Answer:
Option (a) 12.23%
Explanation:
Data provided in the question:
Debt-equity ratio = 0.6
or
Debt = 0.6 × Equity
Cost of equity, ke = 16% = 0.16
Pretax cost of debt, kd = 9% = 0.09
Tax rate = 34% = 0.34
Now,
Firm's WACC = [ weight of equity × ke] + [ Weight of debt × kd × (1-Tax rate) ]
also,
weight of equity = Equity ÷ ( Debt + equity )
= Equity ÷ ( 0.6 × Equity + equity )
= 1 ÷ 1.6
= 0.625
weight of Debt = Debt ÷ ( Debt + equity )
= 0.6 × Equity ÷ ( 0.6 × Equity + equity )
= 0.6 ÷ 1.6
= 0.375
Thus,
Firm's WACC = [ 0.625 × 0.16 ] + [ 0.375 × 0.09 × (1- 0.34) ]
= 0.1 + 0.022275
= 0.122275
or
= 0.122275 × 100%
= 12.2275% ≈ 12.23%
Answer: Establish a revocable living trust.
Explanation:
A revocable living trust is a written document that details how an individual assets would be handled after they die. They are used to avoid probate and protect privacy of the trust owner, beneficiary of trust and reduce estate taxes. Assets placed in the beneficiary name are transfered from the owners account or details to theirs.
Answer:
Both of these answers are the primary differences.
1.The accrual basis records revenues when services or products are delivered and records expenses when incurred.
And
2.The cash bases records revenues when cash is received and records expenses when cash is paid.
Explanation:
Under the cash basis, entries in the book of accounts are made when cash is received or paid and not when the receipt or payment has become due.
While
Under the accrual basis, however, revenues and costs are recognised in that period in which they occur rather when they are paid
Accrual basis is more generally accepted than cash basis, as it gives a truer image of enterprise performance in an accounting period.
Answer:
The true statement is "The cumulative translation adjustment account affects the amount of gain or loss reported upon the sale of a foreign subsidiary".
Explanation:
The current technique needs that each one quality and accountability books be interpreted at this rate whereas shareholders’ justice accounts are interpreted at ancient altercation rates. The distinction is mirrored finished the additive conversion alteration, therefore the quantity of improvement or loss according upon the auction of a distant secondary to the additive conversion alteration.
Answer:
C. The original amount invested and previously paid interest payments
Explanation:
Compound interest is the interest calculations that take into account the principal amount and the interest payment summed up to calculate the subsequent interest payment. For example in year 0 there was an investment of 1000 and 10% interest payable annually,
Year 0 = 1000
Year 1 = 1000 + 100 (here hundred is the interest payment)
Year 2 = 1000 + 100 + 110 (110 is the compounded interest on 1000 +100 from previous periods)
Hope that helps.
