Answer:
a. 4.94%
b. 11.48%
Explanation:
Here in this question, we are interested in calculating the pretax cost of debt and cost of equity.
We proceed as follows;
a. From the question;
The debt equity ratio = 1.15
since Equity = 1 ; Then
Total debt + Total equity = 1 + 1.15 = 2.15
Mathematically ;
WACC = Cost of equity x Weight of equity + Pretax Cost of debt x Weight of debt x (1-Tax rate)
Where WACC = 8.6%
Cost of equity = 14%
Weight of equity = 1/(total debt + total equity) = 1/(1+1.15) = 1/2.15
Pretax cost of debt = ?
Weight of debt = debt equity ratio/total cost of debt = 1.15/2.15
Tax rate = 21% = 0.21
Substituting these values, we have;
8.6% = 14% x 1/2.15 + Pretax cost of debt x 1.15/2.15 x (1-21%)
8.6% = 14% x 1/2.15 + Pretax cost of debt x 1.15/2.15 x (1-21%)
Pretax cost debt = (8.6%-6.511628%)/(1.15/2.15 x (1-21%))
Pretax cost of debt = 4.94%
b. WACC = Cost of equity x Weight of equity + After tax Cost of debt x Weight of debt
8.6% = Cost of equity x 1/2.15 + 6.1% x 1.15/2.15
Cost of equity = (8.6%-3.26279%)/(1/2.15)
Cost of equity = 11.48%
Answer:
Explanation:
Total cost per unit <u><em>(Which is calculated by adding up the fixed costs and variable costs and dividing by the overall quantity of units produced.)</em></u> is calculated below:
(20 + 30 + 8 + 13 + 12 + 7)
90
Desired return
20% on 1440000
288000
Per unit 288000/10000.
28.8
Markup on cost
Desired return per unit
28.8
Cost 90
28.8 /90 = 32% on cost
Target sale price
90+28.8
= 118.8
Hello <span>Wahsorad4380 </span>
Question: The bretton woods agreement incorporated all of these features except ________.<span>
Answer: floating exchange rates
Hope This Helps!
<u>-Chris</u></span>
Solution:
The home sells for = $120000
The commission that is paid by the seller is 3 percent
Therefore, commission = 3% of $120000 = $3600
The sales-person is on a 65 percent commission schedule with her broker which means that the saleperson gets the 65 percent amount of the commission.
Thus, the amount which is received by the salesperson from the given transaction is = 65% of $3600 = $2340
Therefore, the salesperson receives $2340 amount from the said transaction.
