The benefit principle of taxation is based on two ideas. The first and foremost is that those who benefit from services should be the ones who pay for them. Secondly, people should pay taxes in proportion to the amount of services or benefits they receive.
Explanation:
HOPE IT HELP U MAKE
Although the benefit principle of taxes is founded on two notions, it is critical for business administration students to learn and understand the fundamental principles of income taxation. The first and most important point is that people who gain from services should pay for them. Second, taxation should be proportional to the amount of benefits or services received.
An income tax is generally a tax levied on persons or corporations (taxpayers) based on their earnings or profits (often referred to as taxable income). In most cases, income tax is calculated as the result of a tax rate multiplied by the taxable income.
Taxation rates may differ depending on the taxpayer's attributes and the source of income.
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Putting together two or more parcels of land to make a large piece is called:________.
Answer:
Assemblage.
Explanation:
In Real estate, putting together two or more parcels of land to make a large piece is called assemblage. The main purpose of assemblage is to increase the price of parcels of land by combining them together rather than selling them individually as a single unit.
For instance, a real estate agent may purchase two (5) parcels of land each worth $50,000 (2 × $50,000). When he assembles them, the new single parcel of land is worth $150,000.
An analyst observes a GUI & Co 6.25%, 5 year semi-annual pay bond trading at 104.764% of par (where par = $1,000). The bond is callable at 102 in 3 years and putable at 99 in 3 years. #3: what are the bond's current yield and yield to maturity? #4. What's the bond's yield to call and put? EC: Do you expect that the bond would be called and/or put? Why or Why not?
Answer:
3) the bond's current yield = ($31.25 / $1,047.64) x 2 = 5.97%
the bond's YTM = {31.25 + [(1,000 - 1,047.64) / 10]} / [(1,000 + 1,047.64) / 2] = 26.486 / 1,023.82 = 2.587% x 2 = 5.17%
4) bond's YTC = {31.25 + [(1,020 - 1,047.64) / 6]} / [(1,020 + 1,047.64) / 2] = 26.64 / 1,033.82 = 2.577% x 2 = 5.15%
bond's YTP = {31.25 + [(990 - 1,047.64) / 6]} / [(990 + 1,047.64) / 2] = 21.64 / 1,018.82 = 2.124% x 2 = 4.25%
EC) Since the bond's coupon rate is higher than the market rate, it is being sold at a premium. Since the call price is lower than the market price, they will probably be called.
Katie had a high monthly food bill before she decided to cook at home every day in order to reduce her expenses. She starts to save $1,410 every year and plans to renovate her kitchen. She deposits the money in her savings account at the end of each year and earns 5% annual interest. Katie’s savings are an example of an annuity. If Katie decides to renovate her kitchen, how much would she have in her savings account at the end of eight years?
Answer: $13,464.23
Explanation:
Kate is saving a constant amount of $1,410 per year so indeed it is an annuity.
The amount she will have in the account after 8 years is the future value of the annuity after 8 years.
The formula is;
Future Value of Annuity = Annuity * (future value factor of annuity, 8 years, 5%)
= 1,410 * 9.5491
= 13,464.231
= $13,464.23
Why are intercompany sale of assets eliminated?
Answer:
To avoid a company's documentation of revenue from sales to itself
Explanation:
Intercompany sale of assets is a financial related term that can only arise as a result of transaction activities occurring between companies in a group.
Since it is believed that, the various companies in a group of companies are together and the same.
Hence, the intercompany sale of assets is eliminated because of the need to avoid company's documentation of revenue from sales to itself
Requirement 3. The owner has been considering ways to increase the sales volume. The owner thinks that 10,000 pizzas could be sold per month by cutting the selling price per pizza from $6.25 to $5.75. How much extra profit (above the current level) would be generated if the selling price were to be decreased? (Hint: Find the restaurant's current monthly profit and compare it to the restaurant's projected monthly profit at the new sales price and volume.) Identify the profit formula and compute the monthly profit at the current and the new volume.
Answer and Explanation:
The computation of the extra profit above the current level is shown below:
Volume New 10,000 units Old 7,500 units
Selling Price $57,500 $46,875
(10,000 × $5.75) (7,500 × $6.25)
Less:
Variable cost at $1.55 ($15,500) ($11,625)
(10,000 × $1.55) (7,500 × $1.55)
Less:
Fixed Cost ($12,000) ($12,000)
Profit $30,000 $23,250
As it can be seen that there is an extra profit of $6,750
= $30,000 - $23,250
= $6,750
So, the company should able to reduce the selling price per unit at 10,000 units
Here profit formula is
Profit = Sales - variable cost - fixed cost
Bristol corporation reported a beginning balance of $6200 in accounts receivable on January at the beginning of the year and 5,334 million at the end of the year. Its statement of cash flows using the direct method reported cash collections from customers of 33.551 million for the year. Assuming that microchem corporation makes all sales on account, compute teh amount of sales during the year.
Answer: $32,685
Explanation:
The closing balance of the accounts receivable account is;
Closing Balance = Opening Balance + Sales - Cash collections
Sales = Closing Balance - Opening Balance + Cash Collections
Sales = 5,334 - 6,200 + 33,551
Sales = $32,685
Development that considers both current and future needs is referred to as______ development
Answer:
Sustainable
Explanation:
Sustainable development is involves utilization of resources to achieve our goals both in present and the future goals, Sustainable development can be categorized as
✓environmental
✓human
✓ social
✓economic
It should be noted that Development that considers both current and future needs is referred to as sustainable development
A partial listing of costs incurred during December at Rooks Corporation appears below: Factory supplies $ 15,000 Administrative wages and salaries $ 112,000 Direct materials $ 160,000 Sales staff salaries $ 75,000 Factory depreciation $ 56,000 Corporate headquarters building rent $ 41,000 Indirect labor $ 39,000 Marketing $ 110,000 Direct labor $ 90,000 The total of the product costs listed above for December is:
Answer: $360,000
Explanation:
Product costs will be the addition of the Direct materials, Direct labor and the Manufacturing overhead.
Manufacturing overhead costs will be:
Factory supplies = $15,000
Add: Factory depreciation = $56,000
Add: Indirect labor = $39,000
Total = $110,000
Product cost will be:
Direct materials = $160,000
Add: Direct labor = $90,000
Add: Manufacturing overhead = $110,000
Product cost = $360,000
Lloyd is a divorce attorney who practices law in Florida. He wants to join the American Divorce Lawyers Association (ADLA), a professional organization for divorce attorneys. The membership dues for the ADLA are $650 per year and must be paid at the beginning of each year. For instance, membership dues for the first year are paid today, and dues for the second year are payable one year from today. However, the ADLA also has an option for members to buy a lifetime membership today for $7,000 and never have to pay annual membership dues.Obviously, the lifetime membership isn’t a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it’s a great deal. Suppose that the appropriate annual interest rate is 5.9%. What is the minimum number of years that Lloyd must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value basis) than paying $650 in annual membership dues? (Note: Round your answer up to the nearest year.)
Answer:
16 years
Explanation:
we can use the present value of an annuity due formula:
PV of annuity due = payment + {payment x [1 - (1 + r)ⁿ⁻¹]/r}
present value = 7,000payment = 650 r = 0.0597,000 = 650 + {650 x [1 - (1 + 0.059)ⁿ⁻¹]/0.059}
6,350 = 650 x [1 - (1 + 0.059)ⁿ⁻¹]/0.059
6,350 / 650 = 9.769230769 = [1 - (1 + 0.059)ⁿ⁻¹]/0.059
9.769230769 x 0.059 = [1 - (1 + 0.059)ⁿ⁻¹]
0.576384615 = 1 - (1 + 0.059)ⁿ⁻¹
(1 + 0.059)ⁿ⁻¹ = 0.423615384
n - 1 = log 0.423615384 / log 1.059 = 0.373028275 / 0.02489596 = 14.98336571
n = 14.98336571 + 1 = 15.98336571
if an attorney remains am ember for at least 16 years (16 ≥ 15.98336571), then the lifetime membership fee is better
A lender generally charges discount points on an FHA loan to:__________
Answer: provide the investors with greater interest yield
Explanation:
Federal Housing Administration (FHA) loan is simply a mortgage insured by the Federal Housing Administration and the main aim of the loan is to help meet the needs of low income earners.
A lender generally charges discount points on an FHA loan on order to provide the investors with greater interest yield.
XYZ can buy a Monet for $8,200,000 today. She believes that the masterpiece can be sold in 9 years for $19,600,000. What is the annual rate of return that XYZ expects to earn on this art investment? a. 139.02% (plus or minus .02 percentage points) b. 15.45% (plus or minus .02 percentage points) c. 10.17% (plus or minus .02 percentage points) d. 26.56% (plus or minus .02 percentage points) e. None of the above is within .02 percentage points of the correct answer
Answer:
c. 10.17%
Explanation:
we can use the future value formula:
future value = present value x (1 + r)ⁿ
future value = $19,600,000present value = $8,200,000n = 9$19,600,000 = $8,200,000 x (1 + r)⁹
$19,600,000 / $8,200,000 = (1 + r)⁹
(1 + r)⁹ = 2.390243902
⁹√(1 + r)⁹ = ⁹√2.390243902⁹√
1 + r = 1.101663943
r = 1.101663943 - 1 = 0.101663943 = 10.17%
Hedging transactions in an active future market have zero.
A. True
B. False
Answer:
A. True
Explanation:
Hedging transactions can be described as derivative that are purchased in order to reduce investment risk of investments by using options, futures or forward contracts as insurance.
A futures market refers to a central financial exchange where standardized futures contracts are bought and sole as defined by the exchange.
Generally, positive net present value (NPV) is yielded by hedging. But the NPV will be zero or even slightly negative as when the market becomes active about the future.
Based on this explanation, the correct option is A. True. That is, hedging transactions in an active future market have zero.
The Foundational 15 (Algo) [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6, LO5-7, LO5-8] [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 10,000 Variable expenses 5,500 Contribution margin 4,500 Fixed expenses 2,250 Net operating income $ 2,250 Foundational 5-1 (Algo) Required: 1. What is the contribution margin per unit
Answer:
4.50
Explanation:
Calculation for the contribution margin per unit
Using this formula
Contribution margin per unit =
(Sales - Variable Expenses) / Sales volume units
Let plug in the formula
Contribution margin per unit =($10,000-$5,500)/1,000 units
Contribution margin per unit=$4,500/1,000 units
Contribution margin per unit=4.50
Therefore the Contribution margin per unit will be 4.50
Pappy's Toys makes two models of a metal toy—Standard and DeLuxe. Both models are produced on a single machine. The price and costs of the two models appear as follows. Standard DeLuxe Price per unit $ 40 $ 60 Variable cost per unit $ 20 $ 24 Machine hours per unit 0.5 1.5 The one machine that used to produce both models has a capacity of 90,000 machine-hours per quarter. Fixed manufacturing costs per quarter are $800,000. Required: a. Suppose that the maximum unit sales in a quarter that Pappy's can achieve is 200,000 units of each product. How many units of each model should Pappy's produce in a quarter? b. Suppose that the maximum unit sales in a quarter that Pappy's can achieve is 120,000 units of each product. How many units of each model should Pappy's produce in a quarter?
Answer:
See explanations below
Explanation:
a. Contribution margin per hour
Standard
Selling price $40
Variable cost $20
Contribution margin. $20
Hour per unit. 0.5
Contribution margin per hour $10
Deluxe
Selling price $60
Variable cost. $24
Contribution margin $36
Hour per unit. 1.5
Contribution margin per hour $54
Optimum product mix
Standard 90,000 / 0.5 = 180,000 units
Deluxe. 0
Total. 90,000
Pappy should produce 180,000 units of standard and nil of deluxe.
b. Given the contribution margin per hour of $10 for standard and $54 for deluxe, the optimum product mix would be;
Standard 120,000 × 0.5 = 60,000 hours, 120,000 units
Deluxe 30,000 hours , 30,000/1.5= 20,000 units.
Total hours 90,000 hours
Therefore, Pappy should produce 120,000 units of standard and 20,000 units of deluxe.
Which of the following are correct descriptions of large corporations? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
Answer:
The corporation survives even if managers are dismissed.Shareholders can sell their holdings without disrupting the business.Explanation:
Large corporations are not as easy to dissolve as other types of companies because they have other resources that are able to keep them going if they lose some. One of those resources could be a manager. Should a manager be dismissed, the corporation will survive and simply replaced the dismissed manager.
Also with such corporations, the shareholders can simply sell their shares and the business's operation will not be disrupted as the shareholders do not have any direct say over the day to day running of the business.
Which of the following statements is most correct regarding accepted principles of advancing human rights?a. Engage in an open dialogue with workers and management b. Be aware of human Rights issues and concerns in the home country in which the company engages business in c. Adopt the prevailing legal standard, but seek to embrace a financial approach and standard adopt the prevailing moral standard, but seek to embrace a "best practices" approach and standard
Answer:
b. Be aware of human Rights issues and concerns in the home country in which the company engages business.
Explanation:
The globalized business market has expanded business activities beyond its country of origin, which enables companies to search for advantageous business opportunities in other countries, with different cultures and issues regarding human rights.
Therefore, it is necessary for companies to be aware of what are the prevailing issues and concerns related to human rights in the country of origin in which the company does business, since companies more than profitable entities need to be agents that promote a more just society. for all, where there is the promotion of best practices and the defense of the rights of every citizen.
Through this ethical attitude towards society, the company guarantees greater positioning in the market and greater reliability in its processes, which guarantees significant advantages in relation to the perception of its stakeholders.
As of 2013, which of these countries had the highest GDP per capita? Uganda the United States Switzerland Brazil
Answer:
Switzerland the answer
In the year 2013, the nation that had the highest GDP per capita out of the options was Switzerland.
What was the GDP per capita of Switzerland in 2013?In 2013, Switzerland had the very high GDP per capita of $88,109.49 which put it higher than the United States and Brazil.
This high GDP per capita meant that the Swiss economy was strong and that the people were mostly well off.
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cientists have developed a bacteria that they believe will lower the freezing point of agricultural products. This innovation could save farmers $1 billion a year in crops now lost to frost damage. If this technology becomes widely used, what will happen to the equilibrium price and quantity in, for example, the potato market?
Answer:
equilibrium price would fall and equilibrium quantity would increase
Explanation:
The discovery would reduce the amount of crops now lost to frost damage and increase the supply of crops e.g. potato.
As a result of the increase in supply, there would be an excess of supply over demand equilibrium price would fall and quantity would increase
Please check the attached image for a graph showing increase in supply
Ruth has a home office that she shares with her husband, Barret. She keeps track of her business profits and expenses in several worksheets. Ruth has fully tested all of the formulas in her worksheet and the correct results appear. Ruth provides a copy of the worksheet file to Barret so he can use it for his business calculations. As a user, Barret can make changes only to certain cells. What did Ruth do to ensure the other cells cannot be altered by user Barret
Answer:
unlock the user cells and then protect the worksheet
Explanation:
In order for Ruth's husband, Barret not to alter other cells of the worksheet files, she has to unlock the user cells and then protect the worksheet.
By unlocking the user cells and protecting the work sheet, she has prevented her husband, Barret from making a change to other cells of the worksheet.
A worksheet refers to a sheet of paper on which one performs work. The worksheet Ruth used in he home office is the computer based work sheet (software) where she keeps records of her business transactions.
What is the anticipated level of profits for the expected sales volumes? b. Assuming that the product mix would be 43 percent chicken and 57 percent fish at the break-even point, compute the break-even volume using weighted-average contribution margin. c. If the product sales mix were to change to four chicken tacos for each fish taco, what would be the new break-even volume?
Answer:
a. Anticipated level of profit.
Profit = Contribution margin of Chicken + Contribution Margin of Fish - Fixed costs
Contribution margin of Chicken
= (Selling - Variable costs) * Units sold
= ( 3.9 - 1.95) * 209,000
= $407,550
Contribution Margin of Fish
= (Selling - Variable costs) * Units sold
= ( 5 - 2.5 ) * 305,000
= $762,500
Profit = 407,550 + 762,500 - 111,000
Profit = $1,059,050
b. Break-even using weighted-average contribution margin.
Breakeven point = Fixed Cost/ Weighted Contribution margin
Weighted contribution margin
= (Proportion of chicken * Contribution margin of chicken) + (Proportion of fish * Contribution margin of fish)
= ( 43% * (3.9-1.95)) + ( 57% * ( 5 - 2.5 ))
= $2.2635
Breakeven point = 111,000 / 2.2635
= 49,039 units
c. Sales mix changes to four chicken tacos for each fish taco.
That means 0.8 chickens and 0.2 fish.
= (Proportion of chicken * Contribution margin of chicken) + (Proportion of fish * Contribution margin of fish)
= ( 80% * (3.9-1.95)) + ( 20% * ( 5 - 2.5 ))
= $2.06
Breakeven point = 111,000 / 2.06
= 53,883 units
Chicken = 80% * 53,883
= 43,106 units
Fish = 53,883 - 43,106
= 10,777 units
Attached photo is similar question as yours is missing details.
The balance sheet data of Corinne Company at the end of 2025 and 2024 follow: 2025 2024 Cash $50 $70 Accounts receivable (net) 320 270 Buildings and equipment 200 150 Accumulated depreciation - buildings and equipment (36) (16) Land 180 80 Totals $714 $554 Accounts payable $180 $146 Notes payable - bank, long-term 0 80 Mortgage payable 60 0 Common stock, $10 par 418 318 Retained earnings 56 10 Totals $714 $554 Land worth $100 was acquired in exchange for common stock, par $100, during the year; all equipment purchased was with cash. Equipment costing $10 was sold for $12; book value of the equipment was $8. Cash dividends of $20 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2025, the net cash provided (used) by investing activities was:
Answer:
Corinne Company
Investing Activities Section of the Statement of Cash Flows:
Equipment sales $12
Equipment bought ($58)
Net cash used ($46)
Explanation:
a) Data and Calculations:
Balance Sheet of Corinne company at the end of 2025 and 2024:
2025 2024
Cash $50 $70
Accounts receivable (net) 320 270
Buildings and equipment 200 150
Accumulated depreciation
- buildings and equipment (36) (16)
Land 180 80
Totals $714 $554
Accounts payable $180 $146
Notes payable- bank long term 0 80
Mortgage payable 60 0
Common stock, $10 par 418 318
Retained earnings 56 10
Totals $714 $554
b) other information:
Land and Common Stock exchange
Equipment sold for $12 (cost $10 and book value $8)
Cash dividends $20
c) Equipment account
Beginning balance 150
Equipment sold -8
Balance 142
Closing balance 200
Purchase of new 58 (200 - 142)
Your grandfather put some money in an account for you on the day you were born. You are now 18 years old and are allowed to withdraw the money for the first time. The account currently has $3,996 in it and pays an 8% interest rate. a. How much money would be in the account if you left the money there until your 25th birthday? b. What if you left the money until your 65th birthday? c. How much money did your grandfather originally put in the account?
Answer:
a. $6,848.48
b. $148,779.85
c. $1000
Explanation:
First we have to determine the present value of the money
The formula for calculating present value:
P = FV (1 + r)^-n
FV = Future value
P = Present value
R = interest rate
N = number of years
$3,996(1.08)^-18 = $1000
a. The formula for calculating future value:
FV = P x (1 + r) n
FV = Future value
P = Present value
R = interest rate
N = number of years
a. $1000 x (1.08)^25 = $6,848.48
b. $1000 x (1.08)^65 = $148,779.85
Based on the amount in the account and the interest rate, the following is true:
a. $6,848.44b. $148,779.12c. $1,000The amount at your 25th birthday can be found as:
= Amount x ( 1 + rate) ^ number of years
Number of years:
= 25 - 18
= 7 years
Amount at 25th birthday:
= 3,996 x ( 1 + 8%)⁷
= $6,848.44
Amount at 65th birthday:
Number of years = 65 - 25
= 40 years
= 6,848.44 x ( 1 x 8%)⁴⁰
= $148,779.12
The amount that was originally deposited can be found from:
Amount at 18th birthday = Original amount x ( 1 x 8%)¹⁸
3,996 = Amount x 3.996019499
Amount = 3,996 / 3.996019499
= $1,000
In conclusion, $1,000 was initially deposited.
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A $36,000 cash gift was received by a college during the year. In which fund should the gift be recorded if there were no restrictions on the use of the cash? In which fund should the gift be recorded if the donor specified that the cash was to be used to replace obsolete and damaged equipment?
Answer: Temporary Restricted Fund
Explanation:
A temporary restricted fund is a type of fund that not-for-profits like colleges have that include cash that was donated to them for a specific purpose. It is also time-bound and therefore has to be used by a certain date.
When the money has been used to do what the donor intended for it to be for or if the time elapses, the account can become unrestricted.
In this case the college got the money to replace obsolete and damaged equipment so the money will be temporarily restricted.
A self-employed middle-aged woman contributes annually to a Traditional IRA. She is unmarried, has two grown children, and has established a trust naming her two children as sole beneficiaries. The woman puts her assets in the trust and names the trust as beneficiary of the Traditional IRA. If she should die, what would happen to her IRA? (A) IRA assets would be divided evenly between her two children. (B) IRA assets would be included in the trust and established distributions from the trust to her children would be taxable as ordinary income. (C) IRA assets would be included in the trust, and her children would be allowed to rollover the distributions into their own IRAs on a tax-free basis. (D) The IRA would become the property of the Estate and would not be distributed to her children.
Answer:
(B) IRA assets would be included in the trust and established distributions from the trust to her children would be taxable as ordinary income.
Explanation:
In this case, the trust is the direct beneficiary of the woman's IRA account. In case she dies, her IRA account's assets will pass to the trust. Then, the trust must make any distributions to the beneficiaries of the trust. in this case, the two children are the sole beneficiaries of the trust, and therefore, they will receive the distributions form the trust. This distributions should be made according to specific terms contained in the trust and will be taxed as ordinary income.
The advantage of designating a trust as a beneficiary of an IRA account is that the woman will decide how the trust will make the distributions.
Why is it important for businesses to their heavy users?
Answer:
The Heavy users of a business are those people who comprise about 20% of the business's consumers and yet buy so much that they bring in about 80% of the business's revenue.
Heavy users also have an impact on light users because they can market the goods to light users whether indirectly or directly when they use so much of a business's goods and services.
It is therefore very important that the business knows of these heavy users so that they can focus marketing strategies on them as well as to offer them incentives that will keep them satisfied and coming back for more because if they don't act and they lose their heavy users, their revenues will see a significant drop.
Holiday Corp. has two divisions, Quail and Marlin Quail produces a widget that Marlin could use in its production Quail's variable costs are $5.90 per widget while the full cost Is $8.90. Widgets sell on the open market for $15.80 each. If Quail is operating at capacity, what would be the cost savings if the transfer were made and Marlin currently is purchasing 195,000 units on the open market?
Answer:
Cost savings when transfer are made = $0
Explanation:
In the question it was given that Quail is operating at capacity, then the Minimum and Maximum transfer price would be market price = $15.80
Cost savings when transfer are made = No of unit Marlin purchase*(Maximum transfer price - Minimum transfer price)
Cost savings when transfer are made = 195,000 unit * ($15.80 - $15.80)
Cost savings when transfer are made = $3,081,000 - $3,081,000
Cost savings when transfer are made = $0
ASAP/WILL MARK BRAINLIEST
Economic decision making is the process of choosing _____.
a. how to spend your time.
b. which needs and wants will be satisfied.
c. how to use your income.
d. whether to buy products now or later.
Answer:
c. how to use your income.
Explanation:
While b and d are both types of economic decisions, using income coverse all of them and is the correct answer here
West-Coast Business Software (WBS) just reported $24 million total net income. The firm has 10 million shares outstanding. Analysts expect that WBS can sustain a long-run return on reinvestment (RIR) of 15%. The firm’s cost of capital is 12%. a. What are the firm’s earnings per share (EPS)? Suppose WBS pays a dividend of $1.60 per share. What is the pay-out ratio? b. Given the pay-out ratio calculated in part a), what is the expected rate of dividend growth? What is the value of the firm’s stock? c. How would the answer to part b) change if WBS instead followed a policy of paying only 1/3 of earnings as dividends?
Answer:
EPS = $2.40 per share
Pay-out ratio = 2 / 3
Growth rate = 5%
Price of a stock (P0) = $24
Explanation:
Earning per share can be calculated by dividing the total net income a company in the total number of shares the company has issued. After finding EPS we can calculatate payout ratio easily by dividing dividends per share in Earning per share.
DATA
Net income = 24m
No of shares = 10m
RIR = 15%
Ke = 12%
a)
EPS = Net Income / No. of share outstanding
EPS = $24,000,000 / 10,000,000 shares
EPS = $2.40 per share
Pay-out ratio = Dividend per share / Earning per share
Pay-out ratio = $1.60 / $2.40
Pay-out ratio = 2 / 3
b)
Growth rate = (1 - payout ratio) x RIR
Growth rate= (1 - 2/3) x 15%
Growth rate = 5%
Price of a stock (P0) = D0 x (1 + g) / (Ke - g)
Where do KE = cost of capital , g = growth
Price of a stock (P0) = $1.60 x (1 + 0.05) / (0.12 - 0.05)
Price of a stock (P0) = $1.68 / 0.07
Price of a stock (P0) = $24
c) If the payout ratio was 1/3,
Growth rate = (1 - 1/3) x 15%
Growth rate = 2/3 x 15%
Growth rate = 10%
Dividend per share (D0) = $2.4 x 1/3
Dividend per share (D0) = $0.80 per share
P0 = $0.80 x (1 + 0.10) / (0.12 - 0.10)
P0= $0.88 / 0.02
P0= $44
What Is the last step in developing a marketing plan
When is a contingent liability recorded? a) When the amount car be reasonably estimated. b) When the future events are probable to occur and the amount can be reasonably estimated. c) When the future events are probable to occur. d) When the future events will possibly occur and the amount can be reasonably estimated.
Answer:
The answer is B.
Explanation:
Contingent liability is a liability that may occur in the future subject to the outcome of a specific event. The future outcome determines contingent liability. Examples of contingent liability are product warranties, pending court case etc.
So contingent liability should be recognized when the future events are probable to occur and the amount can be reasonably estimated
