XYZ Buys a 24 Per Cent Share in ABC for $80

question 2

Multiple Choice

XYZ buys a 24 per cent share in ABC for $80 million. ABC's total net profit is $50 million and it pays $4 million in dividends to XYZ. Using the cost method, what would be the revenue and investment amounts at year-end for this investment?

• A) $4 million and $80 million
• B) $4 million and $84 million
• C) $12 million and $80 million
• D) $12 million and $92 million

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Definitions:

Total Fertility Rate

The total number of offspring a woman is predicted to give birth to during her lifetime, based on existing age-related fertility trends.

Replacement Rate

The percentage of a worker's pre-retirement income that is paid out by a pension program upon retirement.

Market Price

The market rate at which an asset or service is currently available for buying or selling.