Doc's Ribhouse Had Beginning Equity of $52,000; Net Income of $35,000

question 237

Multiple Choice

Doc's Ribhouse had beginning equity of $52,000; net income of $35,000, and withdrawals by the owner of $12,000. The owner made no investments during the year. Calculate the ending equity.

• A) $29,000.
• B) $(5,000).
• C) $75,000.
• D) $5,000.
• E) $99,000.

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Definitions:

Expected Growth Rate

The projected annual rate at which an investment or business is expected to grow.

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices.

Semistrong Efficient

A term from the Efficient Market Hypothesis indicating that all public information is reflected in stock prices, along with all historical data.

SML

The Security Market Line, a graphical representation of the capital asset pricing model (CAPM), showing the expected return of investments as a function of their beta or systemic risk.