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3 years ago

Which statement is true about risk-based financing?

1 answer:

5 0

Risk-based financing is a way that lenders determine your interest rate for a loan based on how likely you are to repay that loan.

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On september 1, capitol maintenance company contracted to provide monthly maintenance services for the next nine months at a ra

Alexus [3.1K]

Monthly maintenance services for the next nine months at a rate of $2400 per month

The client paid capitol $21,600 on September 1

The adjusting entry recorded on December31will be that the debit service revenue and credit unearned revenue for $12,000.

8 0

3 years ago

If the distribution of water is a natural monopoly, then (i) multiple firms would likely each have to pay large fixed costs to d

Sergio [31]

Answer: the correct answer is B. (i) and (iii) only

Explanation:

A natural monopoly is a monopoly in an industry in which huge infrastructural costs and other fences to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming advantage over potential competitors.

(i) multiple firms would likely each have to pay large fixed costs to develop their own network of pipes. This is true but often times it is just one big company the one that serves the whole market or a partnership of two or (rarely) three companies that works as a big company.

(iii) a single firm can serve the market at the lowest possible average total cost. This is true because a natural monopoly has scale economies that's why it can offer the lowest possible average total costs.

5 0

3 years ago

The table shows a point-based grading system.

Ilia_Sergeevich [38]

Answer:

ITS 2.9

Explanation:

i did the test

6 0

3 years ago

Read 2 more answers

Harris Inc. has EBIT of $1,500 and debt of $5,000 on which it pays 12% interest. Its EPS is currently $2.35 per share. Managemen

Bond [772]

Answer:

Ans. The new EPS be if that happens will be $1.57

Explanation:

Hi, first let´s introduce the equation we need to find the EPS.

$EPS=\frac{((EBIT-Int)(1-Tax)}{Shares}$

And since we know that the next EBIT will decline by 20%, our new EBIT will be 80% of the initial EBIT, so we solve the last equation for (1-tax) and we get the following 2 equations.

$(1-Tax)=\frac{EPS(1)*Shares}{(EBIT-Int)}$

$(1-Tax)=\frac{EPS(2)*Shares}{(0.8*EBIT-Int)}$

Our interest expense (Int) is $5,000*0.12= $600, EBIT is 1,500, 0.8*EBIT=1,200, EBIT(1)=$2.35, so we solve for EPS(2) the followiong equation.

$\frac{EPS(2)*Shares}{(0.8*EBIT-Int)}=\frac{EPS(1)*Shares}{(EBIT-Int)}$

$\frac{EPS(2)}{(0.8*EBIT-Int)}=\frac{EPS(1)}{(EBIT-Int)}$

$EPS(2)=\frac{EPS(1)*(0.8*EBIT-Int)}{(EBIT-Int)}$

$EPS(2)=\frac{2.35*(1,200-600)}{(1,500-600)} =\frac{1,410}{900} =1.57$

Therefore, our new EPS if the company´s EBIT drops by 20% would be $ 1.57.

Best of luck.

3 0

3 years ago

On June 30, 2021, the Esquire Company sold some merchandise to a customer for $40,000. In payment, Esquire agreed to accept a 5%

EastWind [94]

Answer:

Notes Receivables 40,000 debit

Sales revenue 40,000 credit

-- to record the sale and the accepted promissory note--

interest receivables 1,000 debit

interest revenue 1,000 credit

--to adjust for interest at year-end ---

Cash 41,500 credit

Notes Receivables 40,000 credit

Interest receivables 1,000 credit

Interest revenue 500 credit

--to record the maturity and honor of the note--

If we didn't make the adjusting entr. the 2021 income will be understated by 1,000 and the 2022 overstated by 1000

as we assing the 6 month of interest from 2021 into 2022 accounting period.

Explanation:

We record the sales reveneu for the nominal. over time we are going to accrue interest.

principal x rate x time = interest

we should express rate and time in the same metric, in this case as teh rate is annual we express time in portion of a year (X month / 12)

Adjusting entry at year-end

40,000 x 5% x 6 /12 = 1,000 interest revenue

At maturity:

40,000 x 5% x 3/12 = 500 interest revenue

And we have to write-of the note receivable and the interest receivables.

4 0

4 years ago