The Following Balance Sheet Information Is for the Partnership of Abel,Boule,and

question 27

Multiple Choice

The following balance sheet information is for the partnership of Abel,Boule,and Cayman: Figures shown parenthetically reflect agreed profit and loss sharing percentages.
If assets on the initial balance sheet are fairly valued,Abele and Boule consent and Dann pays Cayman $225,000 for his interest; the revised capital balances of the partners would be

• A)Abele,$315,000; Boule,$495,000; Dann,$450,000.
• B)Abele,$315,000; Boule,$495,000; Dann,$420,000.
• C)Abele,$300,000; Boule,$570,000; Dann,$450,000.
• D)Abele,$300,000; Boule,$480,000; Dann,$420,000.

Understand the role and calculation of the plowback (earnings retention) ratio in growth and valuation.

Analyze the effects of growth rates on dividends and their subsequent impact on stock valuation.

Apply the Constant-Growth DDM to estimate stock value in a constant growth scenario.

Utilize the Capital Asset Pricing Model (CAPM) to determine the required rate of return.

---

Definitions:

Positive Statements

Factual statements that can be tested and validated, describing the world as it is rather than how it should be, typically used in economic analysis.

Value Judgments

Assessments or opinions made based on a set of criteria or moral standards rather than factual evidence alone.

Marginal Costs

The increase or decrease in the total costs incurred by producing one additional unit of a product or service.

Resources Scarcity

The economic problem of having seemingly unlimited human wants in a world of limited resources.