Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system. It is of two types: Test of Details Analytical Procedures To describe: Sampling methods.

Question

Compute Ke and Kn under the following circumstances: a. D1= $5, P0=$70, g=8%, F=$7 b. D1=$0.22, P0=$28, g=7%, F=2.50 c. E1 (earnings at the end of period one) = $7, payout ratio equals 40 percent, P0= $30, g=6%, F=$2,20. Note: D1 is the earnings times the payout rate. d. D0 (dividend at the beginning of the first period) = $6, growth rate for dividends and earnings (g)=7%, P0=$60, F=$3. You will need to calculate D1 (the dividend after the first period).

Answer 1

Question

Chapter 9, Problem 9.17MCQ

To determine

Introduction:

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

It is of two types:

Test of Details

Analytical Procedures

To describe: Sampling methods.

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Compute Ke and Kn under the following circumstances: a. D1= $5, P0=$70, g=8%, F=$7 b. D1=$0.22, P0=$28, g=7%, F=2.50 c. E1 (earnings at the end of period one) = $7, payout ratio equals 40 percent, P0= $30, g=6%, F=$2,20. Note: D1 is the earnings times the payout rate. d. D0 (dividend at the beginning of the first period) = $6, growth rate for dividends and earnings (g)=7%, P0=$60, F=$3. You will need to calculate D1 (the dividend after the first period).

Terrier Company is in a 45 percent tax bracket and has a bond outstanding that yields 11 percent to maturity. a. What is Terrier's after-tax cost of debt? b. Assume that the yield on the bond goes down by 1 percentage point, and due to tax reform, the corporate tax falls to 30 percent. What is Terrier's new aftertax cost of debt? c. Has the after-tax cost of debt gone up or down from part a to part b? Explain why.

The Squeaks Cat Rescue, which is tax-exempt, issued debt last year at 9 percent to help finance a new animal shelter in Rocklin. a. If the rescue borrowed money this year, what would the after-tax cost of debt be, based on its cost last year and the 25 percent increase? b. If the receipts of the rescue were found to be taxable by the IRS (at a rate of 25 percent because of involvement in political activities), what would the after-tax cost of debt be?

Answer 2

Question

Chapter 9, Problem 9.17MCQ

To determine

Introduction:

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

It is of two types:

Test of Details

Analytical Procedures

To describe: Sampling methods.

Expert Solution & Answer

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Answer 3

Question

Chapter 9, Problem 9.17MCQ

To determine

Introduction:

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

It is of two types:

Test of Details

Analytical Procedures

To describe: Sampling methods.

Expert Solution & Answer

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Check out sample textbook solution

Answer 4

Question

Chapter 9, Problem 9.17MCQ

To determine

Introduction:

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

It is of two types:

Test of Details

Analytical Procedures

To describe: Sampling methods.

Expert Solution & Answer

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Check out sample textbook solution

Answer 5

Chapter 9, Problem 9.17MCQ

To determine

Introduction:

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

It is of two types:

Test of Details

Analytical Procedures

To describe: Sampling methods.

Answer 6

Chapter 9, Problem 9.17MCQ

To determine

Introduction:

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

It is of two types:

Test of Details

Analytical Procedures

To describe: Sampling methods.

Answer 7

Chapter 9, Problem 9.17MCQ

To determine

Introduction:

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

It is of two types:

Test of Details

Analytical Procedures

To describe: Sampling methods.

Answer 8

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Ch. 9 - Prob. 9.1RQ Ch. 9 - Prob. 9.2RQ Ch. 9 - Prob. 9.3RQ Ch. 9 - Prob. 9.4RQ Ch. 9 - Prob. 9.5RQ Ch. 9 - Prob. 9.6RQ Ch. 9 - Prob. 9.7RQ Ch. 9 - Prob. 9.8RQ Ch. 9 - Prob. 9.9RQ Ch. 9 - Prob. 9.10RQ

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system. It is of two types: Test of Details Analytical Procedures To describe: Sampling methods.

Solution Summary: The author explains that substantive procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

Introduction:

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

It is of two types:

Test of Details

Analytical Procedures

To describe: Sampling methods.

Chapter 9 Solutions

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system. It is of two types: Test of Details Analytical Procedures To describe: Sampling methods.

Solution Summary: The author explains that substantive procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

Introduction: Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system. It is of two types: Test of Details Analytical Procedures To describe: Sampling methods.

Chapter 9 Solutions

Introduction:

Substantive Procedures are designed and performed to detect material misstatement by ensuring the completeness, accuracy and validity of the data produced by the client’s system.

It is of two types:

Test of Details

Analytical Procedures

To describe: Sampling methods.