Answer:
d. decrease the firm's WACC.
Explanation:
As per WACC formula
WACC = ( Weight of Common Equity x Cost of Common Equity ) + ( Weight of Common Debt x Cost of Common Debt x ( 1 - Tax rate ) ) + ( Weight of Preferred Equity x Cost of Preferred Equity )
By assuming the values to prove the answer
Weights
Common equity = 55%
Preferred Equity = 15%
Debt = 30%
Costs
Common equity = 15%
Preferred Equity = 8%
Debt = 12%
Tax rate is 15%
Placing values in the formula
WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 15% ) ) + ( 15% x 8% )
WACC = 8.25% + 3.06% + 1.2% = 12.51%
Keeping others values constant, Now increase the Tax rate to 25% and placing vlaues in the formula
WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 25% ) ) + ( 15% x 8% )
WACC = 8.25% + 2.7 + 1.2% = 12.15%
Hence the WACC is decreased from 12.51% to 12.15% when the tax rate is increased from 15% to 25% keeping other values constant.
Answer: A balanced economy generally has neutral economic stance.
Explanation:
A balanced economy generally has neutral economic stance. This means a balanced economy is one in which the finance of the economy I.e both the imports and exports are in equal proportion.
Answer: A) Business.
I hope this helped :)
Answer:
Option (B) is correct.
Explanation:
Given that,
Percentage increase in price = 5%
Percentage decrease in quantity demanded = 15%
Therefore,
= 3.0
Hence, elasticity of demand facing Billy Bob's Barber Shop is 3.0
