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Bagwell's Net Income for the Year Ended December 31, Year

question 112

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Bagwell's net income for the year ended December 31, Year 2 was $185,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2.  At December 31  Year 2 Year 1 Common Stock, $5 par value $500,000$450,000 Paid-in capital in excess of par 948,000853,000 Retained earnings 688,000582,000\begin{array} { | l | c | c | } \hline \text { At December 31 } & \text { Year } 2 & \text { Year } 1 \\\hline \text { Common Stock, } \$ 5 \text { par value } & \$ 500,000 & \$ 450,000 \\\hline \text { Paid-in capital in excess of par } & 948,000 & 853,000 \\\hline \text { Retained earnings } & 688,000 & 582,000 \\\hline\end{array}

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Definitions:

Investment Amounts

The total funds allocated by individuals or businesses towards investment vehicles like stocks, bonds, or real estate for the purpose of earning returns.

Required Rate

The minimum return or yield that investors expect to receive on an investment, taking into account the risk level and market conditions.

Cost of Capital

The rate of return a company must earn on its investments to satisfy its investors or lenders.

Hurdle Rate

The minimum rate of return that an investment project must generate before it is considered viable or attractive for investment.

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