
Debit seller $858.45, Credit buyer $858.45
Answer:
Examine shipping documents for matching sales invoices.
Explanation:
Sales invoice is provided by the seller and for shipped goods it is usually attached to the merchandise. If the auditor wants to know if the goods shipped are properly billed he will check the sales invoice to see if the goods supplied is the same quantity and type requested for. Also it is used to check if the correct amount is charged for the shipment.
In the case where there is discrepancy in any of the agreed terms, it is noted on the sales invoice and sent back to the seller to notify him of the discrepancy.
Answer:
A recession occurs when an economy experiences a period in which there is - B. a decrease in total production.
According to economists, a recession is a two-consecutive quarterly periods of economic decline, as represented by GDP. In other words, if GDP falls for six consecutive months, we have a recession. And GDP is a measure of the total production of a particular region in a given period of time.
The business cycle exists because - D. total production experiences periods of increases and periods of decreases.
The business cycles refers to the cyclical nature of the periods of growth, and degrowth of total production of GDP. This means that it is natural and expected for total production to grow in some periods of time, and to fall in other periods of time, which affects firms and individuals accordingly: when GDP grows, firms produce more, hire more people, and incomes rise, when GDP falls, firms produce less, lay off people, and incomes stagnate, or go down.