Paral Company Began Operations on January 2, 2011, and Appropriately

question 40

Multiple Choice

Paral Company began operations on January 2, 2011, and appropriately used the installment sales method of accounting. The following data are available for 2011 and 2012:

The realized gross profit for 2012 is

• A) $1,440,000.
• B) $1,040,000.
• C) $920,000.
• D) $780,000.

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Definitions:

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, typically represented by the yield on government bonds.

Intrinsic Value

The actual value of a company or an asset based on underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors.

D1

Often used in dividend discount models, it represents the expected dividend per share for the next year.

Dividend Per Share

The amount of dividend that a company pays out to its shareholders for each share they own.