Al, Ronda, and Rony Enter into a Partnership

question 126

Short Answer

Al, Ronda, and Rony enter into a partnership. Al owns 1/4 of the company, and Ronda owns 1/8. Calculate the part that is owned by Rony.

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Definitions:

Cost of Equity

is the return that investors expect for investing in a company's equity, reflecting the compensation for the risk undertaken.

Market Value

The ongoing rate at which one can buy or sell a service or asset in an unregulated market.

Cost of Equity

The rate of return required by a company's shareholders for investing in the company, representing the compensation for the risk undertaken.

Cost of Debt

The actual rate at which a corporation incurs cost on its present liabilities, assessable before or after tax deductions.