Answer:
8.45%
Explanation:
The formula used to calculate WACC is:
WACC = {[total equity/(total debt + equity)] x cost of equity} + {[total debt/(total debt + equity)] x cost of debt x (1 - tax rate)}
first we have to calculate the cost of equity:
cost of equity = risk free rate + (beta x market risk premium) = 4% + (1.2 x 7.5%) = 4% + 9% = 13%
now, WACC:
WACC = {[880/(880+880)] x 13%} + {[880/(880+880)] x 6% x (1 - 35%)} = (0.5 x 13%) + (0.5 x 6% x 0.65) = 6.5% + 1.95% = 8.45%
WACC = weighted average cost of capital is the rate at which the company effectively finances its assets
Answer:
(a) 0.99
(b) 0.96
(c) Apple has better liquidity
Explanation:
(a) Apple's current ratio:
= Current assets ÷ Current liabilities
= $ 75.91 billion ÷ $ 76.31 billion
= 0.99
(b) Apple's quick ratio:
= (Current assets - Inventory) ÷ Current liabilities
= ($ 75.91 billion - $ 2.45 billion) ÷$ 76.31 billion
= 0.96
(c) In January 2016,
Quick ratio = 0.66
Current ratio = 0.90
In comparison to H-P assets quality Apple has much better quality. Current ratio and quick ratio of apple is better than H-P which shows that apple has better liquidity than H-P.
Answer:
Business transactions are denominated in foreign currencies.
Explanation:
Foreign exchange can be referred to as the exchange of one country's currency for another currency. The exchange of these currencies occurs in an exchange market known as forex market.
Foreign exchange risk is a financial risk in which changes in the exchange rate may result in the loss of investment value or huge financial breakdown.
The most effective approach to preventing foreign exchange risks is for organizations to make and receive all forms of payment in their own currency.
Answer:
Correct option is C
Explanation:
Total E&P = $ 160000
Total voting Right Sold = 50/ (100+100) = 25%
Reduction of E& P due to exchange = Total E&P*Total voting Right Sold
Reduction of E& P due to exchange = 160000*25%
Reduction of E& P due to exchange = 40000
Reduction of E& P Lower of Total E&P*Total voting Right Sold or Amount realised
Reduction of E& P Lower of 40000 or (50*1000)
Reduction of E& P Lower of 40000 or 50000
Answer
C. A reduction of $40,000 in E&P because of the exchange.
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