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Author Question: Which of the following gives the calculation of the capitalization rate? A) the equity risk ... (Read 6 times)

mp14

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on: Jul 6, 2018
Which of the following gives the calculation of the capitalization rate?
 
  A) the equity risk premium plus the specific company risk premium
  B) the required rate of return minus the risk free rate
  C) the dividend payout rate plus the long-term sustainable growth rate
  D) the discount rate minus the expected long-term sustainable growth rate

Question 2

What is the effect of the following error? 360 was received on account from customer. The accountant debited cash for 360 and credited Professional Fees for 360.
 a. Revenue was understated.
   b. Cash was understated.
   c. Revenue was overstated.
   d. Cash was overstated.
   e. Total assets were understated.


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firehawk60

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Reply #1 on: Jul 6, 2018
Answer to Question 1

D
Explanation: D) The capitalization rate is equal to the discount rate minus the expected long-term sustainable growth rate in the proxy benefit.

Answer to Question 2

c


mp14

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Reply 2 on: Jul 6, 2018
Thanks for the timely response, appreciate it

cam1229

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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