Answer:
a) Realized gain on the sale of land = Selling price – tax basis
=> $100,000 - $77,000 = $23,000
b) Gross profit percentage as per instalment sale method = Gross profit / Sales
=> $23,000/$100,000 = 0.23 or 23%
c) Recognized gain under instalment sale method = Cash collection x gross profit percentage
Year 1 => $10,000 x 23% = $2,300
Year 2 => $45,000 x 23% = $10,350
Year 3 => $45,000 x 23% = $10,350
Answer:
13.26%
Explanation:
For computing the best estimate, first we have to determine the expected rate of return by using the CAPM model which is shown below:
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 5.5% + 1.10 × 8%
= 5.5% + 8.8%
= 14.3%
The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.
Now under the dividend growth model, the cost of equity would be
Price = Next year dividend ÷ (Required rate of return - growth rate)
where,
the next year dividend would be
= $2.20 + $2.20 × 5%
= $2.20 + 0.11
= $2.31
The other items rate would remain same
Now put these values to the above formula
So, the value would equal to
$32 = $2.31 ÷ (Cost of equity - 5%)
After solving this, the cost of equity would be 12.22%
Now the best estimated would be
= (14.3% + 12.2%) ÷ 2
= 13.26%
Most probably B. What does Unc mean in question A?
The money is serving as a medium of exchange. You are exchanging money, which represents the ability to purchase any good of equal value, for the sandwich and bag of chips.
I believe D : ) hope it helps
