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Svetllana [295]
3 years ago
13

If the margin of safety is 0, then a.the margin of safety cannot be less than or equal to 0; it must be positive. b.the company

is operating at a loss. c.the company is earning a small profit. d.the company is precisely breaking even. e.the company's total variable costs are equal to its total fixed costs.
Business
1 answer:
sdas [7]3 years ago
3 0

Answer:

d.the company is precisely breaking even.

Explanation:

Margin of safety is referred to current sales - Break even sales ratio to current sales as a percentage.

Basically it is quoted as follows:

\frac{Current\ sales\ -\ Break-even\ Sales}{Current\ Sales} \times 100

Therefore, when the current sales = Break even sales then only the company will have margin of safety = 0

Thus, at 0 margin of safety the company basically is at no profit no loss situation, that is break even.

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Suppose you started a new all-equity financed company that is expected to generate an ROE of 15% indefinitely. The current book
Luda [366]

Answer:

The value of the stock at start-up = $67.5

Explanation:

According to the dividend valuation model , the current price of a stock is the present value of the expected future dividends discounted at the required rate of return  

This principle can be applied as follows:  

The value of stock today is the present value of the future return discounted at the required rate of return

The return can be computed as the ROE × Book value of share

Return = 15%× 30 =4.5

Price of stock today = D× (1+g)/r-g

D= current return, g- growth rate, r-required rate of return

DATA: D= 4.5, g= 5%, r= 12%

PV  = 4.5× (1.05)/(0.12-0.05)

= 67.5

The value of the stock at start-up = $67.5

7 0
3 years ago
Government-regulated maximum rent levels are an example of what? A. price floors B. public good C. rationing D. price ceilings
OLga [1]

D. Price ceiling

This is a government regulation that establishes a maximum price for a specific thing.

3 0
3 years ago
On January 1, Hurley Corporation issues $500,000, 5-year, 12% bonds at 96 with interest payable on January 1. The entry on Janua
KonstantinChe [14]

Answer:

b. credit to Cash $60,000.

Explanation:

Given that:

Hurley Corporation issues the principal amount of $500,000

Time = 5 years

Rate = 12%  at 96  with interest payable on January 1

Discount on issue  =500000 × (1 - 0.96) = 20000

Annual discount  amortization= 20000/5 = 4000                  

Interest payable  = 500000× 12% =  60000

From the information given in the question; we can have a journal entry to determine the what the straight-line method will include.

So, let have a look at the table below:

Discount on issue                     20000                                      

Annual discount                        4000

amortization

                                                     Debit                            Credit

Interest expense                         64000

Discount on Bonds payable                                            4000

Interest payable                                                               60000

Now; The January 1 entries will now be as follows:

                                                    Debit                        Credit

Interest payable                           60,000

Cash                                                                                60,000

Thus; The entry on January 1 to record payment of bond interest assuming amortization of bond discount used the straight-line method will include a: <u>Credit to cash  $60,000</u>

3 0
3 years ago
In a balanced balance sheet, if liabilities are $2,000 and owner’s equity is $3,300, what must assets be ____?
TEA [102]

Answer:

5300

Explanation:

assets=equitys +liabilities

3 0
2 years ago
Which of these individuals is an entreneur ?
wlad13 [49]

Answer:

A. a computer programmer who starts her own software Company

Explanation:

Entrepreneurship is the process through which new businesses are started. An entrepreneur is a person who takes risks by committing their time and resources to start a business.

The computer programmer is the entrepreneur in this case. She is starting a new software business. Other than her computer skills, she will need to be creative and innovate to develop products that will appeal to customers. She will take all risks of her new business but also stand to enjoy its success.

7 0
3 years ago
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