Answer:
a. Amount of operating expenses recognized during the accounting period = Account payable closing balance + Cash payment - Opening balance
= $25,000 + $40,000 - $2,000
= $63,000
b. Net income earned during the accounting period = Cash revenue - Amount of operating expenses recognized
= $85,000 - $63,000
= $22,000
C. Amount of cash flow from operating activities = Net income + Increase in current liability
= $22,000 + ($25,000 - $2,000)
= $45,000
Answer:
A. National income must equal domestic product.
True.
Explanation:
National Income is the total value of goods and services produced in a country during a financial period. It is total income from a country's economic activities.
Domestic product is monetary value of all economic activities of a country during a period.
National Income is sum of Investments, Savings, Government expenditures and net exports. National Income equals the domestic products of a country. The equation is as follows:
C + I + G + (X - IM) = DI + NT.
The statement given is true. Disposable income equals the saving plus consumption. The excess of disposable income which is not consumed is saved. Sum of saving and consumption must equal Disposable income in an economy.
Answer:
Turnbull's weighted average cost of capital will be higher by 0.65% if it has to raise additional common equity capital.
Explanation:
By combining the WACC formula and retained earnings cost of capital,we will arrive at;
WACC = Debt W × after tax cost of debt + Preferred stock weight × cost of capital + Equity W × Cost of capital
= 58% × 4.92% + 6% × 9.3% + 36% × 12.4%
= 2.85% + 0.56% + 4.46%
= 7.87%
Also, using the same WACC formula and using common equity cost of capital, , we will arrive at the below;
WACC = Debt W × after tax cost of debt + preferred stock weight × cost of capital + Equity W × cost of capital
= 58% × 4.92% + 6% × 9.3% + 36% × 14.2%
= 2.85% + 0.56% + 5.11%
= 8.52%
Therefore, increase cost using common equity over retained earnings is [ 8.52% - 7.87%]
= 0.65%
N.B we arrived at 4.92% for after tax by;
Pre tax 8.2%
Current tax rate 40%
= Pre tax × ( 1 - cost of debt)
= 8.2% × ( 1 - 40%)
= 8.2% × 0.6%
= 4.92%
Answer:3.67,1
Explanation:
TE = (O + 4T + P) / 6
where,
TE = Pert Expected Time Duration,
O = Optimistic estimate, =2
T = Typical estimate,=3
P = Pessimistic estimate=8
TE = (O + 4T + P) / 6
=(2+4*3+8)/6
3.6666=3.67
σ = (P – O)/6
=(8-2)/6
=1
