Answer:
b. $212,000
Explanation:
The cost concept entails the initial recognition of an asset at the historical cost or actual cost of purchase.
For Focus company, the amount to be recorded for the land purchased from Donner company using the cost concept is not the market value of the land at $220,000 nor the initial offered price of $177,000.
The cost of another piece of land on the same block sold for $232,000 is also not the amount but the actual cost paid for the property which is $212,000.
Hence the right option is b. $212,000.
Answer:
$ 180
Explanation:
Net capital spending = fixed assets at the end of the year - fixed assets at the beginning of the year + depreciation = $ 730 - $ 600 + $ 50 = $ 180
Net capital spending is the amount a firm used to acquire fixed assets during the year.
Answer:
P1 = 131.6566627 rounded off to $131.66
Explanation:
To calculate the price of the stock at the end of the year or P1, we first need to determine the required rate of return on the stock and the growth rate in dividends.
The required rate of return can be found using the CAPM equation. The formula for required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate
- rM is the return on market
r = 0.06 + 1 * (0.18 - 0.06)
r = 0.18 or 18%
Now we assume that the stock is a constant growth stock which means that the growth in dividends is expected to be constant throughout. The price of such a stock is found using the constant growth model of DDM. The formula for price today under the constant growth model is,
P0 = D1 / (r - g)
Where,
- D1 is expected dividend for the next period
- g is the growth rate in dividends
Plugging in the available variables, g is,
120 = 10 / (0.18 - g)
120* (0.18 - g) = 10
21.6 - 120g = 10
g = (10 - 21.6) / -120
g = 0.096667 or 9.6667% rounded off to 9.67%
So to calculate the price at the end of the year or P1, we will use D2.
P1 = 10 * (1+0.0967) / (0.18 - 0.0967)
P1 = 131.6566627 rounded off to $131.66
25,741.17
because you multiply 0.098x5,837x45! hope this helps!