2012 AICPA Newly Released Questions – Business – Helppppppppppppppppppp plz - Page 3

I dont get it why these are the correct answers for the following two questions !!

First one :-

11. CPA

Co. has the following financial information:

Fixed costs $20,000

Variable costs 60%

Sales price $50

What amount of sales is required for Brewster to achieve a 15% return on sales?

a. $33,333

b. $50,000

c. $80,000

d. $133,333

Explanation

Choice “c” is correct.

2nd one :-

26. CPA

The stock of Fargo Co. is selling for $85. The next annual dividend is expected to be $4.25 and is

expected to grow at a rate of 7%. The corporate tax rate is 30%. What percentage represents the firm’s

cost of common equity?

a. 12.0%.

b. 8.4%.

c. 7.0%.

d. 5.0%.

Explanation

Choice “a” is correct.

Please help !!