Which of the following may cause overestimation of profit?
A. Recognizing expense expenditures that should be capitalize
B. Not recognizing impairment loss for obsolete assets.
C. Reducing residual value for depreciation purposes.
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When considering the relationship between tax rate and WACC, other factors kept constant, which of following is most correct?
A. The higher the tax rate, the higher the WACC.
B. The higher the tax rate, the lower the WACC.
C. The higher the tax rate, the same the WACC.
ABC company issued a 8% semi-annual bond with 5 years to maturity. The yield to maturity at issuance is 10% per annum. If the bond’s face value is $1000, the first year end market interest rate is 8% per annum, which of the following statement is correct regarding the bond’s liability at the end of the first year?
A. The bond’s book value is $1000
B. The bond’s book value is $935
C. The bond’s book value is $937
Golden Mining paid a dividend of $3.50 this year, has payout ratio of 40% and return on equity of 15%, and its stock price is $32.50. The cost of equity for Golden is closest to:
A. 19.77%.
B. 20.74%.
C. 17.42%.