Answer:
Cost of equity = 14.74%
Explanation:
The capital asset pricing model is a risk-based model for estimating the return on a stock..
Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk.
Systematic risks are those which affect all economic actors in the market, they include factors like changes in interest rate, inflation, etc. The magnitude by which a stock is affected by systematic risk is measured by beta.
Under CAPM,
E(r)= Rf + β(Rm-Rf)
E(r)- cost of equity , Rf-risk-free rate , β= Beta, Rm= Return on market.
Using this model, we can work out the value of beta as follows:
β-1.2 Rf- 4.3%, Rm = 13%
E(r) = 4.3% + 1.2 × (13 - 4.3)%=14.74
%
Expected return = 14.74
%
Cost of equity = 14.74%
Answer:
C. Expense $300 of the expense on the income statement.
Explanation:
The correct answer is C.
On 31 December 2016, Sengal Company should report Rent expense of $300 on the income statement.
The initial journal entry was:
Dr Prepaid rent $1, 200
Cr Cash $1, 200
This journal entry recognizes the prepaid rent as an asset to the company because the rent is paid in advance, and they have not yet made use of the property they are renting. The payment is an annual payment, meaning that it is for 12 months. Assuming that the end of the financial year is at 31 December 2016, we know that a portion of the $1, 200 is in excess.
The monthly rent expense is $1,200 / 12 = $100. This means that only $100 is the expense for each month. By 31 December, only $300 was the rent expense. [ $100 x 3]. Sengal Company had paid $900 [$1, 200 - $300] in advance and that $900 was to remain as an asset (prepaid rent). The $300 should be recorded as an expense in the income statement and removed as an asset from the balance sheet.
The subsequent journal entry to record the expense is:
Dr Rent expense $300
Cr Prepaid rent $300
At the end of the financial year [31 December 2016], all income statement accounts must be correctly accounted for. This is because all income and expenses are closed of at year end and are not carried forward into the next financial year. This is according to the GAAP principle of ‘Matching’ which states that all income and expenses should be matched to the correct year in which they occur.
It is most likely that a judicial foreclosure will be used when a lending seek the court’s permission to foreclose on a property used as collateral for a loan that is in default.
<h3>What is a foreclosure process?</h3>
Basically, a foreclosure refers to the legal process that allows lenders to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property.
The judicial foreclosure involves the foreclosure proceedings that take place through the court system. This process occurs when a mortgage note lacks a power of sale clause which would legally authorize the mortgage lender to sell the property if a default occurred.
Read more about foreclosure process
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His marginal cost curve is increasing, because the marginal benefit of each additional bag of seeds keeps going down and the costs continue to go up.
