Answer:
the annual rate of return is 22.50%
Explanation:
The computation of the annual rate of return is shown below:
Average investment is
= ($900,000 + $300,000) ÷ 2
= $600,000
Now
Annual rate of return is
= Annual net income ÷ Average investment
= $135,000 ÷ $600,000
= 22.50%
hence, the annual rate of return is 22.50%
The discount rate used to calculate the net present value of a capital budgeting project should be: a. The risk-free rate. b. The weighted average cost of capital. c. LIBOR. d. The internal rate of return.
Answer:
B
Explanation:
Capital budgeting is the determination of the profitability of proposed investments
One of the capital budgeting methods is the net present value
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
the Weighted cost of capital is used to determine NPV
WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate)
It is the minimum rate of return a company expects from a project
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested. It is a captial budgeting method
On January 1, a company issued and sold a $399,000, 9%, 10-year bond payable, and received proceeds of $394,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is:
Answer:
Cash Interest payable on Bond = $399,000*4.5% = $17,955
Discount to be amortized = ($399,000-$394,000)/20 = $250
Interest expense = $17,955+$250 = $18,205
Date Journal Entry Debit Credit
Interest Expense $18,205
Discount on bonds payable $250
Cash $17,955
Which of these are considered both short- and long-term investments? Select four options.
CDs
stocks
savings accounts
mutual funds
bonds
commodities
Edge answers please
Answer:
CDs
Stocks
Mutual funds
Commodities
Explanation:
:)
'Investments' are defined as the 'process of allocating money having an aim of receiving a profit.'
The items that can be considered as both the short, as well as, long-term investments would be:
A). CDs
B). Stocks
C). Mutual funds
E). Commodities
A CD or Certificate of Deposit(CD) is characterized as both the 'short, as well as, long-term' investment because it provides interest and offers a lump-sum on its maturity. Stocks are also such an investment as it offers both intra-day trade and long-term holding options as well. Mutual funds are also a good option for generating both regular incomes in the short-term and big capital gain over a time period. Commodities like gold, crude oil, etc. also offer such an option as it is the item whose price keeps growing and thereby providing an opportunity to earn.Thus, options A, B, C, and E are the correct answers.
Learn more about 'short-term investment' here:
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