Your answer is A. Paul is correct because the government always withholds money for taxes due from all incomes.
Answer:
A. Debit inventory for $20 and credit expense for $20.
Explanation:
We should remember that we cannot recognize a gain before is realized. Increasing the inventory for their net realizable value would reocgnize the gain before selling the good that is not correct. The comapny will adjust to their original cost of 100 that is, reverse the 20 dollars loss of the previous year.
Answer:
1. The Value of a levered firm can be calculated using WACC which means that if you have the Value, you can compute WACC.
The formula is;
Value of leveraged firm = Free cash-flow/ (WACC - Growth rate)
Value of leveraged firm = Value of Equity + Value of Debt
= 100 + 40
= $140 million
Value of leveraged firm = Free cash-flow/ (WACC - Growth rate)
140 = 7 ( WACC - 3%)
140 * WACC - 4.2 = 7
WACC = 0.08
= 8%
2. Interest tax shield = Value of leveraged firm - Value of unleveraged firm
Value of unleveraged Firm = Free Cash Flow/ WACC before tax - Growth rate
WACC before tax = WACC + (Debt/(Debt + Equity))*Cost of Debt*(Tax Rate)
= 8% + (40/ 140) * 7.5%(35%)
= 8.75%
Value of unleveraged Firm = Free Cash Flow/ WACC before tax - Growth rate
= 7 /( 8.75% - 3%)
= $121.74 million
= $122 million
Interest tax shield = Value of leveraged firm - Value of unleveraged firm
= 140 - 122
= $18 million
Answer: 12.1%
Explanation:
Returns are generally quoted in Nominal terms because they include the inflation of the period. The 12.1% is therefore the nominal yield on the stock.
When adjusted for inflation however, the stock return will most likely reduce to reflect the real rate of return which shows the rate of return without the effects of inflation that 'exaggerates' return.
Answer:
c. $8,500
Explanation:
The computation of the ending inventory using the LIFO method is shown below:
Since it is given that 400 units of product A are on hand which reflects the ending inventory units
So
= 300 units × $21 + 100 units × $22
= $6,300 + $2,200
= $8,500
The 100 units depicts the remaining units i.e
= 400 units - 300 units
= 100 units
First we take the Jan 1 units than the remaining units would take from Jan 10
