How much was the profit before finance cost and income tax?
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
![ter 4- Preparing the Financial Statements
3 The adjusted trial balance of Stratosphere Company includes the
following accounts at December 31, 2019:
5,000,000
28,000
180,000
520,000
2,800,000
500,000
720,000
110,000
800,000
16,000
100,000
400,000
Sales revenue
Commission income
Interest expense
Inventory, December 31, 2019
Purchases (net of returns)
Sales commissions
Administrative salaries
Office supplies expense
Dividends declared
Dividend income
Gain on sale of equipment
Rent expense
Unrealized gain on investments at fair value
through profit or loss
Unrealized gain on investments at fair value
through other comprehensive income
Depreciation expense-store equipment
Depreciation expense-office equipment
Freight-in
Freight-out
55,000
88,000
70,000
50,000
80,000
120,000
Additional information:
(1)
(2)
(3)
Merchandise inventory, January 1, 2019, P450,000.
Income tax rate is 30%.
Rent expense is allocated 60% to selling and 40% to
administrative.
How much was the profit before finance cost and income tax?
a.
P2 100 000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F471658df-c564-4008-843f-a102e3f6dc24%2F9e5f2cb1-f8eb-45da-8a16-b86c7e631357%2Ffh3czhl_processed.jpeg&w=3840&q=75)
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