The basic shortcoming of the EBIT-EPS approach to capital structure is ________
A) that the optimal capital structure is difficult to compute
B) its disregard for the presence of preferred stock in the capital structure
C) its disregard for the firm's dividend policy
D) that it concentrates on the maximization of EPS rather than the maximization of owner's wealth
D
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On August 1, Year 1, Jackson Company issued a one-year $72,000 face value interest-bearing note with a stated interest rate of 9.00% to Galaxy Bank. Jackson accrues interest expense on December 31, Year 1, its calendar year-end.What is the amount of interest expense and the total cash outflow related to the note during the year ending December 31, Year 2? (Do not round your intermediate calculations.)
A.
| Interest Expense | Cash Outflow |
| $2700? | $6480? |
B.
| Interest Expense | Cash Outflow |
| $6480? | $3780? |
C.
| Interest Expense | Cash Outflow |
| $3780? | $78,480? |
D.
| Interest Expense | Cash Outflow |
| $6480? | $72,000? |
Exhibit 7-1 Edwards Co purchased raw materials with a cost of $95,000 on March 2, 2015. Credit terms of 3/20, n/60 applied. Edwards paid for the purchase on March 18, 2015. Calculate the amount at which Edwards would record the inventory on March 2, 2015, the date of purchase, using the method given. Refer to Exhibit 7-1. Edwards uses a perpetual inventory system and the gross price method
A) $42,000 B) $76,000 C) $92,150 D) $95,000
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