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Your ar Question 18 (CHAPTER 2) For the year 2018 the value of a companys equity account was $12,992, net fixed assets were
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Answer #1

Question 18:

Equity + Total liabilities (TL)= Total assets.

Total assets= Fixed assets (FA) + Current Assets (CA)

Therefore, TL= Total assets – Equity = FA + CA- Equity

TL= Current Liabilities (CL) + Long term debt

Therefore, Long term debt= FA+CA-Equity-CL.

Given,

Fixed assets (FA)= $44,085

Current Assets (CA) = $2,135

Current liabilities= $571

Equity= $12,992

Substituting these values,

Total long term debt= $44,085+$2,135-$12,992-$571 = $32,567.

Question 19:

Out of the four approaches, Payback period does not factor Time Value of Money. Hence the answer is option c

Ordinary payback period does not fact factor time value of money for calculation. It is simply the time taken to recover the initial investment, by way of future revenues, in absolute terms.

All other approaches take into account the interest/ discount on periodical cash flows.

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