Answer:
In order to make a decision utilizing a decision tree, you must:___________
b. begin at Time 0 and work towards the most distant point in time.
Explanation:
Decision trees are built up by starting from the present with the overarching objective (goal) in mind. Then, one classifies the information along various branches and leaf nodes, with each branch representing the outcome of an alternative route or a question answered based on the likelihood of the event happening. Each leaf node represents a class label (decision taken after computing all attributes). This structure can be used to predict likely values of data attributes.
Answer:
Transaction 1
Debit : Equipment $130,000
Credit : Cash $130,000
Transaction 2
Debit : Supplies $16,500
Credit : Account Payable $16,500
Transaction 3
Debit : Cash $37,000
Credit : Account Receivable $37,000
Transaction 4
Debit : Dividend $17,000
Credit : Cash $17,000
Explanation:
The first step to record transactions is to identify two or more accounts affected by the transaction.
After that determine if the assets, liability or equity of the accounts identified are increasing or decreasing.
Assets increase on the debit side and decrease on the credit side. The opposite applies to liability and equity.
So, 30 billions were borrowed and 50 billion were returned, which means that the amount returned was bigger than the amount borrowed. This means that the there is now less money in the circulation (on people's accounts, money being exchanged between people), which means that the money supply decreased.
Answer:
Both A and B are true.
- A. All else held constant, if a company has a beta of 1.2, then the cost of equity for this company will increase if the risk-free rate decreases.
- B. If you assume a company has debt, then an increase in the tax rate will decrease the weighted average cost of capital for the company.
Explanation:
A)
The formula to calculate the cost of equity is:
cost of equity = risk free rate of return + [Beta × (market rate of return – risk free rate of return)]
e.g. market rate 15%, risk free rate 5%:
cost of equity = 5% + [1.2 x (15% - 5%)] = 5% + 12% = 17%
if the risk free rate decreases to 3%:
cost of equity = 3% + [1.2 x (15% - 3%)] = 3% + 14.4% = 17.4%
B)
the WACC formula = (cost of equity x weight of equity) + [cost of debt x weight of debt x (1- tax rate)]
if the tax rate increases, then the WACC will decrease because (1 - tax rate) will be lower.
Answer:
(A) $143,220,000
(B) $9,452,520
(C) $133,767,480
Explanation:
(a) The computation of the total proceed is shown below:
= Number of shares sold at IPO × IPO price
= 8,250,000 shares × $17.36
= $143,220,000
(b) The computation of the dollar amount of the underwriting fee is shown below:
= Total proceeds × underwriting discount
= $143,220,000 × 6.6%
= $9,452,520
(c) The computation of the net proceeds is shown below:
= Total proceeds - underwriting fee
= $143,220,000 - $9,452,520
= $133,767,480
