Campus Computers Sells Computers and Provides Internet Access to Students

question 1

Multiple Choice

Campus Computers sells computers and provides internet access to students.The average computer system purchased is $2,500, and for an additional $100, students get wireless access on campus for the year.Wireless access purchased alone costs $180.At the time of sale of a computer with internet access, how much revenue should Campus Computers recognize?

• A)None, unless payment has been received.
• B)$2,500
• C)$2,600
• D)$2,680

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Definitions:

Common Stock

A type of security that represents ownership in a corporation, entitling the holder to vote at shareholder meetings and receive dividends.

Weighted Average Cost of Capital

This refers to the overall cost of capital for a firm, weighted by each capital component's proportion in the overall capital structure.

Market Value of Equity

The total dollar market value of a company's outstanding shares, calculated as share price times the number of shares outstanding.

Cost of Equity

The return that investors expect for investing in a company's equity, indicating the compensation the market demands for taking on the risk of owning the stock.