All the following items are included in the cost of acquiring a fixed asset except ________
a. installation costs
b. damage during unpacking and installation
c. sales taxes
d. freight costs
b
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On January 1, $2,000,000, 5-year, 10% bonds, were issued for $1,960,000 . Interest is paid semiannually on January1 and July 1 . If the issuing corporation uses the straight-line method to amortize discount on bonds payable, thesemiannual amortization amount is
a. $8,000 b. $2,000 c. $4,000 d. $10,000
Which of the following would not inhibit new entrants into a market?
a. Existing technological expertise. b. Large required capital investment. c. Lack of rivalry among current participants. d. Existing patented technology.
A direct quote of $1.6 per British pound in the United States is equivalent to a direct quote of .625
British pounds per U.S. dollar in Great Britain. Indicate whether the statement is true or false
According to Modigliani and Miller (M&M), in a world of perfect capital markets, except that interest on debt is tax deductible, what will be the expected equity return (or cost of equity) for a firm that has a cost of capital of 14 percent, a cost
of debt of 8 percent, a tax rate of 30%, debt valued at $3.0 million, and equity valued at $4.0 million? What would happen to the cost of equity as the amount of debt increased? What would happen to the cost of debt if the amount of debt was increased?