Answer:
D) 12.9%
Explanation:
WACC formula;
WACC = wE*rE + wD*rD(1-tax)
whereby,
wE = weight of equity = 2/3 or 66.67%
rE = cost of equity = 16%
wD = weight of debt = 1/3 or 33.33%
rD = pretax cost of debt = 9%
WACC = (0.6667*0.16 ) + [0.3333*0.09(1-0.35) ]
= 0.1067 + 0.0195
= 0.1262 or 12.62%
Therefore, the after-tax WACC will be closest to 12.9%
Answer:
It is the theory of Market Imperfections
Explanation:
Market imperfections theory is said to be when a trade theory is brought about from international markets where perfect competition does not exist. It occurs when at least, one of the assumptions for perfect competition is violated and this results to what we call an imperfect market.
Answer:
The option (c) $89,100 unfavorable is correct
Explanation:
Solution
Recall that:
The actual price per gallon = $11.75
Actual gallons of material used= 5,000
Actual hourly labor rate= $17.00
Actual hours of production= 24,300
Standard price per gallon =$12.00
Rate of labor = $12.00
Now,
We find the total direct labor variance which is computed as follows:
Total Direct Labor Variance = Actual Direct Labor Cost - Standard Labor Cost
=24300*17 -3*9000*12
= 413,100 -32400
= -89,100 (unfavorable)
Therefore, the total direct labor variance is $89,100
Answer: Buying $200 stock in AT&T is an example of investment. As in this case the persons income exceeds his consumption and he buys new capital.
Borrowing $1000 from a bank to buy a car to use in business is also an investment as in this case buying a car is like investing in a cash flow producing asset, as the car will be an asset which will help earn money from the pizza business.
Explanation:
Roommate depositing $100 is an example of saving and not investing.
Taking out a mortgage and buying a house is an example of consumption and not investment.
Answer:
Receiving $2,000 every year for 6 years is worth more today.
Explanation:
$2,000 received per year is annuity as same amount is received every year.
Given:
Amount received every year = $2,000
Time period = 6 years
Rate = 5%
Check PVIFA (Present value of annuity factor) table for 5% and 6 years, we get 5.0757
Present value of annuity = 2,000 × 5.0757
= $10,151.4
Receiving $2,000 every year for 6 years is worth more today than receiving $10,000 today as present value of annuity is worth $10,151.4 today which is more than $10,000.
So, $2,000 every year is worth more today.
