What Is the Cost of Shares to the Business Is

question 2

Multiple Choice

What is the cost of shares to the business is equivalent to?

• A) The average year-over-year percent increase in share price.
• B) The NPV of the return to the company from its investments.
• C) The bank rate grossed up by a risk premium and the rate of inflation.
• D) The IRR used to evaluate the company's investment projects.
• E) The NPV of the future share prices.

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Definitions:

Bond Payable

A long-term liability account that represents the amount a company owes to bondholders, to be repaid at a future date.

Issue Price

The issue price is the price at which a company's securities, such as stocks or bonds, are first offered for sale to the public when they are issued.

Journal Entry

The record of a financial transaction in an accounting journal, showing the accounts and amounts debited and credited.

Adjusting Entries

Entries necessary at the end of the accounting period to measure all revenues and expenses of that period and update assets and liabilities.