Answer:
The best estimate of the company’s cost of equity is 11.99%.
Explanation:
CAPM based required return = 5% + 1.1*7%
= 12.7%
Dividend model required return
35 = (1.40*1.07)/(r - 0.07)
r - 0.07 = 0.0428
r = 11.28%
The best estimate of the company’s cost of equity is the mean of two = (12.7% + 11.28%)/2
= 11.99%
Therefore, The best estimate of the company’s cost of equity is 11.99%.
Answer: Planet Paul understands even though it cost a little more, the stakeholder considerations are important if one want their business to thrive.
Explanation:
The value of stakeholders to organizations cannot be underappreciated. Stakeholders are the individuals that are interested in ones company and gives ones business both financial and practical support.
Stakeholders include investors, employees, loyal customers etc. Based on the above question, Planet Paul understands even though it cost a little more, the stakeholder considerations are important if one want their business to succeed.
Answer: The purchase of raw materials on account in a process costing system is recorded with a "C. Debit to Raw Materials Inventory and a credit to Accounts Payable.".
Explanation: The purchase of raw materials must reflect an increase in the inventory of raw materials and an increase in the liability generated by the purchase on account.
Answer:
Cullumber Company
Journal Entry:
Debit Loss on Goodwill Impairment $34,200
Credit Goodwill $34,200
To record the loss on goodwill impairment.
Explanation:
a) Data and Calculation:
Fair value = $820,800
Carrying value of net identifiable assets, including goodwill = $855,000
Goodwill impairment = $34,200 ($855,000 - $820,800)
b) Cullumber, which acquired Blossom is expected to check for the impairment of goodwill yearly. The impairment occurs when the carrying value of the net identifiable assets of Blossom is more than the fair value of Blossom. Generally Accepted Accounting Standards require the annual review of the fair value of goodwill to check for its impairment. By the above entry, the goodwill will be reduced by $34,200 and a loss debited in Cullumber's accounts.
The Federal Reserve does not pay interest on reserves held on deposit. The European System of Central Banks does pay interest on reserves held on deposit.
<h3>Federal Reserve Board</h3>
- In the past, reserve banks were unable to offer interest on deposits. The Emergency Economic Stabilization Act of 2008 brought about a shift in that.
- The Federal Reserve Board had to increase the size of its balance sheet by purchasing Treasuries and mortgage-backed securities in order to increase the amount of liquidity available to the banking sector.
<h3> European System of Central Banks</h3>
- The major objective is to preserve price stability or the euro's worth. Price stability is the most significant contribution monetary policy can make in this area because it is crucial for economic growth and job creation, two goals of the European Union.
- The ECB has four decision-making bodies with the authority to carry out the institution's goals.
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