Marvin Services Corporation Had the Following Accounts and Balances If the Balance of the Buildings Account Was $45,000 and

question 71

Multiple Choice

Marvin Services Corporation had the following accounts and balances: $$\begin{array} { l r l r } \text { Accounts payable } & \$ 18,000 & \text { Equipment } & \$ 21,000 \\\text { Accounts receivable } & 3,000 & \text { Land } & 21,000 \\\text { Buildings } & ? & \text { Unearned service revenue } & 6,000 \\\text { Cash } & 9,000 & \text { Total stockholders' equity } & ?\end{array}$$ If the balance of the Buildings account was $45,000 and the equipment was sold for $21,000, what would be the total of stockholders' equity?

• A) $39,000
• B) $54,000
• C) $69,000
• D) $75,000

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Definitions:

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. It represents the average rate that a company is expected to pay to finance its assets.

Cost of Debt

The effective rate that a company pays on its borrowed funds from financial institutions and other sources.

Tax Effects

The impact of taxation on the financial decisions and outcomes of individuals and businesses, including tax liabilities, benefits, and incentives.

Risk-Free Rate

The risk-free rate is the theoretical return on an investment with no risk of financial loss, often represented by the yield on government securities.