Answer:
Correct answer is B, Debit cash $38,800, debit factoring fee expense $1,200 and a credit of Accounts receivable of $40,000
Explanation:
Factoring is one way to raise fund for immediate use of the company. It is a way to sell accounts receivable of the company. The above-mentioned problem is to sell accounts receivable (factored) with the corresponding factoring fee of 3% and that is $1,200 (40,000 x 3%). In effect of this fee, the company will receive cash less than the amount of its accounts receivable sold. The company will record the inflow of cash at $38,800 (40,000 - 3%) and will also recognize an expense incurred during the factoring in the amount of $1,200 and finally will credit the sold accounts receivable in the amount of $40,000.
Answer:
$-13,975.91
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-95,000
Cash flow in year 1 = $30,000
Cash flow each year from 2 to 5 = $20,000
I = 12%
NPV = $-13,975.91
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I would go with C. Approach the Federal Trade Commission
Answer:
The dividend in the upcoming year should be $2.40
Explanation:
Given:
EPS(Earnings Per Share) = $8
Expected ROE(return on equity) = 18%
Appropriate required return = 14%
Plowback ratio = 70%
Required:
Find the dividend
To find the dividend, we need to first calculate the dividend payout ratio.
To find the dividend payout ratio, use the formula below:
Dividend payout ratio = 1 - plowback ratio
= 1 - 0.70
= 0.30 ≈ 30%
The dividend payout ratio is 30%
Therefore, the dividend for the upcoming year would be calculated using the formula below:
Upcoming dividend = upcoming EPS × dividend payout ratio
= $8 × 30%
= $2.4
The dividend in the upcoming year should be $2.4
